Lexmark 2007 Annual Report Download - page 47

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RESTRUCTURING-RELATED CHARGES, PROJECT COSTS AND OTHER
Summary of Restructuring Impacts to 2007 Financial Results
The Company had two restructuring plans (and related projects) that impacted 2007 financial results that
are discussed in detail further below. The following table summarizes the 2007 financial impacts of the
Company’s restructuring plans (and related projects):
Restructuring-
related
Charges (Note 3)
2007
Project Costs
2006
Project Costs Total
Accelerated depreciation charges/project
costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5.1 $0.8 $11.1 $17.0
Employee termination benefit
charges/project costs . . . . . . . . . . . . . . . . 25.7 2.6 6.7 35.0
Total restructuring-related charges/project
costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . $30.8 $3.4 $17.8 $52.0
The $17 million of accelerated depreciation charges and project costs are included in Cost of revenue on
the Consolidated Statements of Earnings. The $26 million of employee termination benefit charges are
included in Restructuring and other, net while the $9 million of related project costs are included in Selling,
general and administrative on the Consolidated Statements of Earnings.
2007 Restructuring
As part of its ongoing efforts to optimize its cost and expense structure, the Company continually reviews
its resources in light of a variety of factors. On October 23, 2007, the Company announced a plan (the
“2007 Restructuring Plan”) which includes:
• Closure of one of the Company’s inkjet supplies manufacturing facilities in Mexico and additional
optimization measures at the remaining inkjet facilities in Mexico and the Philippines.
• Reduction of the Company’s business support cost and expense structure by further consolidating
activity globally and expanding the use of shared service centers in lower-cost regions. The areas
impacted are supply chain, service delivery, general and administrative expense, as well as
marketing and sales support functions.
• Focusing consumer segment marketing and sales efforts into countries or geographic regions that
have the highest supplies usage.
The 2007 Restructuring Plan is expected to impact approximately 1,650 positions by the end of 2008. Most
of the impacted positions are being moved to lower-cost countries. The Company expects the 2007
Restructuring Plan will result in pre-tax charges of approximately $55 million, of which $40 million will
require cash. The Company expects the 2007 Restructuring Plan to be substantially completed by the end
of 2008.
For the year ended December 31, 2007, the Company incurred $30.8 million for the 2007 Restructuring
Plan as follows:
Accelerated depreciation charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5.1
Employee termination benefit charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.7
Total restructuring-related charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $30.8
The accelerated depreciation charges were determined in accordance with SFAS No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets. The accelerated depreciation charges are included in
Cost of revenue on the Consolidated Statements of Earnings.
Employee termination benefit charges were accrued in accordance with SFAS No. 112, Employers’
Accounting for Postemployment Benefits and SFAS No. 146, Accounting for Costs Associated with Exit
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