Lexmark 2007 Annual Report Download - page 72

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The following table presents a rollforward of the liability incurred for employee termination benefit and
contract termination and lease charges in connection with the 2006 actions. The liability is included in
Accrued liabilities on the Company’s Consolidated Statements of Financial Position.
Employee
Termination
Benefit
Charges
Contract
Termination &
Lease Charges Total
Balance at January 1, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ — $ —
Costs incurred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75.9 5.2 81.1
Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (46.2) (0.4) (46.6)
Other
(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4.4) — (4.4)
Balance at December 31, 2006 . . . . . . . . . . . . . . . . . . . . . . . 25.3 4.8 30.1
Payments & other
(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14.0) (1.7) (15.7)
Reversals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.9) (1.7) (2.6)
Balance at December 31, 2007 . . . . . . . . . . . . . . . . . . . . . . . $ 10.4 $ 1.4 $ 11.8
(1)
Other consists primarily of special termination benefits that are paid out of the U.S. pension plan.
(2)
Other consists of additions due to positions being eliminated in 2007 and changes in the liability balance due to foreign currency
translations.
During the first quarter of 2007, the Company sold its Rosyth, Scotland facility for $8.1 million and
recognized a $3.5 million pre-tax gain on the sale.
During the second quarter of 2007, the Company substantially liquidated the remaining operations of its
Scotland entity and recognized an $8.1 million pre-tax gain from the realization of the entity’s accumulated
foreign currency translation adjustment generated on the investment in the entity during its operating life.
This gain is included in Other (income) expense, net on the Company’s Consolidated Statements of
Earnings.
2005 Workforce Reduction
In order to optimize the Company’s expense structure, the Company approved a plan during the third
quarter of 2005 that would reduce its workforce by approximately 275 employees worldwide from various
business functions and job classes. The separation of the affected employees was completed by
December 31, 2005.
As of December 31, 2005, the Company incurred one-time termination benefit charges of $10.4 million
related to the plan that is included in Restructuring and other, net on the Consolidated Statements of
Earnings. For the $10.4 million of one-time termination benefit charges, the Company recorded $6.5 million
in its Business segment, $2.6 million in its Consumer segment and $1.3 million in All other.
4. STOCK-BASED COMPENSATION
Lexmark has various stock incentive plans to encourage employees and nonemployee directors to remain
with the Company and to more closely align their interests with those of the Company’s stockholders. As of
December 31, 2007, awards under the programs consisted of stock options, restricted stock units
(“RSUs”) and deferred stock units (“DSUs”). The Company currently issues the majority of shares
related to its stock incentive plans from the Company’s authorized and unissued shares of Class A
Common Stock. Approximately 47.9 million shares of Class A Common Stock have been authorized for
these stock incentive plans.
For the years ended December 31, 2007 and 2006, the Company incurred pre-tax stock-based
compensation expense under SFAS 123R of $41.3 million and $43.2 million, respectively, in the
Consolidated Statements of Earnings. The Company recorded pre-tax compensation expense of
$2.9 million in 2005 related to its stock incentive plans prior to the adoption of SFAS 123R.
66