Lexmark 2008 Annual Report Download - page 80

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Employee termination benefit charges were accrued in accordance with SFAS No. 112, Employers’
Accounting for Postemployment Benefits. Employee termination benefit charges include severance,
medical and other benefits and are included in Restructuring and related charges on the Consolidated
Statements of Earnings. Although the 2009 Restructuring Plan was announced in January 2009, the
Company accrued the $20.2 million of employee termination benefit charges in December 2008 in
accordance with SFAS No. 112 because the charges were probable and estimable for the 2008 year-
end reporting period.
For the year ended December 31, 2008, the Company incurred restructuring-related charges of
$15.5 million in PSSD, $1.7 million in ISD and $3.0 million in All other. The Company expects to incur
charges related to the 2009 Restructuring Plan of approximately $20.0 million in PSSD, approximately
$3.0 million in ISD and approximately $3.0 million in All other.
Liability Rollforward
The following table represents a rollforward of the liability incurred for employee termination benefits in
connection with the 2009 Restructuring Plan. The liability is included in Accrued liabilities on the
Company’s Consolidated Statements of Financial Position. Employee
Termination
Benefits
Balance at January 1, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ —
Costs incurred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.7
Payments & other
(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.5)
Balance at December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20.2
(1)
Other consists of changes in the liability balance due to foreign currency translations.
2008 Restructuring
General
To enhance the efficiency of the Company’s inkjet cartridge manufacturing operations, the Company
announced a plan (the “2008 Restructuring Plan”) on July 22, 2008 that resulted in the closure of one of the
Company’s inkjet supplies manufacturing facilities in Mexico. The 2008 Restructuring Plan is expected to
be substantially completed by the end of the first quarter of 2009, and any remaining charges to be incurred
will be immaterial.
Impact to 2008 Financial Results
For the year ended December 31, 2008, the Company incurred charges of $21 million in ISD for the 2008
Restructuring Plan as follows:
Accelerated depreciation charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $18.0
Employee termination benefit charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0
Total restructuring-related charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $21.0
The accelerated depreciation charges were determined in accordance with SFAS No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets, and 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 or
Disposal Activities, as appropriate. Employee termination benefit charges include severance, medical and
other benefits and are included in Restructuring and related charges on the Consolidated Statements of
Earnings.
74