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Liability Rollforward
The following table presents a rollforward of the liability incurred for employee termination benefits in
connection with the 2008 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4
Payments & other
(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2.2)
Reversals
(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.4)
Balance at December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.8
(1)
Other consists of changes in the liability balance due to foreign currency translations.
(2)
Reversals due to changes in estimates for employee termination benefits.
2007 Restructuring
General
On October 23, 2007, the Company announced the “2007 Restructuring Plan”, which included:
• Closing 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;
• Reducing 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; and
• Focusing ISD marketing and sales efforts into countries or geographic regions that have the highest
supplies usage.
The 2007 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 $21.5 million for the 2007
Restructuring Plan as follows:
Accelerated depreciation charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $17.3
Employee termination benefit charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.7)
Contract termination and lease charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.9
Total restructuring-related charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $21.5
The accelerated depreciation charges were determined in accordance with SFAS No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets. For the year ended December 31, 2008, the Company
incurred $9.2 million of accelerated depreciation charges in Cost of revenue and $8.1 million in Selling,
general and administrative 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. Contract termination and lease charges were also accrued in
accordance with SFAS No. 146. Employee termination benefit charges and contract termination and
lease charges are included in Restructuring and related charges on the Consolidated Statements of
Earnings.
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