Lexmark 2009 Annual Report Download - page 48

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RESTRUCTURING AND RELATED CHARGES AND PROJECT COSTS
Summary of Restructuring Impacts
The Company’s 2009 financial results are impacted by its ongoing restructuring plans and related projects
and are discussed in further detail below. Project costs consist of additional charges related to the
execution of the restructuring plans. These project costs are incremental to the Company’s normal
operating charges and are expensed as incurred, and include such items as compensation costs for
overlap staffing, travel expenses, consulting costs and training costs. The table below summarizes the
2009 financial impacts of the Company’s restructuring plans and related projects.
For the year ended December 31, 2009, the Company incurred charges, including project costs, of
$141.3 million for the Company’s restructuring plans as follows:
(In Millions)
2009 Actions*
Restructuring-
related
Charges
(Note 4)
2008 Action
Restructuring-
related
Charges
(Note 4)
2007 Action
Restructuring-
related
Charges
(Note 4)
2006 Action
Restructuring-
related
Charges
(Note 4)
Project
Costs Total
Accelerated depreciation
charges/project costs . . . . . . . . $ 41.2 $(1.5) $1.8 $ — $10.1 $ 51.6
Employee termination benefit
charges/project costs . . . . . . . . 66.7 — 3.1 (0.6) 19.1 88.3
Contract termination and lease
charges . . . . . . . . . . . . . . . . . . 1.0 — 0.4 — — 1.4
Total restructuring-related
charges/project costs . . . . . . . . $108.9 $(1.5) $5.3 $(0.6) $29.2 $141.3
* Amounts represent a combined total for all 2009 Restructuring Actions. Please see below for separate details regarding each plan.
The Company incurred $51.5 million of accelerated depreciation charges and project costs in Cost of
revenue and $0.1 million in Selling, general and administrative on the Consolidated Statements of
Earnings. Total employee termination benefits and contract termination and lease charges of
$70.6 million are included in Restructuring and related charges while $19.1 million of related project
costs are included in Selling, general and administrative on the Consolidated Statements of Earnings.
For the year ended December 31, 2009, the Company incurred restructuring and related charges and
project costs related to its restructuring plans of $64.6 million in PSSD, $44.4 million in ISD and
$32.3 million in All other.
In the first quarter of 2010, the Company expects savings of approximately $55 million from the 2007, 2008
and 2009 restructuring actions. In 2010 due to the 2009 restructuring actions, the Company expects
restructuring and related costs and expenses to be approximately $65 million, with $17 million expected to
be incurred in the first quarter.
October 2009 Restructuring Plan
General
As part of Lexmark’s ongoing plans to improve the efficiency and effectiveness of all of our operations, the
Company announced restructuring actions (the “October 2009 Restructuring Plan”) on October 20, 2009.
The Company continues its focus on refining its selling and service organization, reducing its general and
administrative expenses, consolidating its cartridge manufacturing capacity, and enhancing the efficiency
of its supply chain infrastructure. The actions taken will reduce cost and expense across the organization,
with a focus in manufacturing and supply chain, service delivery overhead, marketing and sales support,
corporate overhead and development positions as well as reducing cost through consolidation of facilities
in supply chain and cartridge manufacturing. The Company expects these actions to be principally
completed by the end of the first quarter of 2011.
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