Lexmark 2010 Annual Report Download - page 55

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Impact to 2008 Financial Results
For the year ended December 31, 2008, the Company incurred charges of $92.7 million for the Company’s
Other Restructuring Actions as follows:
(Dollars in Millions)
Other Actions
Restructuring-
related
Charges
(Note 5)
Project
Costs Total
Accelerated depreciation charges/project costs . . . . . . . . . . . . . $35.3 $15.3 $50.6
Employee termination benefit charges/project costs . . . . . . . . . 21.0 15.3 36.3
Contract termination and lease charges . . . . . . . . . . . . . . . . . . 5.8 — 5.8
Total restructuring-related charges/project costs . . . . . . . . . . . . $62.1 $30.6 $92.7
The Company incurred $42.5 million of accelerated depreciation charges and project costs in Cost of
revenue and $8.1 million in Selling, general and administrative on the Consolidated Statements of
Earnings. Employee termination benefit and contract termination and lease charges of $26.8 million
are included in Restructuring and related charges, and $15.3 million of related project costs are included in
Selling, general and administrative on the Company’s Consolidated Statements of Earnings.
For the year ended December 31, 2008, the Company incurred restructuring and related charges and
project costs related to the Company’s Other Restructuring Actions of $54.7 million in ISS and $38.0 million
in All other.
Refer to Note 5 of Notes to Consolidated Financial Statements for a rollforward of the liability incurred for
the Company’s Other Restructuring Actions.
ACQUISITION-RELATED ADJUSTMENTS
In connection with acquisitions, Lexmark incurs costs and adjustments (referred to as “acquisition-related
adjustments”) that affect the Company’s financial results. These acquisition-related adjustments result
from business combination accounting rules as well as expenses that would otherwise have not been
incurred by the Company if acquisitions had not taken place.
The following pre-tax acquisition-related adjustments affected the Company’s 2010 financial results.
(Dollars in Millions)
Adjustment to revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $13.0
Amortization of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.0
Acquisition and integration costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
Total acquisition-related adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $32.1
Adjustments to revenue result from business combination accounting rules when deferred revenue
balances for service contracts assumed as part of acquisitions are adjusted down to fair value. Fair
value approximates the cost of fulfilling the service obligation, plus a reasonable profit margin. Subsequent
to acquisitions, the Company analyzes the amount of amortized revenue that would have been recognized
had the acquired company remained independent and had the deferred revenue balances not been
adjusted to fair value. The $13.0 million downward adjustment to revenue for 2010 is reflected in Revenue
presented on the Company’s Consolidated Statements of Earnings. For 2011, the Company expects pre-
tax adjustments to deferred revenue of approximately $4 million.
Due to business combination accounting rules, intangible assets are recognized as a result of acquisitions
which were not previously presented on the balance sheet of the acquired company. These intangible
assets consist primarily of purchased technology, customer relationships, trade names, in-process R&D
and non-compete agreements. Subsequent to the acquisition date, some of these intangible assets begin
amortizing and represent an expense that would not have been recorded had the acquired company
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