Lexmark 2013 Annual Report Download - page 51

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Selling, general Restructuring Impact on
Restructuring- Impact on and and related Operating
(Dollars in millions) related costs Gross profit administrative charges income
Accelerated depreciation charges $ 4.5 $ 4.5 $ 2.4 $ – $ 6.9
Impairments on long-lived assets held for sale – – 4.6 – 4.6
Employee termination benefit charges – – – 2.1 2.1
Contract termination and lease charges – – – (0.1) (0.1)
Project costs – 0.7 15.7 – 16.4
Total restructuring charges/project costs $ 4.5 $ 5.2 $ 22.7 $ 2.0 $ 29.9
For the year ended December 31, 2011, the Company incurred restructuring charges and project costs related to the 2012
Restructuring Plan of $7.6 million in ISS. The Company incurred restructuring charges and project costs related to the Other
Restructuring Actions of $9.0 million in ISS and $13.3 million in All other.
In 2011, the Company recorded impairment charges of $1.0 million related to its manufacturing facility in Juarez, Mexico, and $3.6
million related to one of its support facilities in Boigny, France for which the current fair values had fallen below the carrying values.
Subsequent to the impairment charge, the Juarez, Mexico facility was sold and the Company recognized a $0.6 million pre-tax gain on
the sale that is included in the $29.9 million total restructuring charges presented above as project costs related to the Company’s
Other Restructuring Actions.
ACQUISITION AND DIVESTITURE-RELATED ADJUSTMENTS
Pre-tax acquisition and divestiture-related adjustments affected the Company’s financial results as follows:
(Dollars in Millions) 2013 2012 2011
Reduction in revenue $ 15.9 $ 5.5 $ 4.9
Amortization of intangible assets 56.9 41.4 21.2
Acquisition and integration costs 17.6 18.9 3.3
Total acquisition-related adjustments $ 90.4 $ 65.8 $ 29.4
Gain on sale of inkjet-related technology and assets (73.5) – –
Divestiture costs 4.3 – –
Total divestiture-related adjustments (69.2) – –
Total acquisition and divestiture-related adjustments $ 21.2 $ 65.8 $ 29.4
Reductions in revenue and amortization of intangible assets were recognized primarily in the Perceptive Software reportable segment.
Acquisition and integration costs were recognized primarily in All other. The gain on sale of inkjet-related technology and assets and
divestiture costs were recognized primarily in the ISS reportable segment.
Acquisitions
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.
Reductions in revenue result from business combination accounting rules when deferred revenue balances 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 $15.9
million, $5.5 million and $4.9 million downward adjustments to revenue for 2013, 2012 and 2011, respectively, are reflected in
Revenue presented on the Company’s Consolidated Statements of Earnings. The Company expects future pre-tax reductions in
revenue of approximately $8 million for 2014.
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 research and development 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 remained independent. The Company incurred the following on the Consolidated Statements of Earnings for the
amortization of intangible assets.
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