Lexmark 2015 Annual Report Download - page 49

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45
charges of approximately $55 million, with approximately $37 million incurred to date and approximately $18 million remaining to be
incurred in 2016. The Company expects the total cash costs of the 2015 Restructuring Actions to be approximately $55 million, with
$36 million incurred to date and approximately $19 million remaining to be incurred in 2016. The anticipated timing of the cash
outlays for the 2015 Restructuring Actions is $8 million through 2015 and approximately $47 million in 2016.
The 2015 Restructuring Actions generated cash savings of $2 million in 2015, and the Company expects to generate savings of $55
million in 2016 and ongoing annual savings of approximately $65 million beginning in 2017, all of which will be cash savings. These
ongoing savings should be split approximately 90% to Operating expense and 10% to Cost of revenue. The Company expects these
actions to be complete by the end of 2016.
Other Restructuring Actions
As part of Lexmark’s ongoing strategy to increase the focus of its talent and resources on higher usage business platforms, the
Company announced various restructuring actions (“Other Restructuring Actions”) over the past several years. The Other
Restructuring Actions primarily include exiting the development and manufacturing of the Company’s remaining inkjet hardware,
with reductions primarily in the areas of inkjet-related manufacturing, research and development, supply chain, marketing and sales as
well as other support functions. The Other Restructuring Actions are considered substantially completed and any remaining charges to
be incurred from these actions are expected to be immaterial.
Impact to 2015 Financial Results
For the year ended December 31, 2015, the Company incurred charges (reversals), including project costs, for the Company’s
restructuring plans as follows:
Other
2016
2015
2015
Actions
Other
Actions
Actions
Actions
Restructuring
Actions
Restructuring
2016
Restructuring
Restructuring
2015
Charges
Restructuring
Other
Total
Charges
Actions
Charges
Project
Actions
(Reversals)
Project
Actions
All
(Dollars in millions)
(Note 5)
Total
(Note 5)
Costs
Total
(Note 5)
Costs
Total
Actions
Accelerated depreciation
charges
$
–
$
–
$
0.4
$
–
$
0.4
$
1.4
$
–
$
1.4
$
1.8
Employee termination
benefit charges
40.4
40.4
34.9
–
34.9
0.1
–
0.1
75.4
Excess components and
other inventory-related
charges
–
–
–
–
–
1.2
–
1.2
1.2
Contract termination and
lease charges (reversals)
–
–
0.1
–
0.1
(0.5)
–
(0.5)
(0.4)
Project costs
–
–
–
1.1
1.1
–
9.1
9.1
10.2
Total restructuring
charges and project costs
$
40.4
$
40.4
$
35.4
$
1.1
$
36.5
2.2
$
9.1
$
11.3
$
88.2
Restructuring charges (reversals) and project costs for all restructuring actions are recorded in the Company’s Consolidated
Statements of Earnings for the year ended December 31, 2015 as follows:
Restructuring
Selling,
and related
Impact on
Restructuring-
Impact on
general and
charges
Operating
(Dollars in millions)
related costs
Gross profit
administrative
(reversals)
income
Accelerated depreciation charges
$
0.4
$
0.4
$
1.4
$
–
$
1.8
Excess components and other inventory-
related charges
1.2
1.2
–
–
1.2
Employee termination benefit charges
–
–
–
75.4
75.4
Contract termination and lease charges
(reversals)
–
–
–
(0.4)
(0.4)
Project costs
–
–
10.2
–
10.2
Total restructuring charges and project
costs
$
1.6
$
1.6
$
11.6
$
75.0
$
88.2