Xerox 2005 Annual Report Download - page 73

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Xerox Corporation
65
Additional details about our restructuring programs are as follows
(in millions):
Reconciliation to Statements of Cash Flows
Years Ended December 31, 2005 2004 2003
Charges to reserve,
all programs $(247) $(190) $(378)
Pension curtailment,
special termination benefits
and settlements – 8 33
Asset Impairments 15 1 1
Effects of foreign currency
and other non-cash 18 (6) (1)
Cash payments for
restructurings $(214) $(187) $(345)
Restructuring – Ongoing Programs: Beginning in the fourth
quarter of 2002, we initiated a series of ongoing restructuring
initiatives designed to leverage cost savings resulting from
realized productivity improvements, realign and lower our overall
cost structureand outsource certain internal functions. These
initiatives primarily include severance actions and impact all major
geographies and segments. During 2003, we provided $177 for
ongoing restructuring programs, net of reversals of $16 related
to changes in estimates for severance costs from previously
recorded actions. The provision consisted of net charges of
$138 primarily related to the elimination of approximately
2,000 positions worldwide, $33 for pension settlements and
post-retirement medical benefit curtailments and $6 for lease
terminations. During 2004, we provided an additional $93 for
ongoing restructuring programs, net of reversals of $11 related
to changes in estimates for severance costs from previously
recorded actions. The additional provision consisted of a net
charge of $76 related to the elimination of approximately 1,900
positions primarily in North America and Latin America, $8 for
pension settlements, $8 for lease terminations and $1 for asset
impairments. During 2005, we provided an additional $371
for ongoing restructuring programs, net of reversals of $27
primarily related to changes in estimates in severance costs
from previously recorded actions. The additional provision in
2005 consisted of a net charge of $350 for severance costs,
primarily related to the elimination of approximately 3,900
positions worldwide, a net charge of $6 for lease terminations
and $15 for asset impairments. The initiatives in 2005 are
focused on cost reductions in service, manufacturing and
back-office support operations primarily within the Office and
Production segments. We expect to spend the majority of the
restructuring balance as of December 31, 2005 in 2006.
Xerox Annual Report 2005
The following tables summarize the total amount of costs expected to be incurred in connection with these restructuring programs and
the cumulative amount incurred as of December 31, 2005:
Segment Reporting
Cumulative amount Amount incurred for Cumulative amount
incurred as of the year ended incurred as of Total expected
(in millions) December 31, 2004 December 31, 2005 December 31, 2005 to be incurred*
Production $ 255 $ 150 $ 405 $ 407
Office 198 175 373 374
DMO 97 22 119 123
Other 122 24 146 150
Total Provisions $672 $371 $1,043 $1,054
*The total amount of $1,054 represents the cumulative amount incurred through December 31, 2005 plus additional expected restructuring charges of approximately $11
related to initiatives identified to date that have not yet been recognized in the Consolidated Financial Statements as well as expected interest accretion on the reserve.
Major Cost Reporting
Cumulative amount Amount incurred for Cumulative amount
incurred as of the year ended incurred as of Total expected
(in millions) December 31, 2004 December 31, 2005 December 31, 2005 to be incurred*
Severance and related costs $ 567 $350 $ 917 $ 922
Lease cancellation and other costs 59 6 65 70
Asset impairments 46 15 61 62
Total Provisions $672 $371 $1,043 $1,054