Xerox 2008 Annual Report Download - page 69

Notes to the Consolidated
Financial Statements
(in millions, except per share data and
unless otherwise indicated)
Reconciliation to Consolidated Statements of Cash Flows
Year Ended December 31,
2008 2007 2006
Charges to reserve $(186) $(222) $(284)
Asset impairments 53 1 30
Effects of foreign currency and other
non-cash items 2(14) (11)
Cash payments for restructurings $(131) $(235) $(265)
The following table summarizes the total amount of costs incurred
in connection with these restructuring programs by segment for
the three years ended December 31, 2008:
2008 2007 2006
Production $190 $(6) $147
Office 200 3 138
Other 39 (3) 100
Total net charges $429 $(6) $385
Over the past several years we have engaged in a series of
restructuring programs related to downsizing our employee base,
exiting certain activities, outsourcing certain internal functions and
engaging in other actions designed to reduce our cost structure
and improve productivity. These initiatives primarily include
severance actions and impact all major geographies and segments.
Management continues to evaluate our business and, therefore,
there may be additional provisions for new plan initiatives as well
as changes in estimates to amounts previously recorded, as
payments are made or actions are completed. Asset impairment
charges were also incurred in connection with these restructuring
actions for those assets made obsolete as a result of these
programs.
2008 Activity
During 2008, we recorded $357 of net restructuring charges
predominantly consisting of severance and costs related to the
elimination of approximately 4,900 positions primarily in both
North America and Europe. Focus areas for the actions include the
following:
• Improving efficiency and effectiveness of infrastructure
including: marketing, finance, human resources & training.
• Capturing efficiencies in technical services, managed services
and supply chain & manufacturing infrastructure.
• Optimizing product development and engineering resources.
In addition, related to these activities, we also recorded lease
cancellation and other costs of $19 and asset impairment charges
of $53. The lease termination and asset impairment charges
primarily related to: (i) the relocation of certain manufacturing
operations including the closing of our toner plant in Oklahoma
City and the consolidation of our manufacturing operations in
Ireland; and (ii) the exit from certain leased and owned facilities as
a result of the actions noted above.
2007 Activity
Restructuring activity was minimal in 2007 and the related charges
primarily reflected changes in estimates in severance costs from
previously recorded actions.
2006 Activity
The 2006 charges primarily relate to the elimination of
approximately 3,400 positions primarily in North America and
Europe. The actions associated with these charges primarily include
the following: technical and professional services infrastructure and
global back-office optimization; continued R&D efficiencies and
productivity improvements; supply chain optimization to ensure,
for example, alignment to our global two-tier model
implementation; and selected off-shoring opportunities. The lease
termination and asset impairment charges primarily related to the
relocation of certain manufacturing operations as well as an exit
from certain leased and owned facilities. These charges were offset
by reversals of $35 primarily related to changes in estimates in
severance costs from previously recorded actions.
Note 10 – Supplementary Financial Information
The components of other current assets and other current liabilities
at December 31, 2008 and 2007 were as follows:
2008 2007
Other current assets
Deferred taxes $ 305 $ 200
Restricted cash 20 45
Prepaid expenses 119 120
Financial derivative instruments 39 27
Other 307 290
Total Other current assets $ 790 $ 682
Other current liabilities
Income taxes payable $ 47 $ 84
Other taxes payable 173 179
Interest payable 141 137
Restructuring reserves 325 81
Unearned income 203 242
Financial derivative instruments 134 30
Product warranties 25 25
Dividends payable 38 40
Other 683 694
Total Other current liabilities $1,769 $1,512
Xerox 2008 Annual Report 67