Xerox 2011 Annual Report Download - page 81

79Xerox 2011 Annual Report
Severance and Lease Cancellation Asset
Related Costs and Other Costs Impairments(1) Total
Balance at December 31, 2008 $ 320 $ 32 $ — $ 352
Restructuring provision 28 9 — 37
Reversals of prior accruals (39) (6) — (45)
Net current period charges(2) (11) 3 — (8)
Charges against reserve and currency (255) (15) — (270)
Balance at December 31, 2009 54 20 — 74
Restructuring provision 470 28 26 524
Reversals of prior accruals (32) (9) — (41)
Net current period charges(2) 438 19 26 483
Charges against reserve and currency (194) (14) (26) (234)
Balance at December 31, 2010 298 25 — 323
Restructuring provision 98 1 5 104
Reversals of prior accruals (65) (6) — (71)
Net current period charges(2) 33 (5) 5 33
Charges against reserve and currency (215) (13) (5) (233)
Balance at December 31, 2011 $ 116 $ 7 $ — $ 123
(1) Charges associated with asset impairments represent the write-down of the related assets to their new cost basis and are recorded concurrently with the recognition of the provision.
(2) Represents amount recognized within the Consolidated Statements of Income for the years shown.
Note 9 – Restructuring and Asset Impairment Charges
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 consist of severance actions and impact all
major geographies and segments. Management continues to evaluate our
The following table summarizes the reconciliation to the Consolidated
Statements of Cash Flows:
Year Ended December 31,
2011 2010 2009
Charges against reserve $ (233) $ (234) $ (270)
Asset impairment 5 26 —
Effects of foreign currency and
other non-cash items 10 (5) —
Restructuring Cash Payments $ (218) $ (213) $ (270)
The following table summarizes the total amount of costs incurred in
connection with these restructuring programs by segment:
Year Ended December 31,
2011 2010 2009
Technology $ 23 $ 325 $ (5)
Services 12 104 (2)
Other (2) 54 (1)
Total Net Restructuring Charges $ 33 $ 483 $ (8)
business; therefore, in future years, there may be additional provisions for
new plan initiatives, as well as changes in previously recorded estimates, as
payments are made or actions are completed. Asset impairment charges
were also incurred in connection with these restructuring actions for those
assets sold, abandoned or made obsolete as a result of these programs.
A summary of our restructuring program activity during the three years
ended December 31, 2011 is as follows:
2012Plan
To date, we have identified and approved additional restructuring
initiatives of approximately $25 for the first quarter of 2012. These actions
are expected to impact all geographies and segments with approximately
equal focus on SAG reductions, gross margin improvements and
optimization of RD&E investments.
2011Activity
During 2011, we recorded $33 of net restructuring and asset impairment
charges, which included the following:
•$98 of severance costs related to headcount reductions of
approximately 3,900 employees, primarily in North America. The
actions impacted several functional areas, and approximately 55% of
the costs were focused on gross margin improvements, 36% on SAG
and 9% on the optimization of RD&E investments.
•$1 for lease termination costs.
•$5 of asset impairment losses from the disposition of two aircraft
associated with the restructuring of our corporate aviation operations.
The above charges were partially offset by $71 of net reversals for
changes in estimated reserves from prior-period initiatives.
Notes to the Consolidated
Financial Statements
(in millions, except per-share data and where otherwise noted)