XML 119 R15.htm IDEA: XBRL DOCUMENT

Restructuring Charges

12 Months Ended

Dec. 31, 2013

Restructuring And Related Charges [Abstract]

5. RESTRUCTURING CHARGES

2012 Restructuring Actions

General

As part of Lexmark's ongoing strategy to increase the focus of its talent and resources on higher usage business platforms, the Company announced restructuring actions (the “2012 Restructuring Actions”) on January 31 and August 28, 2012. These actions better align the Company's sales, marketing and development resources, and align and reduce its support structure consistent with its focus on business customers. The 2012 Restructuring Actions 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 Company will continue to provide service, support and aftermarket supplies for its inkjet installed base. The Company expects these actions to be complete by the end of 2015.

The 2012 Restructuring Actions are expected to impact about 2,063 positions worldwide, including 300 manufacturing positions. The 2012 Restructuring Actions will result in total pre-tax charges of approximately $176.0 million, with $146.4 million incurred to date and approximately $29.6 million to be incurred in 2014 and 2015. The Company expects the total cash costs of the 2012 Restructuring Actions to be approximately $101.5 million with $75.9 million incurred to date, and approximately $25.6 million remaining in 2014 and 2015.

The Company expects to incur total charges related to the 2012 Restructuring Actions of approximately $135.2 million in ISS, $35.7 million in All other and $5.1 million in Perceptive Software.

In the second quarter of 2013, the Company sold inkjet-related technology and assets. Refer to Note 4 of the Notes to Consolidated Financial Statements for more information.

Impact to 2013, 2012 and 2011 Financial Results

For the year ended December 31, 2013, charges for the 2012 Restructuring Actions were recorded in the Company's Consolidated Statements of Earnings as follows:

					Selling, general		Restructuring		Impact on
	Restructuring-		Impact on		and		and related		Operating
	related costs		Gross profit		administrative		charges		Income
Accelerated depreciation charges	$	5.6	$	5.6	$	5.5	$	-	$	11.1
Excess components and other inventory-related charges		15.8		15.8		-		-		15.8
Employee termination benefit charges		-		-		-		9.2		9.2
Contract termination and lease charges		-		-		-		(0.2	)	(0.2	)
Total restructuring charges	$	21.4	$	21.4	$	5.5	$	9.0	$	35.9

For the year ended December 31, 2012, charges for the 2012 Restructuring Actions were recorded in the Company's Consolidated Statements of Earnings as follows:

					Selling, general		Restructuring		Impact on
	Restructuring-		Impact on		and		and related		Operating
	related costs		Gross profit		administrative		charges		Income
Accelerated depreciation charges	$	29.5	$	29.5	$	19.8	$	-	$	49.3
Impairment of long-lived assets held for sale		0.6		0.6		-		-		0.6
Excess components and other inventory-related charges		17.7		17.7		-		-		17.7
Employee termination benefit charges		-		-		-		31.1		31.1
Contract termination and lease charges		-		-		-		4.2		4.2
Total restructuring charges	$	47.8	$	47.8	$	19.8	$	35.3	$	102.9

For the year ended December 31, 2011, charges for the 2012 Restructuring Actions were recorded in the Company's Consolidated Statements of Earnings as follows:

					Restructuring		Impact on
	Restructuring-		Impact on		and related		Operating
	related costs		Gross profit		charges		Income
Accelerated depreciation charges	$	4.5	$	4.5	$	-	$	4.5
Employee termination benefit charges		-		-		3.1		3.1
Total restructuring charges	$	4.5	$	4.5	$	3.1	$	7.6

The estimated useful lives of certain long-lived assets changed as a result of the Company's decision to exit the development and manufacture of inkjet hardware. Accelerated depreciation and impairment charges for the years ended December 31, 2013, 2012 and 2011 for the 2012 Restructuring Actions and all of the other restructuring actions were determined in accordance with FASB guidance on accounting for the impairment or disposal of long-lived assets. For the year ended December 31, 2012, the impairment charges incurred were related to machinery and equipment located in Juarez, Mexico, which was held for sale as of December 31, 2012, and for which the current fair value had fallen below the carrying value.

The inventory-related charges incurred for the years ended December 31, 2013 and 2012 were determined in accordance with FASB guidance on inventory and were attributable to the decision to cease manufacturing of inkjet hardware.

For the years ended December 31, 2013, 2012 and 2011, the company incurred employee termination benefit charges, which include severance, medical and other benefits, and contract termination and lease charges. Charges for the 2012 Restructuring Actions and all of the other restructuring actions were recorded in accordance with FASB guidance on employers' accounting for postemployment benefits and guidance on accounting for costs associated with exit or disposal activities, as appropriate.

For the years ended December 31, 2013, 2012 and 2011, the Company incurred restructuring charges in connection with the 2012 Restructuring Actions in the Company's segments as follows:

	2013		2012		2011
ISS	$	25.2	$	84.7	$	7.6
All other		7.8		17.5		-
Perceptive Software		2.9		0.7		-
Total charges	$	35.9	$	102.9	$	7.6

Liability Rollforward

The following table represents a rollforward of the liability incurred for employee termination benefits and contract termination and lease charges in connection with the 2012 Restructuring Actions. The $9.9 million restructuring liability as of December 31, 2013 is included in Accrued liabilities on the Company's Consolidated Statements of Financial Position.

			Contract
	Employee		Termination
	Termination		& Lease
	Benefits		Charges		Total
Balance at January 1, 2011	$	-	$	-	$	-
Costs incurred		3.1		-		3.1
Balance at December 31, 2011		3.1		-		3.1
Costs incurred		31.3		4.7		36.0
Reversals ⁽¹⁾		(0.2	)	(0.5	)	(0.7	)
Payments & Other ⁽²⁾		(16.4	)	(3.9	)	(20.3	)
Balance at December 31, 2012		17.8	$	0.3		18.1
Costs incurred		14.4		-		14.4
Reversals ⁽¹⁾		(5.2	)	(0.2	)	(5.4	)
Payments & Other ⁽²⁾		(17.1	)	(0.1	)	(17.2	)
Balance at December 31, 2013	$	9.9	$	-	$	9.9

(1) Reversals due to changes in estimates for employee termination benefits.

(2) Other consists of changes in the liability balance due to foreign currency translations.

Summary of Other Restructuring Actions

General

In response to global economic weakening, to improve the efficiency and effectiveness of its operations, enhance the efficiency of the Company's inkjet cartridge manufacturing operations and to reduce the Company's business support cost and expense structure, the Company announced various restructuring actions (“Other Restructuring Actions”) from 2006 to October 2009. The Other Restructuring Actions include closing the Company's inkjet supplies manufacturing facilities in Mexico, the consolidating of its cartridge manufacturing capacity, as well as impacting positions in the Company's general and administrative functions, supply chain and sales support, marketing and sales management, and consolidating of the Company's research and development programs. In the fourth quarter of 2013 employee termination benefit charges were incurred for actions that were not a part of an announced plan. 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 2013, 2012 and 2011 Financial Results

For the year ended December 31, 2013, charges for the Company's Other Restructuring Actions were recorded in the Consolidated Statements of Earnings as follows:

	Restructuring		Impact on
	and related		Operating
	charges		Income
Employee termination benefit charges	$	1.9	$	1.9

For the year ended December 31, 2012, charges (reversals) for the Company's Other Restructuring Actions were recorded in the Consolidated Statements of Earnings as follows:

	Selling, general		Restructuring		Impact on
	and		and related		Operating
	administrative		charges		Income
Accelerated depreciation charges	$	0.1	$	-	$	0.1
Impairment of long-lived assets held for sale		1.5		-		1.5
Employee termination benefit charges (reversals)		-		(0.1	)	(0.1	)
Contract termination and lease charges		-		0.9		0.9
Total restructuring charges	$	1.6	$	0.8	$	2.4

For the year ended December 31, 2011, charges (reversals) for the Company's Other Restructuring Actions were recorded in the Consolidated Statements of Earnings as follows:

	Selling, general		Restructuring		Impact on
	and		and related		Operating
	administrative		charges		Income
Accelerated depreciation charges	$	2.4	$	-	$	2.4
Impairment of long-lived assets held for sale		4.6		-		4.6
Employee termination benefit charges (reversals)		-		(1.0	)	(1.0	)
Contract termination and lease charges (reversals)		-		(0.1	)	(0.1	)
Total restructuring charges (reversals)	$	7.0	$	(1.1	)$	5.9

The impairment charges recorded in 2012 are related to the Company's site in Boigny, France held for sale for which the current fair value had fallen below the carrying value. In 2011, the Company recorded impairment charges of $3.6 million related to its Boigny, France site and $1.0 million related to its manufacturing facility in Juarez, Mexico for which the current fair value had fallen below the carrying value. 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 Selling, general and administrative on the Company's Consolidated Statements of Earnings. This gain is not included in the total restructuring charges (reversals) presented in the table above.

For the year ended December 31, 2011, the reversal for employee termination benefit charges is due primarily to revisions in assumptions.

For the years ended December 31, 2013, 2012, and 2011, the Company incurred restructuring charges in connection with the Other Restructuring Actions in the Company's segments as follows:

	2013		2012		2011
ISS	$	-	$	0.8	$	2.1
All other		0.1		1.6		3.8
Perceptive Software		1.8		-		-
Total charges	$	1.9	$	2.4	$	5.9

Liability Rollforward

The following table represents a rollforward of the liability incurred for employee termination benefits and contract termination and lease charges in connection with the Company's Other Restructuring Actions. Of the total $1.5 million restructuring liability as of December 31, 2013, $1.3 million is included in Accrued liabilities and $0.2 million is included in Other liabilities on the Company's Consolidated Statements of Financial Position.

			Contract
	Employee		Termination
	Termination		& Lease
	Benefits		Charges		Total
Balance at January 1, 2011	$	26.5	$	1.1	$	27.6
Costs incurred		1.0		0.4		1.4
Reversals ⁽¹⁾		(2.2	)	(0.5	)	(2.7	)
Payments & Other ⁽²⁾		(18.0	)	(1.0	)	(19.0	)
Balance at December 31, 2011		7.3		-		7.3
Costs incurred		0.6		0.9		1.5
Reversals ⁽¹⁾		(1.0	)	-		(1.0	)
Payments & Other ⁽²⁾		(4.1	)	(0.2	)	(4.3	)
Balance at December 31, 2012		2.8		0.7		3.5
Costs incurred		2.0		-		2.0
Reversals ⁽¹⁾		(0.1	)	-		(0.1	)
Payments & Other ⁽²⁾		(3.3	)	(0.6	)	(3.9	)
Balance at December 31, 2013	$	1.4	$	0.1	$	1.5

(1) Reversals due to changes in estimates for employee termination benefits.

(2) Other consists of changes in the liability balance due to foreign currency translations.

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

+ References+ Details