Restructuring costs and savings question

[X-Offender]

Lenovo Group Ltd. is planning on undergoing some restructuring activities this year. Their press release says:

"This effort will reduce expenses by about $650 million in the second half of this year and about $1.35 billion on an annual basis. These actions will include a reduction of 3,200 people in our non-manufacturing workforce around the world. This equates to about 10 percent of non-manufacturing headcount and about 5 percent of our total population of around 60,000 people. The company will incur restructuring costs of approximately $600 million and additional spending to clear smartphone inventory of approximately $300 million."

I have two questions:

1) The $1.35 billion savings they're talking about, is it yearly, or just for this fiscal year? They say on annual basis, so I'm assuming savings of $1.35 billion every year. Or is it perhaps $1.35 billion spread over the next few years?

2) The $600+$300 restructuring costs, are they included in the savings, or should they be subtracted from the $1.35 billion figure for this year?

I would greatly appreciate any kind of help.

 

[ArcSine]

Very likely:
1. 1.35B every year. The current year probably has around 6 months or so remaining after the restructuring takes effect; hence savings of 650M (which is pretty close to half of the expected annual savings) for that half-year period. Then around 1.35B each year thereafter.
2. The restructuring costs are not included in the savings figures. The costs of a project, and the benefits / cash flows a project are expected to throw off, are typically quoted as separate values, not netted.

I say "very likely" because the wording of the press release doesn't make it 100% ambiguity-free, but the interpretations I mention are usually the ones the author intended in such cases.

 

[X-Offender]

Yeah, I think the same.

Thanks a lot!