Lexmark 2007 Annual Report Download - page 86

Download and view the complete annual report

Please find page 86 of the 2007 Lexmark annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 113

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113

14. PENSION AND OTHER POSTRETIREMENT PLANS
Lexmark and its subsidiaries have defined benefit and defined contribution pension plans that cover
certain of its regular employees, and a supplemental plan that covers certain executives. Medical, dental
and life insurance plans for retirees are provided by the Company and certain of its non-U.S. subsidiaries.
Effective April 3, 2006, Lexmark froze pension benefits in its defined benefit pension plan for
U.S. employees and at the same time changed from a maximum Company matching contribution of
three percent of eligible compensation to an automatic Company contribution of one percent and a
maximum Company matching contribution of five percent to Lexmark’s existing 401(k) plan. As a result,
during 2006, the Company recognized a $9.9 million pension curtailment gain due to the freeze of benefit
accruals in the U.S. Additionally, in 2006 and 2007, the Company made a maximum Company matching
contribution of six percent to a nonqualified deferred compensation plan on compensation amounts in
excess of IRS qualified plan limits.
Effective December 31, 2006, the Company adopted SFAS No. 158, Employers’ Accounting for Defined
Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and
132(R) (“SFAS 158”). SFAS 158 required recognition of the funded status of a benefit plan in the statement
of financial position and recognition in other comprehensive earnings of certain gains and losses that arise
during the period, but are deferred under pension accounting rules.
The Pension Protection Act of 2006 (“the Act”) was enacted on August 17, 2006. Most of its provisions will
become effective in 2008. The Act significantly changes the funding requirements for single-employer
defined benefit pension plans. The funding requirements will now largely be based on a plan’s calculated
funded status, with faster amortization of any shortfalls or surpluses. The Act directs the U.S. Treasury
Department to develop a new yield curve to discount pension obligations for determining the funded status
of a plan when calculating the funding requirements.
80