Lexmark 2008 Annual Report Download - page 75

In June 2008, the FASB issued FSP No. EITF 03-6-1, Determining Whether Instruments Granted in Share-
Based Payment Transactions Are Participating Securities (“FSP EITF 03-6-1”). The FASB concluded in
this FSP that unvested share-based payment awards that contain nonforfeitable rights to dividends or
dividend equivalents are participating securities and shall be included in the calculation of earnings per
share pursuant to the two-class method. This FSP is effective for financial statements issued for fiscal
years beginning after December 15, 2008, requiring all prior-period earnings per share data presented to
be adjusted retrospectively. The Company does not expect FSP EITF 03-6-1 to have a material impact on
its calculation of earnings per share.
In December 2008, the FASB issued FSP No. FAS 132(R)-1, Employers’ Disclosures about Postretirement
Benefit Plan Assets. The FSP amends the disclosure requirements of FAS 132(R) Employers’ Disclosures
about Pensions and Other Postretirement Benefit to provide additional transparencies regarding the
assets held by retirement plans and their associated risks. The FSP also requires employers to disclose
information about the fair value measurements of plan assets in a similar manner to the disclosures
currently required by FASB No. 157, Fair Value Measurements. The additional disclosures are effective for
financial statements issued for fiscal years ending after December 15, 2009. The Company is currently
evaluating the impact of the disclosure requirements of this FSP.
Reclassifications:
Certain prior year amounts have been reclassified, if applicable, to conform to the current presentation.
3. FAIR VALUE
General
The Company adopted the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 157,
Fair Value Measurements (“FAS 157”) effective January 1, 2008. FAS 157 defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles (“GAAP”) and expands
disclosures about fair value measurements. The standard defines fair value as the price that would be
received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. As part of the framework for measuring fair value, FAS 157 establishes a
hierarchy of inputs to valuation techniques used in measuring fair value that maximizes the use of
observable inputs and minimizes the use of unobservable inputs by requiring that the most observable
inputs be used when available.
The Company has not applied the provisions of FAS 157 to any nonrecurring, nonfinancial fair value
measurements as permitted under Financial Accounting Standards Board (“FASB”) Staff Position
No. 157-2 (“FSP FAS 157-2”). Refer to Part II, Item 8, Note 2 of the Notes to Consolidated Financial
Statements for additional information regarding FSP FAS 157-2. The Company is in the process of
evaluating the inputs and techniques used in these measurements, including such items as impairment
assessments of fixed assets, initial recognition of asset retirement obligations, and goodwill impairment
testing.
The provisions of FASB Staff Position No. 157-3 (“FSP FAS 157-3”) Determining the Fair Value of a
Financial Asset When the Market for That Asset Is Not Active, issued October 10, 2008, were also
considered in preparation of the year end 2008 financial statements. Refer to Part II, Item 8, Note 2 of the
Notes to Consolidated Financial Statements for additional information regarding FSP FAS 157-3.
Fair Value Hierarchy
The three levels of the fair value hierarchy under FAS 157 are:
• Level 1 — Quoted prices (unadjusted) in active markets for identical, unrestricted assets or
liabilities that the Company has the ability to access at the measurement date;
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