Lexmark 2008 Annual Report Download - page 93

including, the date of repurchase. A “change of control triggering event” is defined as the occurrence of
both a change of control and a downgrade in the debt rating assigned to the notes to a level below
investment grade.
The Company intends to use the net proceeds from the offering for general corporate purposes, including
to fund share repurchases, repay debt, finance acquisitions, finance capital expenditures and operating
expenses and invest in any subsidiaries.
Credit Facility
Effective January 20, 2005, Lexmark entered into a $300 million 5-year senior, unsecured, multi-currency
revolving credit facility with a group of banks. Under the credit facility, the Company may borrow in
U.S. dollars, euros, British pounds sterling and Japanese yen. As of December 31, 2008 and 2007, there
were no amounts outstanding under the credit facility.
Lexmark’s credit agreement contains usual and customary default provisions, leverage and interest
coverage restrictions and certain restrictions on secured and subsidiary debt, disposition of assets, liens
and mergers and acquisitions. The $300 million credit facility has a maturity date of January 20, 2010.
Interest on all borrowings under the facility depends upon the type of loan, namely alternative base rate
loans, swingline loans or eurocurrency loans. Alternative base rate loans bear interest at the greater of the
prime rate or the federal funds rate plus one-half of one percent. Swingline loans (limited to $50 million)
bear interest at an agreed upon rate at the time of the borrowing. Eurocurrency loans bear interest at the
sum of (i) a LIBOR for the applicable currency and interest period and (ii) an interest rate spread based
upon the Company’s debt ratings ranging from 0.18% to 0.80%. In addition, Lexmark is required to pay a
facility fee on the $300 million line of credit of 0.07% to 0.20% based upon the Company’s debt ratings. The
interest and facility fees are payable at least quarterly.
Short-term Debt
Lexmark’s Brazilian operation has a short-term, uncommitted line of credit. The interest rate on this line of
credit varies based upon the local prevailing interest rates at the time of borrowing. The interest rate
averaged approximately 26.8% and 15.0% during 2008 and 2007, respectively. As of December 31, 2008,
there was $5.5 million outstanding under the credit facility. As of December 31, 2007, there was no amount
outstanding under the credit facility.
Other
Total cash paid for interest on the debt facilities amounted to $26.9 million, $12.6 million, and $12.7 million
in 2008, 2007, and 2006, respectively.
The components of Interest (income) expense, net in the Consolidated Statements of Earnings are as
follows:
2008 2007 2006
Interest (income) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(35.0) $(34.2) $(34.2)
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.9 13.0 12.1
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (6.1) $(21.2) $(22.1)
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