Lexmark 2008 Annual Report Download - page 99

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Accumulated other comprehensive (loss) earnings for the years ended December 31 consists of the
following:
Foreign
Currency
Translation
Adjustment
Cash Flow
Hedges
Minimum
Pension
Liability
Pension or
Other
Postretirement
Benefits
Net Unrealized
(Loss) Gain on
Marketable
Securities
Accumulated
Other
Comprehensive
(Loss) Earnings
Balance at 12/31/05 . . . . . . $(15.2) $ 7.1 $(154.6) $ — $(0.6) $(163.3)
2006 Change. . . . . . . . . . 22.3 (6.4) 26.9 — 0.6 43.4
Adoption of SFAS 158 . . . — — 127.7 (138.7) — (11.0)
Balance at 12/31/06 . . . . . . 7.1 0.7 — (138.7) — (130.9)
2007 Change. . . . . . . . . . 22.5 (0.7) — 17.5 — 39.3
Balance at 12/31/07 . . . . . . $ 29.6 $ — $ — $(121.2) $ — $ (91.6)
2008 Change. . . . . . . . . . (63.4) — — (124.0) (1.3) (188.7)
Balance at 12/31/08 . . . . . . $(33.8) $ — $ — $(245.2) $(1.3) $(280.3)
14. EARNINGS PER SHARE (“EPS”)
The following table presents a reconciliation of the numerators and denominators of the basic and diluted
net EPS calculations for the years ended December 31:
2008 2007 2006
Numerator:
Net earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $240.2 $300.8 $338.4
Denominator:
Weighted average shares used to compute basic EPS . . . . . . . . . . . 88.9 95.3 102.8
Effect of dilutive securities — employee stock plans . . . . . . . . . . . . . 0.3 0.5 0.7
Weighted average shares used to compute diluted EPS . . . . . . . . . . 89.2 95.8 103.5
Basic net EPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2.70 $ 3.16 $ 3.29
Diluted net EPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2.69 $ 3.14 $ 3.27
RSUs and stock options totaling an additional 10.4 million, 5.1 million and 5.3 million of Class A Common
Stock in 2008, 2007 and 2006, respectively, were outstanding but were not included in the computation of
diluted net earnings per share because the effect would have been antidilutive.
The Company executed two accelerated share repurchase agreements (“ASR”) with financial institution
counterparties in 2008, resulting in a total of 8.7 million shares repurchased at a cost of $250.0 million over
the third and fourth quarter. The ASRs had a favorable impact to 2008 basic and diluted EPS of $0.06. The
settlement provisions established in the agreements were essentially forward contracts and therefore
potentially dilutive common stock equivalents that must be evaluated under Emerging Issues Task Force
(“EITF”) Topic No. D-72 Effect of Contracts That May Be Settled in Stock or Cash on the Computation of
Diluted Earnings per Share until final settlement. At December 31, 2008, there were no outstanding
settlement provisions to evaluate for potential dilution. Refer to Part II, Item 8, Note 13 of the Notes to
Consolidated Financial Statements for additional information regarding the Company’s accelerated share
repurchase agreements.
15. 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
93