Lexmark 2009 Annual Report Download - page 121

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movement in 2009 was the 32.7% increase in the Brazilian real exchange rate. The primary drivers of the
unfavorable change in 2008 were the 20.2% devaluation of the Mexican peso and 13.2% devaluation of the
Philippine peso. The largest factor behind the favorable movement in 2007 was the 19% increase in the
Philippine peso exchange rate. Foreign currency translation adjustment activity in 2007 also included a
reclassification adjustment of approximately $(7) million, net of tax, related to the realization of a foreign
currency translation gain in Net earnings upon substantial liquidation of the Company’s Scotland
subsidiary.
The 2009 activity in Net unrealized gain (loss) on OTTI marketable securities was driven by credit losses of
$1.4 million, net of tax, that were recycled to Net earnings during the year. Earlier in the year, the Company
recorded a cumulative effect adjustment to Accumulated other comprehensive (loss) earnings in the
amount of $(1.7) million, net of tax, related to the adoption of new accounting guidance regarding OTTI of
marketable debt securities.
Refer to Part II, Item 8, Notes 6 and 15 of the Notes to Consolidated Financial Statements for additional
information regarding the Company’s marketable securities and pension and postretirement plans.
Accumulated other comprehensive (loss) earnings for the years ended December 31 consists of the
following:
Foreign
Currency
Translation
Adjustment
Cash Flow
Hedges
Pension or
Other
Postretirement
Benefits
Net Unrealized
Gain (Loss) on
Marketable
Securities - OTTI
Net Unrealized
(Loss) Gain on
Marketable
Securities
Accumulated
Other
Comprehensive
(Loss) Earnings
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)
Adoption of OTTI
guidance* . . . . . . . — — — (1.7) — (1.7)
2009 Change . . . . . . 27.8 — 8.7 1.1 1.8 39.4
Balance at 12/31/09 . . $ (6.0) $ — $(236.5) $(0.6) $ 0.5 $(242.6)
* Cumulative effect adjustment related to the adoption of accounting guidance regarding the recognition and presentation of
other-than-temporary impairment — $(2.1) million gross, $(1.7) million net of tax
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:
2009 2008 2007
Numerator:
Net earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $145.9 $240.2 $300.8
Denominator:
Weighted average shares used to compute basic EPS . . . . . . . . . . . 78.2 88.9 95.3
Effect of dilutive securities — employee stock plans . . . . . . . . . . . . . 0.4 0.3 0.5
Weighted average shares used to compute diluted EPS . . . . . . . . . . 78.6 89.2 95.8
Basic net EPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.87 $ 2.70 $ 3.16
Diluted net EPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.86 $ 2.69 $ 3.14
RSUs and stock options totaling an additional 9.1 million, 10.4 million and 5.1 million of Class A Common
Stock in 2009, 2008 and 2007, respectively, were outstanding but were not included in the computation of
diluted net earnings per share because the effect would have been antidilutive.
115