Lexmark 2009 Annual Report Download - page 122

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In addition to the 9.1 million antidilutive shares for the year ended December 31, 2009 mentioned above,
unvested restricted stock units with a performance condition that were granted in the first quarter of 2009
were also excluded from the computation of diluted earnings per share. The performance period for these
awards ended on December 31, 2009. The Company’s assessment as of December 31, 2009 is that the
minimum level of achievement has not been met and as a result these awards were cancelled. Refer to
Part II, Item 8, Note 5 to the Consolidated Financial Statements for additional information regarding the
restricted stock awards with a performance condition.
Effective first quarter of 2009, unvested share-based payment awards that contain nonforfeitable rights to
dividends or dividend equivalents shall be considered participating securities and included in the
calculation of earnings per share pursuant to the two-class method in accordance with accounting
guidance for determining whether instruments granted in share-based payment transactions are
participating securities. There was no impact to the Company’s EPS because the terms of its share-
based payment awards do not contain nonforfeitable rights to dividends or dividend equivalents.
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 accounting guidance on the
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.
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