Lexmark 2009 Annual Report Download - page 125

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The estimated net loss for the defined benefit pension plans that will be amortized from Accumulated other
comprehensive earnings (loss) into net periodic benefit cost over the next fiscal year is $19.3 million. The
estimated prior service credit for the other defined benefit postretirement plans that will be amortized from
Accumulated other comprehensive earnings (loss) into net periodic benefit cost over the next fiscal year is
$3.4 million.
Assumptions:
2009 2008 2009 2008
Pension
Benefits
Other
Postretirement
Benefits
Weighted-Average Assumptions Used to Determine
Benefit Obligations at December 31:
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6% 6.2% 5.4% 6.4%
Rate of compensation increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7% 2.8% 4.0% 4.0%
2009 2008 2007 2009 2008 2007
Pension
Benefits
Other
Postretirement
Benefits
Weighted-Average Assumptions Used to Determine
Net Periodic Benefit Cost for Years Ended
December 31:
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2% 6.2% 5.7% 6.4% 6.0% 5.7%
Expected long-term return on plan assets . . . . . . . . . . 7.4% 7.6% 7.6% — — —
Rate of compensation increase . . . . . . . . . . . . . . . . . . 2.8% 3.5% 2.9% 4.0% 4.0% 4.0%
Plan assets:
Plan assets are invested in equity securities, government and agency securities, mortgage-backed
securities, commercial mortgage-backed securities, asset-backed securities, corporate debt, annuity
contracts and other securities. The U.S. defined benefit plan comprises a significant portion of the assets
and liabilities relating to the defined benefit plans. The investment goal of the U.S. defined benefit plan is to
achieve an adequate net investment return in order to provide for future benefit payments to its
participants. Asset allocation percentages are targeted to be 65% equity and 35% fixed income
investments. The U.S. defined benefit plan employed professional investment managers during 2009
to invest in new asset classes, including international developed equity, emerging market equity, high yield
bonds and emerging market debt. Each investment manager operates under an investment management
contract that includes specific investment guidelines, requiring among other actions, adequate
diversification, prudent use of derivatives and standard risk management practices such as portfolio
constraints relating to established benchmarks. The plan currently uses, and intends to use during the
asset allocation transition in 2009 noted above, a combination of both active management and passive
index funds to achieve its investment goals.
The following is a description of the valuation methodologies used for pension assets measured at fair
value. Refer to Note 3 of the Notes to Consolidated Financial Statements for details on the accounting
framework for measuring fair value and the related fair value hierarchy.
Commingled trust funds: Valued at the closing price reported on the active market on which the
funds are traded or at the net asset value per unit at year end as quoted by the funds as the basis for
current transactions.
Mutual and money market funds: Valued at the per share (unit) published as the basis for current
transactions.
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