Lexmark 2009 Annual Report Download - page 69

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a hypothetical 10% adverse change in interest rates and amounts to approximately $17.5 million at
December 31, 2009.
At December 31, 2008, the fair value of the Company’s senior notes was estimated at $505 million using
quoted market prices obtained from an independent broker. The carrying value as recorded in the
Consolidated Statements of Financial Position at December 31, 2008 exceeded the fair value of the
senior notes by approximately $143.7 million. Market risk is estimated as the potential change in fair value
resulting from a hypothetical 10% adverse change in interest rates and amounted to approximately
$26.9 million at December 31, 2008.
See the section titled “LIQUIDITY AND CAPITAL RESOURCES — Investing Activities:” in Item 7 of this
report for a discussion of the Company’s auction rate securities portfolio which is incorporated herein by
reference.
Foreign Currency Exchange Rates
The Company has employed, from time to time, a foreign currency hedging strategy to limit potential losses
in earnings or cash flows from adverse foreign currency exchange rate movements. Foreign currency
exposures arise from transactions denominated in a currency other than the Company’s functional
currency and from foreign denominated revenue and profit translated into U.S. dollars. The primary
currencies to which the Company is exposed include the Euro, the Mexican peso, the British pound, the
Philippine peso, the Canadian dollar as well as other currencies. The potential gain in fair value at
December 31, 2009 for such contracts resulting from a hypothetical 10% adverse change in all foreign
currency exchange rates is approximately $1.5 million. This gain would be mitigated by corresponding
losses on the underlying exposures. The potential gain in fair value at December 31, 2008 for such
contracts resulting from a hypothetical 10% adverse change in all foreign currency exchange rates was
approximately $6.7 million. This gain would have been mitigated by corresponding losses on the
underlying exposures.
63