Lexmark 2010 Annual Report Download - page 120

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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 $20.9 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:
2010 2009 2010 2009
Pension
Benefits
Other
Postretirement
Benefits
Weighted-Average Assumptions Used to Determine
Benefit Obligations at December 31:
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2% 5.6% 4.7% 5.4%
Rate of compensation increase . . . . . . . . . . . . . . . . . . . . . . . . 2.6% 2.7% 4.0% 4.0%
2010 2009 2008 2010 2009 2008
Pension
Benefits
Other Postretirement
Benefits
Weighted-Average Assumptions Used to Determine
Net Periodic Benefit Cost for Years
Ended December 31:
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6% 6.2% 6.2% 5.4% 6.4% 6.0%
Expected long-term return on plan assets . . . . . . . . . . 7.5% 7.4% 7.6% — — —
Rate of compensation increase . . . . . . . . . . . . . . . . . . 2.7% 2.8% 3.5% 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. pension plan employs professional investment managers to invest in
U.S. equity, global equity, international developed equity, emerging market equity, U.S. fixed income,
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 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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