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Lexmark International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular Dollars in Millions, Except Per Share Amounts)
1. ORGANIZATION AND BUSINESS
Since its inception in 1991, Lexmark International, Inc. (“Lexmark” or the “Company”) has become a
leading developer, manufacturer and supplier of printing, imaging and document workflow solutions for the
office. The Company operates in the office imaging and enterprise content management (“ECM”) markets.
Lexmark’s products include laser printers, inkjet printers, multifunction devices, dot matrix printers, and
associated supplies, services and solutions as well as ECM and document process software, solutions
and services. The customers for Lexmark’s products are large enterprises, small and medium businesses
and small offices home offices (“SOHOs”) worldwide. The Company’s products are principally sold through
resellers, retailers and distributors in more than 170 countries in North and South America, Europe, the
Middle East, Africa, Asia, the Pacific Rim and the Caribbean. Refer to Note 20 for a discussion of changes
in the organization and business that took place in 2010.
2. SIGNIFICANT ACCOUNTING POLICIES
The Company’s significant accounting policies are an integral part of its financial statements.
Principles of Consolidation:
The accompanying consolidated financial statements include the accounts of the Company and its
subsidiaries. All significant intercompany accounts and transactions have been eliminated.
Use of Estimates:
The preparation of consolidated financial statements in conformity with accounting principles generally
accepted in the United States of America (“U.S.”) requires management to make estimates and judgments
that affect the reported amounts of assets, liabilities, revenue and expenses, as well as disclosures
regarding contingencies. On an ongoing basis, the Company evaluates its estimates, including those
related to customer programs and incentives, product returns, doubtful accounts, inventories, stock-based
compensation, intangible assets, income taxes, warranty obligations, copyright fees, restructurings,
pension and other postretirement benefits, contingencies and litigation, and fair values that are based
on unobservable inputs significant to the overall measurement. Lexmark bases its estimates on historical
experience, market conditions, and various other assumptions that are believed to be reasonable under
the circumstances, the results of which form the basis for making judgments about the carrying values of
assets and liabilities that are not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.
Foreign Currency Translation and Remeasurement:
Assets and liabilities of non-U.S. subsidiaries that operate in a local currency environment are translated
into U.S. dollars at period-end exchange rates. Income and expense accounts are translated at average
exchange rates prevailing during the period. Adjustments arising from the translation of assets and
liabilities, changes in stockholders’ equity and results of operations are accumulated as a separate
component of Accumulated other comprehensive earnings (loss) in stockholders’ equity.
Certain non-U.S. subsidiaries use the U.S. dollar as their functional currency. Local currency transactions
of these subsidiaries are remeasured using a combination of current and historical exchange rates. The
effect of re-measurement is included in net earnings.
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