Lexmark 2011 Annual Report Download - page 36

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the Consolidated Financial
Statements and Notes thereto presented under Part II, Item 8 of this Form 10-K.
OVERVIEW
Products and Segments
Lexmark makes it easier for businesses of all sizes to move and manage information between the
paper and digital worlds. Since its inception in 1991, Lexmark has become a leading developer,
manufacturer and supplier of printing, imaging, document workflow, and content management solutions
for the office. The Company operates in the office imaging and enterprise content and business
process management markets. Lexmark’s products include laser printers, inkjet printers, multifunction
devices, dot matrix printers and the associated supplies/solutions/services, and ECM and BPM
software solutions and services.
The Company is primarily managed along two segments: ISS and Perceptive Software.
• ISS offers a broad portfolio of monochrome and color laser printers, laser MFPs, inkjet AIOs
and accessories, as well as software applications, software solutions and managed print
services to help businesses efficiently capture, manage and access information. Laser based
products within the distributed printing market primarily serve business customers. Inkjet based
products within the distributed printing market historically have served customers in the
consumer market, but there is an increasing trend toward inkjet products being designed for
the office environment. ISS employs large-account sales and marketing teams whose mission
is to generate demand for its business printing solutions and services, primarily among large
corporations as well as the public sector. These sales and marketing teams primarily focus on
industries such as financial services, retail, manufacturing, education, government and health
care. ISS also markets its laser and inkjet products increasingly through SMB sales and
marketing teams who work closely with channel partners. ISS distributes and fulfills its
products to business customers primarily through its well-established distributor and reseller
network. ISS’ products are also sold through solution providers, which offer custom solutions to
specific markets, and through direct response resellers. ISS also sells its products through
numerous alliances and OEM arrangements.
• Perceptive Software offers a complete suite of ECM and BPM software products and solutions.
The enterprise content and business process management software and services markets
primarily serve business customers. Perceptive Software uses a direct to market sales and
broad lead generation approach, employing internal sales and marketing teams that are
segmented by industry sector — specifically healthcare, education, public sector/government,
and cross industry, which includes areas such as retail, financial services and insurance.
Perceptive Software also offers a direct channel partner program that allows authorized third-
party resellers to market and sell Perceptive Software products and solutions to a distributed
market. Perceptive Software has two general forms of software agreements with its customers,
perpetual licenses and subscription services.
Refer to Part II, Item 8, Note 20 of the Notes to Consolidated Financial Statements for additional
information regarding the Company’s reportable segments, which is incorporated herein by reference.
Operating Results Summary
2011
Lexmark’s 2011 results reflected revenue that decreased less than 1% compared to 2010. Supplies
revenue was flat year-to year (“YTY”), hardware revenue decreased 7% YTY, while software and other
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