Lexmark 2011 Annual Report Download - page 61

the acquired company. Integration costs may consist of information technology expenses, consulting
costs and travel expenses. The costs are expensed as incurred. During 2011 and 2010, the Company
incurred $3.3 million and $7.1 million, respectively, in Selling, general and administrative on the
Company’s Consolidated Statements of Earnings for acquisition and integration costs. The Company
expects pre-tax adjustments for acquisition and integration expenses of approximately $3 million for
2012.
Adjustments to revenue and amortization of intangible assets were recognized primarily in the
Perceptive Software reportable segment. Acquisition and integration costs were recognized in All
other.
PENSION AND OTHER POSTRETIREMENT PLANS
The following table provides the total pre-tax cost related to Lexmark’s pension and other
postretirement plans for the years 2011, 2010, and 2009. Cost amounts are included as an addition to
the Company’s cost and expense amounts in the Consolidated Statements of Earnings.
(Dollars in Millions) 2011 2010 2009
Total cost of pension and other postretirement plans .................... $42.9 $38.8 $41.2
Comprised of:
Defined benefit pension plans ..................................... $18.0 $15.4 $20.3
Defined contribution plans ........................................ 25.6 23.6 21.4
Other postretirement plans ........................................ (0.7) (0.2) (0.5)
Changes in actuarial assumptions did not have a significant impact on the Company’s results of
operations in 2009, 2010 and 2011, nor are they expected to have a material effect in 2012. Future
effects of retirement-related benefits on the operating results of the Company depend on economic
conditions, employee demographics, mortality rates and investment performance. Refer to Part II,
Item 8, Note 17 of the Notes to Consolidated Financial Statements for additional information relating to
the Company’s pension and other postretirement plans.
Because the Company defers current year differences between actual and expected asset returns on
equity and high-yield bond investments over the subsequent five years in accordance with prescribed
accounting guidelines, pension expense for 2011 and 2010 was impacted $3 million and $4 million,
respectively.
The funding requirement for single-employer defined pension plans under the Pension Protection Act
of 2006 (“the Act”) are largely based on a plan’s calculated funded status, with faster amortization of
any shortfalls. The Act directs the U.S. Treasury Department to develop a new yield curve to discount
pension obligations for determining the funded status of a plan when calculating the funding
requirements.
LIQUIDITY AND CAPITAL RESOURCES
Financial Position
Lexmark’s financial position remains strong at December 31, 2011, with working capital of
$1,085.5 million compared to $1,023.3 million at December 31, 2010. The $62.2 million increase in
working capital accounts was primarily due to the $74.2 million decrease in Accrued liabilities driven by
the decrease in the liability related to annual bonuses. The Company resumed its share repurchase
program in 2011, which reduced cash and stockholders’ equity by $250 million during the year.
At December 31, 2011 and December 31, 2010, the Company had senior note debt of $649.3 million and
$649.1 million, respectively. The Company had no amounts outstanding under its U.S. trade receivables
financing program or its revolving credit facility at December 31, 2011 or December 31, 2010.
57