Lexmark 2012 Annual Report Download

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Please find the complete 2012 Lexmark annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

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Table of contents

  • Page 1
    ... or organization) 06-1308215 (I.R.S. Employer Identification No.) One Lexmark Centre Drive 740 West New Circle RoaF Lexington, Kentucky (Address of principal egecutive offices) 40550 (Zip Code) (859) 232-2000 (Registrant's telephone number, including area code) Securities registered pursuant to...

  • Page 2
    ...CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE CONTROLS AND PROCEDURES OTHER INFORMATION PART III DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE EXECUTIVE COMPENSATION SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER...

  • Page 3
    ... of this report. The information referred to above should be considered by investors when reviewing any forward-looking statements contained in this report, in any of the Company's public filings or press releases or in any oral statements made by the Company or any of its officers or other persons...

  • Page 4
    ...and multifunction devices, dot matrig printers and the associated supplies/solutions/services, as well as ECM, BPM, DOM, intelligent data capture, search and web-based document imaging and workflow software solutions and services. Legmark develops and owns most of the technology for its printing and...

  • Page 5
    ...2012, the Company announced it will egit the development and manufacturing of inkjet technology. The Company will continue to provide service, support and aftermarket supplies for its inkjet installed base. Revenue derived from international sales, including egports from the United States of America...

  • Page 6
    ...process management software and services markets serve business customers. These markets include solutions for capturing all types of unstructured information such as hardcopy, photographs, emails, images, video, audio and fages, and the intelligent tagging of this information in order to streamline...

  • Page 7
    ... to printing supplies. The addition of Perceptive Software and its egpansion through Pallas Athena, Brainware, Isys, Nolij and Acuo Technologies add to Legmark's traditional strength in providing document process solutions for specific industries and business processes. The Company's management...

  • Page 8
    ...as well as supplies, software applications, software solutions and managed print services to help businesses efficiently capture, manage and access information. ISS laser products are core building blocks for enabling information on demand. They are designed to enable intelligent document capture in...

  • Page 9
    ... Matrix Products ISS continues to market several dot matrig printer models for customers who print multipart forms. o Supplies and Service Parts ISS designs, manufactures and distributes a variety of cartridges, service parts and other supplies for use in its installed base of laser, inkjet and...

  • Page 10
    ... laser supplies products sold commercially in 2012 were sold through the ISS network of Legmark-authorized supplies distributors and resellers, who sell directly to end-users, or to independent office supply dealers. Inkjet supplies are primarily sold through large office superstores, discount store...

  • Page 11
    ... the installed base of laser and inkjet products matures, the Company egpects competitive supplies activity to increase. • Manufacturing anF Materials - ISS ISS operates manufacturing control centers in Legington, Kentucky; Shenzhen, China; and Geneva, Switzerland; and has manufacturing sites in...

  • Page 12
    ... business processes. These components are developed and maintained by Perceptive Software. In 2012, Perceptive Software acquired four new software product companies to enhance the software portfolio. Brainware's intelligent data capture platform egtracts critical information from paper documents...

  • Page 13
    ... in higher education, by egtracting needed data automatically from business documents received as paper or electronically in a variety of forms such PDFs of TIFs. Perceptive Capture's very high rate of data egtraction is achieved through the use of patented search and machine learning technologies...

  • Page 14
    ... has international business offices in Switzerland, the United Kingdom, France, Germany, Australia, Brazil, and the Netherlands. Perceptive Software also offers a direct channel partner program that allows authorized third-party resellers to market and sell Perceptive Software products and solutions...

  • Page 15
    ... products, the Company may elect to purchase products or key components from third-party suppliers rather than develop them internally. Legmark conducts research and development activities in various locations including Legington, Kentucky; Boulder, Colorado; Shawnee, Kansas; Cebu City, Philippines...

  • Page 16
    ... Officer Egecutive Vice President and President of ISS Vice President and President & Chief Egecutive Officer of Perceptive Software Vice President of Asia Pacific and Latin America Vice President of Human Resources Vice President, General Counsel and Secretary Vice President, ISS and Corporate...

  • Page 17
    ... to manufacture some of its current products, terminate as to specific products upon certain "changes of control" of the Company. The Company has trademark registrations or pending trademark applications for the name LEXMARK in approgimately 90 countries for various categories of goods and services...

  • Page 18
    ... on global economic conditions and the demand for its imaging products and associated supplies, solutions and services and content and process management software solutions and services in the markets in which the Company competes. Continued economic weakness and global economic uncertainty could...

  • Page 19
    ... in 2012 have included workforce reductions, the elimination of inkjet development worldwide, egiting the manufacturing of inkjet hardware, and the closure by the end of 2015 of the Company's Cebu, Philippines inkjet supplies manufacturing facility. The Company egpects to realize cost savings in...

  • Page 20
    ..., marketing and/or technological resources than the Company. Perceptive Software could lose market share if its competitors introduce new products and services, add functionality to egisting products, or reduce prices on their products and services. If such competitors lower prices with respect to...

  • Page 21
    ... of competitors to any such new products or programs, the life cycles of the Company's products, as well as delays in product development and manufacturing, and variations in cost, including but not limited to component parts, raw materials, commodities, energy, products, labor rates, distributors...

  • Page 22
    ...to successfully implement new information technology systems, may negatively impact the Company's operating results. • The Company depends on its information technology systems for the development, manufacture, distribution, marketing, sales and support of its products and services. Any failure in...

  • Page 23
    ...of Perceptive Software in 2010; Pallas Athena in 2011; and Brainware, Nolij, ISYS and Acuo Technologies in 2012, routinely involve significant risks and challenges and the Company may not be able to realize all of the anticipated benefits of such transactions. The Company may not be able to identify...

  • Page 24
    ... the retention of customers and key employees, capitalizing on revenue synergies, and difficulty integrating business systems and technology. The Company's management may be required to spend significant amount of time and resources to integrate these newly acquired businesses and the anticipated...

  • Page 25
    ... its failure to do so could harm the Company's results of operations. Hiring and retaining qualified egecutives, engineers, technical staff, sales, marketing and IT support positions are critical to the Company's business, and competition for egperienced employees in our industry can be intense. To...

  • Page 26
    ... Legington, Kentucky. Perceptive Software's headquarters is located in Shawnee, Kansas. At December 31, 2012, the Company owned or leased approgimately 6.0 million square feet of administrative, sales, service, research and development, warehouse and manufacturing facilities worldwide. Approgimately...

  • Page 27
    ... paying dividends quarterly, though future declarations of dividends are subject to Board of Directors' approval and may be adjusted as business needs or market conditions change. Issuer Purchases of Equity Securities Total Number of Shares PurchaseF as Part of Publicly AnnounceF Plans or Programs...

  • Page 28
    ... graph compares cumulative total stockholder return on the Company's Class A Common Stock with a broad performance indicator, the S&P Composite 500 Stock Indeg, and an industry indeg, the S&P 500 Information Technology Indeg, for the period from December 31, 2007, to December 31, 2012. The graph...

  • Page 29
    ... under the Legmark International, Inc. Broad-Based Employee Stock Incentive Plan (the "Broad-Based Plan"), an equity compensation plan which had not been approved by the Company's stockholders. On February 24, 2011, the Company's Board of Directors terminated the Broad-Based Plan and cancelled the...

  • Page 30
    ... included in Selling, general and administrative. As the Company acquired Acuo on December 28, 2012, the post-acquisition financial results of Acuo were immaterial to the Company's Consolidated Statement of Earnings. The Company acquired Pallas Athena on October 18, 2011. Perceptive Software Revenue...

  • Page 31
    ... administrative and Research and development in the amount of $15.5 million, $5.3 million and $0.4 million, respectively. Other acquisition-related costs and integration egpenses are included in Selling, general and administrative. The Company acquired Perceptive Software on June 7, 2010. Perceptive...

  • Page 32
    ... well as supplies, 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. ISS employs large-account sales and marketing...

  • Page 33
    ... processes, and to further strengthen the Company's products, content/business process management solutions and managed print services, the Company acquired Brainware, Nolij, ISYS and Acuo Technologies in 2012. These acquisitions are included in the Perceptive Software segment. Refer to the section...

  • Page 34
    ...business functions. As a result of these market trends, Legmark has growth opportunities in monochrome and color laser printers and MFPs, managed print services, as well as fleet management, ECM, BPM, DOM, intelligent data capture, search and medical imaging vendor neutral archive software products...

  • Page 35
    ... 2012, the Company announced the egiting of the development and manufacturing of the Company's inkjet technology. While the Company will continue to provide aftermarket supplies for its inkjet installed base, the Company egpects continued year on year declines in inkjet aftermarket supplies sales...

  • Page 36
    ...process management solutions and services for specific industries and business processes in distributed environments. • Legmark internally develops both monochrome and color laser printing technology. • Legmark, through Perceptive Software, provides ECM, BPM, DOM, intelligent capture, search and...

  • Page 37
    ...secure high value product installations and capture profitable supplies, software subscription, and maintenance and service annuities in document-intensive industries and business processes in distributed environments; • Target and capture business customers, markets and channels that drive higher...

  • Page 38
    ... per contract terms or as needed. The Company uses its best estimate of selling price ("BESP") when allocating the transaction price for many of its product and service deliverables as permitted under the accounting guidance for multiple element arrangements when sufficient vendor specific objective...

  • Page 39
    ... company-specific intentions. Warranty Legmark provides for the estimated cost of product warranties at the time revenue is recognized. The amounts accrued for product warranties are based on the quantity of units sold under warranty, estimated product failure rates, and material usage and service...

  • Page 40
    ...2006 restructuring actions. In addition, some of the non-U.S. pension plans are also frozen. 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...

  • Page 41
    ...guidance on employers' accounting for pensions, are accumulated and amortized over the estimated future service period of active plan participants. For 2012, a 25 basis point change in the assumptions for asset return and discount rate would not have had a significant impact on the Company's results...

  • Page 42
    ...such as long-lived assets held for sale. The Company uses third parties to report the fair values of its marketable securities and pension plan assets, though the responsibility remains with the Company's management. The Company utilizes various sources of pricing as well as trading and other market...

  • Page 43
    ... unsuccessful. For these securities, observable pricing data was not available resulting in the Company performing a discounted cash flow analysis based on inputs that it believes market participants would use with regard to such items as egpected cash flows and discount rates adjusted for liquidity...

  • Page 44
    ... Notes to the Consolidated Financial Statements in Part II, Item 8 for more information regarding the Company's marketable securities. Business Combinations The application of the acquisition method of accounting for business combinations requires the use of significant estimates and assumptions in...

  • Page 45
    ...values of these reporting units were substantially in egcess of their carrying values on this date. The value of Perceptive Software was heavily reliant on forecasted financial information as the Company's investments in research and development and marketing outpaced its revenue growth in 2012. Key...

  • Page 46
    ... on driving long-term performance by strategically investing in technology, hardware and software products and solutions to secure high value product installations and capture profitable supplies, software maintenance and service annuities in document-intensive industries and business processes...

  • Page 47
    ...a 3% currency impact and discounting to sell prior generation laser product ahead of new product launch. Small workgroup laser hardware revenue, which for the year ended December 31, 2012 represented 18% of total hardware revenue, declined 10% YTY driven by a 9% decline in units. Small workgroup AUR...

  • Page 48
    ...ISYS and Nolij in the first quarter of 2012 as well as organic growth of 21% in Perceptive Software. The 2012 and 2011 financial results for the Perceptive Software reportable segment include only the activity occurring after the dates of acquisition. Perceptive Software was acquired by the Company...

  • Page 49
    ...in the ISS reportable segment. Revenue by geography: The following table provides a breakdown of the Company's revenue by geography: (Dollars in Millions) United States EMEA (Europe, the Middle East & Africa) Other International Total revenue 2012 $1,695.5 % of Total 45% 35% 20% 100% 2011 $ 1,755...

  • Page 50
    ... in 2012 related to the Company's egiting of the development and manufacture of inkjet technology. Research and development egpenses increased in 2011 compared to 2010 primarily reflecting egpenses due to Perceptive Software and the fact that 2011 contains full year results of Perceptive Software...

  • Page 51
    ... and sales egpense ahead of revenue growth. For Perceptive Software, operating income (loss) includes the full year results for 2011 as well as activities subsequent to the acquisition for 2010. The Company acquired Perceptive Software on June 7, 2010. During 2012, the Company incurred total pre...

  • Page 52
    ... of the Company's effective tag rate to the U.S. statutory rate. The 10.3 percentage point increase of the effective tag rate from 2011 to 2012 was due primarily to a geographic shift in earnings toward higher tag jurisdictions in 2012 compared to 2011, and to the lack of the U.S. research and...

  • Page 53
    ... manufacturing, research and development, supply chain, marketing and sales as well as other support functions. The Company will continue to provide service, support and aftermarket supplies for its inkjet installed base. At the close of 2012, the Company was in the process of identifying...

  • Page 54
    ...lived assets held for sale were incurred in Cost of revenue and Selling, general and administrative on the Consolidated Statements of Earnings. Total employee termination benefit and contract termination and lease charges of $31.0 million and $5.1 million, respectively, are included in Restructuring...

  • Page 55
    ... Selling, general and administrative on the Company's Consolidated Statements of Earnings. For the year ended December 31, 2011, the Company incurred restructuring and related charges and project costs related to the 2012 Restructuring Plan of $7.6 million in ISS. The Company incurred restructuring...

  • Page 56
    ... million in All other. In 2010, the Company sold one of its inkjet supplies manufacturing facilities in Chihuahua, Megico for $5.6 million and recognized a $0.5 million pre-tag gain on the sale that is included in Selling, general and administrative on the Consolidated Statements of Earnings. This...

  • Page 57
    ...Dollars in Millions) 2012 2011 2010 Recorded in Cost of revenue Recorded in Research and development Recorded in Selling, general and administrative Total amortization of intangible assets $27.2 0.9 13.3 $ 41.4 $ 15.5 0.4 5.3 $21.2 $ 9.1 - 2.9 $12.0 For 2013, the Company egpects pre-tag charges...

  • Page 58
    ... asset returns on equity and high-yield bond investments over the subsequent five years in accordance with prescribed accounting guidelines, pension egpense for 2012 and 2011 was impacted $5 million and $3 million, respectively. The funding requirement for single-employer defined pension plans under...

  • Page 59
    ...marketable securities balances and other potential sources of liquidity through utilization of its trade receivables financing program and revolving credit facility or access to the private and public debt markets. The Company may choose to use these sources of liquidity from time to time, including...

  • Page 60
    ... between the activity in 2012 and that of 2011 is driven largely by increased delinquencies as well as an increase in days sales outstanding. The increase in days sales outstanding reflects the changing mig of the Companies business toward solutions, software and managed print services, which have...

  • Page 61
    ... the day the Company pays for materials and the day it collects cash from its customers. Cash conversion days are equal to the days of sales outstanding plus days of inventory less days of payables. The days of sales outstanding are calculated using the period-end Trade receivables balance, net...

  • Page 62
    ... In 2012, cash flow used to acquire businesses was higher than 2011 due to the additional acquisitions of Brainware, ISYS, Nolij, and Acuo at a total purchase price of $245.4 million compared to Pallas Athena, which was acquired in 2011. Brainware is a leading provider of intelligent data capture...

  • Page 63
    ... value measurements are based on inputs that are unobservable and significant to the overall valuation. Level 3 measurements were 2.1% of the Company's total available-for-sale marketable securities portfolio at December 31, 2012 compared to 4.5% at December 31, 2011. Refer to Part II, Item 8, Note...

  • Page 64
    ..., net of discount. The 2013 and 2018 senior notes (collectively referred to as the "senior notes") pay interest on June 1 and December 1 of each year. The interest rate payable on the notes of each series is subject to adjustments from time to time if either Moody's Investors Service, Inc. or...

  • Page 65
    ...defined in the agreement. The new credit facility also limits, among other things, the Company's indebtedness, liens and fundamental changes to its structure and business. Additional information related to the 2012 revolving credit facility can be found in the Form 8-K report that was filed with the...

  • Page 66
    Table of Contents As of December 31, 2012 and December 31, 2011, there were no amounts outstanding under the revolving credit facilities. CreFit Ratings anF Other Information The Company's credit ratings by Standard & Poor's Ratings Services and Moody's Investors Service, Inc. are BBB- and Baa3, ...

  • Page 67
    ..., $156.5 million, and $161.2 million in 2012, 2011 and 2010, respectively. The capital egpenditures for 2012 principally related to infrastructure support (including internal-use software egpenditures) and new product development. The Company egpects capital egpenditures to be approgimately $185...

  • Page 68
    ... on the Company's business. In an effort to minimize the impact on earnings of any such increases, the Company must continually manage its product costs and manufacturing processes. Additionally, monetary assets such as cash, cash equivalents and marketable securities lose purchasing power during...

  • Page 69
    ..., 2012. At December 31, 2011, the fair value of the Company's senior notes was estimated at $696.6 million based on the prices the bonds have recently traded in the market as well as the overall market conditions on the date of valuation, stated coupon rates, the number of coupon payments each year...

  • Page 70
    ... Lexmark International, Inc. anF SubsiFiaries CONSOLIDATED STATEMENTS OF EARNINGS For the years enFeF December 31, 2012, 2011, 2010 (In Millions, Except Per Share Amounts) 2012 2011 2010 Revenue Cost of revenue Gross profit Research and development Selling, general and administrative Restructuring...

  • Page 71
    ...unrealized gain (loss) on marketable securities, net of reclassifications (net of tag benefit (liability) of $(0.6) in 2012, $0.1 in 2011, and $0.1 in 2010) Forward starting interest rate swap designated as cash flow hedge (net of tag benefit of $0.5 in 2012) Total other comprehensive earnings (loss...

  • Page 72
    ... As of December 31, 2012 anF 2011 (In Millions) 2012 2011 ASSETS Current assets: Cash and cash equivalents Marketable securities Trade receivables, net of allowances of $23.6 and $28.0 in 2012 and 2011, respectively Inventories Prepaid egpenses and other current assets Total current assets Property...

  • Page 73
    ... securities Purchase of businesses, net of cash acquired Proceeds from sale of facilities Other Net cash flows useF for investing activities Cash flows from financing activities: Repayment of assumed debt Payment of cash dividend Purchase of treasury stock Proceeds from employee stock plans...

  • Page 74
    ...of Contents Lexmark International, Inc. anF SubsiFiaries CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY For the years enFeF December 31, 2012, 2011 anF 2010...plan compensation Deferred stock units granted under deferred compensation election Tag benefit (shortfall) related to stock plans Stock-based...

  • Page 75
    ... intelligent data capture, search and web-based document imaging and workflow software solutions and services. The major customers for Legmark's products are large corporations, small and medium businesses ("SMBs"), and the public sector. The Company's products are principally sold through resellers...

  • Page 76
    ...to a single discounted amount. The Company uses multiple sources of pricing as well as trading and other market data in its process of reporting fair values and testing default level assumptions. The Company assesses the quantity of pricing sources available, variability in pricing, trading activity...

  • Page 77
    ... to the balance sheet date. Securities that are identified through the analysis using the quantitative and qualitative factors described above are then assessed to determine whether the entire net book value basis of each identified security will be recovered. The Company performs this assessment by...

  • Page 78
    ... retired. Internal-Use Software Costs: Legmark capitalizes direct costs incurred during the application development and implementation stages for developing, purchasing, or otherwise acquiring software for internal use. These software costs are included in Property, plant and equipment, net...

  • Page 79
    ... are developed by the Company's credit management function, taking into account the customer's net worth, payment history, long term debt ratings and/or other information available from recognized credit rating services. If such information is not available, the Company estimates a rating based on...

  • Page 80
    ...laser printers and laser multifunction products as well as a wide range of supplies and services covering its printing products and technology solutions. Perceptive Software offers a complete suite of ECM, BPM, DOM, intelligent data capture and search software as well as associated industry specific...

  • Page 81
    ... at the time of sale. Legmark also records estimated reductions to revenue for price protection, which it provides to substantially all of its distributors and reseller customers. Printing Services Revenue from support or maintenance contracts, including egtended warranty programs, is recognized...

  • Page 82
    ...design and development of new products and enhancements to its egisting products. The Company's research and development activity is focused on laser and inkjet devices (prior to the Company's announcement to egit Inkjet) and associated supplies, features and related technologies as well as software...

  • Page 83
    ... yields on zero-coupon corporate bonds for each maturity. The Company's assumed long-term rate of return on plan assets is based on long-term historical actual return information, the mig of investments that comprise plan assets, and future estimates of long-term investment returns by reference to...

  • Page 84
    ... behavior. The risk-free interest rate used in the Black-Scholes model was based on the implied yield currently available on U.S. Treasury zero-coupon issues with a remaining term equal to the Company's egpected term assumption. The fair value of each restricted stock unit ("RSU") award and deferred...

  • Page 85
    ... Statements of Earnings. For reporting periods prior to the end of the Company's fiscal year, the Company records income tag egpense based upon an estimated annual effective tag rate. This rate is computed using the statutory tag rate and an estimate of annual net income by geographic region...

  • Page 86
    ... related to pension or other postretirement benefits, foreign currency egchange rate adjustments, a forward starting interest rate swap designated as a cash flow hedge and net unrealized gains and losses on marketable securities including the non-credit loss component of OTTI. The Company presents...

  • Page 87
    ... in effect before ASU 2011-05. The new requirements for reporting comprehensive income under the guidance amended by ASU 2011-05 and ASU 2011-12 were effective for the Company starting in the first quarter of fiscal 2012 and required retrospective application. The Company has elected to present...

  • Page 88
    ... assets or liabilities that the Company has the ability to access at the measurement date; Level 2 - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3 - Unobservable inputs used in valuations in which there...

  • Page 89
    ....9 million of money market funds, $6.5 million of U.S. government and agency debt securities and $2.0 million of corporate debt securities at December 31, 2011. The amortized cost of these investments closely approgimates fair value in accordance with the Company's policy regarding cash equivalents...

  • Page 90
    ... information about Level 3 assets measured at fair value on a recurring basis for the year ended December 31, 2012: Available-for-sale marketable securities Twelve Months EnFeF, December 31, 2012 Total Level 3 securities $ Agency Febt securities $ Corporate Febt securities $ AB anF MB securities...

  • Page 91
    ... information about Level 3 assets measured at fair value on a recurring basis for the year ended December 31, 2011: Available-for-sale marketable securities Twelve Months EnFeF, December 31, 2011 Total Level 3 securities $ Agency Febt securities $ Corporate Febt securities $ AB anF MB securities...

  • Page 92
    ... determined that all of its investments in marketable securities should be classified as available-for-sale and reported at fair value. The Company generally employs a market approach in valuing its marketable securities, using quoted market prices or other observable market data when available. In...

  • Page 93
    ... levels of trading activity than government and agency debt securities and corporate debt securities and, therefore, their fair values may be based on other inputs, such as spread data. The consensus price method is generally used to determine the most appropriate price in the range provided. Fair...

  • Page 94
    ... 2008, the Company issued $350 million of five-year figed rate senior unsecured notes and $300 million of ten-year figed rate senior unsecured notes. The fair values shown in the table below are based on the prices the bonds traded in the market as of December 31, 2012 and December 31, 2011, as well...

  • Page 95
    ... Fair Value Measurements Using Unobservable inputs inputs (Level 3) Total gains (losses) YTD 2012 Long-lived assets held for sale $1.6 $ - $ - $ 1.6 $ (2.1) Long-lived assets held for sale Related to the 2007 restructuring plan, the Company's Boigny, France site with carrying value...

  • Page 96
    ... $ (5.9) *Pertains to measurements during the year ended December 31, 2011. Certain assets were sold and derecognized in 2011. Long-lived assets held for sale Related to the April 2009 restructuring plan, the Company's inkjet cartridge manufacturing facility in Juarez, Megico qualified as held...

  • Page 97
    ... strengthens the Company's end-to-end business process solutions and egpands the reach of Perceptive Software's portfolio of leading content management and business process management ("BPM") solutions. Of the total cash payment of $148.2 million, $147.3 million was paid to acquire the outstanding...

  • Page 98
    ... estimated useful lives as of the acquisition date, according to the following schedule. Fair value recognizeF WeighteFAverage Useful Life Intangible assets subject to amortization: Trade names and trademarks Customer relationships Non-compete agreements Purchased technology Total identifiable...

  • Page 99
    ...shares of Nolij Corporation ("Nolij") and ISYS Search Software Pty Ltd. ("ISYS"), respectively, in cash transactions valued at $31.9 million and $29.8 million, respectively. Nolij is a prominent provider of web-based imaging, document management and workflow solutions for the higher education market...

  • Page 100
    .... The acquired companies consisted mostly of technology and other related assets and processes to be utilized by the Company's Perceptive Software segment. The following table summarizes the identifiable intangible assets recognized in the acquisitions of Acuo, Nolij and ISYS. The intangible...

  • Page 101
    ... the Company's growing worldwide sales force to sell these software solutions globally. Of the $50.2 million total cash payment, $41.4 million was paid to acquire the outstanding shares of Pallas Athena, $7.1 million was used to repay debt and short-term borrowings, $1.2 million was used to pay...

  • Page 102
    ... to the Perceptive Software reportable segment and consisted largely of projected future revenue and profit growth, including benefits from Legmark's international structure and sales channels and entity-specific synergies egpected from combining Pallas Athena with Legmark's business. None of...

  • Page 103
    ...-focused document workflow solutions and managed print services and enables the Company to immediately participate in the adjacent, growing market segment of ECM software solutions. The following table summarizes the assets acquired and liabilities assumed as of the acquisition date including...

  • Page 104
    ... Total Total identifiable intangible assets $ 35.8 1.6 74.3 111.7 8.0 years 3.0 years 5.0 years 5.9 years 1.9 32.3 34.2 $ 145.9 * N/A * The in-process technology was not subject to amortization at the acquisition date, but began amortizing upon completion of the project in 2011. The trade...

  • Page 105
    ... of uair Value - Pallas Athena and Perceptive Software were discounted to fair value utilizing a required return of 13% for Pallas Athena and 14% for Perceptive Software. The fair value of deferred revenue was determined for both acquisitions based on the direct and incremental costs to fulfill...

  • Page 106
    ... hardware, with reductions primarily in the areas of inkjet-related manufacturing, research and development, supply chain, marketing and sales as well as other support functions. The Company will continue to provide service, support and aftermarket supplies for its inkjet installed base. The Company...

  • Page 107
    .... For the years ended December 31, 2012 and 2011, the Company incurred restructuring-related charges in connection with the 2012 Restructuring Actions in the Company's segments as follows: 2012 2011 ISS All other Perceptive Software Total charges $ 84.7 17.5 0.7 $102.9 $7.6 - - $7.6 Pension and...

  • Page 108
    ... long-lived assets held for sale Employee termination benefit charges (reversals) Contract termination and lease charges (reversals) Total restructuring-related charges $ 0.1 1.5 (0.1) 0.9 $ 2.4 4.6 (1.0) (0.1) $ 5.9 $ 5.9 - (0.1) 2.5 $ 2.4 $ 8.3 For the years ended December 31, 2012, 2011 and...

  • Page 109
    ... Stock. Approgimately 49.3 million shares of Class A Common Stock have been authorized for these stock incentive plans. For the years ended December 31, 2012, 2011 and 2010, the Company incurred pre-tag stock-based compensation egpense of $23.9 million, $22.4 million and $19.4 million, respectively...

  • Page 110
    ... The following table presents a breakout of the stock-based compensation egpense recognized for the years ended December 31: 2012 2011 2010 Cost of revenue Research and development Selling, general and administrative Stock-based compensation egpense before income tages Income tag benefit Stock...

  • Page 111
    ...,300 RSUs as part of the activity reflected during 2012 in the forfeited or canceled line item. In connection with the retirement of an egecutive officer from the Company and in consideration of the egecutive officer's years of service to the Company, the Company's Compensation and Pension Committee...

  • Page 112
    ... loss. The fair values of the Company's availablefor-sale marketable securities are based on quoted market prices or other observable market data, discounted cash flow analyses, or in some cases, the Company's amortized cost which approgimates fair value. Money market funds included in Cash and...

  • Page 113
    ...less than one year Due in 1-5 years Due after 5 years Total available-for-sale marketable securities $ 185.4 498.3 21.5 $ 705.2 $ 185.8 500.9 20.5 $ 199.6 590.1 $ 199.9 590.5 $ 707.2 23.9 $ 813.6 22.9 $ 813.3 For the years ended December 31, 2012 and 2011, the Company recognized $4.2 million...

  • Page 114
    ... More Fair UnrealizeF Value Loss Fair Value Total UnrealizeF Loss Auction rate securities Corporate debt securities Asset-backed and mortgage-backed securities Government and Agency Total $ - 54.9 6.7 30.9 $92.5 114 $ - (0.1) - - $ (0.1) $6.3 1.4 0.2 - $7.9 $ (1.5) - - - $ (1.5) $ 6.3 56...

  • Page 115
    ... illiquid and that the security's interest rate will continue to be set at the magimum applicable rate, and that the security will not be redeemed until its mandatory redemption date. The methodology for determining the appropriate discount rate uses market-based yield indicators and the underlying...

  • Page 116
    ... speeds, default rates, and current loan status. These drivers are used to apply specific assumptions to each security and are further divided in order to separate the underlying collateral into distinct groups based on loan performance characteristics. For instance, more weight is placed on higher...

  • Page 117
    ... and/or its ability to obtain secured borrowings. A downgrade in the Company's credit rating would reduce the amount of secured borrowings available under the facility. Egpenses incurred under this program totaled $0.5 million, $0.6 million and $0.6 million in 2012, 2011 and 2010 respectively. The...

  • Page 118
    ...the contracts, which have been classified as operating leases based on the terms of the arrangements. The accumulated depreciation related to the Company's leased products was $76.5 million and $58.3 million at year-end 2012 and 2011, respectively. The Company accounts for its internal-use software...

  • Page 119
    ... of Brainware, Nolij, ISYS and Acuo in 2012, including the $(8.0) million net impact of measurement period adjustments determined in 2012. The Company has recorded $33.5 million of goodwill related to the acquisition of Pallas Athena in 2011. Refer to Note 4 for additional details regarding business...

  • Page 120
    ... that were in process on the dates the Company acquired Perceptive Software, Pallas Athena and Acuo. Under the accounting guidance for intangible assets, in-process research and development acquired in a business combination is considered an indefinite lived asset until completion or abandonment of...

  • Page 121
    ... due to higher sales. Refer to Note 17 of the Notes to Consolidated Financial Statements for more information related to pension and other postretirement plans. 13. DEBT Senior Notes - Long-term Debt anF Current Portion of Long-term Debt In May 2008, the Company completed a public debt offering...

  • Page 122
    ... discount of $0.7 million). The 2013 and 2018 senior notes (collectively referred to as the "senior notes") pay interest on June 1 and December 1 of each year. The interest rate payable on the notes of each series is subject to adjustments from time to time if either Moody's Investors Service...

  • Page 123
    ... Statements of Earnings are as follows: 2012 2011 2010 Interest (income) Interest egpense Total $(13.0) 42.6 $ 29.6 $(13.4) 43.3 $ 29.9 $(15.6) 41.9 $ 26.3 The Company capitalized interest costs of $0.3 million, $0.3 million and $2.1 million in 2012, 2011 and 2010, respectively. 14. INCOME...

  • Page 124
    ... than the amount the Company estimated it would have to pay or because the statute of limitations governing the year of the accrual egpired and no audit of that year was ever conducted by the local tag authorities. The effective income tag rate was 32.7% for the year ended December 31, 2012. The 10...

  • Page 125
    ...) at December 31 were as follows: 2012 2011 Deferred tag assets: Tag loss carryforwards Credit carryforwards Inventories Restructuring $ 12.9 7.5 14.0 $ 13.1 10.2 19.2 3.6 66.3 8.8 18.0 32.7 10.2 0.4 23.6 4.3 58.1 Pension Warranty Postretirement benefits Equity compensation Other compensation...

  • Page 126
    ... would affect the Company's effective tag rate. Several tag years are subject to egamination by major tag jurisdictions. In the U.S., federal tag years 2010 and after are subject to egamination. The Internal Revenue Service is currently auditing tag years 2010 and 2011. In France, tag years 2010 and...

  • Page 127
    ... corporate purposes, including future public offerings to raise additional capital and for facilitating acquisitions. In August 2012, the Company received authorization from the Board of Directors to repurchase an additional $200 million of its Class A Common Stock for a total repurchase authority...

  • Page 128
    ... applicable to contracts in an entity's own equity. DiviFenFs The Company's dividend activity during the year ended December 31, 2012 was as follows: Lexmark International, Inc. Class A Common Stock Cash RecorF Date Outlay DiviFenF Payment Date DiviFenF Per Share March 16, 2012 June 15, 2012...

  • Page 129
    ... favorable change of $3.6 million in the 2012 Pension or other postretirement benefits was primarily due to higher than egpected returns on plan assets and amortization, partially offset by decreases in discount rates. The unfavorable change of $49.5 million in 2011 was primarily due to decreases in...

  • Page 130
    ... in a total of 8.1 million shares repurchased at a cost of $190 million during the year. The ASRs had a favorable impact to basic and diluted EPS in 2012. In addition to the 5.7 million antidilutive shares for the year ended December 31, 2011 mentioned above, unvested restricted stock units with...

  • Page 131
    ...at beginning of year Actual return on plan assets Contributions by the employer Benefits paid Foreign currency egchange rate changes Plan adjustments Contributions by plan participants Fair value of plan assets at end of year Unfunded status at end of year 2.7 660.6 $(222.6) For 2012 and 2011, the...

  • Page 132
    ...Pension Benefits 2012 2011 2010 Other Postretirement Benefits 2012 2011 2010 Net PerioFic Benefit Cost: Service cost Interest cost Egpected return on plan assets Amortization of prior service... termination benefit losses totaling $7.4 million in 2012 are the net result of restructuring losses in the...

  • Page 133
    ...-tax) for the years ended December 31: Pension Benefits 2012 Other Postretirement Benefits 2012 $ Total 2012 $ Pension Benefits 2011 $ Other Postretirement Benefits 2011 $ Total 2011 $ Pension Benefits 2010 $ Other Postretirement Benefits 2010 $ Total 2010 $ New prior service cost Net loss...

  • Page 134
    ... 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. Corporate bonds...

  • Page 135
    ... of level 3 assets at December 31: Corporate bonFs anF Febentures, high yielF 2012 2011 Fair value at beginning of year Actual return on plan assets-assets held at reporting date Actual return on plan assets-assets sold during period Purchases, sales and settlements, net Transfers in/(transfers...

  • Page 136
    ...'s acquisition of the Information Products Corporation from IBM in 1991, IBM agreed to pay for its pro rata share (currently estimated at $16.8 million) of future postretirement benefits for all the Company's U.S. employees based on prorated years of service with IBM and the Company. Cash flows: In...

  • Page 137
    ... on pricing models or formulas using current market data, or where applicable, quoted market prices. On the date the derivative contract is entered into, the Company designates the derivative as a fair value or cash flow hedge. Changes in the fair value of a derivative that is highly effective as...

  • Page 138
    ... includes linking all derivatives that are designated as fair value hedges to specific assets and liabilities on the balance sheet. The Company also formally assesses, both at the hedge's inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly...

  • Page 139
    ... circumstances. In addition, the Company uses credit insurance for specific obligors to limit the impact of nonperformance. Legmark sells a large portion of its products through thirdparty distributors and resellers and original equipment manufacturer ("OEM") customers. If the financial condition or...

  • Page 140
    Table of Contents authorities have from time to time initiated inquiries and investigations, some of which are ongoing, including concerns regarding the activities of participants in the markets for printers and supplies. The Company intends to continue to cooperate fully with those governmental ...

  • Page 141
    ...in effect prohibits the forfeiture of vacation time accrued. This statute has been used to invalidate California employers' "use or lose" vacation policies. The class is comprised of less than 200 current and former California employees of the Company. The trial was bifurcated into a liability phase...

  • Page 142
    ... Trademark Office in Munich the Company asserted that all claims for levies on single function printers sold by the Company in Germany should be dismissed. On February 22, 2011 the arbitration board issued a partial decision finding that the claims of VG Wort for the years 2001 through 2005 are time...

  • Page 143
    ... supplies for its inkjet installed base. Perceptive Software offers a complete suite of ECM, BPM, DOM, intelligent data capture and search software as well as associated industry specific solutions. On February 29, March 13, and March 16, 2012, the Company acquired Brainware, Nolij and ISYS...

  • Page 144
    ...11% of the Company's total revenue, respectively. Sales to Dell are included primarily in ISS. The following is revenue by geographic area for the year ended December 31: 2012 2011 2010 Revenue: United States EMEA (Europe, the Middle East & Africa) Other International Total revenue $ 1,695.5 1,320...

  • Page 145
    ... maintenance services sold on a unit basis or as a subscription service Revenue by product category for prior years has been adjusted to reflect changes in the methods used to identify product categories during 2012. Laser and Inkjet printers has been updated to include scanners and printers sold...

  • Page 146
    ... in December of 2012. The consolidated financial results include those of Brainware, ISYS, Nolij and Acuo occurring subsequent to the acquisitions. Refer to Note 20 for financial information regarding the Perceptive Software segment, which includes the activities of all acquired businesses. The sum...

  • Page 147
    ...statement schedule, and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to...

  • Page 148
    ... communicated to the Company's management, including its principal egecutive and principal financial officers or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management's Report on Internal Control over Financial Reporting The Company...

  • Page 149
    ... of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in...

  • Page 150
    ... Code of Business Conduct from: Legmark International, Inc. Attention: Investor Relations One Legmark Centre Drive 740 West New Circle Road Legington, Kentucky 40550 (859) 232-5568 The New York Stock Egchange ("NYSE") requires that the Chief Egecutive Officer of each listed Company certify annually...

  • Page 151
    ... 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES Information required by Part III, Item 14 of this Form 10-K is incorporated by reference from the Company's definitive Progy Statement for its 2013 Annual Meeting of Stockholders, which will be filed with the Securities and Egchange Commission, pursuant...

  • Page 152
    ...: Pages In Form 10-K Report of Independent Registered Public Accounting Firm included in Part II, Item 8 For the years ended December 31, 2010, 2011 and 2012: Schedule II - Valuation and Qualifying Accounts 147 153 All other schedules are omitted as the required information is inapplicable or the...

  • Page 153
    Table of Contents LEXMARK INTERNATIONAL, INC. AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS For the Years EnFeF December 31, 2010, 2011 anF 2012 (In Millions) (A) (B) (C) (D) (E) Description Balance at Beginning of PerioF AFFitions ChargeF to ChargeF Costs anF to Other ...

  • Page 154
    ...duly authorized in the City of Legington, Commonwealth of Kentucky, on February 26, 2013. LEXMARK INTERNATIONAL, INC. By /s/ Paul A. Rooke Name: Paul A. Rooke Title: Chairman and Chief Egecutive Officer Pursuant to the requirements of the Securities Egchange Act of 1934, this report has been signed...

  • Page 155
    Table of Contents Signature Title Date * Jean-Paul L. Montupet Director February 26, 2013 * Kathi P. Seifert Director February 26, 2013 /s/ *John W. Gamble, Jr., Attorney-in-Fact *John W. Gamble, Jr., Attorney-in-Fact 155

  • Page 156
    ... International Group, Inc. Restated Certificate of Incorporation of the Company. 10-Q 3/31/00 2 5/10/00 3.1 10-Q 6/30/00 3(i) 3.1 4.1 8/10/00 3.2 4.1 Company By-Laws, as Amended and Restated July 28, 2011 Form of Indenture, dated as of May 22, 2008, between the Company and The Bank of New...

  • Page 157
    ..., N.A. ("Citibank") and The Bank of Tokyo-Mitsubishi, Ltd., New York Branch ("BTM"), as the Banks; Citicorp North America, Inc. ("CNAI") and BTM, as the Investor Agents; CNAI, as Program Agent for the Investors and Banks; and the Company, as Collection Agent and Originator. 8-K 10.1 1/23/12 10...

  • Page 158
    ..., as Seller; Gotham, as an Investor; Fifth Third Bank, as an Investor Agent and a Bank; BTMUFJ, as Program Agent, an Investor Agent and a Bank; and the Company, as Collection Agent and Originator. Amendment No. 9 to Receivables Purchase Agreement, dated as of September 30, 2011, by and among LRC, as...

  • Page 159
    ... No. 9 to Purchase and Contribution Agreement, dated as of September 30, 2011, by and between the Company, as Seller, and LRC, as Purchaser. Amendment No. 10 to Purchase and Contribution Agreement, dated as of September 28, 2012, by and between the Company, as Seller, and LRC, as Purchaser. 10...

  • Page 160
    ....+ Form of Performance-Based Restricted Stock Unit Award Agreement (multi-year performance period) pursuant to the Company's Stock Incentive Plan.+ 10-K 10.24 10.1 2/27/09 2/26/10 8-K 10.32 8-K 10.1 2/28/12 10.33 10.34 10.35 Form of Long-Term Incentive Plan Award Agreement pursuant to...

  • Page 161
    ... Plan, as Amended and Restated, effective January 1, 2009.+ Form of Employment Agreement entered into as of November 1, 2012, by and between the Company and each of Paul A. Rooke, John W. Gamble, Jr., Martin S. Canning, Ronaldo M. Foresti and Robert J. Patton.+ Form of Perceptive Software...

  • Page 162
    ... Technology, S.A., Legmark International (Asia) S.A.R.L. and the Shareholders of BDGB Enterprise Software (LUX), S.C.A. and BDGB Enterprise Software GP S.A.R.L., dated as of February 29, 2012. Accelerated Share Repurchase Agreement, dated as of August 28, 2012, by and between the Company...

  • Page 163
    ... Earnings for the years ended December 31, 2012, 2011 and 2010, and (v) the Notes to the Consolidated Financial Statements.§ X * + § Confidential treatment previously granted by the Securities and Egchange Commission. Indicates management contract or compensatory plan, contract or arrangement...

  • Page 164
    ...Company], or the Board of Directors of Lexmark (the " Board"). Executive will report to the Chief Executive Officer of [Lexmark][the Company]. During the term of Executive's employment with the Company, Executive will devote Executive's best efforts and substantially all of Executive's business time...

  • Page 165
    ... in consultation with the Chief Executive Officer of Lexmark, and which may be amended from time to time. The annual incentive bonus award shall be determined by the Compensation and Pension Committee of the Board based on annual objectives established by Lexmark and approved by the Compensation...

  • Page 166
    ... Company calculated the Award Amount for such Fiscal Year at the Plan Target Revenue; provided, however, that if, pursuant to the final paragraph of Section 2(a) of the Incentive Program, on or prior to the date of the termination of Executive's employment the Award Amount under the Incentive Plan...

  • Page 167
    ... constitutes a felony, which in the Chief Executive Officer of [Lexmark's][the Company's] reasonable good faith judgment has the effect of materially injuring the reputation or business of the Company; or (v) the willful and material breach by the Executive of any of his obligations hereunder and...

  • Page 168
    ...the location at which Executive was performing Executive's duties as of the Effective Date, except for required travel by Executive on the Company's business; or (v) the breach by the Company of any of its obligations under this Agreement, the Executive Bonus Plan, or the Incentive Program; provided...

  • Page 169
    ... they cannot be modified or amended except in a writing signed by Executive and by the Chairman and Chief Executive Officer of Lexmark. All prior employment-related agreements, letters, or understandings between Executive and the Company are hereby terminated and replaced in their entirety with this...

  • Page 170
    ..., suit or other legal proceeding. IN WITNESS WHEREOF , the parties have executed this EXECUTIVE EMPLOYMENT AGREEMENT on the day and year first above written. PERCEPTIVE SOFTWARE, INC.: By: Name: Title: Chairman and Chief Executive Officer of Lexmark International, Inc. EXECUTIVE: Name: [Executive...

  • Page 171
    ... capitalized terms used in this Release are defined in the Executive Employment Agreement (the "Agreement"), which I have executed and of which this Release is a part. I hereby confirm my obligations under the Company's proprietary information and inventions agreement. Except as otherwise set forth...

  • Page 172
    ... information regarding plans for research, development, new products, marketing and selling, business plans, budgets and unpublished financial statements, licenses, prices and costs, suppliers and customers; and (c) information regarding the skills and compensation of other employees of the Company...

  • Page 173
    ... time enforce, United States and foreign Proprietary Rights relating to Company Inventions in any and all countries. To that end the employee will execute, verify and deliver such documents and perform such other acts (including appearances as a witness) as the Company may reasonably request for use...

  • Page 174
    The employee hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as the employee's agent and attorney in fact, which appointment is coupled with an interest, to act for and in his/her behalf to execute, verify and file any such documents and to do all ...

  • Page 175
    ... or continued employment the PERCEPTIVE SOFTWARE (the "Company"), and the compensation now and hereafter paid to me, by signing below I hereby agree to be bound to the terms and conditions set forth in the above Statement of Employee Obligations and Agreement Involving Proprietary Information and...

  • Page 176
    EXHIBIT A TO: FROM: Perceptive Software DATE: SUBJECT: Previous Inventions 1. Except as listed in Section 2 below, the following is a complete list of all inventions or improvements relevant to the subject matter of my employment by Perceptive Software (the " Company ") that have been made or ...

  • Page 177
    ... OF CONTROL AGREEMENT ("Agreement") is entered into to be effective the day of Software, Inc. (the "Company"), a subsidiary of Lexmark International, Inc. ("Lexmark"), and [EXECUTIVE] ("Executive"). , 2010, between Perceptive WHEREAS , Executive is the of the Company; and WHEREAS , the Board of...

  • Page 178
    ... Board then still in office who are Incumbent Directors shall be treated as an Incumbent Director; or (ii) any "person," including a "group" (as such terms are used in Sections 13(d) and 14(d)(2) of the Act, but excluding Lexmark, its Subsidiaries (including the Company), any employee benefit plan...

  • Page 179
    ... corporation. (c) Change of Control Period . "Change of Control Period " means the period commencing on the date hereof and ending on June 30, 2013. (d) Company Plans . "Company Plans " means: (i) all incentive, savings and retirement plans, practices, policies and programs in which Executive...

  • Page 180
    ... Perceptive Software, Inc. Amended and Restated Executive Bonus Plan and the Perceptive Software, Inc. Incentive Compensation Program; provided, however, that such termination shall only be for Good Reason if Executive provides notice to Company of his intent to terminate employment for Good Reason...

  • Page 181
    ... employment for Good Reason, and a Separation from Service occurs, the Company shall pay to Executive (or Executive's heirs) cash severance in an amount equal to the sum of: (i) two and one-half times the sum of (1) the annual base salary and (2) an amount equal to 100% of the Executive's year end...

  • Page 182
    ... any other disability or pension plan of the Company. (d) Parachute Payments . If any payment or benefit Executive would receive in connection with a Change of Control or otherwise ("Payment") would (i) constitute a "parachute payment" within the meaning of Section 280G of the Code, and (ii) but...

  • Page 183
    ... with detailed supporting documentation, to the Company and Executive within fifteen (15) calendar days after the date on which Executive's right to a Payment is triggered (if requested at that time by the Company or Executive) or such other time as requested by the Company or Executive. If the...

  • Page 184
    ... of any obligations or liabilities to Executive under this Agreement). As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid. 8. (a) Miscellaneous This Agreement shall be governed by and construed under the...

  • Page 185
    ... guaranteeing next-day delivery and providing a receipt, addressed as follows: If to the Company: If to Executive: Lexmark International, Inc. Attn: Secretary 740 W. New Circle Road Lexington, KY 40550 [ENTER ADDRESS HERE] or to such other address as either party shall have furnished, to the...

  • Page 186
    ... authorization from the Board of Directors of Lexmark, the Company has caused this Agreement to be executed in its name on its behalf, all as of the day and year first above written. PERCEPTIVE SOFTWARE, INC. By: Chairman and Chief Executive Officer of Lexmark International, Inc. EXECUTIVE: 10

  • Page 187
    ... capitalized terms used in this Release are defined in the Change of Control Agreement (the "Agreement"), which I have executed and of which this Release is a part . I hereby confirm my obligations under the Company's Proprietary Information and Inventions Agreement. Except as otherwise set forth...

  • Page 188
    ... Charges (Dollars in Millions, Except Ratios) For the Year Ended December 31, 2008 2009 2010 2011 2012 Earnings: Net earnings Provision for income taxes Amortization of capitalized interest Fixed charges excluding interest capitalized Total $240.2 35.n 0.1 $ 145.9 41.1 0.2 $ 340.0 81.5 0.n 50...

  • Page 189
    ... of LEXMARK INTERNATIONAL, INC. Subsidiariss Stats or Country of Incorporation Acuo Technologies, LLC BDGB Enterprise Software S.A.R.L. CEEmark-CS Ltt CEEmark Limitet ISYS Search Software Pty Ltt Lexington Care, LLC Lexington Tooling Company Lexmark Asia Pacific Corporation, Inc. Lexmark Bilgi...

  • Page 190
    ...te C.V. Lexmark Printer (Shenzhen) Company Ltt Lexmark Receivables Corporation Lexmark Research I Development Corporation Lexmark S.A. (Korea) Ltt. Lexmark (Schweiz) AG Pallas Athena Caribbean B.V. Pallas Athena, Ltt. Perceptive Software, LLC Perceptive Software RID B.V. Perceptive Software USA, Inc...

  • Page 191
    ...) of Lexmark International, Inc. of our report dated February 26, 2013 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K. /s/PricewaterhouseCoopers LLP Lexington, Kentucky February...

  • Page 192
    ... or an officer, or both, of Lexmark International, Inc., a Delaware corporation ("Lexmark"), does hereby make, constitute and appoint Paul A. Rooke, John W. Gamble, Jr. and Robert J. Patton, the address of each of which is in care of Lexmark, One Lexmark Centre Drive, Lexington, Kentucky 40550, and...

  • Page 193
    ... report financial information; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 26, 2013 /s/ Paul A. Rooke Paul A. Rooke Chairman and Chief Executive Officer

  • Page 194
    ...; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 26, 2G13 /s/ John W. Gamble, Jr. John W. Gamble, Jr. Executive Vice President and Chief Financial Officer

  • Page 195
    ... ACT OF 2002 In connection with the Annual Report of Lexmark International, Inc. (the "Company") on Form 10-K for the period ending December 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Paul A. Rooke, Chairman and Chief Executive Officer of the...

  • Page 196
    ... connection with the Annual Report of Lexmark International, Inc. (the "Company") on Form 10-K for the period ending December 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John W. Gamble, Jr., Executive Vice President and Chief Financial Officer...

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