Lexmark 2013 Annual Report Download - page 111

2013 2012
Pension and other postretirement benefits $ 154.6 $ 268.5
Deferred revenue 135.8 131.6
Other 114.3 99.4
Other liabilities $ 404.7 $ 499.5
The $94.8 million decrease in Other liabilities was driven by the $113.9 decrease in pension and other postretirement benefits liability
due to favorable market conditions. 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
In March 2013, the Company completed a public debt offering of $400.0 million aggregate principal amount of fixed rate senior
unsecured notes. The notes with an aggregate principal amount of $400.0 million and 5.125% coupon were priced at 99.998% to have
an effective yield to maturity of 5.125% and will mature March 15, 2020 (referred to as the “2020 senior notes”). The 2020 senior
notes will rank equally with all existing and future senior unsecured indebtedness. The notes from the May 2008 public debt offering
with an aggregate principal amount of $300.0 million and 6.65% coupon were priced at 99.73% to have an effective yield to maturity
of 6.687% and will mature June 1, 2018 (referred to as the “2018 senior notes”). At December 31, 2013, the outstanding balance of
long-term debt was $699.6 million (net of unamortized discount of $0.4 million). At December 31, 2012, the outstanding balance was
$649.6 million (net of unamortized discount of $0.4 million), of which $350 million was classified as current.
The 2020 senior notes will pay interest on March 15 and September 15 of each year, beginning September 15, 2013. The 2018 senior
notes pay interest on June 1 and December 1 of each year. The interest rate payable on the notes of each series will be subject to
adjustments from time to time if either Moody’s Investors Service, Inc. or Standard and Poor’s Ratings Services downgrades the debt
rating assigned to the notes to a level below investment grade, or subsequently upgrades the ratings.
The senior notes contain typical restrictions on liens, sale leaseback transactions, mergers and sales of assets. There are no sinking
fund requirements on the senior notes and they may be redeemed at any time at the option of the Company, at a redemption price as
described in the related indenture agreements, as supplemented and amended, in whole or in part. If a “change of control triggering
event” as defined below occurs, the Company will be required to make an offer to repurchase the notes in cash from the holders at a
price equal to 101% of their aggregate principal amount plus accrued and unpaid interest to, but not including, the date of repurchase.
A “change of control triggering event” is defined as the occurrence of both a change of control and a downgrade in the debt rating
assigned to the notes to a level below investment grade.
In March 2013, the Company repaid its $350.0 million principal amount of 5.90% senior notes that were due on June 1, 2013 (referred
to as the “2013 senior notes”). A loss of $3.3 million was recognized in the Consolidated Statements of Earnings, related to $3.2
million of premium paid upon repayment and $0.1 million related to the write-off of related debt issuance costs.
The Company used a portion of the net proceeds from the 2020 senior notes offering to extinguish the 2013 senior notes and intends to
use the remaining net proceeds for general corporate purposes, including to fund share repurchases, fund dividends, finance
acquisitions, finance capital expenditures and operating expenses and invest in any subsidiaries.
Credit Facility
Effective January 18, 2012, Lexmark entered into a $350 million 5-year senior, unsecured, multicurrency revolving credit facility that
replaces the Company’s $300 million 3-year Multicurrency Revolving Credit Agreement entered into on August 17, 2009.
The facility provides for the availability of swingline loans and multicurrency letters of credit. Under certain circumstances and
subject to certain conditions, the aggregate amount available under the facility may be increased to a maximum of $500 million.
Interest on all borrowings under the facility is determined based upon either the Adjusted Base Rate or the Adjusted LIBO Rate, in
each case plus a margin that is adjusted on the basis of a combination of the Company’s consolidated leverage ratio and the
Company’s index debt rating.
The facility contains customary default provisions, affirmative and negative covenants and also contains certain financial covenants,
including those relating to a minimum interest coverage ratio of not less than 3.0 to 1.0 and a maximum leverage of not more than 3.0
to 1.0 as defined in the agreement. The facility limits, among other things, the Company’s indebtedness, liens and fundamental
changes to its structure and business. The Company was in compliance with all covenants and other requirements set forth in the
facility agreement at December 31, 2013
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