Lexmark 2013 Annual Report Download - page 16

available features quickly and easily. Finally, customers may also subscribe to Perceptive Software product and solution licenses on a
recurring basis (quarterly or annually) with customers managing and operating the system and associated infrastructure on the
customer’s premises.
• Competition — Perceptive Software
Perceptive Software is a leading developer of content and process management products and solutions, including intelligent capture,
ECM, BPM, DOM and enterprise search. Perceptive Software takes an end-to-end approach to content and process management
solutions. With its Content in Context™ methodology, Perceptive Software offers the flexibility and scalability to automate virtually
any business process and manage the entire lifecycle of any content elevating the value of an organization’s transactional content.
Perceptive Software’s principal method of competition is to provide specific industry/sector and back office process solutions,
combining its software platform and products that have the ability to be quickly and easily configured and integrated with a large
number of business applications. The market for Perceptive Software’s products is highly competitive, and the Company’s
management expects competition will continue to intensify as the ECM and BPM markets mature. Perceptive Software competes with
a large number of ECM providers, including document management and web content management businesses, as well as companies
that focus on document imaging and workflow. Competitors in the ECM market space include larger competitors such as EMC’s
Documentum, OpenText, and IBM’s FileNet, as well as various smaller competitors, such as Hyland. Perceptive Software competes
with a number of BPM competitors including Appian, IBM, OpenText and Pegasystems. Competitors in the Capture market space
include many of the traditional ECM providers listed above as well as smaller competitors such as Kofax and Readsoft. Competitors
in the Search space including Google Search Appliance, Microsoft Fast, and HP Autonomy.
• Backlog — Perceptive Software
At December 31, 2013, Perceptive Software had a backlog of software license, maintenance, and professional services agreements
with customers in the normal course of its business, most of which is expected to be recognized as revenue in 2014. The dollar amount
of Perceptive Software backlog is not material to an understanding of the Company’s overall business.
Research and Development
Lexmark’s research and development efforts focus on technologies associated with laser printing, fleet management, connectivity,
document management, ECM/BPM/DOM software, intelligent data capture, enterprise search, healthcare VNA and other customer
facing solutions. Lexmark also develops related applications and tools that enable the Company to efficiently provide a broad range of
services. Lexmark is also actively engaged in the design and development of enhancements to its existing products that increase the
performance, improve ease of use and lower production costs. In the case of certain products, the Company may elect to purchase
products or key components from third-party suppliers rather than develop them internally.
Lexmark conducts research and development activities in various locations including Lexington, Kentucky; Boulder, Colorado;
Shawnee, Kansas; Cebu City, Philippines; Kolkata, India; and Apeldoorn, Netherlands. Research and development expenditures were
$287 million in 2013, $369 million in 2012, and $406 million in 2011.
The process of developing new products is complex and requires innovative designs that anticipate customer needs and technological
trends. The Company must make strategic decisions from time to time as to which technologies will produce products and solutions in
market sectors that will experience the greatest future growth. There can be no assurance that the Company can develop the more
technologically advanced products required to remain competitive.
Employees
As of December 31, 2013, of the approximately 12,000 Lexmark employees worldwide, 4,000 are located in the U.S. and the
remaining 8,000 are located in Europe, Canada, Latin America, Asia Pacific, the Middle East and Africa. None of the U.S. employees
are represented by a union. Employees in France and the Netherlands are represented by a Statutory Works Council.
Available Information
Lexmark makes available, free of charge, electronic access to all documents (including annual reports on Form 10-K, quarterly reports
on Form 10-Q, current reports on Form 8-K, and any amendments to those reports, as well as any beneficial ownership filings) filed
with or furnished to the Securities and Exchange Commission (“SEC” or the “Commission”) by the Company on its website at
http://investor.lexmark.com as soon as reasonably practicable after such documents are filed. The Company also posts all required
XBRL exhibits to its corporate web site on the same calendar day as the date of the related filing. The public may read and copy any
materials the company files with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The
public may obtain information on the operation of the Public Reference Room by calling the SEC at (800) SEC-0330. The SEC also
maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file
electronically with the SEC at www.sec.gov.
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