Lexmark 2013 Annual Report Download - page 31

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 improve their business processes by enabling them to capture, manage and
access critical unstructured business information in the context of their business processes while speeding the movement and
management of information between the paper and digital worlds. Since its inception in 1991, Lexmark has become a leading
developer, manufacturer and supplier of printing, imaging, device management, MPS, document workflow and, more recently,
business process and content management solutions. The Company operates in the office printing and imaging, ECM, BPM, DOM,
intelligent data capture and search software markets. Lexmark’s products include laser printers and multifunction devices, dot matrix
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.
The Company is primarily managed along two segments: ISS and Perceptive Software.
 ISS offers a broad portfolio of monochrome and color laser printers and laser MFPs, as well as supplies, software
applications, software solutions and MPS 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 teams whose mission is to generate demand for its business printing solutions and services, primarily among large
corporations, small and medium businesses, 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 distributes and fulfills
its products to business customers primarily through its well-established distributor and reseller network. The ISS distributor
and reseller network includes IT Resellers, Direct Marketing Resellers, and Copier Dealers. ISS also sells its products
through numerous alliances and OEM arrangements.
 Perceptive Software offers a complete suite of ECM, BPM, DOM, intelligent data capture, search software and medical
imaging VNA software products and solutions. The ECM and BPM 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, banking, insurance and manufacturing. 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.
Key Messages
2013
Lexmark is focused 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 in distributed environments. The Company continues the transition to a
solutions company as it shifts from a hardware-centric company to a solutions company providing end-to-end solutions that allow
customers to bridge the paper and digital worlds and the unstructured and structured content/process worlds. Lexmark provides
comprehensive capabilities to allow customers to manage their print and MFP environment, including MPS. The Company also
continues to build its capabilities to help customers capture, manage and access unstructured content, in any form, through both
organic investment and acquisitions.
The Company continues a strategic focus on growing its MPS offerings and the placement of high-end hardware. The Company also
continues the strategic focus on expansion in solutions and software capabilities, to both strengthen its MPS offerings and grow its
non-printing related software solutions business focused in the ECM, BPM and DOM markets. These strategic focus areas are
intended to increase our penetration in the business segment. The business segment tends to have higher page generating and more
software intensive application requirements, which drive increasing levels of supplies and software maintenance and support revenue.
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