Lexmark 2013 Annual Report Download - page 4

In our high value segments of MPS and Perceptive Software, each grew well in excess of market growth rates.
Further, within the past 24 months, Lexmark competed for and won 23 new MPS contracts with companies
listed on either the Global 500 or Fortune 500, which represent incremental business to the company. In
addition, as we continue to deliver savings and value to our customers, our renewal rate for MPS customers
was 100 percent for the year.
While we are focused on our capabilities and winning and retaining customers, Lexmark’s development of
world-class imaging solutions also continued to impress the industry’s most inuential and well-known market
analyst rms. Three of these rms lauded Lexmark’s MPS as an industry leader in 2013, repeating the accolade
from 2012– another outstanding achievement for the company.
Perceptive Software also received leadership accolades from market analysts for both its enterprise content
management and healthcare solutions.
Financial Results Reect Solid Execution
2013 nancial results were highlighted by record revenue performance in our high value segments of MPS and
Perceptive Software, record gross prot margin percentage, increased earnings and solid free cash ow.
MPS and Perceptive Software together grew 22 percent and comprised 26 percent of total revenue. Lexmark’s
total revenue declined 3 percent as the company continued to navigate a sluggish economic environment and
the diminishing impact from the planned decline inkjet exit revenue.
We have delivered a record gross prot margin percentage in each of the past ve years. This is a clear
reection of the success we are seeing in growing our high value segments. For 12 consecutive years we
have delivered positive free cash ow. This continues to fuel our transformation and enables the ongoing
return of capital to our shareholders.
In regard to Lexmark’s inkjet exit, we sold our inkjet-related technology and assets in the second quarter for $100
million. This legacy business is behind us and we are now focused squarely on the needs of our business customers.
Additionally, the restructuring actions we took in August 2012 delivered approximately $85 million in savings in 2013
and we project that these saving will increase to approximately $140 million in ongoing savings in 2015.
Focused on Delivering Value to Our Shareholders
Our disciplined capital allocation framework is comprised of two elements – returning capital to shareholders
and driving shareholder value through expanding and growing our solutions and software capabilities and reach.
Since 2011, Lexmark has generated nearly $800 million in free cash ow and returned nearly $700 million through
dividend payments and share repurchases.
In 2013, we generated $308 million of free cash ow and returned $157 million to our shareholders. We paid an
attractive dividend of $1.20 per share totaling $75 million and repurchased $82 million of the company’s shares.
We remain condent in Lexmark’s ability to continue to generate positive free cash ow as we have in each of
the past 12years.
Our People Make the Dierence
As we transform Lexmark, our employees remain focused and committed to our vision of Customers for Life.
Our value proposition is steeped in this vision, our ability to listen to our customers, anticipate their needs and
develop unique solutions to support their evolving business. Customers for Life is at the heart of everything we
do. It drives all of us, and is what makes Lexmark a better partner for our customers than any of our competitors.
To our customers, our shareholders, our business partners and our employees, thank you for your continued support.
Sincerely,
Paul Rooke
Chairman and CEO
Lexmark International, Inc