Lexmark 2013 Annual Report Download - page 67

Lexmark International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular Dollars in Millions, Except Per Share Amounts)
1. ORGANIZATION AND BUSINESS
Since its inception in 1991, Lexmark International, Inc. (“Lexmark” or the “Company”) has become a leading developer,
manufacturer and supplier of printing, imaging, device management, managed print services (“MPS”), document workflow and, more
recently, business process and content management solutions. The Company operates in the office printing and imaging, and
enterprise content and business process management (“ECM and BPM”), document output management (“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 the associated workflow
software solutions and services. The major customers for Lexmark’s products are large corporations, small and medium businesses
(“SMBs”), and the public sector. The Company’s products are principally sold through resellers, retailers and distributors in various
countries in North and South America, Europe, the Middle East, Africa, Asia, the Pacific Rim and the Caribbean.
Revisions were made to the Consolidated Statements of Cash Flows for the years ended December 31, 2012 and December 31, 2011
to properly reflect the amortization and accretion of premiums and discounts and the realized gains and losses related to the
Company’s marketable securities. These revisions increased Net cash flows provided by operating activities for 2012 and 2011 by
$8.2 million and $10.0 million, respectively, and increased Net cash flows used for investing activities by the same amounts. The
revision to operating activities impacted Other in the Adjustments to reconcile net earnings to net cash provided by operating
activities and Other assets and liabilities in the Changes in assets and liabilities, net of acquisitions and divestitures by $4.1 million
each for 2012 and $6.8 million and $3.2 million, respectively, for 2011. The revision to investing activities impacted Proceeds from
sales of marketable securities and Proceeds from maturities of marketable securities as an increase of $0.2 million and a decrease of
$8.4 million, respectively, for 2012 and decreases of $6.9 million and $3.1 million, respectively, for 2011. The revisions in the
Consolidated Statements of Cash Flows noted above represent errors that are not deemed material, individually or in the aggregate, to
the current or prior periods consolidated financial statements.
2. SIGNIFICANT ACCOUNTING POLICIES
The Company’s significant accounting policies are an integral part of its financial statements.
Principles of Consolidation:
The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. All significant
intercompany accounts and transactions have been eliminated.
Use of Estimates:
The preparation of consolidated financial statements in conformity with accounting principles generally accepted (“GAAP”) in the
United States of America (“U.S.”) requires management to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenue and expenses, as well as disclosures regarding contingencies. On an ongoing basis, the Company evaluates its
estimates, including those related to customer programs and incentives, product returns, doubtful accounts, inventories, stock-based
compensation, goodwill, intangible assets, income taxes, warranty obligations, copyright fees, restructurings, pension and other
postretirement benefits, contingencies and litigation, long-lived assets, and fair values that are based on unobservable inputs
significant to the overall measurement. Lexmark bases its estimates on historical experience, market conditions, and various other
assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.
Foreign Currency Translation and Remeasurement:
Assets and liabilities of non-U.S. subsidiaries that operate in a local currency environment are translated into U.S. dollars at period-
end exchange rates. Income and expense accounts are translated at average exchange rates prevailing during the period. Adjustments
arising from the translation of assets and liabilities, changes in stockholders’ equity and results of operations are accumulated as a
separate component of Accumulated other comprehensive earnings (loss) in stockholders’ equity.
Certain non-U.S. subsidiaries use the U.S. dollar as their functional currency. Local currency transactions of these subsidiaries are
remeasured using a combination of current and historical exchange rates. The effect of re-measurement is included in net earnings.
63