Lexmark 2015 Annual Report Download - page 31

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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/CCM, intelligent content capture and data extraction and enterprise search software markets. Lexmark’s products include laser
printers and multifunction devices, dot matrix printers and the associated supplies/solutions/services. They also include an integrated
suite of ECM, BPM and DOM/CCM that includes case management, electronic signature, process analytics, information and
application integration, intelligent content capture and data extraction, enterprise search, medical imaging VNA software products and
solutions.
In April 2015, the Company announced a strategic rebranding action to unify and strengthen the market presence of the Company’s
information technology portfolio of enterprise software, print hardware and MPS. As part of the rebranding action, the Company
elected to change the name of its Perceptive Software segment to Lexmark Enterprise Software. Certain software products will still
include the Perceptive Software name.
The Company is managed along two operating segments: ISS and Enterprise Software.
 ISS offers a broad portfolio of color and monochrome 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, and in conjunction with
ISS’ development and manufacturing teams, are able to customize printing solutions to meet customer needs for printing
electronic forms, media handling, duplex printing, intelligent capture and other document workflow solutions. 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.
 Enterprise Software offers an integrated suite of ECM, BPM, DOM/CCM that includes case management, electronic
signature, process analytics, information and application integration, intelligent content capture and data extraction, enterprise
search software and medical imaging VNA software products and solutions. The ECM and BPM software and services
markets primarily serve business customers. Enterprise Software uses a direct to market sales and demand generation
approach, employing internal sales and marketing teams that are segmented by industry sector — specifically healthcare,
public sector (which includes higher education and government), and commercial, which spans areas such as retail, banking,
insurance and manufacturing. Enterprise Software also offers a channel partner program that allows authorized third-party
resellers to market and sell Enterprise Software products and solutions to a distributed market, as well as an OEM program
which includes Enterprise Software’s offerings within channel partners’ existing solutions to their customers. Enterprise
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
2015
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