SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Security and Exchange Act of 1934
(Mark One):
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
for the transition period from ________________ to ___________________
Commission file number 1-14050
A. Full title of the Plan and the address of the Plan, if different
from that of the issuer named below:
Lexmark Savings Plan
B. Name of issuer of securities held pursuant to the Plan and the
address of its principal executive office:
Lexmark International Group, Inc.
One Lexmark Centre Drive
740 New Circle Road NW
Lexington, Kentucky 40550
1
<PAGE>
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the Plan Administrator has duly caused this annual report to be signed on
its behalf by the undersigned hereunto duly authorized.
LEXMARK SAVINGS PLAN
Date: June 19, 1997 BY: /s/ Terrence P. Chin
---------------------- --------------------
Terence P. Chin
Treasurer
Lexmark International Group, Inc.
2
<PAGE>
Form 11-K
Lexmark Savings Plan
December 31, 1996
--------
Pages
Report of Independent Accountants 1
Financial Statements:
Statement of Net Assets Available for Plan Benefits with Fund
Information as of December 31, 1996 2
Statement of Net Assets Available for Plan Benefits with Fund
Information as of December 31, 1995 3
Statement of Changes in Net Assets Available for Plan Benefits with
Fund Information for the year ended December 31, 1996 4
Statement of Changes in Net Assets Available for Plan Benefits with
Fund Information for the year ended December 31, 1995 5
Notes to Financial Statements 6-13
Supplemental Schedules:
Item 27(a) Schedule of Assets Held for Investment Purposes
as of December 31, 1996 14
Item 27(d) Schedule of Reportable Transactions for the year
ended December 31, 1996 15
Exhibit:
Consent of Independent Accountants
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Plan Administrator of
the Lexmark Savings Plan
Lexington, Kentucky
We have audited the accompanying statements of net assets available for plan
benefits of the Lexmark Savings Plan (the "Plan") as of December 31, 1996 and
1995, and the related statements of changes in net assets available for plan
benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits as of December
31, 1996 and 1995, and the changes in net assets available for plan benefits for
the years then ended in conformity with generally accepted accounting
principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes as of December 31, 1996 and reportable transactions for
the year ended December 31, 1996 (included on pages 14 and 15) are presented for
the purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The fund information in the
statements of net assets available for plan benefits and the statements of
changes in net assets available for plan benefits is presented for purposes of
additional analysis, rather than to present the net assets available for plan
benefits and changes in net assets available for plan benefits of each fund. The
supplemental schedules and fund information have been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ Coopers & Lybrand L.L.P.
Lexington, Kentucky
May 2, 1997
1
<PAGE>
LEXMARK SAVINGS PLAN
Statement of Net Assets Available for Plan Benefits with Fund Information
December 31, 1996
<TABLE>
<CAPTION>
Large Small Balanced International Lexmark
Money Company Fixed Company Asset Index Stock
Market Fund Index Fund Income Fund Index Fund Fund Fund Fund Loan Fund Total
----------- ----------- ----------- ----------- -------- ------------- ------- --------- ----------
ASSETS
Investments, at fair
value:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Common trust funds $5,984,279 $48,834,392 $ 158,545 $25,355,514 $7,482,198 $4,107,328 $ 313,566 $ 92,235,822
Participant loans $6,072,413 6,072,413
Lexmark Class A
common stock 18,305,872 18,305,872
Guaranteed investment
contracts, at
contract value 69,526,648 69,526,648
---------- ----------- ----------- ----------- ---------- ---------- ----------- ---------- ------------
Total investments 5,984,279 48,834,392 69,685,193 25,355,514 7,482,198 4,107,328 18,619,438 6,072,413 186,140,755
Interest receivable 27,281 680 396,952 268 92 45 1,338 426,656
Receivable for sale
of investment 65,000 65,000
Contribution
receivable 1,074,147 1,074,147
---------- ----------- ----------- ----------- ---------- ---------- ----------- ---------- ------------
Total assets 6,011,560 48,835,072 70,082,145 25,355,782 7,482,290 4,172,373 19,694,923 6,072,413 187,706,558
LIABILITIES
Payable for
purchase of
investments 394,555 65,000 459,555
---------- ----------- ----------- ----------- ---------- ---------- ----------- ---------- ------------
NET ASSETS AVAILABLE
FOR FUND/PLAN
BENEFITS $6,011,560 $48,835,072 $69,687,590 $25,355,782 $7,482,290 $4,107,373 $19,694,923 $6,072,413 $187,247,003
========== =========== =========== =========== ========== ========== =========== ========== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
LEXMARK SAVINGS PLAN
Statement of Net Assets Available for Plan Benefits with Fund Information
December 31, 1995
<TABLE>
<CAPTION>
Lexmark
Junior
Large Small Balanced International Preferred
Money Company Fixed Company Asset Index Stock
Market Fund Index Fund Income Fund Index Fund Fund Fund Fund Loan Fund Total
----------- ----------- ----------- ----------- -------- ------------- ------- --------- ----------
ASSETS
Investments, at fair
value:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Common trust funds $5,546,732 $34,930,430 $ 41,786 $18,678,148 $4,191,330 $2,135,328 $ 1,669 $ 65,525,423
Participant loans $5,990,880 5,990,880
Lexmark Class A
common stock 13,687,500 13,687,500
Guaranteed investment
contracts, at
contract value 71,015,974 71,015,974
---------- ----------- ----------- ----------- ---------- ---------- ----------- ---------- ------------
Total investments 5,546,732 34,930,430 71,057,760 18,678,148 4,191,330 2,135,328 13,689,169 5,990,880 156,219,777
Interest receivable 27,943 427,035 25 31,299 486,302
Cash 326 2,949 33,920 1,166 12,690 619 51,670
---------- ----------- ----------- ----------- ---------- ---------- ----------- ---------- ------------
Total assets 5,575,001 34,933,379 71,518,715 18,679,314 4,204,020 2,135,947 13,689,194 6,022,179 156,757,749
LIABILITIES
Payable for
purchase of
investments 426,606 426,606
---------- ----------- ----------- ----------- ---------- ---------- ----------- ---------- ------------
NET ASSETS AVAILABLE
FOR FUND/PLAN
BENEFITS $5,575,001 $34,933,379 $71,092,109 $18,679,314 $4,204,020 $2,135,947 $13,689,194 $6,022,179 $156,331,143
========== =========== =========== =========== ========== ========== =========== ========== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
LEXMARK SAVINGS PLAN
Statement of Changes in Net Assets Available for Plan Benefits with Fund
Information for the year ended December 31, 1996
<TABLE>
<CAPTION>
Large Small Balanced International
Money Company Fixed Company Asset Index
Market Fund Index Fund Income Fund Index Fund Fund Fund
----------- ----------- ----------- ----------- -------- -------------
Transfers:
<S> <C> <C> <C> <C> <C> <C>
Interfund transfers $ (929,000) $ 2,803,456 $(5,255,844) $ 1,115,792 $1,815,195 $1,013,318
Investment income:
Interest income 301,903 3,556 4,716,523 2,192 952 812
Net appreciation in
value of investments 8,673,642 3,661,281 922,395 379,031
Contributions:
Employer 277,682 594,993 752,194 388,289 132,315 90,634
Participants 1,348,063 3,406,544 3,980,611 2,333,171 746,963 569,214
Participant loan
activity:
Participant loans (160,078) (650,643) (1,491,843) (394,379) (132,095) (51,922)
Participant loan
payments 103,108 806,062 1,325,607 469,072 209,754 117,387
Distributions to
withdrawing
participants (480,390) (1,576,209) (5,223,951) (789,214) (361,757) (125,294)
Administrative
expenses (24,729) (159,708) (207,816) (109,736) (55,452) (21,754)
---------- ----------- ----------- ----------- ---------- ----------
Net increase(decrease)
in fund/plan equity 436,559 13,901,693 (1,404,519) 6,676,468 3,278,270 1,971,426
Net assets available for
fund/plan benefits:
Beginning of year 5,575,001 34,933,379 71,092,109 18,679,314 4,204,020 2,135,947
---------- ----------- ----------- ----------- ---------- ----------
End of year $6,011,560 $48,835,072 $69,687,590 $25,355,782 $7,482,290 $4,107,373
========== =========== =========== =========== ========== ==========
</TABLE>
Lexmark
Junior
Lexmark Preferred
Stock Stock
Fund Fund Loan Fund Total
------- -------- --------- -----
Transfers:
Interfund transfers $14,717,921 $(15,280,838) -
Investment income:
Interest income 104,618 260 $ 472,840 $ 5,603,656
Net appreciation in
value of investments 4,134,672 2,803,424 20,574,445
Contributions:
Employer 1,119,975 3,356,082
Participants 168,683 12,553,249
Participant loan
activity:
Participant loans (55,015) 2,935,975 -
Participant loan
payments 94,452 (3,125,442) -
Distributions to
withdrawing
participants (552,473) (1,212,040) (233,139) (10,554,467)
Administrative
expenses (37,910) (617,105)
----------- ----------- ---------- ------------
Net increase(decrease)
in fund/plan equity 19,694,923 (13,689,194) 50,234 30,915,860
Net assets available for
fund/plan benefits:
Beginning of year 13,689,194 6,022,179 156,331,143
----------- ----------- ---------- ------------
End of year $19,694,923 $ 0 $6,072,413 $187,247,003
=========== =========== ========== ============
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
LEXMARK SAVINGS PLAN
Statement of Changes in Net Assets Available for Plan Benefits with Fund
Information for the year ended December 31, 1995
<TABLE>
<CAPTION>
Lexmark
Junior
Large Small Balanced International Preferred
Money Company Fixed Company Asset Index Stock
Market Fund Index Fund Income Fund Index Fund Fund Fund Fund Loan Fund Total
----------- ----------- ----------- ----------- -------- ------------- ------- --------- ----------
Transfers:
Interfund
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
transfers $(1,044,738) $ 3,637,866 $(9,014,509) $ 1,443,040 $3,404,051 $1,574,290 -
Investment income:
Interest
income 335,430 661 5,193,942 469 124 869 $ 1,030 $ 396,530 $ 5,929,055
Net appreciation
in value of
investments 8,487,802 4,003,358 359,116 217,848 2,187,500 15,255,624
Contributions:
Employer 244,908 448,528 1,030,710 296,940 64,346 54,392 2,139,824
Participants 1,181,879 2,540,056 5,542,759 1,757,666 387,179 345,482 11,755,021
Participant loan
activity:
Participant loans (183,024) (779,459) (2,180,361) (470,096) (77,512) (66,847) 3,757,299 -
Participant loan
payments 109,833 498,979 1,526,180 299,270 105,765 66,219 (2,606,246) -
Distributions to
withdrawing
participants (278,482) (583,722) (1,391,936) (291,137) (27,416) (49,836) (25,785) (88,640) (2,736,954)
Administrative
expenses (24,934) (97,408) (171,273) (71,839) (11,633) (6,470) (383,557)
---------- ----------- ----------- ----------- ---------- ---------- ----------- ---------- ------------
Net increase in
fund/plan equity 340,872 14,153,303 535,512 6,967,671 4,204,020 2,135,947 2,162,745 1,458,943 31,959,013
Net assets
available for
fund/plan
benefits:
Beginning of year 5,234,129 20,780,076 70,556,597 11,711,643 11,526,449 4,563,236 124,372,130
---------- ----------- ----------- ----------- ---------- ---------- ----------- ---------- ------------
End of year $5,575,001 $34,933,379 $71,092,109 $18,679,314 $4,204,020 $2,135,947 $13,689,194 $6,022,179 $156,331,143
========== =========== =========== =========== ========== ========== =========== ========== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Plan Description:
The following description of the Lexmark Savings Plan (the "Plan")
provides only general information.
(a) General
-------
The Plan is a defined contribution plan that covers all regular
full-time employees of the U.S. subsidiaries of Lexmark International
Group, Inc.(the "Company"). To be eligible to participate in the Plan
employees must have one year of service and 1,000 hours of service.
The number of participants in each fund as of December 31, 1996 and
1995 is as follows: 1996 1995
Money Market Fund 1,206 1,118
Large Company Index Fund 2,009 1,636
Fixed Income Fund 2,091 2,262
Small Company Index Fund 1,593 1,248
Balanced Asset Fund 594 411
International Index Fund 593 408
Lexmark Junior Preferred Stock Fund 0 3,042
Lexmark Stock Fund 2,547 0
Loan Fund 1,117 1,091
The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA). Participants should refer to the
Company publication, "You and Your Company" for more complete
information.
(b) Investment Funds
----------------
The Plan consists of seven active investment options: Money Market,
Large Company Index, Fixed Income, Small Company Index, Balanced
Asset, International Index and Lexmark Stock Funds. The Money Market
Fund is represented by a diversified portfolio of high-quality,
short-term money market securities whose return follows current
market interest rates. The Large Company Index Fund is represented
principally by a common trust fund comprised of investments in common
stocks that are expected to produce results that approximate the
performance of the Standard & Poor's Composite Index of 500 Stocks.
The Fixed Income Fund is represented principally by investments in
instruments providing a fixed rate of return over a specific period
of time. Investments in this fund are invested in high-quality
financial instruments or deposited with one or more financial
institutions, banks or insurance companies that have agreed to
guarantee principal and to pay a fixed rate of interest during a
fixed term of one or more years. The Small Company Index Fund is
represented principally by investments in mutual funds that are
expected to produce results
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
1. Plan Description, continued:
(b) Investment Funds, continued
----------------
that approximate the performance of the medium and small-company
common stocks generally not included in the Standard & Poor's 500
Index. The Balanced Asset Fund is represented by a diversified
portfolio of stocks, bonds, and money market instruments. The
International Index Fund is represented principally by securities in
major stock markets in Europe, Australia, Latin America and the Far
East to provide growth potential and diversification. The Lexmark
Stock Fund is represented principally by Lexmark Class A common
stock.
The Lexmark Stock Fund was made available to participants as an
additional investment option on January 1, 1996. In May 1996 the
Lexmark Junior Preferred Stock Fund was eliminated and the Class A
common stock in the fund was transferred to the Lexmark Stock Fund.
The Loan Fund is not an investment option, but is a fund used to
record loans to participants and any activity related to these loans.
(c) Contributions
-------------
The Plan is funded by voluntary employee pretax contributions up to a
maximum of 12% of total annual eligible compensation. The
contributions for a participant are made by payroll deduction and are
determined for each pay period by multiplying the participant
contribution rate then in effect by his/her eligible compensation for
such period.
A participant can designate the proportions in which his/her pretax
contributions are allocated among the Plan's active investment funds.
The minimum allocation to each fund is 5%.
The Company matches employee pretax contributions in an amount equal
to 30% of the first 5% the employee contributes per pay period.
Matching contributions are invested in the same investment funds and
in the same proportions as designated by the participant. Effective
November 27, 1995, the Company announced an enhanced Company matching
contribution based on business results for each fiscal year, with
payout, if any, in the first quarter of the following year. The first
year for this enhanced match was 1996 for which $1,074,147 has been
accrued in these financial statements and was subsequently paid in
1997.
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
1. Plan Description, continued:
(d) Allocations to Participants
---------------------------
Contributions and earnings of the Plan are allocated to the accounts
of the participants on a semi-monthly basis. Each participant's value
in the net assets of the active investment funds is based upon the
assignment of units. The number of units and the net asset value per
unit in the funds as of December 31, 1996 and 1995 are as follows:
1996
-----------------------------
Net Asset
Units Value Per Unit
Money Market Fund 4,641,077 $1.30
Large Company Index Fund 21,264,926 $2.30
Fixed Income Fund 46,335,971 $1.50
Small Company Index Fund 11,114,734 $2.28
Balanced Asset Fund 5,398,858 $1.39
International Index Fund 3,144,674 $1.31
Lexmark Stock Fund 12,107,358 $1.63
Loan Fund 5,767,726 $1.05
1995
--------------------------
Net Asset
Units Value Per Unit
Money Market Fund 4,497,042 $1.24
Large Company Index Fund 18,971,536 $1.84
Fixed Income Fund 49,543,661 $1.43
Small Company Index Fund 9,739,864 $1.92
Balanced Asset Fund 3,614,971 $1.16
International Index Fund 1,862,746 $1.15
Lexmark Junior Preferred Stock Fund 6,299,731 $2.17
Loan Fund 6,137,313 $0.98
(e) Withdrawals and Vesting
-----------------------
Prior to April 27, 1995 participants vested immediately in their
contributions and matching contributions made on their behalf by the
Company. On April 27, 1995 the Plan was amended to change the vesting
policy to require employees hired after June 30, 1994 and who were
not participants in the Plan as of June 30, 1995 to have five years
of service before becoming fully vested in the employer matching
contributions. A participant who has reached age 59 1/2 may withdraw
all or part of his/her contributions and matching contributions in
such a manner as prescribed by the plan administrator. In the event
of normal retirement or permanent disability, the funds may be
withdrawn immediately. The participant may elect one of two options
for the distribution of funds as prescribed by the Plan or may defer
either option until a later date. The two options available to these
participants are (1) to receive their distribution in the form of a
lump sum cash distribution or (2) to receive a specified number of
annual cash installments, over a period of up to ten years. In the
event that a participant dies before the balance of his/her accounts
has been distributed, the remaining balance of the accounts shall be
distributed to the participant's beneficiaries in a lump sum cash
distribution.
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
1. Plan Description, continued:
(e) Withdrawals and Vesting, continued
-----------------------
Upon termination of employment for any reason other than retirement,
disability or death, and providing that the value of the
participant's accounts is in excess of $3,500, the participant may
elect to receive an immediate distribution of his/her accounts in a
lump sum cash distribution or he/she may elect to defer receipt of
such lump sum cash distribution until a later date. Hardship
withdrawals are available under provisions of the Plan if approved by
the trustee of the Plan but are limited to the employee's
contributions; earnings, Company stock and the Company's matching
contributions are not eligible for hardship withdrawals. A
participant may not contribute to the Plan during the twelve-month
period following the hardship withdrawal.
Regular full-time Company employees and employees on approved leaves
of absence may borrow funds from their Plan account subject to the
provisions of the Plan. A participant is eligible to have up to two
outstanding loans at a given time and may borrow up to half the value
of his/her Plan account (including any current loan balance), but no
more than $50,000 less their highest outstanding loan balance during
the preceding 12-month period. An administrative fee is charged for
the origination of the loan and is deducted from the loan check.
Loans are granted for a minimum term of one year, or in whole year
increments up to a maximum of four years. The loan bears a fixed rate
of interest as determined by the plan administrator based upon
comparable rates offered by commercial lending institutions. Twice a
month a payroll deduction is made for payment of the loan. Payments
of principal and interest are allocated on a monthly basis to the
investment funds elected for current contributions. A participant may
continue to contribute to the Plan while he/she has an outstanding
loan balance, providing the loan is not in default.
(f) Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the dates of the financial statements and the changes in net assets
available for plan benefits during the reporting periods. Actual
results could differ from those estimates.
2. Summary of Significant Accounting Policies:
The following are significant accounting policies followed by the Plan:
(a) Valuation of Investments
------------------------
Shares in common trust funds are valued at the quoted net asset value
per unit.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
2. Summary of Significant Accounting Policies, continued:
(a) Valuation of Investments, continued
------------------------
Investments in guaranteed investment contracts are stated at contract
value, which represents deposits received and interest earned at
guaranteed rates. The fair value of these contracts approximates the
contract value at December 31, 1996 and 1995. Fair value is
determined by discounting the contracts using current market rates. A
penalty or adjustment may be imposed for early withdrawal or
termination of certain guaranteed investment contracts.
The Lexmark Class A common stock is stated at fair value as quoted by
the New York Stock Exchange.
Fair value of investments, as quoted, is based on various factors
including the current interest rate environment and the general
strength of the economy. Changes in the fair value could
significantly affect the Plan's net assets available for plan
benefits.
(b) Net Appreciation (Depreciation)
-------------------------------
The Plan presents in the statement of changes in net assets available
for plan benefits the net appreciation (depreciation) in the fair
value of its investments which consists of the realized gains or
losses and the unrealized appreciation or depreciation on those
investments.
(c) Distributions to Withdrawing Participants
-----------------------------------------
Distributions to withdrawing participants are recorded when paid.
3. Investments:
The Plan's investments (including investments bought, sold, and held
during the period) appreciated in value during the years ended December
31, 1996 and 1995 as follows:
1996 1995
Large Company Index Fund $ 8,673,642 $ 8,487,802
Small Company Index Fund 3,661,281 4,003,358
Balanced Asset Fund 922,395 359,116
International Index Fund 379,031 217,848
Lexmark Stock Fund 4,134,672
Lexmark Junior Preferred Stock Fund 2,803,424 2,187,500
---------- -----------
$20,574,445 $15,255,624
=========== ===========
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
3. Investments, continued:
The investments that represent 5% or more of the Plan's net assets at
December 31, 1996 and 1995 are as follows:
1996 1995
Investments at Fair Value:
Lexmark Class A common stock
662,656 and 750,000 shares
respectively $ 18,305,872 $ 13,687,500
Bankers Trust Company
Pyramid Equity Index Fund,
28,610 and 25,294 shares
respectively 48,631,930 34,930,430
Pyramid Russell 2500 Index Fund
99,977 and 87,277 shares,
respectively 25,236,829 18,678,148
Other investments less than 5% of
net assets 24,439,476 17,907,725
Investments at Contract Value:
Participation in Group Annuity
Contract #G-26156.01 with
Pacific Mutual Life Insurance
Company 11,076,307
Commonwealth Life Contract
#ADA00024 with Commonwealth
Life Insurance Company 10,102,533 10,119,578
Participation in Group Annuity
Contract #214760 with Citibank 9,766,406 9,174,642
Participation in Group Annuity
Contract #5918 with John Hancock
Mutual Life Insurance Company 14,182,331
New York Life Placement Contract
#30034 with New York Life
Insurance Company 10,906,750
Other investments less than 5%of
net assets 38,581,402 26,632,673
------------ ------------
Total Investments $186,140,755 $156,219,777
============ ============
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
3. Investments, continued:
The crediting interest rate as of December 31, 1996 and 1995 and the
average yield for the years then ended for each guaranteed investment
contract are as follows:
Average
annual yield/
Crediting
Guaranteed Investment Contracts Interest rate
Participation in Group Annuity Contract #5150 with
Allstate Life Insurance Company 8.5%
Participation in Group Annuity Contract #5918 with
John Hancock Mutual Life Insurance Company 8.7%
Commonwealth Life Contract #ADA00024 with
Commonwealth Life Insurance Company 6.7%
New York Life Placement Contract #30034 with
New York Life Insurance Company 7.4%
Commonwealth Placement Contract #ADA00558FR with
Commonwealth Life Insurance Company 5.9%
Participation in Group Annuity Contract #G-26156.01
with Pacific Mutual Life Insurance Company 7.5%
Benefits Assessable Securities Investment Contract
(BASIC) with Bankers Trust Company 7.5%
Participation in Group Annuity Contract #214760 with
Citibank 6.5%
Participation in Group Annuity Contract #51365 with
TransAmerica Occidental Life Insurance Company 6.3%
Participation in Group Annuity Contract #8617 with
John Hancock Mutual Life Insurance Company 6.9%
These rates are net of investment manager fees which are automatically
deducted from the fund's interest income according to the terms of the
Investment Management Agreement.
4. Administrative Expenses:
Expenses for administration of the Plan are paid from the appropriate
fund assets. Certain administrative services were provided at no cost to
the Plan by the Company.
5. Income Tax Status:
The Plan qualifies within the meaning of Section 401(a) and 401(k) of the
Internal Revenue Code of 1986, (the "Code"), as amended, and the trust is
exempt from tax under Section 501(a) of the Code.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
5. Income Tax Status, continued:
Participants will not be subject to income tax withholding for deferred
compensation, unless required by state or local authority.
A participant will not be subject to federal income tax on employer
contributions made to a participant's account, or on income accruing to
the account, until distribution or withdrawal of the account, in whole or
in part.
6. Plan Termination:
The Company has the right under the Plan to discontinue its contribution
at any time and to terminate the Plan subject to the provisions set forth
in ERISA.
7. Concentration of Credit Risk:
Plan assets are invested in various financial instruments that contain
some degree of credit risk. Approximately 37% of Plan assets are invested
in guaranteed investment contracts and approximately 10% of Plan assets
are invested in Lexmark Class A common stock. The Plan does not obtain
collateral or other security to support these investments.
8. Reconciliation to Form 5500:
Reconciliation of audited financial statements to Form 5500 items 31g and
32e(1) for the year ended December 31, 1996:
Distributions to withdrawing paraticipants per
financial statements $10,554,467
Benefit claims payable per item 31g on the 1995
Form 5500 (167,931)
-----------
Benefit payments directly to participants per
item 32e(1) on the 1996 Form 5500 $10,386,536
===========
9. Subsequent Event:
The Plan's administrators have decided to change the Plan's trustee to
Fidelity Institutional Retirement Services Company from Bankers Trust
Company. In accordance with this change, the assets invested in common
funds administered by Bankers Trust Company will be moved to common funds
administered by Fidelity Investments.
13
<PAGE>
SUPPLEMENTAL SCHEDULES
-------
<PAGE>
LEXMARK SAVINGS PLAN
PLAN #002 EIN #22-3074422
Item 27(a) Schedule of Assets Held for Investment Purposes
December 31, 1996
<TABLE>
<CAPTION>
Par or
Identity of Issue, Maturity Value/
Borrower, Lessor, Description of Number of Current
or Similar Party Investment Shares Cost Value
<S> <C> <C> <C>
* Bankers Trust Company Pyramid Discretionary Cash
Fund 6,367,416 $ 6,367,416 $ 6,367,416
* Bankers Trust Company Pyramid Directed Account
Cash Fund 472,110 472,110 472,110
* Bankers Trust Company Pyramid Equity Index Fund 28,610 26,097,484 48,631,930
* Bankers Trust Company Pyramid Russell 2500
Index Fund 99,977 16,870,581 25,236,829
* Bankers Trust Company Pyramid Asset Management
Fund 50,482 6,244,811 7,450,552
* Bankers Trust Company Pyramid Daily Japanese
Equity Index Fund 12,052 1,150,546 1,026,222
* Bankers Trust Company Pyramid Daily Non-Japanese
Equity Index Fund 20,780 2,429,059 3,050,763
* Participant Loans Participant loans at prime
plus 1.5% $6,072,413 0 6,072,413
* Lexmark Class A common stock 662,656 6,231,048 18,305,872
* Bankers Trust Company Benefit Accessible Securities
Investment Contract
(BASIC) at 7.55% with
maturity on April 15, 2002 $ 2,367,469 2,367,469 2,367,469
Citibank Participation in Group Annuity
Contract #214760
at 6.6% with maturity
on March 31, 1998 $ 9,766,406 9,766,406 9,766,406
Allstate Life Insurance
Company Participation in Group
Annuity Contract #5150
at 8.6% with maturity on
December 31, 1998 $ 3,760,384 3,760,384 3,760,384
John Hancock Mutual
Life Insurance Company Participation in Group Annuity
Contract #5918 at 8.95%
with maturity on
September 1, 1998 $ 5,137,786 5,137,786 5,137,786
Commonwealth Life
Insurance Company Commonwealth Life Contract
#ADA00024 at 6.85%
with maturity on
June 15, 2001 $10,102,533 10,102,533 10,102,533
New York Life Insurance
Company New York Life Placement
Contract #30034 at 7.8% with
maturity on June 15, 1999 $ 8,198,701 8,198,701 8,198,701
Commonwealth Life
Insurance Company Commonwealth Placement
Contract #ADA00558FR at
6.0% with maturity on
December 14, 2000 $ 8,207,444 8,207,444 8,207,444
Pacific Mutual Life
Insurance Company Participation in Group Annuity
Contract #G-26156.01 at
7.55% with maturity on
June 20, 2000 $11,076,307 11,076,307 11,076,307
TransAmerica
Occidential Life
Insurance Company Participation in Group Annuity
Contract #51365 at 6.35%
with maturity on
February 17, 2001 $ 5,173,114 5,173,114 5,173,114
John Hancock Mutual
Life Insurance Company Participation in Group Annuity
Contract #8617 at 6.95%
with maturity on
December 20, 1999 $ 5,736,504 5,736,504 5,736,504
------------ ------------
$135,389,703 $186,140,755
============ ============
</TABLE>
* Party-in-interest to the Plan
14
<PAGE>
LEXMARK SAVINGS PLAN
PLAN #002 EIN #22-3074422
Item 27(d) Schedule of Reportable Transactions*
for the year ended December 31, 1996
<TABLE>
<CAPTION>
Fair Value of
Asset on
Purchase Selling Cost of Transaction Gain on
Identity of Party Description of Asset Price Price Asset Date Sale
---------------- -------------------------------------- -------- ------- ------- ------------- -------
<S> <C> <C> <C> <C> <C>
** Bankers Trust Company Pyramid Discretionary Cash Fund $13,621,944 $13,621,944 $13,621,944
** Bankers Trust Company Pyramid Discretionary Cash Fund $12,801,261 $12,801,261 $12,801,261
** Bankers Trust Company Pyramid Directed Account Cash Fund $24,555,032 $24,455,032 $24,455,032
** Bankers Trust Company Pyramid Directed Account Cash Fund $24,126,376 $24,126,376 $24,126,376
** Bankers Trust Company Pyramid Equity Index Fund $ 8,133,138 $ 8,133,138 $ 8,133,138
** Bankers Trust Company Pyramid Equity Index Fund $ 3,105,281 $ 1,744,973 $ 3,105,281 $1,360,308
John Hancock Mutual Participation in Group Annuity $ 741,470 $ 741,470 $ 741,470
Life Insurance Co. Contract #5918 at 8.65% with
maturity on September 1, 1998
John Hancock Mutual Participation in Group Annuity $ 9,786,015 $ 9,786,015 $ 9,786,015
Life Insurance Co. Contract #5918 at 8.65% with
maturity on September 1, 1998
Pacific Mutual Life Participation in Group Annuity $ 5,752,242 $ 5,752,242 $ 5,752,242
Insurance Company Contract #G-26156.01 at 7.55% with
maturity on June 20, 2000
Pacific Mutual Life Participation in Group Annuity $ 2,296,000 $ 2,296,000 $ 2,296,000
Insurance Company Contract #G-26156.01 at 7.55% with
maturity on June 20, 2000
TransAmerica Occidental Participation in Group Annuity $11,337,114 $11,337,114 $11,337,114
Life Insurance Company Contract #51365 at 6.35% with
maturity on February 17, 2001
TransAmerica Occidental Participation in Group Annuity $ 6,164,000 $ 6,164,000 $ 6,164,000
Life Insurance Company Contract #51365 at 6.35% with
maturity on February 17, 2001
** Lexmark Class A common stock $ 3,789,880 $ 3,789,880 $ 3,789,880
** Lexmark Class A common stock $ 6,109,605 $ 2,958,832 $ 6,109,605 $3,150,773
</TABLE>
* All individual transactions or series of transactions which, when aggregated,
exceed 5% of plan assets at January 1, 1996.
** Party-in-interest to the Plan
15
CONSENT OF INDEPENDENT ACCOUNTANTS
--------
We consent to the incorporation by reference in the Registration Statement on
Form S-8 of Lexmark International Group, Inc. of our report dated May 2, 1997 on
our audits of the net assets available for plan benefits of the Lexmark Savings
Plan as of December 31, 1996 and 1995 and the related statements of changes in
net assets available for plan benefits for the years then ended, which report is
included in this Form 11-K.
/s/ Coopers & Lybrand L.L.P.
Lexington, Kentucky
June 16, 1997
