LEXMARK INTERNATIONAL GROUP INC, S-3, 1998-03-11

LEXMARK INTERNATIONAL GROUP INC
S-3, 1998-03-11
COMPUTER & OFFICE EQUIPMENT

Previous: ITT CORP /NV/, 4, 1998-03-11

Next: INTEVAC INC, 10-K, 1998-03-11

<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 10, 1998
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

---------------

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

---------------

LEXMARK INTERNATIONAL GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 22-3074422
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
---------------
ONE LEXMARK CENTRE DRIVE
LEXINGTON, KENTUCKY 40550
(606) 232-2000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
VINCENT J. COLE, ESQ.
LEXMARK INTERNATIONAL GROUP, INC.
ONE LEXMARK CENTRE DRIVE
LEXINGTON, KENTUCKY 40550
(606) 232-2700
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE
OF AGENT FOR SERVICE)

COPIES TO:
<TABLE>
<CAPTION>
PAUL S. BIRD, ESQ. DAVID B. HARMS, ESQ. KEITH F. HIGGINS, ESQ.
<S> <C> <C>
DEBEVOISE & PLIMPTON SULLIVAN & CROMWELL ROPES & GRAY
875 THIRD AVENUE 125 BROAD STREET ONE INTERNATIONAL PLACE
NEW YORK, NEW YORK 10022 NEW YORK, NEW YORK 10004 BOSTON, MASSACHUSETTS 02110
(212) 909-6000 (212) 558-4000 (617) 951-7000
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box: [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with a dividend or
interest reinvestment plans, check the following box: [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering: [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]
---------------
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
AMOUNT PROPOSED MAXIMUM AGGREGATE AMOUNT OF
TITLE OF SECURITIES TO BE OFFERING PRICE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class Common Stock, par value
$.01 per share(3)................... 7,704,577 $43.56 $335,611,374.12 $99,006
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1)Includes up to shares subject to the Underwriters' over-allotment
options.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933 based on the
average of the high and low prices of the Class A Common Stock as
reported in the consolidated reporting system on March 6, 1998.
(3)Includes the Series A Junior Participating Preferred Stock purchase rights
associated with the Class A Common Stock.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

EXPLANATORY NOTE

This Registration Statement contains two forms of prospectuses: one to be
used in connection with a United States offering (the "U.S. Prospectus") and
one to be used in a concurrent international offering (the "International
Prospectus"). The U.S. Prospectus and the International Prospectus are
identical in all respects except that they contain different front, inside
front, and back cover pages and different descriptions of the plan of
distribution (contained under the caption "Underwriting" in both the U.S.
Prospectus and the International Prospectus), and the International Prospectus
also contains an additional section under the caption "Certain United States
Tax Consequences to Non-United States Holders." Pages for the International
Prospectus are separately designated.
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MARCH 10, 1998

7,704,577 SHARES

LEXMARK INTERNATIONAL GROUP, INC.

CLASS A COMMON STOCK
(PAR VALUE $.01 PER SHARE)
-----------

Of the 7,704,577 shares of Class A Common Stock offered, shares are
being offered hereby in the United States and shares are being
offered in a concurrent international offering outside the United States. The
public offering price and the aggregate underwriting discount per share will be
identical for both offerings. See "Underwriting". As of April 3, 1998 each
share of Class A Common Stock, including the shares offered hereby, will have
associated with it one right to purchase one one-hundredth of a share of the
Company's Series A Junior Participating Preferred Stock at a stipulated price
in certain circumstances relating to changes in ownership of the Company under
the Company's Rights Agreement.

All the shares of Class A Common Stock are being sold by the Selling
Stockholders. See "Selling Stockholders". The Company will not receive any of
the proceeds from the sale of the shares. In addition, the Company will
repurchase 2,000,000 shares of Class A Common Stock less any shares sold
pursuant to the over-allotment options from certain of the Selling Stockholders
at a price per share described herein. See "Certain Transactions and
Relationships".

The last reported sale price of the Class A Common Stock, which is listed
under the symbol "LXK", on the New York Stock Exchange on March 9, 1998 was
$42.62 per share. See "Price Range of Class A Common Stock and Dividend
Policy".

SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR CERTAIN CONSIDERATIONS RELEVANT TO
AN INVESTMENT IN THE CLASS A COMMON STOCK.

-----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
-----------

<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO SELLING
OFFERING PRICE DISCOUNT(1) STOCKHOLDERS(2)
-------------- ------------ -------------------
<S> <C> <C> <C>
Per Share....................... $ $ $
Total(3)........................ $ $ $
</TABLE>
- -----
(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933. See "Underwriting".
(2) Expenses of approximately $75,000 and $900,000 are payable by the Company
and the Selling Stockholders, respectively, in connection with the
offerings.
(3) The Selling Stockholders have granted the U.S. Underwriters an option for
30 days to purchase up to an additional shares at the public
offering price per share, less the underwriting discount, solely to cover
over-allotments. The Selling Stockholders have granted the International
Underwriters a similar option with respect to an additional shares
as part of the concurrent international offering. If such options are
exercised in full, the total initial public offering price, underwriting
discount and proceeds to Selling Stockholders will be $ ,
$ and $ , respectively. See "Underwriting".

-----------

The shares offered hereby are offered severally by the U.S. Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to
their right to reject any order in whole or in part. It is expected that the
shares will be ready for delivery in New York, New York, on or about March ,
1998, against payment therefor in immediately available funds.

GOLDMAN, SACHS & CO.

-----------

The date of this Prospectus is March , 1998.
<PAGE>

[COLOR PHOTOS OF SELECTED LEXMARK PRODUCTS]

2
<PAGE>

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
and Exchange Act of 1934, as amended ( the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
Regional Offices located at Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center, 7th
Floor, New York, New York 10048. Copies of such materials may also be obtained
upon written request from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C., 20549, at prescribed rates. The
Commission also maintains a Web Site at http://www.sec.gov. which contains
reports and other information regarding registrants that file electronically
with the Commission. In addition, such material may also be inspected and
copied at the offices of the New York Stock Exchange, Inc. (the "NYSE"), 20
Broad Street, New York, New York, 10005, on which the Class A Common Stock is
listed.

The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the shares (the "Shares") of its Class A
Common Stock, par value $.01 per share (the "Class A Common Stock"), being
offered hereby. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. Statements made
in this Prospectus as to the contents of any contract, agreement or other
document are not necessarily complete; with respect to each such contract,
agreement or other document filed as an exhibit to the Registration Statement,
reference is made to the exhibit for a more complete description of the matter
involved, and each such statement shall be deemed qualified in its entirety by
such reference. For further information with respect to the Company and the
Shares, reference is hereby made to the Registration Statement.

----------------

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed by the Company with the Commission pursuant to
the Exchange Act are incorporated herein by reference:
1.The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997.
2. The description of the Common Stock (as defined herein) of the Company,
which is contained in the Company's Registration Statement on Form 8-A
filed with the Commission on October 27, 1995, including any amendments
or reports filed for the purpose of updating such description.
3. The description of certain preferred stock purchase rights that have
attached to the Common Stock (as defined herein), which is contained in
the Company's Registration Statement on Form 8-A filed with the
Commission on February 27, 1998, including any amendments or reports
filed for the purpose of updating such description.
4. All other documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offerings of the Shares.

The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any or all of the
documents which are incorporated herein by reference, other than exhibits to
such information (unless such exhibits are specifically incorporated by
reference into such documents). Requests should be directed to the Company,
One Lexmark Centre Drive, Lexington, Kentucky 40550, Attention: Office of the
Secretary, telephone (606) 232-2700.

----------------

3
<PAGE>

Any statement contained in a document or a portion thereof which is
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent
that a statement contained herein or in any other subsequently filed document
or portion thereof which also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any statement so modified shall
not be deemed to constitute a part of this Prospectus except as so modified,
and any statement so superseded shall not be deemed to constitute part of this
Prospectus.

----------------

CERTAIN PERSONS PARTICIPATING IN THE OFFERINGS MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE CLASS A COMMON
STOCK, INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS
IN SUCH SECURITIES AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THE
OFFERINGS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".

4
<PAGE>

Lexmark International Group, Inc. ("LIG") is a Delaware corporation that has
as its only significant asset all the outstanding common stock of Lexmark
International, Inc., a Delaware corporation ("Lexmark International").
Hereinafter, "the Company" and "Lexmark" will refer to LIG, or to LIG and
Lexmark International, including its subsidiaries, as the context requires.
Unless otherwise indicated, all information set forth in this Prospectus
assumes no exercise of the over-allotment options to be granted to the
Underwriters by the Selling Stockholders. References herein to the "Common
Stock" refer to the Company's Class A Common Stock and its non-voting Class B
Common Stock, par value $.01 per share (the "Class B Common Stock"), and to
the "IPO" refer to the Company's initial public offering of Class A Common
Stock on November 15, 1995.

THE COMPANY

Lexmark is a global developer, manufacturer and supplier of laser and inkjet
printers and associated consumable supplies for the office and home markets.
Lexmark also sells dot matrix printers for printing single and multi-part
forms by business users. In 1997, revenues from the sale of printers and
associated printer supplies increased 10% from 1996 and accounted for 81% of
total Company revenues of approximately $2.5 billion.

The Company's installed base of printers supports a large and profitable
printer supplies business. Because consumable supplies must be replaced on
average one to three times a year, depending on type of printer and usage,
demand for laser and inkjet print cartridges is increasing at a higher rate
than their associated printer shipments. This is a relatively high margin,
recurring business that management expects to contribute to the stability of
Lexmark's earnings over time.

In addition to its core printer business, Lexmark develops, manufactures and
markets a broad line of other office imaging products which include supplies
for International Business Machines Corporation ("IBM") branded printers,
after-market supplies for original equipment manufacturer ("OEM") products,
and typewriters and typewriter supplies that are sold under the IBM trademark.
In 1997, revenues from the sale of other office imaging products decreased 7%
from 1996, primarily as a result of lower typewriter sales and lower
typewriter and impact printing supplies volume reflecting the continuing
decline of these markets, and accounted for 19% of total Company revenues.

Revenues derived from international sales, including exports from the United
States, represent over half of the Company's revenues. Lexmark's products are
sold in over 150 countries in North and South America, Europe, the Middle
East, Africa, Asia, the Pacific Rim and the Caribbean. As of December 31,
1997, the Company had approximately 8,000 employees worldwide.

The Company's principal executive offices are located at One Lexmark Centre
Drive, Lexington, Kentucky 40550. Telephone: (606) 232-2000.

PRINTERS AND ASSOCIATED SUPPLIES

Lexmark competes primarily in the markets for office desktop laser and color
inkjet printers--two of the fastest growing printer categories. Sales of
office desktop laser and color inkjet printers and their associated supplies
together represented approximately 86% and 87% of Lexmark's total printer and
associated supplies revenues in 1996 and 1997, respectively.

The Company's critical technology and manufacturing capabilities have
allowed Lexmark to effectively manage quality and to reduce its typical new
product introduction cycle times, for example, in the case of laser printers
from 24 months to approximately 12 to 16 months. Management believes its cycle
times are among the fastest in the industry and that these capabilities have
contributed to the Company's success over the last several years.

5
<PAGE>

LASER PRINTERS. Network laser printer growth is being driven by the office
migration from large mainframe computers to local area networks that link
various types of computers using a variety of protocols and operating systems.
This shift has created strong demand for office desktop laser printers with
network connectivity attributes. Laser printers that print at speeds of 11-30
pages per minute ("ppm") are referred to herein as "office desktop" or
"network" printers, while lower-speed (1-10 ppm) laser printers and inkjet
printers are referred to herein as "personal" printers. The Company's laser
printers primarily compete in the office desktop segment, which the Company
believes is one of the fastest growing segments of the laser printer market.

Lexmark develops and owns most of the technology for its desktop laser
printers and consumable supplies, which differentiates the Company from a
number of its major competitors, including Hewlett-Packard Company ("HP")
which purchases its laser engines from third parties. Lexmark's integration of
research and development, manufacturing and marketing has enabled the Company
to design laser printers with features desired by specific customer groups and
has resulted in substantial market presence for Lexmark within certain
industry segments such as banking, retail/pharmacy, automobile distribution
and health care.

INKJET PRINTERS. The color inkjet printer market, the fastest growing
segment of the personal printer market, is expanding rapidly due to growth in
personal computers at home and in business and the development of easy-to-use
color inkjet technology with high quality color and black print capability at
low prices. Based on data from industry analysts, management believes that the
inkjet market grew from 4 million units in 1992 to 33 million units in 1997
and will continue to grow substantially as a result of the increase in the
number of personal computers and as the inkjet market continues to shift from
monochrome to color and as inkjet printers continue to replace low-speed laser
printers. Lexmark introduced its first color inkjet printer using its own
technology in 1994 and has experienced strong sales growth through retail
outlets. The Company has increased its product distribution through retail
outlets, with the number of such outlets worldwide rising from approximately
5,000 retail outlets in 1995 to more than 15,000 in 1996, and remaining
relatively constant during 1997. The Company's ability to increase or maintain
its presence in the retail marketplace with its branded products may be
adversely affected as the Company becomes more successful in its sales and
marketing efforts for OEM opportunities. The Company made substantial capital
investments in its inkjet production capacity in 1995 and 1996 to address the
growing demand for its color inkjet printers.

SUPPLIES. The Company is currently the exclusive source for new print
cartridges for the laser and inkjet printers it manufactures. Management
expects that an increasing percentage of future Company earnings will come
from its consumable supplies business due to the consumer's continual usage
and replacement of cartridges. In 1996, the Company substantially expanded its
inkjet cartridge manufacturing capacity in both North America and Europe.

STRATEGY. Lexmark's laser printer strategy is to target fast growing
segments of the network printer market and to increase market share by
providing high quality, technologically advanced products at competitive
prices. To promote Lexmark brand awareness and market penetration, Lexmark
will continue to identify and focus on customer segments where Lexmark can
differentiate itself by supplying laser printers with features that meet
specific customer needs and represent the best total cost of printing
solution. Management intends to continue to develop and market products with
more functions and capabilities than comparably priced HP printers. The
Company's inkjet printer strategy is to generate demand for the Lexmark color
inkjet printer by offering high-quality products at competitive prices to
retail, business and OEM customers. Management expects that the Company's
associated printer supplies business will continue to grow as its installed
base of laser and inkjet printers increases.

OTHER OFFICE IMAGING PRODUCTS

The Company's other office imaging products category includes many mature
products such as supplies for IBM printers, typewriters and typewriter
supplies and other impact supplies that require

6
<PAGE>

little investment but provide a significant source of cash flow. The Company
introduced its after-market laser cartridges in May 1995 for the large
installed base of a range of laser printers sold by other manufacturers.
Management believes that the potential for an after-market laser cartridge
business is significant. The Company's strategy for other office imaging
products is to pursue the after-market OEM laser supplies opportunity while at
the same time managing its mature businesses for cash flow.

BACKGROUND

LIG was formed in 1990 by Clayton, Dubilier & Rice, Inc., a private
investment firm ("CD&R"), in connection with the acquisition (the
"Acquisition") of IBM Information Products Corporation (renamed Lexmark
International) from IBM. The Acquisition was completed in March 1991. Upon
completion of the Offerings (as defined herein) and the Share Repurchase (as
defined herein), The Clayton & Dubilier Private Equity Fund IV Limited
Partnership ("C&D Fund IV"), a private investment fund managed by CD&R, will
own shares of Class A Common Stock.

Since the Acquisition, Lexmark has made a successful transition from being a
division within a large corporation to an independent company with its own
line of Lexmark-branded products, its own sales and marketing relationships
and more efficient development and manufacturing processes. Important
achievements since the Acquisition include reducing cycle time for most new
product announcements by 30% to 50% and achieving a position of technological
leadership for laser printers while reducing debt from $940 million to $75
million as of December 31, 1997.

THE OFFERINGS

The offering of shares of Class A Common Stock being offered in the
United States (the "United States Offering") and the offering of shares
of Class A Common Stock being offered outside the United States (the
"International Offering") are referred to herein collectively as the
"Offerings". The closing of the International Offering is conditional upon the
closing of the United States Offering, and vice versa.

<TABLE>
<S> <C>
Class A Common Stock offered by the Selling Stockholders..... 7,704,577 shares
U.S. Offering............................................... shares
International Offering...................................... shares
Class A Common Stock to be outstanding after the
Offerings(1)................................................. shares
NYSE Symbol.................................................. LXK
</TABLE>
- --------
(1) Based upon shares outstanding at February 28, 1998. Does not include
7,420,582 shares of Class A Common Stock issuable pursuant to options.

The Company will not receive any of the proceeds from the sale of Shares in
the Offerings. See "Selling Stockholders".

The Company has agreed to repurchase 2,000,000 shares of Class A Common
Stock less any shares sold pursuant to the over-allotment options from certain
of the Selling Stockholders at a price per share equal to the lowest of $44.25
and the net proceeds per share to the Selling Stockholders (such repurchase,
the "Share Repurchase"). The Share Repurchase is conditioned upon at least
6,000,000 shares of Class A Common Stock being sold. See "Certain Transactions
and Relationships".
- --------
Lexmark(TM) is a registered trademark of Lexmark International. HP(R) is a
registered trademark of Hewlett-Packard Company. Apple(R) is a registered
trademark of Apple Computer, Inc. Canon(R) is a registered trademark of Canon
Kabushiki Kaisha. IBM(R) is a registered trademark of IBM. Xerox(R) is a
registered trademark of Xerox Corporation.

7
<PAGE>

RISK FACTORS

Prospective investors should consider carefully the following factors
relating to the Company and the Offerings, together with the information and
financial data set forth elsewhere in this Prospectus, prior to making an
investment decision.

COMPETITION

The markets for printers and associated supplies are highly competitive,
especially with respect to pricing and the introduction of new products and
features. The office desktop laser printer market is dominated by HP, which
has a widely recognized brand name and has been estimated to have an
approximate 65% to 70% market share. Several other large manufacturers such as
Canon, Inc. ("Canon"), Apple Computer, Inc. ("Apple"), Xerox Corporation
("Xerox") and IBM also compete in the laser printer market.

The Company's strategy is to target fast growing segments of the network
printer market and to increase market share by providing high quality,
technologically advanced products at competitive prices. This strategy
requires that the Company continue to develop and market new and innovative
products at competitive prices. New product announcements by the Company's
principal competitors, however, can have and in the past have had a material
adverse effect on the Company's financial results. Such new product
announcements can quickly undermine any technological competitive edge that
one manufacturer may enjoy over another and set new market standards for
quality, speed and function. Knowledge in the marketplace about pending new
product announcements by the Company's competitors may also have a material
adverse effect on the Company inasmuch as purchasers of printers may defer
purchasing decisions until the announcement and subsequent testing of such new
products.

In recent years, the Company and its principal competitors, all of which
have significantly greater financial, marketing and technological resources
than the Company, have regularly lowered prices on printers and are expected
to continue to do so. The Company is vulnerable to these pricing pressures
which, if not mitigated by cost and expense reductions, may result in lower
profitability and could jeopardize the Company's ability to increase or
maintain market share and build an installed base of Lexmark printers. The
Company expects that, as it competes more successfully with its larger
competitors, the Company's increased market presence may attract more frequent
challenges, both legal and commercial, from its competitors, including claims
of possible intellectual property infringement.

HP is also the market leader in the personal color inkjet printer market
and, with Canon and Seiko Epson Corporation ("Epson"), has been estimated to
account for approximately 80% to 90% of worldwide personal color inkjet
printer sales. As with laser printers, if pricing pressures are not mitigated
by cost and expense reductions, the Company's ability to maintain or build
market share and its profitability could be adversely affected. In addition,
as a relatively new entrant to the retail marketplace with a less widely
recognized brand name, the Company must compete with HP, Canon and Epson for
retail shelf space for its inkjet printers. The Company's ability to increase
or maintain its presence in the retail marketplace with its branded products
may be adversely affected as the Company becomes more successful in its sales
and marketing efforts for OEM opportunities.

Like certain of its competitors (including Xerox), the Company is a supplier
of after-market laser cartridges for laser printers utilizing certain models
of Canon engines. There is no assurance that the Company will be able to
compete effectively for a share of the after-market cartridge business for its
competitors' base of laser printers. The Company's participation in this
market may have an adverse effect on the Company's relations with certain of
its suppliers. Although Lexmark is currently the exclusive supplier of new
print cartridges for its laser printers, there can be no assurance that other
companies will not develop new compatible cartridges for Lexmark laser
printers. In addition, refill and

8
<PAGE>

remanufactured alternatives for the Company's cartridges are available from
independent suppliers and, although generally offering lower print quality,
compete with the Company's supplies business. As the installed base of laser
and inkjet printers grows and ages, the Company expects competitive refill and
remanufacturing activity to increase.

CHANGING TECHNOLOGIES

To compete effectively in the printer and associated supplies markets, the
Company must continue to introduce new products and features that address the
needs and preferences of its target markets. The printer market is
characterized by short product development cycles that are driven by rapidly
changing technology and consumer preferences as well as declining product
prices. There can be no assurance that the Company will be able to continue to
introduce new competitively priced products, that the market will be receptive
to its new products or features or that its competitors will not introduce
advancements ahead of Lexmark. Furthermore, there can be no assurance that the
Company will have access to new competitive technology to permit it to
introduce new products and features for its target markets. In addition, the
Company must make strategic decisions from time to time as to which new
technologies will produce products in market segments that will experience the
greatest future growth. If the Company is not successful in continuing to
introduce new products in the growing segments of the market, there could be a
material adverse effect on the Company's business and financial results.

OTHER OFFICE IMAGING PRODUCTS

The Company's traditional other office imaging products business includes
consumable supplies for IBM and other OEM products, typewriters and typewriter
supplies. This business accounted for 23%, 22% and 19% of the Company's
revenues in 1995, 1996 and 1997, respectively. Although the Company is less
dependent on revenue and profitability from its other office imaging products
business than it has been historically and intends to focus on the growing
portions of that market, such as the after-market laser cartridge supplies
category, there is no assurance that the Company will be able to compete in
the after-market supplies business effectively or that the declining market
areas in its other office imaging products business will not adversely affect
the Company's operating results.

KEY SUPPLIES AND SUPPLIERS

The Company procures a wide variety of components for the manufacture of its
products, some of which are sourced from preferred suppliers. The Company
generally must place commitments for its projected component needs
approximately three to six months in advance and occasionally faces capacity
constraints when there has been more demand for its printers and associated
supplies than initially projected. Certain finished products, certain print
engines and certain components of the Company's products are only available
from one supplier and should such products, print engines and components not
be available, there can be no assurance that production of the Company's
products would not be disrupted for significant periods of time or that
certain of the Company's products would be available. Such a disruption could
interfere with the Company's ability to manufacture and sell products and
materially adversely affect the Company's financial results.

DEPENDENCE ON KEY PERSONNEL

As is typical of technology based companies, the Company is dependent on
certain key personnel, including senior members of its research and
development staff. The future success of the Company's research and
development efforts depends on its continuing ability to attract and retain
highly qualified technical personnel. Competition for such personnel is
intense, and there can be no assurance that the Company will be successful in
attracting and retaining such personnel. The loss of the services of such key
personnel, or the inability to attract additional qualified personnel, could
have a material adverse effect on the Company's business.

9
<PAGE>

INTERNATIONAL OPERATIONS

Revenues derived from international sales, including exports from the United
States, represent over half of the Company's consolidated revenues, with
European revenues accounting for about 69% of international revenues. While
currency translation has significantly affected international revenues and
cost of revenues, it did not have a material impact on operating income
through 1997. Although the Company manages its net exposure to exchange rate
fluctuations through operational hedges, such as pricing actions and product
sourcing changes, and financial instruments, such as forward exchange
contracts and currency options, there can be no assurances that currency
fluctuations will not have a material impact on operating income in the
future. As the Company's international operations continue to grow, more
management effort will be required to focus on the operation and expansion of
the Company's global business and to manage the cultural, language and legal
differences inherent in international operations. In addition, the Company
believes that international operations in new geographic markets will be less
profitable than operations in U.S. and European markets as a result, in part,
of the higher investment levels for marketing, selling and distribution
required to enter these markets. Although the current economic conditions in
some of the Asian markets may adversely affect the Company's growth in that
region, management does not expect the impact will result in the Company's not
being able to achieve its 1998 operating income growth objective.

INTELLECTUAL PROPERTY RIGHTS

The Company's success depends in part on its ability to obtain patents,
copyrights and trademarks, maintain trade secret protection and operate
without infringing the proprietary rights of others.

As is typical in technology industries, the Company receives notices from
time to time by third parties claiming infringement of certain patent and/or
other intellectual property rights of others. As the Company competes more
successfully with its larger competitors, the Company's increased market
presence may attract more frequent legal challenges from its competitors,
including claims of possible intellectual property infringement. If the
Company were infringing the intellectual property rights of others and were
unable to obtain licenses to use the protected technology, the Company could
incur substantial costs to redesign its products or to defend against
infringement actions. The Company's inability to obtain such licenses on
favorable terms or a finding of infringement could have a material adverse
effect on the Company.

In addition, the Company also relies on trade secrets, technical know-how
and other unpatented proprietary information relating to its product
development and manufacturing activities which it seeks to protect, in part,
through confidentiality agreements. There can be no assurance that these
agreements will not be breached, that the Company would have adequate remedies
for any such breach or that the Company's trade secrets and know-how will not
otherwise become known or independently discovered by others. The Company
could also incur significant expenses in enforcing its intellectual property
rights against others.

RISKS ASSOCIATED WITH ACQUISITION STRATEGY

Part of the Company's business strategy is to expand its business through
the acquisition of related businesses. There can be no assurance that suitable
acquisitions can be accomplished on terms favorable to the Company. Further,
there can be no assurance that the Company will be able to operate profitably
any businesses or other assets it may acquire, effectively integrate the
operations of such acquisitions or otherwise achieve the intended benefits of
such acquisitions.

CERTAIN PROVISIONS RELATING TO CHANGES IN CONTROL

Although the Offerings will not constitute a "change of control", several of
the patent cross-licenses that the Company considers to be material to its
business, including those that permit the

10
<PAGE>

Company to manufacture its current design of laser and inkjet printers and
after-market laser cartridges for OEM printers, terminate as to future
products upon certain "changes of control" of the Company. Similarly, a
trademark license agreement and other agreements entered into by the Company
with IBM permit IBM to terminate those agreements upon certain "changes of
control" of the Company. Although the definition of "change of control" in the
Company's cross-licenses and trademark license agreement vary from agreement
to agreement, generally in order for a "change of control" to occur under such
agreements either (a) more than 50% of the voting stock of the Company must be
acquired by an unaffiliated party which, in some instances, must be engaged in
the business of manufacturing or marketing printers or related products or (b)
a third party must obtain the power to control or direct the affairs of the
Company, either through the ownership of voting stock or otherwise, except
that a change of control can be deemed to occur, in very limited
circumstances, upon an acquisition of substantially less than 50% of the
Company's voting shares. Such provisions could discourage potential acquirors
from making a bid to acquire control of the Company. In addition, the
Company's Rights Agreement may also have the effect of making an acquisition
of the Company more difficult.

11
<PAGE>

PRICE RANGE OF CLASS A COMMON STOCK AND DIVIDEND POLICY

Since November 15, 1995, as part of the Company's IPO, the Class A Common
Stock has been traded on the NYSE under the symbol "LXK". The following table
sets forth the high and low reported sale prices for the Class A Common Stock
as quoted by the NYSE for the periods indicated.

<TABLE>
<CAPTION>
MARKET PRICE
------------- ---
<S> <C> <C> <C>
HIGH LOW
------ ------
1995
Fourth Quarter (from November 15, 1995).................... $22.38 $15.50
1996
First Quarter.............................................. $23.25 $16.00
Second Quarter............................................. $23.13 $17.88
Third Quarter.............................................. $20.88 $13.38
Fourth Quarter............................................. $27.75 $18.88
1997
First Quarter.............................................. $29.63 $22.00
Second Quarter............................................. $30.50 $19.13
Third Quarter.............................................. $36.31 $26.88
Fourth Quarter............................................. $38.00 $29.56
1998
First Quarter (through March 9, 1998)...................... $44.62 $35.00
</TABLE>

The last reported sale price for the Class A Common Stock by the NYSE on
March 9, 1998 was $42.62 per share. As of December 31, 1997 the Company had
approximately 67,539,935 shares of Class A Common Stock outstanding (excluding
6,438,114 shares held in treasury) and 410,537 shares of Class B Common Stock
outstanding. As of December 31, 1997, there were approximately 1,207 holders
of record of the Class A Common Stock, and five holders of record of the Class
B Common Stock.

Other than the dividend to stockholders of record on April 3, 1998 of one
right to purchase under certain circumstances one one-hundredth of a share of
Series A Junior Participating Preferred Stock, the Company has never declared
or paid any dividends on the Class A Common Stock and has no current plans to
pay cash dividends on the Class A Common Stock. The payment of any future cash
dividends will be determined by the Board of Directors in light of conditions
then existing, including the Company's earnings, financial condition and
capital requirements, restrictions in financing agreements, business
conditions, certain corporate law requirements and other factors.

The Company is a holding company and thus its ability to pay cash dividends
on the Class A Common Stock depends on the Company's subsidiaries' ability to
pay cash dividends to the Company.

12
<PAGE>

CAPITALIZATION

The following table sets forth the consolidated cash and cash equivalents,
short-term debt and capitalization of the Company as of December 31, 1997.
This table should be read in conjunction with the Consolidated Financial
Statements and the notes thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
DECEMBER 31,
1997
-------------
(IN MILLIONS)
<S> <C>
CASH AND CASH EQUIVALENTS........................................ $ 43.0
======
SHORT-TERM DEBT.................................................. $ 18.0
======
LONG-TERM DEBT
Term loan...................................................... $ 37.0
Other.......................................................... 20.0
------
Total long-term debt......................................... 57.0
STOCKHOLDERS' EQUITY(1):
Preferred stock, $.01 par value, 1,600,000 shares authorized,
no
shares outstanding............................................ --
Class A common stock, $.01 par value, 160,000,000 shares autho-
rized,
67,539,935 outstanding........................................ 0.7
Class B common stock, $.01 par value, 10,000,000 shares autho-
rized,
410,537 outstanding(2)........................................ --
Additional paid-in capital..................................... 537.2
Retained earnings.............................................. 168.8
Accumulated translation adjustment............................. (23.8)
Treasury stock, at cost........................................ (182.2)
------
Total stockholders' equity................................... 500.7
------
Total capitalization......................................... $557.7
======
</TABLE>
- --------
(1) In April 1996, the Company's board of directors authorized the repurchase
of up to $50 million of its Class A Common Stock. In May 1997, the
Company's board of directors authorized the repurchase of an additional
$150 million of its Class A Common Stock. The repurchase authority allows
the Company to selectively repurchase its stock from time to time in the
open market or in privately negotiated transactions depending upon market
price and other factors. As of December 31, 1997, the Company had
repurchased 6,438,114 shares at prices ranging from $21.25 to $33.75 per
share for an aggregate cost of approximately $182 million, including
3,000,000 shares of Class A Common Stock repurchased by the Company from
certain of its stockholders, including one of the Selling Stockholders, at
a price equal to $29.90 per share (the "1997 Share Repurchase"). In
February 1998, the Company's board of directors authorized the repurchase
of up to an additional $200 million of its Class A Common Stock. This
repurchase authority, like the prior authorizations, allows the Company at
management's discretion to selectively repurchase its stock from time to
time in the open market or in privately negotiated transactions depending
upon market price and other factors. The Company has agreed to repurchase
2,000,000 shares of Class A Common Stock less any shares sold pursuant to
the over-allotment options from certain of the Selling Stockholders at a
price per share equal to the lowest of $44.25 per share and the net
proceeds per share to the Selling Stockholders. The Company expects to use
available borrowings under its existing credit facilities to finance the
Share Repurchase. See "Certain Transactions and Relationships."
(2) As of March 9, 1998, all of the outstanding shares of Class B Common Stock
had been converted into Class A Common Stock.

13
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA
(IN MILLIONS, EXCEPT SHARE DATA)

The following table sets forth selected financial data of the Company on a
consolidated basis. The statement of earnings data for the years ended
December 31, 1993, 1994, 1995, 1996 and 1997 and the statement of financial
position data as of December 31, 1993, 1994, 1995, 1996 and 1997 were derived
from the audited Consolidated Financial Statements of the Company.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
1993 1994 1995(1) 1996 1997
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS
DATA:
Revenues................ $ 1,675.7 $ 1,852.3 $ 2,157.8 $ 2,377.6 $ 2,493.5
Cost of revenues........ 1,107.4 1,298.8 1,487.9 1,630.2 1,623.5
---------- ---------- ---------- ---------- ----------
Gross profit............ 568.3 553.5 669.9 747.4 870.0
Research and
development............. 111.7 101.0 116.1 123.9 128.9
Selling, general and
administrative......... 322.0 292.9 359.1 388.0 466.5
---------- ---------- ---------- ---------- ----------
Operating income before
option compensation
related to IPO and
amortization of
intangibles............ 134.6 159.6 194.7 235.5 274.6
Option compensation
related to IPO......... -- -- 60.6 -- --
Amortization of
intangibles(2)......... 64.0 44.7 25.6 5.1 --
---------- ---------- ---------- ---------- ----------
Operating income........ 70.6 114.9 108.5 230.4 274.6
Interest expense........ 63.9 50.6 35.1 20.9 10.8
Amortization of deferred
financing costs and
other expense.......... 13.1 13.6 10.1 7.9 9.1
---------- ---------- ---------- ---------- ----------
Earnings (loss) before
income taxes and
extraordinary item..... (6.4) 50.7 63.3 201.6 254.7
Provision for income
taxes.................. 3.0 6.1 15.2 73.8 91.7
---------- ---------- ---------- ---------- ----------
Earnings (loss) before
extraordinary item..... (9.4) 44.6 48.1 127.8 163.0
Extraordinary loss(3)... -- -- (15.7) -- (14.0)
---------- ---------- ---------- ---------- ----------
Net earnings (loss)..... $ (9.4) $ 44.6 $ 32.4 $ 127.8 $ 149.0
========== ========== ========== ========== ==========
Diluted earnings (loss)
per common share before
extraordinary item(4).. $ (0.35) $ (0.48) $ 0.65 $ 1.69 $ 2.17
Diluted net earnings
(loss) per common
share(4)............... $ (0.35) $ (0.48) $ 0.44 $ 1.69 $ 1.98
Shares used in diluted
earnings per share
calculation............ 58,880,761 58,853,416 74,200,279 75,665,734 75,168,776
<CAPTION>
AS OF DECEMBER 31,
---------------------------------------------------------
1993 1994 1995 1996 1997
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF FINANCIAL
POSITION DATA:
Working capital......... $ 293.6 $ 237.5 $ 227.7 $ 343.8 $ 228.6
Total assets............ 1,215.0 960.9 1,142.9 1,221.5 1,208.2
Total long-term debt
(including current
portion)................ 650.7 290.0 195.0 165.3 75.0
Redeemable senior
preferred stock(5)...... 85.0 -- -- -- --
Stockholders'
equity(5)............... 173.7 295.5 390.2 540.3 500.7
</TABLE>
- --------
(1) The Company recognized a non-cash compensation charge of $60.6 ($38.5 net
of tax benefit) in the fourth quarter of 1995 and will recognize
additional amounts totalling $2.2 ($1.4 net of tax benefit) in the years
1996-2000, resulting from the vesting of certain of the Company's
outstanding employee stock options at the time of the IPO.
(2) Acquisition-related intangibles were fully amortized at March 31, 1996.
(3) Represents extraordinary after-tax loss caused by early extinguishments of
debt related to the refinancing of the Company's term loan in April 1995
and prepayment of the Company's senior subordinated notes in March 1997.
(4) Earnings per share amounts have been calculated and presented under the
provisions of SFAS No. 128. Diluted earnings (loss) per common share are
net of dividends of $11.5 and $11.8 paid on the Company's redeemable
senior preferred stock in 1993 and 1994, respectively. Earnings
attributable to common stock in 1994 are also net of a $61.3 preferred
stock redemption premium related to the exchange of redeemable senior
preferred stock for Class A Common Stock on December 30, 1994. No senior
preferred stock is currently outstanding.
(5) Redeemable senior preferred stock with a liquidation preference of $85.0
was exchanged for 9,750,000 shares of Class A Common Stock on December 30,
1994. As of December 31, 1997, the Company had repurchased 6,438,114
shares of Class A Common Stock in the open market for an aggregate cost of
approximately $182.2 million.

14
<PAGE>

SELLING STOCKHOLDERS

The following table sets forth certain information with respect to the
Selling Stockholders and their beneficial ownership of the Class A Common
Stock as of December 31, 1997 and as adjusted to reflect the sale of the Class
A Common Stock offered by the Selling Stockholders hereby, and other than as
noted below, includes information with respect to positions, offices or other
material relationships of the Selling Stockholders with the Company or any
predecessor or affiliate thereof, other than as a stockholder thereof, during
the past three years. For information with respect to material relationships
during the past three years between the Company and C&D Fund IV, see "Certain
Transactions and Relationships". Unless otherwise indicated, each Selling
Stockholder named has sole voting and dispositive power with respect to its
shares.

The information presented in the preceding discussion and in the following
table assumes that the over-allotment options are exercised in full, but does
not give effect to the Share Repurchase.

<TABLE>
<CAPTION>
SHARES
BENEFICIALLY SHARES
OWNED BENEFICIALLY OWNED
NAME AND ADDRESS OF PRIOR TO NUMBER OF AFTER
BENEFICIAL OWNER OFFERINGS(1) SHARES OFFERINGS(1)[(3)
------------------- ----------------- --------- ----------------------
NUMBER PERCENT OFFERED NUMBER PERCENT
--------- ------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C>
The Clayton & Dubilier
Private Equity
Fund IV Limited
Partnership................. 6,654,829 9.8 4,654,829 2,000,000 3.0
270 Greenwich Avenue
Greenwich, CT 06830
Mellon Bank, N.A., as trustee
for First
Plaza Group Trust(2)......... 3,049,748 4.5 3,049,748 0 0
One Mellon Bank Center
Pittsburgh, PA 15258
- ---------------------------
</TABLE>
(1) The percentage of the issued and outstanding shares of Common Stock of the
Company held by each individual or group has been calculated on the basis
of 67,539,935 shares of Class A Common Stock issued and outstanding
(excluding 6,438,114 shares held in treasury) on December 31, 1997.
(2) Mellon Bank, N.A., acts as the trustee (the "Trustee") for First Plaza
Group Trust ("FPGT"), a trust under and for the benefit of certain
employee benefit plans for General Motors Corporation ("GM") and its
subsidiaries. These shares may be deemed to be owned beneficially by
General Motors Investment Management Corporation ("GMIMCo"), a wholly-
owned subsidiary of GM. GMIMCo's principal business is providing
investment advice and investment management services with respect to the
assets of certain employee benefit plans of GM and its subsidiaries and
with respect to the assets of certain direct and indirect subsidiaries of
GM and associated entities. GMIMCo is serving as FPGT's investment manager
with respect to these shares and in that capacity it has the sole power to
direct the Trustee as to the voting and disposition of these shares.
Because of the Trustee's limited role, beneficial ownership of the shares
by the Trustee is disclaimed.
(3) Pursuant to the Share Repurchase, concurrently with the closing of the
Offerings, the Company will repurchase an aggregate of 2,000,000 shares of
Class A Common Stock from certain of the Selling Stockholders,
substantially all of which is being repurchased from C&D Fund IV. Upon
completion of the Offerings and the Share Repurchase, C&D Fund IV will no
longer own any shares of Class A Common Stock.

15
<PAGE>

CERTAIN TRANSACTIONS AND RELATIONSHIPS

CD&R AND C&D FUND IV

C&D Fund IV, which is the Company's largest stockholder, is a private
investment fund managed by CD&R. Amounts contributed to C&D Fund IV by its
limited partners are invested at the discretion of the general partner in
equity or equity-related securities of entities formed to effect leveraged
buy-out transactions and in the equity of corporations where the infusion of
capital coupled with the provision of managerial assistance by CD&R can be
expected to generate returns on investments comparable to returns historically
achieved in leveraged buy-out transactions. The general partner of C&D Fund IV
is Clayton & Dubilier Associates IV Limited Partnership ("Associates IV"). B.
Charles Ames, Donald J. Gogel, Andrall E. Pearson and Joseph L. Rice, III,
each of whom is a principal of CD&R and a general partner of Associates IV,
have served as directors of the Company since the Acquisition. Messrs. Pearson
and Rice resigned from the Board of Directors in February 1997. LIG was formed
by CD&R to effect the Acquisition. C&D Fund IV currently owns 6,654,829 shares
of Class A Common Stock of which 4,654,829 shares are being offered hereby.
See "Selling Stockholders".

The Company paid CD&R a fee of $500,000 during each of 1995, 1996, and 1997,
respectively, for advisory, management consulting and monitoring services. The
Company will pay CD&R a fee of $125,000 for services rendered for the first
three months of 1998, after which time the Company will cease paying such fee.
None of the principals of CD&R who serve as directors of the Company receive
directors' fees. Two principals of CD&R, Messrs. Ames and Gogel, continue to
serve as Class II directors.

The Company paid fees to the law firm of Debevoise & Plimpton during 1996
and 1997 for legal services rendered. Franci J. Blassberg, Esq., a member of
Debevoise & Plimpton, is married to Joseph L. Rice, III, who was until
February 1997 a director of the Company and who is currently a general partner
of the general partner of C&D Fund IV.

The Company has entered into an indemnification agreement with CD&R and C&D
Fund IV pursuant to which the Company has agreed, subject to certain
exceptions, to indemnify the members of its boards of directors, as well as
CD&R, C&D Fund IV and certain of their associates and affiliates (the
"Indemnitees"), to the fullest extent allowable under applicable Delaware law,
and to indemnify the Indemnitees against any suits, claims, damages or
expenses which may be made against or incurred by them under applicable
securities laws in connection with offerings of securities of the Company,
including the Offerings, liabilities to third parties arising out of any
action or failure to act by the Company, and, except in cases of gross
negligence or intentional misconduct, the provision by CD&R of advisory,
management consulting and monitoring services.

1997 SHARE REPURCHASE

On October 21, 1997, the Company entered into an agreement with C&D Fund IV
(the "1997 Stock Disposition Agreement") pursuant to which the Company agreed
concurrently with the consummation in November 1997 of a secondary offering
(the "1997 Secondary Offering"), to repurchase from C&D Fund IV 3,000,000
shares of Class A Common Stock at a price per share equal to the lesser of
$34.8125 and the initial public offering price of the 1997 Secondary Offering
net of the underwriting discount. Although C&D Fund IV had the right to assign
its rights and obligations pursuant to the 1997 Stock Disposition Agreement to
other selling stockholders participating in the 1997 Secondary Offering, the
Company repurchased substantially all of such shares from C&D Fund IV on
November 4, 1997 at a price equal to $29.90 per share, the initial offering
price for the 1997 Secondary Offering net of the underwriting discount.

SHARE REPURCHASE FROM CERTAIN SELLING STOCKHOLDERS

The Company has entered into an agreement, dated as of March 9, 1998 (the
"Stock Disposition Agreement"), with C&D Fund IV pursuant to which the Company
has agreed, concurrently with the

16
<PAGE>

consummation of the Offerings, to repurchase from C&D Fund IV 2,000,000 shares
of Class A Common Stock less any shares sold pursuant to the over-allotment
options at a price per share equal to the lowest of $44.25 and the net
proceeds per share to the Selling Stockholders. The Share Repurchase is
conditioned upon at least 6,000,000 shares of Class A Common Stock being sold.
C&D Fund IV has the right to assign its rights and obligations pursuant to the
Stock Disposition Agreement to other Selling Stockholders, but it is currently
expected that the Company will repurchase substantially all of such shares
from C&D Fund IV. The closing of the Share Repurchase is conditioned upon, and
will take place concurrently with, the closing of the Offerings.

"HOLDBACK ARRANGEMENTS"

The Selling Stockholders and the directors and executive officers (as
defined in Section 16 of the Exchange Act) of the Company who own Class A
Common Stock have each agreed not to enter into any agreement providing for,
or to effect, any public sale, distribution or other disposition of any shares
of Common Stock, including sales pursuant to Rule 144 or Rule 144A under the
Securities Act, or grant any public option for any such sale, or otherwise
cause the Company to register any securities of the Company pursuant to any
registration rights previously granted to them, for a period of 60 days after
the date of this Prospectus without the prior written consent of Goldman,
Sachs & Co. on behalf of the Underwriters, except for the shares of Class A
Common Stock offered in connection with the Offerings. After the expiration of
such 60-day period, such stockholders will in general be entitled to dispose
of their shares that are currently outstanding pursuant to Rule 144 under the
Securities Act and those who are not "affiliates" of the Company may do so
without regard to the volume limit and certain other requirements of Rule 144.

VALIDITY OF THE SHARES

The validity of the shares of Class A Common Stock offered hereby will be
passed upon for the Company by Debevoise & Plimpton, New York, New York, and
for the Underwriters by Sullivan & Cromwell, New York, New York. Debevoise &
Plimpton also acts and may hereafter act as counsel to CD&R and its affiliates
and to the Company and its affiliates. Franci J. Blassberg, Esq., a member of
Debevoise & Plimpton, is married to Joseph L. Rice, III, who was until
February 1997 a director of the Company and who is currently a general partner
of the general partner of C&D Fund IV.

EXPERTS

The consolidated statements of financial position as of December 31, 1996
and 1997 and the consolidated statements of earnings, cash flows and
stockholders' equity for each of the three years in the period ended December
31, 1997 incorporated by reference in this Prospectus from the Company's
Annual Report on Form 10-K for the year ended December 31, 1997 have been
incorporated by reference herein in reliance on the report of Coopers &
Lybrand L.L.P., independent accountants, given on the authority of that firm
as experts in accounting and auditing.

FORWARD LOOKING STATEMENTS

Certain statements in this Prospectus and in documents incorporated by
reference herein contain forward-looking statements that are based on current
expectations, estimates and projections and management's beliefs and
assumptions. Words such as "believes", "expects", "intends", "plans",
"estimates", or variations of such words and similar expressions, are intended
to identify such forward-looking statements. These statements are not
guarantees of future performance and involve certain risks and uncertainties
which are difficult to predict. Therefore, actual outcomes and results may
differ materially from what is expressed or forecasted in such forward-looking
statements. The Company undertakes no obligation to update publicly any
forward-looking statements, whether as a result of new information, future
events or otherwise.

17
<PAGE>

Such risks and uncertainties include, but are not limited to, the impact of
competitive products and pricing, increased investment to support product
introductions and enter new markets, currency fluctuations, market acceptance
of new products and programs, product transitions by the Company and its
competitors, management of inventory levels, production and supply
difficulties, intellectual property infringement claims and expenses, the
outcome of pending and future litigation or governmental proceedings, changes
in a country's or region's political or economic conditions, and other risks
described herein and in other filings by the Company with the Commission.

18
<PAGE>

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Selling Stockholders have agreed to sell to each of the U.S. Underwriters
named below, and each of such U.S. Underwriters has severally agreed to
purchase from the Selling Stockholders, the respective number of shares of
Class A Common Stock set forth opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF
SHARES
OF CLASS
A
COMMON
UNDERWRITER STOCK
----------- ---------
<S> <C>
Goldman, Sachs & Co. ..............................................
-----
Total............................................................
=====
</TABLE>

Under the terms and conditions of the Underwriting Agreement, the U.S.
Underwriters are committed to take and pay for all of the shares offered
hereby, if any are taken.

The U.S. Underwriters propose to offer the shares of Class A Common Stock in
part directly to the public at the initial public offering price set forth on
the cover page of this Prospectus, and in part to certain securities dealers
at such price less a concession of $ per share. The U.S. Underwriters may
allow, and such dealers may reallow, a concession not in excess of $ per
share to certain brokers and dealers. After the shares of Class A Common Stock
are released for sale to the public, the offering price and other selling
terms may from time to time be varied by the U.S. Underwriters.

The Company and the Selling Stockholders have entered into an underwriting
agreement (the "International Underwriting Agreement") with the underwriters
of the International Offering (the "International Underwriters" and, together
with the U.S. Underwriters, the "Underwriters") providing for the concurrent
offer and sale of an aggregate of shares of Class A Common Stock in an
international offering outside the United States. The public offering price
and underwriting discounts and commissions per share for the two offerings are
identical. The closing of the offering made hereby is a condition to the
closing of the International Offering, and vice versa. The several
International Underwriters are , , and .

Pursuant to an Agreement between the U.S. and International Underwriting
Syndicates (the "Agreement Between") relating to the two offerings, each of
the U.S. Underwriters named herein has agreed that, as a part of the
distribution of the shares offered hereby and subject to certain exceptions,
it will offer, sell or deliver the shares of Class A Common Stock, directly or
indirectly, only in the United States of America (including the States and the
District of Columbia), its territories, its possessions and other areas
subject to its jurisdiction (the "United States") and to U.S. persons, which
term shall mean, for purposes of this paragraph: (a) any individual who is a
resident of the United States or (b) any corporation, partnership or other
entity organized in or under the laws of the United States or any political
subdivision thereof and whose office most directly involved with the purchase
is located in the United States. Each of the International Underwriters has
agreed pursuant to the Agreement Between that, as a part of the distribution
of the shares offered in the International Offering, and subject to certain
exceptions, it will not, directly or indirectly, offer, sell or deliver shares
of Class A Common Stock in the United States or to any U.S. persons.

Pursuant to the Agreement Between, sales may be made between the U.S.
Underwriters and the International Underwriters of such number of shares of
Class A Common Stock as may be mutually agreed. The price of any shares so
sold shall be the public offering price, less an amount not greater than the
selling concession.

U-1
<PAGE>

The Selling Stockholders have granted the U.S. Underwriters an option
exercisable for 30 days after the date of this Prospectus to purchase up to an
aggregate of additional shares of Class A Common Stock solely to cover
over-allotments, if any. If the U.S. Underwriters exercise their over-
allotment option, the U.S. Underwriters have severally agreed, subject to
certain conditions, to purchase approximately the same percentage thereof that
the number of shares to be purchased by each of them, as shown in the
foregoing table, bears to the shares of Class A Common Stock initially
offered hereby. The Selling Stockholders have granted the International
Underwriters a similar option exercisable for up to an aggregate of
additional shares of Class A Common Stock.

The Company and the Selling Stockholders have each agreed, for a period of
60 days after the date of this Prospectus, not to file a registration
statement with respect to, enter into any agreement providing for or effect
any public sale, distribution or other disposition (including, without
limitation, any sale pursuant to Rule 144 or Rule 144A under the Securities
Act and any sale in a broker's transaction or through a market maker) of,
except as provided under the Underwriting Agreement and under the
International Underwriting Agreement, any Class A Common Stock, Class B Common
Stock or securities of the Company that are substantially similar to the Class
A Common Stock or Class B Common Stock, including but not limited to any
securities that are convertible into or exchangeable for, or that represent
the right to receive, Class A Common Stock, Class B Common Stock or any such
substantially similar securities (other than pursuant to employee benefit or
incentive plans existing on, or upon the conversion or exchange of convertible
or exchangeable securities outstanding as of, the date of this Prospectus),
without the prior written consent of . In addition, the Selling
Stockholders and certain other stockholders of the Company have entered into
"holdback" agreements with the Underwriters.

In connection with the Offerings, the Underwriters may purchase and sell the
Class A Common Stock in the open market. These transactions may include over-
allotment and stabilizing transactions and purchases to cover syndicate short
positions created in connection with the Offerings. Stabilizing transactions
consist of certain bids or purchases for the purpose of preventing or
retarding a decline in the market price of the Class A Common Stock, and
syndicate short positions involve the sale by the Underwriters of a greater
number of shares of Class A Common Stock than they are required to purchase
from the Company in the Offerings. The Underwriters also may impose a penalty
bid, whereby selling concessions allowed to syndicate members or other broker-
dealers in respect of the Class A Common Stock sold in the Offerings for their
account may be reclaimed by the syndicate if such Class A Common Stock is
repurchased by the syndicate in stabilizing or covering transactions. These
activities may stabilize, maintain or otherwise affect the market price of the
Class A Common Stock, which may be higher than the price that might otherwise
prevail in the open market, and these activities, if commenced, may be
discontinued at any time. These transactions may be effected on the New York
Stock Exchange, in the over-the-counter market or otherwise.

The Class A Common Stock is traded on the New York Stock Exchange.

The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933.

U-2
<PAGE>

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

---------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information...................................................... 3
Incorporation of Certain Documents by
Reference................................................................. 3
The Company................................................................ 5
The Offerings.............................................................. 7
Risk Factors............................................................... 8
Price Range of Class A Common Stock and Dividend Policy.................... 12
Capitalization............................................................. 13
Selected Consolidated Financial Data....................................... 14
Selling Stockholders....................................................... 15
Certain Transactions and Relationships..................................... 16
Shares Eligible for Future Sale............................................ 17
Validity of the Shares..................................................... 18
Experts.................................................................... 18
Forward Looking Statements................................................. 18
Underwriting............................................................... U-1
</TABLE>

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

7,704,577 SHARES

LEXMARK
INTERNATIONAL GROUP, INC.

CLASS A COMMON STOCK
(PAR VALUE $.01 PER SHARE)

---------------

LOGO LEXMARK(TM)

---------------

GOLDMAN, SACHS & CO.

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

LEXMARK INTERNATIONAL GROUP, INC.

CLASS A COMMON STOCK
(PAR VALUE $.01 PER SHARE)
-----------

Of the 7,704,577 shares of Class A Common Stock offered, shares are
being offered hereby in an international offering outside the United States and
shares are being offered in a concurrent offering in the United States.
The public offering price and the aggregate underwriting discount per share
will be identical for both offerings. See "Underwriting". As of April 3, 1998
each share of Class A Common Stock, including the shares offered hereby, will
have associated with it one right to purchase one one-hundreth of a share of
the Company's Series A Junior Participating Preferred Stock at a stipulated
price in certain circumstances relating to changes in ownership of the Company
under the Company's Rights Agreement.

SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR CERTAIN CONSIDERATIONS RELEVANT TO
AN INVESTMENT IN THE CLASS A COMMON STOCK.
-----------

<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO SELLING
OFFERING PRICE DISCOUNT(1) STOCKHOLDERS(2)
-------------- ------------ -------------------
<S> <C> <C> <C>
Per Share....................... $ $ $
Total(3)........................ $ $ $
</TABLE>
- -----
(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933. See "Underwriting".
(2) Expenses of approximately $75,000 and $900,000 are payable by the Company
and the Selling Stockholders, respectively, in connection with the
offerings.
(3) The Selling Stockholders have granted the International Underwriters an
option for 30 days to purchase up to an additional shares at the public
offering price per share, less the underwriting discount, solely to cover
over-allotments. The Selling Stockholders have granted the U.S.
Underwriters a similar option with respect to an additional shares as
part of the concurrent offering in the United States. If such options are
exercised in full, the total initial public offering price, underwriting
discount and proceeds to Selling Stockholders will be $ , $ and
$ , respectively. See "Underwriting".

-----------

The shares offered hereby are offered severally by the International
Underwriters, as specified herein, subject to receipt and acceptance by them
and subject to their right to reject any order in whole or in part. It is
expected that the shares will be ready for delivery in New York, New York, on
or about March , 1998, against payment therefor in immediately available
funds.

GOLDMAN SACHS INTERNATIONAL

-----------

The date of this Prospectus is March , 1998.
<PAGE>

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

----------------

IN CONNECTION WITH THESE OFFERINGS, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS
A COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN
THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY
BE DISCONTINUED AT ANY TIME.

4
<PAGE>

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

CERTAIN UNITED STATES TAX
CONSEQUENCES TO NON-U.S. HOLDERS

The following is a general discussion of certain United States Federal
income and estate tax consequences of the ownership and disposition of Class A
Common Stock by a person other than (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity created or organized
in the United States or under the laws of the United States or of any State of
the United States, (iii) an estate whose income is includable in gross income
for United States Federal income tax purposes regardless of its source or (iv)
a trust if (x) a court within the United States is able to exercise primary
supervision over the administration of the trust and (y) at least one United
States person has authority to control all substantial decisions of the trust
(referred to hereafter as a "non-U.S. holder"). Recently enacted legislation
authorizes the issuance of Treasury regulations that, under certain
circumstances, could reclassify as a non-U.S. partnership a partnership that
would otherwise be treated as a U.S. partnership, or could reclassify as a
U.S. partnership a partnership that would otherwise be treated as a non-U.S.
partnership. Such regulations would apply only to partnerships created or
organized after the date that proposed regulations are filed with the Federal
Register (or, if earlier, the date of issuance of a notice substantially
describing the expected contents of the regulations).

The discussion is based on provisions of the Internal Revenue Code of 1986,
as amended (the "Code"), and administrative and judicial interpretations as of
the date hereof, all of which are subject to change, possibly with retroactive
effect. Furthermore, this discussion does not consider specific facts and
circumstances that may be relevant to a particular holder's tax position.
Prospective purchasers are urged to consult a tax adviser with respect to the
United States Federal income and estate tax consequences of owning and
disposing of Class A Common Stock, as well as any tax consequences under the
laws of any other taxing jurisdiction.

INCOME TAX

Dividends. Generally, dividends paid on Class A Common Stock to a non-U.S.
holder will be subject to U.S. Federal income tax. Except in the case of
dividends that are effectively connected with the holder's conduct of a trade
or business within the United States, this tax is imposed and withheld at the
rate of 30% of the amount of the dividend, unless reduced by an applicable
income tax treaty. Currently, dividends paid to an address in a foreign
country are presumed to be paid to a resident of such country in determining
the applicability of a treaty for such purposes.

However, under recently finalized United States Treasury regulations
relating to withholding of tax on non-U.S. holders, which by their terms apply
to dividend and other payments made after December 31, 1998 (the "Final
Withholding Regulations"), a non-U.S. holder who is the beneficial owner
(within the meaning of the Final Withholding Regulations) of dividends paid on
Class A Common Stock and who wishes to claim the benefit of an applicable
treaty is generally required to satisfy certain certification and
documentation requirements. Certain special rules apply to claims for treaty
benefits made by non-U.S. holders that are entities rather than individuals
and to beneficial owners (within the meaning of the Final Withholding
Regulations) of dividends paid to entities in which such beneficial owners are
interest holders.

Except as may be otherwise provided in an applicable income tax treaty,
dividends paid on Class A Stock to a non-U.S. holder that are effectively
connected with the non-U.S. holder's conduct of a trade or business within the
United States are subject to Federal income tax on a net income basis, which
tax is not collected by withholding (except as described below under "Backup
Withholding and Information Reporting"). All or part of any effectively
connected dividends received by a non-U.S. corporation may also, under certain
circumstances, be subject to an additional "branch profits" tax at a 30% rate
or such lower rate as may be specified by an applicable income tax treaty. A
non-U.S. holder of Class A Common Stock who wishes to claim an exemption from
withholding for effectively connected dividends is generally required to
satisfy certain certification and documentation requirements.

18
<PAGE>

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

A non-U.S. holder that is eligible for a reduced rate of U.S. withholding
tax pursuant to a tax treaty may obtain a refund of any excess amounts
withheld by filing an appropriate claim for refund with the United States
Internal Revenue Service (the "IRS").

Disposition of Class A Common Stock. Generally, non-U.S. holders will not be
subject to United States Federal income tax (including withholding thereof) in
respect of gain recognized on a disposition of Class A Common Stock unless (i)
the gain is effectively connected with the non-U.S. holder's conduct of a
trade or business within the United States (in which case the "branch profits"
tax described above may also apply if the holder is a non-U.S. corporation);
(ii) in the case of a non-U.S. holder who is a non-resident alien individual
and holds Class A Common Stock as a capital asset, such holder is present in
the United States for 183 or more days in the taxable year of the sale and
certain other conditions are met; or (iii) the Company is or has been a
"United States real property holding corporation" for Federal income tax
purposes (which the Company does not believe it has been or is currently) and
the non-U.S. holder has held directly or constructively more than 5% of the
outstanding Class A Common Stock within the five-year period ending on the
date of the disposition.

ESTATE TAX

If an individual non-U.S. holder owns, or is treated as owning, Class A
Common Stock at the time of his or her death, such stock would be subject to
U.S. Federal estate tax imposed on the estates of non-resident aliens, in the
absence of a contrary provision contained in any applicable tax treaty.

BACKUP WITHHOLDING AND INFORMATION REPORTING

Dividends. Under current law, dividends paid on Class A Common Stock to a
non-U.S. holder at an address outside the United States are generally exempt
from backup withholding tax and U.S. information reporting requirements (but
not from 30% withholding tax discussed above). Under the Final Withholding
Regulations, for dividends paid after December 31, 1998, a non-U.S. holder
must generally provide proper documentation indicating non-U.S. status to a
withholding agent in order to avoid backup withholding tax. However, dividends
paid to certain exempt recipients (not including individuals) will not be
subject to backup withholding even if such documentation is not provided if
the withholding agent is allowed to rely on certain regulatory presumptions of
the recipient's non-U.S. status (including payment to an address outside the
United States).

Broker Sales. Payments of proceeds from the sale of Class A Common Stock by
a non-U.S. holder made to or through a non-U.S. office of a broker generally
will not be subject to information reporting or backup withholding. However,
payments made to or through certain non-U.S. offices, including the non-U.S.
offices of a U.S. broker, are generally subject to information reporting (but
not backup withholding) unless the holder certifies its non-U.S. status under
penalties of perjury or otherwise establishes its entitlement to an exemption.
Payments of proceeds from the sale of Class A Common Stock by a non-U.S.
holder made to or through a U.S. office of a broker are generally subject to
both information reporting and backup withholding at a rate of 31% unless the
holder certifies its non-U.S. status under penalties of perjury or otherwise
establishes an exemption.

A non-U.S. holder may obtain a refund of any excess amounts withheld under
the backup withholding rules by filing the appropriate claim for refund with
the IRS.

VALIDITY OF THE SHARES

The validity of the shares of Class A Common Stock offered hereby will be
passed upon for the Company by Debevoise & Plimpton, New York, New York, and
for the Underwriters by Sullivan & Cromwell, New York, New York. Debevoise &
Plimpton also acts and may hereafter act as counsel to CD&R and its affiliates
and to the Company and its affiliates. Franci J. Blassberg, Esq., a member of
Debevoise & Plimpton, is married to Joseph L. Rice, III, who until February
1997 was a director of the Company and who is currently a general partner of
the general partner of C&D Fund IV.

19
<PAGE>

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

EXPERTS

FORWARD LOOKING STATEMENTS

20
<PAGE>

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Selling Stockholders have agreed to sell to each of the International
Underwriters named below, and each of such International Underwriters has
severally agreed to purchase from the Selling Stockholders, the respective
number of shares of Class A Common Stock set forth opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
CLASS A
COMMON
UNDERWRITER STOCK
----------- ---------
<S> <C>
Goldman Sachs International......................................
Total............................................................
=====
</TABLE>

Under the terms and conditions of the Underwriting Agreement, the
International Underwriters are committed to take and pay for all of the shares
offered hereby, if any are taken.

The International Underwriters propose to offer the shares of Class A Common
Stock in part directly to the public at the initial public offering price set
forth on the cover page of this Prospectus, and in part to certain securities
dealers at such price less a concession of $ per share. The International
Underwriters may allow, and such dealers may reallow, a concession not in
excess of $ per share to certain brokers and dealers. After the shares of
Class A Common Stock are released for sale to the public, the offering price
and other selling terms may from time to time be varied by the International
Underwriters.

The Company and the Selling Stockholders have entered into an underwriting
agreement (the "U.S. Underwriting Agreement") with the underwriters of the
United States Offering (the "U.S. Underwriters" and, together with the
International Underwriters, the "Underwriters") providing for the concurrent
offer and sale of an aggregate of shares of Class A Common Stock in an
offering in the United States. The public offering price and underwriting
discounts and commissions per share for the two offerings are identical. The
closing of the offering made hereby is a condition to the closing of the
United States Offering, and vice versa. The several U.S. Underwriters are
, and .

The Selling Stockholders have granted the International Underwriters an
option exercisable for 30 days after the date of this Prospectus to purchase
up to an aggregate of additional shares of Class A Common Stock solely to
cover over-allotments, if any. If the International Underwriters exercise
their over-allotment option, the International Underwriters have severally
agreed, subject to certain conditions, to purchase approximately the same
percentage thereof that the number of shares

U-1
<PAGE>

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
to be purchased by each of them, as shown in the foregoing table, bears to the
shares of Class A Common Stock initially offered hereby. The Selling
Stockholders have granted the U.S. Underwriters a similar option exercisable
for up to an aggregate of additional shares of Class A Common Stock.

The Company and the Selling Stockholders have each agreed, for a period of
90 days after the date of this Prospectus, not to file a registration
statement with respect to, enter into any agreement providing for or effect
any public sale, distribution or other disposition (including, without
limitation, any sale pursuant to Rule 144 or Rule 144A under the Securities
Act and any sale in a broker's transaction or through a market maker) of,
except as provided under the Underwriting Agreement and under the U.S.
Underwriting Agreement, any Class A Common Stock, Class B Common Stock or
securities of the Company that are substantially similar to the Class A Common
Stock or Class B Common Stock, including but not limited to any securities
that are convertible into or exchangeable for, or that represent the right to
receive, Class A Common Stock, Class B Common Stock or any such substantially
similar securities (other than pursuant to employee benefit or incentive plans
existing on, or upon the conversion or exchange of convertible or exchangeable
securities outstanding as of, the date of this Prospectus), without the prior
written consent of . In addition, the Selling Stockholders and certain
other stockholders of the Company have entered into "holdback" agreements with
the Underwriters. See "Shares Eligible for Future Sale".

Each International Underwriter has also agreed that (a) it has not offered
or sold and, prior to the expiry of the period of six months from the Closing
Date, will not offer or sell any shares of Class A Common Stock to persons in
the United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or
agent) for the purposes of their businesses or otherwise in circumstances
which have not resulted and will not result in an offer to the public in the
United Kingdom within the meaning of the Public Offers of Securities
Regulations 1995 of Great Britain, (b) it has complied and will comply with
all applicable provisions of the Financial Services Act 1986 of Great Britain
with respect to anything done by it in relation to the shares of Class A
Common Stock in, from or otherwise involving the United Kingdom, and (c) it
has only issued or passed on and will only issue or pass on in the United
Kingdom any document received by it in connection with the issue of the shares
of Class A Common Stock to a person who is of a kind described in Article
11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996 of Great Britain or is a person to whom such document
may otherwise lawfully be issued or passed on.

Buyers of shares of Class A Common Stock offered hereby may be required to
pay stamp taxes and other charges in accordance with the laws and practice of
the country of purchase in addition to the initial public offering price.

The Class A Common Stock is traded on the New York Stock Exchange.

The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933.

U-2
<PAGE>

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

---------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information......................................................
Incorporation of Certain Documents by
Reference.................................................................
The Company................................................................
The Offerings..............................................................
Risk Factors...............................................................
Price Range of Class A Common Stock
and Dividend Policy.......................................................
Capitalization.............................................................
Selected Consolidated Financial Data.......................................
Selling Stockholders.......................................................
Certain Transactions and Relationships.....................................
Shares Eligible for Future Sale............................................
Certain United States Tax Consequences to Non-U.S. Holders.................
Validity of the Shares.....................................................
Experts....................................................................
Forward Looking Statements.................................................
Underwriting............................................................... U-1
</TABLE>

7,704,577 SHARES

LEXMARK
INTERNATIONAL GROUP, INC.

CLASS A COMMON STOCK
(PAR VALUE $.01 PER SHARE)

---------------

LOGO LEXMARK(TM)

---------------

GOLDMAN SACHS INTERNATIONAL

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following are the estimated expenses of the issuance and distribution of
the shares of Class A Common Stock being registered, including fees and
expenses incurred by the Company and the Selling Stockholders, other than any
underwriting compensation.

Fees and expenses incurred by the Company:

<TABLE>
<S> <C>
National Association of Securities Dealers, Inc. filing fee........ $ 30,500
Miscellaneous expenses............................................. $ 24,500
--------
Total............................................................ $ 75,000
========

Fees and expenses incurred by the Selling Stockholders:

Registration fee................................................... $ 99,006
Accounting fees and expenses....................................... $125,000
Legal fees and expenses............................................ $100,000
Printing and engraving............................................. $170,000
Transfer Agent's fees.............................................. $ 10,000
Blue Sky fees and expenses (including counsel fees)................ $ 10,000
Miscellaneous expenses............................................. $385,994
--------
Total............................................................ $900,000
========
</TABLE>

All of the above expenses of the Offering will be borne by the Company and
the Selling Stockholders as contemplated by the Registration and Participation
Agreement entered into at the time of the Acquisition.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the General Corporation Law of the State of Delaware (the
"Delaware Law") empowers a Delaware corporation to indemnify any persons who
are, or are threatened to be made, parties to any threatened, pending or
completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
such corporation), by reason of the fact that such person was an officer or
director of such corporation, or is or was serving at the request of such
corporation as a director, officer, employee or agent of another corporation
or enterprise. The indemnity may include expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding,
provided that such officer or director acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the corporation's best
interests, and, for criminal proceedings, had no reasonable cause to believe
his conduct was illegal. A Delaware corporation may indemnify officers and
directors in an action by or in the right of the corporation under the same
conditions, except that no indemnification is permitted without judicial
approval if the officer or director is adjudged to be liable to the
corporation in the performance of his duty. Where an officer or director is
successful on the merits or otherwise in the defense of any action referred to
above, the corporation must indemnify him against the expenses which such
officer or director actually and reasonably incurred.

Article VI of the Company's By-Laws provides for indemnification by the
Company of its directors and officers to the full extent permitted by the
Delaware Law. Pursuant to Section 145 of the Delaware Law, the Company has
purchased insurance on behalf of its present and former directors and officers
against any liability asserted against or incurred by them in such capacity or
arising out of their status as such.

II-1
<PAGE>

Pursuant to specific authority granted by Section 102 of the Delaware Law,
Article FIFTH of the Company's Third Restated Certificate of Incorporation
contains the following provision regarding limitation of liability of
directors and officers:

"(e) No director of the Corporation shall be liable to the Corporation or
its stockholders for monetary damages for breach of his or her fiduciary
duty as a director, provided that nothing contained in this Third Restated
Certificate of Incorporation shall eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of the
law, (iii) under Section 174 of the General Corporation Law of the State of
Delaware or (iv) for any transaction from which the director derived an
improper personal benefit."

The Company has entered into an Indemnification Agreement with C&D Fund IV
(together with its respective affiliates, directors and officers, the
"Indemnitees"). Pursuant to the Indemnification Agreement and under the Third
Restated Certificate of Incorporation, the Company has agreed to indemnify the
members of the Company's Board of Directors to the fullest extent allowable
under applicable Delaware law. In addition, the Company has agreed to
indemnify the Indemnitees against any suits, claims, damages or expenses that
may be made against or incurred by them under applicable securities laws in
connection with offerings of securities of the Company. However, the Company
will not be obligated to indemnify any Indemnitee in the event that any such
suit, claim, damage or expense is based upon an untrue statement or agreements
related to such offerings of securities in reliance upon written information
furnished by such Indemnitee specifically for use in such documents, contracts
and agreements. See "Underwriting".

Reference is hereby made to Sections 9 and 10 of the Underwriting Agreements
filed as Exhibits 1.1 and 1.2 hereto, for certain indemnification
arrangements.

II-2
<PAGE>

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

1. (A) EXHIBITS

<TABLE>
<CAPTION>
NUMBER DESCRIPTION OF EXHIBITS
------ -----------------------
<C> <S>
1.1 Form of Underwriting Agreement (U.S. Version).(8)
1.2 Form of Underwriting Agreement (International Version).(8)
Form of Agreement between U.S. and International Underwriting
1.3 Syndicates.(8)
4.1 Third Restated Certificate of Incorporation of Lexmark International
Group, Inc. (the
"Company").(1)
4.2 By-Laws of the Company, as amended and restated as of October 26, 1995,
and amended by Amendment No. 1 dated as of February 13, 1997.(6)
4.3 Registration and Participation Agreement, dated as of March 27, 1991,
among the Company, The Clayton & Dubilier Private Equity Fund IV ("C&D
Fund IV") and the stockholders of the Company named therein.(2)
4.4 Amendment, Waiver and Consent Under Registration and Participation
Agreement, dated as of December 21, 1994, executed by C&D Fund IV,
Leeway & Co., Mellon Bank N.A., as Trustee for First Plaza Group Trust
("Mellon Bank", and with Leeway & Co., the "Institutional Investors")
and the Equitable Investors.(2)
4.5 Registration Agreement, dated as of March 27, 1991, among the Company,
Lexmark International, the Equitable Investors and the Institutional
Investors.(2)
4.6 Amendment No. 1 to Registration Agreement, dated as of December 31,
1991, among the Company, Lexmark International, the Equitable Investors
and the Institutional Investors.(2)
4.7 Securities Purchase Agreement, dated as of March 27, 1991, among the
Company and the Institutional Investors.(2)
4.8 Amendment No. 1 to Securities Purchase Agreement, dated as of March 27,
1991, among the Company and the Institutional Investors.(2)
4.9 Amendment No. 2 to Securities Purchase Agreement, dated as of December
21,
1992, among the Company and the Institutional Investors.(2)
4.10 Specimen of Class A Common Stock certificate.(1)
4.11 Rights Agreement, dated as of February 18, 1998, between the Company
and ChaseMellon Shareholder Services, L.L.C., as Rights Agent.(7)
5 Opinion of Debevoise & Plimpton regarding the validity of the
securities being registered.(8)
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Debevoise & Plimpton (included in the Opinion of Debevoise &
Plimpton filed as Exhibit 5).(8)
24 Powers of Attorney.
</TABLE>
- --------
(1) Incorporated herein by reference to the Company's Form S-1 Registration
Statement, Amendment No. 1 (Registration No. 33-97218) filed with the
Commission on October 27, 1995.
(2) Incorporated herein by reference to the Company's Form S-1 Registration
Statement (Registration No. 33-97218) filed with the Commission on
September 22, 1995.
(3) Incorporated herein by reference to the Company's Form S-1 Registration
Statement, Amendment No. 2 (Registration No. 33-97218) filed with the
Commission on November 13, 1995.
(4) Incorporated herein by reference to the Company's Quarterly Report on Form
10-Q (File No. 1-14050) for the Quarterly Period ended March 31, 1996.
(5) Incorporated herein by reference to the Company's Annual Report on Form
10-K (File No. 1-14050) for the Fiscal Year ended December 31, 1995.
(6) Incorporated herein by reference to the Company's Annual Report on Form
10-K (File No. 1-14050) for the Fiscal Year ended December 31, 1996.
(7) Incorporated herein by reference to the Company's Current Report on Form
8-K (File No. 1-14050) dated February 27, 1998.
(8) To be filed by Amendment.

II-3
<PAGE>

ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Act, the information
omitted from the form of prospectus filed as part of this registration
statement in reliance upon Rule 430A and contained in a form of prospectus
filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration statement as of
the time it was declared effective;

(2) For the purpose of determining any liability under the Act, each post-
effective amendment that contains a form of prospectus shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof; and

(3) For purposes of determining any liability under the Act, each filing of
the registrant's annual report pursuant to section 13(a) or section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.

II-4
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT CERTIFIES
THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF LEXINGTON, STATE OF KENTUCKY, ON MARCH 10, 1998.

Lexmark International Group, Inc.

By /s/ Marvin L. Mann
---------------------
NAME: MARVIN L. MANN
TITLE: Chairman of the Board
&
Chief Executive Officer

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE FOLLOWING
CAPACITIES AND ON MARCH 10, 1998.

SIGNATURE TITLE

/s/ Marvin L. Mann Chairman of the
- ----------------------------- Board/Chief
MARVIN L. MANN Executive Officer
(Principal
Executive Officer)

/s/ Gary E. Morin Vice President/Chief
- ----------------------------- Financial Officer
GARY E. MORIN (Principal
Financial Officer)

/s/ David L. Goodnight Corporate Controller
- ----------------------------- (Principal
DAVID L. GOODNIGHT Accounting Officer)

/s/ B. Charles Ames* Director
- -----------------------------
B. CHARLES AMES

/s/ Roderick H. Carnegie* Director
- -----------------------------
RODERICK H. CARNEGIE

/s/ Frank T. Cary* Director
- -----------------------------
FRANK T. CARY

/s/ Paul J. Curlander* Director
- -----------------------------
PAUL J. CURLANDER

/s/ William R. Fields*
Director
- -----------------------------
WILLIAM R. FIELDS

II-5
<PAGE>

SIGNATURE TITLE

/s/ Donald J. Gogel* Director
- ----------------------------
DONALD J. GOGEL

/s/ Ralph E. Gomory* Director
- ----------------------------
RALPH E. GOMORY

/s/ Stephen R. Hardis* Director
- ----------------------------
STEPHEN R. HARDIS

/s/ Michael J. Maples* Director
- ----------------------------
MICHAEL J. MAPLES

/s/ Martin D. Walker* Director
- ----------------------------
MARTIN D. WALKER

/s/ Vincent J. Cole
* By:
------------------------
VINCENT J. COLE
ATTORNEY-IN-FACT

II-6

<PAGE>

[EXHIBIT 23.1]

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in the Registration Statement
on Form S-3 of our reports dated February 18, 1998, on our audits of the
consolidated financial statements and financial statement schedule of Lexmark
International Group, Inc. and subsidiaries as of December 31, 1996 and 1997, and
for the years ended December 31, 1995, 1996 and 1997. We also consent to the
reference to our firm under the caption "Experts."

/s/ Coopers & Lybrand L.L.P.

Lexington, Kentucky
March 6, 1998

<PAGE>

[EXHIBIT 24]

POWER OF ATTORNEY

The undersigned, a director of Lexmark International Group, Inc., a Delaware
corporation (the "Company"), does hereby constitute and appoint Marvin L.
Mann, Gary E. Morin and Vincent J. Cole, and each of them, with full power of
substitution, as his true and lawful attorneys and agents, to execute in his
name and on his behalf:

(a) one or more Registration Statements of the Company on an appropriate
form proposed to be filed with the Securities and Exchange Commission
("SEC") for the purpose of registering under the Securities Act of 1933, as
amended (the "Securities Act"), such number of shares of the Company's
Class A common stock, par value $.01 per share (the "Common Stock"), as
shall be determined pursuant to a resolution of the Board of Directors of
the Company or any duly authorized committee thereof;

(b) any and all supplements and amendments (including, without
limitation, post-effective amendments and any subsequent registration
statements pursuant to Rule 462(b) under the Securities Act) to such
Registration Statements; and

(c) any and all other documents and instruments which such attorneys and
agents deem necessary or advisable to enable the Company to comply with (i)
the Securities Act and the other federal securities laws of the United
States of America (including, without limitation, the Exchange Act) and the
rules, regulations and requirements of the SEC in respect of any thereof,
(ii) the securities or Blue Sky laws of any state or other governmental
subdivision of the United States of America, (iii) the rules and
regulations of the New York Stock Exchange, Inc. or any other national or
foreign securities exchange or authorized interdealer quotation system,
(iv) the requirements of the National Association of Securities Dealers,
Inc. and (v) the securities laws of any foreign jurisdiction; and the
undersigned does hereby ratify and confirm as his own acts and deeds that
all such attorneys-in-fact and agents, and each of them, shall do or cause
to be done by virtue hereof. Each one of such attorneys-in-fact and agents
shall have, and may exercise, all of the powers hereby conferred.