SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities and Exchange Act of 1934
(Mark One):
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
for the transition period from _________________ to ___________________
Commission file number 1-14050
A. Full title of the Plan and the address of the Plan, if different
from that of the issuer named below:
Lexmark Savings Plan
B. Name of issuer of securities held pursuant to the Plan and the
address of its principal executive office:
Lexmark International Group, Inc.
One Lexmark Centre Drive
740 West New Circle Road
Lexington, Kentucky 40550
1
<PAGE>
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act
of 1934, the Plan Administrator of the Plan has duly caused this annual report
to be signed on its behalf by the undersigned hereunto duly authorized.
LEXMARK SAVINGS PLAN
Date: June 24, 1999 By: /s/ Kurt M. Braun
------------- -----------------
Kurt M. Braun
Treasurer
Lexmark International Group, Inc.
2
<PAGE>
Form 11-K
Lexmark Savings Plan
December 31, 1998
--------
Pages
Report of Independent Accountants 1
Financial Statements:
Statements of Net Assets Available for Plan Benefits
as of December 31, 1998 and 1997 2
Statements of Changes in Net Assets Available for Plan Benefits
for the years ended December 31, 1998 and 1997 3
Notes to Financial Statements 4-19
Supplemental Schedules:
Item 27(a) Schedule of Assets Held for Investment Purposes
as of December 31, 1998 20
Item 27(d) Schedule of Reportable Transactions for the year
ended December 31, 1998 21-22
Exhibit:
Consent of Independent Accountants
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of the
Lexmark Savings Plan
In our opinion, the accompanying statements of net assets available for plan
benefits and the related statements of changes in net assets available for plan
benefits present fairly, in all material respects, the net assets available for
benefits of the Lexmark Saving Plan (the "Plan") at December 31, 1998 and 1997,
and the changes in net assets available for benefits for the years then ended in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Plan's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes as of December 31, 1998 and of reportable transactions
for the year ended December 31, 1998 are presented for the purpose of additional
analysis and are not a required part of the basic financial statements but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of the
Plan's management. The supplemental schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
/s/ PricewaterhouseCoopers LLP
Lexington, Kentucky
May 28, 1999
1
<PAGE>
LEXMARK SAVINGS PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
--------------------- ----------------------
ASSETS
Investments, at fair market value:
<S> <C> <C>
Common trust funds $ 159,388,748 $ 136,218,657
Participant loans 5,874,373 5,483,771
Lexmark Class A common stock 80,975,611 26,208,434
Guaranteed investment contracts (GICs)
and Synthetic GICs, at contract value 75,679,852 64,138,444
--------------------- ----------------------
Total investments 321,918,584 232,049,306
Employer contribution receivable 1,796,710 533,378
Due from broker for securities sold - 739,737
Other receivables 221,232 2,665
--------------------- ----------------------
Total assets 323,936,526 233,325,086
--------------------- ----------------------
LIABILITIES
Due to broker for securities purchased 1,469,389 -
Other payables 1,953,373 752,238
--------------------- ----------------------
Total liabilities 3,422,762 752,238
--------------------- ----------------------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS $ 320,513,764 $ 232,572,848
===================== ======================
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
LEXMARK SAVINGS PLAN
Statements of Changes in Net Assets Available for Plan Benefits
for the years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
--------------------- ---------------------
Investment income:
<S> <C> <C>
Dividend and interest income $ 13,399,790 $ 10,989,784
Net appreciation in value of investments 60,013,429 27,132,262
Contributions:
Employer 4,572,373 2,991,567
Participants 18,635,929 13,912,655
Distributions to withdrawing participants (8,571,278) (9,268,164)
Administrative expenses (109,327) (432,259)
--------------------- ---------------------
Net increase 87,940,916 45,325,845
NET ASSETS AVAILABLE FOR PLAN BENEFITS
Beginning of year 232,572,848 187,247,003
--------------------- ---------------------
End of year $320,513,764 $232,572,848
===================== =====================
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Plan Description:
The Lexmark Savings Plan (the "Plan") is subject to the provisions of the
Employee Retirement Security Act of 1974 ("ERISA"). The following
description of the Plan provides only general information.
(a) General
-------
The Plan is a defined contribution plan that covers all regular
full-time employees of the U.S. subsidiaries of Lexmark International
Group, Inc. (the "Company"). Employees are eligible to participate on
the first day one hour of service as a regular employee is performed.
Prior to January 1, 1998, employees had to have one year and 1,000
hours of service to be eligible to participate in the Plan.
The Plan was amended and restated on July 1, 1997. Significant changes
to the Plan have been disclosed herein. Effective July 1, 1997, the
trustee was changed from Bankers Trust Company (the "predecessor
trustee") to Fidelity Management Trust Company (the "successor
trustee"). The Plan assets held by the predecessor trustee were
invested by the successor trustee into the following investment
options:
Bankers Trust Company Fidelity Management Trust Company
--------------------- ---------------------------------
Large Company Index Fund Fidelity Equity-Income Fund
Small Company Stock Fund Fidelity Low-Priced Stock Fund
Balanced Asset Fund Fidelity Freedom 2000 Fund
International Index Fund Fidelity Diversified International Fund
Money Market Fund Fidelity Retirement Government Money
Market Portfolio
The successor trustee offers additional investment funds which
include: Fidelity Growth & Income Portfolio, Fidelity Intermediate
Bond Fund, Fidelity Contrafund, Fidelity Freedom Income Fund, Fidelity
Freedom 2010 Fund, Fidelity Freedom 2020 Fund, Fidelity Freedom 2030
Fund and Spartan U.S. Equity Index Fund.
Recordkeeping responsibilities for the Lexmark Stock Fund and the
Dwight Fixed Income Fund were also transferred from the predecessor
trustee to the successor trustee; however, invested assets remained
consistent at the time of transfer.
4
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
1. Plan Description, continued:
(b) Investment Funds
----------------
Prior to July 1, 1997, the Plan's participant-directed options were
as follows: Money Market, Large Company Index, Small Company Stock,
Balanced Asset, International Index, Dwight Fixed Income, and
Lexmark Stock Funds. The Money Market Fund was represented by a
diversified portfolio of high-quality, short-term money market
securities whose return was expected to follow current market
interest rates. The Large Company Index Fund was represented
principally by a common trust fund comprised of investments in
common stocks that were expected to produce results that
approximated the performance of the Standard & Poor's 500 Index. The
Small Company Stock Fund was represented principally by investments
in common stocks that were expected to produce results that
approximated the performance of the medium and small-company common
stocks generally not included in the Standard & Poor's 500 Index.
The Balanced Asset Fund was represented by a diversified portfolio
of stocks, bonds, and money market instruments. The International
Index Fund was represented principally by securities in major stock
markets in Europe, Australia, Latin America and the Far East to
provide growth potential and diversification. The Dwight Fixed
Income Fund was and continues to be a stable value, commingled fund
solely for Company employees that invests in high quality investment
contracts offered by major insurance companies and other approved
financial institutions and short-term investments to provide for
liquidity needs. The Lexmark Stock Fund was and continues to be a
commingled fund solely for Company employees that buys shares of
Lexmark Class A common stock with a small amount of short-term
investments to provide for liquidity needs.
Effective July 1, 1997, the Plan's active participant-directed
options are as follows: The Fidelity Retirement Government Money
Market Portfolio is a money market fund that invests in high
quality, short-term money market securities of the U.S. Treasury and
government agencies. The Fidelity Equity-Income Fund is a growth and
income mutual fund that invests primarily in income-producing
stocks, but may also invest in bonds for income. The Fidelity
Low-Priced Stock Fund is a growth mutual fund that invests primarily
in stocks of companies that the fund's manager believes are
undervalued or out of favor and could offer the potential for
significant capital appreciation. The Fidelity Diversified
International Fund is an international, growth mutual fund that
invests primarily in stocks of relatively undervalued larger
companies located outside the U.S. that are included in the Morgan
Stanley EAFE Index. The Fidelity Growth & Income Portfolio is a
growth and income mutual fund that invests mainly in U.S. and
foreign stocks of companies currently paying dividends and carrying
the potential for increased earnings, but may also invest in bonds.
The Fidelity Intermediate Bond Fund is an income mutual fund that
invests in all types of investment-grade bonds, including foreign,
U.S. government and corporate issues, with intermediate maturities.
The Fidelity Contrafund is a growth mutual fund that invests
primarily in U.S. and foreign common stocks of unpopular companies
that the fund's manager believes are undervalued or out of favor.
The Fidelity Freedom Funds
5
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
1. Plan Description, continued:
(b) Investment Funds, continued
----------------
are asset allocation mutual funds investing in other Fidelity stock,
bond and money market mutual funds. The allocation strategy for each
Freedom Fund with a target retirement date is based on the number of
years until anticipated retirement, gradually adopting a more
conservative asset allocation over time. The Freedom Income Fund,
however, is designed for those already in retirement. The Spartan
U.S. Equity Index Fund is a growth and income fund that invests
primarily in the companies that comprise the S&P 500 Index. The
Dwight Fixed Income Fund is a stable value, commingled fund solely
for Company employees that invests in high quality investment
contracts offered by major insurance companies and other approved
financial institutions and short-term investments to provide for
liquidity needs. The Lexmark Stock Fund is a commingled fund solely
for Company employees that buys shares of Lexmark Class A common
stock with a small amount of short-term investments to provide for
liquidity needs.
(c) Contributions
-------------
The Plan is funded by voluntary employee pre-tax contributions up to
a maximum of 20% of total annual eligible compensation. Prior to
January 1, 1998, the maximum voluntary pre-tax contribution was 12%.
The contributions for a participant are made by payroll deductions
and are determined each pay period by multiplying the participant
contribution rate then in effect by his/her eligible compensation
for such period.
A participant can designate and change the proportions in which
his/her pretax contributions are allocated among the Plan's active
investment funds. Prior to July 1, 1997, the minimum allocation to
each fund was 5%. Effective July 1, 1997, the minimum allocation to
each Fund is 1%.
The Company matches employee pretax contributions in an amount equal
to 30% of up to the first 5% the employee contributes per pay
period. Matching contributions are invested in the same investment
funds and in the same proportions as designated by the participant.
However, the participant can elect to have all or a portion of
matching contributions invested in the Lexmark Stock Fund.
The Company contributes an additional matching contribution if the
Company achieves certain business results each fiscal year, with
payout, if any, as soon as practicable in the following year. The
additional matching contribution is allocated to a participant based
on his/her aggregate contributions to the Plan for that year and is
invested in the Lexmark Stock Fund. A participant is not permitted
to transfer amounts attributable to such allocation, including any
earnings thereon, from the Lexmark Stock Fund to another investment
fund, except during retirement. An additional matching contribution
of $1,796,710 and $533,378 for 1998 and 1997, respectively, has been
accrued in the Plan's financial statements.
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
1. Plan Description, continued:
(d) Allocations to Participants
---------------------------
Prior to July 1, 1997, contributions and earnings of the Plan were
allocated to the accounts of the participants on a semi-monthly
basis. Each participant's value in the net assets of the investment
funds was based upon the assignment of units.
Effective July 1, 1997, contributions continue to be allocated on a
semi-monthly basis and earnings are allocated to the accounts of the
participants on a daily basis. The investment fund options provided
by the successor trustee are mutual funds that do not assign units
for contributions and earnings allocation, except for the Lexmark
Stock Fund, which has 2,575,452 units with a $31.45 net asset value
per unit as of December 31, 1998 and 2,114,495 units with a $12.49
net asset value per unit as of December 31, 1997.
(e) Vesting
-------
Employees who were eligible to participate in the Plan prior to July
1, 1994 vest immediately in their contributions and matching
contributions made on their behalf by the Company. Employees hired on
or after July 1, 1994 and who were not participants in the Plan as of
June 30, 1995 become fully vested in the employer matching
contributions upon completing five years of continuous service or
upon death, disability or attainment of normal retirement age as an
employee, whichever occurs first.
(f) Withdrawals
-----------
A participant who has attained age 59 1/2 may withdraw in cash all or
part of his/her contributions and matching contributions provided
that a participant may make only one such withdrawal in any Plan
year.
Hardship withdrawals are available according to provisions of the
Plan if approved by the Plan administrator but are limited to the
value of the participant's contributions and the participant's
immediate financial need. Earnings and matching contributions are not
eligible for hardship withdrawals. After receipt of a hardship
withdrawal, a participant is suspended for twelve months from making
contributions to the Plan.
In the case of a partial withdrawal made by a participant with an
interest in more than one investment fund, the amount withdrawn from
each of the participant's investment funds is in the same proportion
as the value of his/her interest in each investment fund.
(g) Distributions
-------------
In the event of normal retirement or permanent disability, and
provided the value of the participant's account is in excess of
$5,000, the participant may elect one of two options or may defer
either election to a later date. The two options available are (1)
receive a lump sum distribution or (2) receive a specified number of
annual installments, over a period of generally up to ten years.
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
1. Plan Description, continued:
(g) Distributions, continued
-------------
In the event that a participant dies before the balance of his/her
account has been distributed, the remaining balance of his/her
account shall be distributed to the participant's beneficiaries in a
lump sum distribution.
Upon termination of employment for any reason other than retirement,
permanent disability, or death, and the value of the participant's
account is in excess of (or at the time of any prior distribution was
in excess of) $5,000, the participant may elect one of two options or
may defer either election to a later date. The two options available
are (1) receive a lump sum distribution or (2) receive a specified
number of annual installments, over a period of generally up to ten
years.
If upon a participant's normal retirement, permanent disability,
death, or termination of employment and the value of the
participant's account is not in excess of $5,000, such participant
receives an immediate distribution.
Distributions are generally cash distributions; however, a
participant who is entitled to a distribution and who has investments
in whole or in part in the Lexmark Stock Fund may elect, in writing,
to have the value of his/her investment in the Lexmark Stock Fund
distributed in whole shares of the Company's Class A common stock.
Fractional shares are distributed in cash.
(h) Participant Loans
-----------------
A Participant may borrow funds from his/her Plan account subject to
the provisions of the Plan. A participant is eligible to have up to
two outstanding loans at a given time and may borrow up to half the
value of his/her Plan account (including any current loan balance),
but no more than $50,000 less his/her highest outstanding loan
balance during the preceding 12-month period. No loan will be made
while any other loan is in default. An administrative fee is charged
for the origination of the loan and is deducted from the
participant's account in proportion to the funds held for investment.
Loans are granted for a minimum term of one year, and thereafter in
monthly increments up to a maximum of five years; however, the
participant may pre-pay the loan at any time. Each loan bears a fixed
rate of interest determined at the inception of the loan by the plan
administrator based upon comparable rates offered by commercial
lending institutions, prime plus 1.5% for the years ended December
31, 1998 and 1997. Payment of the loan is made through payroll
deductions. Payments of principal and interest are allocated to the
investment funds elected for current contributions. A participant may
continue to contribute to the Plan while he/she has an outstanding
loan balance, provided the loan is not in default.
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
1. Plan Description, continued:
(i) Forfeitures
-----------
Any portion of a participant's account balance in which the
participant is not vested upon termination constitutes a forfeiture
at the time the participant receives a distribution, unless the
participant has no vested interest, in which case such forfeiture
occurs at his/her termination of employment. Forfeitures occurring in
a Plan year are applied equally on a per participant basis to reduce
administrative fees that would otherwise be assessed against the
participant's account or may be utilized by the Plan administrator,
if certain criteria are satisfied, to restore forfeited amounts of
previously terminated employees returning to the Plan. Any remaining
forfeitures are remitted to the Company and customarily applied
against its matching contribution obligation.
2. Summary of Significant Accounting Policies:
The following are significant accounting policies followed by the Plan:
(a) Valuation of Investments
------------------------
Shares in common trust funds are stated at fair market value as
quoted.
Investments in guaranteed investment contracts (GICs) are stated at
contract value, which represents deposits received and interest
earned at guaranteed rates. The fair market value of these contracts
approximates the contract value at December 31, 1998 and 1997. Fair
market value is determined by discounting the contracts using current
market rates. A penalty or adjustment may be imposed for early
withdrawal or termination of certain GICs.
The Plan enters into arrangements known as synthetic GICs, which are
investment contracts that simulate the performance of traditional
GICs through the use of financial instruments. The Plan purchases a
security such as a government security, private or public
mortgage-backed or other asset-backed security or an investment grade
corporation obligation which is held in trust for the Plan. The Plan
then enters into a benefit responsive "wrapper" contract with a
third-party such as a financial institution or an insurance company
which guarantees the Plan a specific value and rate of return for the
security held in trust. The underlying security held in trust and the
wrapper contract are presented together in the financial statements
at contract value. The contract value of the synthetic GICs
approximates the fair market value (determined by discounting the
contracts using current market rates) of the contracts at December
31, 1998 and 1997.
The Lexmark Class A common stock is stated at fair market value as
quoted by the New York Stock Exchange.
Participant loans are stated at cost, which approximates fair market
value.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
2. Summary of Significant Accounting Policies, continued
(a) Valuation of Investments, continued
------------------------
Fair market value of investments, as quoted, is based on various
factors including the current interest rate environment and the
general strength of the economy. Changes in the fair market value
could significantly affect the Plan's net assets available for plan
benefits.
(b) Net Appreciation (Depreciation)
-------------------------------
The Plan presents in the statement of changes in net assets available
for Plan benefits the net appreciation (depreciation) in the fair
value of its investments which consists of the realized gains or
losses and the unrealized appreciation (depreciation) on those
investments.
(c) Distributions to Withdrawing Participants
-----------------------------------------
Distributions to withdrawing participants are recorded when paid.
(d) Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the dates of the financial statements and the changes in net assets
available for Plan benefits during the reporting periods. Actual
results could differ from those estimates.
(e) Reclassifications
-----------------
Certain financial statement reclassifications have been made to prior
year amounts to be consistent with current year presentation. Such
reclassifications have no affect on net assets available for plan
benefits or net increase in net assets available for plan benefits.
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
3. Investments:
The investments that represent 5% or more of the Plan's net assets at
December 31, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
1998 1997
---------------- -----------------
Investments at Fair Market Value:
<S> <C> <C>
Lexmark Class A common stock (805,604 and 689,646 shares, respectively) $ 80,975,611 $ 26,208,434
Fidelity Management and Research Company
Equity-Income Fund (993,057 and 1,206,473 shares, respectively) 55,164,296 63,231,224
Low Priced Stock Fund (1,007,216 and 1,199,223 shares, respectively) 23,014,888 30,136,486
Spartan U.S. Equity Index Fund (398,310 and 222,877 shares, respectively) 17,509,717 -
Other investments at fair market value less than 5% of net assets 69,574,220 46,245,987
Investments at Contract Value (less than 5% of net assets) 75,679,852 66,227,175
---------------- -----------------
Total Investments $ 321,918,584 $ 232,049,306
================ =================
</TABLE>
The crediting interest rates as of December 31, 1998 and 1997 and the
average yields for the years then ended for each guaranteed investment
contract and synthetic guaranteed investment contract are as follows:
<TABLE>
<CAPTION>
Average annual yield/
Crediting interest rate
1998 1997
------------ ------------
Guaranteed Investment Contracts
Participation in Group Annuity Contract #5150 with
<S> <C> <C>
Allstate Life Insurance Company - 8.5%
New York Life Placement Contract #30034 with New York Life
Insurance Company 7.4% 7.4%
Monumental Placement Contract #ADA00558FR with Monumental
Life Insurance Company 5.9% 5.9%
Participation in Group Annuity Contract #G-26156.01 with
Pacific Mutual Life Insurance Company 7.5% 7.5%
Participation in Group Annuity Contract #214760 with Citibank - 6.5%
Participation in Group Annuity Contract #8617 with John Hancock
Mutual Life Insurance Company 6.9% 6.9%
Participation in Group Annuity Contract #51508 with Transamerica
Occidental Life Insurance Company 6.1% -
</TABLE>
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
3. Investments, continued:
<TABLE>
<CAPTION>
Average annual yield/
Crediting interest rate
1998 1997
----------- -----------
Synthetic Guaranteed Investment Contracts
Synthetic GIC including FHLMC mortgages 1404-D (CUSIP: 312912VTA)
(fair market value of $10,175,367) and Group Annuity Contract #ADA00024 with
Monumental Life at 6.79% with maturity on June 15, 2001. Excess of the fair
<S> <C> <C>
market value of the underlying asset over contract value is $109,730. 6.8% 6.8%
Synthetic GIC including AAA bond ATTMT 1997-A (CUSIP: 00206LAN5)
(fair market value of $5,006,639) and Group Annuity Contract #76678 at 6.5% with
Transamerica Life with maturity on December 17, 2001. Wrapper fair market value
of $842,777. 6.4% 6.4%
Synthetic GIC including FNMA seven year balloon mortgage pass-through
securities FN313526 (CUSIP: 31374GHB6) (fair market value of $4,201,785) and
Wrap Agreement Contract #97037 with State Street Bank at 7.17% with maturity on
March 25, 2003. Excess of the fair market value of the underlying asset over
contract value is $100,683. 7.0% 7.0%
Synthetic GIC including AAA bond PEMEX5.2 11/03 (CUSIP: 706448AA5)
(fair market value of $4,998,731) and Group Annuity Contract #76877-000 with
Transamerica Life at 5.7% with maturity on November 15, 2003. Wrapper fair
market value of $13,744. 5.6% -
Synthetic GIC including FNMA mortgage backed security FN381002
(CUSIP: 31377MGK1) (fair market value of $8,619,565) and Wrap Agreement Contract
#76877-001 with Transamerica Life at 5.7% with maturity on November 25, 2005.
Wrapper fair market value of $71,756. 5.6% -
Synthetic GIC including FNMA mortgage backed security FN380214
(CUSIP: 31377LK36) (fair market value of $5,279,569) and Wrap Agreement Contract
#98022 with State Street Bank at 6.07% with maturity on April 25, 2005. Excess
of the fair market value of the underlying asset over contract value is $104,793. 6.0% -
Synthetic GIC including FHLMC mortgages FSPC T-13 A7 (CUSIP: 3133TGDB2)
(fair market value of $ 4,020,155) and Group Annuity Contract #98155 with State
Street Bank at 6.17% with maturity on April 25, 2013. Excess of the fair market
value of the underlying asset over contract value is $1,312. 6.1% -
</TABLE>
These rates are net of investment management fees, if any, which are
automatically deducted from the fund's interest income according to the
terms of the Investment Management Agreement.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
4. Administrative Expenses:
Expenses for administration of the Plan are paid jointly by participants
and the Company. Participants pay an annual participant fee; operating
and management fees of the investment funds; and any applicable loan,
distribution and withdrawal fees. All other fees are paid by forfeitures,
to the extent available, and thereafter by the Company. Certain
administrative services are provided at no cost to the Plan by the
Company.
5. Income Tax Status:
The Plan qualifies within the meaning of Section 401(a) and 401(k) of the
Internal Revenue Code of 1986, (the "Code"), as amended, and the trust is
exempt from tax under Section 501(a) of the Code. The Plan was amended
and restated effective July 1, 1997, and has received a favorable
determination letter dated January 28, 1998 in which the Internal Revenue
Service stated that the Plan and related trust are in compliance with the
applicable requirements of the Code.
Participants will not be subject to income tax withholding for deferred
compensation, unless required by state or local authority.
A participant will not be subject to federal income tax on employer
contributions made to a participant's account, or on income accruing to
the account, until distribution or withdrawal of the account, in whole or
in part.
6. Plan Termination:
The Company has the right under the Plan to discontinue its contribution
at any time and to terminate the Plan subject to the provisions set forth
in ERISA. In the event of Plan termination, participants will become 100%
vested in their accounts and the Plan assets will be distributed in
accordance with the provisions of the Plan.
7. Concentration of Credit Risk:
Plan assets are invested in various financial instruments that contain
some degree of credit risk. There is a concentration of credit risk as
25% of Plan assets are invested in Lexmark Class A common stock as of
December 31, 1998.
8. Fund Information
Net assets available for benefits and changes in net assets available for
benefits by participant-directed investment funds for the years ended
December 31, 1998 and 1997 are as follows:
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
8. Fund Information, continued
<TABLE>
<CAPTION>
Fidelity Fidelity
Retirement Govt. Fidelity Low- Diversified
Money Market Fidelity Equity- Priced Stock International
Portfolio Income Fund Fund Fund
---------------- ---------------- ------------- -------------
Net Assets Available for Plan Benefits with
Fund Information December 31, 1998
ASSETS
Investments, at fair market value:
<S> <C> <C> <C> <C>
Common trust funds $6,869,593 $55,164,296 $23,014,888 $5,866,763
Participant loans - - - -
Lexmark Class A common stock - - - -
Guaranteed investment contracts
(GICs) and Synthetic GICs,
at contract value - - - -
---------- ----------- ----------- ----------
Total investments 6,869,593 55,164,296 23,014,888 5,866,763
Employer contribution receivable - - - -
Other receivables - - - -
---------- ----------- ----------- ----------
Total Assets 6,869,593 55,164,296 23,014,888 5,866,763
---------- ----------- ----------- ----------
LIABILITIES
Due to broker for securities purchased - - - -
Other payables - - - -
---------- ----------- ----------- ----------
Total Liabilities - - - -
---------- ----------- ----------- ----------
Net assets available for fund/plan
benefits at December 31, 1998 $6,869,593 $55,164,296 $23,014,888 $5,866,763
========== =========== =========== ==========
Changes in Net Assets Available for Plan
Benefits with Fund information for the year
ended December 31, 1998
Interfund transfers $ 579,551 ($17,570,883) ($ 9,244,126) ($ 699,536)
Investment income:
Dividend and interest income 338,748 3,521,196 2,168,642 232,934
Net appreciation (depreciation) in
value of investments - 3,287,089 (1,983,415) 479,932
Contributions:
Employer 217,121 610,792 372,445 104,166
Participants 1,011,431 3,770,750 2,450,238 735,505
Participant loan activity:
Participant loans (198,642) (856,188) (427,393) (55,575)
Participant loan payments 119,876 726,890 353,658 54,829
Distributions to withdrawing
participants (1,021,540) (1,553,153) (805,480) (221,068)
Administrative expenses (108,941) (3,421) (6,167) (4)
---------- ----------- ----------- ----------
Net increase (decrease) in
fund/plan equity 937,604 (8,066,928) (7,121,598) 631,183
Net assets available for fund/plan
benefits at December 31, 1997 5,931,989 63,231,224 30,136,486 5,235,580
---------- ----------- ----------- ----------
Net assets available for fund/plan
benefits at December 31, 1998 $6,869,593 $55,164,296 $23,014,888 $5,866,763
========== =========== =========== ==========
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
8. Fund Information, continued
<TABLE>
<CAPTION>
Fidelity
Fidelity Growth & Intermediate Fidelity Fidelity Freedom
Income Portfolio Bond Fund Contrafund Income Fund
---------------- ---------------- ------------- -------------
Net Assets Available for Plan Benefits with
Fund Information December 31, 1998
ASSETS
Investments, at fair market value:
<S> <C> <C> <C> <C>
Common trust funds $15,489,929 $2,429,915 $9,078,920 $969,000
Participant loans - - - -
Lexmark Class A common stock - - - -
Guaranteed investment contracts
(GICs) and Synthetic GICs,
at contract value - - - -
----------- ---------- ---------- --------
Total investments 15,489,929 2,429,915 9,078,920 969,000
Employer contribution receivable - - - -
Other receivables - - - -
----------- ---------- ---------- --------
Total Assets 15,489,929 2,429,915 9,078,920 969,000
----------- ---------- ---------- --------
LIABILITIES
Due to broker for securities purchased - - - -
Other payables - - - -
----------- ---------- ---------- --------
Total Liabilities - - - -
----------- ---------- ---------- --------
Net assets available for fund/plan
benefits at December 31, 1998 $15,489,929 $2,429,915 $9,078,920 $969,000
=========== ========== ========== ========
Changes in Net Assets Available for Plan
Benefits with Fund information for the year
ended December 31, 1998
Interfund transfers $ 5,434,994 $ 841,467 $2,095,671 $574,594
Investment income:
Dividend and interest income 703,229 95,380 676,936 32,518
Net appreciation (depreciation) in
value of investments 1,745,126 13,911 1,016,533 28,537
Contributions:
Employer 194,154 28,181 132,277 10,272
Participants 1,597,090 243,378 1,136,160 84,537
Participant loan activity:
Participant loans (154,117) (20,474) (118,654) (3,460)
Participant loan payments 136,869 24,779 77,650 7,383
Distributions to withdrawing
participants (176,971) (4,847) (107,367) (2,394)
Administrative expenses (1,076) (622) (116) (47)
----------- ---------- ---------- --------
Net increase (decrease) in
fund/plan equity 9,479,298 1,221,153 4,909,090 731,940
Net assets available for fund/plan
benefits at December 31, 1997 6,010,631 1,208,762 4,169,830 237,060
----------- ---------- ---------- --------
Net assets available for fund/plan
benefits at December 31, 1998 $15,489,929 $2,429,915 $9,078,920 $969,000
=========== ========== ========== ========
</TABLE>
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
8. Fund Information, continued
<TABLE>
<CAPTION>
Fidelity Freedom Fidelity Freedom Fidelity Freedom Fidelity Freedom
2000 Fund 2010 Fund 2020 Fund 2030 Fund
---------------- ---------------- ---------------- ----------------
Net Assets Available for Plan Benefits with
Fund Information December 31, 1998
ASSETS
Investments, at fair market value:
<S> <C> <C> <C> <C>
Common trust funds $6,931,597 $3,376,067 $1,695,851 $1,561,490
Participant loans - - - -
Lexmark Class A common stock - - - -
Guaranteed investment contracts
(GICs) and Synthetic GICs,
at contract value - - - -
---------- ---------- ---------- ----------
Total investments 6,931,597 3,376,067 1,695,851 1,561,490
Employer contribution receivable - - - -
Other receivables - 0 - -
---------- ---------- ---------- ----------
Total Assets 6,931,597 3,376,067 1,695,851 1,561,490
---------- ---------- ---------- ----------
LIABILITIES
Due to broker for securities purchased - - - -
Other payables - - - -
---------- ---------- ---------- ----------
Total Liabilities - - - -
---------- ---------- ---------- ----------
Net assets available for fund/plan
benefits at December 31, 1998 $6,931,597 $3,376,067 $1,695,851 $1,561,490
========== ========== ========== ==========
Changes in Net Assets Available for Plan
Benefits with Fund information for the year
ended December 31, 1998
Interfund transfers ($1,492,867) $ 894,438 $ 435,842 $ 199,542
Investment income:
Dividend and interest income 359,586 153,744 62,469 67,887
Net appreciation (depreciation) in
value of investments 618,386 299,900 159,497 149,396
Contributions:
Employer 80,138 36,335 35,280 43,277
Participants 563,309 217,519 294,864 370,704
Participant loan activity:
Participant loans (77,730) (19,700) (17,736) (18,932)
Participant loan payments 100,618 38,990 16,333 9,302
Distributions to withdrawing
participants (167,221) (802) (14,673) (4,582)
Administrative expenses (35) (12) (47) (124)
---------- ---------- ---------- ----------
Net increase (decrease) in
fund/plan equity (15,816) 1,620,412 971,829 816,470
Net assets available for fund/plan
benefits at December 31, 1997 6,947,413 1,755,655 724,022 745,020
---------- ---------- ---------- ----------
Net assets available for fund/plan
benefits at December 31, 1998 $6,931,597 $3,376,067 $1,695,851 $1,561,490
========== ========== ========== ==========
</TABLE>
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
8. Fund Information, continued
<TABLE>
<CAPTION>
Spartan U.S. Dwight Fixed Lexmark Stock
Equity Index Fund Income Fund Fund Fund Total
----------------- ------------ ------------- ----------
Net Assets Available for Plan Benefits with
Fund Information December 31, 1998
ASSETS
Investments, at fair market value:
<S> <C> <C> <C> <C>
Common trust funds $17,509,717 $ 6,213,752 $ 3,216,970 $159,388,748
Participant loans - - - -
Lexmark Class A common stock - - 80,975,611 80,975,611
Guaranteed investment contracts
(GICs) and Synthetic GICs,
at contract value - 75,679,852 - 75,679,852
----------- ----------- ----------- ------------
Total investments 17,509,717 81,893,604 84,192,581 316,044,211
Employer contribution receivable - - 1,796,710 1,796,710
Other receivables - - 221,232 221,232
----------- ----------- ----------- ------------
Total Assets 17,509,717 81,893,604 86,210,523 318,062,153
----------- ----------- ----------- ------------
LIABILITIES
Due to broker for securities purchased - - 1,469,389 1,469,389
Other payables - 6,912 1,946,461 1,953,373
----------- ----------- ----------- ------------
Total Liabilities - 6,912 3,415,850 3,422,762
----------- ----------- ----------- ------------
Net assets available for fund/plan
benefits at December 31, 1998 $17,509,717 $81,886,692 $82,794,673 $314,639,391
=========== =========== =========== ============
Changes in Net Assets Available for Plan
Benefits with Fund information for the year
ended December 31, 1998
Interfund transfers $ 5,880,444 $10,131,754 $ 1,939,115 $ -
Investment income:
Dividend and interest income 274,085 4,659,027 53,409 13,399,790
Net appreciation (depreciation) in
value of investments 2,425,676 - 51,772,861 60,013,429
Contributions:
Employer 174,977 530,090 2,002,868 4,572,373
Participants 1,523,569 3,127,410 1,509,465 18,635,929
Participant loan activity:
Participant loans (111,542) (1,065,663) (649,894) (3,795,700)
Participant loan payments 69,224 1,000,207 330,342 3,066,950
Distributions to withdrawing
participants (522,638) (2,717,067) (894,000) (8,213,803)
Administrative expenses (331) (6,242) (1,469) (128,654)
----------- ----------- ----------- ------------
Net increase (decrease) in
fund/plan equity 9,713,464 15,659,516 56,062,697 87,550,314
Net assets available for fund/plan
benefits at December 31, 1997 7,796,253 66,227,176 26,731,976 227,089,077
----------- ----------- ----------- ------------
Net assets available for fund/plan
benefits at December 31, 1998 $17,509,717 $81,886,692 $82,794,673 $314,639,391
=========== =========== =========== ============
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
8. Fund Information, continued
<TABLE>
<CAPTION>
Participant Loans Total
----------------- --------------
Net Assets Available for Plan Benefits with
Fund Information December 31, 1998
ASSETS
Investments, at fair market value:
<S> <C> <C>
Common trust funds $ - $159,388,748
Participant loans 5,874,373 5,874,373
Lexmark Class A common stock - 80,975,611
Guaranteed investment contracts
(GICs) and Synthetic GICs,
at contract value - 75,679,852
---------- ------------
Total investments 5,874,373 321,918,584
Employer contribution receivable - 1,796,710
Other receivables - 221,232
---------- ------------
Total Assets 5,874,373 323,936,526
---------- ------------
LIABILITIES
Due to broker for securities purchased - 1,469,389
Other payables - 1,953,373
---------- ------------
Total Liabilities - 3,422,762
---------- ------------
Net assets available for fund/plan
benefits at December 31, 1998 $5,874,373 $320,513,764
========== ============
Changes in Net Assets Available for Plan
Benefits with Fund information for the year
ended December 31, 1998
Interfund transfers $ - $ -
Investment income:
Dividend and interest income - 13,399,790
Net appreciation (depreciation) in
value of investments - 60,013,429
Contributions:
Employer - 4,572,373
Participants - 18,635,929
Participant loan activity:
Participant loans 3,795,700 -
Participant loan payments (3,066,950) -
Distributions to withdrawing
participants (357,475) (8,571,278)
Administrative expenses 19,327 (109,327)
---------- ------------
Net increase (decrease) in
fund/plan equity 390,602 87,940,916
Net assets available for fund/plan
benefits at December 31, 1997 5,483,771 232,572,848
---------- ------------
Net assets available for fund/plan
benefits at December 31, 1998 $5,874,373 $320,513,764
========== ============
</TABLE>
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
8. Fund Information, continued
<TABLE>
<CAPTION>
Money Market Large Company Small Company Balanced Asset
Fund Index Fund Stock Fund Fund
------------ ------------- ------------- --------------
Net Assets Available for Plan Benefits with
Fund Information December 31, 1997
ASSETS
Investments, at fair market value:
<S> <C> <C> <C> <C>
Common trust funds $ - $ - $ - $ -
Participant loans - - - -
Lexmark Class A common stock - - - -
Guaranteed investment contracts
(GICs) and Synthetic GICs,
at contract value - - - -
---------- ----------- ----------- ----------
Total investments - - - -
Employer contribution receivable - - - -
Due from broker for securities sold - - - -
Other receivables - - - -
---------- ----------- ----------- ----------
Total assets - - - -
---------- ----------- ----------- ----------
LIABILITIES
Other payables - - - -
Total liabilities - - - -
---------- ----------- ----------- ----------
Net assets available for fund/plan
benefits at December 31, 1997 $ - $ - $ - $ -
========== =========== =========== ==========
Changes in Net Assets Available for Plan
Benefits with Fund information for the year
ended December 31, 1997
Interfund transfers ($6,612,014) ($61,005,456) ($28,799,587) ($8,585,810)
Investment income:
Dividend and interest income 167,600 2,124 1,088 456
Net appreciation (depreciation) in
value of investments - 10,424,093 2,449,994 875,337
Contributions:
Employer 169,819 381,850 238,224 79,473
Participants 806,392 2,184,913 1,415,841 463,738
Participant loan activity:
Participant loans (67,314) (337,229) (117,995) (29,650)
Participant loan payments 55,655 464,319 230,341 95,401
Distributions to withdrawing
participants (516,532) (834,332) (700,123) (339,668)
Administrative expenses (15,166) (115,354) (73,565) (41,567)
---------- ----------- ----------- ----------
Net increase (decrease) in
fund/plan equity (6,011,560) (48,835,072) (25,355,782) (7,482,290)
Net assets available for fund/plan
benefits at December 31, 1996 6,011,560 48,835,072 25,355,782 7,482,290
---------- ----------- ----------- ----------
Net assets available for fund/plan
benefits at December 31, 1997 $ - $ - $ - $ -
========== =========== =========== ==========
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
8. Fund Information, continued
<TABLE>
<CAPTION>
Fidelity
Retirement Govt. Fidelity Low-
International Money Market Fidelity Equity- Priced Stock
Index Fund Portfolio Income Fund Fund
------------- ------------ ---------------- ------------
Net Assets Available for Plan Benefits with
Fund Information December 31, 1997
ASSETS
Investments, at fair market value:
<S> <C> <C> <C> <C>
Common trust funds $ - $5,931,989 $63,231,224 $30,136,486
Participant loans - - - -
Lexmark Class A common stock - - - -
Guaranteed investment contracts
(GICs) and Synthetic GICs,
at contract value - - - -
---------- ---------- ----------- -----------
Total investments - 5,931,989 63,231,224 30,136,486
Employer contribution receivable - - - -
Due from broker for securities sold - - - -
Other receivables - - - -
---------- ---------- ----------- -----------
Total assets - 5,931,989 63,231,224 30,136,486
---------- ---------- ----------- -----------
LIABILITIES
Other payables - - - -
---------- ---------- ----------- -----------
Total liabilities - - - -
---------- ---------- ----------- -----------
Net assets available for fund/plan
benefits at December 31, 1997 $ - $5,931,989 $63,231,224 $30,136,486
========== ========== =========== ===========
Changes in Net Assets Available for Plan
Benefits with Fund information for the year
ended December 31, 1997
Interfund transfers ($4,845,633) $5,110,068 $56,229,019 $25,941,663
Investment income:
Dividend and interest income 325 173,928 2,385,743 2,107,310
Net appreciation (depreciation) in
value of investments 500,495 - 3,569,719 1,380,388
Contributions:
Employer 52,679 124,240 290,780 175,711
Participants 323,622 681,302 1,663,934 1,039,337
Participant loan activity:
Participant loans (7,361) (116,611) (524,270) (209,524)
Participant loan payments 53,462 44,744 435,002 225,467
Distributions to withdrawing
participants (169,346) (85,682) (818,703) (519,080)
Administrative expenses (15,616) - - (4,786)
---------- ---------- ----------- -----------
Net increase (decrease) in
fund/plan equity (4,107,373) 5,931,989 63,231,224 30,136,486
Net assets available for fund/plan
benefits at December 31, 1996 4,107,373 - - -
---------- ---------- ----------- -----------
Net assets available for fund/plan
benefits at December 31, 1997 $ - $5,931,989 $63,231,224 $30,136,486
========== ========== =========== ===========
</TABLE>
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
8. Fund Information, continued
<TABLE>
<CAPTION>
Fidelity
Diversified Fidelity Growth Fidelity
International & Income Intermediate Fidelity
Fund Portfolio Bond Fund Contrafund
------------- --------------- ------------ ----------
Net Assets Available for Plan Benefits with
Fund Information December 31, 1997
ASSETS
Investments, at fair market value:
<S> <C> <C> <C> <C>
Common trust funds $5,235,580 $6,010,631 $1,208,762 $4,169,830
Participant loans - - - -
Lexmark Class A common stock - - - -
Guaranteed investment contracts
(GICs) and Synthetic GICs,
at contract value - - - -
---------- ---------- ---------- ----------
Total investments 5,235,580 6,010,631 1,208,762 4,169,830
Employer contribution receivable - - - -
Due from broker for securities sold - - - -
Other receivables - - - -
---------- ---------- ---------- ----------
Total assets 5,235,580 6,010,631 1,208,762 4,169,830
---------- ---------- ---------- ----------
LIABILITIES
Other payables - - - -
---------- ---------- ---------- ----------
Total liabilities - - - -
---------- ---------- ---------- ----------
Net assets available for fund/plan
benefits at December 31, 1997 $5,235,580 $6,010,631 $1,208,762 $4,169,830
========== ========== ========== ==========
Changes in Net Assets Available for Plan
Benefits with Fund information for the year
ended December 31, 1997
Interfund transfers $4,984,466 $5,449,331 $1,101,679 $3,826,205
Investment income:
Dividend and interest income 196,614 192,163 24,320 338,523
Net appreciation (depreciation) in
value of investments (263,013) 61,020 7,768 (246,386)
Contributions:
Employer 43,439 35,699 6,695 30,626
Participants 263,534 250,138 83,785 213,926
Participant loan activity:
Participant loans (38,225) (25,625) (23,710) (13,102)
Participant loan payments 57,306 56,481 8,225 29,136
Distributions to withdrawing
participants (8,541) (8,576) - (9,098)
Administrative expenses - - - -
---------- ---------- ---------- ----------
Net increase (decrease) in
fund/plan equity 5,235,580 6,010,631 1,208,762 4,169,830
Net assets available for fund/plan
benefits at December 31, 1996 - - - -
---------- ---------- ---------- ----------
Net assets available for fund/plan
benefits at December 31, 1997 $5,235,580 $6,010,631 $1,208,762 $4,169,830
========== ========== ========== ==========
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
8. Fund Information, continued
<TABLE>
<CAPTION>
Fidelity Fidelity
Fidelity Freedom Fidelity Freedom Freedom 2010 Freedom 2020
Income Fund 2000 Fund Fund Fund
---------------- ---------------- ------------ ------------
Net Assets Available for Plan Benefits with
Fund Information December 31, 1997
ASSETS
Investments, at fair market value:
<S> <C> <C> <C> <C>
Common trust funds $237,060 $6,947,413 $1,755,655 $724,022
Participant loans - - - -
Lexmark Class A common stock - - - -
Guaranteed investment contracts
(GICs) and Synthetic GICs,
at contract value - - - -
-------- ---------- ---------- --------
Total investments 237,060 6,947,413 1,755,655 724,022
Employer contribution receivable - - - -
Due from broker for securities sold - - - -
Other receivables - - - -
-------- ---------- ---------- --------
Total assets 237,060 6,947,413 1,755,655 724,022
-------- ---------- ---------- --------
LIABILITIES
Other payables - - - -
-------- ---------- ---------- --------
Total liabilities - - - -
-------- ---------- ---------- --------
Net assets available for fund/plan
benefits at December 31, 1997 $237,060 $6,947,413 $1,755,655 $724,022
======== ========== ========== ========
Changes in Net Assets Available for Plan
Benefits with Fund information for the year
ended December 31, 1997
Interfund transfers $206,687 $6,467,114 $1,665,727 $610,651
Investment income:
Dividend and interest income 6,500 237,179 60,423 25,023
Net appreciation (depreciation) in
value of investments (349) 256,746 (33,924) (12,091)
Contributions:
Employer 4,583 43,976 10,101 6,145
Participants 20,361 258,166 64,022 91,941
Participant loan activity:
Participant loans (904) (61,401) (18,304) (592)
Participant loan payments 407 66,540 7,610 2,975
Distributions to withdrawing
participants (225) (320,907) - (30)
Administrative expenses - - - -
-------- ---------- ---------- --------
Net increase (decrease) in
fund/plan equity 237,060 6,947,413 1,755,655 724,022
Net assets available for fund/plan
benefits at December 31, 1996 - - - -
-------- ---------- ---------- --------
Net assets available for fund/plan
benefits at December 31, 1997 $237,060 $6,947,413 $1,755,655 $724,022
======== ========== ========== ========
</TABLE>
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
8. Fund Information, continued
<TABLE>
<CAPTION>
Spartan U.S.
Fidelity Freedom Equity Index Dwight Fixed Lexmark Stock
2030 Fund Fund Income Fund Fund
---------------- ------------ ------------ -------------
Net Assets Available for Plan Benefits with
Fund Information December 31, 1997
ASSETS
Investments, at fair market value:
<S> <C> <C> <C> <C>
Common trust funds $745,020 $7,796,253 $ 2,088,732 $ -
Participant loans - - - -
Lexmark Class A common stock - - - 26,208,434
Guaranteed investment contracts
(GICs) and Synthetic GICs,
at contract value - - 64,138,444 -
-------- ---------- ----------- -----------
Total investments 745,020 7,796,253 66,227,176 26,208,434
Employer contribution receivable - - - 533,378
Due from broker for securities sold - - - 739,737
Other receivables - - - 2,665
-------- ---------- ----------- -----------
Total assets 745,020 7,796,253 66,227,176 27,484,214
-------- ---------- ----------- -----------
LIABILITIES
Other payables - - - 752,238
-------- ---------- ----------- -----------
Total liabilities - - - 752,238
-------- ---------- ----------- -----------
Net assets available for fund/plan
benefits at December 31, 1997 $745,020 $7,796,253 $66,227,176 $26,731,976
======== ========== =========== ===========
Changes in Net Assets Available for Plan
Benefits with Fund information for the year
ended December 31, 1997
Interfund transfers $666,368 $7,221,457 ($ 8,524,368) ($ 1,107,567)
Investment income:
Dividend and interest income 24,506 85,310 4,642,380 21,500
Net appreciation (depreciation) in
value of investments (11,261) 217,376 - 7,956,350
Contributions:
Employer 8,398 36,636 635,742 616,751
Participants 51,526 232,260 3,411,203 392,714
Participant loan activity:
Participant loans (95) (4,887) (1,181,215) (245,160)
Participant loan payments 5,908 16,262 1,414,274 138,721
Distributions to withdrawing
participants (330) (8,161) (3,729,188) (699,293)
Administrative expenses - - (129,242) (36,963)
-------- ---------- ----------- -----------
Net increase (decrease) in
fund/plan equity 745,020 7,796,253 (3,460,414) 7,037,053
Net assets available for fund/plan
benefits at December 31, 1996 - - 69,687,590 19,694,923
-------- ---------- ----------- -----------
Net assets available for fund/plan
benefits at December 31, 1997 $745,020 $7,796,253 $66,227,176 $26,731,976
======== ========== =========== ===========
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
8. Fund Information, continued
<TABLE>
<CAPTION>
Participant
Fund Total Loans Total
---------- ----------- ---------
Net Assets Available for Plan Benefits with
Fund Information December 31, 1997
ASSETS
Investments, at fair market value:
<S> <C> <C> <C>
Common trust funds $136,218,657 $ - $136,218,657
Participant loans - 5,483,771 5,483,771
Lexmark Class A common stock 26,208,434 - 26,208,434
Guaranteed investment contracts
(GICs) and Synthetic GICs,
at contract value 64,138,444 - 64,138,444
------------ ---------- ------------
Total investments 226,565,535 5,483,771 232,049,306
Employer contribution receivable 533,378 - 533,378
Due from broker for securities sold 739,737 - 739,737
Other receivables 2,665 - 2,665
------------ ---------- ------------
Total assets 227,841,315 5,483,771 233,325,086
------------ ---------- ------------
LIABILITIES
Other payables 752,238 - 752,238
------------ ---------- ------------
Total liabilities 752,238 - 752,238
------------ ---------- ------------
Net assets available for fund/plan
benefits at December 31, 1997 $227,089,077 $5,483,771 $232,572,848
============ ========== ============
Changes in Net Assets Available for Plan
Benefits with Fund information for the year
ended December 31, 1997
Interfund transfers $ - $ - $ -
Investment income:
Dividend and interest income 10,693,015 296,769 10,989,784
Net appreciation (depreciation) in
value of investments 27,132,262 - 27,132,262
Contributions:
Employer 2,991,567 - 2,991,567
Participants 13,912,655 - 13,912,655
Participant loan activity:
Participant loans (3,023,174) 3,023,174 -
Participant loan payments 3,408,236 (3,408,236) -
Distributions to withdrawing
participants (8,767,815) (500,349) (9,268,164)
Administrative expenses (432,259) (432,259)
------------ ---------- ------------
Net increase (decrease) in
fund/plan equity 45,914,487 (588,642) 45,325,845
Net assets available for fund/plan
benefits at December 31, 1996 181,174,590 6,072,413 187,247,003
------------ ---------- ------------
Net assets available for fund/plan
benefits at December 31, 1997 $227,089,077 $5,483,771 $232,572,848
============ ========== ============
</TABLE>
19
<PAGE>
SUPPLEMENTAL SCHEDULES
-------
<PAGE>
LEXMARK SAVINGS PLAN
PLAN #002 EIN #22-3074422
Item 27(a) Schedule of Assets Held for Investment Purposes
December 31, 1998
<TABLE>
<CAPTION>
Par or
Maturity Value/
Identity of Issuer, Borrower, Number of Current
Lessor or Similar Party Description of Investment Shares Cost Value
- ---------------------------------------- ------------------------------------------- --------------- ------------ ------------
<S> <C> <C> <C>
* Fidelity Management and Research Co. Lexmark Stock Fund 805,604 $ 28,882,385 $ 80,975,611
* Fidelity Management and Research Co. Contrafund 159,868 8,301,864 9,078,920
* Fidelity Management and Research Co. Equity-Income Fund 993,057 50,381,981 55,164,296
* Fidelity Management and Research Co. Growth & Income Portfolio 337,913 13,795,260 15,489,929
* Fidelity Management and Research Co. Intermediate Bond Fund 236,603 2,414,514 2,429,915
* Fidelity Management and Research Co. Low-Priced Stock Fund 1,007,216 24,025,954 23,014,888
* Fidelity Management and Research Co. Diversified International Fund 331,081 5,668,430 5,866,763
* Fidelity Management and Research Co. Freedom Income Fund 86,673 941,779 969,000
* Fidelity Management and Research Co. Freedom 2000 Fund 562,173 6,382,333 6,931,597
* Fidelity Management and Research Co. Freedom 2010 Fund 253,840 3,138,173 3,376,067
* Fidelity Management and Research Co. Freedom 2020 Fund 121,566 1,548,087 1,695,851
* Fidelity Management and Research Co. Freedom 2030 Fund 112,418 1,428,687 1,561,490
* Fidelity Management and Research Co. Retirement Govt. Money Market Portfolio 6,869,593 6,869,593 6,869,593
* Fidelity Management and Research Co. Spartan U.S. Equity Index Fund 398,310 15,069,873 17,509,717
* Participant Loans Participant Loans at Prime plus 1.5% 5,874,373 0 5,874,373
John Hancock Mutual Life Insurance Participation in Group Annuity Contract #8617
Company at 6.95% with maturity on December
20, 1999. $ 3,530,134 3,530,134 3,530,134
Monumental Life Insurance Company Monumental Placement Contract #ADA00558FR
at 6.0% with maturity on December 14, 2000. $ 9,204,492 9,204,492 9,204,492
New York Life Insurance Company New York Life Placement Contract #30034 at
7.8% with maturity on August 15, 2001. $ 9,453,483 9,453,483 9,453,483
Pacific Mutual Life Insurance Company Participation in Group Annuity
Contract #G-26156.01 at 7.55%
with maturity on June 20, 2000. $ 6,396,453 6,396,453 6,396,453
TransAmerica Life Insurance & Annuity Participation in Group Annuity
Company Contract #51508 at 6.12% with
maturity on June 15, 2002. $ 4,181,720 4,181,720 4,181,720
TransAmerica Life Insurance & Annuity Synthetic GIC including AAA bond
Company ATTMT 1997-A (CUSIP:00206LAN5) (fair market
value of $5,006,639) and Group
Annuity Contract #76678 at 6.5%
with maturity on December 17, 2001.
Wrapper fair market value of $842,777. $ 5,849,416 5,849,416 5,849,416
TransAmerica Life Insurance & Annuity Synthetic GIC including AAA bond
Company PEMEX5.2 11/03 (CUSIP:706448AA5) (fair
market value of $4,998,731) and Group
Annuity Contract #76877-000 at 5.7% with
maturity on November 15, 2003. Wrapper
fair market value of $13,744. $ 5,012,475 5,012,475 5,012,475
TransAmerica Life Insurance & Annuity Synthetic GIC including FNMA mortgage backed
Company security FN381002 (CUSIP: 31377MGK1) (fair
market value of $8,619,565) and Wrap
Agreement Contract #76877-001 at 5.7%
with maturity on November 25, 2005.
Wrapper fair market value of $71,756. $ 8,691,321 8,691,321 8,691,321
State Street Bank & Trust Company Synthetic GIC including FNMA seven year
balloon mortgage pass-through securities
FN313526 (CUSIP: 313746HB6)(fair market
value of $4,201,785) and Wrap Agreement
Contract #97037 at 7.17% with maturity on
March 25, 2003. Excess of the fair market
value of the underlying asset over contract
value is $100,683. $ 4,101,102 4,101,102 4,101,102
State Street Bank & Trust Company Synthetic GIC including FNMA mortgage backed
security FN380214 (CUSIP: 31377LK36) (fair
market value of $5,279,569) and Wrap
Agreement Contract #98022 at 6.07%
with maturity on April 25, 2005. Excess
of the fair market value of the
underlying asset over contract value is
$104,793. $ 5,174,776 5,174,776 5,174,776
Monumental Life Insurance Company Synthetic GIC including FHLMC mortgages
1404-D (CUSIP:312912VTA)(fair market
value of $10,175,367) and Group Annuity
Contract #ADA00024 at 6.79% with maturity
on June 15, 2001. Excess of the fair market
value of the underlying asset over contract
value is $109,730. $10,065,637 10,065,637 10,065,637
State Street Bank & Trust Company Synthetic GIC including FHLMC mortgages FSPC
T-13 A7 (CUSIP: 3133TGDB2)(fair market
value of $4,020,155) and Group Annuity
Contract #98155 at 6.17% with maturity on
April 25, 2013. Excess of the fair market
value of the underlying asset over contract
value is $1,312. $ 4,018,843 4,018,843 4,018,843
* Fidelity Management and Research Co. Short-Term Interest Bearing Funds $ 9,430,722 9,430,722 9,430,722
------------ ------------
$253,959,487 $321,918,584
============ ============
</TABLE>
* Party-in-interest to the Plan.
20
<PAGE>
LEXMARK SAVINGS PLAN
PLAN #002 EIN #22-3074422
Item 27(d) Schedule of Reportable Transactions*
for the year ended December 31, 1998
<TABLE>
<CAPTION>
Fair Value of
Asset on
Total Total Cost of Transaction Realized
Identity of Party Description of Asset Purchases Sales Asset Date Gain/Loss
------------------------------------ --------------------- ------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
** Fidelity Management and Research Co. Contrafund $ 9,262,446 $ 9,262,446 $ 9,262,446
** Fidelity Management and Research Co. Contrafund $ 5,369,890 $ 5,382,274 $ 5,369,890 $ (12,384)
** Fidelity Management and Research Co. Equity-Income Fund $ 24,757,066 $ 24,757,066 $ 24,757,066
** Fidelity Management and Research Co. Equity-Income Fund $ 36,111,083 $ 34,634,136 $ 36,111,083 $ 1,476,947
** Fidelity Management and Research Co. Growth & Income Fund $ 21,476,746 $ 21,476,746 $ 21,476,746
** Fidelity Management and Research Co. Growth & Income Fund $ 13,742,575 $ 13,619,797 $ 13,742,575 $ 122,778
** Fidelity Management and Research Co. Low-Priced Stock Fund $ 7,395,155 $ 7,395,155 $ 7,395,155
** Fidelity Management and Research Co. Low-Priced Stock Fund $ 12,533,339 $ 12,402,737 $ 12,533,339 $ 130,602
** Fidelity Management and Research Co. Diversified
International Fund $ 7,439,952 $ 7,439,952 $ 7,439,952
** Fidelity Management and Research Co. Diversified
International Fund $ 7,288,702 $ 7,260,782 $ 7,288,702 $ 27,920
** Fidelity Management and Research Co. Freedom 2000 Fund $ 7,707,129 $ 7,707,129 $ 7,707,129
** Fidelity Management and Research Co. Freedom 2000 Fund $ 8,341,330 $ 8,158,885 $ 8,341,330 $ 182,445
** Fidelity Management and Research Co. Retirement Gov't.
Money Market
Portfolio $ 6,628,537 $ 6,628,537 $ 6,628,537
** Fidelity Management and Research Co. Retirement Gov't.
Money Market
Portfolio $ 5,690,933 $ 5,690,933 $ 5,690,933
** Fidelity Management and Research Co. Spartan U.S. Equity
Index Fund $ 28,765,297 $ 28,765,297 $ 28,765,297
** Fidelity Management and Research Co. Spartan U.S. Equity
Index Fund $ 21,477,508 $ 21,266,296 $ 21,477,508 $ 211,212
** Fidelity Management and Research Co. Lexmark Stock Fund $175,129,491 $175,129,491 $175,129,491
** Fidelity Management and Research Co. Lexmark Stock Fund $172,102,987 $153,946,606 $172,102,987 $18,156,381
State Street Bank & Trust Company Synthetic GIC
including FNMA
seven year balloon
mortgage pass-
through securities
FN313526 (CUSIP:
313746HB6) (fair
market value of
$4,201,785) and
Wrap Agreement
Contract #97037 at
7.17% with maturity
on March 25, 2003.
Excess of the fair
market value of the
underlying asset
over contract value
is $100,683. $ 3,003,023 $ 3,003,023 $ 3,003,023
State Street Bank & Trust Company Synthetic GIC including
FNMA seven year
balloon mortgage
pass-through
securities FN313526
(CUSIP: 313746HB6)
(fair market value of
$4,201,785) and Wrap
Agreement Contract
#97037 at 7.17% with
maturity on March 25,
2003. Excess of the
fair market value of
the underlying asset
over contract value is
$100,683. $ 4,824,835 $ 4,824,835 $ 4,824,835
State Street Bank & Trust Company Synthetic GIC including
FNMA mortgage backed
security FN380214
(CUSIP: 31377LK36)
(fair market value
of $5,279,569) and
Wrap Agreement
Contract #98022 at
6.07%. Excess of
the fair market
value of the
underlying asset
over contract value
is $104,793. $ 14,046,937 $ 14,046,937 $ 14,046,937
State Street Bank & Trust Company Synthetic GIC including
FNMA mortgage backed
security FN380214
(CUSIP: 31377LK36)
(fair market value
of $5,279,569) and
Wrap Agreement
Contract #98022 at
6.07%. Excess of the
fair market value of
the underlying asset
over contract value
is $104,793. $ 9,118,670 $ 9,118,670 $ 9,118,670
State Street Bank & Trust Company Synthetic GIC
including FHLMC
mortgages FSPC
T-13 A7 (CUSIP:
3133TGDB2) (fair
market value of
$4,020,155) and
Group Annuity
Contract #98155
at 6.17%. Excess
of the fair market
value of the
underlying asset
over contract value
is $1,312. $ 5,021,083 $ 5,021,083 $ 5,021,083
State Street Bank & Trust Company Synthetic GIC
including FHLMC
mortgages FSPC
T-13 A7 (CUSIP:
3133TGDB2) (fair
market value of
$4,020,155) and
Group Annuity
Contract #98155 at
6.17%. Excess
of the fair market
value of the
underlying asset
over contract value
is $1,312. $ 1,081,133 $ 1,081,133 $ 1,081,133
* All individual transactions or series of transactions, which, when
aggregated, exceed 5% of plan assets at January 1, 1998.
** Party-in-interest to the Plan.
</TABLE>
21
<PAGE>
LEXMARK SAVINGS PLAN
PLAN #002 EIN #22-3074422
Item 27(d) Schedule of Reportable Transactions*
for the year ended December 31, 1998
<TABLE>
<CAPTION>
Fair Value of
Asset on
Total Total Cost of Transaction Realized
Identity of Party Description of Asset Purchases Sales Asset Date Gain/Loss
------------------------------------ --------------------- ------------- ------------ ------------ ------------ ------------
TransAmerica Life Insurance & Participation in Group
Annuity Company Annuity Contract
#51508 at 6.12%
with maturity on
<S> <C> <C> <C> <C>
June 15, 2002. $ 4,000,000 $ 4,000,000 $ 4,000,000
TransAmerica Life Insurance & Synthetic GIC
Annuity Company including AAA bond
ATTMT 1997-A (CUSIP:
00206LAN5) (fair
market value of
$5,006,639) and
Group Annuity
Contract #76678 at
6.5% with maturity
on December 17, 2001.
Wrapper fair market
value of $842,777. $ 219,775 $ 219,775 $ 219,775
TransAmerica Life Insurance & Synthetic GIC
Annuity Company including AAA bond
ATTMT 1997-A (CUSIP:
00206LAN5) (fair
market value of
$5,006,639) and
Group Annuity
Contract #76678 at
6.5% with maturity
on December 17, 2001.
Wrapper fair market
value of $842,777. $ 223,571 $ 223,571 $ 223,571
TransAmerica Life Insurance & Synthetic GIC
Annuity Company including AAA bond
PEMEX5.2 11/03 (CUSIP:
706448AA5) (fair
market value of
$4,998,731) and Group
Annuity Contract
#76877-000 at 5.7%.
Wrapper fair market
value of $13,744. $ 4,999,550 $ 4,999,550 $ 4,999,550
TransAmerica Life Insurance & Synthetic GIC
Annuity Company including FNMA
mortgage backed
security FN381002
(CUSIP: 31377MGK1)
(fair market value
of $8,619,565) and
Wrap Agreement
Contract #76877-001
at 5.7%. Wrapper
fair market value of
$71,756. $ 8,670,226 $ 8,670,226 $ 8,670,226
** Fidelity Management and Research Co. Short-Term Interest
Bearing Funds $126,117,895 $126,117,895 $126,117,895
** Fidelity Management and Research Co. Short-Term Interest
Bearing Funds $122,299,366 $122,299,366 $122,299,366
* All individual transactions or series of transactions, which, when
aggregated, exceed 5% of plan assets at January 1, 1998.
** Party-in-interest to the Plan.
</TABLE>
22
<PAGE>
EXHIBIT
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 of Lexmark International Group, Inc. of our report dated May 28, 1999
on our audits of the statements of net assets available for plan benefits of the
Lexmark Savings Plan as of December 31, 1998 and 1997 and the related statements
of changes in net assets available for plan benefits for the years then ended,
which report is included in this Form 11-K.
/s/ PricewaterhouseCoopers LLP
Lexington, Kentucky
June 24, 1999
