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, 1999
-----------------
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
<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 21, 2000 By: /s/ Kurt M. Braun
------------- -----------------
Kurt M. Braun
Treasurer
Lexmark International Group, Inc.
<PAGE>
Form 11-K
Lexmark Savings Plan
December 31, 1999
--------
Pages
Report of Independent Accountants 1
Financial Statements:
Statements of Net Assets Available for Plan Benefits
as of December 31, 1999 and 1998 2
Statements of Changes in Net Assets Available for Plan Benefits
for the years ended December 31, 1999 and 1998 3
Notes to Financial Statements 4-15
Supplemental Schedule:
Form 5500, Schedule H, Line 4i - Schedule of Assets Held for
Investment Purposes as of December 31, 1999 16
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, 1999 and 1998,
and the changes in net assets available for benefits for the years then ended in
conformity with accounting principles generally accepted in the United States.
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
auditing standards generally accepted in the United States 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 schedule of assets held
for investment purposes as of December 31, 1999 is presented for the purpose of
additional analysis and is not a required part of the basic financial statements
but is 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. This supplemental schedule is the responsibility of the
Plan's management. This supplemental schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ PricewaterhouseCoopers LLP
Lexington, Kentucky
June 2, 2000
1
<PAGE>
LEXMARK SAVINGS PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 1999 and 1998
(In Thousands of Dollars)
<TABLE>
<CAPTION>
1999 1998
ASSETS ----------- -----------
<S> <C> <C>
Investments $ 434,994 $ 321,919
Employer contribution receivable 1,403 1,797
Due from broker for securities sold 7,932 -
Other receivables 16 221
----------- -----------
Total assets 444,345 323,937
----------- -----------
LIABILITIES
Due to broker for securities purchased - 1,469
Other payables 3,516 1,954
----------- -----------
Total liabilities 3,516 3,423
----------- -----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 440,829 $320,514
=========== ===========
</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, 1999 and 1998
(In Thousands of Dollars)
<TABLE>
<CAPTION>
1999 1998
----------- -----------
Investment income:
<S> <C> <C>
Dividend and interest income $ 17,357 $ 13,400
Net appreciation in value of investments 91,657 60,013
Contributions:
Employer 4,810 4,572
Participants 23,757 18,636
Distributions to withdrawing participants (17,056) (8,571)
Administrative expenses (210) (109)
----------- -----------
Net increase 120,315 87,941
NET ASSETS AVAILABLE FOR PLAN BENEFITS
Beginning of year 320,514 232,573
----------- -----------
End of year $ 440,829 $ 320,514
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
LEXMARK SAVINGS PLAN
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. For additional
information regarding the Plan's provisions, participants should refer to
the Company publication, "You and Your Company," which is available to all
participants.
(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.
The trustee of the Plan is Fidelity Management Trust Company (the
"Trustee"). The Trustee offers the following investment funds to Plan
participants: Fidelity Retirement Government Money Market Portfolio,
Fidelity Equity-Income Fund, Fidelity Low-Priced Stock Fund, Fidelity
Diversified International Fund, Fidelity Growth & Income Portfolio,
Fidelity Intermediate Bond Fund, Fidelity Contrafund, Fidelity Freedom
Income Fund, Fidelity Freedom 2000 Fund, Fidelity Freedom 2010 Fund,
Fidelity Freedom 2020 Fund, Fidelity Freedom 2030 Fund, Spartan U.S.
Equity Index Fund, Dwight Fixed Income Fund and Lexmark Stock Fund.
(b) Investment Funds
----------------
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
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
4
<PAGE>
LEXMARK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. Plan Description (continued):
(b) Investment Funds
----------------
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 a broadly diversified portfolio
of AAA-rated fixed income securities and guaranteed investment
contracts. The fixed income investments within the Dwight Fixed
Income Fund are wrapped (protected by a contract making them fully
benefit responsive) by high quality insurance companies and banks,
thus investor withdrawals are guaranteed to take place at book value
(principal plus interest) rather than market value. 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, as well as ongoing account balances,
are allocated among the Plan's active investment funds. The minimum
allocation to each Fund is 1%.
Prior to January 1, 2000, the Company matched employee pretax
contributions in an amount equal to 30% of up to the first 5% of the
participant's compensation that the employee contributed per pay
period. Effective January 1, 2000, the Company matches employee
pretax contributions in an amount equal to 50% of up to the first 6%
of the participant's compensation that the employee contributes per
pay period. Matching contributions are invested in the same
investment funds and in the same proportion as the allocation
designated by the participant. However, the participant can elect to
have all or a portion of matching contributions invested in the
Lexmark Stock Fund, regardless of how the participant's pretax
contributions are invested.
5
<PAGE>
LEXMARK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. Plan Description (continued):
(c) Contributions
-------------
Prior to January 1, 2000, the Company contributed an additional
matching contribution if the Company achieved certain business
results each fiscal year, with payout, if any, as soon as practicable
in the following year. The additional matching contribution was
allocated to a participant based on his/her aggregate contributions
to the Plan for that year and was 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. The
business results match will not apply to business results for 2000
and beyond. An additional matching contribution of $1,403,040 and
$1,796,710 for 1999 and 1998, respectively, has been accrued in the
Plan's financial statements.
(d) Allocations to Participants
---------------------------
Contributions to the Plan are allocated to the accounts of the
participants on a biweekly basis. However, earnings of the Plan are
allocated on a daily basis. The investment fund options provided by
the Trustee are mutual funds that do not assign units for
contributions and earnings allocation, except for the Lexmark Stock
Fund.
(e) Vesting
-------
Plan participants who first completed an hour of service 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 part
(minimum of $500) or all 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.
6
<PAGE>
LEXMARK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. Plan Description (continued):
(f) Withdrawals
-----------
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.
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 if 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.
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.
7
<PAGE>
LEXMARK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. Plan Description (continued):
(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. 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.
(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 applied by the Company against its matching
contribution obligation.
(j) Exchanges
---------
A participant may reallocate his/her account balance among the
various investment options on a daily basis, however, there are
certain restrictions that apply to participant exchanges. A
participant may not transfer funds directly from the Dwight Fixed
Income Fund to the Fidelity Retirement Government Money Market Fund,
the Fidelity Intermediate Bond Fund or the Fidelity Freedom Income
Fund because these are considered "competing," or similar, funds.
Funds must first be transferred from the Fixed Income Fund to a
"non-competing" fund for at least 90 days. With regard to the Lexmark
Stock Fund and effective March 5, 1999, a participant may not
exchange money into the Lexmark Stock Fund from the first day of the
last month of each quarter, until two days after that quarter's
earnings results are announced. Also, effective January 1, 2000, a
participant may not make more than two transactions (exchanges in or
out) involving the Lexmark Stock Fund during a calendar quarter.
8
<PAGE>
LEXMARK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies:
The following are significant accounting policies followed by the Plan:
(a) Valuation of Investments
------------------------
Mutual funds are valued at quoted market prices which represent the
net asset value of shares held by the Plan at year end.
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, 1999 and 1998. 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
interests in commingled trusts managed by Dwight Asset Management or
other fixed income securities, which are 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 commingled trust or security held in trust. The underlying
financial instrument 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, 1999 and 1998.
The Lexmark Class A common stock is stated at fair market value as
quoted by the New York Stock Exchange.
Participant loans, short-term investments and cash are stated at
cost, which approximates fair market value.
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.
9
<PAGE>
LEXMARK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies (continued):
(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 respective dates of the financial statements and the changes in
net assets available for Plan benefits during the respective
reporting periods. Actual results could differ from those estimates.
3. Investments:
The investments that represent 5% or more of the Plan's net assets in
thousands of dollars at December 31, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
1999 1998
--------- ---------
Investments at Fair Market Value:
<S> <C> <C>
Lexmark Class A common stock (1,928,975 and 805,604 shares, respectively) $ 174,572* $ 80,976*
Fidelity Management and Research Company
Equity-Income Fund (875,663 and 993,057 shares, respectively) 46,830 55,164
Low Priced Stock Fund (1,007,216 shares in 1998) - 23,015
Spartan U.S. Equity Index Fund (487,714 and 398,310
shares, respectively) 25,405 17,510
Other investments at fair market value less than 5% of net assets 107,371 69,574
Investments at Contract Value (less than 5% of net assets) 80,816 75,680
--------- ---------
Total Investments $ 434,994 $321,919
========= ========
</TABLE>
* A portion of which is nonparticipant-directed
For the years ended December 31, 1999 and 1998, the Plan's investments
(including investments bought, sold and held during the year) appreciated
in value in thousands of dollars as follows:
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Lexmark Class A common stock $ 84,090 $ 51,773
Mutual funds 7,567 8,240
-------- --------
Net appreciation in fair market value of investments $ 91,657 $ 60,013
======== ========
</TABLE>
10
<PAGE>
LEXMARK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
3. Investments (continued):
The crediting interest rates as of December 31, 1999 and 1998 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 Yield
1999 1998
------ ------
Guaranteed Investment Contracts
<S> <C> <C>
Monumental Placement Contract #ADA00558FR with Monumental Life Insurance Company
and crediting rate of 5.9% as of December 31, 1999 and 1998. 5.9% 5.9%
New York Life Placement Contract #30034 with New York Life Insurance Company and
crediting rate of 7.4% as of December 31, 1999 and 1998. 7.4% 7.4%
Participation in Group Annuity Contract #G-26156.01 with Pacific Mutual Life
Insurance Company and crediting rate of 7.5% as of December 31, 1999 and 1998. 7.5% 7.5%
Participation in Group Annuity Contract #8617 with John Hancock Mutual Life
Insurance Company and crediting rate of 6.9% as of December 31, 1998. - 6.9%
Participation in Group Annuity Contract #51508 with Transamerica Occidental Life
Insurance Company and crediting rate of 6.1% as of December 31, 1999 and 1998. 6.1% 6.1%
Principal Life Placement Contract #4-40184 with Principal Financial Group and
crediting rate of 6.7% as of December 31, 1999. 6.7% -
Synthetic Guaranteed Investment Contracts
Synthetic GIC including UAM Dwight Target 2 Fund and Wrap Agreement Contract
#MDA00015TR with Monumental Life with evergreen maturities and crediting rate
of 6.4% as of December 31, 1999. Wrapper fair market value is $164,095. 6.8% -
Synthetic GIC including FHLMC mortgages 1404-D (CUSIP: 312912VTA) and Wrap
Agreement Contract #ADA00024 with Monumental Life with maturity on June 15,
2001 and crediting rate of 6.8% as of December 31, 1998. Consolidated into
Monumental Wrap #MDA00015TR. - 6.8%
</TABLE>
11
<PAGE>
LEXMARK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
3. Investments (continued):
<TABLE>
<CAPTION>
Average Yield
1999 1998
------ ------
Synthetic Guaranteed Investment Contracts
<S> <C> <C>
Synthetic GIC including UAM Dwight Target 2 Fund, UAM Dwight Target 5 Fund and
Wrap Agreement Contract #76877-002 with Transamerica Life with evergreen
maturities and crediting rate of 5.7% as of December 31, 1999. Wrapper fair
market value is $1,144,310. 5.9% -
Synthetic GIC including AAA bond ATTMT 1997-A (CUSIP: 00206LAN5) and Group
Annuity Contract #76678 with Transamerica Life with maturity on December 17,
2001 and crediting rate of 6.6% as of December 31, 1998. Consolidated into
Transamerica Wrap # 76877-002. - 6.6%
Synthetic GIC including AAA bond PEMEX5.2 11/03 (CUSIP: 706448AA5) and Group
Annuity Contract #76877-000 with Transamerica Life with maturity on November
15, 2003 and crediting rate of 5.7% as of December 31, 1998. Consolidated into
Transamerica Wrap # 76877-002. - 5.7%
Synthetic GIC including FNMA mortgage backed security FN381002 (CUSIP:
31377MGK1) and Wrap Agreement Contract #76877-001 with Transamerica Life with
maturity on November 25, 2005 and crediting rate of 5.7% as of December 31,
1998. Consolidated into Transamerica Wrap # 76877-002. - 5.7%
Synthetic GIC including UAM Dwight Target 2 Fund and Wrap Agreement Contract
#99066 with State Street with evergreen maturities and crediting rate of 7.0%
as of December 31, 1999. Wrapper fair market value is $2,213. 7.0% -
Synthetic GIC including UAM Dwight Target 2 Fund, UAM Dwight Target 5 Fund and
Wrap Agreement Contract #97037 with State Street with evergreen maturities and
crediting rate of 5.5% as of December 31, 1999. Wrapper fair market value is
$553,187. 6.1% -
Synthetic GIC including FNMA seven year balloon mortgage pass-through securities
FN313526 (CUSIP: 31374GHB6) and Wrap Agreement Contract #97037 with State
Street Bank with maturity on March 25, 2003 and crediting rate of 7.2% as of
December 31, 1998. Consolidated with State Street Wrap # 98022 and 98155. - 7.0%
Synthetic GIC including FNMA mortgage backed security FN380214 (CUSIP:
31377LK36) and Wrap Agreement Contract #98022 with State Street Bank with
maturity on April 25, 2005 and crediting rate of 6.1% as of December 31, 1998.
Consolidated into State Street Wrap # 97037. - 6.2%
Synthetic GIC including FHLMC mortgages FSPC T-13 A7 (CUSIP: 3133TGDB2) and
Group Annuity Contract #98155 with State Street Bank with maturity on April
25, 2013 and crediting rate of 6.2% as of December 31, 1998. Consolidated into
State Street Wrap # 97037. - 6.1%
</TABLE>
12
<PAGE>
LEXMARK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
4. Nonparticipant-Directed Investments:
Information about the net assets and the significant components of the
changes in net assets relating to the nonparticipant-directed investments is
shown in the following tables. The Lexmark Stock Fund is a
nonparticipant-directed investment due to the Company directed allocation
and non-transferability of the business results matching contribution.
NET ASSETS:
December 31, 1999 and 1998
(In Thousands of Dollars)
<TABLE>
<CAPTION>
1999 1998
---------- ----------
Assets
Investments, at fair market value:
<S> <C> <C>
Short-term investments and cash $ - $ 3,217
Lexmark Class A common stock 174,572 80,976
---------- ----------
Total investments 174,572 84,193
Employer contribution receivable 1,403 1,797
Due from broker for securities sold 7,932 -
Other receivables 16 221
---------- ----------
Total assets 183,923 86,211
---------- ----------
Liabilities
Due to broker for securities purchased - 1,469
Other payables 3,510 1,947
---------- ----------
Total liabilities 3,510 3,416
---------- ----------
Net assets $ 180,413 $ 82,795
========== ==========
</TABLE>
13
<PAGE>
LEXMARK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
4. Nonparticipant-Directed Investments (continued):
CHANGES IN NET ASSETS:
for the years ended December 31, 1999 and 1998
(In Thousands of Dollars)
<TABLE>
<CAPTION>
1999 1998
---------- ----------
Investment income:
<S> <C> <C>
Dividend and interest income $ 323 $ 53
Net appreciation in value of investments 84,090 51,773
Contributions:
Employer 2,054 2,003
Participants 5,330 1,510
Participant loan activity:
Participant loans (1,277) (650)
Participant loan payments 673 330
Distributions to withdrawing participants (4,273) (894)
Interfund transfers 10,705 1,939
Administrative expenses (7) (1)
---------- ----------
Net increase $ 97,618 $ 56,063
========== ==========
</TABLE>
5. Administrative Expenses:
Expenses for administration of the Plan are paid jointly by participants and
the Company. Participants pay an annual participant fee (on a quarterly
basis); 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.
6. 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 January 1, 1998, and anticipates filing an application
during 2000 for a favorable determination letter from the Internal Revenue
Service stating that the Plan and related trust, as restated, are in
compliance with the applicable requirements of the Code.
14
<PAGE>
LEXMARK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
6. Income Tax Status (continued):
Participants will not be subject to income tax withholding for deferred
compensation, unless required by state or local authority.
A participant will not be subject to federal income tax on employer
contributions made to a participant's account, or on income accruing to the
account, until distribution or withdrawal of the account, in whole or in
part.
7. 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.
8. 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 40% and
25% of Plan assets are invested in Lexmark Class A common stock as of
December 31, 1999 and 1998, respectively.
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SUPPLEMENTAL SCHEDULE
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LEXMARK SAVINGS PLAN
PLAN #002 EIN #22-3074422
Form 5500, Schedule H, Line 4i - Schedule of Assets Held for Investment Purposes
December 31, 1999
<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 1,928,975 $74,491,374 $174,572,237
* Fidelity Management and Research Co. Contrafund 318,939 19,142,729
* Fidelity Management and Research Co. Equity-Income Fund 875,663 46,830,442
* Fidelity Management and Research Co. Growth & Income Portfolio 389,574 18,372,318
* Fidelity Management and Research Co. Intermediate Bond Fund 195,846 1,911,460
* Fidelity Management and Research Co. Low-Priced Stock Fund 792,699 17,946,697
* Fidelity Management and Research Co. Diversified International Fund 429,191 10,995,881
* Fidelity Management and Research Co. Freedom Income Fund 54,503 617,521
* Fidelity Management and Research Co. Freedom 2000 Fund 514,315 6,680,955
* Fidelity Management and Research Co. Freedom 2010 Fund 404,821 6,019,693
* Fidelity Management and Research Co. Freedom 2020 Fund 178,593 2,925,347
* Fidelity Management and Research Co. Freedom 2030 Fund 193,672 3,269,185
* Fidelity Management and Research Co. Retirement Govt. Money Market Portfolio 7,214,501 7,214,501
* Fidelity Management and Research Co. Spartan U.S. Equity Index Fund 487,714 25,405,028
* Participant Loans Participant Loans at Prime plus 1.25% 6,237,306 0 6,237,306
Monumental Life Insurance Company Monumental Placement Contract #ADA00558FR at
5.9% with maturity on December 15, 2000. $ 9,746,277 9,746,277
New York Life Insurance Company New York Life Placement Contract #30034 at 7.4%
with maturity on August 15, 2001. $ 6,607,508 6,607,508
Pacific Mutual Life Insurance Company Participation in Group Annuity Contract
#G-26156.01 at 7.5% with maturity on
June 20, 2000. $ 3,436,465 3,436,465
Principal Financial Group Principal Life Placement Contract #4-40184
at 6.7% with maturity on December 15, 2002. $11,046,231 11,046,231
TransAmerica Life Insurance & Participation in Group Annuity Contract
Annuity Company #51508 at 6.1% with maturity on
June 15, 2002. $ 4,437,641 4,437,641
TransAmerica Life Insurance & Synthetic GIC including UAM Dwight Target 2
Annuity Company Fund, UAM Dwight Target 5 Fund and Wrap
Agreement Contract #76877-002 at 5.7% with
evergreen maturities. Wrapper fair market
value of $1,144,310. $18,306,466 18,306,466
State Street Bank & Trust Company Synthetic GIC including UAM Dwight Target 2
Fund, UAM Dwight Target 5 Fund and
Wrap Agreement Contract #97037 at 5.5%
with evergreen maturities.
Wrapper fair market value of $553,187. $12,836,007 12,836,007
State Street Bank & Trust Company Synthetic GIC including UAM Dwight Target 2
Fund and Wrap Agreement Contract #99066 at
7.0% with evergreen maturities.
Wrapper fair market value of $2,213. $ 4,002,225 4,002,225
Monumental Life Insurance Company Synthetic GIC including UAM Dwight Target 2
Fund and Wrap Agreement Contract #MDA00015TR
at 6.4% with evergreen maturities.
Wrapper fair market value of $164,095. $10,397,196 10,397,196
* Fidelity Management and Research Co. Short-Term Interest Bearing Funds $ 6,037,025 6,037,025
------------
$434,994,341
============
</TABLE>
* Party-in-interest to the Plan.
16
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