Form 8-K LEXMARK INTERNATIONAL For: Sep 30

Lexmark reports third quarter results

• Clearance received from Committee on Foreign Investment in the United States to proceed with proposed acquisition of Lexmark
• Lexmark acquisition expected to close in 2016

LEXINGTON, Ky. – Oct. 28, 2016 – Lexmark International, Inc. today announced financial results for the third quarter of 2016.

Results1

CFIUS Clearance to Proceed with Acquisition of Lexmark

• On Sept. 30, 2016, clearance was received from the Committee on Foreign Investment in the United States (CFIUS) to proceed with the proposed acquisition of the company. CFIUS found that there are no unresolved national security issues associated with the proposed transaction.
• As a precondition to CFIUS clearance of the transaction, CFIUS required that the company and the Consortium enter into a National Security Agreement with the Departments of Defense and Homeland Security.
• The transaction remains subject to approval from China’s State Administration of Foreign Exchange (SAFE) and other customary closing conditions.
• The parties continue to expect the transaction to close in 2016.

Looking Forward

• The company will not conduct quarterly conference calls while the transaction is pending.
• Upon closing, Lexmark common stock will cease to be publicly traded on the New York Stock Exchange.

Earnings Materials

This earnings release, including reconciliations between GAAP and non-GAAP financial measures, will be available on Lexmark’s investor relations website at http://investor.lexmark.com.

GAAP to non-GAAP Financial Measures

In an effort to provide investors with additional information regarding the company's results as determined by generally accepted accounting principles (GAAP), the company has also disclosed in this press release non-GAAP financial measures such as Adjusted EBITDA, earnings per share amounts and related income statement items which management believes provides useful information to investors. When used in this press release, “non-GAAP” Adjusted EBITDA, earnings per share amounts and related income statement items exclude restructuring charges and project costs, strategic alternatives, acquisition and divestiture-related adjustments, pension plan actuarial gains/losses, and remediation-related adjustments. The rationale for management's use of non-GAAP measures is included in Appendix A to the financial information attached hereto.

About Lexmark

Lexmark (NYSE: LXK) creates enterprise software, hardware and services that remove the inefficiencies of information silos and disconnected processes, connecting people to the information they need at the moment they need it. Open the possibilities at www.Lexmark.com.

Lexmark, the Lexmark logo and Open the possibilities are trademarks of Lexmark International, Inc., registered in the U.S. and/or other countries. All other trademarks are the property of their respective owners.

Safe Harbor

Statements in this release which are not historical facts are forward-looking and involve risks and uncertainties which may cause the company’s actual results or performance to be materially different from the results or performance expressed or implied by the forward-looking statements. Factors that may impact such forward-looking statements include, but are not limited to, Lexmark may not be able to complete the proposed sale of the Company to the Consortium pursuant to the terms of the merger agreement by and among the parties because of a number of factors, including without limitation (i) the occurrence of any event, change or other circumstances that could give rise to the expected timing of completion or termination of the Merger Agreement, or (ii) a failure to satisfy the other closing conditions; the proposed transaction also includes risks related to the disruption of management’s attention from Lexmark’s ongoing business operations due to the pending transaction and  the ability of Lexmark to retain and hire key personnel, maintain relationships with its customers and suppliers, and maintain its operating results and business generally; fluctuations in foreign currency exchange rates; decreased supplies consumption; excessive inventory for the company’s reseller channel; aggressive pricing from competitors and resellers; failure to successfully integrate newly acquired businesses; inability to realize all of the anticipated benefits of the company’s acquisitions; failure to manage inventory levels or production capacity; possible changes in the size of expected restructuring costs, charges, and savings; market acceptance of new products; continued economic uncertainty related to volatility of the global economy; inability to execute the company’s strategy to become an end-to-end solutions provider; changes in the company’s tax provisions or tax liabilities; periodic variations affecting revenue and profitability; the failure of information technology systems, including data breaches or cyberattacks; the inability to develop new products and enhance existing products to meet customer needs on a cost competitive basis; reliance on international production facilities, manufacturing partners and certain key suppliers; business disruptions; increased competition in the aftermarket supplies business; inability to obtain and protect the company’s intellectual property rights and defend against claims of infringement and/or anticompetitive conduct; ineffective internal controls; customer demands and new regulations related to conflict-free minerals; fees on the company’s products or litigation costs required to protect the company’s rights; inability to perform under managed print services contracts; terrorist acts; acts of war or other political conflicts; increased investment to support product development and marketing; the financial failure or loss of business with a key customer or reseller; credit risk associated with the company’s customers, channel partners, and investment portfolio; the outcome of litigation or regulatory proceedings to which the company may be a party; unforeseen cost impacts as a result of new legislation; changes in a country’s political or economic conditions; disruptions at important points of exit and entry and distribution centers; and other risks described in the company’s Securities and Exchange Commission filings. The company undertakes no obligation to update any forward-looking statement.

Footnotes

(1)  Totals may not foot due to rounding.

(2)  ISS is the acronym for Lexmark’s Imaging Solutions and Services segment.

(3)  ES is the acronym for Lexmark’s Enterprise Software segment.

(4)  Core revenue is defined as total Lexmark revenue minus Inkjet Exit revenue. Inkjet Exit is defined as consumer and business inkjet hardware and supplies that the company is exiting.

(5)  Higher Value Solutions revenue is defined as combined Managed Print Services (MPS) and Enterprise Software revenue. MPS is defined as ISS laser hardware, supplies, and fleet management solutions sold through a managed print services agreement.

(6)  Constant currency is calculated by translating prior period results at current period exchange rates and removing related hedge gains and losses.

(7)  Adjusted EBITDA, a non-GAAP measure, is defined as net earnings plus net interest expense (income), provision for income taxes, depreciation and amortization, excluding restructuring charges and project costs, acquisition and divestiture related adjustments, pension plan actuarial gains or losses, and remediation related adjustments.

(8)  Cash is defined as cash and cash equivalents.

(9)  Net debt, a non-GAAP measure, is defined as Cash minus long-term and short-term debt.

(10)Free cash flow, a non-GAAP measure, is defined as net cash flows provided by operating activities minus purchases of property, plant and equipment plus proceeds from sale of fixed assets if applicable.

Investor Contact:

John Morgan

(859) 232-5568

[email protected]

Media Contact:

Jerry Grasso

(859) 232-3546

[email protected]

LEXMARK INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS

(In Millions, Except Per Share Amounts)

(Unaudited)

LEXMARK INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL POSITION

(In Millions)

(Unaudited)