Segment Data

12 Months Ended

Dec. 31, 2013

Segment Data [Abstract]

Segment Data

20.           SEGMENT DATA

Lexmark operates in the office imaging and enterprise content and business process management markets. The Company is managed primarily along two segments:  ISS and Perceptive Software.

ISS offers a broad portfolio of monochrome and color laser printers and laser multifunction products as well as a wide range of supplies and services covering its printing products and technology solutions. In August 2012, the Company announced it will exit the development and manufacturing of inkjet technology. The Company will continue to provide service, support and aftermarket supplies for its inkjet installed base.

Perceptive Software offers a complete suite of ECM, BPM, DOM, intelligent data capture and search software as well as associated industry specific solutions. On February 29, March 13, and March 16, 2012, the Company acquired Brainware, Nolij and ISYS, respectively, which all joined the Company's Perceptive Software segment. These acquisitions further strengthen the Company's products, content/business process management solutions and managed print services. On December 28, 2012, the Company expanded its presence within the healthcare sector with the acquisition of Acuo which also joined the Perceptive Software segment. On March 1, 2013, the Company acquired AccessVia and Twistage as well as Saperion on September 16, 2013, further expanding and strengthening the solutions available in the Perceptive Software segment. On October 3, 2013, the Company acquired all of the issued and outstanding shares of PACSGEAR which is also reported in the Perceptive Software segment starting in the fourth quarter of 2013.

The Company evaluates the performance of its segments based on revenue and operating income, and does not include segment assets or non-operating income/expense items for management reporting purposes. Segment operating income (loss) includes: selling, general and administrative; research and development; restructuring and related charges; and other expenses, certain of which are allocated to the respective segments based on internal measures and may not be indicative of amounts that would be incurred on a stand-alone basis or may not be indicative of results of other enterprises in similar businesses. All other operating income (loss) includes significant expenses that are managed outside of the reporting segments. These unallocated costs include such items as information technology expenses, certain occupancy costs, stock-based compensation and certain other corporate and regional general and administrative expenses such as finance, legal and human resources.  Acquisition-related costs and integration expenses are also included primarily in All other.

During the fourth quarter of 2013, the Company changed its accounting policy for pension and other postretirement benefit plan asset and actuarial gains and losses. Under the new accounting policy, these gains and losses will be recognized in net periodic benefit cost in the year in which they occur rather than amortized over time. Results for all periods presented in this Annual Report on Form 10-K reflect the retrospective application of this accounting policy change. Refer to Note 2 of the Notes to Consolidated Financial Statements for additional information. In addition, in the fourth quarter of 2013, Lexmark changed its method of allocating the elements of net periodic benefit cost to reporting segments. Historically, total net periodic benefit cost was allocated to reporting segments. Under the new allocation method, service cost, amortization of prior service cost and credit, and pension and other postretirement benefit plan settlements and curtailments will continue to be allocated to reporting segments. Interest cost, expected return on plan assets, and asset and net actuarial gains and losses will be included in results for All other.

The following table includes information about the Company's reportable segments:

	2013		2012		2011
Revenue:
ISS	$	3,444.0	$	3,641.6	$	4,078.2
Perceptive Software		223.6		156.0		94.8
Total revenue	$	3,667.6	$	3,797.6	$	4,173.0
Operating income (loss):
ISS	$	770.3	$	601.0	$	779.3
Perceptive Software		(79.5	)	(72.1	)	(29.5	)
All other		(281.6	)	(337.4	)	(382.1	)
Total operating income (loss)	$	409.2	$	191.5	$	367.7

Operating income (loss) noted above for the year ended December 31, 2013 includes a Gain on sale of inkjet-related technology and assets of $73.5 million in ISS. Operating income (loss) noted above for the year ended December 31, 2013 includes restructuring charges of $25.2 million in ISS, $4.7 in Perceptive Software, and $7.9 million in All other. Operating income (loss) related to Perceptive Software for the year ended December 31, 2013 includes $56.4 million of amortization expense related to intangible assets acquired by the Company. Operating income (loss) related to All other for the year ended December 31, 2013 includes a pension and other postretirement benefit plan asset and actuarial net gain of $83.0 million.

Operating income (loss) noted above for the year ended December 31, 2012 includes restructuring charges of $85.5 million in ISS, $19.1 million in All other, and $0.7 million in Perceptive Software. ISS operating income (loss) in 2012 versus 2011 was primarily influenced by negative currency movements and an increase in restructuring charges. Operating income (loss) related to Perceptive Software for the year ended December 31, 2012 includes $40.9 million of amortization expense related to intangible assets acquired by the Company. Operating income (loss) in 2012 versus 2011 for the Perceptive Software segment was driven by YTY increases in marketing and development expenditures and amortization expense related to intangible assets. All other for the year ended December 31, 2012 includes a pension and other postretirement benefit plan asset and actuarial net loss of $21.8 million.

Operating income (loss) noted above for the year ended December 31, 2011 includes restructuring charges of $9.7 million in ISS and $3.8 million in All other. Operating income (loss) related to Perceptive Software for the year ended December 31, 2011 includes $20.7 million of amortization expense related to intangible assets acquired by the Company. All other for the year ended December 31, 2011 includes a pension and other postretirement benefit plan asset and actuarial net loss of $94.7 million.

During 2013 and 2012, no one customer accounted for more than 10% of the Company's total revenues. In 2011, one customer, Dell, accounted for $414.7 million or approximately 10% of the Company's total revenue. Sales to Dell are included primarily in ISS.

The following is revenue by geographic area for the year ended December 31:

	2013		2012		2011
Revenue:
United States	$	1,576.8	$	1,695.5	$	1,755.4
EMEA (Europe, the Middle East & Africa)		1,353.5		1,320.3		1,531.6
Other International		737.3		781.8		886.0
Total revenue	$	3,667.6	$	3,797.6	$	4,173.0

Sales are attributed to geographic areas based on the location of customers. Other International revenue includes exports from the U.S. and Europe.

The following is long-lived asset information by geographic area as of December 31:

	2013		2012		2011
Long-lived assets:
United States	$	466.2	$	445.3	$	460.3
EMEA (Europe, the Middle East & Africa)		101.5		117.4		125.1
Other International		244.7		282.6		303.4
Total long-lived assets	$	812.4	$	845.3	$	888.8

Long-lived assets above include net property, plant and equipment and exclude goodwill and net intangible assets. At December 31, 2013, approximately $83.9 million of the Company's net property, plant and equipment were located in the Philippines, down from $125.9 million and $150.7 million at December 31, 2012 and 2011, respectively. The decrease in 2013 was largely driven by the divestiture of inkjet-related technology and assets.

The following is revenue by product category for the year ended December 31:

	2013		2012		2011
Revenue:
Hardware (1)	$	762.8	$	826.5	$	990.4
Supplies (2)		2,484.4		2,640.1		2,910.6
Software and Other (3)		420.4		331.0		272.0
Total revenue	$	3,667.6	$	3,797.6	$	4,173.0

(1) Includes laser, inkjet, and dot matrix hardware and the associated features sold on a unit basis or through a managed service agreement

(2) Includes laser, inkjet, and dot matrix supplies and associated supplies services sold on a unit basis or through a managed service agreement

(3) Includes parts and service related to hardware maintenance and includes software licenses and the associated software maintenance services sold on a unit basis or as a subscription service