According to the Company’s FORM 10-K For The Fiscal Year Ended December 31, 2002, in late 2001, the company and certain of its officers and directors were named as defendants in four substantially identical securities class actions, which were consolidated (the "Consolidated Complaint") in the U.S. District Court for the Eastern District of Kentucky. By Opinion and Order dated November 8, 2002, the Court granted the defendants' Motion to Dismiss the Consolidated Complaint with prejudice. The plaintiffs have failed to timely appeal the Court's decision and therefore it is final.

The original Complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, by issuing materially false and misleading statements to the market. Specifically, throughout the Class Period, defendants made highly positive statements regarding the Company's financial results, including strong sales and growth of its printers. Despite unprecedented competition in the industry, Lexmark seemed to be immune from market conditions, reporting quarter after quarter of strong financial growth. Unbeknownst to the investing public, Lexmark was plagued with an increasing backlog of unmarketable inventory which defendants failed to properly account for in Lexmark's publicly reported financial results, causing the Company's financial results to be overstated by at least $25 million during the Class Period. By failing to timely take a charge to earnings for the unmarketable inventory, defendants and other Lexmark insiders were able to divest themselves of thousands of Lexmark shares at prices well above $60 per share, generating proceeds of over $8,000,000. On October 22, 2001, defendants finally revealed the truth, indicating that Lexmark would record a $25 to $35 million inventory write-down in the fourth quarter of fiscal year 2001, and that Lexmark would have to undergo a major restructuring in order to maintain its competitiveness. In addition, instead of generating between 70-80 cents in earnings per share for the fourth quarter of 2001, a figure defendants repeatedly emphasized Lexmark would reach, defendants were forced to drastically revise its fourth quarter earnings' guidance. As revealed on October 22, 2001, defendants expected only 40-50 cents in earnings per share for the fourth quarter of 2001 - - a far cry from what analysts and the investing public were led to expect. In response to the unexpected news, Lexmark's stock declined by over 11% to close at $44.77 per share, on extraordinarily high trading volume.