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2011 Corporate Social Responsibility Report

WATER MANAGEMENT

LEXMARK’S COMMITMENT TO WATER CONSERVATION AND PROTECTION

Cane Run Cleanup

Lexmark's Goals

  • Reduce water usage 20 percent (2005-2017)
  • Complete Lexmark's six-point water conservation plan by the end of 2017

Lexmark's Progress

  • Achieved a 39-percent reduction in water usage versus baseline year 2005
  • Exceeded our goal of reducing water usage by 20 percent by 2017

Water Usage

The manufacturing and research and development operations that take place at Lexmark-owned and leased facilities have a substantial impact on the company’s water consumption. This usage varies somewhat with product demand, but is relatively stable. Lexmark uses water for three purposes: manufacturing and development, sanitation and HVAC.

Lexmark water usage is also driven by the need to control temperature. As external temperatures rise, we use more water in our HVAC systems to cool our facilities.

We cannot control the underlying primary variable in our cooling-driven water usage – external temperature. We must therefore aggressively monitor, control and reduce water usage where opportunities exist.

Lexmark has undertaken numerous initiatives at facilities worldwide to reduce consumption of water including installing more efficient HVAC systems and improving the efficiency of existing HVAC systems, installing low-flow plumbing fixtures, desert-scaping (sometimes referred to as xeriscaping) and reusing process water in manufacturing facilities.

By the end of 2012, Lexmark plans to have recently spent nearly $2 million upgrading Lexington headquarters underground city water piping systems to reduce leakage and improve reliability.

We have made a commitment to track and reduce the consumption of natural resources at all our leased manufacturing facilities, research and development facilities and office spaces worldwide. Lexmark has established the following corporate goals to guide our water conservation efforts.

  • Reduce water usage 20 percent (2005-2017)
  • Complete Lexmark's six point water conservation plan by the end of 2017

Lexmark total water usage (as purchased from local utility providers) is shown in the Total Water Usage chart. We have achieved a 39 percent reduction in water usage versus baseline year 2005. This exceeds our goal of reducing water usage by 20 percent by 2017.

This year's reduction can be attributed to milder summers in North America and improved control of cooling tower chemistry, which in the first year alone resulted in a 28 percent reduction in blow down at headquarters. Also aiding in the reduction was the finding and repairing of underground leaks and an increased reuse of water in Cebu, where there was a significantly large increase in recovered water at LIPI between 2010 and 2011 and an even larger decrease in reported total water use for the same period.

Some of this usage reduction can be attributed to the reuse of water. Lexmark reuses water in our manufacturing facility in Lapu-Lapu City, Philippines and in Boulder, Colorado. Our facility in Lapu-Lapu City collects used water and condensate from the air conditioning system in a non-potable water cistern. This water is later used for flushing toilets and for irrigation. The Lapu-Lapu City facility reused 17,110 m3 of water in 2011. Similar reuse takes place in Boulder. That facility collected and reused 15,142 m3 of water in 2011. Reused water accounts for nearly five percent of Lexmark's total water use, not including unmetered rain water.

Water Conservation Plan

Unpredictable temperatures and fluctuations in production result in positive and negative changes in Lexmark's water usage. To help control this, Lexmark implemented a six-point water conservation plan in 2009. This plan will help us achieve more significant, controllable and sustained reductions in water usage going forward.

Increased water use in 2010 versus 2009 resulted from an abnormally hot U.S. summer, the economic recovery driving increased production and the increased scope of reporting to include China and Perceptive Software. In compliance with the Trade Agreements Act of 1979, Lexmark assembles TAA compliant products at it's configuration and distribution center in Southaven, MS.

Lexmark’s Six Point Water Conservation Plan

Point

Goal

Projects

2011 Progress

1

Reduce Consumption (Intentional use of water)

Install low-flow plumbing fixtures in all new construction and replace outdated plumbing fixtures with low-flow plumbing fixtures during remodels/repairs

Aged existing plumbing fixtures were replaced by sensor operated and low flow fixtures at Headquarters in 2010 and 2011.

2

Reduce Consumption (Intentional use of water)

Upgrade water consuming facilities equipment to improve water usage efficiency

Lexmark, in partnership with GE Water and Process Technologies, cooling tower water controls improved control of cooling tower chemistry, resulting in fewer purges and a 28% reduction in the amount of water lost to purges/blow downs.

3

Reduce Losses
(Accidental use of water)

Reduce losses due to leaks from main pipes

In the first quarter of 2011, a significant leak in an underground main and several other smaller leaks were identified and repaired.

4

Reduce Losses
(Accidental use of water)

Reduce losses due to plumbing leaks

In the first quarter of 2011, a significant leak in an underground main and several other smaller leaks were identified and repaired.

5

Education

Complete at least one employee education communication on water conservation per geography per year

Lexmark has made special efforts through Lexmark's internal web site and signage posted throughout our facilities to educate internal facilities team members and facilities contractors about water conservation appropriate to their jobs.

6

Education

Designated employee at each facility to keep abreast of new water conservation opportunities and technology

Lexmark personnel at each manufacturing facility have been assigned this responsibility.

Water Withdraws and Discharges

Where our water comes from and where it goes is of great importance to Lexmark. We understand that access to clean, abundant and affordable water is a critical issue of environmental justice. We also understand that our commitment to responsible use of our water resources and protection of local watersheds helps to ensure that our neighbors have access to clean, abundant and affordable water.

Most Lexmark facilities withdraw water exclusively from municipal water supplies and other water utilities. A limited amount of rainwater (unmetered) is collected and used by some Lexmark facilities.

Lexmark Facility

Utility Provider

Original Source(s) of Water*

Lexington, Kentucky, United States (Headquarters)

Kentucky American Water

Kentucky River, Jacobson Reservoir and Lake Ellerslie

Boulder, Colorado, United States (Manufacturing)

City of Boulder Utilities Division

Barker Reservoir, Lakewood Reservoir, Boulder Reservoir and Carter Lake via the Boulder Feeder Canal

Juárez, Chihuahua, México (Manufacturing)

Junta Municipal de Agua Saneamiento de Juárez

Hueco Bolson, underground aquifer

Cebu, Philippines (Research and Development) / Lapu-Lapu City, Philippines (Manufacturing)

Metropolitan Cebu Water District (MCWD)

The Buhisan Dam and 113 deep wells and the diversion weir in Barangay Jaclupan, Talisay City and rainwater collection system for non-potable use

Shawnee, Kansas (Perceptive Headquarters and Hedge Lane)

Water One

The Missouri River and Kansas River and wells along the Kansas River

Budapest, Hungary

Fövárosi Vízmüvek

Multiple sources, but water from the Danube River (from wells located near the river) dominates the supply

Orleans Plaza, France La Lyonnaise Des Eaux, Val de loire

Five storage tanks throughout the city

Boigny, France

Syndicat Des Eaux Des Usages, Mairie De Vennecy 45760

Nine drilled wells located around Orleans

Shenzhen, China

Shenzhen Water Company

Pearl River - the biggest river in south China. In compliance with the Trade Agreements Act of 1979, Lexmark assembles TAA compliant products at it's configuration and distribution center in Southaven, MS.

*To our knowledge, none of these bodies of water are recognized by professionals to be particularly sensitive due to their relative size, function or status as a rare, threatened or endangered system and none support a particular endangered species of plant or animal or are considered a nationally or internationally proclaimed conservation area. And none of these water sources are significantly affected by Lexmark water withdrawal.

Planned Discharges

Waste water from Lexmark operations is primarily discharged to local utility systems for treatment. Lexmark discharges some water directly to nearby bodies of water in accordance with local laws and regulations. These discharges have had positive impacts. For example, Lexmark occasionally discharges environmentally neutral water to the Cane Run Creek that flows through Lexmark’s property in Lexington, Kentucky. The wildlife that depends on the Cane Run Creek, an impaired surface stream creek that is particularly vulnerable in times of drought, benefits from the occasional addition of water that allows fish, birds and other wildlife to survive during times when the water level in the creek would otherwise be detrimentally low.

Annual water discharges are assumed to be equivalent to total water consumption. All water discharges, whether planned or unplanned, destined for the local utility or nearby bodies of water, are closely monitored by site facilities and environmental teams that test for water quality.

Unplanned Discharges

In an effort to prevent negative impacts on the environment, Lexmark has established site-specific, pollution-prevention plans that encompass compliance with applicable environmental regulations, outline Lexmark’s proactive pollution-prevention efforts and specifically address spill prevention, hazardous-waste management, recycling and water quality. These plans cover multiple pollution routes including discharges to ground, air and water. They cover all Lexmark owned manufacturing and research and development facilities worldwide.

Lexmark reported no significant spills in our 2011 financial statement. In an effort to continually improve our processes, we record and investigate all spills, regardless of size or impact, as directed by site ISO 14001 and OHSAS 18001 and other corrective and preventative action programs.

For 2011 compared to 2010, Lexmark reduced its total water spend by 0.82 percent (the overall spend at non-US facilities increased in 2011) with some sites reducing spend by as much as 29 percent. Due to water conservation efforts in Lexington, water spend year-to-year was reduced by 12 percent. The spend at Lexmark's manufacturing facility in the Philippines was reduced by 26 percent.

In Lexington in 2011 about $20,000 was spent to fix a major underground leak and to replace some defective isolation valves. Another $50,000 was spent to purchase ultrasonic leak-monitoring Permalog devices now being deployed. About $800,000 was spent to reduce water losses from the high-pressure, pumped firewater loop. A secondary city water main was run to provide redundancy to the existing main as required by the property insurers. A follow-up program to remove the main fire pumps and water tanks south of New Circle is planned and includes removal/rehabilitation of aged domestic water lines.

  1. Emissions Scope Canada, China, France, Hungary, India, US, Mexico, Geneva