Lexmark Confidential Until Announce

X502n and X500n Big Functionality for a Small Budget Eric Wallin Color Product Line Strategist Worldwide Marketing PS&SD WW T3 – Lexington, KY February 9, 2007

Lexmark Confidential Until Announce Agenda Product Objective Market Opportunity Product Overview –Improvements from C500 –Print, scan, copy and fax features –Get the Most with Host –PrestoPage Manager –New Adjustable legal tray Table Exercise Product Positioning Supplies Positioning Warranty Positioning and TCO Product Messaging –Tag Line & Positioning Statement –Key Pillars and support points –Superlative Claims Things to Know Marketing Plan Summary

Lexmark Confidential Until Announce X502n/X500n Objectives Participate in fastest growing segment of the MFP market Complete our MFP product line with an entry color laser MFP offering Low development and capital spend Leverage C500n print engine and supplies volumes for lower cost from vendor Fast time to market Establish market position and gain customer experience in entry color laser MFP.

Lexmark Confidential Until Announce Market Opportunity

Lexmark Confidential Until Announce WWxJ Color MFP Price Segment Growth Source: IDC, Sell-In 2Q06 WW excluding Japan Total Color MFP Growth 68% A4 Color MFP Growth 128% $500 -$1000 A4 MFP Growth 128% Color Laser MFP unit volume is now 10% of Mono Laser MFP

Lexmark Confidential Until Announce WWxJ Total Color MFP Market By Region 1Q-3Q05 TOTAL: 398K Units 1Q-3Q06 Market Volumes 68% TOTAL: 671K Source: IDC, Sell-In 3Q06 WW excluding Japan AP excludes Japan EMEA 47%EMEA 48%

Lexmark Confidential Until Announce WWxJ Top Color Laser MFP Vendors WWxJ $500-$999 A4 Color Laser MFP 1Q06-3Q06

Lexmark Confidential Until Announce Product Overview

Lexmark Confidential Until Announce U.S., Canada, and LAD Announcement April 24, 2007 EMEA and AP Announcement May 29, 2007 X502n GA 5/5/07, X500n GA 6/25/07 Print Speed - 31 ppm mono and 8 ppm color Copy Speed – 21 ppm mono and 7 ppm color Network ready 2400x1200 dpi 48 bit scan resolution X500n Pricing 100% HP CM1015 ($499) X502n Pricing 100% HP CM1017 ($699) Host Based Controller for fast job processing Uses same Supplies as C500n Lexmark C502n/X500n Overview 10

Lexmark Confidential Until Announce MFP Derivative of C /8 pm Same core engine as C500 MFP integration Scanner hardware (New CCD design) Controller, firmware and drivers (host based) 3 rd party fax card About 30 new & improved parts added versus C500 X502n Vs. C500n Scanner Fax Card Controller + = C500n Print Engine Improved GUI versus C500 Lexmark had very little input into C500 GUI / drivers Lexmark provided direction for X500n design New op panel (wording / button layout) New menu structure New driver Lexmark driver installer New Color Science X502n

Lexmark Confidential Until Announce Save Money and Space Finally! One device that does it ALL $2200 worth of capability for $699 in a compact size. 31 ppm Network Ready Mono Laser Workhorse $499 $ ppm digital color scanner with ADF $349 High Quality Color Laser Printer $ ppm Mono Laser Fax Machine $ ppm Analog Mono Copier

Lexmark Confidential Until Announce X500n / X502n Features Front Loading Toner Cartridges Optional 550 Sheet Drawer $ Scanner cover remains open when lifted Standard 250 Sheet Drawer Adjustable to Legal size Robust Hand Holds Easy Front Access for Output 35 Sheet ADF with Reliable C-Path Book Hinges for Scanner Cover

Lexmark Confidential Until Announce X500n / X502n Op Panel Easy One Touch Black or Color Copies Large Buttons on Number Pad Easy and Intuitive Menu Navigation Easy One Touch Access to common functions like Enlarge & Reduce 10 Speed buttons for over 20 preset phone numbers or addresses Illuminated Copy/Scan/Fax Function Buttons Easy to See Backlit LCD Display Easy One Touch Job Cancel

Lexmark Confidential Until Announce X502/X500 – Print Color Laser Print Technology 31 ppm mono and 8 ppm color 400 MHz processor with 128 MB memory 1200x600 dpi enhance print quality Network Ready 250 sheets of input 530 sheet optional drawer Small Footprint TTFP from Ready 19 seconds color 13 seconds mono TTFP from cold start less than 56 seconds Automatic Color Calibration Simple design with front access toner replacement Maximum Monthly duty cycle of 35,000 prints Toner Saver – up to 50% Host Based Print Driver

Lexmark Confidential Until Announce X502/X500 – Copy & Scan 21 cpm mono and 7 cpm color – copies or scans TTFC from ready – 30 sec. mono and 35 sec. color TTFC from cold start – less than 56 seconds mono or color Scanner Technology – Charged Coupled Device (CCD) 2400x1200 dpi optical resolution with 48 bits of scan depth 35 sheet Auto Document Feeder (ADF) Simplex C-Path Scanner maximum duty cycle 17,500 scans per month ADF or flatbed Copy 1-99, Scale 25% to 400%, Lighter/Darker Paper Saver Copy Menu Selection - 2 up or 4 up Network Twain Scan Driver Scan to – PDF, jpg, or TIFF Scan to FTP

Lexmark Confidential Until Announce X502 – Fax Super G bps Fax modem 3 second transmission speed MH, MR, and MMR compression coding supported PSTN and PABX fax network supported 100 pages memory back up Mono only 20 hard button speed dials/ s on operator panel 50 additional speed dials/ s in directory –Note * X500n does not support Fax

Lexmark Confidential Until Announce Get the Most with Host Advantages –Much Faster Performance –New Smaller files sizes –Easy Network Installation –Great solution for any user of Windows Vista, XP, 2000, NT, Server 2003 or Mac OS9.x and OSX Disadvantages –Cannot be used with legacy or minority operating systems Linux, Unix, Citrix, DOS, OS2, Win 3.1, Win 95, 98, Me, Mac OS8 or earlier –Cannot be used with applications that generate PS or PCL print files –Cannot be used with mainframe or AS400 systems outputting ASCI text

Lexmark Confidential Until Announce Get the Most with Host Much Faster Performance –X502n and X500n utilize the power of the host PC processor and memory to RIP jobs extremely fast –The engine runs at rated speed for almost any job: text, graphic or high resolution photo

Lexmark Confidential Until Announce Get the Most with Host –Older Host systems created print files which were very large and did not pass over the network well. –C500 and X500/X502 have a new host print architecture that reduces file size on the network. –1 MB vs 0.5 MB average file size on a 100 Megabits per second Ethernet network is insignificant. Ave. Print File Size 500K for LXK PS3 Ave. Print File Size 1000K for X502n Print File Size (KB)

Lexmark Confidential Until Announce Get the Most with Host Easy network Installation –X500/X502 use a Lexmark developed network installer –It has auto IP discovery and auto loading of network addresses –X500/X502 is network ready and can be network installed in 4 mouse clicks –“Network setup was no problem at all.” on C500n Click 1 – Install Printer and Software Click 3 – Next Click 2 – Agree Click 4 – Finish

Lexmark Confidential Until Announce X502/X500 – Presto PageManager Free Presto PageManager Deluxe –Share Documents Scan Direct with Twain Express –Scans directly to your PC, Fax, or application Scan to network Supports Microsoft SharePoint on Server 2003 Built in FTP and Web Browser –Manage and Find Documents File Stacking – Open multiple files with one click OCR with HTML format for instant web publishing De-skew Annotation – add highlighting, notes, audio, and photo’s to scanned documents Advanced Search and Thumbnails

Lexmark Confidential Until Announce New Universal Paper Cassette One standard tray accommodates A5 to U.S. legal size –LV only Backward compatible to C500n

Lexmark Confidential Until Announce Table Exercise Each table pick a leader who’s home telephone number ends in 4 or is closest to 4 Thinking of your customer - List the 5 most important features, their function, and their benefit –Example: Feature - Extendable Paper Tray Function – Extends the tray for larger paper sizes Benefit – Customers can now print legal size with the standard tray You have 5 minutes

Lexmark Confidential Until Announce Product Positioning

Lexmark Confidential Until Announce 2007 Color MFP Product Line X782e $ /35 ppm Price Function LDSS eTask Interface A3 Duplex Scan Solution Card Support Duplex Output X930e $10,499 40/30 ppm X945e $12,499 45/40 ppm New X500n $ ppm mono 8 ppm color Network Ready X502n $ ppm mono 8 ppm color Network Ready Fax Ready

Lexmark Confidential Until Announce X502n/X500n Market Positioning Target Market – Small to Medium Businesses <500 Employees – Department Managers, Business Owners – Small to medium workgroups (3-15) Product Positioning – General office printing, copying, and faxing – Average usage: 850 pgs/mo, 600 print, 250 copy & fax – Color in memos, letters, reports, forms, spreadsheets, correspondence, marketing materials, – technical docs, & presentations – Printing high quality electronic documents through intranets & the Internet – Print on demand collaterals, brochures, and newsletters C500n Customer Testimonial - Small Business Brochures The Spa at Nicholas Michaels – “I was immediately amazed At how fast it prints our brochures. The output is pristine. The red in our logo is incredibly bright and distinct. We printed 300 brochures and inserts in one hour without a jam.” Marianne Lapomardo – Office Manager

Lexmark Confidential Until Announce X500n & X502n Competitive Positioning Lexmark X500nHP CM1015Lexmark X502nHP CM1017 Price$499 $699 Speed Mono/Color 31/88/831/88/8 Print EngineC500n, rotary, $349 HP1600, tandem, $299 C500n, rotary, $349 HP 2600n tandem, $399 FunctionsPCS 35 Sheet ADF PCS Platen PCSF 35 sheet ADF PCS Platen ControllerHBPPCL6/PS3HBPPCL6/PS3 NetworkStandardOptional ENA Standard Std Sheets In/out/MPF 250/150/no125/125/no250/150/no125/125/no Resolution2400x600600x x600600x600 Opt Input Color/ Mono CPP $0.118/ $ $0.118 / $ $0.118/ $ $0.118 / $ Much More for Same

Lexmark Confidential Until Announce X502n/X500n Supplies X502n and X500n share all supplies with C500n HY Black toner cartridge – 5K pages $ HY CMY toner cartridge – 3K pages $ SY Black toner cartridge – 2.5K $90.00 SY CMY toner cartridge – 1.5K $98.45 Waste toner bottle – 30K images - $7.00 Ship with Toner 2.5K mono and 1.5 K CMY Not on ISO yield standard HY Black CPP = 94% CM1017 – 2.17 cents BDP HY Color CPP = 100% CM1017 – 11.8 cents BDP SY Black CPP – 2.9 cents BDP SY Color CPP – 18.7 cents BDP Photodeveloper 120K images – Lifetime Component Fuser 60K pages - Lifetime Component No Return Program 29

Lexmark Confidential Until Announce Warranty Positioning & TCO 1 yr standard Onsite warranty Vs Depot for HP CM1017 –X502n/X500n 2 yr extended warranty Onsite - $259 –HP CM yr extended NBD replacement - $239

Lexmark Confidential Until Announce Product Messaging

Lexmark Confidential Until Announce C502n/X500n Messaging Positioning Statement The business class color laser AIO with high speed printing, scanning, copying, and faxing. Product Tag Line Big Functionality for a Small Budget 32 Lexmark Confidential Until Announce

Messaging Pillars Versatile to Meet Your Business Needs - Consolidate multiple functions into one reliable device - Manage, search and edit documents with ease - Increase productivity of your office by creating documents with little time and effort Professional Results in Color - Print, copy and scan in brilliant color - Impress customers with superior print quality, rivaling professional printing companies - Create unique collateral such as brochures and mailers on a wide range of media Business-Class Performance - Prints fast! Up to 31 ppm in black and up to 8 ppm in color - Network ready- easy to set up and share among multiple users - Supports output for heavy workloads Key Selling Points

Lexmark Confidential Until Announce Superlative Best in Class Claims Fastest printing color laser AIO under $500 Fastest copying color laser AIO under $500 Fastest time to first print or copy for color laser AIO’s under $500 Highest input and output paper capacity of any color laser AIO under $500 Fastest processor for any color laser AIO under $500 Highest Yield supplies and best intervention rate for any color laser AIO under $500 Lowest cost per page for any color laser AIO under $500 Highest scan depth for any color laser AIO under $500 Highest scanner and ADF maximum duty cycle of any color laser AIO under $500

Lexmark Confidential Until Announce Things to Know TAA models available 6/25/07 Supports USB capable Lexmark and 3 rd party ENA’s Supports Lexmark N4050e wireless ENA Does not support Lexmark Solutions such as: –DLE’s, Font Cards, Forms Cards, Internal Network Cards, Hard Drives, Flash Memory, ImageQuick, Confidential Print, or Doc Portal C500n 530 sheet drawer option will work with X500n/X502n When adjusted for Legal the universal cassette will not close flush with the front of the printer Does not support PCL6 or PS3 Does not have a duplex option

Lexmark Confidential Until Announce More Things to Know Will support MarkVision via plug-in for 3 rd party Does not support Color Care Technology No color samples page for color matching, no resident help pages, and no Pantone Cannot upgrade X500n to X502n Not IPv6 complaint Not Blue Angel Complaint – Yes for everything but duplex Not Energy Star Complaint – Yes for everything but duplex C500 drivers will not work with X500 or X502 Driver to Fax function will not be available until 10/07

Lexmark Confidential Until Announce Marketing Plan T3 –WW: February 7-9, 2007 –EMEA: March 21-23, 2007 Beta Units –Available 2/12/07 for US, 3/26/07 for EMEA Eval Units –U.S., LAD, and Canada Evals to be air shipped and arrive 3/26/07 –EMEA and AP Evals to be boat shipped and arrive 4/23/07 Announce & GA –X502n and X500n to Announce in the U.S., Canada, and LAD on 4/24/07 –X502n GA for US, Canada and LAD is two weeks delayed 648 units 4/29/07, then 432 5/5/07 –X502n and X500n to Announce in EMEA and AP 5/29/07 –X502 will have full GA for EMEA and AP on 5/29/07 –X500n will have full WW GA 6/25/07

Lexmark Confidential Until Announce X502 Product Lab Un-boxing video Change supplies Adjust new universal tray Pull scanning from PC Up-load fax numbers and addresses Explore operator panel function Explore driver function Learn jam clearance Make prints and copies Scan to and network

Lexmark Confidential Until Announce X502 Competitive Lab 10 New sub $1000 color laser AIO models announced and shipping in the last 3 months Learn their weaknesses Print and copy samples with originals available.

Lexmark Confidential Until Announce Summary Extreme versatility in business environments –One device does it ALL Professional “copy shop” quality and reliability. –Impress clients with brilliant color Blazing performance for mono and color: print and copy. – Networked and ready for heavy print/copy demands

Lexmark Confidential Until Announce Thank You