- Lexmark reports fourth-quarter revenue of $1.31 billion, GAAP EPS of
$1.04, including $0.25 for restructuring-related activities
- Lexmark reports full-year revenue of $4.97 billion, GAAP EPS of $3.14,
including $0.36 for restructuring-related activities
- Business market segment revenue was a record $800 million in the fourth
quarter, a record $3.00 billion for full year 2007
- Company generates cash of $212 million during fourth quarter, $564
million in 2007
LEXINGTON, Ky., Jan. 29 /PRNewswire-FirstCall/ -- Lexmark
International, Inc. (NYSE: LXK) today announced financial results for the
fourth quarter of 2007. Fourth-quarter revenue was $1.31 billion, down 4
percent compared to revenue of $1.37 billion last year. Fourth-quarter GAAP
earnings per share were $1.04. Earnings per share for the fourth quarter of
2007 would have been $1.29 excluding $0.25 per share for
restructuring-related activities. Fourth- quarter 2006 GAAP earnings per
share were $0.91. Earnings per share for the fourth quarter of 2006 would
have been $1.05 excluding $0.14 per share for restructuring-related
activities.
"Today we're announcing fourth-quarter financial results that reflect
the strategic shift we began in the second half of 2007. Although EPS
greatly exceeded expectations in the fourth quarter, we have more work to
do as we continue to implement our strategy to drive our growth in higher
usage segments," said Paul J. Curlander, Lexmark chairman and chief
executive officer. "Our investments in industry-leading products and
technology are an integral part of our strategy and are demonstrated by the
recent introduction of our new Professional Series inkjet line, our new
high-performance color laser multifunction device, the X560n, and the
significant product awards and industry recognition that we received in
2007. Overall our financial position remains strong, and in 2007 we
continued to generate strong cash flow from the on-going sales of our
aftermarket supplies."
Fourth-quarter 2007 business segment revenue was a record $800 million
growing 4 percent year to year. Consumer segment revenue of $509 million
declined 15 percent compared to a year ago. Fourth-quarter 2007 gross
profit margin was 33.4 percent, the operating expense to revenue ratio was
24.7 percent, the operating income margin was 8.7 percent, and net earnings
were $99 million. Fourth-quarter 2007 operating income includes $30 million
pretax charges in connection with the company's restructuring-related
actions.
Fourth-quarter 2006 gross profit margin was 30.8 percent, the operating
expense to revenue ratio was 23.3 percent, the operating income margin was
7.5 percent, and net earnings were $90 million. Fourth-quarter 2006
operating income included $19 million restructuring-related pretax charges.
On a non-GAAP basis, excluding fourth-quarter restructuring-related
charges:
-- Fourth-quarter 2007 gross profit margin would have been 34.0 percent,
up 2.9 percentage points from 31.1 percent in the same period last
year, principally due to a favorable product mix shift partially
offset by lower product margins.
-- Fourth-quarter 2007 operating expense as a percent of revenue would
have been 23.0 percent, up 0.9 percentage points compared to 22.1
percent in the same quarter last year due to the decline in revenue
offsetting a slight reduction in operating expense.
-- Fourth-quarter 2007 operating income margin would have been 11.0
percent, up 2.1 percentage points from 8.9 percent last year.
-- Fourth-quarter 2007 net earnings would have been $123 million compared
to $104 million in the fourth quarter of 2006.
The company ended the quarter with $796 million in cash and marketable
securities. Fourth-quarter net cash provided by operating activities was
$212 million. Capital expenditures for the quarter were $52 million.
Depreciation and amortization in the quarter was $58 million. Lexmark did
not repurchase its stock during the fourth quarter. The company's remaining
share repurchase authorization was approximately $295 million at quarter
end.
New Products Expand Lexmark's Focus on High-Usage Customers
As part of Lexmark's strategy to increase the company's focus on
higher- usage segments of the inkjet market, in early January Lexmark
introduced the Professional Series which the company believes will meet the
demanding needs of small office and home office (SOHO) users. The
Professional Series is Lexmark's first inkjet all-in-one (AIO) line to
include high-yield cartridges and lifetime, priority phone support(1). The
Professional Series inkjet line features four inkjet AIOs including: the
Lexmark X9575 Wireless All-in-One for $249; the Lexmark X6575 Wireless
All-in-One priced at $169; the Lexmark X4875 Wireless All-in-One priced at
$149; and the Lexmark X5075 All-in-One for $99(2).
Also in January, the company added to its award-winning line of color
laser multifunction products (MFPs) with the announcement of the Lexmark
X560n color laser MFP which is ideally suited for medium and large
workgroups.
Lexmark Adds to List of Accolades from Channel and Leading Test Houses
Ingram Micro Inc., the world's largest technology distributor, recently
recognized Lexmark with its 2007 Manufacturer Award of Excellence in the
peripherals category. Lexmark works with Ingram Micro to distribute both
its inkjet and laser products to consumers, small and medium businesses
(SMB) and large enterprise customers through solution providers and
value-added resellers.
Separately, CRN, a channel publication for solution providers and
valued- added resellers, named Lexmark the No. 1 Top Growth Best-Seller for
MFPs for mid-year 2007. Lexmark was also listed on CRN's mid-year Top Five
Best-Sellers List for both MFPs and color lasers.
Also in the quarter, Lexmark's C935 series was recognized by Better
Buys for Business as one of the Innovative Products of the Year for 2007,
an award reserved for products that introduce an exciting new technology.
In addition, Buyers Laboratory Inc. (BLI) awarded Lexmark four Fall 2007
Pick of the Year awards. The awards included: Outstanding Mid-Size
Workgroup Color Printer, Outstanding Large Workgroup Color Printer,
Outstanding Large Workgroup Color MFP, and Outstanding Mid-Size Workgroup
Monochrome MFP for the Lexmark C782dtn, C935hdn, X945e, and X644e,
respectively. A separate leading test laboratory, BERTL, also recognized
the X945e color laser MFP with its Four- Star, Highly Recommended rating.
Full-year Results
2007 revenue was $4.97 billion, down 3 percent compared to revenue of
$5.11 billion in 2006. 2007 business segment revenue was a record $3.00
billion growing 5 percent, and consumer segment revenue of $1.97 billion
declined 12 percent. 2007 GAAP earnings per share were $3.14. Excluding
$0.36 per share restructuring-related charges, earnings per share would
have been $3.50. 2006 GAAP earnings per share were $3.27. 2006 earnings per
share would have been $4.12 excluding $0.85 per share restructuring-related
charges and pension curtailment benefit.
2007 net cash provided by operating activities was $564 million.
Capital expenditures for the year were $183 million. Depreciation and
amortization in 2007 was $192 million. The company repurchased
approximately 2.7 million shares of its stock during the year for $165
million.
Looking Forward
In the first quarter of 2008, the company expects revenue to be down in
the mid- to high-single digit percentage range year over year. It expects
first-quarter 2008 GAAP EPS to be in the range of $0.66 to $0.76 per share.
Restructuring-related costs and expenses are expected to be approximately
$0.14 per share in the first quarter of 2008. Excluding these
restructuring- related costs and expenses, non-GAAP EPS are expected to be
in the range of $0.80 to $0.90 per share. GAAP EPS in the first quarter of
2007 were $0.95, or $0.96 excluding $0.01 per share restructuring-related
charges.
Conference Call Today
The company will be hosting a conference call with securities analysts
today at 8:30 a.m. (EST). A live broadcast and a complete replay of this
call can be accessed from Lexmark's investor relations Web site at
http://investor.lexmark.com. If you are unable to connect to the Internet,
you can access the call via telephone at 888-693-3477 (outside the U.S. by
calling 973-582-2710) or the replay shortly afterward by calling
800-642-1687 (outside the U.S. by calling 706-645-9291) using access code
29910485. This telephone replay of the conference call will be available
until noon (EST) on Tuesday, February 5, 2008.
Supplemental information slides, including reconciliations between GAAP
and non-GAAP financial measures, will be available on Lexmark's investor
relations Web site prior to the live broadcast.
About Lexmark
Lexmark International, Inc. (NYSE: LXK) provides businesses and
consumers in more than 150 countries with a broad range of printing and
imaging products, solutions and services that help them to be more
productive. In 2007, Lexmark reported $5.0 billion in revenue. Learn how
Lexmark can help you get more done at http://www.lexmark.com.
"Safe Harbor" Statement under the Private Securities Litigation Reform
Act of 1995: Statements in this release which are not historical facts are
forward-looking and involve risks and uncertainties, including, but not
limited to, inability to be successful in the higher-usage segments of the
inkjet market, market acceptance of new products and pricing programs, weak
economic conditions, periodic variations affecting revenue and
profitability, the inability to meet customer product requirements on a
cost competitive basis, failure to execute planned cost reduction measures,
aggressive pricing from competitors and resellers, entrance into the market
of additional competitors focused on printing solutions, the financial
failure or loss of business with a key customer, reseller or supplier,
increased investment to support product development and marketing,
inability to perform under managed print services contracts, decreased
supplies consumption, increased competition in the aftermarket supplies
business, failure to successfully outsource the infrastructure support of
information technology systems, failure to manage inventory levels or
production capacity, unforeseen cost impacts as a result of new
legislation, fees on the company's products or litigation costs required to
protect the company's rights, inability to obtain and protect the company's
intellectual property and defend against claims of infringement and/or
anticompetitive conduct, reliance on international production facilities,
manufacturing partners and certain key suppliers, disruptions at important
points of exit and entry and distribution centers, changes in a country's
political or economic conditions, conflicts among sales channels, the
failure of information technology systems, changes in the company's tax
provisions or tax liabilities, business disruptions, currency fluctuations,
terrorist acts, acts of war or other political conflicts, or the outbreak
of a communicable disease, and other risks described in the company's
Securities and Exchange Commission filings. The company undertakes no
obligation to update any forward-looking statement.
Lexmark and Lexmark with diamond design 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.
All prices, features, specifications and capabilities are subject to
change without notice.
(1) See Statement of Limited Warranty available at purchase locations for
details. Availability can vary by product and country.
(2) All prices are estimated street prices in U.S. dollars -- actual
prices may vary.
LEXMARK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(In Millions, Except Per Share Amounts)
(Unaudited)
Three Months Ended Year Ended
December 31 December 31
2007 2006 2007 2006
Revenue $1,309.7 $1,369.2 $4,973.9 $5,108.1
Cost of revenue (1)(2) 871.7 947.1 3,410.3 3,462.1
Gross profit 438.0 422.1 1,563.6 1,646.0
Research and development 100.5 96.7 403.8 370.5
Selling, general and
administrative (1)(2) 204.3 215.2 812.8 761.8
Restructuring and other,
net (1)(2) 19.1 6.9 25.7 71.2
Operating expense 323.9 318.8 1,242.3 1,203.5
Operating income 114.1 103.3 321.3 442.5
Interest (income) expense, net (7.4) (5.1) (21.2) (22.1)
Other (income) expense, net (3) 0.0 1.4 (7.0) 5.3
Earnings before income taxes 121.5 107.0 349.5 459.3
Provision for income taxes 22.5 17.1 48.7 120.9
Net earnings $99.0 $89.9 $300.8 $338.4
Net earnings per share:
Basic $1.04 $0.92 $3.16 $3.29
Diluted $1.04 $0.91 $3.14 $3.27
Shares used in per share calculation:
Basic 95.0 97.9 95.3 102.8
Diluted 95.3 99.0 95.8 103.5
(1) Amounts for the three months ended December 31, 2007, include
restructuring-related charges and project costs of $28 million in
connection with the Company's 2007 Restructuring Plan and $2 million
of restructuring-related project costs in connection with the
Company's 2006 actions. Restructuring-related charges of $5 million
relating to accelerated depreciation on certain fixed assets are
included in Cost of revenue. Restructuring-related charges of $19
million relating to employee termination benefits are included in
Restructuring and other, net. Total project costs of $2 million and $4
million are included in Cost of revenue and Selling, general and
administrative, respectively.
Amounts for the year ended December 31, 2007, include restructuring-
related charges and project costs of $34 million in connection with
the Company's 2007 Restructuring Plan and $18 million of
restructuring-related project costs in connection with the Company's
2006 actions. Restructuring-related charges of $5 million relating to
accelerated depreciation on certain fixed assets are included in Cost
of revenue. Restructuring-related charges of $26 million relating to
employee termination benefits are included in Restructuring and other,
net. Total project costs of $12 million and $9 million are included in
Cost of revenue and Selling, general and administrative, respectively.
(2) Amounts for the three months ended December 31, 2006, include the
impact of $19 million of restructuring-related charges and project
costs. Restructuring-related charges of $2 million relating to
accelerated depreciation on certain fixed assets were included in Cost
of revenue. Project costs of $1 million and $9 million were included
in Cost of revenue and Selling, general and administrative expenses,
respectively.
Amounts for the year ended December 31, 2006, include the impact of
$135 million of restructuring-related charges and project costs.
Restructuring-related charges of $40 million relating to accelerated
depreciation on certain fixed assets were included in Cost of revenue.
Project costs of $2 million and $12 million were included in Cost of
revenue and Selling, general and administrative expenses,
respectively. A $10 million pension curtailment benefit was also
included in Restructuring and other, net.
(3) Amounts for the year ended December 31, 2007, include an $8 million
pre-tax foreign exchange gain realized upon the substantial
liquidation of the Company's Scotland entity.
LEXMARK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL POSITION
(In Millions)
(Unaudited)
December 31 December 31
2007 2006
ASSETS
Current assets:
Cash and cash equivalents $277.0 $144.6
Marketable securities 519.1 406.3
Trade receivables, net 578.8 584.3
Inventories 464.4 457.8
Prepaid expenses and other current
assets 227.5 237.0
Total current assets 2,066.8 1,830.0
Property, plant and equipment, net 869.0 846.8
Other assets 185.3 172.2
Total assets $3,121.1 $2,849.0
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short term debt $- $-
Current portion of long-term debt 149.9 -
Accounts payable 636.9 600.3
Accrued liabilities 710.5 723.7
Total current liabilities 1,497.3 1,324.0
Long-term debt - 149.8
Other liabilities 345.5 340.0
Total liabilities 1,842.8 1,813.8
Stockholders' equity:
Common stock and capital in excess of par 888.9 828.4
Retained earnings 936.0 627.5
Treasury stock, net (454.7) (289.8)
Accumulated other comprehensive loss (91.9) (130.9)
Total stockholders' equity 1,278.3 1,035.2
Total liabilities and stockholders'
equity $3,121.1 $2,849.0
LEXMARK INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(Unaudited)
Earnings Per Share: 4Q07 4Q06
GAAP $1.04 $0.91
Restructuring-related charges &
project costs 0.25 0.14
Non-GAAP $1.29 $1.05
Operating
Expense to Operating
Gross Profit Revenue Income
4Q07: Margin Ratio Margin
GAAP 33.4% 24.7% 8.7%
Restructuring-related charges &
project costs 0.6% (1.7%) 2.3%
Non-GAAP 34.0% 23.0% 11.0%
4Q06:
GAAP 30.8% 23.3% 7.5%
Restructuring-related charges &
project costs 0.3% (1.2%) 1.4%
Non-GAAP 31.1% 22.1% 8.9%
Net Earnings (In Millions) 4Q07 4Q06
GAAP $99 $90
Restructuring-related charges &
project costs 24 14
Non-GAAP $123 $104
Earnings Per Share
Guidance: 1Q08 1Q07
GAAP $0.66 to $0.76 $0.95
Restructuring-related charges &
project costs 0.14 0.01
Non-GAAP $0.80 to $0.90 $0.96
Note: Management believes that presenting these measures is useful because
they enhance shareholders' understanding of how management assesses
the performance of the Company's businesses. Management reviews the
performance of the Company's operating segments based on GAAP and
non-GAAP measures which reflect income and expense items which are
recurring in nature, and do not include the impact of actions that
management believes are not reflective of the ongoing operation of
the Company. These measures may not be comparable to similar
measures of other companies as not all companies calculate these
measures in the same manner.
Totals may not foot due to rounding.
LEXMARK INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(Unaudited)
Year Ended December 31
Earnings Per Share: 2007 2006
GAAP $3.14 $3.27
Restructuring-related charges &
project costs 0.43 0.91
Accumulated translation gain upon
Scotland liquidation (0.07) -
Pension curtailment gain - (0.07)
Non-GAAP $3.50 $4.12
Operating
Expense to Operating
Gross Profit Revenue Income
2007: Margin Ratio Margin
GAAP 31.4% 25.0% 6.5%
Restructuring-related charges &
project costs 0.4% (0.7%) 1.0%
Non-GAAP 31.8% 24.3% 7.5%
2006:
GAAP 32.2% 23.6% 8.7%
Restructuring-related charges &
project costs 0.8% (1.8%) 2.6%
Pension curtailment gain - 0.1% (0.2%)
Non-GAAP 33.0% 21.9% 11.1%
Net Earnings (In Millions) 2007 2006
GAAP $301 $338
Restructuring-related charges &
project costs 41 94
Accumulated translation gain upon
Scotland liquidation (7) -
Pension curtailment gain - (7)
Non-GAAP $336 $426
Note: Management believes that presenting these measures is useful because
they enhance shareholders' understanding of how management assesses
the performance of the Company's businesses. Management reviews the
performance of the Company's operating segments based on GAAP and
non-GAAP measures which reflect income and expense items which are
recurring in nature, and do not include the impact of actions that
management believes are not reflective of the ongoing operation of
the Company. These measures may not be comparable to similar
measures of other companies as not all companies calculate these
measures in the same manner.
Totals may not foot due to rounding.
LEXMARK INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(In Millions)
(Unaudited)
Segment Operating Income
Restructuring-
Related
Charges and
Project
Three Months Ended December 31 GAAP Costs Non-GAAP
2007
Business $166 $10 $176
Consumer 37 9 46
Other (89) 12 (78)
Total $114 $30 $144
2006
Business $157 $8 $165
Consumer 50 3 53
Other (104) 8 (96)
Total $103 $19 $122
2007 vs. 2006 Year-to-Year Variance
of Segment Operating Income:
Business 6% 7%
Consumer (26%) (12%)
Other 14% 19%
Total 10% 18%
Note: Management believes that presenting these measures is useful
because they enhance shareholders' understanding of how management
assesses the performance of the Company's businesses. Management
reviews the performance of the Company's operating segments based
on GAAP and non-GAAP measures which reflect income and expense
items which are recurring in nature, and do not include the impact
of actions that management believes are not reflective of the
ongoing operation of the Company. These measures may not be
comparable to similar measures of other companies as not all
companies calculate these measures in the same manner.
Totals may not foot due to rounding.
LEXMARK INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(In Millions)
(Unaudited)
Segment Operating Income
Restructuring-
Related
Charges and
Project
Year Ended December 31 GAAP Costs Non-GAAP
2007
Business $612 $12 $624
Consumer 93 12 106
Other (384) 28 (356)
Total $321 $52 $373
2006
Business $600 $36 $636
Consumer 246 57 303
Other (1) (404) 32 (372)
Total $443 $125 $568
2007 vs. 2006 Year-to-Year Variance
of Segment Operating Income:
Business 2% (2%)
Consumer (62%) (65%)
Other 5% 4%
Total (27%) (34%)
(1) $10 million pension curtailment gain included in 2006 GAAP and
Restructuring-related columns on "Other" line.
Note: Management believes that presenting these measures is useful
because they enhance shareholders' understanding of how management
assesses the performance of the Company's businesses. Management
reviews the performance of the Company's operating segments based
on GAAP and non-GAAP measures which reflect income and expense
items which are recurring in nature, and do not include the impact
of actions that management believes are not reflective of the
ongoing operation of the Company. These measures may not be
comparable to similar measures of other companies as not all
companies calculate these measures in the same manner.
Totals may not foot due to rounding.
LEXMARK INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(In Millions)
(Unaudited)
Three Months Ended December 31 2007 2006
Gross Profit:
GAAP $438 $422
Restructuring-related charges &
project costs 7 3
Non-GAAP $445 $425
Operating Expense:
GAAP $324 $319
Restructuring-related charges &
project costs (23) (16)
Non-GAAP $301 $303
Operating Income:
GAAP $114 $103
Restructuring-related charges &
project costs 30 19
Non-GAAP $144 $122
Net Earnings:
GAAP $99 $90
Restructuring-related charges &
project costs 24 14
Non-GAAP $123 $104
Net Earnings: (As a Percentage of Revenue)
GAAP 7.6% 6.6%
Restructuring-related charges &
project costs 1.8% 1.0%
Non-GAAP 9.4% 7.6%
Note: Management believes that presenting these measures is useful because
they enhance shareholders' understanding of how management assesses
the performance of the Company's businesses. Management reviews the
performance of the Company's operating segments based on GAAP and
non-GAAP measures which reflect income and expense items which are
recurring in nature, and do not include the impact of actions that
management believes are not reflective of the ongoing operation of
the Company. These measures may not be comparable to similar
measures of other companies as not all companies calculate these
measures in the same manner.
Totals may not foot due to rounding.
LEXMARK INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(In Millions)
(Unaudited)
Year Ended December 31 2007 2006
Gross Profit:
GAAP $1,564 $1,646
Restructuring-related charges &
project costs 17 42
Non-GAAP $1,581 $1,688
Operating Expense:
GAAP $1,242 $1,203
Restructuring-related charges &
project costs (35) (93)
Pension curtailment gain - 10
Non-GAAP $1,207 $1,120
Operating Income:
GAAP $321 $443
Restructuring-related charges &
project costs 52 135
Pension curtailment gain - (10)
Non-GAAP $373 $568
Net Earnings:
GAAP $301 $338
Restructuring-related charges &
project costs 41 94
Accumulated translation gain upon
Scotland liquidation (7) -
Pension curtailment gain - (7)
Non-GAAP $336 $426
Note: Management believes that presenting these measures is useful because
they enhance shareholders' understanding of how management assesses
the performance of the Company's businesses. Management reviews the
performance of the Company's operating segments based on GAAP and
non-GAAP measures which reflect income and expense items which are
recurring in nature, and do not include the impact of actions that
management believes are not reflective of the ongoing operation of
the Company. These measures may not be comparable to similar
measures of other companies as not all companies calculate these
measures in the same manner.
Totals may not foot due to rounding.
LEXMARK INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(Unaudited)
Year Ended December 31 2007 2006
Net Earnings: (As a Percentage of Revenue)
GAAP 6.0% 6.6%
Restructuring-related charges &
project costs 0.8% 1.8%
Accumulated translation gain upon
Scotland liquidation (0.1%) -
Pension curtailment gain - (0.1%)
Non-GAAP 6.7% 8.3%
Note: Management believes that presenting these measures is useful because
they enhance shareholders' understanding of how management assesses
the performance of the Company's businesses. Management reviews the
performance of the Company's operating segments based on GAAP and
non-GAAP measures which reflect income and expense items which are
recurring in nature, and do not include the impact of actions that
management believes are not reflective of the ongoing operation of
the Company. These measures may not be comparable to similar
measures of other companies as not all companies calculate these
measures in the same manner.
Totals may not foot due to rounding.
SOURCE Lexmark International, Inc.
 back to top
Related links:
http://www.lexmark.com
CONTACT:
John Morgan, +1-859-232-5568,
jmorgan@lexmark.com; or Media, Barbara Leary, +1-859-232-3546,
barbaral@lexmark.com, both of Lexmark International, Inc.
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