Exhibit 99.1
Lexmark International reports 16 percent EPS growth for second quarter
Lexington, Ky., July 21, 2003 - Lexmark International, Inc. (NYSE: LXK) today
announced record revenue and earnings per share for the second quarter of 2003.
Revenue grew 6 percent to $1.120 billion compared to a year ago and earnings per
share of 77 cents grew 16 percent from 67 cents a year earlier.
"Once again our supplies annuity has added stability to our financial results,"
stated Paul J. Curlander, chairman and CEO. "We are pleased to deliver
second-quarter results that reflect growth in revenue, operating income and
earnings per share."
Laser and inkjet supplies account for 56 percent of total revenue
Lexmark's revenue for the second quarter ended June 30 was $1.120 billion, an
increase of 6 percent versus $1.058 billion in the same period of 2002. Laser
and inkjet supplies revenue was $630 million, an 11 percent increase over $566
million a year ago and now represents 56 percent of total revenue, up from 54
percent in the prior year. Laser and inkjet printer revenue was $400 million in
the second quarter of 2003, up 2% versus $394 million a year earlier.
Gross profit margin was 34.0 percent for the quarter versus 32.0 percent a year
ago due to the increase of supplies in the product mix and higher supplies
margins, partially offset by lower printer margins. Operating expenses were $244
million compared to $216 million in the prior year due to the strength of the
Euro versus the U.S. dollar and increased investment in marketing and sales.
Operating income margin was 12.2 percent in the second quarter of 2003, an
increase of 0.6 points over last year. Diluted net earnings per share for the
period were 77 cents, an increase of 16 percent over a year ago.
Lexmark's debt-to-total-capital ratio at June 30, 2003 was 10 percent compared
to 11 percent at March 31, 2003. Net cash provided by operating activities was
$159 million. Capital expenditures were $16 million in the second quarter.
Launch of inkjet products
During the quarter Lexmark continued its tradition of technology leadership by
launching a broad spectrum of inkjet products. Ranging in price from $49 to
$249, these products feature a number of industry firsts including 4800 dots per
inch print resolution across the entire line.
o The P700 Photo Jetprinter series features borderless, six-color printing
and is the first sub-$100 photo printer that comes with an on-board camera
card reader.
o The PrinTrio X1150 is the first All-In-One (AIO) device introduced at a
sub-$100 price point.
o The X6170 AIO at $249 with its 50-sheet automatic document feeder is a
business-class device offering a dedicated standalone fax and delivering
print speeds of up to 19 pages per minute.
Supplies annuity drives first-half EPS growth
Revenue for the six months ended June 30, 2003 was $2.228 billion, an increase
of 6 percent versus $2.108 billion in the same period of 2002. First-half
revenue from laser and inkjet supplies was $1.272 billion, an increase of 14
percent from $1.113 billion a year ago. Laser and inkjet printer revenue was
$770 million compared to $795 million in the first six months of 2002. Gross
profit margin was 33.1 percent, up 2.3 points from the prior year. Operating
income was $266 million versus $227 million a year earlier, an increase of 17
percent. Net earnings for the period were $1.50 per share on a diluted basis, an
increase of 25 percent over the $1.20 per share recorded in the first half of
2002.
Looking forward:
"As we look forward to the third quarter, we believe our extensive corporate and
consumer product launches in the second quarter have put us in a good position
for the second half of 2003," said Curlander. "We continue to be cautious,
however, due to softness in corporate and consumer spending, and aggressive
pricing competition. In the third quarter of 2003, we expect a year-over-year
revenue growth rate in the low- to mid-single digits and earnings per share of
63 to 73 cents, compared to 70 cents in the third quarter of 2002."
###
Lexmark is hosting a conference call with securities analysts on Monday, July
21, 2003 at 8:30 a.m. Eastern Time (888-338-6461). A live broadcast over the
Internet and a complete replay of this call can be accessed from Lexmark's
investor relations web site at http://investor.lexmark.com.
Lexmark International, Inc. is a leading developer, manufacturer and supplier of
printing solutions -- including laser and inkjet printers, multifunction
products, associated supplies and services -- for offices and homes in more than
150 countries. Founded in 1991, Lexmark reported approximately $4.4 billion in
revenue in 2002, and can be found on the Internet at www.lexmark.com.
Prices are estimated in U. S. dollars. Actual prices may vary. PrinTrio, Photo
Jetprinter, 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 property of their respective holders.
"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, aggressive pricing from competitors and resellers, the impact of
competitors' products, the ability and/or incremental expense to produce and
deliver product to satisfy customer demand, market acceptance of new products
and pricing programs, management of the company's and resellers' inventory
levels, changes in a country's or region's political or economic conditions,
production and supply difficulties including disruptions at important points of
exit and entry and distribution centers, financial failure or loss of a key
customer, reseller or supplier, competition in aftermarket supplies, increased
investment to support product development, unforeseen cost impacts, conflicts
among sales channels, difficulties or delays in software and information systems
implementations, the outcome of pending and future litigation or governmental
proceedings, intellectual property and other legal claims and expenses, currency
fluctuations, 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 INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(In Millions, Except Per Share Amounts)
(Unaudited)
Three Months Ended
June 30
-----------------------------
2003 2002
---- ----
Revenue $1,120.2 $1,058.0
Cost of revenue 739.4 719.1
-------- --------
Gross profit 380.8 338.9
-------- --------
Research and development 66.7 63.5
Selling, general and administrative 177.1 152.7
-------- --------
Operating expense 243.8 216.2
-------- --------
Operating income 137.0 122.7
Interest (income)/expense (0.1) 2.3
Other (0.2) 0.7
-------- --------
Earnings before income taxes 137.3 119.7
Provision for income taxes 35.6 30.6
-------- --------
Net earnings $ 101.7 $ 89.1
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Net earnings per share:
Basic $ 0.79 $ 0.69
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Diluted $ 0.77 $ 0.67
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Shares used in per share calculation:
Basic 127.9 129.9
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Diluted 131.6 133.4
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LEXMARK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(In Millions, Except Per Share Amounts)
(Unaudited)
Six Months Ended
June 30
----------------------------
2003 2002
---- ----
Revenue $2,228.1 $2,108.1
Cost of revenue 1,491.1 1,459.6
-------- --------
Gross profit 737.0 648.5
-------- --------
Research and development 128.8 124.7
Selling, general and administrative 342.6 296.5
-------- --------
Operating expense 471.4 421.2
-------- --------
Operating income 265.6 227.3
Interest expense 0.6 5.4
Other (0.2) 4.9
-------- ----------
Earnings before income taxes 265.2 217.0
Provision for income taxes 68.9 56.4
-------- ---------
Net earnings $ 196.3 $ 160.6
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Net earnings per share:
Basic $ 1.54 $ 1.23
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Diluted $ 1.50 $ 1.20
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Shares used in per share calculation:
Basic 127.5 130.2
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Diluted 130.9 133.7
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LEXMARK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL POSITION
(In Millions)
(Unaudited)
June 30 December 31
2003 2002
------------------- -----------------
ASSETS
Current assets:
Cash and cash equivalents $ 887.5 $ 497.7
Trade receivables, net 568.9 600.3
Inventories 393.4 410.3
Prepaid expenses and other current assets 241.5 290.5
--------- ---------
Total current assets 2,091.3 1,798.8
Property, plant and equipment, net 710.6 747.6
Other assets 261.5 261.7
--------- ---------
Total assets $ 3,063.4 $ 2,808.1
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 1.0 $ 12.3
Accounts payable 404.9 378.5
Accrued liabilities 671.8 708.2
--------- ---------
Total current liabilities 1,077.7 1,099.0
Long-term debt 149.3 149.2
Other liabilities 486.6 478.3
--------- ---------
Total liabilities 1,713.6 1,726.5
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Stockholders' equity:
Preferred stock - -
Common stock and capital in excess of par 922.7 865.1
Retained earnings 1,852.1 1,655.8
Treasury stock (1,208.7) (1,209.6)
Accumulated other comprehensive loss (216.3) (229.7)
--------- ---------
Total stockholders' equity 1,349.8 1,081.6
--------- ---------
Total liabilities and stockholders' equity $ 3,063.4 $ 2,808.1
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