Exhibit 99.1
Lexmark reports record revenue and EPS for first
quarter
o Supplies sales drive growth
o Strong laser printer sales in the quarter
o Company repurchases a record $227 million of its common stock
Lexington, Ky., April 26, 2005 - Lexmark International, Inc. (NYSE: LXK) today
announced record financial results for its first quarter ended March 31, 2005.
First quarter revenue was $1.358 billion, an increase of 8 percent compared to
$1.256 billion last year. EPS were $0.96 and would have been $0.99 without the
items described below. Market conditions were particularly challenging in the
first quarter as a result of aggressive pricing and soft consumer market demand.
"Our revenue growth in the quarter was driven mainly by supplies, reflecting the
consistency of our business model, and also by strong demand for our laser
printers. We continued our increased investments in R&D and branding in the
first quarter in support of our strategic initiatives to drive long-term
growth," said Paul J. Curlander, Lexmark chairman and chief executive officer.
First quarter operating income includes a $9.6 million, or 5 cents per share,
charge which represents management's best estimate of probable losses relating
to 2002 through 2004 accounts receivable in Spain due to inappropriate conduct
by a former employee of Lexmark Spain. Also included in earnings per share is a
benefit of 2 cents from the retroactive extension of a favorable non-U.S. tax
rate. Diluted net earnings per share for the first quarter were a record $0.96.
Excluding these items, earnings per share would have been $0.99, up from $0.91
in the same quarter last year.
Gross profit margin was 33.0 percent for the quarter, a 30 basis point
improvement compared to 32.7 percent a year ago. Operating expenses were 21.0
percent of revenue, up from 19.6 percent in the prior year, driven by the charge
and continued strategic investments in development and marketing. Operating
income was $161.7 million compared to $165.2 million last year. Excluding the
charge, operating income would have been a record $171.3 million.
Lexmark repurchased a record $227 million of its common stock during the
quarter. The company's remaining share repurchase authorization was
approximately $675 million at
quarter-end. Net cash provided by operating activities was $77 million in the
first quarter and capital expenditures for the quarter were $53 million.
Lexmark increases participation in photo printing with new All-In-Ones
In keeping with its strategy to increase participation in high-growth segments
such as inkjet photo printing, the company today announced two inkjet All-In-One
(AIO) products that print, copy, scan, and make printing digital photos easy.
Affordably priced to appeal to a broad group of consumers at $79 after rebate
and $129 respectively, the Lexmark X3350 and the Lexmark P4350 are both equipped
with embedded pictbridge support that make it fast and simple to print
borderless 4x6 prints directly from a digital camera. The Lexmark P4350 also
features photo card slots and a 1.7 inch color LCD screen, an industry first for
sub-$150 AIOs.
Looking forward
In the second quarter of 2005, the company expects a year-over-year revenue
growth rate in the mid-single digit range and earnings per share of $1.01 to
$1.11, compared to $1.02 in the same quarter a year ago. The company believes
that the appeal and ease of use of its product line and the strength of its
supplies-driven business model will contribute to future growth. However, the
potential for weakening market demand and for aggressive price competition
continue.
During the second quarter, the company will be evaluating a plan to repatriate
funds under the American Jobs Creation Act. If implemented to the maximum, it
would result in repatriation of $684 million of dividends during 2005 with a tax
cost of up to $70 million, which would be included in the company's second
quarter results. The impact of this repatriation is not included in the
company's guidance.
###
Lexmark is hosting a conference call with securities analysts on Tuesday, April
26, 2005, at 8:30 a.m. Eastern Time. 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 888-338-6461 or the replay shortly after
the call by calling 877-519-4471 using access code 5880094. This telephone
replay will be available until noon on Monday, May 2, 2005.
Lexmark International, Inc. makes it easier for businesses and consumers to move
information between the digital and paper worlds. Since its inception in 1991,
Lexmark has become a leading developer, manufacturer and supplier of printing
and imaging solutions for customers in more than 150 countries. Lexmark reported
$5.3 billion in revenue in 2004, and can be found on the Internet at
www.lexmark.com.
Lexmark and Lexmark with diamond design are trademarks of Lexmark International,
Inc., registered in the U.S. and/or other countries. Prices are estimated street
prices in U.S. dollars.
"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, market conditions, the
impact of competitors' products, management of the company's and resellers'
inventory levels, market acceptance of new products and pricing programs,
increased
investment to support product development and marketing, the ability and/or
incremental expense to produce and deliver products to satisfy customer demand,
changes in a country's or region's political or economic conditions, currency
fluctuations, financial failure or loss of business with a key customer,
reseller or supplier, production and supply difficulties including disruptions
at important points of exit and entry and distribution centers, competition in
aftermarket supplies, unforeseen cost impacts, conflicts among sales channels,
the outcome of pending and future litigation or governmental proceedings,
intellectual property and other legal claims and expenses, difficulties or
delays in software and information systems implementations, 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
March 31
-------------------------------
2005 2004
---- ----
Revenue $ 1,357.6 $ 1,256.0
Cost of revenue 910.3 845.2
--------- ---------
Gross profit 447.3 410.8
--------- ---------
Research and development 82.6 72.2
Selling, general and administrative 203.0 173.4
--------- ---------
Operating expense 285.6 245.6
--------- ---------
Operating income 161.7 165.2
Interest (income) expense, net (6.4) (2.3)
Other expense (income), net 2.7 0.6
--------- ---------
Earnings before income taxes 165.4 166.9
Provision for income taxes 41.5 45.9
--------- ---------
Net earnings $ 123.9 $ 121.0
========= =========
Net earnings per share:
Basic $ 0.97 $ 0.93
========= =========
Diluted $ 0.96 $ 0.91
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Shares used in per share calculation:
Basic 127.3 129.6
========= =========
Diluted 129.5 133.1
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LEXMARK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL POSITION
(In Millions)
(Unaudited)
March 31 December 31
2005 2004
---------------- ------------------
ASSETS
Current assets:
Cash and cash equivalents $ 494.4 $ 626.2
Marketable securities 881.4 940.5
Trade receivables, net 699.5 744.4
Inventories 458.8 464.9
Prepaid expenses and other current assets 218.1 224.9
---------- ----------
Total current assets 2,752.2 3,000.9
Property, plant and equipment, net 806.1 792.2
Other assets 331.8 331.2
---------- ----------
Total assets $ 3,890.1 $ 4,124.3
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ - $ 1.5
Accounts payable 567.8 670.6
Accrued liabilities 727.2 795.6
---------- ----------
Total current liabilities 1,295.0 1,467.7
Long-term debt 149.5 149.5
Other liabilities 431.5 424.2
---------- ----------
Total liabilities 1,876.0 2,041.4
---------- ----------
Stockholders' equity:
Preferred stock - -
Common stock and capital in excess of par 1,099.6 1,077.7
Retained earnings 2,787.6 2,663.7
Treasury stock, net (1,719.7) (1,493.2)
Accumulated other comprehensive loss (153.4) (165.3)
---------- ----------
Total stockholders' equity 2,014.1 2,082.9
---------- ----------
Total liabilities and stockholders' equity $ 3,890.1 $ 4,124.3
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