Business News
Lexmark reports fourth quarter and full year results
Tuesday 27. January 2009 - Lexmark International, Inc. (NYSE:LXK) today announced financial results for the fourth quarter of 2008. The company's fourth quarter 2008 revenue and operating income were negatively impacted by global economic weakness and significant currency rate shifts. Fourth quarter revenue was $1.08 billion, down 17 percent compared to revenue of $1.31 billion last year.
Fourth quarter GAAP earnings per share of $0.23 include a net benefit in the company’s provision for income taxes of $0.29 per share. Excluding $0.52 per share for restructuring-related activities, earnings per share for the fourth quarter of 2008 would have been $0.75. Fourth quarter 2007 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.
“In response to the current market conditions, Lexmark continues to take actions that will reduce our fixed infrastructure and business support costs, which are projected to generate savings of over $100 million in 2009,” said Paul J. Curlander, Lexmark chairman and chief executive officer. “We have a conservative capital structure, a solid balance sheet, with nearly $1 billion in cash and current marketable securities, and a long history of good cash generation, all of which positions us well to prudently invest in the future and successfully compete.
“In addition, we continue to focus on helping our customers generate significant savings in their output costs through our growing managed print services business and innovative, award-winning products,” Curlander said.
Fourth quarter business segment revenue of $718 million declined 10 percent year to year. Consumer segment revenue of $366 million declined 28 percent compared to a year ago.
In the fourth quarter of 2008:
— Gross profit margin was 29.0 percent, versus 33.4 percent in 2007.
— Operating expense was $314 million, compared to $324 million last year.
— Operating income margin of zero includes $47 million pretax
restructuring-related charges. Operating income margin in 2007 of 8.7
percent included $30 million pretax restructuring-related charges.
— Net earnings for the quarter of $18 million include a tax benefit of
$23 million. Fourth quarter 2007 net earnings were $99 million.
On a non-GAAP basis, excluding restructuring-related charges, in the fourth quarter of 2008:
— Gross profit margin would have been 30.4 percent, down 3.6 percentage
points from 34.0 percent in the same period last year, principally due
to a decline in product margins.
— Operating expense would have been $283 million, down $18 million from
last year due to reduced marketing and general and administrative
expenses.
— Operating income margin would have been 4.3 percent, down from 11.0
percent last year.
— Net earnings would have been $60 million, compared to $123 million in
the fourth quarter of 2007.
The company ended the quarter with $973 million in cash and current marketable securities. Fourth quarter net cash provided by operating activities was $53 million. Capital expenditures for the quarter were $67 million. Depreciation and amortization in the quarter was $53 million. Lexmark repurchased $122.5 million (5.2 million shares) of stock during the fourth quarter. The company’s remaining share repurchase authorization was approximately $491 million at quarter end.
Full-year Results
2008 revenue was $4.53 billion, down 9 percent compared to revenue of $4.97 billion in 2007. 2008 business segment revenue declined 1 percent to $2.98 billion, and consumer segment revenue declined 22 percent to $1.55 billion. 2008 GAAP earnings per share were $2.69. Excluding $0.86 per share restructuring-related charges, earnings per share would have been $3.55. 2007 GAAP earnings per share were $3.14. 2007 earnings per share would have been $3.50 excluding $0.36 per share restructuring-related charges.
Earnings Per Share 2008 2007
GAAP $2.69 $3.14
Restructuring-related charges & project costs 0.86 0.36
Non-GAAP $3.55 $3.50
2008 net cash provided by operating activities was $482 million, marking the company’s seventh consecutive year in excess of $450 million. Capital expenditures for the year were $218 million. Depreciation and amortization in 2008 was $205 million. The company repurchased approximately 17.5 million shares of its stock during the year for $555 million.
New Lasers Earn Nearly 70 Industry Awards and Accolades in Quarter
Each of the 38 laser models announced in October 2008 was the recipient of a product award from a third party reviewer of document imaging equipment. These new laser models when combined have earned nearly 70 industry awards and broad recognition from top technology publications and testing houses. Additionally during the quarter, Lexmark received channel recognition for the company’s industry solutions. Accolades for the quarter include:
Monochrome Lasers
— Lexmark T650 Series and Lexmark E260/E360/E460 Series
– Buyers Laboratory Inc., Monochrome Printer Line of the Year for 2008
— Lexmark T650n
– PCMag.com, Editors’ Choice
– Buyers Laboratory Inc., Fall 2008 Pick of the Year
— Lexmark T654 family
– Buyers Laboratory Inc., Fall 2008 Pick of the Year
— Lexmark E360 family
– Better Buys for Business, 2008 Innovative Product of the Year
Color Lasers
— Lexmark C544 family
– Better Buys for Business, 2008 Innovative Product of the Year
— Lexmark C544dn
– PCMag.com, Editors’ Choice
MFPs
— Lexmark X540 Series
– Better Buys for Business, 2008 Innovative Product of the Year
— Lexmark X656/X658 families
– Better Buys for Business, 2008 Innovative Product of the Year
Channel Solutions
— Lexmark Legal Partner (industry-specific monochrome laser MFP)
– VARBusiness, Tech Innovator
Inkjet Products Continue to Receive Top Honors
Lexmark’s 2008 Professional and Home and Student Series inkjet all-in-ones (AIOs) continued to receive awards and honors from industry-leading publications around the world:
— Lexmark X9575 Professional Series Wireless All-In-One
– COM, Winner Best Service, Germany (11/2008)
— Lexmark X7675 Professional Series Wireless All-In-One
– CNET, Excellent Rating, U.S.
– PC Go!, Excellent Product, Germany (11/2008)
— Lexmark X5650 Home and Student All-In-One
– PC Go!, Excellent Product, Germany (12/2008)
— Lexmark X4975 Professional Series Wireless All-In-One
– BERTL, Highly Recommended, U.S.
Looking Forward
Looking ahead, the company expects some of the same factors that impacted the fourth quarter to also impact the first quarter of 2009. In the first quarter, the company currently expects a revenue decline in the mid to high teens percentage range, and GAAP earnings per share to be around $0.52 to $0.62, or $0.65 to $0.75 excluding $0.13 restructuring-related charges. GAAP EPS in the first quarter of 2008 were $1.07, or $1.16 excluding $0.09 per share for restructuring-related activities.