Lexmark International Reports Quarterly and Annual Results for 2001; Supplies Annuity Drives 5 Percent Fourth-quarter Revenue Growth.Business Editors & High-Tech high-tech also hi-tech adj. Informal Of, relating to, or resembling high technology. high-tech Adjective same as hi-tech Adj. 1. Writers LEXINGTON Lexington. 1 City (1990 pop. 225,366), seat of Fayette co., N central Ky., in the heart of the bluegrass region; inc. 1832, made coextensive with Fayette co. 1974. , Ky.--(BUSINESS WIRE)--Jan. 24, 2002 Lexmark (Lexmark International, Inc., Lexington, KY, www.lexmark.com) A manufacturer of desktop and network printers that was spun off from IBM in 1991. For five years, IBM and Lexmark agreed not to compete with each other, and IBM continued to market printers to its own mainframe and International, Inc. (NYSE NYSE See: New York Stock Exchange : LXK) today announced financial results for both the fourth quarter and full year 2001. Fourth-quarter revenue was $1.152 billion, up 5 percent from the same period in 2000. Diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. net earnings per share for the fourth quarter were 46 cents on an operational basis, before non-recurring charges associated with the company's previously announced restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). plan and before the non-recurring benefit from the resolution of income tax matters. Full-year revenue for 2001 increased 9 percent to $4.143 billion. "These fourth quarter financial results are in line with our previous guidance," stated Paul Paul, 1901–64, king of the Hellenes (1947–64), brother and successor of George II. He married (1938) Princess Frederika of Brunswick. During Paul's reign Greece followed a pro-Western policy, and the Cyprus question was temporarily resolved. J. Curlander, chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "Lexmark continues to gain market share, fueling our supplies-driven business model. This makes us one of only a handful of technology companies to consistently grow revenue and generate profit in each quarter of 2001." Fourth-quarter review: Laser and inkjet See inkjet printer. supplies revenue grows 23 percent Lexmark's revenue for the fourth quarter ended Dec. 31 was $1.152 billion, an increase of 5 percent versus $1.096 billion in the same period of 2000. Revenue was not significantly impacted by foreign currency translation. Laser and inkjet supplies revenue was $531 million, a 23 percent increase over $433 million a year ago and now represents 46 percent of total revenue, up from 39 percent in the prior year. Laser and inkjet printer A printer that propels droplets of ink directly onto the medium. Today, almost all inkjet printers produce color. Low-end inkjets use three ink colors (cyan, magenta and yellow), but produce a composite black that is often muddy. revenue was $498 million in the fourth quarter. On an operational basis, gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. was 27.8 percent for the quarter versus 30.8 percent a year ago due to lower laser and inkjet printer margins and lower inkjet supplies margins resulting from reduced cartridge (1) See phono cartridge. (2) A removable storage module that contains magnetic disks, optical discs, magnetic tape or memory chips. Cartridges are inserted into slots in the drive, printer or computer. production, partially offset by an increased mix of supplies. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. was $88 million versus $124 million in the fourth quarter of 2000 primarily due to the lower gross profit margin. Diluted net earnings per share for the period were 46 cents versus 64 cents in 2000. The reported fourth quarter financial results include $88 million of restructuring and related charges and associated inventory write-offs. On a reported basis, gross profit was $291 million in 2001, which includes the $29 million impact of associated restructuring-related inventory write-offs from the company's decision to eliminate its business class inkjet printer, limit the period over which the company will provide replacement parts for products no longer in production, and exit the electronic card manufacturing business. Operating income of $0.3 million includes the $58 million restructuring and related charges plus the $29 million associated inventory write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. . As announced on Oct. 22, 2001, annual savings from the restructuring should be approximately $55 million, with about $40 million being achieved in 2002. These savings will be used to offset competitive impacts and new investments. Additionally, diluted net earnings per share of 27 cents reflect a benefit of $40 million from the resolution of income tax matters. Lexmark's debt-to-total-capital ratio at Dec. 31, 2001 was 13 percent compared to 21 percent at Sept. 30, 2001. Capital expenditures were $45 million in the fourth quarter with most spending in support of new products and capacity expansion. Full-year highlights: Constant currency revenue growth of 11 percent Lexmark's 2001 annual revenue was $4.143 billion, an increase of 9 percent over 2000 revenue of $3.807 billion. Without the negative impact of foreign currency translation, revenue growth would have been 11 percent versus the prior year. Laser and inkjet supplies revenue was $1.962 billion for 2001, a 27 percent increase from $1.548 billion a year earlier, and represents 47 percent of total revenue versus 41 percent in 2000. Laser and inkjet printer revenue was $1.657 billion. On an operational basis, gross profit margin was 31.5 percent in 2001 versus 33.0 percent last year. Operating income was $429 million versus $457 million in the prior year primarily due to the lower gross profit margin. Diluted net earnings per share for the year were $2.23 versus $2.35 in 2000. The reported full year financial results include $88 million of restructuring and related charges and associated inventory write-offs. On a reported basis, gross profit margin was 30.8 percent in 2001 versus 33.0 percent last year. Operating income was $341 million versus $416 million in the prior year. Diluted net earnings per share for the year were $2.05 versus $2.13 in 2000. Other achievements: During the fourth quarter, Lexmark announced a new range of office devices and document management tools that make processing information faster, easier and more affordable. The Lexmark C750, featuring Lexmark's internally developed color laser technology, and the Lexmark C910 establish new standards for business color performance and affordability. The new Lexmark E320 and E322 with print speeds up to 16 pages-per-minute (ppm (Pages Per Minute) The measurement of printer speed. See gppm. PPM - Portable Pixmap ), are the highest-performing monochrome Also called "mono." Refers to display screens that use one foreground and one background color; for example, black on white, white on black or green on black. The first terminals connected to mainframes and minicomputers were monochrome, and monochrome screens were widely used on early laser printers on the market at under $400. The new Lexmark X820e, with its network-centric printer foundation and color touch-screen touch-screen n (COMPUT) → touch-screen m inv; schermo sensibile interface, is a 45 ppm multifunction device that reduces hardcopy (jargon) hardcopy - A paper printout of data displayed on a screen. Contrast softcopy. output costs and improves document workflow The automatic routing of documents to the users responsible for working on them. Workflow is concerned with providing the information required to support each step of the business cycle. . In addition to the printers introduced in the fourth quarter, a new family of Lexmark monochrome laser and multifunction solutions were introduced in June June: see month. , establishing new industry standards for price performance. These highly versatile products deliver print speeds from 20 to 45 ppm at prices beginning as low as $699. In 2001 the company also launched the Lexmark C720, a networkable color laser printer A laser printer that prints in color using four toner cartridges (CMYK) of cyan, magenta, yellow and black. The colors are applied one at a time to the drum and are then adhered to the paper. See printer. that can be configured con·fig·ure tr.v. con·fig·ured, con·fig·ur·ing, con·fig·ures To design, arrange, set up, or shape with a view to specific applications or uses: as a multifunction device, as well as the Lexmark E210, a sub-$200 monochrome laser printer for home users, students and small businesses. Also in 2001, the company refreshed re·fresh v. re·freshed, re·fresh·ing, re·fresh·es v.tr. 1. To revive with or as if with rest, food, or drink; give new vigor or spirit to. 2. its entire line of PC-attached inkjet printers. The four new Z-line Z-line can refer to
adj. Self-contained and usually independently operating: a standalone computer terminal. faxing capabilities. Looking forward: "While the technology market continues to be weak, Lexmark is well positioned due to our strong product announcements in 2001 and market share gains. Although we expect to continue to outperform Outperform An analyst recommendation meaning a stock is expected to do slightly better than the market return. Notes: Exact definitions vary by brokerage, but in general this rating is better than neutral and worse than buy or strong buy. the market, we are cautious as we look forward due to these market conditions and the potential for aggressive competition and pricing," said Curlander. "In the first quarter of 2002, we anticipate revenue will be about flat year-over-year, but will be down sequentially from the fourth quarter due to normal seasonality. We expect gross profit margin to improve sequentially due to a higher mix of supplies, and earnings per share to be in the range of 43 to 53 cents." Lexmark is hosting a conference call with securities analysts on Thursday, January 24, 2002 at 8:30 a.m. Eastern Time (800-558-9407, pass code #1010). A live broadcast over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the , a complete replay, and a transcript A generic term for any kind of copy, particularly an official or certified representation of the record of what took place in a court during a trial or other legal proceeding. A transcript of record of the call will be available on Lexmark's investor relations Investor relations The process by which the corporation communicates with its investors. home page at http://investor.lexmark.com. Lexmark International, Inc. is a leading developer, manufacturer and supplier of printing solutions -- including laser and inkjet printers, associated supplies and services -- for offices and homes in more than 150 countries. Founded in 1991, Lexmark reported more than $4.1 billion of revenue in 2001, 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. All other trademarks are the property of their respective holders. Prices are estimated street prices; actual prices may vary. "Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " Statement under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995: Statements in this release which are not historical facts are forward-looking and involve risks and uncertainties, including, but not limited to, management of the company's and resellers' inventory levels, competition in aftermarket Aftermarket See: Secondary market. aftermarket See secondary market. supplies, changes in a country's or region's political or economic conditions, the impact of competitors' products and pricing, unforeseen cost impacts, market acceptance of new products and pricing programs, currency fluctuations, production and supply difficulties, increased investment to support product development, conflicts among sales channels, the outcome of pending and future litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. or governmental proceedings, intellectual property and other legal claims and expenses, and other risks described in the company's Securities and Exchange Commission filings. The company undertakes no obligation to update any forward-looking statement forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. .
LEXMARK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(In Millions, Except Per Share Amounts)
(Unaudited)
Three Months Ended Percent
December 31 Change
----------------------------- ---------
2001 2000
---- ----
Revenue $1,152.0 $1,095.7 5%
Cost of revenue 861.2 758.2
---------- ----------
Gross profit 290.8 337.5 (14)
---------- ----------
Research and development 61.8 57.0
Selling, general and
administrative 170.3 156.2
Restructuring and
related charges 58.4 41.3
----------- -----------
Operating expense 290.5 254.5 14
---------- ----------
Operating income 0.3 83.0 (100)
Interest expense 4.7 3.3
Other - 3.3
--------- ------------
-
(Loss) earnings before
income taxes (4.4) 76.4 (106)
(Benefit) provision for
income taxes (41.2) 21.4
---------- ----------
Net earnings $ 36.8 $ 55.0 (33)
========== ==========
Net earnings per share:
Basic $ 0.28 $ 0.43 (35)
=========== ==========
Diluted $ 0.27 $ 0.42 (34)
=========== ==========
Shares used in per
share calculation:
Basic 130.9 127.7
========== ==========
Diluted 134.2 132.3
========== ==========
LEXMARK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(In Millions, Except Per Share Amounts)
(Unaudited)
Year Ended Percent
December 31 Change
----------------------------- ----------
2001 2000
---- ----
Revenue $4,142.8 $3,807.0 9%
Cost of revenue 2,865.3 2,550.9
--------- ---------
Gross profit 1,277.5 1,256.1 2
--------- ---------
Research and development 246.2 216.5
Selling, general and
administrative 631.9 582.6
Restructuring and
related charges 58.4 41.3
----------- -----------
Operating expense 936.5 840.4 11
---------- ----------
Operating income 341.0 415.7 (18)
Interest expense 14.8 12.8
Other 8.4 6.5
--------- ---------
Earnings before income
taxes 317.8 396.4 (20)
Provision for income taxes 44.2 111.0
--------- ---------
Net earnings $ 273.6 $ 285.4 (4)
========= =========
Net earnings per share:
Basic $ 2.11 $ 2.22 (5)
========= =========
Diluted $ 2.05 $ 2.13 (4)
========= =========
Shares used in per share
calculation:
Basic 129.6 128.4
========= =========
Diluted 133.8 134.3
========= =========
LEXMARK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL POSITION
(In Millions)
(Unaudited)
December 31 December 31
2001 2000
--------------- ---------------
ASSETS
Current assets:
Cash and cash equivalents $ 90.7 $ 68.5
Trade receivables, net 702.8 594.0
Inventories 455.1 412.3
Prepaid expenses and other
current assets 244.5 168.9
---------- ----------
Total current assets 1,493.1 1,243.7
Property, plant and equipment, net 800.4 730.6
Other assets 156.4 98.9
---------- -----------
Total assets $2,449.9 $2,073.2
ABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 11.0 $ -
Accounts payable 384.7 426.1
Accrued liabilities 535.4 552.9
--------- --------
Total current liabilities 931.1 979.0
Long-term debt 149.1 148.9
Other liabilities 293.8 168.3
--------- --------
Total liabilities 1,374.0 1,296.2
--------- --------
Stockholders' equity:
Preferred stock - -
Common stock and capital in
excess of par 807.8 717.3
Retained earnings 1,289.1 1,015.7
Treasury stock (879.8) (881.1)
Accumulated other comprehensive
loss (141.2) (74.9)
--------- --------
Total stockholders' equity 1,075.9 777.0
--------- --------
Total liabilities and
stockholders' equity $2,449.9 $2,073.2
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