Lexmark reports record revenue, EPS for Q4, full year 2003

Lexmark International today announced record financial results for both the fourth quarter and full year 2003.

Fourth-quarter revenue was $1.37 billion, an increase of 13%, the highest year-to-year growth rate since first quarter 2000. Revenue for the full year ended 31 December 2003 was a record $4.75 billion. Diluted net earnings per share for the fourth quarter were $1.05, up 17% from the 90c reported for the same period a year earlier. Full year earnings per share rose 20% to a record $3.34.

"Our fourth-quarter revenue growth was significantly over our guidance, driven by strong printer sales," says Paul J Curlander, Lexmark chairman and CEO. "Our earnings for the quarter exceeded expectations as we achieved higher revenue and were able to hold gross profit margins fairly stable both sequentially and year-to-year."

For the fourth quarter, revenue was a record $1.37 billion, a 13% increase from the $1.207 billion reported in the same period of 2002. Laser and inkjet supplies revenue of $716 million was up 10% from $654 million a year ago. Laser and inkjet printer revenue totalled $560 million in the fourth quarter, an increase of 23% from $456 million a year earlier.

Gross profit margin was 31.9% for the quarter versus 31.8% a year ago. Operating expenses were $249 million compared with $224 million in the year prior, and were a record low 18.2% of revenue. Operating income margin was 13.7% in the fourth quarter versus 13.2% in the same period a year earlier. Diluted net earnings per share for the period rose 17% to a record $1.05.

Lexmark`s debt-to-total-capital ratio at 31 December 2003 was 8% compared with 9% at 30 September 2003. Net cash provided by operating activities for the quarter was $269 million. Capital expenditures for the quarter were $39 million. Lexmark repurchased approximately 70 000 shares of its common stock during the fourth quarter for $5 million, at prices ranging from $71.51 to $74.30 per share. The company`s remaining share repurchase authorisation was approximately $183 million as of 31 December 2003.

Lexmark`s 2003 annual revenue was $4.755 billion, an increase of 9% over 2002 revenue of $4.356 billion. Laser and inkjet supplies revenue was $2.629 billion for the year, a 13% increase from $2.335 billion a year ago, and represents 55% of total revenue versus 54% in 2002. Laser and inkjet printer revenue grew 8% from last year to $1.760 billion.

Gross profit margin was up one point from the prior year to 32.5%. Operating income was 12.5% of revenue or $594 million, versus $511 million a year earlier. Diluted net earnings per share for the year were $3.34, up 20% over $2.79 per share in 2002.

Lexmark`s net cash provided by operating activities was $748 million in 2003 and capital expenditures for the year were $94 million. "Our continued focus on improving operational efficiency and reducing cash cycle days resulted in another year of strong cash generation for the company," Curlander states.

"We had strong customer demand for our printing solutions in the fourth quarter, and we believe this positions us well for growth in the first quarter," says Curlander. "While we do see some indications of market improvement, we, however, continue to remain cautious due to the uncertain economic environment and the potential for aggressive price competition. In the first quarter of 2004, we expect a year-over-year revenue growth rate of mid- to high-single digits and earnings per share in the range of 79c to 89c."

For further information, please contact Cathy Steyn at telephone (011) 329 0999; fax (011) 792 7449; e-mail cathryn.steyn@lexmark.co.za