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Lexmark Reaches Nearly $1 Billion for the Quarter, Reports Earnings

Press release from the issuing company

LEXINGTON, Ky., Apr 23, 2001 -- Lexmark International, Inc. (NYSE: LXK) today announced record revenue and earnings per share for the first quarter of 2001. First-quarter revenue was a record $999 million, up 12 percent (16 percent in constant currency) from 2000. Diluted net earnings per share were 60 cents. "We are very pleased to report solid first quarter financial results in line with our expectations," said Paul J. Curlander, chairman and CEO. "By focusing exclusively on printing solutions, we continue to build a large installed base of printer hardware that yields strong, recurring revenue growth in consumable supplies." Financial highlights: Printers and associated supplies revenue up 20 percent in constant currency Lexmark's revenue for the first quarter ended March 31 was $999 million, an increase of 12 percent versus revenue of $892 million in the same period of 2000. Without the negative impact of foreign currency translation, revenue growth would have been 16 percent versus last year. Printers and associated supplies revenue was up 16 percent from a year earlier, and would have grown 20 percent if not for the negative currency impact. Gross profit margin was 33.4 percent for the quarter versus 35.3 percent a year ago due to lower hardware margins and the effect of unfavorable foreign currency. Operating expense increased 11 percent in the quarter, but declined to 21.6 percent of revenue, an improvement of 0.2 points from the same period of 2000. Operating income was $118 million versus the $120 million reported a year ago, due to the reduced gross profit margin. Diluted net earnings per share for the period increased 2 percent to 60 cents, versus 59 cents in the first quarter of 2000. Lexmark's debt-to-total-capital ratio at March 31, 2001 was 20 percent compared to 16 percent at the end of 2000. Capital expenditures were $60 million in the first quarter with most spending in support of new products and capacity expansion. On March 29, 2001, the company disclosed in a Securities and Exchange Commission Form 8-K filing that it had experienced a disruption in its U. S. distribution system during the first quarter. This caused the company's back orders to be higher than usual at various times during the quarter. By the end of the first quarter, back orders had returned to typical levels. Looking forward: "We saw good customer demand for both our laser and inkjet printers in the first quarter and are encouraged with our prospects for the second quarter," stated Curlander. "We expect second quarter year-over-year revenue growth of 10 to 15 percent and earnings of 61 to 67 cents per share. We remain cautious about U. S. consumer demand and corporate IT spending but, at this point, we are maintaining our previous guidance of 15 to 20 percent earnings per share growth for the full year 2001."