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Lexmark Reports Q1: Earnings Per Share Up 36 Percent

Press release from the issuing company

LEXINGTON, Ky., April 21 -- Lexmark International, Inc. today announced record financial results for the first quarter of 2003. First-quarter revenue was $1.108 billion, up 6 percent from the same period in 2002. Net earnings per share were a record 73 cents, up 36 percent from the year-ago quarter. "Lexmark continues to report record financial results despite a slow technology market and a sluggish economy," stated Paul J. Curlander, chairman and CEO. "The consistency of our results again demonstrates the strength and stability of our supplies-driven business model." Laser and inkjet supplies revenue grew 17 percent Lexmark's revenue for the first quarter ended March 31, 2003 was $1.108 billion, up 6 percent from $1.050 billion in the same period of 2002, and was positively impacted 7 percent from foreign currency translation. Laser and inkjet supplies revenue was $642 million, a 17 percent increase over $546 million a year ago, and now represents 58 percent of total revenue, up from 52 percent in the prior-year quarter. Laser and inkjet printer revenue was $370 million, down 8 percent from $401 million in the first quarter of 2002. Gross profit was $356 million or 32.1 percent of revenue for the quarter, versus $310 million or 29.5 percent a year ago. The improvement in gross profit margin was due to an increase of supplies in the product mix and higher supplies margins, somewhat offset by lower printer margins. Operating expense was $228 million compared to $205 million in the prior year. Operating income for the first quarter was $129 million or 11.6 percent of revenue versus $105 million or 10.0 percent of revenue a year earlier. Net earnings were $95 million in the first quarter, up 32 percent from $72 million reported a year ago. Diluted net earnings per share for the period were 73 cents, an increase of 36 percent from 53 cents in the same period of 2002. Lexmark's debt-to-total-capital ratio at March 31, 2003 was 11 percent, down from 13 percent at December 31, 2002. Net cash provided by operating activities was $237 million versus $115 million a year earlier. Capital expenditures were $16 million in the first quarter. Continued Technology Leadership Earlier this month, Lexmark unveiled a wide range of laser-printer products and solutions, including low-end monochrome printers, high-performance color and monochrome workgroup devices, and multifunction products. Included in these announcements are: -- The Lexmark E321 and E323, 20 pages-per-minute (ppm) laser printers priced at $299 and $399, respectively. -- The Lexmark T630, T632, and T634 laser products, printing at speeds of 35, 40, and 45 ppm and priced at $749, $999, and $1,399, respectively. -- The Lexmark X630, X632, and X632e, multifunction versions of the new T-family of laser printers, priced at $2,749, $3,749, and $6,459, respectively. -- The Lexmark C912 color laser product, printing at 28 ppm and priced at $3,499. "These announcements demonstrate that we continue to lead the industry in price performance," Curlander noted. "More importantly, these products continue to strengthen our ability to provide distributed, low-cost, high-performance network print devices that are modular and can be configured into multifunction workflow products which strengthen our solutions and services initiatives." Looking forward: "As we look forward to the second quarter, we believe the strength and appeal of our new product announcements, coupled with the power of our supplies annuity, will keep us well-positioned for growth," stated Curlander. "However, we remain cautious due to softness in corporate and consumer spending and aggressive pricing competition. In the second quarter of 2003, we expect a year-over-year revenue growth rate in the low- to mid-single digits and earnings per share to be in the range of 70 to 80 cents, versus 67 cents reported in 2002."