SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 21, 1997
Lexmark International Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-14050 22-3074422
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File No.) Identification No.)
One Lexmark Centre Drive, Lexington, Kentucky 40550
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (606) 232-2000
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740 New Circle Road, NW, Lexington, Kentucky 40511
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(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 5. Other Events.
On January 21, 1997, the Registrant issued the attached
press release announcing its fourth quarter and full year 1996 earnings.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit 20 - Press Release dated January 21, 1997.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
LEXMARK INTERNATIONAL GROUP, INC.
By: /s/ Albert L. Luedtke
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Albert L. Luedtke
Corporate Controller
Date: January 21, 1997
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EXHIBIT 20
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For release: Contacts: Media Relations
Jan. 21, 1997 Jim Joseph
606-232-2249
[email protected]
Investor Relations
Kurt Braun
606-232-5108
[email protected]
LEXMARK INTERNATIONAL REPORTS
RECORD PERFORMANCE FOR YEAR AND QUARTER
-- 1996 net earnings per share up 45 percent before unusual items --
LEXINGTON, Ky., Jan. 21, 1997 -- Lexmark International Group, Inc. (NYSE:
LXK) today announced record revenues and record net earnings for both the full
year and the fourth quarter of 1996. Lexmark also reported a 21 percent increase
in operating income before amortization of intangibles and a 1995 unusual item,
and a 45 percent increase in net earnings per share for the full year before
unusual items.
Full-year review:
Revenues reach $2.4 billion
Revenues in 1996 were $2.4 billion, an increase of 10 percent over 1995
revenues of $2.2 billion; revenues increased 18 percent, however, when revenues
from the phased-out keyboard business are excluded. Operating income before
amortization was $235 million compared to $195 million before amortization and
an unusual item reported in 1995. Operating income after amortization was $230
million, compared to $169 million before an unusual item in 1995, an increase of
36 percent. Amortization, which is now completed, was $5 million in 1996 and $26
million in 1995.
Net earnings for 1996 increased 48 percent to $128 million, compared to $87
million before unusual items in 1995. Net earnings after unusual items in 1995
were $32 million. Net earnings per share were $1.68, up 45 percent from $1.16
before the unusual items a year ago. Net earnings per share after unusual items
in 1995 were 43 cents. Unusual items included a non-cash compensation expense of
$39 million after tax in the fourth quarter of 1995 related to the valuation of
employee stock options at the time of the initial public offering, and an
extraordinary after-tax charge of $16 million related to early extinguishment of
debt in the second quarter of 1995.
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"We are very pleased with our performance this year," said Marvin L. Mann,
Lexmark chairman and CEO, "particularly in light of our exit from the keyboard
business at the end of the first quarter, significant inkjet printer price
reductions, a new laser product announcement by Hewlett Packard in April, IBM's
re-entry into the desktop laser market in June, and a less favorable IBM
supplies distribution agreement. The company's operating margins strengthened as
we continued to provide highly competitive printer solutions while aggressively
managing both manufacturing costs and operating expenses.
"Lexmark's ability to achieve strong growth, in spite of the factors
mentioned, was the result of the excellent performance of our printer and
associated supplies business. Revenues from this core business increased 24
percent and contributed 77 percent of the corporation's revenues in 1996 versus
69 percent in 1995. The success of new products introduced in our other office
imaging products division contributed to better-than-expected performance in
that division."
Fourth quarter review:
Net earnings per share reach record 59 cents
Fourth quarter revenues were $687 million, a 9 percent increase over 1995
fourth quarter revenues of $630 million; the revenues increased 16 percent,
however, when excluding revenues from the phased-out keyboard business. Revenues
from printers and associated supplies increased 22 percent over the very strong
fourth quarter of 1995.
Net earnings in the quarter increased 15 percent to $45 million, compared
to $39 million before an unusual item in 1995. Net earnings after the unusual
item in 1995 were $1 million. Net earnings per share were 59 cents, up 13
percent from 52 cents before an unusual item a year ago. The unusual item was
the non-cash compensation expense described earlier.
"We are very pleased with Lexmark's fourth quarter results considering the
changes in our business mentioned previously," Mann added.
Additional achievements:
Return on equity improves to 27 percent
The company continued to improve its financial position. Return on average
shareholders' equity rose to 27 percent from 25 percent in 1995. In addition,
total debt was reduced by a net $30 million to $165 million in 1996, lowering
the debt-to-capital ratio to
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23 percent from 33 percent last year. The debt reduction occurred even as
capital expenditures were a record $145 million. Most of these funds were
invested in three new inkjet product manufacturing facilities and to support new
products.
During 1996 the company's achievements also included continued development
of international markets, particularly in the Asia/Pacific region, with more
than 50 percent of revenues now coming from products sold to customers outside
the United States. A number of product introductions and enhancements, including
the new Optra E and Optra N laser printers and the Color Jetprinter 2030 and
Color Jetprinter 2050, extended the range and competitiveness of Lexmark's
printer solutions.
Lexmark International Group, Inc. is the parent company of Lexmark
International, Inc., a global developer, manufacturer and supplier of printing
solutions and products, including laser, inkjet and dot-matrix printers and
associated consumable supplies for the office and home markets. Lexmark has
executive offices and its largest manufacturing center in Lexington, Ky.; other
manufacturing centers are Boulder, Colo.; Juarez, Mexico; Rosyth, Scotland;
Orleans, France and Sydney, Australia.
###
97LMI007
1/21/97
"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995: Statements in this release which are not historical facts are
forward-looking and involve risks and uncertainties, including, but not limited
to, the impact of competitive products and pricing, market acceptance of
products, product transitions by the company and its competitors, management of
inventory levels, production and supply difficulties, changes in product sales
mix, and other risks described in the company's registration statement and other
Securities and Exchange Commission filings.
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LEXMARK INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In Millions, Except Per Share Amounts)
(Unaudited)
Three Months Ended Percent
December 31 Change
------------------ -------
1996 1995
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Revenues $686.9 $630.3 9%
Cost of revenues 468.0 427.2
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Gross profit 218.9 203.1 8
Research and development 31.8 28.9
Selling, general and
administrative 108.7 100.5
Option compensation
related to IPO (1) - 60.6
Amortization of intangibles - 5.3
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Operating expenses 140.5 195.3 (28)
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Operating income 78.4 7.8 N/A
Interest expense, net 4.9 6.2
Amortization of deferred
financing costs and other 2.1 5.2
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Earnings (loss) before
income taxes 71.4 (3.6) N/A
Provision (benefit) for
income taxes 26.2 (4.3)
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Net earnings $45.2 $0.7 N/A
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Earnings per common and
common equivalent share,
primary and fully diluted $0.59 $0.01 N/A
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Shares used in per share
calculation 77.0 75.0
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(1) IPO non-cash option compensation recognized for certain of
the Company's outstanding employee stock options upon
consummation of the initial public offerings.
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LEXMARK INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In Millions, Except Per Share Amounts)
(Unaudited)
Years Ended Percent
December 31, Change
----------------- -------
1996 1995
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Revenues $2,377.6 $2,157.8 10%
Cost of revenues 1,630.2 1,487.9
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Gross profit 747.4 669.9 12
Research and development 123.9 116.1
Selling, general and
administrative 388.0 359.1
Option compensation
related to IPO (1) - 60.6
Amortization of intangibles 5.1 25.6
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Operating expenses 517.0 561.4 (8)
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Operating income 230.4 108.5 112
Interest expense, net 20.9 35.1
Amortization of deferred
financing costs and other 7.9 10.1
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Earnings before income
taxes and extraordinary item 201.6 63.3 218
Provision for income taxes 73.8 15.2
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Earnings before
extraordinary item 127.8 48.1 165
Extraordinary loss on
extinguishment of debt
(net of related
tax benefit of $6.4) - (15.7)
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Net earnings $127.8 $32.4 294
======= ========
Earnings per common and
common equivalent share,
primary and fully diluted:
Before extraordinary
item $1.68 $0.64 161
Extraordinary loss - (0.21)
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Net earnings $1.68 $0.43 287
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Shares used in per share
calculation 76.2 74.9
======= ========
(1) IPO non-cash option compensation recognized for certain of
the Company's outstanding employee stock options upon
consummation of the initial public offerings.
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LEXMARK INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL POSITION
(In Millions)
(Unaudited)
December 31, 1996
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1996 1995
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ASSETS
Current assets:
Cash and cash equivalents $119.3 $150.5
Trade receivables, net 304.7 213.6
Inventories 271.0 296.3
Prepaid expenses and other
current assets 70.1 55.3
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Total current assets 765.1 715.7
Property, plant and
equipment, net 434.1 361.2
Other assets 22.3 66.0
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Total assets $1,221.5 $1,142.9
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $2.1 $ -
Current portion of
long-term debt - 20.0
Accounts payable 197.2 209.6
Accrued liabilities 222.0 258.4
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Total current
liabilities 421.3 488.0
Long-term debt 163.2 175.0
Other liabilities 96.7 89.7
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Total liabilities 681.2 752.7
Stockholders' equity:
Preferred stock - -
Common stock and capital
in excess of par 520.0 495.3
Retained earnings (deficit) 19.8 (108.0)
Accumulated translation
adjustment 0.5 2.9
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Total stockholders'equity 540.3 390.2
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Total liabilities and stockholders'
equity $1,221.5 $1,142.9
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