SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): April 20, 1998
Lexmark International Group, Inc.
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(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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(Former name or former address, if changed since last report)
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Item 5. Other Events.
On April 20, 1998, the Registrant issued the attached press
release announcing its financial results for the three months ended March 31,
1998.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit 20 - Press Release dated April 20, 1998.
2
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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/ David L. Goodnight
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David L. Goodnight
Corporate Controller
Date: April 20, 1998
3
Jim Joseph
Media Relations
(606) 232-2249
[email protected]
Kurt Braun
Investor Relations
(606) 232-5108
[email protected]
Lexmark International reports
record first quarter
- -- Revenues increase 15 percent; earnings per share up 72 percent --
LEXINGTON, Ky., April 20, 1998 -- Lexmark International Group, Inc. (NYSE:
LXK) today announced record first-quarter revenues, operating income and
earnings per share.
"We are extremely pleased with Lexmark's record financial performance in the
first quarter -- one that well exceeded our forecast," said Marvin L. Mann,
chairman and CEO. "Customer acceptance of Lexmark's printer solutions continues
to be very high. Our financial performance reflects our ongoing success in
meeting and exceeding customer needs."
First-quarter review:
Operating income up 40 percent
First-quarter revenues were $672 million, an increase of 15 percent over 1997
revenues of $583 million. Revenues would have increased 20 percent versus 1997
without the impact of foreign currency translation. Revenues from printers and
associated supplies increased 22 percent versus a year ago and would have
increased 27 percent without the currency translation impact. Printers and
associated supplies contributed 83 percent of total revenues versus 78 percent a
year ago.
Operating income was $78 million versus $56 million a year ago, an increase of
40 percent. Earnings were $50 million, or 69 cents per share on a diluted basis,
an earnings per share increase of 72 percent versus earnings of $31 million, or
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40 cents per share in 1997 before an extraordinary charge from prepayment of
subordinated notes. First-quarter net earnings per share increased 216 percent
versus 22 cents a year ago, including the extraordinary charge.
"Our first-quarter results reflect strong growth across the business and in each
geographical region except Asia-Pacific," noted Mann. "Our robust revenue growth
this quarter was driven by good unit volume increases in both network laser
printers and color inkjet printers, and even stronger growth from associated
supplies."
Gross profit margins increased by 2.5 points to 36.7 percent as a result of
improved printer and associated supplies margins and a richer mix of supplies
versus printer hardware. Operating expenses in the first quarter were 25.1
percent of revenues versus 24.7 percent a year ago. The 72 percent increase in
earnings per share before last year's extraordinary charge resulted primarily
from the 40 percent increase in operating income. Reduced interest expense,
lower income tax rates and the reduced number of shares used in the earnings per
share calculation also contributed to the increase in earnings per share.
Lexmark's debt-to-total-capital ratio was 25 percent compared to 13 percent at
the end of 1997. The company purchased 2 million shares of its common stock
during the first quarter for approximately $87 million. There remains $131
million of board authorization to repurchase additional shares. Return on
average equity over the past four quarters was 35 percent.
Other achievements:
Continued industry recognition
The first quarter was marked by achievements in addition to record financial
results.
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Lexmark's leadership in printer solutions continues to be recognized by industry
experts. VARBusiness magazine's annual printer product review selected Lexmark
over Hewlett-Packard and all other competitors in price performance, technical
support, network management capability, paper handling, and cost of ownership.
"This award speaks volumes about our ability to deliver outstanding printer
solutions to our customers in the value-added reseller channel," noted Dr. Paul
J. Curlander, president and chief operating officer. "Lexmark's technology
leadership and responsiveness to customer needs were recognized with over 40
industry awards in the first quarter."
The new Lexmark 5700 Color Jetprinter, which received favorable media reviews in
the first quarter, offers industry-leading technology at a popular price point.
The Lexmark 5700 brings to market the industry's highest print density rating,
1,200 X 1,200 dots-per-inch, plus up to eight pages per minute text printing and
photographic color printing, all for $249.
Looking forward:
"We are encouraged by the outstanding financial performance we have achieved in
the first quarter and continue to feel that we are well-positioned for future
growth," noted Mann. "We currently expect strong results in the second quarter
and feel confident about our prospects for the full year. However, results in
the second half of the year will face a more difficult comparison to last year
than we are facing the first half."
Lexmark International Group, Inc. is the parent company of Lexmark
International, Inc., a global developer, manufacturer and supplier of printer
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 a manufacturing center in Lexington, Ky.; other
manufacturing centers are in Boulder, Colo.; Juarez, Mexico; Rosyth, Scotland;
Orleans, France and Sydney, Australia.
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Lexmark, Lexmark with diamond design, Optra is a trademark of Lexmark
International, Inc., registered in the U.S. and/or other countries. Color
Jetprinter is a trademark of Lexmark International, Inc.
"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, increased investment to
support product introductions and enter new geographies, currency fluctuations,
market acceptance of new products and programs and product transitions by the
company and its competitors, the company's ability to increase or maintain
retail market share with its branded products, management of inventory levels,
production and supply difficulties, intellectual property infringement claims
and expenses, 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 EARNINGS
(In Millions, Except Per Share Amounts)
(Unaudited)
Three Months Ended Percent
March 31 Change
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1998 1997
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Revenues $672.1 $583.4 15%
Cost of revenues 425.5 383.6
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Gross profit 246.6 199.8 23
Research and development 36.6 30.6
Selling, general and
administrative 132.1 113.5
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Operating expenses 168.7 144.1 17
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Operating income 77.9 55.7 40
Interest expense, net 2.0 4.9
Amortization of deferred
financing costs
and other 1.5 2.4
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Earnings before income
taxes and extraordinary
item 74.4 48.4 54
Provision for income taxes 24.9 17.7
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Earnings before
extraordinary item 49.5 30.7 61
Extraordinary loss on
extinguishment of debt
(net of related
tax benefit of $8.4) - (14.0)
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Net earnings $ 49.5 $ 16.7 196
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Basic earnings per share:
Before extraordinary
item $ 0.73 $ 0.42 73
Extraordinary loss - (0.19)
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Net earnings $ 0.73 $ 0.23 217
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Diluted earnings per
share:
Before extraordinary
item $ 0.69 $ 0.40 72
Extraordinary loss - (0.18)
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Net earnings $ 0.69 $ 0.22 216
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Shares used in per share calculation:
Basic 68.1 72.9
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Diluted 72.2 76.9
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LEXMARK INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL POSITION
(In Millions)
(Unaudited)
March 31, 1998 December 31, 1997
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ASSETS
Current assets:
Cash and cash equivalents $ 24.9 $ 43.0
Trade receivables, net 353.7 318.9
Inventories 374.2 353.8
Prepaid expenses and other
current assets 50.5 60.4
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Total current assets 803.3 776.1
Property, plant and
equipment, net 403.7 409.6
Other assets 23.1 22.5
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Total assets $1,230.1 $1,208.2
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 30.2 $ 18.0
Accounts payable 254.7 302.0
Accrued liabilities 247.3 227.5
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Total current
liabilities 532.2 547.5
Long-term debt 125.0 57.0
Other liabilities 106.8 103.0
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Total liabilities 764.0 707.5
Stockholders' equity:
Preferred stock - -
Common stock and capital
in excess of par 542.1 537.9
Retained earnings 218.3 168.8
Accumulated other comprehensive
income (25.4) (23.8)
Treasury stock (268.9) (182.2)
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Total stockholders'
equity 466.1 500.7
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Total liabilities
and stockholders'
equity $1,230.1 $1,208.2
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