- Revenue of $1.14 billion, in line with expectations

- Operating income growth of more than 50 percent year to year

- Cash generation of $135 million

- Share repurchases of $158 million

LEXINGTON, Ky., July 22 /PRNewswire-FirstCall/ -- Lexmark International, Inc. (NYSE: LXK) today announced financial results for the second quarter of 2008. Second-quarter revenue was $1.14 billion, down 6 percent compared to revenue of $1.21 billion last year. Second-quarter GAAP earnings per share were $0.89. Earnings per share for the second quarter of 2008 would have been $0.96 excluding $0.07 per share for restructuring-related activities. Second- quarter 2007 GAAP earnings per share were $0.67. Earnings per share for the second quarter of 2007 would have been $0.65 excluding $0.02 per share net benefit for restructuring-related activities.

'During the second quarter we continued the strategic shift that we started in late 2007. EPS grew year to year in 2Q and we had good cash generation performance. Overall, we have more work to do to continue to implement our strategy and to drive growth in higher usage segments,' said Paul J. Curlander, Lexmark chairman and chief executive officer. 'A key element is the introduction of industry-leading products and technology, which has enabled us to win some important large enterprise accounts recently and resulted in our new Professional Series and Home and Student Series inkjet products announced yesterday.'

Second-quarter 2008 business segment revenue of $763 million grew 4 percent year to year. Consumer segment revenue of $376 million declined 21 percent compared to a year ago primarily due to the strategic changes announced last October and the slowdown in the inkjet market. Second-quarter 2008 gross profit margin was 36.6 percent, operating expense was $316 million, the operating income margin was 8.9 percent, operating income was $101 million and net earnings were $84 million. Second-quarter 2008 operating income includes $9 million pretax charges in connection with the company's restructuring-related actions.

Second-quarter 2007 gross profit margin was 30.6 percent, operating expense was $305 million, the operating income margin was 5.4 percent, operating income was $66 million, and net earnings were $64 million. Second- quarter 2007 operating income included $5 million restructuring-related pretax charges.

On a non-GAAP basis, excluding restructuring-related charges, second- quarter 2008:

- Gross profit margin would have been 37.0 percent, up 6.0 percentage points from 31.0 percent in the same period last year, principally due to a favorable product mix shift.

- Operating expense would have been $312 million, up 2.6 percent, principally driven by increased demand generation investment.

- Operating income margin would have been 9.6 percent, up 3.7 percentage points from 5.9 percent last year.

- Operating income would have been $110 million, up 55.1 percent compared to $71 million in the same quarter last year.

- Net earnings would have been $90 million, up 46.0 percent compared to $62 million in the second quarter of 2007.

The company ended the quarter with $1.328 billion in cash and current marketable securities. Second-quarter net cash provided by operating activities was $135 million. Capital expenditures for the quarter were $53 million. Depreciation and amortization in the quarter was $45 million. Lexmark repurchased $158 million (4.5 million shares) of stock during the second quarter. The company's remaining share repurchase authorization was approximately $887 million at quarter end.

Lexmark announced a plan today to enhance the efficiency of its inkjet cartridge manufacturing operations by further consolidating manufacturing capacity for the company's inkjet supplies. This restructuring plan is for the closure of one of the company's inkjet supplies manufacturing facilities in Mexico. This action is expected to impact approximately 650 positions by the end of 2008. Most of the impacted positions are being moved to a lower-cost country. The company estimates that this 2008 action will result in total pretax cost of approximately $24 million ($8 million cash cost), with an approximate $20 million impact in 2008. Pretax cost of $3 million impacted second-quarter 2008 results. Total savings from this restructuring are expected to be about $9 million annually beginning in 2009.

Recent Win Demonstrates Strength of Lexmark's Large Enterprise Value Proposition

Lexmark has signed a five-year, multimillion dollar contract with Washington Mutual, one of the leading consumer and small business banks in the U.S. As part of the contract, Lexmark Global Services will manage more than 25,000 devices throughout WaMu's 2,300 financial centers and 37 back-office locations in the U.S. and will also provide consulting services to optimize the workflow processes, carbon footprint and printing infrastructure in each location.

Significant Recent Industry Recognition for Lexmark's Products

Lexmark continued to receive numerous awards for its color laser, color laser multifunction products (MFPs), mono laser MFPs, inkjet all-in-ones (AIOs), and print management software from leading test laboratories:

    Color laser and color laser MFPs
    - Lexmark C500n
      - BERTL's Best A4 Toner-Based Small Office/Workgroup Color Laser Printer
    - Lexmark X560n
      - Buyers Laboratory Inc. Spring 2008 Pick of the Year
    - Lexmark X560n, X782e, X940e, and X945e
      - Better Buys for Business Editor's Choice
    - Lexmark C780n, C780dn and C780dtn
      - BERTL's Best User-Friendly Color Printer Range
    - Lexmark C782dtn
      - BERTL's Best Color Workgroup Printer
    - Lexmark X940e and X945e
      - BERTL's Best User-Friendly Workgroup Family
    Inkjet AIOs
    - Lexmark Professional Series X9575
      - BERTL's Best Professional Color Multifunction Printer
      - ComputerBild Testsieger Best in Test(1)
    Mono Laser MFPs
    - Lexmark X850e, X852e and X854e
      - Better Buys for Business Editor's Choice
    Print Management Software
    - Lexmark's MarkVision Professional
      - BERTL's Best Extensive MFP/Printer Network-Management Solution

New Inkjets Expand Lexmark's Reach into Higher-Usage Segments

Lexmark continued to raise the bar for inkjet features, functionality and performance with the introduction yesterday of six new AIOs, further enhancing and expanding the company's presence in higher-page generation target segments. The new Lexmark Professional Series X4975, X6675 and X7675 AIOs, with prices ranging from $149.99(2) to $199.99(2), were specifically designed to meet the needs of small-business and small office-home office (SOHO) professionals who demand wireless printing capability, along with exceptional speed, quality, reliability, and ease of use.