Lexmark’s 1999 annual revenues were $3.452 billion, an increase of 14 percent over 1998 revenues of $3.021 billion. Without the negative impact of foreign currency translation, revenue growth would have been 16 percent versus last year. Printer hardware and associated supplies revenues increased in all major geographies and were up 18 percent from a year ago, and would have grown 20 percent if not for the negative currency impact. Gross profit margins in 1999 were 35.6 percent versus 36.0 percent last year.
Operating expenses were 21.8 percent of revenues in 1999, down 1.5 points from 23.3 percent in 1998. Operating income was $477 million, an increase of 24 percent over the $383 million reported a year ago. Net earnings in 1999 were $318 million, an increase of 31 percent versus $243 million last year, due primarily to increased revenues and higher operating margins. Earnings per share were $2.32 for the year, a 36 percent increase over earnings per share of $1.70 for 1998. Lower effective income tax rates and fewer shares outstanding due to share repurchases throughout 1999 also contributed to improved earnings per share.
Lexmark’s debt-to-total-capital ratio at Dec. 31, 1999 was 20 percent compared to 22 percent at the end of 1998. Net cash provided by operating activities was $400 million, up from $289 in 1998. Capital expenditures were $220 million in 1999 primarily related to inkjet capacity expansion and new products. The company repurchased 5,297,600 shares of its common stock during the year for $302 million and had remaining share repurchase authorization of $327 million at year-end.
During 1999, Lexmark announced a significant number of new products, and received over 100 industry awards. Announcement highlights included:
The popular Z family of inkjet printers, featuring 1,200 dots-per-inch resolution, priced from $49 to $199.
The new Optra T family of monochrome laser printers, ranging from 15 to 35 pages per minute, that share identical user interfaces, features and supplies.
New OptraImage multifunction products that provide customers with a wide array of print/copy/scan/fax solutions, in both color and monochrome. These modular and scalable offerings help companies reduce document production and delivery costs and improve productivity, particularly versus copiers.
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Other developments during the year included the announcement of new production facilities in Mexico and the Philippines, as well as expansion of existing plants in Scotland and Mexico, to accommodate the accelerated demand for inkjet products. Lexmark also entered into a strategic alliance with Kodak to jointly develop and market co-branded photographic printers.
Fourth-quarter review:
11 percent sales growth results in first $1 billion quarter
Lexmark’s fourth-quarter revenues were $1.003 billion, an increase of 11 percent over 1998 revenues of $907 million. Without the negative impact of foreign currency translation, revenue growth would have been 14 percent versus last year. Printer hardware and associated supplies revenues increased in all major geographies and were up 14 percent from the same period a year ago, and would have grown 18 percent if not for the negative currency impact. Revenue growth was about where we thought it would be, considering the impact of currency, the effect of the product transition, and the impact on customer spending caused by concerns over year 2000 issues, said Curlander. Gross profit margins in 1999 were 34.4 percent, down slightly from 34.8 percent in 1998. Operating expenses increased 7 percent in the quarter, declining to 19.9 percent of revenues, an improvement of 0.7 points from a year earlier. Operating income of $145 million increased 13 percent over the $128 million reported last year. Net earnings were $100 million, up 22 percent from $82 million in 1998, reflecting the increased revenues, lower effective income tax rates and higher operating margins. Fewer shares outstanding also contributed to improved earnings per share. The company repurchased 1,687,400 shares of its common stock during the quarter for $121 million.
