Lexmark announces revised fourth quarter 2008 financial outlook, 2009 Restructuring Plan
Lexmark International, Inc. (NYSE: LXK) announced that the weakening global economic environment impacted Lexmark’s fourth quarter 2008 operating performance, which will be lower than expected.
The company currently expects its fourth quarter revenue to decline about 17 percent year over year. As compared to the company’s October 2008 fourth quarter guidance of a revenue decline in the low to mid teens range, revenue has been negatively impacted by lower laser and inkjet hardware unit sales and currency rate shifts during the quarter.
The company’s earnings per share for the quarter have been impacted by several factors including:
• The company’s operating income, which was negatively impacted by significant currency rate shifts during the quarter.
• A tax benefit approximately offsetting in EPS the effect of the currency rate shifts.
• Increased restructuring related charges primarily due to the 2009 Restructuring Plan, which the company is announcing today.
Lexmark now expects fourth quarter GAAP EPS to be in the range of $0.19 to $0.24 per share. Fourth quarter restructuring related charges will be about $0.52 per share, or about $0.22 per share higher than expected in the October 2008 guidance primarily due to this 2009 Restructuring Plan. The company’s fourth quarter results are expected to include a tax benefit of about $0.30 per share. EPS excluding restructuring related charges are now expected to be $0.71 to $0.76 with the lower operating income impact being offset by the tax benefit. This compares to the October 2008 guidance range for EPS excluding restructuring of $0.70 to $0.80.
The 2009 Restructuring Plan is expected to impact about 375 positions. The company expects the 2009 Restructuring Plan will result in pre-tax charges of approximately $45 million. Restructuring charges in the fourth quarter of 2008 related to the 2009 Restructuring Plan were $20 million. Lexmark expects the 2009 Restructuring Plan to be substantially completed by the end of 2009 and currently expects total annualized cost savings of $50 million when completed, with approximately $40 million in savings in 2009.
Looking ahead, the company expects some of the same factors that impacted the fourth quarter to also impact the first quarter of 2009. In the first quarter the company currently expects a revenue decline in the mid to high teens percentage range, and GAAP earnings per share to be around $0.52 to $0.62, or $0.65 to $0.75 excluding $0.13 restructuring related charges.
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