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Lexmark To Restructure, Posts Lower Q3 Results

10/23/2007 03:41:00 PM Eastern

Lexington, Ky. — Lexmark International reported lower third-quarter revenue and net earnings and a restructuring plan to cut more than 1,600 jobs by the end of 2008.

Lexmark said revenue for the quarter, ended Sept. 30, was $1.195 billion, down 3 percent compared to the $1.235 billion posted last year. Net earnings were down over $40 million for the quarter to $45.2 million from last year’s $85.6 million.

Paul J. Curlander, Lexmark chairman/CEO, said in a prepared statement, “We are taking steps to shift our consumer market segment focus to higher-usage customers and to improve our cost and expense structure. At the same time, we are committed to continuing our strategic investments in new product development and branding to strengthen our position in growth market segments.”

Lexmark’s restructuring plan includes closure of one of the company’s inkjet supplies manufacturing facilities in Mexico, and additional optimization measures at the remaining inkjet facilities in Mexico.

There will be a reduction in business support cost and expense structure by further consolidating activity globally and expanding the use of shared service centers in lower-cost regions. The areas impacted are supply chain, service delivery, general and administrative expense, as well as marketing and sales support functions.

Lexmark will focus consumer segment marketing and sales efforts into countries or geographic regions that have the highest supplies usage, the company said. About 1,650 jobs will be cut by the end of next year, “most of the impacted positions are being moved to lower-cost countries.”

The company estimates that these actions will result in pretax costs of approximately $20 million in 2007, and $70 million in 2008. Total savings from the restructuring are expected to be about $40 million in 2008, and to be approximately $60 million annually once these actions are completed.

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