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Lexmark 3Q Earnings Up 16 Percent

October 20, 2003

LEXINGTON, Ky. (AP) _ Lexmark International Inc.’s third-quarter net income rose 16 percent as revenue climbed, helping the computer-printer company beat its own July earnings estimate.

The company reported net income of $104.1 million, or 79 cents a share, compared to $89.8 million, or 70 cents a share, in the same quarter last year. Earnings for the prior third quarter included a write-off of 9 cents a share stemming from the abandonment of a software project.

Lexmark said in July it expected earnings of 63 to 73 cents a share for the latest quarter, citing weak spending by both consumers and corporations.

At the time, analysts were looking for earnings of 80 cents a share. The latest Wall Street consensus estimate was 69 cents a share, according to a survey by Thomson First Call.

Revenue rose 11.5 percent to $1.16 billion from $1.04 billion in the same quarter last year, better than Lexmark’s July projection of revenue growth in the low- to mid-single-digit percentages.

However, the gross profit margin fell to 32.1 percent of sales from 32.5 percent a year earlier. Lexmark said lower printer margins were only partly offset by higher margins for supplies.

Although products launched this year for both home and business use put Lexmark in a good position for the fourth quarter, the company continues to be cautious because of the uncertain economic environment and aggressive price competition, Chairman and Chief Executive Paul Curlander said in a statement.

For the fourth quarter, Lexmark expects earnings of 85 cents to 95 cents a share, and revenue growth in the mid to high single-digit percentages, he said.

First Call’s projection is for fourth-quarter earnings of 82 cents a share.

Shares of Lexington-based Lexmark closed at $74, up $6.75, or 10 percent, Monday on the New York Stock Exchange.

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