Lexmark reports third quarter results
-- Revenue, excluding Inkjet Exit, grew 5 percent
-- Record Managed Print Services revenue grew 18 percent
-- Perceptive Software GAAP revenue grew 32 percent (non-GAAP 38 percent)
-- Revenue exceeded guidance range, EPS at top of range
-- Free cash flow generation of $98 million
-- Share repurchases and dividends totaled $40 million
-- Strengthened software solutions with two acquisitions
LEXINGTON, Ky., Oct. 22, 2013 /PRNewswire/ -- Lexmark International, Inc. (NYSE: LXK) today announced financial results for the third quarter of 2013.
"In the third quarter, Lexmark continued solid execution of our strategy of transforming to an end-to-end solutions provider, and delivered revenue that exceeded our July guidance range, EPS at the top of the range and also strong free cash flow," said Paul Rooke, Lexmark chairman and chief executive officer. "Perceptive Software's profitability increased significantly compared to last year and once again both managed print services and Perceptive Software revenue grew at a double-digit rate, reflecting the imaging and software synergies we're creating.
"Lexmark's value proposition is unique and squarely focused on helping our customers solve their unstructured information challenges, enabling us to lead in this large and expanding market," Rooke said.
"Lexmark is continuing to increase shareholder value through acquisitions and organic investments that are accelerating our transition to a higher value solutions portfolio, and through the ongoing capital return of more than 50 percent of free cash flow," added Rooke.
Third Quarter Results
GAAP revenue of $890 million includes $5 million of acquisition-related adjustments. Non-GAAP1 revenue of $896 million declined 3 percent compared with last year. Excluding the ongoing decline in Inkjet Exit revenue2, non-GAAP revenue grew 5 percent year to year.
Earnings Per Share |
3Q13 |
3Q12 |
||
GAAP |
$0.45 |
$0.00 |
||
Adjustments Non-GAAP |
0.50 $0.95 |
0.94 $0.94 |
||
GAAP earnings per share for the third quarter of 2013 were $0.45, compared with GAAP earnings of $0.00 per share in the third quarter of 2012.
Third quarter 2013 adjustments were $0.50 per share, compared with third quarter 2012 adjustments of $0.94 per share. Third quarter 2013 non-GAAP earnings were $0.95 per share compared with non-GAAP earnings of $0.94 per share in the third quarter of 2012.
Earnings in the third quarter of 2013 include an unfavorable impact of $0.04 per share as compared to the company's July guidance resulting from a higher-than-anticipated income tax provision required for the year-to-date period. This higher tax provision was primarily driven by a shift in the company's geographic earnings mix.
Segment Revenue
Imaging Solutions and Services (ISS) revenue of $837 million declined 5 percent compared to the same period last year. ISS revenue, excluding Inkjet Exit revenue2, grew 3 percent, compared to last year. On a year-to-year basis:
- Record Managed Print Services (MPS) revenue3 of $184 million grew 18 percent.
- Non-MPS revenue4 of $569 million declined 1 percent.
- Inkjet Exit revenue2 of $84 million declined 44 percent, represented 9 percent of total company revenue, and is expected to decline as a percentage of total revenue as the trailing inkjet supplies revenue from the remaining installed base of inkjet printers naturally decreases over time.
Perceptive Software revenue was $54 million. Perceptive Software revenue, excluding acquisition-related adjustments of $5 million, was $59 million and grew 38 percent compared to the same period in 2012.
Product Revenue
Hardware revenue of $182 million and Supplies revenue of $606 million declined 11 percent and 4 percent, respectively, compared to last year. Software and Other revenue of $102 million grew 21 percent compared to last year, or 24 percent, excluding acquisition-related adjustments.
GAAP Results
- Revenue was $890 million compared to $919 million last year.
- Gross profit margin was 38.9 percent versus 35.7 percent in 2012.
- Operating expense was $294 million compared to $316 million last year.
- Operating income margin was 5.9 percent compared to 1.3 percent in 2012.
- Net earnings were $29 million compared to 2012 net earnings of $0 million.
Non-GAAP Results
- Revenue was $896 million compared to $921 million last year.
- Record gross profit margin was 40.8 percent versus 39.9 percent in 2012.
- Operating expense was $270 million compared to $269 million last year.
- Operating income margin was 10.6 percent compared to 10.7 percent last year.
- Net earnings were $61 million compared to $65 million in 2012.
Cash Flow
In the third quarter of 2013, net cash provided by operating activities was $143 million, free cash flow5 was $98 million, capital expenditures were $45 million, and depreciation and amortization was $61 million. The company ended the quarter with $974 million in cash and marketable securities.
Maintaining Capital Allocation Discipline to Deliver Shareholder Value
Lexmark is continuing to execute on its stated capital allocation framework of returning more than 50 percent of free cash flow5 to shareholders, on average, through quarterly dividends and share repurchases while building and growing its solutions and software business through expansion and acquisitions. Lexmark has returned more than $650 million to shareholders through dividends and share repurchases since July 2011.
In the third quarter of 2013, Lexmark paid a dividend of $0.30 per share totaling $19 million and also repurchased 0.5 million of the company's shares for $21 million. The company's remaining share repurchase authorization is currently $189 million.
Two Acquisitions Strengthen Software Solutions Presence, Capabilities
With its two recent acquisitions, Lexmark increased the company's enterprise content management (ECM) presence in Europe, and further strengthened its capabilities of providing the platform, products and solutions that help its healthcare customers manage their unstructured information challenges.
- Saperion
During the third quarter, Lexmark completed the acquisition of Germany-based Saperion, a leading provider of ECM software in Europe. Saperion is focused on providing document archive and workflow solutions and now reports into Perceptive Software. Lexmark purchased Saperion for $72 million utilizing non-U.S. cash.
This acquisition expands Perceptive Software's European-based footprint in the ECM market. Saperion's ECM products feature a platform-independent, multilingual architecture, making the products highly scalable and easy to integrate with all major ERP, email and document management systems. Saperion has also developed leading cloud-based and mobile ECM solutions to provide workers easy and intuitive access to important content, even when they are away from the office.
- PACSGEAR
Earlier this month, Lexmark announced the acquisition of PACSGEAR, a leading provider of connectivity solutions for healthcare providers to capture, manage and share medical images and related documents and integrate them with existing picture archiving and communication systems and electronic medical records (EMR) systems. Lexmark paid a cash purchase price of $54 million.
With this acquisition, Perceptive Software will be uniquely positioned to offer a vendor-neutral, standards-based, clinical content platform for capturing, managing, accessing and sharing patient imaging information and related documents within healthcare facilities through an EMR and between facilities via PACSGEAR technology.
Perceptive Software a Leader in Enterprise Content Management
Perceptive Software recently announced it has been positioned by Gartner, Inc. in the Leaders Quadrant for enterprise content management (ECM) solutions, 20136. Gartner evaluated 23 vendors in its most recent iteration of the annual Magic Quadrant for ECM. Gartner's evaluation was based on completeness of vision and ability to execute.
Perceptive Software continues to deliver double-digit revenue growth reflecting the imaging and software synergies being created by Lexmark. Perceptive Software's technology platform spans content management, process management, intelligent capture and enterprise search that, both separately and together, connect the unstructured printed and digital information across the enterprise with the processes, applications, and people that need it.
Looking Forward
In the fourth quarter of 2013, revenue excluding Inkjet Exit revenue2 is expected to be flat to up 2 percent year to year. The company expects a continued negative impact from the decision to exit inkjet. Total revenue is currently expected to decline 3 to 5 percent, compared to last year. GAAP earnings per share in the fourth quarter of 2013 are expected to be around $0.57 to $0.67, compared with GAAP earnings per share of $0.10 in the fourth quarter of 2012. Non-GAAP earnings per share in the fourth quarter of 2013 are expected to be around $1.07 to $1.17, compared with non-GAAP earnings per share of $0.61 in the fourth quarter of 2012.
Conference Call Today
The company will be hosting a conference call with securities analysts today at 8:30 a.m. (EDT). A live broadcast and a complete replay of this call can be accessed from Lexmark's investor relations website at http://investor.lexmark.com. If you are unable to connect to the Internet, you can access the call via telephone at 888-693-3477 (outside the U.S. by calling 973-582-2710) using access code 68337844.
Lexmark's earnings presentation slides, including reconciliations between GAAP and non-GAAP financial measures, will be available on Lexmark's investor relations website prior to the live broadcast.
About Lexmark
Lexmark is uniquely focused on connecting unstructured printed and digital information across enterprises with the processes, applications and people that need it most. For more information, please visit www.lexmark.com.
Lexmark and Lexmark with diamond design are trademarks of Lexmark International, Inc., registered in the U.S. and/or other countries. All other trademarks are the property of their respective owners.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this release which are not historical facts are forward-looking and involve risks and uncertainties which may cause the company's actual results or performance to be materially different from the results or performance expressed or implied by the forward-looking statements. Factors that may impact such forward-looking statements include, but are not limited to, continued economic uncertainty related to volatility of the global economy; uncertainty as a result of U.S. federal government automatic budget cuts required pursuant to the sequester that took effect in March 2013; failure to successfully integrate newly acquired businesses; fluctuations in foreign currency exchange rates; decreased supplies consumption; possible changes in the size of expected restructuring costs, charges, and savings; inability to execute the company's strategy to become an end-to-end solutions provider; market acceptance of new products; inability to realize all of the anticipated benefits of the company's acquisitions; aggressive pricing from competitors and resellers; changes in the company's tax provisions or tax liabilities; the inability to develop new products and enhance existing products to meet customer needs on a cost competitive basis; reliance on international production facilities, manufacturing partners and certain key suppliers; increased investment to support product development and marketing; the financial failure or loss of business with a key customer or reseller; periodic variations affecting revenue and profitability; excessive inventory for the company's reseller channel; failure to manage inventory levels or production capacity; credit risk associated with the company's customers, channel partners, and investment portfolio; entrance into the market of additional competitors focused on imaging and software solutions, including enterprise content management, intelligent capture and business process management solutions; inability to perform under managed print services contracts; increased competition in the aftermarket supplies business; fees on the company's products or litigation costs required to protect the company's rights; inability to obtain and protect the company's intellectual property rights and defend against claims of infringement and/or anticompetitive conduct; the outcome of litigation or regulatory proceedings to which the company may be a party; unforeseen cost impacts as a result of new legislation; the inability to attract, retain and motivate key employees; changes in a country's political or economic conditions; the failure of information technology systems, including data breaches or cyber attacks; disruptions at important points of exit and entry and distribution centers; business disruptions; terrorist acts; acts of war or other political conflicts; or the outbreak of a communicable disease; and other risks described in the company's Securities and Exchange Commission filings. The company undertakes no obligation to update any forward-looking statement.
(1) |
In an effort to provide investors with additional information regarding the company's results as determined by generally accepted accounting principles (GAAP), the company has also disclosed in this press release non-GAAP earnings per share amounts and related income statement items which management believes provides useful information to investors. When used in this press release, "non-GAAP" earnings per share amounts and related income statement items exclude restructuring-related, acquisition and divestiture-related, and debt extinguishment-related adjustments. The rationale for management's use of non-GAAP measures is included in Appendix A to the financial information attached hereto. |
(2) |
Inkjet Exit revenue is defined as consumer and business inkjet hardware and supplies that the company is exiting. |
(3) |
MPS revenue is defined as ISS laser hardware, supplies and fleet management solutions sold through a managed services agreement. |
(4) |
Non-MPS revenue is defined as ISS laser hardware, laser supplies, dot matrix hardware, and dot matrix supplies not sold as a part of an MPS agreement. Non-MPS also includes parts and service related to hardware maintenance. |
(5) |
Free Cash Flow is defined as net cash flows provided by operating activities minus purchases of property, plant and equipment plus proceeds from sale of fixed assets. |
(6) |
Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings. Gartner research publications consist of the opinions of Gartner's research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose © 2013 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. For more information, email [email protected] or visit gartner.com. Used with permission. |
LEXMARK INTERNATIONAL, INC. AND SUBSIDIARIES |
||||||||
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS |
||||||||
(In Millions, Except Per Share Amounts) |
||||||||
(Unaudited) |
||||||||
Three Months Ended |
Nine Months Ended |
|||||||
September 30 |
September 30 |
|||||||
2013 |
2012 |
2013 |
2012 |
|||||
Revenue: |
||||||||
Product |
$ 782.3 |
$ 829.3 |
$ 2,353.8 |
$ 2,575.5 |
||||
Service |
108.2 |
89.9 |
307.7 |
254.7 |
||||
Total Revenue |
890.5 |
919.2 |
2,661.5 |
2,830.2 |
||||
Cost of revenue: |
||||||||
Product |
460.8 |
492.2 |
1,389.2 |
1,516.0 |
||||
Service |
78.4 |
69.8 |
233.0 |
207.3 |
||||
Restructuring and related charges |
5.1 |
28.8 |
18.4 |
36.5 |
||||
Total Cost of revenue |
544.3 |
590.8 |
1,640.6 |
1,759.8 |
||||
Gross profit |
346.2 |
328.4 |
1,020.9 |
1,070.4 |
||||
Research and development |
83.4 |
93.5 |
245.5 |
284.7 |
||||
Selling, general and administrative |
202.9 |
199.9 |
610.5 |
595.6 |
||||
Gain on sale of inkjet-related technology and assets |
- |
- |
(73.5) |
- |
||||
Restructuring and related charges |
7.6 |
22.7 |
4.8 |
28.2 |
||||
Operating expense |
293.9 |
316.1 |
787.3 |
908.5 |
||||
Operating income |
52.3 |
12.3 |
233.6 |
161.9 |
||||
Interest expense (income), net |
8.1 |
7.7 |
25.4 |
22.1 |
||||
Other expense (income), net |
0.7 |
(0.2) |
3.2 |
0.5 |
||||
Loss on extinguishment of debt |
- |
- |
3.3 |
- |
||||
Earnings before income taxes |
43.5 |
4.8 |
201.7 |
139.3 |
||||
Provision for income taxes |
15.0 |
4.8 |
49.5 |
39.3 |
||||
Net earnings |
$ 28.5 |
$ 0.0 |
$ 152.2 |
$ 100.0 |
||||
Net earnings per share: |
||||||||
Basic |
$ 0.45 |
$ 0.00 |
$ 2.41 |
$ 1.43 |
||||
Diluted |
$ 0.45 |
$ 0.00 |
$ 2.37 |
$ 1.41 |
||||
Shares used in per share calculation: |
||||||||
Basic |
62.8 |
68.1 |
63.2 |
70.0 |
||||
Diluted |
64.0 |
68.9 |
64.3 |
70.9 |
||||
Cash dividends declared per common share |
$ 0.30 |
$ 0.30 |
$ 0.90 |
$ 0.85 |
||||
LEXMARK INTERNATIONAL, INC. AND SUBSIDIARIES |
|||
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL POSITION |
|||
(In Millions) |
|||
(Unaudited) |
|||
September 30 |
December 31 |
||
2013 |
2012 |
||
ASSETS |
|||
Current assets: |
|||
Cash and cash equivalents |
$ 229.7 |
$ 212.4 |
|
Marketable securities |
743.9 |
693.4 |
|
Trade receivables, net |
488.0 |
523.6 |
|
Inventories |
295.0 |
277.3 |
|
Prepaid expenses and other current assets |
236.3 |
214.6 |
|
Total current assets |
1,992.9 |
1,921.3 |
|
Property, plant and equipment, net |
799.0 |
845.3 |
|
Marketable securities |
6.8 |
6.3 |
|
Goodwill |
431.6 |
378.7 |
|
Intangibles, net |
245.5 |
231.4 |
|
Other assets |
113.3 |
142.0 |
|
Total assets |
$ 3,589.1 |
$ 3,525.0 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||
Current liabilities: |
|||
Current portion of long-term debt |
$ - |
$ 350.0 |
|
Accounts payable |
484.1 |
512.6 |
|
Accrued liabilities |
605.7 |
582.1 |
|
Total current liabilities |
1,089.8 |
1,444.7 |
|
Long-term debt |
699.6 |
299.6 |
|
Other liabilities |
494.9 |
499.5 |
|
Total liabilities |
2,284.3 |
2,243.8 |
|
Stockholders' equity: |
|||
Common stock and capital in excess of par |
912.6 |
901.6 |
|
Retained earnings |
1,601.0 |
1,507.5 |
|
Treasury stock, net |
(906.4) |
(844.4) |
|
Accumulated other comprehensive loss |
(302.4) |
(283.5) |
|
Total stockholders' equity |
1,304.8 |
1,281.2 |
|
Total liabilities and stockholders' equity |
$ 3,589.1 |
$ 3,525.0 |
|
LEXMARK INTERNATIONAL, INC. AND SUBSIDIARIES |
|||||||||
RECONCILIATION OF GAAP TO NON-GAAP MEASURES |
|||||||||
(Unaudited) |
|||||||||
Net Earnings (In Millions) |
3Q13 |
3Q12 |
|||||||
GAAP |
$ 29 |
$ 0 |
|||||||
Restructuring-related charges & project costs |
13 |
52 |
|||||||
Acquisition and divestiture-related adjustments |
19 |
13 |
|||||||
Non-GAAP |
$ 61 |
$ 65 |
|||||||
Nine Months Ended September 30 |
|||||||||
Net Earnings (In Millions) |
2013 |
2012 |
|||||||
GAAP |
$ 152 |
$ 100 |
|||||||
Restructuring-related charges & project costs |
30 |
67 |
|||||||
Acquisition and divestiture-related adjustments |
(6) |
38 |
|||||||
Loss on extinguishment of debt |
2 |
- |
|||||||
Non-GAAP |
$ 179 |
$ 204 |
|||||||
Earnings Per Share |
3Q13 |
3Q12 |
|||||||
GAAP |
$ 0.45 |
$ 0.00 |
|||||||
Restructuring-related charges & project costs |
0.21 |
0.75 |
|||||||
Acquisition and divestiture-related adjustments |
0.29 |
0.19 |
|||||||
Non-GAAP |
$ 0.95 |
$ 0.94 |
|||||||
Nine Months Ended September 30 |
|||||||||
Earnings Per Share |
2013 |
2012 |
|||||||
GAAP |
$ 2.37 |
$ 1.41 |
|||||||
Restructuring-related charges & project costs |
0.47 |
0.94 |
|||||||
Acquisition and divestiture-related adjustments |
(0.09) |
0.53 |
|||||||
Loss on extinguishment of debt |
0.04 |
- |
|||||||
Non-GAAP |
$ 2.78 |
$ 2.88 |
|||||||
Earnings Per Share Guidance |
4Q13 |
4Q12 |
|||||||
GAAP |
$0.57 - $0.67 |
$ 0.10 |
|||||||
Restructuring-related charges & project costs |
0.19 |
0.35 |
|||||||
Acquisition and divestiture-related adjustments |
0.31 |
0.17 |
|||||||
Non-GAAP |
$1.07 - $1.17 |
$ 0.61 |
|||||||
Refer to Appendix 1 for discussion of management's use of GAAP and Non-GAAP measures. |
|||||||||
Totals may not foot due to rounding. |
|||||||||
LEXMARK INTERNATIONAL, INC. AND SUBSIDIARIES |
|||||||
RECONCILIATION OF GAAP TO NON-GAAP MEASURES |
|||||||
(Unaudited) |
|||||||
Revenue (In Millions) * |
3Q13 |
3Q12 |
|||||
GAAP |
$ 890 |
$ 919 |
|||||
Acquisition-related adjustments (1)(2) |
5 |
2 |
|||||
Non-GAAP |
$ 896 |
$ 921 |
|||||
Software and Other Revenue (In Millions) ** |
3Q13 |
3Q12 |
|||||
GAAP |
$ 102 |
$ 85 |
|||||
Acquisition-related adjustments (1)(2) |
5 |
2 |
|||||
Non-GAAP |
$ 107 |
$ 87 |
|||||
Perceptive Software Revenue (In Millions) *** |
3Q13 |
3Q12 |
|||||
GAAP |
$ 54 |
$ 41 |
|||||
Acquisition-related adjustments (1)(2) |
5 |
2 |
|||||
Non-GAAP |
$ 59 |
$ 43 |
|||||
Revenue, excluding Inkjet Exit (In Millions) **** |
3Q13 |
3Q12 |
|||||
GAAP |
$ 806 |
$ 769 |
|||||
Acquisition-related adjustments (1)(2) |
5 |
2 |
|||||
Non-GAAP |
$ 811 |
$ 771 |
|||||
Gross Profit (In Millions) |
3Q13 |
3Q12 |
|||||
GAAP |
$ 346 |
$ 328 |
|||||
Restructuring-related charges & project costs (3)(4) |
5 |
29 |
|||||
Acquisition-related adjustments (1)(2) |
14 |
11 |
|||||
Non-GAAP |
$ 365 |
$ 368 |
|||||
Gross Profit Margin (%) |
3Q13 |
3Q12 |
|||||
GAAP |
38.9% |
35.7% |
|||||
Restructuring-related charges & project costs |
0.6% |
3.1% |
|||||
Acquisition-related adjustments |
1.6% |
1.1% |
|||||
Non-GAAP |
40.8% |
39.9% |
|||||
Operating Expense (In Millions) |
3Q13 |
3Q12 |
|||||
GAAP |
$ 294 |
$ 316 |
|||||
Restructuring-related charges & project costs (3)(4) |
(13) |
(40) |
|||||
Acquisition and divestiture-related adjustments (1)(2) |
(11) |
(7) |
|||||
Non-GAAP |
$ 270 |
$ 269 |
|||||
Operating Income (In Millions) |
3Q13 |
3Q12 |
|||||
GAAP |
$ 52 |
$ 12 |
|||||
Restructuring-related charges & project costs (3)(4) |
18 |
69 |
|||||
Acquisition and divestiture-related adjustments (1)(2) |
25 |
17 |
|||||
Non-GAAP |
$ 95 |
$ 99 |
|||||
Operating Income Margin (%) |
3Q13 |
3Q12 |
|||||
GAAP |
5.9% |
1.3% |
|||||
Restructuring-related charges & project costs |
2.0% |
7.5% |
|||||
Acquisition and divestiture-related adjustments |
2.8% |
1.9% |
|||||
Non-GAAP |
10.6% |
10.7% |
|||||
Refer to Appendix 1 for discussion of management's use of GAAP and Non-GAAP measures. |
|||||||
Totals may not foot due to rounding. |
|||||||
*
|
Year-to-year Revenue growth was approximately -3% on a GAAP basis and -3% on a non-GAAP basis. Financial results in the third quarter of 2013 include those of Acuo, acquired in the fourth quarter of 2012, those of AccessVia and Twistage, acquired in the first quarter of 2013, and those of Saperion subsequent to the date of acquisition. |
||||||
**
|
Year-to-year Software and Other Revenue growth was approximately 21% on a GAAP basis and 24% on a non-GAAP basis. Financial results in the third quarter of 2013 include those of Acuo, acquired in the fourth quarter of 2012, those of AccessVia and Twistage, acquired in the first quarter of 2013, and those of Saperion subsequent to the date of acquisition. |
||||||
***
|
Year-to-year Perceptive Software Revenue growth was approximately 32% on a GAAP basis and 38% on a non-GAAP basis. Financial results in the third quarter of 2013 include those of Acuo, acquired in the fourth quarter of 2012, those of AccessVia and Twistage, acquired in the first quarter of 2013, and those of Saperion subsequent to the date of acquisition. |
||||||
****
|
Year-to-year Revenue growth, excluding Inkjet Exit, was approximately 5% on a GAAP basis and 5% on a non-GAAP basis. Financial results in the third quarter of 2013 include those of Acuo, acquired in the fourth quarter of 2012, those of AccessVia and Twistage, acquired in the first quarter of 2013, and those of Saperion subsequent to the date of acquisition. |
||||||
(1) |
Amounts for the three months ended September 30, 2013, include total acquisition and divestiture-related adjustments of $25.2 million with $5.0 million, $9.0 million, $0.2 million and $11.0 million included in Revenue, Cost of revenue, Research and development and Selling, general and administrative, respectively. Selling, general and administrative includes $9.9 million of acquisition-related expenses and $1.1 million of divestiture-related expenses. |
||||||
(2) |
Amounts for the three months ended September 30, 2012, include total acquisition-related adjustments of $17.3 million with $2.0 million, $8.5 million, $0.4 million and $6.4 million included in Revenue, Cost of revenue, Research and development and Selling, general and administrative, respectively. |
||||||
(3) |
Amounts for the three months ended September 30, 2013, include total restructuring-related charges and project costs of $17.7 million with $5.1 million and $5.0 million included in Cost of revenue and Selling, general and administrative, respectively, in addition to the $7.6 million in Restructuring and related charges (reversals). |
||||||
(4) |
Amounts for the three months ended September 30, 2012, include total restructuring-related charges and project costs of $69.1 million with $28.8 million and $17.6 million included in Cost of revenue and Selling, general and administrative, respectively, in addition to the $22.7 million in Restructuring and related charges (reversals). |
||||||
LEXMARK INTERNATIONAL, INC. AND SUBSIDIARIES |
|||||||
RECONCILIATION OF GAAP TO NON-GAAP MEASURES |
|||||||
(Unaudited) |
|||||||
Nine Months Ended September 30 |
|||||||
Revenue (In Millions) * |
2013 |
2012 |
|||||
GAAP |
$ 2,661 |
$ 2,830 |
|||||
Acquisition-related adjustments (1)(2) |
11 |
5 |
|||||
Non-GAAP |
$ 2,672 |
$ 2,835 |
|||||
Software and Other Revenue (In Millions) ** |
2013 |
2012 |
|||||
GAAP |
$ 304 |
$ 242 |
|||||
Acquisition-related adjustments (1)(2) |
11 |
5 |
|||||
Non-GAAP |
$ 315 |
$ 247 |
|||||
Perceptive Software Revenue (In Millions) *** |
2013 |
2012 |
|||||
GAAP |
$ 157 |
$ 114 |
|||||
Acquisition-related adjustments (1)(2) |
11 |
5 |
|||||
Non-GAAP |
$ 167 |
$ 119 |
|||||
Revenue, excluding Inkjet Exit (In Millions) **** |
2013 |
2012 |
|||||
GAAP |
$ 2,356 |
$ 2,337 |
|||||
Acquisition-related adjustments (1)(2) |
11 |
5 |
|||||
Non-GAAP |
$ 2,367 |
$ 2,342 |
|||||
Gross Profit (In Millions) |
2013 |
2012 |
|||||
GAAP |
$ 1,021 |
$ 1,070 |
|||||
Restructuring-related charges & project costs (3)(4) |
18 |
37 |
|||||
Acquisition-related adjustments (1)(2) |
37 |
25 |
|||||
Non-GAAP |
$ 1,076 |
$ 1,132 |
|||||
Gross Profit Margin (%) |
2013 |
2012 |
|||||
GAAP |
38.4% |
37.8% |
|||||
Restructuring-related charges & project costs |
0.7% |
1.3% |
|||||
Acquisition-related adjustments |
1.4% |
0.9% |
|||||
Non-GAAP |
40.3% |
39.9% |
|||||
Operating Expense (In Millions) |
2013 |
2012 |
|||||
GAAP |
$ 787 |
$ 909 |
|||||
Restructuring-related charges & project costs (3)(4) |
(22) |
(52) |
|||||
Acquisition and divestiture-related adjustments (1)(2) |
45 |
(25) |
|||||
Non-GAAP |
$ 811 |
$ 831 |
|||||
Operating Income (In Millions) |
2013 |
2012 |
|||||
GAAP |
$ 234 |
$ 162 |
|||||
Restructuring-related charges & project costs (3)(4) |
40 |
89 |
|||||
Acquisition and divestiture-related adjustments (1)(2) |
(8) |
50 |
|||||
Non-GAAP |
$ 266 |
$ 301 |
|||||
Operating Income Margin (%) |
2013 |
2012 |
|||||
GAAP |
8.8% |
5.7% |
|||||
Restructuring-related charges & project costs |
1.5% |
3.1% |
|||||
Acquisition and divestiture-related adjustments |
-0.3% |
1.8% |
|||||
Non-GAAP |
9.9% |
10.6% |
|||||
Refer to Appendix 1 for discussion of management's use of GAAP and Non-GAAP measures. |
|||||||
Totals may not foot due to rounding. |
|||||||
*
|
Year-to-year Revenue growth was approximately -6% on a GAAP basis and -6% on a non-GAAP basis. Financial results of 2013 include full year results of Acuo, acquired in the fourth quarter of 2012, and those of AccessVia, Twistage and Saperion subsequent to the date of acquisition. Financial results of 2012 include those of Brainware, ISYS, and Nolij subsequent to the date of acquisition. |
||||||
**
|
Year-to-year Software and Other Revenue growth was approximately 26% on a GAAP basis and 27% on a non-GAAP basis. Financial results of 2013 include full year results of Acuo, acquired in the fourth quarter of 2012, and those of AccessVia, Twistage and Saperion subsequent to the date of acquisition. Financial results of 2012 include those of Brainware, ISYS, and Nolij subsequent to the date of acquisition. |
||||||
***
|
Year-to-year Perceptive Software Revenue growth was approximately 37% on a GAAP basis and 40% on a non-GAAP basis. Financial results of 2013 include full year results of Acuo, acquired in the fourth quarter of 2012, and those of AccessVia, Twistage and Saperion subsequent to the date of acquisition. Financial results of 2012 include those of Brainware, ISYS, and Nolij subsequent to the date of acquisition. |
||||||
****
|
Year-to-year Revenue, excluding Inkjet Exit, growth was approximately 1% on a GAAP basis and 1% on a non-GAAP basis. Financial results of 2013 include full year results of Acuo, acquired in the fourth quarter of 2012, and those of AccessVia, Twistage and Saperion subsequent to the date of acquisition. Financial results of 2012 include those of Brainware, ISYS, and Nolij subsequent to the date of acquisition. |
||||||
(1) |
Amounts for the nine months ended September 30, 2013, include total acquisition and divestiture-related adjustments of $(8.1) million with $10.6 million, $26.3 million, $0.5 million, $28.0 million and $(73.5) million included in Revenue, Cost of revenue, Research and development, Selling, general and administrative and Gain on sale of inkjet-related technology and assets, respectively. Selling, general and administrative includes $24.2 million of acquisition-related expenses and $3.8 million of divestiture-related expenses. |
||||||
(2) |
Amounts for the nine months ended September 30, 2012, include total acquisition-related adjustments of $50.0 million with $4.8 million, $19.9 million, $0.7 million and $24.6 million included in Revenue, Cost of revenue, Research and development and Selling, general and administrative, respectively. |
||||||
(3) |
Amounts for the nine months ended September 30, 2013, include total restructuring-related charges and project costs of $40.1 million with $18.4 million and $16.9 million included in Cost of revenue and Selling, general and administrative, respectively, in addition to the $4.8 million in Restructuring and related charges (reversals). |
||||||
(4) |
Amounts for the nine months ended September 30, 2012, include total restructuring-related charges and project costs of $88.7 million with $36.5 million and $24.0 million included in Cost of revenue and Selling, general and administrative, respectively, in addition to the $28.2 million in Restructuring and related charges (reversals). |
||||||
Appendix 1 |
|||||
Note:
|
Management believes that presenting non-GAAP measures is useful because they enhance investors' understanding of how management assesses the performance of the Company's businesses. Management uses non-GAAP measures for budgeting purposes, measuring actual results to budgeted projections, allocating resources and in certain circumstances for employee incentive compensation. Adjustments to GAAP results in determining non-GAAP results fall into three general categories that are described below: |
||||
1) Restructuring-related charges |
|||||
2) Acquisition and divestiture-related adjustments |
|||||
a. Adjustments to Revenue |
|||||
b. Amortization of intangible assets |
|||||
c. Acquisition and integration costs |
|||||
d. Divestiture-related adjustments |
|||||
3) Loss on Early Extinguishment of Debt |
|||||
In addition to GAAP results, management presents these non-GAAP financial measures to provide investors with additional information that they can utilize in their own methods of evaluating the Company's performance. |
|||||
Management compensates for the material limitations associated with the use of non-GAAP financial measures by having specific initiatives associated with restructuring actions and acquisitions approved by management, along with their budgeted costs. Subsequently, actual costs incurred as a part of these approved restructuring plans and acquisitions are monitored and compared to budgeted costs to assure that the Company's non-GAAP financial measures only exclude pre-approved restructuring-related costs and acquisition-related adjustments. Any non-GAAP measures provided by the Company may not be comparable to similar measures of other companies as not all companies calculate these measures in the same manner. |
SOURCE Lexmark International, Inc.
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