Lexmark 2Q Profit Declines 16 Percent

LEXINGTON, Ky. - Printer maker Lexmark International Inc. said Tuesday its second-quarter profit declined 16 percent on lower consumer segment sales and higher costs, but its results managed to top Wall Street's forecast.

Based on lower revenue, the company said that it anticipates earnings in the current quarter to fall below analysts' expectations.

Net income fell to $64.2 million, or 67 cents per share, for the second quarter, compared with $76.7 million, or 74 cents per share, in the prior year.

Excluding a benefit from restructuring activities, Lexmark earned 65 cents per share. For the prior year, it posted adjusted earnings of $1.09 per share, which excluding restructuring related charges of 35 cents per share. Both periods' earnings and adjusted earnings included a tax benefit of about 5 cents per share.

Analysts, who typically exclude one-time benefits and charges in their estimates, surveyed by Thomson Financial predicted earnings of 64 cents per share.

Selling, general and administrative costs rose to $202.4 million from $185.2 million, while research and development expenses climbed to $102.2 million from $93.2 million.

Quarterly revenue dipped 2 percent to $1.21 billion from $1.23 billion in the previous year, narrowly beating Wall Street's estimate of $1.2 billion.

Consumer segment sales declined 8 percent to $474 million, while business segment sales climbed 3 percent to $734 million.

For the third quarter, the printer maker sees quarterly net income between breakeven and 10 cents per share. Analysts expect third-quarter earnings of 15 cents per share, according to a Thomson Financial survey.

The company posted a profit of 85 cents per share in the prior-year period. Excluding restructuring-related charges of 10 cents per share, adjusted earnings for the third quarter of 2006 were 95 cents per share.

Lexmark predicts third-quarter sales falling in the low- to mid-single digit percent range.

Analysts forecast revenue of $1.2 billion.

Shares fell 71 cents, or 1.6 percent, to $44.84 in morning trading.