LEXINGTON, Ky. (AP)
Lexmark International Inc., a leading supplier of
printers and related materials, said Tuesday its
second-quarter profit fell due to a tax charge and the company
announced plans to lay off 275 workers through the first half
of next year.
The company's shares fell $7.67, or 11 percent, to $60.88
in afternoon trading on the New York Stock Exchange.
A spokeswoman said most of the layoffs would likely occur
at company headquarters in Lexington.
The majority of the affected employees would leave in the
current quarter. Lexmark expects the layoffs to result in
pretax charges totaling $26 million, including a charge of $13
million in the third quarter that will reduce earnings per
share by 8 cents.
On an annual basis, Lexmark expects the job cuts to make
$23 million available for reinvestment in the company's
For the quarter, Lexmark's net income fell to $79.9
million, or 64 cents per share, from $136.6 million, or $1.02
per share, a year earlier. Results for the latest quarter
reflect an expense of $53 million, or 42 cents per share, for
repatriating foreign profits under a 2004 law that allows
companies to do so at a reduced tax rate. Excluding that
expense, earnings would have risen slightly to $1.06 per
share, matching the estimate of analysts surveyed by Thomson
Revenue rose 3 percent to $1.28 billion from $1.25 billion,
driven by a 9 percent increase in sales of printer supplies.
In the third quarter, the company expects revenue to grow
in the low single digits compared to a year ago, and earnings
per share to be 95 cents to $1.05, excluding the charge for
the work force reduction. Lexmark said its outlook is cautious
``due to uncertain market conditions and the potential for
aggressive price competition.''
Analysts are expecting the company to earn $1.05 per share
for the quarter. Third quarter 2004 earnings per share were
$1.17, or $1.02 excluding a tax benefit.
About 3,550 of Lexmark's 13,400 employees work in
Lexington, spokeswoman Julane Hamon said Tuesday.
Hamon said the company plans to offer some workers the
chance to leave their job voluntarily in exchange for some
early retirement benefits, severance pay, an extension of
medical insurance and career assistance benefits. She said the
total layoffs will depend on how many workers sign up for the
company's ``voluntary separation'' program.
``Given the size of the site, the majority of the
reductions are expected to occur in Lexington although we
won't know the final impact until the program is completed,''
Hamon said the company has hired about 200 people this year
in Lexington, mostly in research and development positions.
``This adjustment is unfortunate but a necessary part of
aligning resources to meet market needs,'' she said. ``We have
continued to make significant investments in (research and
development) and advertising and we believe we will be a
stronger company as a result.''