Lexmark 2007 Annual Report Download - page 41

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Additionally, during 2007, the Company incurred incremental charges related to the execution of its 2007
Restructuring Plan and its 2006 actions (collectively referred to as “project costs”). Net earnings in 2007
included $21.2 million (net of a $3.5 million pre-tax gain on the sale of the Rosyth, Scotland facility) of these
pre-tax project costs. See “Restructuring-related Charges, Project Costs and Other” that follows for further
discussion. Net earnings in 2007 also included an $8.1 million pre-tax foreign exchange gain realized upon
the substantial liquidation of the Company’s Scotland entity, an $18 million tax benefit primarily related to
the settlement of a tax audit outside the U.S. and an $11 million tax benefit resulting from adjustments to
previously recorded taxes.
Net earnings for the year ended December 31, 2006, decreased 5% from the prior year primarily due to
lower operating income partially offset by a lower effective tax rate. Net earnings in 2006 included
$135.1 million of pre-tax restructuring-related charges and project costs, a $9.9 million pre-tax pension
curtailment gain and a $14.3 million income tax benefit from the reversal of previously accrued taxes
related to the finalization of certain tax audits and the expiration of various domestic and foreign statutes of
limitation. Net earnings in 2005 included increased income tax expense of $51.9 million resulting from the
repatriation of foreign dividends during 2005 and $10.4 million of one-time pre-tax termination benefit
charges related to a 2005 workforce reduction plan.
Additionally, for the years ended December 31, 2007 and 2006, the Company incurred pre-tax stock-based
compensation expense under SFAS 123R of $41.3 million and $43.2 million, respectively. The Company
recorded pre-tax compensation expense of $2.9 million in 2005 related to its stock incentive plans prior to
the adoption of SFAS 123R.
Revenue
The following tables provide a breakdown of the Company’s revenue by product category, hardware unit
shipments and market segment:
Revenue by product:
(Dollars in Millions) 2007 2006 % Change 2006 2005 % Change
Laser and inkjet printers . . . $1,498.3 $1,663.0 (10)% $1,663.0 $1,799.4 (8)%
Laser and inkjet supplies . . . 3,248.6 3,211.6 1% 3,211.6 3,117.2 3%
Other . . . . . . . . . . . . . . . . . . 227.0 233.5 (3)% 233.5 304.9 (23)%
Total revenue. . . . . . . . . . . . $4,973.9 $5,108.1 (3)% $5,108.1 $5,221.5 (2)%
Unit shipments:
(Units in Millions) 2007 2006 2005
Laser units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 2.1 2.0
Inkjet units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1 14.7 18.4
During 2007, laser and inkjet supplies revenue increased 1% YTY as good growth in laser supplies was
mostly offset by a decline in inkjet supplies. Laser and inkjet hardware revenue decreased 10% primarily
due to a decline in inkjet units.
During 2006, laser and inkjet supplies revenue increased 3% YTY as good growth in laser supplies was
partially offset by a decline in inkjet supplies. Laser and inkjet hardware revenue decreased 8% with growth
in laser hardware units more than offset by the decline in inkjet hardware units.
During 2007, 2006 and 2005, one customer, Dell, accounted for $717 million or approximately 14%,
$744 million or approximately 15% and $782 million or approximately 15%, of the Company’s total
revenue, respectively. Sales to Dell are included in both the Business and Consumer segments.
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