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Investor Contact: John Morgan
Media Contact: Tim Fitzpatrick

Lexmark International, Inc. (NYSE: LXK) sees good long-term growth opportunities despite currently challenging business conditions, Chairman and Chief Executive Officer Paul J. Curlander told analysts and investors during the company’s annual Analyst Day program today.

"The distributed output market is growing and presents a number of attractive growth opportunities," Curlander said. "Lexmark has unique strengths in this market, and we continue to strengthen our competitive position, through our strategic investments, in order to pursue these growth opportunities."

Curlander said that market trends driving long-term growth in distributed printing include:

• Continuing improvement in price/performance points;
• Continued convergence in technology between printers, scanners, copiers and fax machines into single, integrated all-in-one devices;
• Advancements in digital photography driving the opportunity to print digital images on distributed output devices;
• Increased adoption of color output in business; and
• Advancements in electronic movement of information, driving more pages to be printed by end users when and where it is convenient to do so.

As a result of these market trends, Lexmark has growth opportunities in low-end monochrome laser printers, color lasers, laser all-in-ones, photo all-in-ones, and business inkjet four-in-ones.

Curlander explained that Lexmark’s strategy to take advantage of its growth opportunities is three fold: expand its product segments, expand penetration in market segments, and further develop brand awareness and brand positioning.

"This strategy requires investment," Curlander said, noting that the company has maintained its increased spending in research and development and branding despite challenging business conditions this year.

"We’re seeing the results of this increased R&D in new product announcements into our targeted growth segments," Curlander explained, including today’s announcement of the new Lexmark X8350 Office All-in-One Plus Photo for small office/home office users (SOHO).

Curlander acknowledged that financial results year to date have been negatively impacted by a difficult hardware environment, a shortfall in the expected growth rate of supplies and by the company’s increased investment in R&D and branding.

He said the company has more work to do to complete its short-term plans to address challenging business conditions, but noted that the company has a strong financial position with a strong balance sheet and good cash flow. 

Curlander said that Lexmark’s unique strengths include the fact that Lexmark is the only major player in the industry which is exclusively focused on distributed output; the company’s vertical integration in technology, which it believes is a strong competitive advantage and historically has allowed the company to drive cost and price performance; and the fact that the company is very close to customers as a result of its large account industry teams and retail-centric consumer teams, which drive customer responsiveness and flexibility.

In addition to Curlander, other presenters at today’s Analyst Day conference included Paul A. Rooke, Lexmark executive vice president and president of its Printing Solutions and Services Division; Najib Bahous, Lexmark vice president and president of its Consumer Printer Division; and, John W. Gamble Jr., Lexmark executive vice president and chief financial officer.

The presentations by Curlander, Rooke, Bahous and Gamble, as well as a Q&A session, are available via replay at http://investor.lexmark.com.

About Lexmark
Lexmark International, Inc. (NYSE: LXK) makes it easier for businesses and consumers to move information between the digital and paper worlds. Since its inception in 1991, Lexmark has become a leading developer, manufacturer and supplier of printing and imaging solutions for customers in more than 150 countries. Lexmark reported $5.3 billion in revenue in 2004, and can be found on the Internet at www.lexmark.com.