| Our supplies annuity provides stability. Lexmark has a very straightforward business model: We sell printers to deliver customer solutions that drive sales of our after-market supplies - primarily toner and ink cartridges. Increasing supplies sales is not only a factor of more electronic information flow, but also a function of the growing base of installed printers. From 1998 through 2002 our installed base of laser printers increased significantly from approximately 2.9 million to 4.9 million units. Over this same period, our inkjet printer installed base jumped sharply from approximately 10 million to 45 million units. This growth has driven an expansion of our supplies business from $836 million in 1998, or 28 percent of our total revenue, to $2.3 billion last year, or 54 percent of our total revenue. The resulting supplies annuity represents a stable and reliable source of funding needed to drive the research and development of products with the features, functions and cost-effectiveness that best serve our customers in the home and office. In fact, it is during times of economic instability that the power of our supplies-driven business model is most evident. |
