Please note that Paul and John will be referring to specific earnings presentation slides that are posted to our Investor Relations website located at investor.lexmark.com earlier this morning. Following the conclusion of this conference call, a complete replay will be made available on our Investor Relations website.Also, on this site, you'll find details regarding our upcoming IR events, including our participation in Barclays Capital Global Technology Conference on December 8 in San Francisco. As a reminder, any of today's remarks that are not statements of historical fact are forward-looking statements that involve certain risks and uncertainties that are disclosed in the Safe Harbor section of our earnings releases and SEC filings. Actual results may differ materially from such statements, and Lexmark undertakes no obligation to update any forward-looking statements. With that, I'll turn it over to Paul. Paul A. Rooke Thank you, John, and good morning to everyone. As John said, we'll be using a presentation slide deck as we did last time. We'll refer to the slide numbers as we go to keep everyone on the same page. So let's begin. Starting with Slide 3, our third quarter financial results reflected good operational performance. We saw better-than-expected revenue growth in Imaging Solutions and Services or ISS, and 15% year-to-year growth in Perceptive Software. Gross profit margin was strong and up year-to-year. Operating margin was driven by solid improvement in ISS's margin, offset by increased investment to accelerate the product roadmap and expand globally in Perceptive Software and other cost and expense. This, along with an unfavorable impact from discreet tax items of $0.06 per share, resulted in earnings per share at the low end of what we expected. Secondly, we continued year-to-year revenue growth in our strategic focus areas. With ISS's core imaging business growing 10%, driven by double-digit revenue growth in high-end hardware at 17%, core supplies at 12%, and managed print services in excess of 25%. Perceptive Software grew 15%. This overall growth, however, was dampened by the continued, but expected year-to-year revenue decline in our legacy consumer business.
We also resumed our share repurchase program in the third quarter, we repurchased $125 million of shares in the third quarter, and we anticipate repurchasing an additional $125 million in the fourth quarter. Finally, we continue to execute our strategy focused on the higher growth and higher page-generating segments of the imaging market and the higher growth enterprise content management software market. In the third quarter, we continued to strengthen our business process in fleet management solutions in support of this. Last week, we announced the acquisition of Pallas Athena, a Netherlands-based business process management software company that builds upon our world-class fleet management capabilities and strengthens our business process solutions capability even further. I will cover this more later.We also announced the new enterprise class, cloud-based Print Release solution enables comprehensive mobile printing across network attach fleets. And finally, we announced 2 additional vertical solutions for healthcare and education to help customers capture, manage and access content more efficiently. Now looking at our third quarter 2011 results, our GAAP revenue was $1.03 billion, up 1% year-to-year. GAAP earnings per share for the second quarter were $0.86, down 4% year-to-year. On Slide 4, using the non-GAAP numbers, you can see the key third quarter takeaways. Revenue for the third quarter 2011 was $1.035 billion, up 1% year-to-year, much better than expected. Underneath this, on a year-to-year basis, we saw a solid revenue growth in our strategic focus areas, ISS's core imaging business was up 10%, driven by double-digit growth and high-end hardware and core supplies, managed print services, again grew over 25%. Perceptive Software grew 15%, an encouraging sign. However, Lexmark's overall revenue growth was dampened by the continuing revenue decline from our legacy consumer business. Now our operating margin of 10.4% was less than expected down 0.5 percentage point year-to-year. Gross profit margin was up year-to-year with good operational performance and continued improvement in our nonmanufacturing cost.
Operating margin was driven by solid improvement in ISS's margin offset by increased investment to accelerate the product roadmap and expand globally in Perceptive Software and other cost and expense that John will describe later.This, along with an unfavorable impact from discrete tax items of $0.06 per share, resulted in non-GAAP earnings per share of $0.95 at the low end of what we expected. Now on Slide 5, we've shown our total unit laser shipments from 2007 to an estimate for 2011. As you can see, our overall laser hardware shipments into the install base over the last 5 years have been up and down on a unit basis. At the same time, we saw record laser supplies revenues for 2010 and for the first 9 months of 2011, and we're projecting for the full year 2011. Although we have seen uneven laser unit shipment performance into the installed base over the last several years, our statistical model indicates that the record laser supplies growth is attributable to the quality, not the quantity of the installed base since not all units are created equal. In other words, we're seeing increased average supplies consumption per installed unit of our base. Remember, supplies revenue as a function of the installed base size and the supplies revenue generated per unit of installed base, while one may debate whether our laser installed base has grown based on the variation in the shipments into the installed base over the past few years, our model indicates that the key driver of the core laser supplies growth we're seeing is an increase in supplies revenue generated per installed base unit. Read the rest of this transcript for free on seekingalpha.com