Lexmark 2007 Annual Report Download - page 23

The failure of information technology systems may negatively impact the Company’s operating results.
• The Company depends on its information technology systems for the development, manufacture,
distribution, marketing, sales and support of its products and services. Any failure in such systems,
or the systems of a partner or supplier, may adversely affect the Company’s operating results.
Furthermore, because vast quantities of the Company’s products flow through only a few
distribution centers to provide product to various geographic regions, the failure of information
technology systems or any other disruption affecting those product distribution centers could have a
material adverse impact on the Company’s ability to deliver product and on the Company’s financial
results.
Changes in the Company’s tax provisions or tax liabilities could negatively impact the Company’s
profitability.
• The Company’s effective tax rate could be adversely affected by changes in the mix of earnings in
countries with differing statutory tax rates. In addition, the amount of income tax the Company pays
is subject to ongoing audits in various jurisdictions. A material assessment by a taxing authority or a
decision to repatriate foreign cash could adversely affect the Company’s profitability.
Business disruptions could seriously harm our future revenue and financial condition and increase our
costs and expenses.
• Our worldwide operations and those of our manufacturing partners, suppliers, and freight
transporters, among others, are subject to natural and manmade disasters and other business
interruptions such as earthquakes, tsunamis, floods, hurricanes, typhoons, fires, extreme weather
conditions, environmental hazards, power shortages, water shortages and telecommunications
failures. The occurrence of any of these business disruptions could seriously harm our revenue and
financial condition and increase our costs and expenses. As the Company continues its
consolidation of certain functions into shared service centers and movement of certain functions
to lower cost countries, the probability and impact of business disruptions may be increased over
time.
Cost reduction efforts associated with the Company’s share-based payment awards and other
compensation and benefit programs could adversely affect our ability to attract, motivate and retain
employees.
• The Company has historically used stock options and other forms of share-based payment awards
as key components of the total rewards program for employee compensation in order to align
employees’ interests with the interests of stockholders, motivate employees, encourage employee
retention and provide competitive compensation and benefits packages. As a result of Statement of
Financial Accounting Standards No. 123R, the Company would incur increased compensation
costs associated with its share-based compensation programs and as a result has reviewed its
compensation strategy in light of the current regulatory and competitive environment and has
decided to change the form of its share-based awards. Due to this change in compensation strategy,
combined with other benefit plan changes undertaken to reduce costs, the Company may find it
difficult to attract, retain and motivate employees, and any such difficulty could materially adversely
affect its operating results.
Terrorist acts, acts of war or other political conflicts may negatively impact the Company’s ability to
manufacture and sell its products.
• Terrorist attacks and the potential for future terrorist attacks have created many political and
economic uncertainties, some of which may affect the Company’s future operating results. Future
terrorist attacks, the national and international responses to such attacks, and other acts of war or
hostility may affect the Company’s facilities, employees, suppliers, customers, transportation
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