Lexmark 2008 Annual Report Download - page 19

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The Company’s ability to be successful in shifting its strategy and selling its products into the higher-
usage segments of the inkjet market could adversely affect future operating results.
• The Company’s future operating results may be adversely affected if it is unable to successfully
develop, manufacture, market and sell products into the geographic and customer and product
segments of the inkjet market that support higher usage of supplies.
Conflicts among various sales channels and the loss of retail shelf space may negatively impact the
Company’s operating results.
• The Company markets and sells its products through several sales channels. The Company has
also advanced a strategy of forming alliances and OEM arrangements with many companies. The
Company’s future operating results may be adversely affected by any conflicts that might arise
between or among its various sales channels, the volume reduction in or loss of any alliance or OEM
arrangement or the loss of retail shelf space. Aggressive pricing on laser and inkjet products and/or
associated supplies from customers and resellers, including, without limitation, OEM customers,
could result in a material adverse impact on the Company’s strategy and financial results.
The revenue and profitability of our operations have historically varied, which makes our future
financial results less predictable.
• Our revenue, gross margin and profit vary among our hardware, supplies and services, product
groups and geographic markets and therefore will likely be different in future periods than our
current results. Overall gross margins and profitability in any given period is dependent upon the
hardware/supplies mix, the mix of hardware products sold, and the geographic mix reflected in that
period’s revenue. Overall market trends, seasonal market trends, competitive pressures, pricing,
commoditization of products, increased component or shipping costs and other factors may result in
reductions in revenue or pressure on gross margins in a given period.
The Company may experience difficulties in product transitions negatively impacting the Company’s
performance and operating results.
• The introduction of products by the Company or its competitors, or delays in customer purchases of
existing products in anticipation of new product introductions by the Company or its competitors and
market acceptance of new products and pricing programs, any disruption in the supply of new or
existing products as well as the costs of any product recall or increased warranty, repair or
replacement costs due to quality issues, the reaction of competitors to any such new products
or programs, the life cycles of the Company’s products, as well as delays in product development
and manufacturing, and variations in cost, including but not limited to component parts, raw
materials, commodities, energy, products, labor rates, distributors, fuel and variations in supplier
terms and conditions, may impact sales, may cause a buildup in the Company’s inventories, make
the transition from current products to new products difficult and could adversely affect the
Company’s future operating results.
The Company’s failure to manage inventory levels or production capacity may negatively impact the
Company’s operating results.
• The Company’s performance depends in part upon its ability to successfully forecast the timing and
extent of customer demand and reseller demand to manage worldwide distribution and inventory
levels of the Company. Unexpected fluctuations in reseller inventory levels could disrupt ordering
patterns and may adversely affect the Company’s financial results. In addition, the financial failure or
loss of a key customer, reseller or supplier could have a material adverse impact on the Company’s
financial results. The Company must also be able to address production and supply constraints,
including product disruptions caused by quality issues, and delays or disruptions in the supply of key
components necessary for production. Such delays, disruptions or shortages may result in lost
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