Lexmark 2008 Annual Report Download - page 20

revenue or in the Company incurring additional costs to meet customer demand. The Company’s
future operating results and its ability to effectively grow or maintain its market share may be
adversely affected if it is unable to address these issues on a timely basis.
The Company’s inability to meet customer product requirements on a cost competitive basis may
negatively impact the Company’s operating results.
• The Company’s future operating results may be adversely affected if it is unable to continue to
develop, manufacture and market products that are reliable, competitive, and meet customers’
needs. The markets for laser and inkjet products and associated supplies are aggressively
competitive, especially with respect to pricing and the introduction of new technologies and
products offering improved features and functionality. In addition, the introduction of any
significant new and/or disruptive technology or business model by a competitor that
substantially changes the markets into which the Company sells its products or demand for the
products sold by the Company could severely impact sales of the Company’s products and the
Company’s operating results. The impact of competitive activities on the sales volumes or revenue
of the Company, or the Company’s inability to effectively deal with these competitive issues, could
have a material adverse effect on the Company’s ability to attract and retain OEM customers,
maintain or grow retail shelf space or maintain or grow market share. The competitive pressure to
develop technology and products and to increase the Company’s investment in research and
development and marketing expenditures also could cause significant changes in the level of the
Company’s operating expense.
Any failure by the Company to execute planned cost reduction measures timely and successfully
could result in total costs and expenses that are greater than expected or the failure to meet
operational goals as a result of such actions.
• The Company has undertaken cost reduction measures over the last few years in an effort to
optimize the Company’s expense structure. Such actions have included workforce reductions, the
consolidation of manufacturing capacity, and the centralization of support functions to regional and
global shared service centers. In particular, the Company’s manufacturing and support functions
are becoming more heavily concentrated in China and the Philippines. The Company expects to
realize cost savings in the future through these actions and may announce future actions to further
reduce its worldwide workforce and/or centralize its operations. The risks associated with these
actions include potential delays in their implementation, particularly workforce reductions;
increased costs associated with such actions; decreases in employee morale and the failure to
meet operational targets due to unplanned departures of employees, particularly key employees
and sales employees.
Decreased consumption of supplies could negatively impact the Company’s operating results.
• The Company’s future operating results may be adversely affected if the consumption of its supplies
by end users of its products is lower than expected or declines, if there are declines in pricing,
unfavorable mix and/or increased costs.
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.
14