Lexmark 2009 Annual Report Download - page 19

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Lexmark is committed to maintaining compliance with all environmental laws applicable to its operations,
products and services.
Lexmark is also required to have permits from a number of governmental agencies in order to conduct
various aspects of its business. Compliance with these laws and regulations has not had, and in the future
is not expected to have, a material effect on the capital expenditures, earnings or competitive position of
the Company. There can be no assurance, however, that future changes in environmental laws or
regulations, or in the criteria required to obtain or maintain necessary permits, will not have an
adverse effect on the Company’s operations.
Lexmark is subject to legislation in an increasing number of jurisdictions that makes producers of electrical
goods, including printers, financially responsible for specified collection, recycling, treatment and disposal
of past and future covered products (sometimes referred to as “product take-back legislation”). There is no
assurance that such existing or future laws will not have a material adverse effect on Lexmark’s operations
or financial condition, although Lexmark does not anticipate that effects of product take-back legislation will
be different or more severe for Lexmark than the impacts on others in the electronics industry.
Item 1A. Risk Factors
The following significant factors, as well as others of which we are unaware or deem to be immaterial at this
time, could materially adversely affect our business, financial condition or operating results in the future.
Therefore, the following information should be considered carefully together with other information
contained in this report. Past financial performance may not be a reliable indicator of future
performance, and historical trends should not be used to anticipate results or trends in future periods.
Continuation of economic weakness, foreign currency exchange rate fluctuations, and uncertainty of
recovery could adversely impact the Company’s revenue, operating income and other financial results.
• The United States and other countries around the world experienced one of the worst recessions in
recent history in 2009, and the timing and scope of the economic recovery remains uncertain.
Although the Company has begun to see improvements in the economy, if the economic conditions
do not continue to improve, it could adversely affect the Company’s results in future periods. During
an economic downturn, demand for the Company’s products may decrease. Restrictions on credit
globally and foreign currency exchange rate fluctuations in certain countries may impact economic
activity and the Company’s results. Credit risk associated with the Company’s customers, channel
partners and the Company’s investment portfolio may also be adversely impacted. The interest rate
environment and general economic conditions could also impact the investment income the
Company is able to earn on its investment portfolio.
• Continued softness in certain markets and industries, constrained IT spending, and uncertainty
about global economic conditions could result in lower demand for the Company’s products,
including supplies. Weakness in demand has resulted in intense price competition and may
result in excessive inventory for the Company and/or its reseller channel, which may adversely
affect sales, pricing, risk of obsolescence and/or other elements of the Company’s operating results.
Ongoing weakness in demand for the Company’s hardware products may also cause erosion of the
installed base of products over time, thereby reducing the opportunities for supplies sales in the
future.
The competitive pricing pressure in the market may negatively impact the Company’s operating results.
• The Company and its major competitors, many of which have significantly greater financial,
marketing and/or technological resources than the Company, have regularly lowered prices on
their products and are expected to continue to do so. In particular, both the inkjet and laser printer
markets have experienced and are expected to continue to experience significant price pressure.
Price reductions on inkjet or laser products or the inability to reduce costs, including warranty costs,
to contain expenses or to increase or maintain sales as currently expected, as well as price
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