Lexmark 2009 Annual Report Download - page 23

Any failure by the Company to successfully outsource the infrastructure support of its information
technology system and application maintenance functions and centralize certain of its support
functions may disrupt these systems or functions and could have a material adverse effect on the
Company’s systems of internal control and financial reporting.
• The Company has migrated the infrastructure support of its information technology system and
application maintenance functions to third-party service providers. The Company is in the process
of centralizing certain of its accounting and other finance functions and order-to-cash functions from
various countries to shared service centers. The Company is also in the process of reducing,
consolidating and moving various parts of its general and administrative resource, supply chain
resource and marketing and sales support structure. Many of these processes and functions are
moving to lower-cost countries, including China, India and the Philippines. Any disruption in these
systems, processes or functions could have a material adverse impact on the Company’s
operations, its financial results, its systems of internal controls and its ability to accurately
record and report transactions and financial results.
The Company’s reliance on international production facilities, international manufacturing partners and
certain key suppliers could negatively impact the Company’s operating results.
• The Company relies in large part on its international production facilities and international
manufacturing partners, many of which are located in China and the Philippines, for the
manufacture of its products and key components of its products. Future operating results may
also be adversely affected by several other factors, including, without limitation, if the Company’s
international operations or manufacturing partners are unable to perform or supply products reliably,
if there are disruptions in international trade, trade restrictions, import duties, “Buy American”
constraints, disruptions at important geographic points of exit and entry, if there are difficulties in
transitioning such manufacturing activities among the Company, its international operations and/or
its manufacturing partners, or if there arise production and supply constraints which result in
additional costs to the Company. The financial failure or loss of a sole supplier or significant supplier
of products or key components, or their inability to produce the required quantities, could result in a
material adverse impact on the Company’s operating results.
The entrance of additional competitors that are focused on printing solutions could negatively impact the
Company’s strategy and operating results.
• The entrance of additional competitors that are focused on printing solutions could further intensify
competition in the inkjet and laser printer markets and could have a material adverse impact on the
Company’s strategy and financial results.
The Company’s inability to perform satisfactorily under service contracts for managed print services may
negatively impact the Company’s strategy and operating results.
• The Company’s inability to perform satisfactorily under service contracts for managed print services
and other customer services may result in the loss of customers, loss of reputation and/or financial
consequences that may have a material adverse impact on the Company’s financial results and
strategy.
Increased competition in the Company’s aftermarket supplies business may negatively impact the
Company’s revenue and gross margins.
• Refill, remanufactured, clones, counterfeits and other compatible alternatives for some of the
Company’s cartridges are available and compete with the Company’s supplies business. The
Company expects competitive supplies activity to increase. Various legal challenges and
governmental activities may intensify competition for the Company’s aftermarket supplies business.
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