Lexmark 2010 Annual Report Download - page 25

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employment laws, fair trade laws or the Foreign Corrupt Practices Act. Although the Company
implements policies and procedures designed to ensure compliance with these laws, our
employees, contractors and agents, as well as those business partners to which we outsource
certain of our business operations, may take actions in violation of our policies. Any such violation,
even if prohibited by our policies, could have a material adverse effect on our business and our
reputation. Because of the challenges in managing a geographically dispersed workforce, there
also may be additional opportunities for employees to commit fraud or personally engage in
practices which violate the policies and procedures of the Company.
The failure of the Company’s information technology systems, or its failure to successfully implement new
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. The
Company also may not be successful in implementing new systems or transitioning data, including a
current project to implement a new enterprise-wide system. 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.
Any failure by the Company to successfully centralize certain of its support functions may disrupt these
functions and could have a material adverse effect on the Company’s systems of internal control and
financial reporting.
• The Company is continuing 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 continuing 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, Hungary, 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.
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