Lexmark 2011 Annual Report Download - page 25

Conflicts among various sales channels and the loss of 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 shelf space.
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, software, 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/software/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 inability to develop new products and enhance existing products 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.
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