Lexmark 2011 Annual Report Download - page 26

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 of printing behavior driven by adoption of electronic processes and/or use of mobile
devices such as tablets and smart phones by businesses could result in a reduction in printing,
which could adversely impact consumption of supplies.
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 cost and expense structure. Such actions have included workforce
reductions, the consolidation of facilities, operations functions and 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.
Changes in the Company’s tax provisions or tax liabilities could negatively impact the Company’s
profitability.
• The Company’s future income taxes could be adversely affected by earnings being lower than
anticipated in jurisdictions where the Company has lower statutory tax rates and higher than
anticipated in jurisdictions where the Company has higher statutory tax rates, by changes in
the valuation of the Company’s deferred tax assets and liabilities, as a result of gains on the
management of the Company’s foreign exchange risks, or changes in tax laws, regulations,
and accounting principles. The Company is subject to regular review and audit by both
domestic and foreign tax authorities. Any adverse outcome of such a review or audit could
have a negative effect on the Company’s operating results and financial condition.
• In addition, the determination of the Company’s worldwide provision for income taxes and other
tax liabilities requires significant judgment, and there are many transactions and calculations
where the ultimate tax determination is uncertain. Although the Company, and its legal and
financial advisors, believe the Company’s estimates are reasonable, the ultimate tax outcome
may differ from the amounts recorded in the Company’s financial statements and may
materially affect the Company’s financial results in the period or periods for which such
determination is made. A material assessment by a taxing authority or a decision to repatriate
foreign cash could adversely affect the Company’s profitability.
Due to the international nature of our business, changes in a country’s or region’s political or economic
conditions or other factors could negatively impact the Company’s revenue, financial condition or
operating results.
• Revenue derived from international sales make up more than half of the Company’s revenue.
Accordingly, the Company’s future results could be adversely affected by a variety of factors,
including changes in a specific country’s or region’s political or economic conditions, foreign
currency exchange rate fluctuations, trade protection measures and unexpected changes in
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