Lexmark 2011 Annual Report Download - page 27

regulatory requirements. In addition, changes in tax laws and the ability to repatriate cash
accumulated outside the U.S. in a tax efficient manner may adversely affect the Company’s
financial results, investment flexibility and operations. Moreover, margins on international sales
tend to be lower than those on domestic sales, and the Company believes that international
operations in emerging geographic markets will be less profitable than operations in the
U.S. and European markets, in part, because of the higher investment levels for marketing,
selling and distribution required to enter these markets.
• In many foreign countries, particularly those with developing economies, it is common for local
business practices to be prohibited by laws and regulations applicable to the Company, such
as 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. 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.
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 located in Mexico and
the Philippines and international manufacturing partners, many of which are located in China,
Japan, Thailand 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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