Lexmark 2013 Annual Report Download - page 19

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Item 1A. Risk Factors
The following significant factors, as well as others of which we are unaware or deem to be immaterial at this time, could materially
adversely affect our business, financial condition or operating results in the future. Therefore, the following information should be
considered carefully together with other information contained in this report. Past financial performance may not be a reliable
indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods.
Continued economic weakness and uncertainty and foreign currency exchange rate fluctuations, could adversely impact the
Company’s revenue, operating income and other financial results.
 The Company’s revenue is largely dependent on global economic conditions and the demand for its imaging products and
associated supplies, solutions and services and capture, manage and access software solutions and services in the markets in
which the Company competes. Continued global economic weakness and uncertainty could adversely affect the Company’s
results in future periods. During times of economic uncertainty, demand for the Company’s products may decrease and may
result in decreased revenue, operating income and other financial results.
 Foreign currency exchange rate fluctuations, particularly the Euro, the Canadian dollar, the South African Rand, the British
Pound, the Mexican peso, the Brazilian real, the Philippine peso, the Australian dollar and the Argentine peso may adversely
impact economic activity and the Company’s operating results.
 Restrictions on credit globally and credit risk associated with the Company’s customers, channel partners and the Company’s
investment portfolio may also be adversely impacted by continued global economic weakness and uncertainty.
 The interest rate environment and general economic conditions could also impact the investment income the Company is able
to earn on its investment portfolio.
 Continued softness in certain markets and industries, constrained IT spending, and uncertainty about global economic
conditions could result in lower demand for the Company’s products, including supplies. Weakness in demand has resulted in
intense price competition and may result in excessive inventory for the Company and/or its reseller channel, which may
adversely affect sales, pricing, risk of obsolescence and/or other elements of the Company’s operating results. Ongoing
weakness in demand for the Company’s hardware products may also cause erosion of the installed base of products over
time, thereby reducing the opportunities for supplies sales in the future.
If the Company cannot successfully execute on its strategy to become an end-to-end solutions provider, the Company’s revenue and
gross margin may suffer.
 Since the Company’s acquisition of Perceptive Software in June 2010, the Company’s strategy has been based on becoming
an end-to-end solutions provider of imaging and content, process and output management solutions, enabling businesses to
capture, manage and access critical unstructured information in the context of their business process. In executing that
strategy, the Company has made significant investments in complementary software companies to enhance the Company’s
solutions capabilities. The Company needs to continue integrating these new technologies into its solutions offerings and
continue to focus the Company on delivering integrated imaging and content, process and output management solutions to
businesses. Any failure to execute this strategy could adversely affect the Company’s revenue and gross margin.
Continued reductions in government spending could adversely impact the Company’s revenue, operating income and other financial
results.
 A significant portion of the Company’s revenue is derived from contracts with the U.S federal, state and local governments
and their agencies, as well as international governments and their agencies. Any reductions in U.S. or foreign government
spending could significantly reduce demand for the Company’s hardware products, services and solutions. For example, the
reduction in U.S. federal government spending that took effect in March 2013 resulted in deferred purchases of the
Company’s hardware products and services during 2013. To a lesser extent, the Company also experienced reduced foreign
government spending. Continued reductions in spending by U.S. or foreign governments could have a material adverse
effect on the Company’s revenue, operating income and financial condition.
Decreased consumption of supplies could negatively impact the Company’s operating results.
 A significant portion of the Company’s revenue is derived from the sale of supplies. The Company’s future operating results
may be adversely affected if the consumption of its supplies, including consumption of supplies by the Company’s legacy
inkjet installed base, by end users of its products is lower than expected or declines, if there are declines in pricing,
unfavorable mix and/or increased costs.
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