Lexmark 2013 Annual Report Download - page 24

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The Company’s inability to perform satisfactorily under service contracts for managed print services or software services may
negatively impact the Company’s strategy and operating results.
The Company’s inability to perform satisfactorily under service contracts for managed print services and other customer
services may result in the loss of customers, loss of reputation and/or financial consequences that may have a material
adverse impact on the Company’s financial results and strategy.
Increased competition in the Company’s aftermarket supplies business may negatively impact the Company’s revenue and gross
margins.
Refill, remanufactured, clones, counterfeits and other compatible alternatives for some of the Company’s cartridges are
available and compete with the Company’s supplies business. The Company expects competitive supplies activity to
increase. Various legal challenges and governmental activities may intensify competition for the Company’s aftermarket
supplies business.
New legislation, fees on the Company’s products or litigation costs required to protect the Company’s rights may negatively impact
the Company’s cost structure, access to components and operating results.
Certain countries (primarily in Europe) and/or collecting societies representing copyright owners’ interests have commenced
proceedings to impose fees on devices (such as scanners, printers and multifunction devices) alleging the copyright owners
are entitled to compensation because these devices enable reproducing copyrighted content. Other countries are also
considering imposing fees on certain devices. The amount of fees, if imposed, would depend on the number of products sold
and the amounts of the fee on each product, which will vary by product and by country. The financial impact on the
Company, which will depend in large part upon the outcome of local legislative processes, the Company’s and other industry
participants’ outcome in contesting the fees and the Company’s ability to mitigate that impact by increasing prices, which
ability will depend upon competitive market conditions, remains uncertain. The outcome of the copyright fee issue could
adversely affect the Company’s operating results and business.
The Company’s inability to obtain and protect its intellectual property and defend against claims of infringement by others may
negatively impact the Company’s operating results.
The Company’s success depends in part on its ability to develop technology and obtain patents, copyrights and trademarks,
and maintain trade secret protection, to protect its intellectual property against theft, infringement or other misuse by others.
The Company must also conduct its operations without infringing the proprietary rights of others. Current or future claims of
intellectual property infringement could prevent the Company from obtaining technology of others and could otherwise
materially and adversely affect its operating results or business, as could expenses incurred by the Company in obtaining
intellectual property rights, enforcing its intellectual property rights against others or defending against claims that the
Company’s products infringe the intellectual property rights of others, that the Company engages in false or deceptive
practices or that its conduct is anti-competitive.
The inability to attract, retain and motivate key employees could adversely affect the Company’s operating results.
In order to compete, the Company must attract, retain, and motivate executives and other key employees, and its failure to do
so could harm the Company’s results of operations. Hiring and retaining qualified executives, engineers, technical staff,
sales, marketing and IT support positions are critical to the Company’s business, and competition for experienced employees
in our industry can be intense. To help attract, retain, and motivate qualified employees, the Company must offer a
competitive compensation package, including cash, cash-based incentive awards and share-based incentive awards, such as
restricted stock units. Because the cash-based and share-based incentive awards are dependent upon the performance
conditions relating to the Company’s performance and the performance of the price of the Company’s common stock, the
future value of such awards are uncertain. If the anticipated value of such incentive awards does not materialize, or if the
total compensation package ceases to be viewed as competitive, the Company’s ability to attract, retain, and motivate
employees could be weakened, which could harm the Company’s results of operations.
Terrorist acts, acts of war or other political conflicts may negatively impact the Company’s ability to manufacture and sell its
products.
Terrorist attacks and the potential for future terrorist attacks have created many political and economic uncertainties, some of
which may affect the Company’s future operating results. Future terrorist attacks, the national and international responses to
such attacks, and other acts of war or hostility may affect the Company’s facilities, employees, suppliers, customers,
transportation networks and supply chains, or may affect the Company in ways that are not capable of being predicted
presently.
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