Memorex 2011 Annual Report Download - page 16

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Significant litigation matters could result in large costs. We are subject to various pending or threatened legal
actions in the ordinary course of our business, especially regarding patents related to our data storage and audio and video
information products. We are generally indemnified by our suppliers; litigation, however, is always subject to many
uncertainties and outcomes that are not predictable. We cannot ascertain the ultimate aggregate amount of any monetary
liability or financial impact that may be incurred by us in litigation.
Changing laws and regulations have resulted in increased compliance costs for us, which could affect our
operating results. Changing laws, regulations and standards relating to corporate governance and public disclosure,
including the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act and newly
enacted SEC regulations have created additional compliance requirements. We are committed to maintaining high standards
of internal controls over financial reporting, corporate governance and public disclosure. As a result, we intend to continue to
invest appropriate resources as necessary to comply with evolving standards which may result in increased expenses. Laws
enacted that directly or indirectly affect our production, distribution, packaging, cost of raw materials, fuel, ingredients, and
water could impact our business and financial results.
We rely on our information systems to conduct our business, and failure to protect these systems against
security breaches could adversely affect our business and results of operations. Additionally, if these systems fail
or become unavailable for any significant period of time, our business could be harmed. The efficient operation of
our business is dependent on computer hardware and software systems. Information systems are vulnerable to security
breach by computer hackers and cyber terrorists. We rely on industry accepted security measures and technology to securely
maintain confidential and proprietary information maintained on our information systems. However, these measures and
technology may not adequately prevent security breaches. In addition, the unavailability of the information systems or failure
of these systems to perform as anticipated for any reason could disrupt our business and could result in decreased
performance and increased overhead costs, causing our business and results of operations to suffer. Any significant
interruption or failure of our information systems or any significant breach of security could adversely affect our business and
results of operations.
The market price of our common stock is volatile. The market price of our common stock has been, and may
continue to be, volatile. Factors such as the following may significantly affect the market price of our common stock:
• actual or anticipated fluctuations in our operating results;
• announcements of technological innovations by us or our competitors which may decrease the volume and
profitability of sales of our existing products and increase the risk of inventory obsolescence;
• new products introduced by us or our competitors;
• periods of severe pricing pressures due to oversupply or price erosion resulting from competitive pressures or
industry consolidation;
• developments with respect to patents or proprietary rights;
• conditions and trends in the consumer electronics and data storage industries;
• contraction in our operating results or growth rates;
• changes in financial estimates by securities analysts relating specifically to us or the industries in which we participate
in general; and
• macroeconomic conditions that affect the market generally.
In addition, general economic conditions may cause the stock market to experience extreme price and volume
fluctuations from time to time that particularly affect the stock prices of many high technology companies. These fluctuations
often appear to be unrelated to the operating performance of the companies.
If we are unable to attract and retain employees and key talent our business and financial results may be
materially impacted. We operate in a highly competitive market for employees with specialized skills, experience and
industry knowledge. No assurance can be given that we will be able to attract and retain employees and key talent.
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