Management Discussion & Analysis Customer  Concentration  Confidentiality of  Personal & Health  Information  Steel Pricing Risks  LifeMark Health's revenue is dependent in part on contracts from certain  governmental agencies. The loss of any such contract would have a significant adverse  effect on LifeMark Health.  The collection, use and disclosure of patient personal and health information are  subject to substantial regulation by the federal and, in most cases, provincial  governments. These laws provide that an individual's consent is required prior to the  collection, use and disclosure of information collected from them (with limited  prescribed exceptions), that the collected information be protected with reasonable  security measures and that the individual have access to the information so collected  in order to ensure its accuracy. In addition, future legislation may affect the  dissemination of health information that is not individually identifiable. Physicians  and other persons providing patient information to LifeMark Health are also required  to comply with these laws and regulations. If a client's privacy is violated or if LifeMark  Health is found to have violated any law or regulation, it could be liable for damages  or for criminal fines or penalties.  The world steel markets in which LMS operates can be extremely volatile and cyclical.  Up to approximately 60% of LMS's variable costs can be attributed to the price of  steel. A failure of LMS to anticipate and appropriately respond in a timely fashion to  steel pricing trends in the purchasing and selling of steel products may have a material  adverse effect on LMS's results. Reinforcing steel products are typically sold by means of fixed price contracts, where  the reinforcing steel is provided to the customer over a period of time which may  range from several weeks to several years. At any point in time, therefore, LMS is  contractually obligated to supply significant quantities of steel at a predetermined  price. LMS does not hold inventory in quantities to match these obligations. The  proportion of inventory to outstanding contractual obligations varies according to  management's anticipation of steel pricing trends, but in any event, a material portion  of the contractual obligations will always be exposed to future steel purchase pricing  risk. If contractual obligations have to be fulfilled by steel purchased at higher costs,  then LMS will incur lower realization on those contracts which will have an adverse  effect on LMS's results. LMS's other steel products are sold and shipped within a very short timeframe. These  sales are often supported with large inventories of raw materials. During a period of  falling prices for raw materials such as what occurred in late 2008, LMS would  normally expect price realization on shipments of LMS's finished products to  deteriorate, producing inferior returns during the period when older inventories are  being sold.  General Economic  Conditions  Affecting LMS  Market events and conditions beginning in 2008, including disruptions in the  international credit markets and other financial systems resulted in a deterioration of  global economic conditions and had a negative effect on LMS' operations. Specifically, LMS experienced a dramatic shift in its business late in its fiscal 2008 year  that included projects being cancelled and others being significantly delayed due to the  unprecedented economic conditions that formed at that time. The end result was that  LMS incurred material bad debt expenses for the first time in its operating history that  72  2011 Annual Report  Alaris Royalty Corp. Risks Relating Specifically to LMS