DELPHI 2015 Annual Report Download - page 44

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are also susceptible to security breaches that may go undetected. Although we have taken precautions to mitigate such events,
including geographically diverse data centers, redundant infrastructure and the implementation of security measures, a
significant or large-scale interruption of our information technology could adversely affect our ability to manage and keep our
operations running efficiently and effectively. An incident that results in a wider or sustained disruption to our business could
have a material adverse effect on our business, financial condition and results of operations.
Risks Related to Legal, Regulatory, Tax and Accounting Matters
We may incur material losses and costs as a result of warranty claims, product recalls, product liability and intellectual
property infringement actions that may be brought against us.
We face an inherent business risk of exposure to warranty claims and product liability in the event that our products fail
to perform as expected and, in the case of product liability, such failure of our products results in bodily injury and/or property
damage. The fabrication of the products we manufacture is a complex and precise process. Our customers specify quality,
performance and reliability standards. If flaws in either the design or manufacture of our products were to occur, we could
experience a rate of failure in our products that could result in significant delays in shipment and product re-work or
replacement costs. Although we engage in extensive product quality programs and processes, these may not be sufficient to
avoid product failures, which could cause us to:
• lose net revenue;
• incur increased costs such as warranty expense and costs associated with customer support;
• experience delays, cancellations or rescheduling of orders for our products;
• experience increased product returns or discounts; or
• damage our reputation,
all of which could negatively affect our financial condition and results of operations.
If any of our products are or are alleged to be defective, we may be required to participate in a recall involving such
products. Each vehicle manufacturer has its own practices regarding product recalls and other product liability actions relating
to its suppliers. However, as suppliers become more integrally involved in the vehicle design process and assume more of the
vehicle assembly functions, OEMs continue to look to their suppliers for contribution when faced with recalls and product
liability claims. A recall claim brought against us, or a product liability claim brought against us in excess of our available
insurance, may have a material adverse effect on our business. OEMs also require their suppliers to guarantee or warrant their
products and bear the costs of repair and replacement of such products under new vehicle warranties. Depending on the terms
under which we supply products to a vehicle manufacturer, a vehicle manufacturer may attempt to hold us responsible for some
or all of the repair or replacement costs of defective products under new vehicle warranties when the OEM asserts that the
product supplied did not perform as warranted. Although we cannot assure that the future costs of warranty claims by our
customers will not be material, we believe our established reserves are adequate to cover potential warranty settlements. Our
warranty reserves are based on our best estimates of amounts necessary to settle future and existing claims. We regularly
evaluate the level of these reserves and adjust them when appropriate. However, the final amounts determined to be due related
to these matters could differ materially from our recorded estimates.
In addition, as we adopt new technology, we face an inherent risk of exposure to the claims of others that we have
allegedly violated their intellectual property rights. We cannot assure that we will not experience any material warranty, product
liability or intellectual property claim losses in the future or that we will not incur significant costs to defend such claims.
We may be adversely affected by laws or regulations, including environmental regulation, litigation or other liabilities.
We are subject to various U.S. federal, state and local, and non-U.S., laws and regulations, including those related to
environmental, health and safety, financial and other matters.
We cannot predict the substance or impact of pending or future legislation or regulations, or the application thereof. The
introduction of new laws or regulations or changes in existing laws or regulations, or the interpretations thereof, could increase
the costs of doing business for us or our customers or suppliers or restrict our actions and adversely affect our financial
condition, operating results and cash flows.
We are subject to regulation governing, among other things:
• the generation, storage, handling, use, transportation, presence of, or exposure to hazardous materials;
• the emission and discharge of hazardous materials into the ground, air or water;
• the incorporation of certain chemical substances into our products, including electronic equipment; and
• the health and safety of our employees.