3Ware 2003 Annual Report Download - page 43

• loss of credibility with our current and prospective customers.
Any such event could have a material adverse effect on our business, financial condition and results of
operations.
Our future success depends in part on the continued service of our key design engineering, sales,
marketing, manufacturing, and executive personnel and our ability to identify, hire and retain additional,
qualified personnel.
There is intense competition for qualified personnel in the semiconductor industry, in particular design,
product and test engineers, and we may not be able to continue to attract and retain engineers or other qualified
personnel necessary for the development of our business, or to replace engineers or other qualified personnel who
may leave our employment in the future. Periods of contraction in our business may inhibit our ability to attract
and retain our personnel. Loss of the services of, or failure to recruit, key design engineers or other technical and
management personnel could be significantly detrimental to our product development.
To manage operations effectively, we will be required to continue to improve our operational, financial and
management systems and to successfully hire, train, motivate, and manage our employees. The integration of
past and future potential acquisitions will require significant additional management, technical and administrative
resources. We cannot be certain that we would be able to manage our expanded operations effectively.
Our ability to supply a sufficient number of products to meet demand could be severely hampered by a
shortage of water, electricity or other supplies, or by natural disasters or other catastrophes.
The manufacture of our products requires significant amounts of water. Previous droughts have resulted in
restrictions being placed on water use by manufacturers. In the event of a future drought, reductions in water use
may be mandated generally and our external foundries’ ability to manufacture our products could be impaired.
Early in 2001, California experienced prolonged energy alerts and blackouts caused by disruption in energy
supplies. As a consequence, California continues to experience substantially increased costs of electricity and
natural gas. We are unsure whether these alerts and blackouts will reoccur or how severe they may become in the
future. Several of our facilities, including our principal executive offices, are located in California. Many of our
customers and suppliers are also headquartered or have substantial operations in California. If we, or any of our
major customers or suppliers located in California, experience a sustained disruption in energy supplies, our
results of operations could be materially and adversely affected.
Our test and assembly facilities are located in San Diego, California and our external manufacturing
operations are mainly concentrated in Taiwan. These areas are subject to natural disasters such as earthquakes or
floods. We do not have earthquake or business interruption insurance for these facilities, because adequate
coverage is not offered at economically justifiable rates. A significant natural disaster or other catastrophic event
could have a material adverse impact on our business, financial condition and operating results.
The effects of war, acts of terrorism or global threats, including, but not limited to, the outbreak of epidemic
disease, could have a material adverse effect on our business, operating results and financial condition. The
terrorist attacks in New York and Washington, D.C. on September 11, 2001 disrupted commerce throughout the
world and intensified the uncertainty of the U.S. economy and other economies around the world. The continued
threat of terrorism and heightened security and military action in response to this threat, or any future acts of
terrorism, may cause further disruptions to these economies and create further uncertainties. To the extent that
such disruptions or uncertainties result in delays or cancellations of customer orders, or the manufacture or
shipment of our products, our business, operating results and financial condition could be materially and
adversely affected.
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