3Ware 2003 Annual Report Download - page 44

We could incur substantial fines or litigation costs associated with our storage, use and disposal of
hazardous materials.
We are subject to a variety of federal, state and local governmental regulations related to the use, storage,
discharge and disposal of toxic, volatile or otherwise hazardous chemicals that were used in our manufacturing
process. Any failure to comply with present or future regulations could result in the imposition of fines, the
suspension of production or a cessation of operations. These regulations could require us to acquire costly
equipment or incur other significant expenses to comply with environmental regulations or clean up prior
discharges. Since 1993, we have been named as a PRP, along with a large number of other companies that used
Omega Chemical Corporation in Whittier, California to handle and dispose of certain hazardous waste material.
We are a member of a large group of PRPs that has agreed to fund certain on-going remediation efforts at the
Omega Chemical site. To date, our payment obligations with respect to these funding efforts have not been
material, and we believe that our future obligations to fund these efforts will not have a material adverse effect on
our business, financial condition or operating results. Although we believe that we are currently in material
compliance with applicable environmental laws and regulations, we cannot assure you that we are or will be in
material compliance with these laws or regulations or that our future obligations to fund any remediation efforts,
including those at the Omega Chemical site, will not have a material adverse effect on our business.
We have in the past and may in the future make acquisitions that will involve numerous risks. We may not
be able to address these risks successfully without substantial expense, delay or other operational or
financial problems.
The risks involved with acquisitions include:
• potential dilution to our stockholders, or use of a significant portion of our cash reserves;
• diversion of management’s attention;
• failure to retain key personnel;
• difficulty in completing an acquired company’s in-process research or development projects;
• amortization of acquired intangible assets and deferred compensation;
• customer dissatisfaction or performance problems with an acquired company’s products or services;
• the cost associated with acquisitions;
• the difficulties associated with the integration of acquired companies;
• difficulties competing in markets that are unfamiliar to us;
• ability of the acquired companies to meet their financial projections; and
• assumption of unknown liabilities, or other unanticipated events or circumstances.
Any of these risks could materially harm our business, financial condition and results of operations.
As with past purchase acquisitions, future acquisitions could adversely affect operating results. In particular,
acquisitions may materially and adversely affect our results of operations because they may require large one-
time charges or could result in increased debt or contingent liabilities, adverse tax consequences, substantial
additional depreciation or deferred compensation charges. Our past purchase acquisitions required us to
capitalize significant amounts of goodwill and purchased intangible assets. As a result of the slowdown in our
industry and reduction of our market capitalization, we have been required to record various significant
impairment charges against these assets as noted in our financial statements. At March 31, 2003, we have $88.2
million of goodwill and purchased intangible assets. There can be no assurance that we will not be required to
take additional significant charges as a result of an impairment to the carrying value of these assets, due to further
declines in market conditions.
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