3Ware 2004 Annual Report Download - page 59

Several of our facilities, including our principal executive offices, are located in California. 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. 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 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.
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.
Our business strategy contemplates the acquisition of other companies, products and technologies. Merger
and acquisition activities involve numerous risks and we may not be able to address these risks
successfully without substantial expense, delay or other operational or financial problems.
Acquiring products, technologies or businesses from third parties is part of our business strategy. The risks
involved with merger and acquisition activities 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;
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