Crucial 2013 Annual Report Download - page 24

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23
Breaches of our network security could expose us to losses.
We manage and store on our network systems, various proprietary information and sensitive or confidential data relating to
our operations. We also process, store, and transmit large amounts of data for our customers, including sensitive personal
information. Computer programmers and hackers may be able to gain unauthorized access to our network system and steal
proprietary information, compromise confidential information, create system disruptions, or cause shutdowns. These parties
may also be able to develop and deploy viruses, worms, and other malicious software programs that disrupt our operations and
create security vulnerabilities. Attacks on our network systems could result in significant losses and damage our reputation
with customers.
We are subject to counterparty default risks.
We have numerous arrangements with financial institutions that subject us to counterparty default risks, including cash
deposits, investments, foreign currency option and forward contracts, and capped-call contracts on our stock. As a result, we
are subject to the risk that the counterparty to one or more of these arrangements will default on its performance obligations. A
counterparty may not comply with their contractual commitments which could then lead to their defaulting on their obligations
with little or no notice to us, which could limit our ability to take action to mitigate our exposure. Additionally, our ability to
mitigate our exposures may be constrained by the terms of our contractual arrangements or because market conditions prevent
us from taking effective action. If one of our counterparties becomes insolvent or files for bankruptcy, our ability to recover
any losses suffered as a result of that counterparty's default may be limited by the liquidity of the counterparty or the applicable
laws governing the bankruptcy proceeding. In the event of such default, we could incur significant losses, which could
adversely impact our business, results of operations or financial condition.
Compliance with new regulations regarding the use of conflict minerals could limit the supply and increase the cost of
certain metals used in manufacturing our products.
Increased focus on environmental protection and social responsibility initiatives led to the passage of Section 1502 of the
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act"), and its implementing SEC
regulations. The Dodd-Frank Act imposes new supply chain diligence and disclosure requirements for certain manufacturers of
products containing specific minerals that may originate in or near the Democratic Republic of the Congo (the "DRC") and
finance or benefit local armed groups. These "conflict minerals" are commonly found in materials used in the manufacture of
semiconductors. The implementation of these new regulations may limit the sourcing and availability of some of these
materials. This in turn may affect our ability to obtain materials necessary for the manufacture of our products in sufficient
quantities and may affect related material pricing. Some of our customers may elect to disqualify us as a supplier if we are
unable to verify that our products are DRC conflict free.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.