DELPHI 2011 Annual Report Download - page 27

Table of Contents
agreements are subject to extension in the case of an earnings release or material news or a material event relating to us. Goldman, Sachs & Co. and J.P.
Morgan Securities LLC may, in their sole discretion and without notice, release all or any portion of the ordinary shares subject to lock-up agreements. As
restrictions on resale end, the market price of our ordinary shares could drop significantly if the holders of these shares sell them or are perceived by the
market as intending to sell them. We are required to file a shelf registration statement prior to expiration of the lock-up period on May 15, 2012 to permit the
resale of such remaining shares. Any such shares not registered for resale will be freely tradable (subject to volume and manner of sale requirements) on
May 22, 2012. The increase or decrease to the number of freely tradable shares in the public market could cause the market price of our ordinary shares to
fluctuate, and could also make it more difficult for us to raise additional funds through future offerings of our ordinary shares or other securities.
Risks Related to Legal, Regulatory, Tax and Accounting Matters
We may incur material losses and costs as a result of warranty claims and 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.
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