DELPHI 2013 Annual Report Download - page 43

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• 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.
In addition, as we adopt new technology, we face an inherent risk of exposure to the claims of others that we have
allegedly violated their intellectual property rights. We cannot assure that we will not experience any material warranty, product
liability or intellectual property claim losses in the future or that we will not incur significant costs to defend such claims.
We may be adversely affected by laws or regulations, including environmental regulation, litigation or other liabilities.
We are subject to various U.S. federal, state and local, and non-U.S., laws and regulations, including those related to
environmental, health and safety, financial and other matters.
We cannot predict the substance or impact of pending or future legislation or regulations, or the application thereof. The
introduction of new laws or regulations or changes in existing laws or regulations, or the interpretations thereof, could increase
the costs of doing business for us or our customers or suppliers or restrict our actions and adversely affect our financial
condition, operating results and cash flows. An example of such changing regulation is the adoption by the SEC of annual
disclosure and reporting requirements for those companies who use conflict minerals mined from the Democratic Republic of
Congo and adjoining countries in their products. These provisions will require continued due diligence efforts, with initial
disclosure requirements beginning in May 2014. There will be costs associated with complying with these disclosure
requirements, including for diligence to determine the sources of conflict minerals that we may find to be used in our products.
We are also subject to regulation governing, among other things:
• the generation, storage, handling, use, transportation, presence of, or exposure to hazardous materials;
• the emission and discharge of hazardous materials into the ground, air or water;
• the incorporation of certain chemical substances into our products, including electronic equipment; and
• the health and safety of our employees.
We are also required to obtain permits from governmental authorities for certain operations. We cannot assure you that
we have been or will be at all times in complete compliance with such laws, regulations and permits. If we violate or fail to
comply with these laws, regulations or permits, we could be fined or otherwise sanctioned by regulators. We could also be held
liable for any and all consequences arising out of human exposure to hazardous substances or other environmental damage.
Certain environmental laws impose liability, sometimes regardless of fault, for investigating or cleaning up contamination
on or emanating from our currently or formerly owned, leased or operated property, as well as for damages to property or
natural resources and for personal injury arising out of such contamination. Some of these environmental laws may also assess
liability on persons who arrange for hazardous substances to be sent to third party disposal or treatment facilities when such
facilities are found to be contaminated. At this time, we are involved in various stages of investigation and cleanup related to
environmental remediation matters at a number of present and former facilities in the U.S. and abroad. The ultimate cost to us
of site cleanups is difficult to predict given the uncertainties regarding the extent of the required cleanup, the potential for
ongoing environmental monitoring and maintenance that could be required for many years, the interpretation of applicable laws
and regulations, alternative cleanup methods, and potential agreements that could be reached with governmental and third