SGR » Topics » The nature of our projects exposes us to potential professional liability, product liability, warranty and other claims, which may reduce our profits.

These excerpts taken from the SGR 10-K filed Oct 31, 2008.
The nature of our projects exposes us to potential professional liability, product liability, warranty and other claims, which may reduce our profits.
 
We engineer, construct and perform services in large industrial facilities where accidents or system failures can be disastrous. Any catastrophic occurrence at locations engineered or constructed by us or where our products are installed or services performed could result in significant professional liability, product liability, warranty and other claims against us.


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We have been and may in the future be named as a defendant in legal proceedings where parties may make a claim for damages or other remedies with respect to our projects or other matters. These claims generally arise in the normal course of our business. When it is determined that we have liability, we may not be covered by insurance or, if covered, the dollar amount of these liabilities may exceed our policy limits. Our professional liability coverage is on a “claims-made” basis covering only claims actually made during the policy period currently in effect. In addition, even where insurance is maintained for such exposures, the policies have deductibles resulting in our assuming exposure for a layer of coverage with respect to any such claims. Any liability not covered by our insurance, in excess of our insurance limits or, if covered by insurance but subject to a high deductible, could result in a significant loss for us, which may reduce our profits and cash available for operations.
 
In addition, under some of our contracts, we must use new metals or processes for producing or fabricating pipe for our customers. The failure of any of these metals or processes could result in warranty claims against us for significant replacement or reworking costs, which could materially impact our financial statements.
 
Further, the engineering and construction projects we perform expose us to additional risks including, but not limited to, equipment failures, personal injuries, property damage, shortages of materials and labor, permitting delays, work stoppages, labor disputes, weather problems and unforeseen engineering, architectural, environmental and geological problems, each of which could significantly impact our performance and materially impact our financial statements. In addition, once our construction of a project is complete, we may face claims with respect to the performance of these facilities, which could materially impact our financial statements.
 
The
nature of our projects exposes us to potential professional
liability, product liability, warranty and other claims, which
may reduce our profits.



 



We engineer, construct and perform services in large industrial
facilities where accidents or system failures can be disastrous.
Any catastrophic occurrence at locations engineered or
constructed by us or where our products are installed or
services performed could result in significant professional
liability, product liability, warranty and other claims against
us.





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Table of Contents






We have been and may in the future be named as a defendant in
legal proceedings where parties may make a claim for damages or
other remedies with respect to our projects or other matters.
These claims generally arise in the normal course of our
business. When it is determined that we have liability, we may
not be covered by insurance or, if covered, the dollar amount of
these liabilities may exceed our policy limits. Our professional
liability coverage is on a “claims-made” basis
covering only claims actually made during the policy period
currently in effect. In addition, even where insurance is
maintained for such exposures, the policies have deductibles
resulting in our assuming exposure for a layer of coverage with
respect to any such claims. Any liability not covered by our
insurance, in excess of our insurance limits or, if covered by
insurance but subject to a high deductible, could result in a
significant loss for us, which may reduce our profits and cash
available for operations.


 



In addition, under some of our contracts, we must use new metals
or processes for producing or fabricating pipe for our
customers. The failure of any of these metals or processes could
result in warranty claims against us for significant replacement
or reworking costs, which could materially impact our financial
statements.


 



Further, the engineering and construction projects we perform
expose us to additional risks including, but not limited to,
equipment failures, personal injuries, property damage,
shortages of materials and labor, permitting delays, work
stoppages, labor disputes, weather problems and unforeseen
engineering, architectural, environmental and geological
problems, each of which could significantly impact our
performance and materially impact our financial statements. In
addition, once our construction of a project is complete, we may
face claims with respect to the performance of these facilities,
which could materially impact our financial statements.


 




EXCERPTS ON THIS PAGE:

10-K (2 sections)
Oct 31, 2008
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