Nobody enjoys self-exposure of actual or potential shortcomings. For manufacturers, public disclosure of the details of warranty claims and product liability experience historically has been viewed as repugnant, exposing one’s firm to potential competitive disadvantage and to threats of litigation.
Accordingly, public company manufacturers preparing quarterly and annual reports for the Securities and Exchange Commission (SEC) and public distribution commonly report no more than aggregate annual expenses for warranty claims and product liability cases, comparing current period figures to prior periods. These discussions typically make no mention of individual products or product lines. Discussions of product liability lawsuits, if any are identified and described, tend to be carefully worded in generalities to emphasize the availability of meritorious defenses and avoid indications that a material adverse impact may result for the company.
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