1003515--7/10/2007--HINES_HORTICULTURE

related topics

{debt, indebtedness, cash}

{cost, regulation, environmental}

{operation, natural, condition}

{cost, contract, operation}

{provision, law, control}

{competitive, industry, competition}

{stock, price, share}

{cost, operation, labor}

{tax, income, asset}

{customer, product, revenue}

{personnel, key, retain}

{property, intellectual, protect}

{regulation, government, change}

{control, financial, internal}

{product, candidate, development}

{gas, price, oil}

Risks Related to Our Capital Structure We have a substantial amount of debt outstanding, which could hurt our future prospects and prevent us from fulfilling our debt obligations. The terms of our debt may limit our ability to plan for, or respond to, changes in our business. Our stock may be delisted from The Nasdaq Global Market, which could adversely affect the market liquidity of our common stock. Repayment of the principal of the Senior Notes and our other debt may require additional financing. We are not certain of the source or availability of any such financing at this time. Risks Related to Our Business Our production of plants may be adversely affected by a number of agricultural risks, including factors beyond our control. In addition, our nursery operations were adversely affected by the acute tropical weather season that plagued the Southern and South-eastern regions of the United States in 2005, and significant tropical storms in the future could adversely impact our operations. Increases in water prices or insufficient availability of water could adversely affect our plant production, resulting in reduced sales and profitability. We face risks associated with sudden oak death ( SOD ). Quarantines of our products or other actions by federal and state regulatory authorities in response to sudden oak death could have a material adverse effect on our business and results of operations. Because our business is highly seasonal, our revenues, cash flows from operations and operating results may fluctuate on a seasonal and quarterly basis. Because we depend on a core group of significant customers, our sales, cash flows from operations and results of operations may be negatively affected if our key customers reduce the amount of products they purchase from us. We face intense competition, and our inability to compete effectively for any reason could adversely affect our business. Our nursery facility in Irvine, California is entirely on leased land and we do not expect the leases to be extended beyond their current terms. Our anticipated transition of our operations resulting from our Vacaville, California property sale may not be as successful as we anticipate and unexpected delays and difficulties or increased costs could adversely affect our business and prospects. We are subject to various environmental laws and regulations that govern, and impose liability for, our activities and operations. If we do not comply with these laws and regulations, our business could be materially and adversely affected. We are subject to federal and state "fair trade" laws and weights and measures regulations that govern and impose liability for improperly marketing, labeling or advertising plant container size. If we do not comply with these laws and regulations, our business could be materially and adversely affected. Changes in local zoning laws may adversely affect our business. Compliance with, and changes to, labor laws, particularly those concerning seasonal workers, could significantly increase our costs. Our transportation costs are significant and we depend on independent contractors for trucking services to ship large quantities of our products and increases in transportation costs, changes in available trucking capacity and other changes affecting such carriers, as well as interruptions in service or work stoppages, could adversely impact our results of operations. Our research and development efforts may not be successful. Our current principal stockholders have significant influence over our business and could delay, deter or prevent a change of control or other business combination. Our business will suffer if certain senior executives discontinue employment with us or if we are unable to recruit and retain highly skilled staff. Price increases of certain raw materials could adversely affect our business. If we are unable to protect our intellectual property rights, our business and prospects may be harmed. Changes in corporate governance requirements may continue to increase our compliance and financial reporting costs, and failure to achieve and maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have a material adverse effect on our business and stock price. Significant decreases in our stock price could result in our having to record an impairment charge related to our goodwill.

Full 10-K form ▸

1003515--7/10/2007--HINES_HORTICULTURE_INC