1262450--3/20/2008--UNIVERSAL_CITY_DEVELOPMENT_PARTNERS

related topics

{debt, indebtedness, cash}

{condition, economic, financial}

{acquisition, growth, future}

{operation, natural, condition}

{investment, property, distribution}

{product, candidate, development}

{stock, price, operating}

{customer, product, revenue}

{system, service, information}

{personnel, key, retain}

{cost, contract, operation}

RISKS RELATED TO OUR INDEBTEDNESS We may not be able to refinance or repay in full the April 2010 notes and Holdings may not be able to refinance or repay in full the May 2010 notes by 2010 when they all mature and if we are or Holdings is, as the case may be, unable to refinance or repay in full the April 2010 notes prior to December 1, 2009, or the May 2010 notes prior to January 1, 2010 then our amended and restated senior secured credit agreement will also become due and payable and we may be forced to take other actions to satisfy our obligations under such indebtedness, which may not be successful. Our ability to refinance our debt obligations could be adversely impacted by the Consultant s right, starting in June 2010, to terminate the periodic payments under the Consulting Agreement and receive instead one payment equal to the fair market value of the Consultant s interest in the Orlando parks and any comparable projects. We may not have the ability to raise the funds necessary to finance any change of control offer required by the indenture governing our April 2010 notes. Our partners may not have the ability to raise the funds necessary to finance any change of control offer required by the indenture governing the May 2010 notes. Our debt agreements contain restrictions that limit our flexibility in operating the business. We may not be able to generate sufficient cash to service all of our indebtedness for reasons beyond our control. Federal and state statutes allow courts, under specific circumstances, to void the notes, subordinate claims in respect of the notes and require note holders to return payments received from us. Our substantial indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligations under the April 2010 notes. In addition, we are highly leveraged and have substantial debt service obligations. Despite our substantial indebtedness, we may still incur significantly more debt. This could exacerbate the risks described above. RISKS RELATED TO OUR BUSINESS Attendance at our theme parks is influenced by general economic and other conditions. Our business is largely dependent on air travel. We are subject to the risks inherent in deriving substantially all of our revenue from one location. The United States is currently engaged in military operations in Iraq and elsewhere, which could drive up the price of gas and air travel and increase the chance of another terrorist attack in the United States or key international markets, each of which would have a negative impact on attendance at our theme parks. Loss of key distribution channels for pass sales may reduce our revenues. The theme park industry competes with numerous vacation and entertainment alternatives; the Orlando theme park market is extremely competitive. There is the risk of accidents occurring at theme parks, which may create negative publicity which may reduce attendance and thereby negatively impact our results of operations. If we are unable to adequately protect the right to use the intellectual property of the themed elements of our rides and attractions, we may be required to re-theme certain rides and attractions, which will be expensive and time consuming. In addition, if there is an uncured event of default under certain of our intellectual property agreements and such agreements are terminated, we may suffer negative consequences such as acceleration of payments due thereunder. The loss of key personnel could hurt our operations. Our business is seasonal and bad weather can adversely impact attendance at our theme parks. If our computer network security is compromised we could be subject to financial liability and our reputation could be harmed. RISKS RELATED TO OUR PARTNERS Risks related to the right of first refusal agreement between our partners. If the equity holders of Holding I and Holding II that are controlled by Blackstone default on certain indebtedness, Blackstone s equity interests in Holding I and Holding II will be subject to foreclosure. Potential deadlock between the partners of our general partner could prevent us from executing certain aspects of our business strategy. Blackstone and Vivendi Universal Entertainment control us and may have conflicts of interest with us or you in the future.

Full 10-K form ▸

1262450--3/20/2008--UNIVERSAL_CITY_DEVELOPMENT_PARTNERS_LTD