1271193--3/15/2007--SUPERIOR_ESSEX

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Risks to Our Business Related to Copper We may be unable to adequately hedge risks related to volatility, including declines, in copper pricing, which may have a material adverse effect on our business. Increases in copper prices may reduce customer demand for our products which may have a material adverse effect on our business. Increases in copper prices will increase our need for working capital. Increases in copper prices may increase credit and default risk with respect to our customers. Shortages or disruptions in the availability of copper could have a material adverse effect on our business. Other Risks Related to Our Business Our net sales, net income and growth depend largely on the economies in the geographic markets that we serve, and any significant weakening in one or more of these markets could reduce the demand for our products. The increased use of fiber optic cable in the local loop may reduce the market for copper OSP products. Advancing technologies, such as fiber optic and wireless technologies, may make some of our products less competitive. Continued or accelerated declines in access lines and spending reductions by the telephone industry could adversely affect our business. Our inability to maintain our relationships with key customers and distributors could have a material adverse affect on our business. Consolidation among our customers could result in our losing a customer or experiencing a slowdown as integration takes place. Migration of magnet wire demand to China may adversely affect our business. We may not be able to operate or expand our recently constructed China magnet wire manufacturing facility successfully, which may adversely affect our business. Fluctuations in the supply of certain non-copper raw materials and energy could harm our business. Our inability to compete with other manufacturers in the wire and cable industry could harm our business. Our customer base in our communications cable and copper rod segments is highly concentrated, and a loss of a major customer could substantially impact the financial performance of these segments. Our indebtedness may limit cash flow available to invest in the ongoing needs of our business to generate future cash flow. We may be unable to meet our covenant obligations under our senior secured revolving credit facility which could adversely affect our business. We may be unable to raise additional capital to meet capital expenditure needs if our operations do not generate sufficient funds to do so. Declining returns in the investment portfolio of our defined benefit plans may require us to increase cash contributions to the plans. If we are unable to retain senior management, our business operations could be adversely affected. Failure to negotiate extensions of our labor agreements as they expire may result in a disruption of our operations. The designation of Essex Nexans as an unrestricted subsidiary under our 9% note indenture and exclusion of Essex Nexans as a subsidiary under our credit agreement may have an adverse impact on our operations. Essex Nexans dependence on its continuing relationship with Nexans may expose Essex Nexans to additional risks to its operations. Our revenues, operating income and net income are subject to quarterly and seasonal fluctuations due to the seasonal nature of our business, which makes it more difficult for investors and analysts to make meaningful comparisons of our interim quarterly results. Risks Relating to Our Common Stock We cannot assure you as to the market price for our common stock. Our operating results can fluctuate significantly from period to period. If we miss financial expectations, our stock price could decline. Our dividend policies and other restrictions on the payment of dividends may prevent the payment of dividends for the foreseeable future. Provisions of our certificate of incorporation and bylaws could discourage potential acquisition proposals and could deter or prevent a change in control.

Full 10-K form ▸

1271193--3/15/2007--SUPERIOR_ESSEX_INC