1281949--3/16/2006--ADESA

related topics

{financial, litigation, operation}

{condition, economic, financial}

{tax, income, asset}

{gas, price, oil}

{cost, operation, labor}

{personnel, key, retain}

{operation, international, foreign}

{regulation, change, law}

{acquisition, growth, future}

{debt, indebtedness, cash}

{stock, price, operating}

{property, intellectual, protect}

RISKS RELATED TO ADESA's BUSINESS Fluctuationsin consumer demand for used and leased vehicles impact auction sales volume and conversion rates, which may adversely affect ADESA's revenues and profitability. The Company has experienced and expects to continue to experience fluctuations in its quarterly results of operations. ADESA may not be able to grow if the Company is unable to successfully acquire and integrate other auction businesses and facilities. High fuel prices may have an adverse effect on the Company's revenues and operating results, as well as its earnings growth rates. Weather-related and other events beyond ADESA's control may adversely impct operations. The Company is, and may be in the future, subject to patent infringement claims, which could have an impact on the Company's business or operating results due to a disruption in its business operations, the incurrence of significant costs and other factors. Pending litigation could have an adverse effect on the Company. Changes in technology could cause ADESA's competitive position to be negatively impacted and, as a result, ADESA may lose customers. Increased use of online wholesale auctions may diminish ADESA's supply of vehicles. The operation of the Company's auction facilities poses certain environmental risks which could adversely affect ADESA's results of operations and financial condition. ADESA assumes the settlement risk for all vehicles sold through its auctions. ADESA has debt obligations that could restrict its operations. If ADESA is not able to retain its executive officers and key employees, ADESA may not be able to implement its business strategy and the business could suffer. ADESA is dependent on good labor relations. A portion of ADESA's net income is derived from Canada, which exposes the Company to foreign exchange and other risks. ADESA's operations may be restricted by vehicle-related or lending laws and other regulations, including vehicle brokerage and auction laws. The Company has a material amount of goodwill which, if it becomes impaired, would result in a reduction in the Company's net income. New accounting pronouncements or new interpretations of existing standards could require ADESA to make adjustments to accounting policies that could adversely affect the financial statements. RISKS RELATING TO ADESA's FORMER RELATIONSHIP WITH AND SEPARATION FROM ALLETE ADESA may be required to indemnify ALLETE if the spin-off becomes taxable. ADESA faces risks associated with being a member of ALLETE's consolidated group for federal income tax purposes for the periods prior to the spin-off.

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1281949--3/16/2006--ADESA_INC