1314357--3/31/2006--Universal_City_Florida_Holding_Co.

related topics

{debt, indebtedness, cash}

{condition, economic, financial}

{acquisition, growth, future}

{stock, price, operating}

{operation, natural, condition}

{investment, property, distribution}

{product, candidate, development}

{customer, product, revenue}

{cost, contract, operation}

{personnel, key, retain}

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, 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. We may not be able to adequately protect the right to use the intellectual property of the themed elements of our rides and attractions, which may require us to re-theme certain rides and attractions. The loss of key personnel could hurt our operations. Our business is seasonal and bad weather can adversely impact attendance at our theme parks. 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 interest in the Orlando parks and any comparable projects. UCDP s debt agreements contain restrictions that limit our flexibility in operating the business. 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. Holding I and Holding II are holding companies and UCFH I Finance and UCFH II Finance have no operations; therefore we depend on our subsidiaries to pay interest on the May 2010 notes and our other obligations. 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. Because we are the sole obligors of the May 2010 notes, and our subsidiaries have not guaranteed our obligations under these notes or have any obligation with respect to these notes, the May 2010 notes are structurally subordinated to the debt and liabilities of our subsidiaries. In addition, the May 2010 notes are effectively subordinated to any of our present and future secured debt. The substantial indebtedness of our subsidiaries could adversely affect our financial condition and prevent us from fulfilling our obligations under the May 2010 notes. In addition, we are highly leveraged and have substantial debt service obligations. Despite our subsidiaries substantial indebtedness, they may still incur significantly more debt. In addition, we may incur a significant amount of additional indebtedness. This could exacerbate the risks described above. Our subsidiaries may not be able to generate sufficient cash to service all of their indebtedness for reasons beyond our control. We may not be able to refinance or repay in full the May 2010 notes and UCDP may not be able to refinance or repay in full the April 2010 notes by 2010 when they all mature and if we are or UCDP is, as the case may be, unable to refinance or repay in full the May 2010 notes prior to January 1, 2010, or the April 2010 notes prior to December 1, 2009, then UCDP s amended and restated senior secured credit agreement will also mature and our subsidiaries may be forced to take other actions to satisfy their obligations under such indebtedness, which may not be successful. We may not have the ability to raise the funds necessary to finance any change of control offer required by the indenture. Risks related to the right of first refusal agreement between our partners. Our dependence on Universal Studios, Inc. and its affiliates; risks related to a change of control. 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.

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1314357--3/31/2006--Universal_City_Florida_Holding_Co._I