1342505--3/13/2007--ACCELLENT

related topics

{debt, indebtedness, cash}

{product, market, service}

{customer, product, revenue}

{system, service, information}

{acquisition, growth, future}

{competitive, industry, competition}

{personnel, key, retain}

{stock, price, operating}

{regulation, government, change}

{cost, regulation, environmental}

{operation, international, foreign}

{cost, contract, operation}

{product, liability, claim}

{tax, income, asset}

{property, intellectual, protect}

{operation, natural, condition}

We have a substantial amount of indebtedness which may adversely affect our cash flow and our ability to operate our business, remain in compliance with debt covenants and make payments on our indebtedness. Our debt agreements contain restrictions that limit our flexibility in operating our business. We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful. Repayment of our debt is dependent on cash flow generated by our subsidiaries. Quality problems with our processes, products and services could harm our reputation for producing high quality products and erode our competitive advantage. If we experience decreasing prices for our products and services and we are unable to reduce our expenses, our results of operations will suffer. Because a significant portion of our net sales comes from a few large customers, any decrease in sales to these customers could harm our operating results. We may not be able to continue to grow our business if the trend by medical device companies to outsource their manufacturing activities does not continue or if our customers decide to manufacture internally products that we currently provide. Our operating results may fluctuate, which may make it difficult to forecast our future performance. Our industry is very competitive. We may face competition from, and we may be unable to compete successfully against, new entrants and established companies with greater resources. As we rationalize manufacturing capacity and shift production to more economical facilities, our customers may choose to reallocate their outsource requirements among our competitors or perform such functions internally. If we do not respond to changes in technology, our manufacturing, design and engineering processes may become obsolete and we may experience reduced sales and lose customers. Inability to obtain sufficient quantities of raw materials and production feedstock could cause delays in our production. Our international operations are subject to a variety of risks that could adversely affect those operations and thus our profitability and operating results. We may expand into new markets and products and our expansion may not be successful. We are subject to a variety of environmental laws that could be costly for us to comply with, and we could incur liability if we fail to comply with such laws or if we are responsible for releases of contaminants to the environment. Our inability to protect our intellectual property could result in a loss of our competitive advantage, and infringement claims by third parties could be costly and distracting to management. Our earnings and financial condition could suffer if we or our customers become subject to product liability claims or recalls. We may also be required to spend significant time and money responding to investigations or requests for information related to end-products of our customers, including for example, responding to the subpoena we received in the investigation of Guidant Corporation described below in which we have been informed we are a witness. We and our customers are subject to various political, economic and regulatory changes in the healthcare industry that could force us to modify how we develop and price our components, manufacturing capabilities and services and could harm our business. Consolidation in the healthcare industry could have an adverse effect on our revenues and results of operations. Our business is indirectly subject to healthcare industry cost containment measures that could result in reduced sales of medical devices containing our components. Accidents at our facilities could delay production and could subject us to claims for damages. A substantial amount of our assets represents goodwill, and our net income will be reduced if our goodwill becomes impaired. Our inability to access additional capital could have a negative impact on our growth strategy. Some of our operations are highly cyclical. We face risks associated with the implementation of our new Enterprise Resource Planning System. The loss of the services of members of our senior management could adversely affect our business. Our business may suffer if we are unable to recruit and retain the experienced engineers and management personnel that we need to compete in the medical device industry. We depend on outside suppliers and subcontractors, and our production and reputation could be harmed if they are unable to meet our quality and volume requirements and alternative sources are not available. We have acquired several companies during the last several years as part of our growth strategy and may selectively pursue additional acquisitions in the future, but, because of the uncertainty involved, we may not be able to identify suitable acquisition candidates and may not successfully integrate acquired businesses into our business and operations. Our Sponsors control our decisions and may have interests that conflict with ours.

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1342505--3/13/2007--ACCELLENT_INC