1342505--3/31/2010--ACCELLENT

related topics

{debt, indebtedness, cash}

{product, market, service}

{customer, product, revenue}

{system, service, information}

{acquisition, growth, future}

{operation, natural, condition}

{personnel, key, retain}

{stock, price, operating}

{product, liability, claim}

{regulation, government, change}

{competitive, industry, competition}

{condition, economic, financial}

{cost, regulation, environmental}

{operation, international, foreign}

{regulation, change, law}

{tax, income, asset}

{control, financial, internal}

{property, intellectual, protect}

{financial, litigation, operation}

We have a substantial amount of indebtedness which may adversely affect our ability to operate our business and our cash flow and make payments on our indebtedness. The terms of our debt covenants could limit our flexibility in operating our business and our ability to raise additional funds. The amount of borrowings permitted under the ABL Revolver may fluctuate significantly, and the maturity of the ABL Revolver may be accelerated under certain circumstances, which may adversely affect our liquidity, financial position and results of operations. 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. Our business could be materially adversely affected as a result of general economic and market conditions, including the current economic crisis. 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 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 or new products and our expansion may not be successful. We conduct significant operations at our facility in Juarez, Mexico, which could be materially adversely affected as a result of the increased levels of drug-related violence in that city. We are subject to a variety of environmental, health and safety 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. We and our customers are subject to various regulations, as well as political, economic and regulatory changes in the healthcare industry or otherwise, that could force us to modify how we develop and price our components, manufacturing capabilities and services and could harm our business. The recently enacted Affordable Healthcare for America Act includes provisions that may adversely affect our business and results of operations, including an excise tax on the sales of most medical devices. 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. Unanticipated disruptions of our manufacturing operations could adversely affect our ability to manufacture or distribute products and subject us to claims for damages. A substantial amount of our assets represents goodwill, and our earnings 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 Enterprise Resource Planning System. The loss of the services of members of our senior management could adversely affect our business. Our business could be materially adversely affected as a result of war or acts of terrorism. 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 may selectively pursue 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. Subsequent to December 31, 2009 our internal controls over financial reporting may not be effective and we may not be able to certify as to their effectiveness, which could have a significant and adverse effect on our business and reputation.

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1342505--3/31/2010--ACCELLENT_INC