1405041--3/31/2008--Momentive_Performance_Materials

related topics

{cost, regulation, environmental}

{cost, operation, labor}

{customer, product, revenue}

{debt, indebtedness, cash}

{operation, international, foreign}

{investment, property, distribution}

{regulation, change, law}

{tax, income, asset}

{stock, price, operating}

{cost, contract, operation}

{control, financial, internal}

{property, intellectual, protect}

{personnel, key, retain}

{operation, natural, condition}

{financial, litigation, operation}

Risks Related to Our Business Our substantial indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry and prevent us from making debt-service payments. The terms of our senior credit facility and the indentures may restrict our current and future operations, particularly our ability to respond to changes in our business or take certain actions. Changes in pricing or supply of silicon metal may adversely affect the results of our operations. Changes in the pricing, supply or regulation of intermediates such as siloxane may adversely affect the results of our operations. Our Quartz division is dependent upon a particular type of sand currently available from a single source. Rising energy costs could increase our operating expenses, reduce net income and negatively affect our financial condition. As a global business, we are subject to risks associated with our non-U.S. operations that are not present in the United States. Our business is subject to foreign currency risk. Apollo and GE (our Sponsors ) control us and may have conflicts of interest with our investors or us in the future. We may be required to expend greater time and expense than other companies in dealing with our employees, some of whom are unionized, represented by works councils or subject to local laws that are less favorable to employers than the laws of the United States. If we fail to extend or renegotiate our collective bargaining agreements with our labor unions as they expire from time to time, or if our unionized employees were to engage in a strike or other work stoppage, our business and operating results could be materially adversely affected. Our future success will depend in part on our ability to protect our intellectual property rights, and our inability to enforce these rights could have an adverse effect on our competitive advantage. Our production facilities are subject to operating hazards. We may be adversely affected by environmental, health, safety, production and product regulations or concerns. Future chemical regulatory actions may decrease profitability. Recent or new regulations may increase our compliance costs and reduce our ability to compete in certain markets. Some of our pension plans are unfunded or underfunded. We are dependent on certain of our key executives and our ability to attract and retain qualified employees. We are subject to certain risks related to litigation filed by or against us, and adverse results may harm our business. We may be unable to achieve the cost savings that we expect to achieve from our strategic initiatives. If we fail to achieve and maintain effective internal controls, it could have a material adverse effect on our business in the future. Risks Related to Our Separation from GE Limitations on our use of certain product-identifying information, including the GE name and monogram, could adversely affect our business and profitability. We may be unable to make, on a timely or cost-effective basis, the changes necessary to operate as an independent company, and we may experience increased costs. We may no longer be able to enjoy certain benefits of GE s operating diversity and resources, including bargaining power with third parties.

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1405041--3/31/2008--Momentive_Performance_Materials_Inc.