1474735--3/30/2010--GENERAC_HOLDINGS

related topics

{stock, price, operating}

{cost, regulation, environmental}

{debt, indebtedness, cash}

{tax, income, asset}

{product, market, service}

{customer, product, revenue}

{cost, operation, labor}

{stock, price, share}

{competitive, industry, competition}

{provision, law, control}

{gas, price, oil}

{regulation, change, law}

{control, financial, internal}

{operation, international, foreign}

{personnel, key, retain}

{property, intellectual, protect}

{condition, economic, financial}

{capital, credit, financial}

{product, liability, claim}

Risk factors related to our business and industry Demand for our products is significantly affected by unpredictable major power-outage events that can lead to substantial variations in, and uncertainties regarding, our financial results from period to period. Demand for our standby generators is significantly affected by durable goods spending by consumers and businesses and other macroeconomic conditions. Decreases in the availability, or increases in the cost, of raw materials and key components we use could materially reduce our earnings. The industry in which we compete is highly competitive, and our failure to compete successfully could adversely affect our results of operations and financial condition. Our industry is subject to technological change, and our failure to continue developing new and improved products and to bring these products rapidly to market could have an adverse impact on our business. We rely on independent dealers and distribution partners, and the loss of these dealers and distribution partners, or of any of our sales arrangements with significant private label, telecommunications or retail customers, would adversely affect our business. Our business could be negatively impacted if we fail to adequately protect our intellectual property rights or if third parties claim that we are in violation of their intellectual property rights. Our operations are subject to various environmental, health and safety laws and regulations, and non-compliance with or liabilities under such laws and regulations could result in substantial costs, fines, sanctions and claims. Our products are subject to substantial government regulation. We may incur costs and liabilities as a result of product liability claims. The loss of any key members of our senior management team or key employees could disrupt our operations and harm our business. Disruptions caused by labor disputes or organized labor activities could harm our business. We may experience material disruptions to our manufacturing operations. A significant portion of our purchased components are sourced in foreign countries, exposing us to additional risks that may not exist in the United States. As a U.S. corporation that sources components in foreign countries, we are subject to the Foreign Corrupt Practices Act. A determination that we violated this act may affect our business and operations adversely. We have significant tax assets, usage of which may be subject to limitations in the future. Our total assets include goodwill and other indefinite-lived intangibles. If we determine these have become impaired in the future, net income could be materially adversely affected. We may need additional capital to finance our growth strategy or to refinance our existing credit facilities, and we may not be able to obtain it on acceptable terms, or at all, which may limit our ability to grow. We are unable to determine the specific impact of changes in selling prices or changes in volumes of our products on our net sales. Risks related to our common stock We do not anticipate paying dividends on our common stock in the foreseeable future. Future sales of our common stock may cause our stock price to decline. If securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations regarding our common stock or if our results of operations do not meet their expectations, our common stock price and trading volume could decline. As a public company, we are required to meet periodic reporting requirements under the Securities and Exchange Commission, or SEC, rules and regulations. Complying with federal securities laws as a public company is expensive and we will incur significant time and expense enhancing, documenting, testing and certifying our internal control over financial reporting. Any deficiencies in our financial reporting or internal controls could adversely affect our business and the trading price of our common stock. Anti-takeover provisions in our amended and restated certificate of incorporation and by-laws could prohibit a change of control that our stockholders may favor and could negatively affect our stock price. Risks related to our capital structure 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. The terms of our senior secured credit facilities restrict our current and future operations, particularly our ability to respond to changes in our business or to take certain actions. Our principal stockholder continues to have substantial control over us. Conflicts of interest may arise because some of our directors are principals of our principal stockholder.

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1474735--3/30/2010--GENERAC_HOLDINGS_INC.