276889--12/14/2007--QUANEX

related topics

{product, market, service}

{customer, product, revenue}

{cost, regulation, environmental}

{condition, economic, financial}

{product, liability, claim}

{tax, income, asset}

{cost, operation, labor}

{acquisition, growth, future}

{property, intellectual, protect}

{debt, indebtedness, cash}

{operation, natural, condition}

If the Company s raw materials or energy were to become unavailable or to significantly increase in price, the Company might not be able to timely produce products for our customers or maintain our profit levels. Portions of our business are generally cyclical in nature. Lowered vehicle production, fewer housing starts, reduced remodeling expenditures or weaknesses in the economy could significantly reduce our revenue, net earnings and cash flow. The Company is subject to various environmental requirements, and compliance with, or liabilities under, existing or future environmental laws and regulations could significantly increase the Company s costs of doing business. The Company may not be able to successfully identify, manage or integrate future acquisitions, and if the Company is unable to do so, it is unlikely to sustain its historical growth rates and profitability. The Company operates in competitive markets, and the Company s business will suffer if it is unable to adequately address potential downward pricing pressures and other factors that may reduce its operating margins. Original Equipment Manufacturers (OEMs) have significant pricing leverage over suppliers and may be able to achieve price reductions over time, which will reduce the Company s profits. The Company could lose customers and the related revenues due to the transfer of manufacturing capacity by its customers out of the United States to lower cost regions of the world. If the Company s relationship with its employees were to deteriorate, the Company could be faced with labor shortages, disruptions or stoppages, which could shut down certain of its operations, reducing its revenue, net earnings, and cash flows. Changes in regulatory requirements or new technologies may render the Company s products obsolete or less competitive. Equipment failures, delays in deliveries or catastrophic loss at any of the Company s manufacturing facilities could lead to production curtailments or shutdowns that prevent the Company from producing its products. The Company s business involves complex manufacturing processes that may result in costly accidents or other disruptions of its operations. Flaws in the design or manufacture of the Company s products could cause future product liability or warranty claims for which it does not have adequate insurance or affect its reputation among customers. The Company s success depends upon its ability to develop new products and services, integrate acquired products and services and enhance its existing products and services. The Company has a risk that its goodwill and indefinite-lived intangible assets may be impaired and result in a charge to income. The Company may not be able to protect its intellectual property. The Company may not be able to repay or repurchase the principal amount of its debentures when required.

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276889--12/14/2007--QUANEX_CORP