277158--3/13/2007--SEMCO_ENERGY

related topics

{gas, price, oil}

{debt, indebtedness, cash}

{operation, natural, condition}

{condition, economic, financial}

{tax, income, asset}

{capital, credit, financial}

{cost, regulation, environmental}

{acquisition, growth, future}

{stock, price, share}

{customer, product, revenue}

{cost, contract, operation}

The Company s Common Stock price and business prospects may be adversely affected if the Share Exchange is not completed. The restrictive covenants of the Exchange Agreement have placed, and will continue to place, significant restrictions on the Company s business operations until the completion of the Share Exchange. Risks Relating to the Company s Operations The Company s Gas Distribution Business is subject to rate regulation, and certain actions of these regulatory bodies may reduce the Company s revenues, earnings and cash flow. The increased cost of purchasing natural gas during periods in which natural gas prices are rising significantly could adversely impact the Company s liquidity and earnings. Volatility in the price of natural gas could result in large industrial customers switching to alternative energy sources or shifting production to facilities outside the Company s service area, which could reduce revenues, earnings and cash flow. The Company s liquidity and earnings could be adversely affected by the MPSC s disallowance of costs after retrospective reviews of the Company s gas procurement practices. The Company s earnings and cash flow are sensitive to decreases in customer consumption resulting from warmer than normal temperatures and customer conservation. The Company s earnings are substantially dependent on its current customers maintaining a certain level of consumption as well as on customer growth. The Company s customers may be able to acquire natural gas without using the Company s distribution system, which would reduce revenues and earnings. Declining production from the Cook Inlet gas fields may result in potential deliverability problems in ENSTAR s service area. Changes in the regulatory environment and events in the energy markets that are beyond the Company s control may reduce the Company s earnings and limit its access to capital markets. The Company may be required to recognize additional impairment charges which would reduce its earnings. The Company s ability to use net operating loss carry-forwards may be impaired. The Company s operations and business are subject to environmental laws and regulations that may increase the Company s cost of operations, impact or limit the Company s business plans or expose the Company to environmental liabilities. Substantial operational risks are involved in operating natural gas distribution, pipeline and storage system and propane distribution businesses, and such operational risks could adversely affect the Company s revenues, earnings, cash flow and financial condition. In the event that the Share Exchange or a similar transaction to sell the Company is not consummated, the Company s ability to grow its businesses will be adversely affected if the Company is not successful in making acquisitions or in integrating the acquisitions it makes. Earnings and cash flow may be adversely affected by downturns in the economy. The Company s debt indentures and Bank Credit Agreement contain restrictive covenants that may reduce the Company s flexibility, and adversely affect its business, earnings, cash flow, liquidity and financial condition. Adverse changes in the Company s credit ratings may limit the Company s access to capital, increase the Company s cost of capital, increase the cost of maintaining certain contractual relationships or otherwise have a material adverse effect on the Company s business, earnings, cash flow, liquidity and financial condition. The Company s substantial indebtedness may limit its ability to borrow additional funds at all, or on reasonable terms, limit its growth and diminish its ability to respond to changing business and economic conditions and, thereby, may adversely affect its business, earnings, cash flow, liquidity and financial condition.

Full 10-K form ▸

277158--3/13/2007--SEMCO_ENERGY_INC