38570--9/13/2007--ORLEANS_HOMEBUILDERS

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{regulation, change, law}

{cost, operation, labor}

{acquisition, growth, future}

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Cautionary Statement for Purposes of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. We currently have a significant amount of debt. To service our indebtedness and continue our operations, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control. The financing agreements governing our debt contain various covenants that limit our discretion in the operation of our business and could lead to acceleration of debt. Deterioration of market conditions in the homebuilding industry and customer demand could adversely affect our results of operations. Future increases in interest rates, a decrease in the availability of mortgage financing and other economic factors outside our control, such as consumer confidence and declines in employment levels, could lead to fewer home sales, which could adversely affect our total earned revenues and earnings. We are subject to substantial risks with respect to the land and home inventories we maintain and fluctuations in market conditions may affect our ability to sell our land and home inventories at expected prices, if at all, which could reduce our total earned revenues and earnings. The market value of our inventory could drop significantly, requiring further write-downs to the carrying value of our real estate held for development and sale to its estimated fair value, which would negatively impact our results of operations and financial condition. The competitive conditions in the homebuilding industry could increase our costs, reduce our total earned revenues and earnings and otherwise adversely affect our results of operations or limit our growth. We may not be able to acquire suitable land at reasonable prices, which could result in cost increases we are unable to recover and reduce our total earned revenues and earnings. We are subject to construction defect, product liability and warranty claims arising in the ordinary course of business that could adversely affect our results of operations. We may be subject to mold litigation and mold claims arising in the ordinary course of business for which we have no insurance that could adversely affect our results of operations. We may be subject to environmental liabilities that could adversely affect our results of operations or the value of our properties. We depend upon the continued services of certain members of our senior management team and the loss of their services could harm our business. Shortages of labor or materials and increases in the price of materials can harm our business by delaying construction, increasing costs, or both. We depend on the continued availability and satisfactory performance of our subcontractors which, if unavailable, could have a material adverse effect on our business by limiting our ability to build and deliver homes. Our business is subject to governmental regulations that may delay, increase the cost of, prohibit or severely restrict our development and homebuilding projects and reduce our total earned revenues and growth. States, cities and counties in which we operate have adopted, or may adopt, slow or no growth initiatives which would reduce our ability to build and sell homes in these areas and could adversely affect our total earned revenues and earnings. Increases in taxes or governmental fees could increase our costs and adverse changes in tax laws could reduce customer demand for our homes, either of which could reduce our total earned revenues or profitability. We may not be successful in our effort to identify, complete or integrate acquisitions or to enter new markets through start-up operations, which could disrupt the activities of our current business, adversely affect our results of operations and future growth or cause losses. Jeffrey P. Orleans, Chairman and Chief Executive Officer and our majority shareholder, can cause us to take certain actions or preclude us from taking actions without the approval of the other shareholders and may have interests that could conflict with other shareholders. Our business, total earned revenues and earnings may be adversely affected by adverse weather conditions or natural disasters. Acts of war or terrorism may seriously harm our business.

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38570--9/13/2007--ORLEANS_HOMEBUILDERS_INC