752714--3/14/2006--MCGRATH

related topics

{customer, product, revenue}

{condition, economic, financial}

{cost, regulation, environmental}

{competitive, industry, competition}

{regulation, government, change}

{system, service, information}

{operation, international, foreign}

{stock, price, operating}

{regulation, change, law}

{operation, natural, condition}

{personnel, key, retain}

Our stock price is subject to fluctuations and the value of your investment may decline. Our future operating results may fluctuate, fail to match past performance or fail to meet expectations. Our ability to retain our executive management and to recruit, retain and motivate key employees is critical to the success of our business. Our effective tax rate may change and become less predictable as our business expands. Future changes in financial accounting standards may cause lower than expected operating results and affect our reported results of operations. If we suffer loss to our facilities, equipment or distribution system due to catastrophe, our operations could be seriously harmed. The nature of our businesses exposes us to the risk of litigation and liability under environmental, health and safety and products liability laws. Conducting our routine businesses exposes us to risk of litigation from employees, vendors and other third parties. If we do not effectively manage our credit risk, collect on our accounts receivable, or recover our rental equipment from our customers sites, it could have a material adverse effect on our operating results. Failure by third parties to manufacture our products to our specifications or on a timely basis may harm our reputation and financial condition. The majority of our indebtedness is subject to variable interest rates, which makes us vulnerable to increases in interest rates. We may not be able to effectively implement our selected Enterprise Resource Planning system, or ERP. We will continue to incur increased costs as a result of recent securities law initiatives, which may adversely affect our profitability and liquidity. Specific Risks Related to Our Relocatable Modular Buildings Business Segment: A significant reduction of funding to public schools could cause the demand for our modular classroom units to decline, which could result in a reduction in our revenues and profitability. Public policies that create demand for our products and services may change. Failure to comply with applicable regulations could harm our business and financial condition, resulting in lower operating results and cash flows. We are subject to laws and regulations governing government contracts. These laws and regulations make these government contracts more favorable to government entities than other third parties and any changes in these laws and regulations, or the failure to comply with these laws and regulations could harm our business. Seasonality of our educational business may have adverse consequences for our business. We face strong competition in our modular building markets. We may not be able to quickly redeploy modular equipment returning from leases. Significant increases in raw material and labor costs could increase our acquisition cost of new modular rental equipment, would increase our operating costs and harm our profitability. Failure to properly design, manufacture, repair and maintain the modular product may result in impairment charges and reduction of our operating results and cash flows. Our warranty costs may increase. Specific Risks Related to Our Electronic Test Equipment Business Segment: Market risk and cyclical downturns in the industries using test equipment may result in periods of low demand for our product resulting in excess inventory, impairment charges and reduction of our operating results and cash flows. Seasonality of our electronics business may impact quarterly results. Our rental test equipment may become obsolete and result in an impairment charge. If we do not effectively compete in the rental equipment market, our operating results will be materially and adversely affected. If we are not able to obtain equipment at favorable rates, there could be a material adverse effect on our operating results. If we are not able to anticipate and mitigate the risks associated with operating internationally, there could be a material adverse effect on our operating results.

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752714--3/14/2006--MCGRATH_RENTCORP