862480--2/26/2008--K_SWISS

related topics

{customer, product, revenue}

{product, market, service}

{system, service, information}

{operation, natural, condition}

{personnel, key, retain}

{operation, international, foreign}

{property, intellectual, protect}

{condition, economic, financial}

{stock, price, operating}

{tax, income, asset}

{cost, regulation, environmental}

{financial, litigation, operation}

The market for athletic footwear is intensely competitive and if we fail to compete effectively, we could lose our market position. The athletic footwear business is subject to consumer preferences and unanticipated shifts in consumer preferences could adversely affect our sales and results of operations. If we fail to accurately forecast consumer demand, we may experience difficulties in handling customer orders or in liquidating excess inventories and our sales and brand image may be adversely affected. Our current backlog of open orders may not be indicative of our level of future sales. Fluctuations in the price, availability and quality of raw materials could cause delay and increase costs. The loss of a significant customer, or a significant reduction in our sales to such a customer, could adversely affect our sales and results of operations. Our financial success is limited to the success of our customers. If we decrease the price that we charge for our products, we may earn lower gross margins and our revenues and profitability may be adversely affected. Our business is subject to economic conditions in our major markets. Our international sales and manufacturing operations are subject to the risks of doing business abroad, which could affect our ability to sell or manufacture our products in international markets, obtain products from foreign suppliers or control the cost of our products. Our financial position, cash flow or results may be adversely affected by the threat of terrorism and related political instability and economic uncertainty. Because we rely on independent manufacturers to produce our products, our sales and profitability may be adversely affected if our independent manufacturers fail to meet pricing, product quality and timeliness requirements or if we are unable to obtain some components used in our products from limited supply sources or supply chain disruptions. We rely on our warehouses and if there is a natural disaster or other serious disruption at any of these facilities, we may be unable to deliver product effectively to our customers. We depend on independent distributors to sell our products in certain international markets. Our competitive position could be harmed if we are unable to protect our intellectual property rights. Counterfeiting of our brands can divert sales and damage our brand image. We may be subject to periodic litigation and other regulatory proceedings and may be affected by changes in government regulations. Our net income may be adversely affected by an increase in our effective tax rate. We depend on attracting and retaining qualified personnel, whose loss would adversely impact our business. A limited number of our stockholders can exert significant influence over the Company. We depend on our computer and communications systems. Our business may be adversely affected if we encounter complications in connection with our implementation of SAP information management software.

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862480--2/26/2008--K_SWISS_INC