| HANOVER COMPRESSOR CO / Item 1A Risk Factors We have a substantial amount of debt, including our compression equipment lease obligations, that could limit our ability to fund future growth and operations and increase our exposure during adverse economic conditions |
| At December 31, 2005, we had approximately dlra1cmam478dtta9 million of debt, including approximately dlra48dtta0 million in borrowings and excluding outstanding letters of credit of approximately dlra118dtta6 million under our bank credit facility |
| Additional borrowings of up to dlra283dtta4 million were available under that facility as of December 31, 2005 |
| Our substantial debt could have important consequences |
| For example, these commitments could: • make it more difficult for us to satisfy our contractual obligations; • increase our vulnerability to general adverse economic and industry conditions; • limit our ability to fund future working capital, capital expenditures, acquisitions or other general corporate requirements; • increase our vulnerability to interest rate fluctuations because the interest payments on a portion of our debt are at, and a portion of our compression equipment leasing expense is based upon, variable interest rates; • limit our flexibility in planning for, or reacting to, changes in our business and our industry; • place us at a disadvantage compared to our competitors that have less debt or fewer operating lease commitments; and • limit our ability to borrow additional funds |
| We will need to generate a significant amount of cash to service our debt, to fund working capital and to pay our debts as they come due |
| Our ability to make scheduled payments on our compression equipment lease obligations and our other debt, or to refinance our debt and other obligations, will depend on our ability to generate cash in the future |
| Our ability to generate cash in the future is subject to, among other factors, our operational performance, as well as general economic, financial, competitive, legislative and regulatory conditions |
| For the year ended December 31, 2005, we incurred interest expense of dlra136dtta9 million related to our debt, including our compression equipment lease obligations |
| Our ability to refinance our debt and other financial obligations at a reasonable cost will be affected by the factors discussed herein and by the general market at the time we refinance |
| The factors discussed herein could adversely affect our ability to refinance this debt and other financial obligations at a reasonable cost |
| Our business may not generate sufficient cash flow from operations, and future borrowings may not be available to us under our bank credit facility in an amount sufficient to enable us to pay our debt, compression equipment lease obligations, operating lease commitments and other financial obligations, or to fund our other liquidity needs |
| We cannot be sure that we will be able to refinance any of our debt or our other financial obligations on commercially reasonable terms or at all |
| Our inability to refinance our debt or our other financial obligations on commercially reasonable terms could materially adversely affect our business |
| 17 _________________________________________________________________ [72]Table of Contents The documents governing our outstanding debt, including our compression equipment lease obligations, contain financial and other restrictive covenants |
| Failing to comply with those covenants could result in an event of default which, if not cured or waived, could have a material adverse effect on us |
| Our bank credit facility and other debt obligations, including the indentures related to our notes and the agreements related to our compression equipment lease obligations, contain, among other things, covenants that may restrict our ability to finance future operations or capital needs or to engage in other business activities |
| These covenants include provisions that, among other things, restrict our ability to: • incur additional debt or issue guarantees; • create liens on our assets; • engage in mergers, consolidations and dispositions of assets; • enter into additional operating leases; • pay dividends on or redeem capital stock; • enter into derivative transactions; • make certain investments or restricted payments; • make investments, loans or advancements to certain of our subsidiaries; • prepay or modify our debt facilities; • enter into transactions with affiliates; or • enter into sale leaseback transactions |
| In addition, under our bank credit facility we have granted the lenders a security interest in our inventory, equipment and certain of our other property and the property of our US subsidiaries and pledged 66prca of the equity interest in certain of our international subsidiaries |
| Our bank credit facility also prohibits us (without the lenders’ prior approval) from declaring or paying any dividend (other than dividends payable solely in our common stock or in options, warrants or rights to purchase such common stock) on, or making similar payments with respect to, our capital stock |
| Our bank credit facility and other financial obligations and the agreements related to our compression equipment lease obligations require us to maintain financial ratios and tests, which may require that we take action to reduce our debt or act in a manner contrary to our business objectives |
| Adverse conditions in the oil and gas business or in the United States or global economy or other events related to our business may affect our ability to meet those financial ratios and tests |
| A breach of any of these covenants or failure to maintain such financial ratios would result in an event of default under our bank credit facility, the agreements related to our compression equipment lease obligations and the agreements relating to our other financial obligations |
| A material adverse change in our business may also limit our ability to effect borrowings under our bank credit facility |
| If such an event of default occurs, the lenders could elect to declare all amounts outstanding thereunder, together with accrued interest, to be immediately due and payable |
| 18 _________________________________________________________________ [73]Table of Contents We have significant leverage relative to our total capitalization, which could result in a further downgrade in our credit rating or other adverse consequences if we do not reduce our leverage |
| As of February 24, 2006, our credit ratings as assigned by Moody’s and Standard & Poor’s were: Standard & Moody’s Poor’s Outlook Stable Stable Senior implied rating B1 BB- Liquidity Rating SGL-3 — 2001A equipment lease notes, interest at 8dtta5prca, due September 2008 B2 B+ 2001B equipment lease notes, interest at 8dtta8prca, due September 2011 B2 B+ 4dtta75prca convertible senior notes due 2008 B3 B 4dtta75prca convertible senior notes due 2014 B3 B 8dtta625prca senior notes due 2010 B3 B 9dtta0prca senior notes due 2014 B3 B Zero coupon subordinated notes, interest at 11prca, due March 31, 2007 Caa1 B- 7dtta25prca convertible subordinated notes due 2029* Caa1 B- * Rating is on the Mandatorily Redeemable Convertible Preferred Securities issued by Hanover Compressor Capital Trust, a trust that we sponsored |
| Prior to adoption of FIN 46 in 2003, these securities were reported on our balance sheet as mandatorily redeemable convertible preferred securities |
| Because we only have a limited ability to make decisions about its activities and we are not the primary beneficiary of the trust, the trust is a variable interest entity (“VIE”) under FIN 46 |
| As such, the Mandatorily Redeemable Convertible Preferred Securities issued by the trust are no longer reported on our balance sheet |
| These notes have previously been eliminated in our consolidated financial statements |
| The changes related to our Mandatorily Redeemable Convertible Preferred Securities for our balance sheet are reclassifications and had no impact on our consolidated results of operations or cash flow |
| We do not have any credit rating downgrade provisions in our debt agreements or the agreements related to our compression equipment lease obligations that would accelerate their maturity dates |
| However, a downgrade in our credit rating could materially and adversely affect our ability to renew existing, or obtain access to new, credit facilities in the future and could increase the cost of such facilities |
| Should this occur, we might seek alternative sources of funding |
| In addition, our significant leverage puts us at greater risk of default under one or more of our existing debt agreements if we experience an adverse change to our financial condition or results of operations |
| Our ability to reduce our leverage depends upon market and economic conditions, as well as our ability to execute liquidity-enhancing transactions such as sales of non-core assets or our equity securities |
| We are still in the process of improving our infrastructure capabilities, including our internal controls and procedures, which were strained by our rapid growth, to reduce the risk of future accounting and financial reporting problems |
| We experienced rapid growth from 1998 through 2001, primarily as a result of acquisitions, particularly during 2000 and 2001, during which period our total assets increased from approximately dlra753 million as of December 31, 1999 to approximately dlra2dtta3 billion as of December 31, 2001 |
| Our growth exceeded our infrastructure capabilities and strained our internal control environment |
| During 2002, we announced a series of restatements of transactions that occurred in 1999, 2000 and 2001 |
| In November 2002, the SEC issued a Formal Order of Private Investigation relating to the transactions underlying and other matters relating to the restatements |
| In addition, during 2002, Hanover and certain of its officers and directors were named as defendants in a consolidated action in federal court that included a putative securities class action, a putative class action arising under the Employee Retirement Income Security Act and shareholder derivative actions |
| The litigation related principally to 19 _________________________________________________________________ [74]Table of Contents the matters involved in the transactions underlying the restatements of our financial statements |
| Both the SEC investigation and the litigation were settled in 2003 |
| During 2002, a number of company executives involved directly and indirectly with the transactions underlying the restatements resigned, including our former Chief Executive Officer, Chief Financial Officer and Vice Chairman of our board of directors, Chief Operating Officer and the head of our international operations |
| Under the direction of our board of directors and new management, we have continued to review our internal controls and procedures for financial reporting and have substantially enhanced our controls and procedures |
| Even after making our improvements to our internal controls and procedures, Hanover’s internal control over financial reporting may not prevent or detect misstatements |
| A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that objectives of the control system are met |
| Future accounting and financial reporting problems could result in, among other things, new securities litigation claims being brought against us, future investigations of us by the SEC and possible fines and penalties, including those resulting from a violation of the cease and desist order we entered into with the SEC in December 2003, and a loss of investor confidence which could adversely affect the trading prices of our debt and equity securities and adversely affect our ability to access sources of necessary capital |
| Unforeseen difficulties with the implementation or operation of our enterprise resource planning system could adversely affect our internal controls and our business |
| We contracted with Oracle Corporation to assist us with the design and implementation of an enterprise resource planning system that supports our human resources, accounting, estimating, financial, fleet and job management and customer systems |
| We have substantially completed implementation of this system |
| The efficient execution of our business is dependent upon the proper functioning of our internal systems |
| Any significant failure or malfunction of our enterprise resource planning system may result in disruptions of our operations |
| Our results of operations could be adversely affected if we encounter unforeseen problems with respect to the operation of this system |
| We require a substantial amount of capital to expand our compressor rental fleet and our complementary businesses |
| We invested dlra155dtta1 million in property, plant and equipment during the year ended December 31, 2005, primarily for maintenance capital and international rental projects |
| Historically, we have funded our capital expenditures through internally generated funds, sale and leaseback transactions and debt and equity financing |
| While we believe that cash flow from our operations and borrowings under our existing dlra450 million bank credit facility will provide us with sufficient cash to fund our planned 2006 capital expenditures, we cannot assure you that these sources will be sufficient |
| At December 31, 2005, we had dlra48dtta0 million in outstanding borrowings and dlra118dtta6 million in letters of credit outstanding under our bank credit facility |
| Additional borrowings of up to dlra283dtta4 million were available under that facility at December 31, 2005 |
| Failure to generate sufficient cash flow, together with the absence of alternative sources of capital, could have a material adverse effect on our business, consolidated financial condition, results of operations or cash flows |
| Our ability to substitute compression equipment under our compression equipment leases is limited and there are risks associated with reaching that limit prior to the expiration of the lease term |
| As of December 31, 2005, we were the lessee in two transactions involving the sale of compression equipment by us to special purpose entities, which in turn lease the equipment back to us |
| We are entitled under the compression equipment operating lease agreements to substitute equipment that we own for equipment owned by the special purpose entities, provided that the value of the equipment that we are substituting is equal to or greater than the value of the equipment that is being substituted |
| We generally substitute equipment when one of our lease customers exercises a contractual right or 20 _________________________________________________________________ [75]Table of Contents otherwise desires to buy the leased equipment or when fleet equipment owned by the special purpose entities becomes obsolete or is selected by us for transfer to international projects |
| Each lease agreement limits the aggregate amount of replacement equipment that may be substituted to, among other restrictions, a percentage of the termination value under each lease |
| The termination value is equal to (1) the aggregate amount of outstanding principal of the corresponding notes issued by the special purpose entity, plus accrued and unpaid interest and (2) the aggregate amount of equity investor contributions to the special purpose entity, plus all accrued amounts due on account of the investor yield and any other amounts owed to such investors in the special purpose entity or to the holders of the notes issued by the special purpose entity or their agents |
| In the following table, termination value does not include amounts in excess of the aggregate outstanding principal amount of notes and the aggregate outstanding amount of the equity investor contributions, as such amounts are periodically paid as supplemental rent as required by our compression equipment operating leases |
| The aggregate amount of replacement equipment substituted (in dollars and percentage of termination value), the termination value and the substitution percentage limitation relating to each of our compression equipment operating leases as of December 31, 2005 are as follows: Substitution Limitation as Value of Percentage of Percentage of Substituted Termination Termination Termination Lease Termination Lease Equipment Value(1) Value(1) Value Date (dollars in millions) 2001A compression equipment lease $ 19dtta4 14dtta2prca $ 137dtta1 25prca September 2008 2001B compression equipment lease 45dtta4 17dtta6prca 257dtta7 25prca September 2011 Total $ 64dtta8 $ 394dtta8 (1) Termination value assumes all accrued rents paid before termination |
| In the event we reach the substitution limitation prior to a lease termination date, we will not be able to effect any additional substitutions with respect to such lease |
| This inability to substitute could have a material adverse effect on our business, consolidated financial position, results of operations and cash flows |
| A prolonged, substantial reduction in oil or gas prices, or prolonged instability in US or global energy markets, could adversely affect our business |
| Our operations depend upon the levels of activity in natural gas development, production, processing and transportation |
| In recent years, oil and gas prices and the level of drilling and exploration activity have been volatile |
| For example, oil and gas exploration and development activity and the number of well completions typically decline when there is a significant reduction in oil and gas prices or significant instability in energy markets |
| As a result, the demand for our gas compression and oil and gas production and processing equipment would be adversely affected |
| Any future significant, prolonged decline in oil and gas prices could have a material adverse effect on our business, consolidated financial condition, results of operations and cash flows |
| Erosion of the financial condition of our customers can also adversely affect our business |
| During times when the oil or natural gas market weakens, the likelihood of the erosion of the financial condition of these customers increases |
| If and to the extent the financial condition of our customers declines, our customers could seek to preserve capital by canceling or delaying scheduled maintenance of their existing gas compression and oil and gas production and processing equipment or determining not to purchase new gas compression and oil and gas production and processing equipment |
| In addition, upon the financial failure of a customer, we could experience a loss associated with the unsecured portion of any of our outstanding accounts receivable |
| 21 _________________________________________________________________ [76]Table of Contents There are many risks associated with conducting operations in international markets |
| We operate in many geographic markets outside the United States |
| Changes in local economic or political conditions, particularly in Latin America and Nigeria, could have a material adverse effect on our business, consolidated financial condition, results of operations and cash flows |
| Additional risks inherent in our international business activities include the following: • difficulties in managing international operations; • unexpected changes in regulatory requirements; • tariffs and other trade barriers that may restrict our ability to enter into new markets; • governmental actions that result in the deprivation of contract rights; • changes in political and economic conditions in the countries in which we operate, including civil uprisings, riots, kidnappings and terrorist acts, particularly with respect to our operations in Nigeria; • potentially adverse tax consequences; • restrictions on repatriation of earnings or expropriation of property without fair compensation; • difficulties in establishing new international offices and risks inherent in establishing new relationships in foreign countries; and • the burden of complying with the various laws and regulations in the countries in which we operate |
| We have substantial operations in Argentina and Venezuela |
| As a result, adverse political conditions in Argentina and Venezuela could materially and adversely affect our business |
| As a result of continued pressure by Argentina’s unions for increased compensation for workers, and related civil unrest, we have experienced an increase in operating costs in Argentina |
| In the past, we have been able to successfully renegotiate some of our contracts to recover a portion of cost increases |
| While we hope to recover cost increases that we incur, we can provide no assurance that we will be successful in renegotiating our Argentine contracts |
| In December 2002, opponents of Venezuelan President Hugo Chavez initiated a country-wide strike by workers of the national oil company in Venezuela |
| This strike, a two-month walkout, had a significant negative impact on Venezuela’s economy and temporarily shut down a substantial portion of Venezuela’s oil industry |
| As a result of the strike, Venezuela’s oil production dropped |
| In addition, exchange controls have been put in place that put limitations on the amount of Venezuelan currency that can be exchanged for foreign currency by businesses operating inside Venezuela |
| In May 2003, after six months of negotiation, the Organization of the American States brokered an agreement between the Venezuelan government and its opponents |
| Although the accord does offer the prospect of stabilizing Venezuela’s economy, if another national strike is staged, exchange controls remain in place, or economic and political conditions in Venezuela continue to deteriorate, our results of operations in Venezuela could be materially and adversely affected, which could result in reductions in our net income |
| In addition, our future plans involve expanding our business in international markets where we currently do not conduct business |
| The risks inherent in establishing new business ventures, especially in international markets where local customs, laws and business procedures present special challenges, may affect our ability to be successful in these ventures or avoid losses which could have a material adverse effect on our business, financial condition, results of operations and cash flows |
| 22 _________________________________________________________________ [77]Table of Contents Fluctuations in currency exchange rates in Italy, Argentina and Venezuela could adversely affect our business |
| We have significant operations that expose us to currency risk in Argentina and Venezuela |
| For the year ended December 31, 2005, our Argentine operations represented approximately 5prca of our revenue and 8prca of our gross profit |
| For the year ended December 31, 2005, our Venezuelan operations represented approximately 10prca of our revenue and 18prca of our gross profit |
| At December 31, 2005, we had approximately dlra17dtta3 million and dlra18dtta3 million in accounts receivable related to our operations in Argentina and Venezuela, respectively |
| At December 31, 2005 we also had intercompany advances outstanding to our subsidiary in Italy of approximately dlra68dtta7 million |
| These advances are denominated in US dollars |
| The impact of the remeasurement of these advances on our statement of operations by our subsidiary will depend on the outstanding balance in future periods |
| The remeasurement of these advances resulted in a translation loss of approximately dlra10dtta3 million during the year ended December 31, 2005 and a translation gain of dlra3dtta7 million during the year ended December 31, 2004 |
| The following table summarizes the exchange gains and losses we recorded for assets exposed to currency translation (in thousands): Year Ended December 31, 2005 2004 Italy $ (10cmam388 ) $ 4cmam170 Argentina 388 (624 ) Venezuela 3cmam501 1cmam165 Canada (1cmam705 ) 105 All other countries 314 406 Exchange gain (loss) $ (7cmam890 ) $ 5cmam222 In February 2003, the Venezuelan government fixed the exchange rate to 1cmam600 bolivars for each US dollar |
| In February 2004 and March 2005, the Venezuelan government devalued the currency to 1cmam920 bolivars and 2cmam148 bolivars, respectively, for each US dollar |
| The impact of any further devaluation on our results will depend upon the amount of our assets (primarily working capital and deferred taxes) exposed to currency fluctuation in Venezuela in future periods |
| The economic situation in Argentina and Venezuela is subject to change |
| To the extent that the situation deteriorates, exchange controls continue in place and the value of the peso and bolivar against the dollar is reduced further, our results of operations in Argentina and Venezuela could be materially and adversely affected, which could result in reductions in our net income |
| Many of our compressor leases with customers have short initial terms, and we cannot be sure that the leases for these rental compressors will be renewed after the end of the initial lease term |
| The length of our compressor leases with customers varies based on operating conditions and customer needs |
| In most cases, under currently prevailing lease rates, the initial lease terms are not long enough to enable us to fully recoup the average cost of acquiring or fabricating the equipment |
| We cannot be sure that a substantial number of our lessees will continue to renew their leases or that we will be able to re-lease the equipment to new customers or that any renewals or re-leases will be at comparable lease rates |
| The inability to renew or re-lease a substantial portion of our compressor rental fleet would have a material adverse effect upon our business, consolidated financial condition, results of operations and cash flows |
| We operate in a highly competitive industry |
| We experience competition from companies that may be able to adapt more quickly to technological changes within our industry and throughout the economy as a whole, more readily take 23 _________________________________________________________________ [78]Table of Contents advantage of acquisitions and other opportunities and adopt more aggressive pricing policies |
| We also may not be able to take advantage of certain opportunities or make certain investments because of our significant leverage and the restrictive covenants in our bank credit facility, the agreements related to our compression equipment lease obligations and our other obligations |
| In times of weak market conditions, we may experience reduced profit margins from increased pricing pressure |
| We may not be able to continue to compete successfully in times of weak market conditions or against such competition |
| If we cannot compete successfully, we may lose market share and our business, consolidated financial condition, results of operations and cash flows could be materially adversely affected |
| Natural gas operations entail inherent risks that may result in substantial liability to us |
| Natural gas operations entail inherent risks, including equipment defects, malfunctions and failures and natural disasters, which could result in uncontrollable flows of gas or well fluids, fires and explosions |
| These risks may expose us, as an equipment operator or fabricator, to liability for personal injury, wrongful death, property damage, pollution and other environmental damage |
| Our business, consolidated financial condition, results of operations and cash flows could be materially adversely affected if we incur substantial liability and the damages are not covered by insurance or are in excess of policy limits |
| Our ability to manage our business effectively will be weakened if we lose key personnel |
| We depend on the continuing efforts of our executive officers and senior management |
| The departure of any of our key personnel could have a material adverse effect on our business, operating results and financial condition |
| We do not maintain key man life insurance coverage with respect to our executive officers or key management personnel |
| In addition, we believe that our success depends on our ability to attract and retain qualified employees |
| There is significant demand in our industry for experienced qualified employees |
| If we fail to retain our skilled personnel and to recruit other skilled personnel, we could be unable to compete effectively |
| Our business is subject to a variety of governmental regulations |
| We are subject to a variety of federal, state, local and international laws and regulations relating to the environment, health and safety, export controls, currency exchange, labor and employment and taxation |
| These laws and regulations are complex, change frequently and have tended to become more stringent over time |
| Failure to comply with these laws and regulations may result in a variety of administrative, civil and criminal enforcement measures, including assessment of monetary penalties, imposition of remedial requirements and issuance of injunctions as to future compliance |
| From time to time as part of the regular overall evaluation of our operations, including newly acquired operations, we may be subject to compliance audits by regulatory authorities in the various countries in which we operate |
| We may need to apply for or amend facility permits or licenses from time to time with respect to storm water or wastewater discharges, waste handling, or air emissions relating to manufacturing activities or equipment operations, which subjects us to new or revised permitting conditions that may be onerous or costly to comply with |
| In addition, certain of our customer service arrangements may require us to operate, on behalf of a specific customer, petroleum storage units such as underground tanks or pipelines and other regulated units, all of which may impose additional compliance and permitting obligations |
| As one of the largest natural gas compression companies in the United States, we conduct operations at numerous facilities in a wide variety of locations across the country |
| Our operations at many of these facilities require federal, state or local environmental permits or other authorizations |
| Additionally, natural gas compressors at many of our customer facilities require individual air permits or 24 _________________________________________________________________ [79]Table of Contents general authorizations to operate under various air regulatory programs established by rule or regulation |
| These permits and authorizations frequently contain numerous compliance requirements, including monitoring and reporting obligations and operational restrictions, such as emission limits |
| Generally, our customers are contractually responsible for any permits on their facilities, however, given the large number of facilities in which we operate, and the numerous environmental permits and other authorizations applicable to our operations, we occasionally identify or are notified of technical violations of certain requirements existing in various permits and other authorizations, and it is likely that similar technical violations will occur in the future |
| Occasionally, we have been assessed penalties for our non-compliance, and we could be subject to such penalties in the future |
| While such penalties generally do not have a material financial impact on our business or operations, it is possible future violations could result in substantial penalties |
| We currently do not anticipate that any changes or updates in response to regulations relating to the environment, health and safety, export controls, currency exchange, labor and employment and taxation, or that any other anticipated ongoing regulatory compliance obligations will have a material adverse effect on our operations either as a result of any enforcement measures or through increased capital costs |
| Based on our experience to date, we believe that the future cost of compliance with existing laws and regulations will not have a material adverse effect on our business, consolidated financial condition, results of operations and cash flows |
| However, future events, such as compliance with more stringent laws, regulations or permit conditions, a major expansion of our operations into more heavily regulated activities, more vigorous enforcement policies by regulatory agencies, or stricter or different interpretations of existing laws and regulations could require us to make material expenditures |
| Our business has acquired facilities in the past, which could subject us to future environmental liabilities |
| We have conducted preliminary environmental site assessments with respect to some, but not all, properties currently owned or leased by us, usually in a pre-acquisition context |
| These assessments have revealed that soils and/or groundwater at some of our facilities are contaminated with hydrocarbons, heavy metals and various other regulated substances |
| With respect to acquired properties, we do not believe that our operations caused or contributed to any such contamination in any material respect and we are not currently under any governmental orders or directives requiring us to undertake any remedial activity at such properties |
| We typically will develop a baseline of site conditions so we can establish conditions at the outset of our operations on such property |
| However, the handling of petroleum products and other regulated substances is a normal part of our operations and we have experienced occasional minor spills or incidental leakage below reportable quantity thresholds in connection with our operations |
| Certain properties previously owned or leased by us were determined to be affected by soil contamination |
| At one of our owned sites, we are working with the prior owner who has undertaken the full legal obligations to monitor and/or clean-up contamination at the sites that occurred prior to our acquisition of it |
| Where contamination was identified and determined by us to be our responsibility, we conducted remedial activities at these previously-held properties to the extent we believed necessary to meet regulatory standards and either sold the owned properties to third parties or returned the leased properties to the lessors |
| Based on our experience to date and the relatively minor nature of the types of contamination we have identified to date, we believe that the future cost of necessary investigation or remediation on our current properties will not have a material adverse effect on our business, consolidated financial condition, results of operations, and cash flows |
| We cannot be certain, however, that clean-up standards will not become more stringent, or that we will not be required to undertake any remedial activities involving any material costs on any of these current or previously held properties in the future or that the discovery of unknown or migratory contamination or third-party claims made with respect to current or previously owned or leased properties will not result in material costs |
| 25 _________________________________________________________________ [80]Table of Contents Our stock price may experience volatility |
| Some of the factors that could affect our stock price are quarterly increases or decreases in revenue or earnings, changes in revenue or earnings estimates by the investment community, and speculation in the press or investment community about our financial condition or results of operations |
| General market conditions and US or international economic factors unrelated to our performance may also affect our stock price |
| For these reasons, investors should not rely on recent trends to predict future stock prices or financial results |