1039399--2/27/2008--FORMFACTOR

related topics

{customer, product, revenue}

{property, intellectual, protect}

{cost, contract, operation}

{acquisition, growth, future}

{personnel, key, retain}

{product, market, service}

{operation, international, foreign}

{operation, natural, condition}

{control, financial, internal}

{stock, price, share}

{provision, law, control}

{stock, price, operating}

{tax, income, asset}

{competitive, industry, competition}

{condition, economic, financial}

{cost, regulation, environmental}

Our operating results are likely to fluctuate, which could cause us to miss market analyst or investor expectations and cause the trading price of our common stock to decline. Cyclicality in the semiconductor industry historically has affected our sales and might do so in the future, and as a result we could experience reduced revenues or operating results. If we are unable to successfully ramp production of our Harmony architecture-based probe card products, our business may be materially adversely affected. If we are unable to manufacture our products efficiently, our operating results could suffer. If we do not innovate and keep pace with technological developments in the semiconductor industry, our products might not be competitive and our revenues and operating results could suffer. We depend upon the sale of our wafer probe cards for substantially all of our revenues, and the majority of our wafer probe cards are utilized by semiconductor manufacturers for testing DRAM devices; if we experience a downturn in demand for our products, our revenues could decline. The markets in which we participate are competitive, and if we do not compete effectively, our operating results could be harmed. We derive a substantial portion of our revenues from a small number of customers, and our revenues could decline significantly if any major customer cancels, reduces or delays a purchase of our products. If our relationships with our customers and companies that manufacture semiconductor test equipment deteriorate, our product development activities could be harmed. Because we generally do not have a sufficient backlog of unfilled orders to meet our quarterly revenue targets, revenues in any quarter are substantially dependent upon customer orders received and fulfilled in that quarter. If semiconductor manufacturers do not migrate elements of final test to wafer probe test, market acceptance of other applications of our technology could be delayed. Changes in test strategies, equipment and processes could cause us to lose revenues. We manufacture all our products at our facility in Livermore, California, and any disruption in the operations of this facility could adversely impact our business and operating results. If we do not effectively expand our manufacturing capacity at our new operations and manufacturing facility as demand for our products increases, and introduce automation into our processes, our business and operating results will be negatively impacted. We have delayed our planned establishment of a manufacturing facility in Singapore, and if we do not effectively execute our current global manufacturing plan or if we decide to change our plan, our operating results could be negatively impacted. If we are unable to continue to reduce the time it takes for us to design and produce a wafer probe card, our growth could be impeded. We obtain some of the components and materials we use in our products from a sole source or a limited group of suppliers, and the partial or complete loss of one of these suppliers could cause production delays and a substantial loss of revenues. Wafer probe cards that do not meet specifications or that contain defects could damage our reputation, decrease market acceptance of our technology, cause us to lose customers and revenues, and result in liability to us. If our ability to forecast demand for our products deteriorates or the predictability of our manufacturing yields do not improve, we could incur higher inventory losses than we currently experience. If we fail to remediate the material weakness identified in our internal control and accounting systems in October 2007 our business may be materially adversely affected. We might be subject to claims of infringement of other parties' proprietary rights which could harm our business. If we fail to protect our proprietary rights, our competitors might gain access to our technology, which could adversely affect our ability to compete successfully in our markets and harm our operating results. If we do not effectively manage growth and other changes in our business, these changes could place a significant strain on our management and operations and, as a result, our business might not succeed. If we fail to attract, integrate and retain qualified personnel, our business might be harmed. We may make acquisitions and investments, which could put a strain on our resources, cause ownership dilution to our stockholders and adversely affect our financial results. As part of our sales process, we could incur substantial sales and engineering expenses that do not result in revenues, which would harm our operating results. Our failure to comply with environmental laws and regulations could subject us to significant fines and liabilities, and new laws and regulations or changes in regulatory interpretation or enforcement could make compliance more difficult and costly. Because we conduct most of our business internationally, we are subject to operational, economic, financial and political risks abroad. Unanticipated changes in our tax rates or exposure to additional income tax liabilities could affect our profitability. We may not obtain the tax and other benefits that we anticipate through the expansion of our manufacturing operations into Singapore, which could negatively impact our operating results. The trading price of our common stock has been and is likely to continue to be volatile, and you might not be able to sell your shares at or above the price that you paid for them. Provisions of our certificate of incorporation and bylaws or Delaware law might discourage, delay or prevent a change of control of our company or changes in our management and, therefore, depress the trading price of our common stock.

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1039399--2/27/2008--FORMFACTOR_INC