1097149--3/12/2007--ALIGN_TECHNOLOGY

related topics

{product, market, service}

{stock, price, operating}

{product, candidate, development}

{product, liability, claim}

{customer, product, revenue}

{control, financial, internal}

{system, service, information}

{property, intellectual, protect}

{regulation, government, change}

{stock, price, share}

{regulation, change, law}

{personnel, key, retain}

{provision, law, control}

{operation, international, foreign}

{acquisition, growth, future}

If we fail to grow our revenue while controlling our expenses, the market price of our common stock may decline. We have a limited operating history and expect our future financial results to fluctuate which may cause volatility in our stock price. We depend on the sale of Invisalign for the vast majority of our revenues, and any decline in sales of Invisalign or average selling prices would adversely affect revenue, gross margin and net profits. We are dependent on our international manufacturing operations, which exposes us to foreign operational, political and other risks that may harm our business. A key step in our manufacturing process relies on sophisticated computer technology that requires new technicians to undergo a relatively long training process. If we are unable to accurately predict our volume growth, and fail to hire sufficient number of technicians in advance of such demand, the delivery time of our product could be delayed which could adversely affect our results of operations. Our headquarters, ClinCheck setup and other manufacturing processes are all principally located in regions that are subject to earthquakes and other natural disasters. We currently rely on third parties to provide key inputs to our manufacturing process, and if our access to these inputs is diminished, our business may be harmed. We experience competition from manufacturers of traditional braces and expect aggressive competition from these and other companies that may introduce new technologies in the future. Our information technology systems are critical to our business. System integration and implementation issues and system security risks could disrupt our operations, which could have a material adverse impact on our business and operating results. Our success depends in part on our proprietary technology, and if we are unable to successfully enforce our intellectual property rights, our competitive position may be harmed. Litigating claims of this type is costly and could distract our management and cause a decline in our results of operations and stock price. While we believe we currently have adequate internal control over financial reporting, we are required to assess our internal control over financial reporting on an annual basis and any future adverse results from such assessment could result in a loss of investor confidence in our financial reports and have an adverse effect on our stock price. Our future success may depend on our ability to develop and successfully introduce new products. If we lose our key personnel or are unable to attract and retain key personnel, we may be unable to pursue business opportunities or develop our products. If we infringe the patents or proprietary rights of other parties or are subject to a patent infringement claim, our ability to grow our business will be severely limited. We maintain single supply relationships for certain of our key machines and materials technologies, and our business and operating results could be harmed if supply is restricted or ends. We have experienced rapid growth, and our failure to manage this growth could harm our business. We rely on our direct sales force to sell our products, and any failure to maintain our direct sales force could harm our business. Complying with regulations enforced by the Food and Drug Administration (FDA) and other regulatory authorities is an expensive and time-consuming process, and any failure to comply could result in substantial penalties. If the security of our customer and patient information is compromised, patient care could suffer, and we could be liable for related damages, and our reputation could be impaired. If compliance with healthcare regulations becomes costly and difficult for our customers or for us, we may not be able to grow our business. Extensive and changing government regulation of the healthcare industry may be expensive to comply with and exposes us to the risk of substantial government penalties. We face risks related to our international sales, including the need to obtain necessary foreign regulatory clearance or approvals. Our business exposes us to potential product liability claims, and we may incur substantial expenses if we are subject to product liability claims or litigation. In fiscal 2006 and during the first two months of fiscal 2007, the market price for our common stock was volatile. Future sales of significant amounts of our common stock may depress our stock price. Changes in, or interpretations of, accounting rules and regulations, could result in unfavorable accounting charges. We have made use of a shareholders rights plan to limit the possibility that we are acquired, which may mean that a transaction that shareholders are in favor of or are benefited by may be prevented.

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1097149--3/12/2007--ALIGN_TECHNOLOGY_INC