1275014--2/28/2006--ULTRA_CLEAN_HOLDINGS

related topics

{stock, price, operating}

{customer, product, revenue}

{product, market, service}

{acquisition, growth, future}

{operation, international, foreign}

{property, intellectual, protect}

{personnel, key, retain}

{provision, law, control}

{operation, natural, condition}

{control, financial, internal}

{product, liability, claim}

{cost, regulation, environmental}

{competitive, industry, competition}

{stock, price, share}

We have recently established operations in China, which exposes us to new risks associated with operating in a foreign country. Our quarterly revenue and operating results fluctuate significantly from period to period, and this may cause volatility in our common stock price. Third parties have claimed and may in the future claim we are infringing their intellectual property, which could subject us to litigation or licensing expenses, and we may be prevented from selling our products if any such claims prove successful. Because we are subject to order and shipment uncertainties, any significant reductions, cancellations or delays in customer orders could cause our revenue to decline and our operating results to suffer. The manufacturing of our products is highly complex, and if we are not able to manage our manufacturing and procurement process effectively, our business and operating results will suffer. OEMs may not continue to outsource gas delivery systems and other subsystems, which would adversely impact our operating results. If our new products are not accepted by OEMs or if we are unable to maintain historical margins on our new products, our operating results would be adversely impacted. We may not be able to manage our future growth successfully. We may experience difficulties and incur significant costs as a result of evaluating or completing acquisitions of companies, assets, businesses or technologies, and the anticipated benefits of any completed or contemplated acquisitions may never be realized. Our business is largely dependent on the know-how of our employees, and we generally do not have a protected intellectual property position. If we do not keep pace with developments in the semiconductor industry and with technological innovation generally, our products may not be competitive. The industry in which we participate is highly competitive and rapidly evolving, and if we are unable to compete effectively, our operating results would be harmed. We must achieve design wins to retain our existing customers and to obtain new customers. We may not be able to respond quickly enough to increases in demand for our products. Our dependence on our suppliers may prevent us from delivering an acceptable product on a timely basis. Defects in our products could damage our reputation, decrease market acceptance of our products, cause the unintended release of hazardous materials and result in potentially costly litigation. The technology labor market is very competitive, and our business will suffer if we are unable to hire and retain key personnel. We may not be able to fund our future capital requirements from our operations, and financing from other sources may not be available on favorable terms or at all. Fluctuations in currency exchange rates may adversely affect our financial condition and results of operations. If environmental contamination were to occur in one of our manufacturing facilities, we could be subject to substantial liabilities. If our facilities were to experience catastrophic loss due to natural disasters, our operations would be seriously harmed. We may not be able to continue to secure adequate facilities to house our operations, and any move to a new facility could be disruptive to our operations. We must maintain effective controls, and our auditors will report on them. Risks related to our ownership by Francisco Partners We will continue to be controlled by FP-Ultra Clean, L.L.C. as long as FP-Ultra Clean, L.L.C. owns a significant percentage of our common stock, and therefore our other stockholders will be unable to affect the outcome of stockholder voting during such time. FP-Ultra Clean, L.L.C. and its designees on our board of directors may have interests that conflict with our interests and the interests of our other stockholders. Risks related to the securities markets and ownership of our common stock Future sales of our common stock by our controlling stockholder could depress our stock price. The market for our stock is subject to significant fluctuation. Provisions of our charter documents could discourage potential acquisition proposals and could delay, deter or prevent a change in control.

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1275014--2/28/2006--ULTRA_CLEAN_HOLDINGS_INC