1321033--3/9/2006--UGS

related topics

{debt, indebtedness, cash}

{system, service, information}

{product, market, service}

{condition, economic, financial}

{property, intellectual, protect}

{operation, international, foreign}

{cost, contract, operation}

{financial, litigation, operation}

{personnel, key, retain}

{acquisition, growth, future}

{stock, price, operating}

{product, candidate, development}

If we are unable to deliver new and innovative PLM software products and services, our revenues will be adversely affected. Substantial, prolonged economic downturns in the markets in which we operate could cause our customers to reduce their spending on capital investments, which has in the past and could in the future, negatively affect our results of operations. Our international sales constitute a substantial portion of our total sales and could be negatively affected by disruptions in international markets caused by currency exchange rate fluctuations, government actions, international political or economic instability, or other similar events. We expect that our quarterly operating results will fluctuate, which may result in fluctuations in the trading price of our senior subordinated notes. Future terrorist attacks could lead to decreased capital expenditures on PLM software and services and could negatively affect our business. We received certain indemnities from EDS that may not adequately protect us from liability against all consequences or aspects of matters we were indemnified against. Our ability to complete or integrate future acquisitions may adversely affect our business or financial performance. Declining unit prices and increased productivity of PLM software products, or changes in the pricing models for PLM software products, could negatively impact our revenue growth. As a result of our strategy of partnering with other companies for product development, marketing, distribution, and services, our products and business development could be adversely affected if we experience difficulties with our partners. Defects, major design errors or security flaws in our products could harm our reputation and expose us to potential liability. Our facilities and systems are subject to the risk of temporary damage due to system interference, breakdown or physical harm. Our international activities subject us to export requirements, the violation of which could adversely affect us. If we are unable to protect our intellectual property rights, it could negatively affect the value of our brands and products. Claims that our products infringe the intellectual property rights of others could increase our costs and reduce our sales, which would adversely affect our revenue and operating margins. The loss of technology licensed from third-parties on a non-exclusive basis that we integrate in our software could delay implementation of our products or force us to pay higher license fees. If we lose the services of our senior executives or employees who possess specialized market knowledge and technical skills, it could reduce our ability to compete, to manage our operations effectively, or to develop new products and services. Our level of indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry and prevent us from meeting our obligations under our senior subordinated notes. Restrictive covenants may adversely affect us. Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly. Our global presence increases the complexity of assessing the adequacy of our provision for income taxes.

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1321033--3/9/2006--UGS_Corp.