706015--3/10/2006--FILENET

related topics

{product, market, service}

{system, service, information}

{stock, price, operating}

{property, intellectual, protect}

{personnel, key, retain}

{acquisition, growth, future}

{capital, credit, financial}

{operation, international, foreign}

{regulation, change, law}

{product, candidate, development}

{customer, product, revenue}

Our quarterly operating results may fluctuate in future periods and are not predictable and, as a result, we may fail to meet expectations of investors and analysts, causing our stock price to fluctuate or decline. The markets in which we operate are highly competitive and we cannot ensure that we will be able to continue to compete effectively, which could result in lost market share and reduced revenue. A significant portion of our revenue is derived internationally and we are subject to many risks internationally, which could put our revenue at risk. The market for content management solutions may not grow as we anticipate, and may decline, and our products may not gain acceptance within this market, resulting in reduced revenue. We must develop and sell new products to keep up with rapid technological change in order to achieve future revenue growth and profitability. We are dependent upon customers concentrated in a small number of industries. A significant decline in one of those industries could result in reduced revenue. We must devote substantial resources to software development, and we may not realize revenue from our development efforts for a substantial period of time. We are increasing our use of third-party software developers and may have difficulty enforcing or managing our agreements with them, which could delay new product introductions and reduce revenue. We must retain and attract key executives and personnel who are essential to our business, which could result in increased personnel expenses. If our products contain errors or performance problems, we could incur unplanned expenses and delays that could result in reduced revenue, lower profits, and harmful publicity. The limitation of liability provisions contained in our license agreements may not be effective as a result of existing or future federal, state or local laws or ordinances or unfavorable judicial decisions. Acquisitions of companies or technologies may result in disruptions to our business and diversion of management attention, which could cause our financial performance to suffer. Our business is highly automated for the execution of marketing, selling and technical support functions, and natural disasters that disable these systems could result in a disruption in our ability to transact business Protection of our intellectual property and other proprietary rights is limited, which could result in the use of our technology by competitors or other third parties. We may, from time to time, be notified that we are infringing certain patent or intellectual property rights of others, which could expose us to litigation and other costs. We depend on certain strategic relationships in order to broaden the number of third-party platforms with which our products are compatible and the loss of these relationships could harm our business. We currently license certain software from third parties, including software that is integrated with internally developed software and used in our products to perform key functions. Also, certain of our products include publicly available software pursuant to open source license agreements. We would be unable to sell these products if we do not maintain these licenses, which would result in reduced revenue. In addition to our direct sales force, we depend on relationships with systems integrators, independent software vendors, and value added resellers to sell our products and services The loss of a large strategic partner could affect our ability to sell in a specific segment of the market. Our stock price has been and may continue to be volatile, causing fluctuations in the market price of our stock, which would impact shareholder value.

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706015--3/10/2006--FILENET_CORP