813347--2/22/2007--KOMAG_INC

related topics

{customer, product, revenue}

{product, market, service}

{acquisition, growth, future}

{property, intellectual, protect}

{operation, natural, condition}

{regulation, change, law}

{system, service, information}

{gas, price, oil}

{operation, international, foreign}

{personnel, key, retain}

{cost, regulation, environmental}

{stock, price, operating}

{financial, litigation, operation}

If we are unable to perform successfully in the highly competitive and increasingly concentrated disk industry, we may not be able to maintain or gain additional market share and our business and operating results would be harmed. If we do not keep pace with the rapid technological changes in the disk drive industry, we will not be able to compete effectively, and our operating results could suffer. If we fail to effectively implement our perpendicular magnetic recording media (PMR) product transition plans, our operating results will suffer. If we are unable to minimize the use of precious metals in our products and the price and scarcity of these precious metals continue to increase, our ability to transition to PMR products could be delayed or eliminated. Because we depend on a limited number of suppliers, if our suppliers experience capacity constraints or production failures, our production, operating results and growth potential could be harmed. We receive a large percentage of our net sales from only a few disk drive manufacturing customers, the loss or reduction of any of which would materially and adversely affect our business and sales. Our agreements with each of our major customers require us to meet certain production volumes and to provide certain credits on future disk sales, and if we fail to successfully perform under these agreements, we may incur substantial costs and expenses, and our business and financial condition could be materially and adversely affected. Our failure to timely and efficiently transition our enterprise resource planning software from the system we currently use to a new system, could adversely affect our business and financial results. If we are not able to attract and retain key personnel our business and operation results could be harmed. If our production capacity is underutilized, our gross margin will be adversely affected and we could sustain significant losses. Internal disk operations of disk drive manufacturers may adversely affect our ability to sell our disk products. All of our manufacturing operations are in Malaysia and our foreign operations and international sales subject us to additional risks inherent in doing business on an international level that could make it more costly and difficult to conduct our business. Because our products require a lengthy sales cycle with no assurance of high volume sales, we may expend significant financial and other resources without a return. Disk drive programs are highly customized. If we fail to respond to our customers demanding requirements, we will not be able to compete effectively. If we fail to improve the quality of, and control contamination in our manufacturing processes, we will lose our ability to remain competitive. An industry trend towards glass-based applications could negatively impact our ability to remain competitive. If we do not protect our patents and other intellectual property rights, our net sales could suffer. We may face intellectual property infringement claims that are costly to resolve, may divert our management s attention, and may negatively impact our business and operating results. Historical quarterly results may not accurately predict our performance due to a number of uncertainties and market factors, and as a result it is difficult to predict our future results. If we make unprofitable acquisitions or are unable to successfully integrate future acquisitions, our business could suffer. The nature of our operations makes us susceptible to material environmental liabilities, which could result in significant compliance and clean-up expenses and adversely affect our financial condition. From time to time, we may have to defend against lawsuits in connection with the operation of our business. Earthquakes, tsunamis or other natural or man-made disasters could disrupt our operations. Terrorist attacks may adversely affect our business and operating results. Compliance with the rules and regulations concerning corporate governance may be costly, time-consuming, and difficult to achieve, which could harm our operating results and business. In the future, we may need additional capital, which may not be available on favorable terms, or at all.

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813347--2/22/2007--KOMAG_INC_/DE/