836106--3/1/2007--NOVELLUS_SYSTEMS

related topics

{regulation, change, law}

{property, intellectual, protect}

{loan, real, estate}

{customer, product, revenue}

{condition, economic, financial}

{stock, price, operating}

{product, market, service}

{cost, regulation, environmental}

{control, financial, internal}

{personnel, key, retain}

{operation, international, foreign}

{financial, litigation, operation}

{tax, income, asset}

{acquisition, growth, future}

Cyclical downturns in the semiconductor industry negatively impact demand for our equipment. The competitive and capital-intensive nature of the semiconductor industry increases the difficulty of maintaining gross margin and maintaining and capturing market share. We are exposed to risks associated with outsourcing activities, which could result in supply shortages that could affect our ability to meet customer demands. The loss of key employees could harm our business and operations. We face risks related to concentration of net sales. We are exposed to the risks of global operations. We face risks related to intellectual property. Changes in tax rates or liabilities could negatively impact our future results. We are subject to litigation proceedings that could adversely affect our business. We are exposed to risks associated with our diversification strategy. We are exposed to risks associated with our investment activities. Corporate governance and financial reporting requirements have led and may continue to lead to increased costs and may make it more difficult to attract qualified executive officers and directors. We are exposed to risks related to our indemnification of third parties. We face risks related to changes in accounting standards for stock option plans. If our outside audit firm does not maintain its independence, we may be unable to meet our regulatory reporting obligations. We face risks associated with acquisitions. Our quarterly operating results and stock price are unpredictable. Compliance with current and future environmental regulations may be costly.

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836106--3/1/2007--NOVELLUS_SYSTEMS_INC