897067--2/27/2008--CYMER

related topics

{customer, product, revenue}

{property, intellectual, protect}

{product, market, service}

{system, service, information}

{operation, international, foreign}

{regulation, change, law}

{stock, price, operating}

{personnel, key, retain}

{competitive, industry, competition}

{acquisition, growth, future}

{product, liability, claim}

{cost, regulation, environmental}

{operation, natural, condition}

{condition, economic, financial}

Our revenues and operating results from quarter to quarter and year to year have varied in the past and our future operating results may continue to fluctuate significantly. Our business depends on the semiconductor and the semiconductor capital equipment industries, which are volatile and unpredictable. A significant percentage of our revenue is derived from sales to our lithography tool manufacturer customers, and if we are not able to retain these customers, or they reschedule, reduce or cancel orders, or delay or default on payments, our revenues would be reduced and our financial condition and cash flows would suffer. Our revenue is derived from the sale of a limited number of models of our light source systems, and replacement and support service products surrounding these systems. We depend on the introduction of new products for our success, and we are subject to risks associated with rapid technological change. Failure to maintain effectively our direct field service and support organization could have a material adverse effect on our business. We must develop and manufacture enhancements to our existing products and introduce new products in order to benefit our customers and continue to grow our business. We may not effectively manage our growth and integrate these new enhancements and products, which could materially harm our business. We face competition from one company and may face competition from additional competitors who enter the market. We must effectively manage changes in our business. We depend on a few key suppliers for purchasing components and subassemblies that are included in our products. We are dependent on our limited manufacturing facilities and on our subcontractors to assemble and test our products. We depend on key personnel, especially management and technical personnel, who may be difficult to attract and retain. Economic, political, regulatory and other events in geographic areas where we have significant sales or operations could interfere with our business. Our ability to compete could be jeopardized if we are unable to protect our intellectual property rights. These types of claims could seriously harm our business or require us to incur significant costs. The parties to whom we provide research and development services may dispute the ownership of the intellectual property that we develop while performing these services. We may be subject to patent litigation to enforce patents issued to us or defend ourselves against claimed infringement by our competitor or any other third party. We may acquire a business or enter a new market that will involve numerous risks. We may not be able to address these risks successfully without substantial expense, delay or other operational and financial challenges. We may experience difficulties with our enterprise resource planning ("ERP") system or other critical information systems that we use for the daily operations of our business. System failure or malfunction or loss of data contained in these information systems may result in disruption of our operations and result in our inability to process transactions, and this could adversely affect our financial results. Compliance with changing regulations and standards for accounting, corporate governance and public disclosure may result in additional expenses We are dependent on air transport to conduct our business and disruption of domestic and international air transport systems could adversely affect our business. We are exposed to foreign currency exchange rate fluctuations for all foreign currencies in which we do business and we may be adversely affected by these fluctuations or declining economic conditions in the countries in which we operate. We are subject to many standards and regulations of foreign governments and, even though we intend to comply, we may not always be in compliance with these rules, or we may be unable to design or redesign our products to comply with these rules. Our chipmaker customers' prolonged use of our products in high volume production may not produce the results they desire and, as a result, our reputation and that of our customers who supply photolithography tools to the chipmakers could be damaged in the semiconductor industry. Our operations are subject to environmental and other government regulations that may expose us to liabilities for noncompliance. Our products are subject to potential product liability claims if personal injury or death results from their use. Trademark infringement claims against our registered and unregistered trademarks would be expensive and we may have to stop using such trademarks and pay damages. The price of our common stock has fluctuated and may continue to fluctuate widely.

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897067--2/27/2008--CYMER_INC