897067--3/15/2006--CYMER

related topics

{customer, product, revenue}

{property, intellectual, protect}

{regulation, change, law}

{product, market, service}

{personnel, key, retain}

{operation, international, foreign}

{competitive, industry, competition}

{acquisition, growth, future}

{cost, regulation, environmental}

{operation, natural, condition}

{stock, price, operating}

{product, liability, claim}

Our business depends on the semiconductor and the semiconductor capital equipment industries, which are highly volatile and unpredictable. A significant percentage of our revenue is derived from sales to a few large 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. A substantial percentage of our revenue is derived from the sale of a limited number of primary products. 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 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 must effectively manage changes in our business. Chipmakers 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. We depend on a few key suppliers for purchasing components and subassemblies that are included in our products. We face competition from one company and may face competition from additional competitors who enter the market. 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. 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. Compliance with changing regulations of corporate governance and public disclosure may result in additional expenses Decreased effectiveness of equity compensation could adversely affect our ability to attract and retain employees, and changes in accounting for equity compensation could adversely affect earnings. 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 performing these services. In the future, we may be subject to patent litigation to enforce patents issued to us and defend ourselves against claimed infringement by our competitor or any other third party. Trademark infringement claims against our registered and unregistered trademarks would be expensive and we may have to stop using such trademarks and pay damages. 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 risks related to the fluctuations in the currency exchange rates for all foreign currencies in which we do business, but particularly for the Japanese yen. 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. Many foreign government standards and regulations apply to our products. These standards and regulations are always being amended. Although we intend to meet all foreign standards and regulations, our products may not comply with these foreign government standards and regulations. Further, it might not be cost effective for us to redesign our products to comply with these foreign government standards and regulations. Our inability to design products to comply with foreign standards therefore could have a material adverse effect on our business. 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. The price of our common stock has fluctuated and may continue to fluctuate widely.

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897067--3/15/2006--CYMER_INC