EXHIBIT 99.1

RISK FACTORS

     You should carefully consider the following factors in addition to theother information set forth in this annual report in analyzing an investment inour common stock. The risks and uncertainties described below are not the onlyones facing us. Additional risks and uncertainties that we do not presently knowabout or that we currently believe are immaterial may also adversely impact ourbusiness operations. If any of the following risks actually occur, our business,financial condition or results of operations would likely suffer. In such case,the trading price of our common stock could fall, and you may lose all or partof the money you paid to buy our common stock. This annual report containsforward-looking statements that involve risks and uncertainties. Actual resultscould differ materially from those discussed herein. Factors that could cause orcontribute to such differences include, but are not limited to, those identifiedbelow as well as those discussed elsewhere in this annual report.

We had a net loss for fiscal 2003 and may incur further losses in thefuture.

     We have reported $133.6 million of net loss for fiscal 2003. We reported$49.2 million of net loss for fiscal 2002 and $25.8 million of net income forfiscal 2001. Due to the current downturn in the semiconductor industry and therelated downturn in the semiconductor capital equipment industry, weak economicconditions worldwide, and other factors, we cannot predict how long we willincur further losses or whether we will become profitable again. Moreover, inpart due to these downturns, for the year ended March 30, 2003, we recorded$81.3 million for the write off of goodwill and other intangible assets,inventory charge, restructuring, severance and other costs related to reductionsin work force. We cannot assure you that our business will not continue todecline or that our performance will improve.

We need to have sufficient cash to operate if our business is to succeed.

     Our principal sources of funds have been and are anticipated to becash and short-term investments on hand ($13.7 million unrestricted as of March31, 2003), cash flows from operating activities an, if available and necessary,borrowings under our bank credit facility. Our cash and short-term investmentsbalance decreased by $45.4 million during fiscal year 2003. No assurance can begiven that we will be able to maintain sufficient cash or liquidity to operateour business. We may require additional equity or debt financing to meet ourworking capital requirements or to fund our research and development activities.There can be no assurance that additional financing will be available whenrequired or, if available, will be on terms satisfactory to us. As a result of this and the mattersdiscussed above, our independent auditors report on our March 30, 2003consolidated financial statements indicates that there is substantial doubtabout our ability to continue as a going concern.

 

Our performance is affected by the cyclicality of the semiconductor deviceindustry, which may, from time to time, lead to decreased demand for ourproducts.

     The current downturn in the semiconductor industry is having a materialadverse effect on our business, financial condition and results of operations.Our business depends upon the capital expenditures of semiconductormanufacturers, which, in turn, depend upon the current and anticipated marketdemand for semiconductors and products utilizing semiconductors. Thesemiconductor industry is cyclical and has historically experienced periodicdownturns, which have often resulted in a decrease in the semiconductorindustry's demand for capital equipment, including process control metrologysystems. There is typically a six to twelve month lag between changes in thesemiconductor industry and the related impact on the level of capitalexpenditures. In most cases, the resulting decrease in capital expenditures hasbeen more pronounced than the precipitating downturn in semiconductor industryrevenues. We cannot be sure:

- when the semiconductor industry will recover; or
- whether the recovery, if it happens, will result in increased demand for ourcapital equipment by the semiconductor industry.

Our quarterly operating results have historically and may, in the future,vary significantly. This may result in volatility in the market price for ourshares.

     Our quarterly operating results have historically and may, in thefuture, vary significantly. Some of the factors that may influence our operatingresults and that could cause trading in our shares to be subject to extremeprice and volume fluctuations in a given quarter include:

- customer demand, which is influenced by economic conditions in thesemiconductor industry, demand for products that use semiconductors, marketacceptance of our products and those of our customers, seasonality, changes inproduct mix, and the timing, cancellation or delay of customer orders andshipments;
- competition, such as competitive pressures on prices of our products, theintroduction or announcement of new products by us or our competitors anddiscounts that may be granted to customers;
- fluctuations in the availability and cost of components, subassemblies andproduction capacity;
- expenses incurred in connection with litigation;
- product development costs, such as increased research, development,engineering and marketing expenses associated with new products or productenhancements, and the effect of transitioning to new or enhanced products;and
- levels of fixed expenses relative to revenue levels, including research anddevelopment costs associated with product development.

     During a given quarter, a significant portion of our revenue may bederived from the sale of a relatively small number of systems. Accordingly, asmall change in the number of systems actually shipped may cause significantchanges in operating results. In addition, because of the significantlydifferent gross margins attributable to our Therma-Probe and Opti-Probe productlines, changes in product mix may cause fluctuations in operating results. Inaddition, we cannot assure you that the market price of our common stock willnot experience significant fluctuations in the future, including fluctuationsthat are material, adverse and unrelated to our performance.

Our internal controls may be insufficient to timelyalert us to material information that is required to be included in our periodicreports or to provide reasonable assurance that our financial statements arefairly presented in conformity with generally accepted accountingprinciples.

In late January 2003, managementbecame aware of a possible revenue recognition issue associated with the sale ofone tool through one of our foreign branches. Our Audit Committee launched aninvestigation and engaged outside legal counsel and independent forensicaccountants to assist it. The investigation was conducted to (i) identifyadditional potential revenue recognition issues, if any; (ii) to review thebusiness expense practices of certain of our employees at that foreign branch.As a result of this matter, management conducted a detailed review of revenuerecognition. Based upon the investigation and management's revenue recognitionreview, a material weakness has been identified relating to controls surroundingevaluating and reporting revenue transactions, particularly in the Asia/Pacificregion.  Management is considering additional controls as a result of thespecial investigation and development is ongoing.

Also, in connection withPricewaterhouseCoopers LLP's audit for the year ended March 30, 2003,PricewaterhouseCoopers identified a material weakness in our processes relatingto account analysis and reconciliations, including lack of timely managementreview.  We are considering adopting additional controls and procedures tostrengthen our internal control system.  However, we cannot assure you that ourinternal control structure is sufficient to timely alert us to all materialinformation that is required to be filed in our period reports with the SEC orto provide reasonable assurance that our financial statements are fairlypresented in conformity with generally accepted accounting principles.

Our largest customers have historically accounted for a significant portionof our revenues. Accordingly, our business may be adversely affected by the lossof, or reduced purchases by, one or more of our large customers.

     If, for any reason, any of our key customers were to purchasesignificantly less of our products in the future, such decreased level ofpurchases could have a material adverse effect on our business, financialcondition and results of operations. During the year ended March 31, 2003, onecustomer represented 13%  of our net revenues. During the year ended March 31,2002, three customers represented 24%, 13% and 12% of our net revenues. Duringthe year ended April 1, 2001, two customers represented 22% and 13% of our netrevenues. As customers seek to establish closer relationships with theirsuppliers, we expect that our customer base will continue to become moreconcentrated with a limited number of customers accounting for a significantportion of our revenues. 

Our business could be adversely affected if we are unable to protect ourproprietary technology or if we infringe on the proprietary technology ofothers.

Our future success and competitive position depend in part upon our abilityto obtain and maintain proprietary technology used in our principal productfamilies, and we rely, in part, on patent, trade secret and trademark law toprotect that technology. We have obtained a number of patents relating to ourtwo key product families, the Opti-Probe and Therma-Probe, as well as our newerintegrated real time critical dimension products and have filed applications foradditional patents. There can be no assurance that any of our pending patentapplications will be approved, that we will develop additional proprietarytechnology that is patentable, that any patents owned by or issued to us willprovide us with competitive advantages or that these patents will not bechallenged by any third parties. Furthermore, there can be no assurance thatthird parties will not design around our patents. Any of the foregoing resultscould have a material adverse effect on our business, financial condition,results of operations or cash flows. 

On April 22, 2002, we filed a patent infringement suit against Boxer CrossInc. in the United States District Court, Northern District of California. Thesuit alleges that Boxer Cross' BX-10 product infringes certain patents held byTherma-Wave related to ion implant monitoring. Two of the asserted patents werepreviously found to be valid and infringed in a suit filed against Jenoptik, AG,in 1994. The earlier court rulings led to Jenoptik's withdrawal from the U.S.market.  On June 7, 2002, Boxer Cross filed its amended answer and counterclaimsto our complaint and asserted various affirmative defenses to our claims ofpatent infringement. The pleading also contained various counterclaims includingallegations that Therma-Wave's Therma-Probe product infringed upon certainpatents owned by Boxer Cross and also raised claims of misappropriation of tradesecrets, tortious interference with contract, unfair competition and unfairbusiness practices. We replied to Boxer Cross's counterclaims, denying thematerial allegations and asserting declaratory judgment counterclaims. OnDecember 9, 2002, the court held a Markman claim construction hearing on ourpatents-in-suit.  The court has not yet issued its ruling.  No discoverydeadline or trial date has been set. On April 29, 2003, Applied Materialsannounced that it had acquired all of the outstanding stock of Boxer Cross. Webelieve that the outcome from this matter, even if adverse to us, would not havea material adverse effect on our financial condition or results ofoperations.

     In addition to patent protection, we rely upon trade secret protectionfor our confidential and proprietary information and technology. We routinelyenter into confidentiality agreements with our employees. However, there can beno assurance that these agreements will not be breached, that we will haveadequate

remedies for any breach or that our confidential and proprietary informationand technology will not be independently developed by or become otherwise knownto third parties.

     We license and will continue to license certain technology used in ourproducts from third parties. Our inability to acquire any third-party licenses,or integrate the related third-party technologies into our products, couldresult in delays in our product developments and enhancements until equivalenttechnologies can be identified, licensed or integrated. We may also require newlicenses in the future as our business grows and technology evolves. We cannotassure you that these licenses will be available to us on commerciallyreasonable terms, if at all.

     Our commercial success will also depend, in part, on our ability toavoid infringing or misappropriating any patents or other proprietary rightsowned by third parties. If we are found to infringe or misappropriate a thirdparty's patent or other proprietary rights, we could be required to pay damagesto such third party, alter our products or processes, obtain a license from thethird party or cease activities utilizing such proprietary rights, includingmaking or selling products utilizing such proprietary rights. If we are requiredto do any of the foregoing, there can be no assurance that we will be able to doso on commercially favorable terms, if at all. Our inability to do any of theforegoing on commercially favorable terms could have a material adverse impacton our business, financial condition, results of operations or cash flows. 

Protection of our intellectual property rights, or third parties seekingto enforce their own intellectual property rights against us, may result inlitigation, the cost of which could be substantial. 

     There are currently no material legal proceedings pending against usother than those described in the prior risk factor. We may be required toinitiate additional litigation in order to enforce any patents issued to orlicensed to us or to determine the scope and/or validity of a third party'spatent or other proprietary rights. In addition, we may be subject to additionallawsuits by third parties seeking to enforce their own intellectual propertyrights. Any such litigation, regardless of outcome, could be expensive and timeconsuming and, as discussed above in the prior risk factor, could subject us tosignificant liabilities or require us to cease using proprietary third partytechnology and, consequently, could have a material adverse effect on ourbusiness, financial condition, results of operations or cash flows. 

We operate in the highly competitive semiconductor capital equipmentindustry and compete against larger companies.

     We operate in the highly competitive semiconductor capital equipmentindustry and face competition from a number of competitors, some of which havegreater financial, engineering, manufacturing and marketing resources andbroader product offerings than Therma-Wave. We cannot assure you that ourproducts will be able to compete successfully with the products of ourcompetitors. Many of our competitors are investing heavily in the development ofnew products aimed at applications we currently serve. Our competitors in eachproduct area can be expected to continue to improve the design and performanceof their products and to introduce new products with competitive prices andperformance characteristics. In addition, we believe that our competitorssometimes provide demonstration systems to semiconductor manufacturers at nocost. We could be required to employ similar promotions in order to remaincompetitive if this practice becomes more pervasive in the industry. 

Competitive conditions in our industry may require us to reduce ourprices.

     Due to competitive conditions in our industry, we have selectivelyreduced prices on our products in order to maintain our market share. Thesereductions are not necessarily permanent nor do they affect all of our products.There can be no assurance that competitive pressures will not necessitatefurther price reductions. Maintaining technological advantages to mitigate theadverse effect of pricing pressures will require a continued high level ofinvestment by us in research and development and sales and marketing. There canbe no assurance that we will have sufficient resources to continue to make suchinvestments or that we will be able to make the technological advances necessaryto maintain such competitive advantages. To the extent our products do notprovide technological advantages over products offered by our competitors, weare likely to experience increased price competition or loss of market sharewith respect to such products.

We encounter difficulties in soliciting customers of our competitorsbecause of high switching costs in the markets in which we operate.

     We believe that once a device manufacturer has selected a particularvendor's capital equipment, that manufacturer generally relies upon thatvendor's equipment for that specific production line application and, to theextent possible, subsequent generations of that vendor's systems. Accordingly,it may be difficult to achieve significant sales to a particular customer onceanother vendor's capital equipment has been selected by that customer unlessthere are compelling reasons to do so, such as significant performance or costadvantages.

We may incur indebtedness in the future under our bank credit facility,which could require the use of a portion of our excess cash flow and may limitour access to additional capital.

     As of March 30, 2003, we had no significant debt outstanding. We mayincur indebtedness from time to time to finance acquisitions, capitalexpenditures and working capital or for other purposes.

     The level of our indebtedness could have important consequences for us.The following summarizes the material consequences:

- a substantial portion of our cash flow from operations would be required tobe dedicated to the repayment of indebtedness and will not be available forother purposes;

- our future ability to obtain additional debt financing for working capital,capital expenditures, acquisitions or other purposes may be limited;and

- our level of indebtedness has in the past, and could in the future, limitour flexibility in reacting to changes in the industry, general economicconditions and our ability to withstand a prolonged downturn in thesemiconductor and/or semiconductor capital equipment industries.

Our future growth depends on our ability to develop new and enhancedproducts for the semiconductor industry. We cannot assure you that we will besuccessful in our product development efforts or that our new products will gaingeneral market acceptance.

     Our future growth will depend, in part, on our ability to design,develop, manufacture, assemble, test, market and support new products andenhancements on a timely and cost-effective basis. Our failure to successfullyidentify new product opportunities or to develop, manufacture, assemble orintroduce new products could have a material adverse effect on our growthprospects. For example, we expect our product development efforts to includecontinuing to combine separate metrology systems into one tool, implementingintegrated systems and networking these systems together. Integrated systemsallow us to measure product wafers and monitor process equipment during thesemiconductor fabrication process. We cannot assure you that we will notexperience difficulties or delays in our development efforts with respect tothese products or that we will be successful in developing these products. Inaddition, we cannot assure you that these products will gain market acceptanceor that we will not experience reliability or quality problems.

Rapid technological changes in our industry will require us to continuallydevelop new and enhanced products.

     Any failure by us to anticipate or respond adequately to technologicaldevelopments and customer requirements, or any significant delays in productdevelopment or introduction could result in a loss of competitiveness and couldmaterially adversely affect our operating results. There can be no assurancethat we will successfully develop and bring new products to market in a timelyand cost-effective manner, that any product enhancement or new product developedby us will gain market acceptance, or that products or technologies developed byothers will not render our products or technologies obsolete or noncompetitive.A fundamental shift in technology in our product markets could have a materialadverse effect on us, particularly in light of the fact that we currently derivesubstantially all of our revenues from sales of our two major product families,the Opti-Probe and Therma-Probe.

We will need to be able to attract and retain key personnel with knowledgeof instruments used in semiconductor manufacturing processes to help support ourfuture growth. Competition for such personnel in our industry is high.

     Our success depends to a significant degree upon the continuedcontributions of key management, engineering, sales and marketing, customersupport, finance and manufacturing personnel. The loss of the services of keypersonnel, who would be extremely difficult to replace, could have a materialadverse effect on us. There can be no assurance that the services of suchpersonnel will continue to be available to us. We have employment agreementswith key members of our senior management team, including Messrs. Lipkin,Christie and Smedt. To support our future growth, we will need to attract andretain additional qualified employees. Competition for such personnel in ourindustry is high, and we cannot assure you that we will be successful inattracting and retaining such personnel.

Our operations are characterized by the need for continued investment inresearch and development and, as a result, our ability to reduce costs islimited.

     Our operations are characterized by the need for continued investment inresearch and development and extensive ongoing customer service and supportcapability. As a result, our operating results could be materially adverselyaffected if our level of revenues is below expectations. In addition, because ofour emphasis on research and development and technological innovation, there canbe no assurance that our operating costs will not increase in the future. 

We obtain some of the components and subassemblies included in our systemsfrom a single source or limited group of suppliers, the partial or complete lossof which could have at least a temporary adverse effect on our operations. 

     Some of the components and subassemblies included in our systems areobtained from a single source or a limited group of suppliers. From time totime, we have experienced temporary difficulties in receiving orders from someof these suppliers. Although we seek to reduce dependence on these sole andlimited source suppliers, the partial or complete loss of these sources couldhave at least a temporary adverse effect on our results of operations and damagecustomer relationships. Further, a significant increase in the price of one ormore of these components or subassemblies could materially adversely affect ourresults of operations.

We are subject to risks associated with manufacturing all of our productsat a single facility. Any prolonged disruption in the operations of thatfacility could have a material adverse effect on our business.

     We produce all of our products in our manufacturing facility located inFremont, California. Our manufacturing processes are highly complex, requiringsophisticated and costly equipment and a specially designed facility. As aresult, any prolonged disruption in the operations of our manufacturingfacility, whether due to technical or labor difficulties, destruction of ordamage to this facility as a result of an earthquake, fire or any other reason,could have a material adverse effect on our business, financial condition,results of operations or cash flows.

We rely upon manufacturers' sales representatives for a significantportion of our sales. A disruption in our relationship with any salesrepresentative could have a material adverse effect on our business.

     Approximately 50% of our sales have historically been made throughmanufacturers' sales representatives. The activities of these representativesare not within our control, and they may sell products manufactured by othermanufacturers. In addition, in some locations our manufacturing salesrepresentatives also provide field service to our customers. A reduction in thesales efforts or financial viability of such manufacturers' salesrepresentatives, or a termination of our relationship with such representatives,could have a material adverse effect our sales, financial results and ability tosupport our customers. Although we believe that we maintain good relations withour sales representatives, there can be no assurance that such relationshipswill continue.

Our net sales and results of operations can be adversely affected by theinstability of Asian economies, from which we derive a significant portion ofour revenues.

     Our sales to customers in Asian markets represented approximately58%, 45% and 47% of total net revenues for fiscal 2003, 2002 and 2001,respectively. Companies in the Asia Pacific region, including Japan and Taiwan,each of which accounts for a significant portion of our business in that region,are currently experiencing weaknesses in their currency, banking and equitymarkets. These weaknesses may adversely affect our sales to semiconductor deviceand capital equipment manufacturers located in these regions in the comingquarters.

We are subject to operational, financial, political and foreign exchangerisks due to our significant level of international sales.

     International sales accounted for approximately 72%, 62% and 59% of ourtotal revenues for fiscal 2003, 2002 and 2001, respectively. We anticipate thatinternational sales will continue to account for a significant portion of ourrevenue in the foreseeable future. Due to the significant level of ourinternational sales, we are subject to material risks, which include: 

- unexpected changes in regulatory requirements;
- tariffs and other market barriers;
- political and economic instability;
- potentially adverse tax consequences;
- outbreaks of hostilities;
- difficulties in accounts receivable collection;
- extended payment terms;
- difficulties in managing foreign sales representatives; and
- difficulties in staffing and managing foreign branch operations.

     In addition, the laws of countries in which our products are or may besold may not provide our products and intellectual property rights with the samedegree of protection as the laws of the United States.

     A substantial portion of our international sales is denominated in U.S.dollars. As a result, changes in the values of foreign currencies relative tothe value of the U.S. dollar can render our products comparatively moreexpensive. Such conditions could negatively impact our international sales. 

Our common stock could be delisted from the NASDAQNational Market, which would make trading in our stock more difficult.

 

We have received delisting noticesfrom the Nasdaq National Market that we have not been in compliance with itslisting requirements that we file our periodic reports in a timely manner andmaintain a minimum bid price of $1.00.  While we are now in compliance withthese requirements, there no guarantee that we can maintain our listing onNasdaq.  If our shares were delisted, it would force us to list our shares onthe OTC Bulletin Board or some other quotation medium, such as pink sheets,depending upon our ability to meet the specific listing requirements of thosequotation systems.  As a result, an investor might find it more difficultto dispose of, or to obtain accurate price quotations for, our shares. Delisting might also reduce the visibility, liquidity and price of our commonstock.

 

If our common stock were delistedfrom the Nasdaq National Market and were not traded on another nationalsecurities exchange, we could become subject to penny stock regulations thatimpose additional sales practice disclosure and market making requirements onbroker/dealers who sell or make a market in our stock.  The rules of theSEC generally define "penny stock" to be common stock that has amarket price of less than $5.00 per share and is not traded on a nationalexchange.  If our stock became subject to penny stock regulations, it couldadversely affect the ability and willingness of broker/dealers who sell or makea market in our common stock and of investors to purchase or sell our stock inthe secondary market.

Acquisitions could result in dilution, operating difficulties and otherharmful consequences.

     From time to time, we may acquire or make significant investments incomplementary companies, products and technologies.  The following risks arecommon to the integration of two companies, and may be associated with recent orfuture acquisitions:

- the difficulty of incorporating new operations, technology and personnelinto one company;
- the potential disruption of our ongoing business;
- the additional expense associated with amortization of acquired intangibleassets;
- the maintenance of uniform standards, controls, procedures and policies;and
- the impairment of relationships with employees and customers.

     Prior to the acquisition of Sensys in January 2002, we had no experiencein managing this integration process.  Moreover, the anticipated benefits of theSensys acquisition or any future acquisitions or mergers may not be realized.Future acquisitions or mergers could result in potentially dilutive issuances ofequity securities, the incurrence of debt, contingent liabilities oramortization expenses related to goodwill and other tangible assets, any ofwhich could be harmful to our business.  Future acquisitions or mergers mayrequire us to obtain additional equity or debt financing, which may not be onfavorable terms or at all.  Even if available, this financing may be dilutive.We cannot assure you that we will successfully overcome these risks or any otherproblem that we encounter in connection with any future acquisitions.

Provisions of our charter documents and Delaware law could discouragepotential acquisition proposals and could delay, deter or prevent a change incontrol. 

     Provisions of our certificate of incorporation and by-laws may inhibitchanges in control of Therma-Wave not approved by our board of directors andwould limit the circumstances in which a premium may be paid for the commonstock in proposed transactions, or a proxy contest for control of the board maybe initiated. These provisions provide for:

- a classified board of directors;
- a prohibition on stockholder action through written consents;
- a requirement that special meetings of stockholders be called only by ourchief executive officer or the board of directors;
- advance notice requirements for stockholder proposals and nominations;
- limitations on the ability of stockholders to amend, alter or repeal the by-laws; and
- the authority of the board to issue, without stockholder approval, preferredstock with such terms as the board may determine.

     We will also be afforded the protections of Section 203 of the DelawareGeneral Corporation Law, which could have similar effects.

Terrorist attacks, such as the attacks that occurred in New York andWashington, D.C. on September 11, 2001, and other acts of violence or war orinfectious illness, such as SARS, may affect the markets on which our securitiestrade, the markets in which we operate, our operations and our profitability.

     Terrorist attacks may negatively affect our operations and yourinvestment. There can be no assurance that there will not be further terroristattacks against the United States or United States businesses. These attacks orarmed conflicts may directly impact our physical facilities or those of oursuppliers or customers.  Furthermore, these attacks may make travel and thetransportation of our supplies and products more difficult and more expensiveand ultimately affect the sales of our products in the United States andoverseas.  

     Also as a result of terrorism, the United States has in the past and mayin the future enter into an armed conflict which could have a further impact onour domestic and international sales, our supply chain, our productioncapability and our ability to deliver product to our customers. Political andeconomic instability in some regions of the world may also result and couldnegatively impact our business. The consequences of any of these armed conflictsare unpredictable, and we may not be able to foresee events that could have anadverse effect on our business or your investment.

The forward-looking statements contained in this Annual Report arebased on our predictions of future performance. As a result, you should notplace undue reliance on these forward-looking statements.

     This annual report contains forward-looking statements, including,without limitation, statements concerning the conditions in the semiconductorand semiconductor capital equipment industries, our operations, economicperformance and financial condition, including in particular statements relatingto our business and growth strategy and product development efforts. The words"believe," "expect," "anticipate," "intend" and other similar expressionsgenerally identify forward-looking statements. Potential investors are cautionednot to place undue reliance on these forward-looking statements, which speakonly as of their dates. These forward-looking statements are based largely onour current expectations and are subject to a number of risks and uncertainties,including, without limitation, those identified under "Risk Factors" andelsewhere in this annual report and other risks and uncertainties indicated fromtime to time in our filings with the SEC. Actual results could differ materiallyfrom these forward-looking statements. In addition, important factors toconsider in evaluating such forward-looking statements include changes inexternal market factors, changes in our business or growth strategy or aninability to execute our strategy due to changes in our industry or the economygenerally, the emergence of new or growing competitors, our ability to controlour costs and various other competitive factors. In light of these risks anduncertainties, there can be no assurance that the matters referred to in theforward-looking statements contained in this annual report will in factoccur.