| PAREXEL INTERNATIONAL CORP ITEM 1A RISK FACTORS In addition to other information in this report, the following risk factors should be considered carefully in evaluating our Company and our business |
| These risk factors could cause actual results to differ from those indicated by forward-looking statements made in this report, including in the section of this report entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other forward-looking statements that we may make from time to time |
| If any of the following risks occur, our business, financial condition, or results of operations would likely suffer |
| THE LOSS, MODIFICATION, OR DELAY OF LARGE OR MULTIPLE CONTRACTS MAY NEGATIVELY IMPACT OUR FINANCIAL PERFORMANCE Our clients generally can terminate their contracts with us upon 30 to 60 days notice or can delay the execution of services |
| The loss or delay of a large contract or the loss or delay of multiple contracts could adversely affect our operating results, possibly materially |
| We have in the past experienced contract cancellations, which have adversely affected our operating results, including a major Phase III cancellation during the first quarter of fiscal year 2005 |
| -15- _________________________________________________________________ [70]Table of Contents Clients terminate or delay their contracts for a variety of reasons, including,: • merger or potential merger related activities; • failure of products being tested to satisfy safety requirements; • failure of products being tested to prove effective; • products having unexpected or undesired clinical results; • client decisions to forego a particular study, perhaps for economic reasons; • insufficient patient enrollment in a study; • insufficient investigator recruitment; • production problems which cause shortages of the product; • product withdrawal following market launch; and • shut down of manufacturing facilities |
| In addition, clients may determine to proceed with fewer clinical trials or conduct them without the assistance of bio/pharmaceutical services companies if they are trying to reduce costs as a result of budgetary limits or changing priorities |
| These factors may cause such clients to cancel contracts with us |
| WE FACE INTENSE COMPETITION IN MANY AREAS OF OUR BUSINESS; IF WE DO NOT COMPETE EFFECTIVELY, OUR BUSINESS WILL BE HARMED The bio/pharmaceutical services industry is highly competitive and we face numerous competitors in many areas of our business |
| If we fail to compete effectively, we may lose clients, which would cause our business to suffer |
| We primarily compete against in-house departments of pharmaceutical companies, other full service clinical research organizations, or CROs, small specialty CROs, and to a lesser extent, universities, teaching hospitals, and other site organizations |
| and Pharmaceutical Product Development Inc |
| In addition, our PCMS business competes with a large and fragmented group of specialty service providers, including advertising/promotional companies, major consulting firms with pharmaceutical industry groups and smaller companies with pharmaceutical industry focus |
| Perceptive competes primarily with CROs, information technology companies and other software companies |
| Some of these competitors, including the in-house departments of pharmaceutical companies, have greater capital, technical and other resources than us |
| In addition, our competitors that are smaller specialized companies may compete effectively against us because of their concentrated size and focus |
| If we fail to adequately price our contracts or if we experience significant cost overruns, our gross margins on the contracts would be reduced and we could lose money on contracts |
| In the past, we have had to commit unanticipated resources to complete projects, resulting in lower gross margins on those projects |
| IF GOVERNMENTAL REGULATION OF THE DRUG, MEDICAL DEVICE AND BIOTECHNOLOGY INDUSTRY CHANGES, THE NEED FOR OUR SERVICES COULD DECREASE Governmental regulation of the drug, medical device and biotechnology product development process is complicated, extensive, and demanding |
| A large part of our business involves assisting pharmaceutical and biotechnology companies through the regulatory approval process |
| Changes in regulations, that, for example, streamline procedures or relax approval standards, could eliminate or reduce the need for our services |
| If companies regulated by the FDA or similar foreign regulatory authorities needed fewer of our services, we would have fewer business opportunities and our revenues would decrease, possibly materially |
| -16- _________________________________________________________________ [71]Table of Contents In the US, the FDA and the Congress have attempted to streamline the regulatory process by providing for industry user fees that fund the hiring of additional reviewers and better management of the regulatory review process |
| In Europe, governmental authorities have approved common standards for clinical testing of new drugs throughout the European Union by adopting standards for GCP and by making the clinical trial application and approval process more uniform across member states |
| The FDA has had GCP in place as a regulatory standard and requirement for new drug approval for many years and Japan adopted GCP in 1998 |
| The US, Europe and Japan have also collaborated in the 15-year-long International Conference on Harmonisation, or ICH, the purpose of which is to eliminate duplicative or conflicting regulations in the three regions |
| The ICH partners have agreed upon a common format (the Common Technical Document) for new drug marketing applications that reduces the need to tailor the format to each region |
| Such efforts and similar efforts in the future that streamline the regulatory process may reduce the demand for our services |
| Parts of our PCMS business advises clients on how to satisfy regulatory standards for manufacturing and clinical processes and on other matters related to the enforcement of government regulations by the FDA and other regulatory bodies |
| Any reduction in levels of review of manufacturing or clinical processes or levels of regulatory enforcement, generally, would result in fewer business opportunities for our business in this area |
| IF WE FAIL TO COMPLY WITH EXISTING REGULATIONS, OUR REPUTATION AND OPERATING RESULTS WOULD BE HARMED Our business is subject to numerous governmental regulations, primarily relating to worldwide pharmaceutical product development and regulatory approval and the conduct of clinical trials |
| If we fail to comply with these governmental regulations, it could result in the termination of our ongoing research, development or sales and marketing projects, or the disqualification of data for submission to regulatory authorities |
| We also could be barred from providing clinical trial services in the future or could be subjected to fines |
| Any of these consequences would harm our reputation, our prospects for future work and our operating results |
| In addition, we may have to repeat research or redo trials |
| If we are required to repeat research or redo trials, we may be contractually required to do so at no further cost to our clients, but at substantial cost to us |
| WE MAY LOSE BUSINESS OPPORTUNITIES AS A RESULT OF HEALTH CARE REFORM AND THE EXPANSION OF MANAGED-CARE ORGANIZATIONS Numerous governments, including the US government and governments outside of the US have undertaken efforts to control growing health care costs through legislation, regulation and voluntary agreements with medical care providers and drug companies |
| If these efforts are successful, drug, medical device and biotechnology companies may react by spending less on research and development |
| If this were to occur, we would have fewer business opportunities and our revenues could decrease, possibly materially |
| In addition, new laws or regulations may create a risk of liability, increase our costs or limit our service offerings |
| For instance, in the past the US Congress has entertained several comprehensive health care reform proposals |
| The proposals were generally intended to expand health care coverage for the uninsured and reduce the growth of total health care expenditures |
| While the US Congress has not yet adopted any comprehensive reform proposals, members of Congress may raise similar proposals in the future |
| We are unable to predict the likelihood that health care reform proposals will be enacted into law |
| In addition to health care reform proposals, the expansion of managed-care organizations in the health care market and managed-care organizations’ efforts to cut costs by limiting expenditures on pharmaceuticals and medical devices could result in pharmaceutical, biotechnology and medical device companies spending less on research and development |
| If this were to occur, we would have fewer business opportunities and our revenues could decrease, possibly materially |
| IF WE DO NOT KEEP PACE WITH RAPID TECHNOLOGICAL CHANGES, OUR PRODUCTS AND SERVICES MAY BECOME LESS COMPETITIVE OR OBSOLETE, ESPECIALLY IN OUR PERCEPTIVE BUSINESS The biotechnology, pharmaceutical and medical device industries generally, and clinical research specifically, are subject to increasingly rapid technological changes |
| Our competitors or others might develop technologies, products or services that are more effective or commercially attractive than our current or future technologies, products or services, or render our technologies, products or services less competitive or obsolete |
| If competitors introduce superior technologies, products or services and we cannot make enhancements to our technologies, products and services necessary to remain competitive, our competitive position would be harmed |
| If we are unable to compete successfully, we may lose clients or be unable to attract new clients, which could lead to a decrease in our revenue |
| -17- _________________________________________________________________ [72]Table of Contents BECAUSE WE DEPEND ON A SMALL NUMBER OF INDUSTRIES AND CLIENTS FOR ALL OF OUR BUSINESS, THE LOSS OF BUSINESS FROM A SIGNIFICANT CLIENT COULD HARM OUR BUSINESS, REVENUE AND FINANCIAL CONDITION The loss of, or a material reduction in the business of, a significant client could cause a substantial decrease in our revenue and adversely affect our business and financial condition, possibly materially |
| In both fiscal year 2006 and fiscal year 2005, our five largest clients accounted for 25prca of our consolidated service revenue and no single client accounted for 10prca or more of consolidated service revenue |
| We expect that a small number of clients will continue to represent a significant part of our revenue |
| Our contracts with these clients generally can be terminated on short notice |
| We have in the past experienced contract cancellations with significant clients |
| IF OUR PERCEPTIVE BUSINESS IS UNABLE TO MAINTAIN CONTINUOUS, EFFECTIVE, RELIABLE AND SECURE OPERATION OF ITS COMPUTER HARDWARE, SOFTWARE AND INTERNET APPLICATIONS AND RELATED TOOLS AND FUNCTIONS, ITS BUSINESS WILL BE HARMED Our Perceptive Informatics business involves collecting, managing, manipulating and analyzing large amounts of data, and communicating data via the Internet |
| In our Perceptive Informatics business, we depend on the continuous, effective, reliable and secure operation of computer hardware, software, networks, telecommunication networks, Internet servers and related infrastructure |
| If the hardware or software malfunctions or access to data by internal research personnel or customers through the Internet is interrupted, our Perceptive Informatics business could suffer |
| In addition, any sustained disruption in Internet access provided by third parties could adversely impact our Perceptive Informatics business |
| Although the computer and communications hardware used in our Perceptive Informatics business is protected through physical and software safeguards, it is still vulnerable to fire, storm, flood, power loss, earthquakes, telecommunications failures, physical or software break-ins, and similar events |
| In addition, the Perceptive Informatics software products are complex and sophisticated, and could contain data, design or software errors that could be difficult to detect and correct |
| If Perceptive fails to maintain and further develop the necessary computer capacity and data to support the needs of our Perceptive Informatics customers, it could result in a loss of or a delay in revenue and market acceptance |
| IF WE ARE UNABLE TO ATTRACT SUITABLE WILLING VOLUNTEERS FOR THE CLINICAL TRIALS OF OUR CLIENTS, OUR CRS BUSINESS MAY SUFFER One of the factors on which our CRS business competes is the ability to recruit patients for the clinical studies we are managing |
| These clinical trials rely upon the ready accessibility and willing participation of volunteer subjects |
| These subjects generally include volunteers from the communities in which the studies are conducted |
| Although to date these communities have provided a substantial pool of potential subjects for research studies, there may not be enough patients available with the traits necessary to conduct the studies |
| If multiple organizations are conducting similar studies and competing for patients, it could also make our recruitment efforts more difficult |
| If we were unable to attract suitable and willing volunteers on a consistent basis, it would have an adverse effect on the trials being managed by our CRS business, which could have a material adverse effect on our CRS business |
| IF WE CANNOT RETAIN OUR HIGHLY QUALIFIED MANAGEMENT AND TECHNICAL PERSONNEL, OUR BUSINESS WOULD BE HARMED We rely on the expertise of our Chairman and Chief Executive Officer, Josef H von Rickenbach and it would be difficult and expensive to find a qualified replacement with the level of specialized knowledge of our products and services and the bio/pharmaceutical services industry |
| We are a party to an employment agreement with Mr |
| von Rickenbach, which may be terminated by us or Mr |
| von Rickenbach upon notice to the other party |
| In addition, in order to compete effectively, we must attract and maintain qualified sales, professional, scientific, and technical operating personnel |
| Competition for these skilled personnel, particularly those with a medical degree, a Ph |
| We may not be successful in attracting or retaining key personnel |
| -18- _________________________________________________________________ [73]Table of Contents WE MAY HAVE SUBSTANTIAL EXPOSURE TO PAYMENT OF PERSONAL INJURY CLAIMS AND MAY NOT HAVE ADEQUATE INSURANCE TO COVER SUCH CLAIMS Our CRS business primarily involves the testing of experimental drugs and medical devices on consenting human volunteers pursuant to a study protocol |
| Clinical research involves a risk of liability for personal injury or death to patients who participate in the study or who use a product approved by regulatory authorities after the clinical research has concluded, due to, among other reasons, possible unforeseen adverse side effects or improper administration of the drug or device by physicians |
| In some cases, these patients are already seriously ill and are at risk of further illness or death |
| In order to mitigate the risk of liability, we seek to include indemnity provisions in our Clinical Research Services contracts with clients and with investigators |
| However, we are not able to include indemnity provisions in all of our contracts |
| The indemnity provisions we include in these contracts would not cover our exposure if: • we had to pay damages or incur defense costs in connection with a claim that is outside the scope of an indemnity; or • a client failed to indemnify us in accordance with the terms of an indemnity agreement because it did not have the financial ability to fulfill its indemnification obligation or for any other reason |
| We also carry insurance to cover our risk of liability |
| However, our insurance is subject to deductibles and coverage limits and may not be adequate to cover claims |
| In addition, liability coverage is expensive |
| In the future, we may not be able to maintain or obtain liability insurance on reasonable terms, at a reasonable cost, or in sufficient amounts to protect us against losses due to claims |
| In March 2006, we conducted a Phase I clinical trial on behalf of TeGenero AG, a German pharmaceutical company |
| During the trial, six participants experienced adverse reactions to the TeGenero compound being tested |
| Through June 30, 2006, we have expensed approximately dlra1dtta2 million in legal fees and other incremental costs in connection with the incident |
| To date, none of the participants in the clinical trial have filed suit against us |
| We carry insurance to cover risks such as this, but our insurance is subject to deductibles and coverage limits and may not be adequate to cover claims against us |
| While we believe that TeGenero is responsible to indemnify us with respect to claims related to this matter, TeGenero filed for insolvency in July 2006, which likely will limit any recovery by us from them |
| In addition, while TeGenero carried insurance with respect to this type of matter, this insurance also is subject to deductibles and coverage limits |
| OUR BUSINESS IS SUBJECT TO INTERNATIONAL ECONOMIC, POLITICAL, AND OTHER RISKS THAT COULD NEGATIVELY AFFECT OUR RESULTS OF OPERATIONS OR FINANCIAL POSITION We provide most of our services on a worldwide basis |
| Our service revenue from non-US operations represented approximately 64dtta6prca of total consolidated service revenue for the fiscal year ended June 30, 2006 and approximately 62dtta7prca of total consolidated service revenue for the fiscal year ended June 30, 2005 |
| More specifically, our service revenue from operations in the United Kingdom represented approximately 17dtta0prca of total consolidated service revenue for the fiscal year ended June 30, 2006 and approximately 19dtta7prca of total consolidated service revenue for the fiscal year ended June 30, 2005 |
| Our service revenue from operations in Germany represented approximately 20dtta2prca of total consolidated service revenue for the fiscal year ended June 30, 2006 and approximately 18dtta6prca of total consolidated service revenue for the fiscal year ended June 30, 2005 |
| Accordingly, our business is subject to risks associated with doing business internationally, including: • changes in a specific country’s or region’s political or economic conditions, including Western Europe, in particular; • potential negative consequences from changes in tax laws affecting our ability to repatriate profits; • difficulty in staffing and managing widespread operations; • unfavorable labor regulations applicable to its European or other international operations; • changes in foreign currency exchange rates; and • longer payment cycles of foreign customers and difficulty of collecting receivables in foreign jurisdictions |
| -19- _________________________________________________________________ [74]Table of Contents OUR OPERATING RESULTS HAVE FLUCTUATED BETWEEN QUARTERS AND YEARS AND MAY CONTINUE TO FLUCTUATE IN THE FUTURE, WHICH COULD AFFECT THE PRICE OF OUR COMMON STOCK Our quarterly and annual operating results have varied and will continue to vary in the future as a result of a variety of factors |
| For example, our income from operations totaled dlra5dtta0 million for the quarter ended September 30, 2005, dlra10dtta6 million for the quarter ended December 31, 2005, dlra11dtta2 million for the quarter ended March 31, 2006 and dlra13dtta1 million for the quarter ended June 30, 2006 |
| Factors that cause these variations include: • the level of new business authorizations in a particular quarter or year; • the timing of the initiation, progress, or cancellation of significant projects; • exchange rate fluctuations between quarters or years; • restructuring charges; • the mix of services offered in a particular quarter or year; • the timing of the opening of new offices; • costs and the related financial impact of acquisitions; • the timing of internal expansion; • the timing and amount of costs associated with integrating acquisitions; • the timing and amount of startup costs incurred in connection with the introduction of new products, services or subsidiaries; and • the dollar amount of changes in contract scope finalized during a particular period |
| Many of these factors, such as the timing of cancellations of significant projects and exchange rate fluctuations between quarters or years, are beyond our control |
| Approximately 60-65prca of our operating costs are fixed in the short term with a significant portion of those costs related to personnel |
| As a result, the effect on our revenues of the timing of the completion, delay or loss of contracts, or the progress of client projects, could cause our operating results to vary substantially between reporting periods |
| If our operating results do not match the expectations of securities analysts and investors, the trading price of our common stock will likely decrease |
| OUR REVENUE AND EARNINGS ARE EXPOSED TO EXCHANGE RATE FLUCTUATIONS Approximately 64dtta6prca of our total consolidated service revenue for the fiscal year ended June 30, 2006 and approximately 62dtta7prca of our total consolidated service revenue for the fiscal year ended June 30, 2005 were from non-US operations |
| Our financial statements are denominated in US dollars |
| As a result, changes in foreign currency exchange rates could have and have had a significant effect on our operating results |
| For example, as a result of year-over-year foreign currency fluctuation, service revenue for fiscal year 2006 was negatively impacted by approximately, dlra18dtta7 million as compared to fiscal year 2005 |
| Exchange rate fluctuations between local currencies and the US dollar create risk in several ways, including: • Foreign Currency Translation Risk |
| The revenue and expenses of our foreign operations are generally denominated in local currencies, primarily the British pound and the Euro, and then are translated into US dollars for financial reporting purposes |
| For the fiscal year ended June 30, 2006, approximately 17dtta0prca of total consolidated service revenue was denominated in British pounds and approximately 37dtta0prca of total consolidated service revenue was denominated in Euros |
| For the fiscal year ended June 30, 2005, approximately 19dtta7prca of total consolidated service revenue was denominated in British pounds and approximately 34dtta2prca of total consolidated service revenue was denominated in Euros |
| Accordingly, changes in exchange rates between foreign currencies and the US dollar will affect the translation of foreign results into US dollars for purposes of reporting our consolidated results |
| We may be subjected to foreign currency transaction risk when our foreign subsidiaries enter into contracts or incur liabilities denominated in a currency other than the foreign subsidiaries functional (local) currency |
| To the extent we are unable to shift the effects of currency fluctuations to the clients, foreign exchange fluctuations as a result of foreign currency exchange losses could have a material adverse effect on our results of operations |
| Although we try to limit these risks through exchange rate fluctuation provisions stated in our service contracts, or by hedging transaction risk with foreign currency exchange contracts, we may still experience fluctuations in financial results from our operations outside of the US, and may not be able to favorably reduce the currency transaction risk associated with our service contracts |
| OUR BUSINESS HAS EXPERIENCED SUBSTANTIAL EXPANSION IN THE PAST AND SUCH EXPANSION AND ANY FUTURE EXPANSION COULD STRAIN OUR RESOURCES IF NOT PROPERLY MANAGED We have expanded our business substantially in the past |
| Future rapid expansion could strain our operational, human and financial resources |
| In order to manage expansion, we must: • continue to improve operating, administrative, and information systems; • accurately predict future personnel and resource needs to meet client contract commitments; • track the progress of ongoing client projects; and • attract and retain qualified management, sales, professional, scientific and technical operating personnel |
| If we do not take these actions and are not able to manage the expanded business, the expanded business may be less successful than anticipated, and we may be required to allocate additional resources to the expanded business, which we would have otherwise allocated to another part of our business |
| We may face additional risks in expanding our foreign operations |
| Specifically, we may find it difficult to: • assimilate differences in foreign business practices, exchange rates and regulatory requirements; • operate amid political and economic instability; • hire and retain qualified personnel; and • overcome language, tariff and other barriers |
| WE MAY MAKE ACQUISITIONS IN THE FUTURE, WHICH MAY LEAD TO DISRUPTIONS TO OUR ONGOING BUSINESS We have made a number of acquisitions and will continue to review new acquisition opportunities |
| If we are unable to successfully integrate an acquired company, the acquisition could lead to disruptions to our business |
| The success of an acquisition will depend upon, among other things, our ability to: • assimilate the operations and services or products of the acquired company; • integrate acquired personnel; • retain and motivate key employees; • retain customers; • identify and manage risks facing the acquired company; and • minimize the diversion of management’s attention from other business concerns |
| -21- _________________________________________________________________ [76]Table of Contents Acquisitions of foreign companies may also involve additional risks, including assimilating differences in foreign business practices and overcoming language and cultural barriers |
| In the event that the operations of an acquired business do not meet our performance expectations, we may have to restructure the acquired business or write-off the value of some or all of the assets of the acquired business |
| OUR EFFECTIVE INCOME TAX RATE MAY FLUCTUATE FROM QUARTER-TO-QUARTER, WHICH MAY AFFECT EARNINGS AND EARNINGS PER SHARE Our quarterly effective income tax rate is influenced by our projected profitability in the various taxing jurisdictions in which we operate |
| Changes in the distribution of profits and losses among taxing jurisdictions may have a significant impact on our effective income tax rate, which in turn could have a material adverse effect on our net income and earnings per share |
| Factors that affect the effective income tax rate include, but are not limited to: • the requirement to exclude from our quarterly worldwide effective income tax calculations losses in jurisdictions where no tax benefit can be recognized; • actual and projected full year pretax income; • changes in tax laws in the various taxing jurisdictions; • audits by the taxing authorities; and • the establishment of valuation allowances against deferred tax assets if it is determined that it is more likely than not that future tax benefits will not be realized |
| Fluctuations in our effective income tax rate could cause fluctuations in our earnings and earnings per share, which can affect our stock price |
| OUR CORPORATE GOVERNANCE STRUCTURE, INCLUDING PROVISIONS OF OUR ARTICLES OF ORGANIZATION, AND BY-LAWS, AND OUR SHAREHOLDER RIGHTS PLAN, AND MASSACHUSETTS LAW MAY DELAY OR PREVENT A CHANGE IN CONTROL OR MANAGEMENT THAT STOCKHOLDERS MAY CONSIDER DESIRABLE Provisions of our articles of organization, by-laws and our shareholder rights plan, as well as provisions of Massachusetts law, may enable our management to resist acquisition of us by a third party, or may discourage a third party from acquiring us |
| These provisions include the following: • we have divided our board of directors into three classes that serve staggered three-year terms; • we are subject to Section 8dtta06 of the Massachusetts Business Corporation Law which provides that directors may only be removed by stockholders for cause, vacancies in our board of directors may only be filled by a vote of our board of directors and the number of directors may be fixed only by our board of directors; • we are subject to Chapter 110F of the Massachusetts General Laws which limits our ability to engage in business combinations with certain interested stockholders; • our stockholders are limited in their ability to call or introduce proposals at stockholder meetings; and • our shareholder rights plan would cause a proposed acquirer of 20prca or more of our outstanding shares of common stock to suffer significant dilution |
| These provisions could have the effect of delaying, deferring, or preventing a change in control of us or a change in our management that stockholders may consider favorable or beneficial |
| These provisions could also discourage proxy contests and make it more difficult for stockholders to elect directors and take other corporate actions |
| These provisions could also limit the price that investors might be willing to pay in the future for shares of our stock |
| -22- _________________________________________________________________ [77]Table of Contents In addition, our board of directors may issue preferred stock in the future without stockholder approval |
| If our board of directors issues preferred stock, the holders of common stock would be subordinate to the rights of the holders of preferred stock |
| Our board of directors’ ability to issue the preferred stock could make it more difficult for a third party to acquire, or discourage a third party from acquiring, a majority of our stock |
| OUR STOCK PRICE HAS BEEN AND MAY IN THE FUTURE BE VOLATILE, WHICH COULD LEAD TO LOSSES BY INVESTORS The market price of our common stock has fluctuated widely in the past and may continue to do so in the future |
| On August 30, 2006, the closing sale price of our common stock on the NASDAQ Global Select Market was dlra33dtta48 per share |
| During the period from July 1, 2004 to June 30, 2006, the closing price of our common stock ranged from a high of dlra30dtta44 per share to a low of dlra17dtta28 per share |
| Investors in our common stock must be willing to bear the risk of such fluctuations in stock price and the risk that the value of an investment in our stock could decline |
| Our stock price can be affected by quarter-to-quarter variations in a number of factors including, but not limited to: • operating results; • earnings estimates by analysts; • market conditions in the industry; • prospects of health care reform; • changes in government regulations; • general economic conditions, and • our effective income tax rate |
| In addition, the stock market has from time to time experienced significant price and volume fluctuations that are not related to the operating performance of particular companies |
| These market fluctuations may adversely affect the market price of our common stock |
| Since our common stock has traded in the past at a relatively high price-earnings multiple, due in part to analysts’ expectations of earnings growth, the price of the stock could quickly and substantially decline as a result of even a relatively small shortfall in earnings from, or a change in, analysts’ expectations |