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(a)

Other Asia includes China, India, Korea, Singapore and Taiwan.

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bringing ultrasound out of the imaging center to the patient’s bedside or the physician’s examining table; and

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enabling physicians to conduct an “imaging physical” by incorporating ultrasound imaging into routine physical examinations.

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(a)

Asia includes China, India, Korea, Singapore and Taiwan.

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any adverse impact to our revenues or gross margins as a result of increased competition;

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any delay or inability to collect accounts receivable timely as a result of continued or deteriorating global economic conditions;

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a need to significantly increase our sales and marketing and research and development expenditures as a result of increased competition or new market opportunities; and

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a need to significantly increase our sales and marketing expenditures as a result of our introduction of new products.

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greater financial and infrastructure resources;

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larger research and development staffs

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greater experience in product manufacturing, marketing and distribution;

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greater brand name recognition; and

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long-standing relationships with many of our potential customers.

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our competitors introduce ultrasound devices that are superior to ours;

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other products using new technologies emerge; or

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industry standards exceed our products’ capabilities.

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failure of products to perform as expected;

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a perception that our products are difficult to use; and

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litigation concerning the performance of our products or our technology.

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product and price competition;

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global economic conditions;

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performance of our third-party distributors;

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year-end customer budget constraints and other customer buying patterns; and

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changes in component cost and availability.

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demand for our products;

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estimating appropriate manufacturing levels for forecasted sales;

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inventory management and obsolescence;

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performance of our direct sales and distribution channels;

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development of new and enhanced products;

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product introductions and commercializations; and

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timing and magnitude of our expenses.

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substantially increase our costs of operations;

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temporarily divert existing management resources;

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establish an efficient and self-reliant local infrastructure;

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attract, hire and train qualified local sales and administrative personnel;

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comply with additional local regulatory requirements; and

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expand our information, financial, distribution and control systems to manage expanded global operations.

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currency rate fluctuations;

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reduced protection for intellectual property rights;

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longer receivables collection periods and greater difficulty in receivables collection;

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localizing products for foreign markets; and

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compliance with export laws, including license requirements, trade restrictions and tariff increases.

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unauthorized use of our technology by competitors;

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independent development of the same or similar technology by a competitor, coupled with a lack of enforceable patents on our part;

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failure of our pending patent applications to result in issued patents;

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successful interference actions to our patents or successful oppositions to our patents and patent applications;

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unauthorized disclosure or use of our proprietary information by former employees or affiliates; and

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failure by our commercial partners to comply with their obligations to share technology or use our technology in a limited manner.

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assert or defend against claims of infringement;

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enforce our issued and licensed patents;

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protect our trade secrets or know-how; or

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determine the enforceability, scope and validity of the proprietary rights of others.

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divert existing management, scientific and financial resources;

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subject us to significant liabilities;

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allow our competitors to market competitive products without obtaining a license from us;

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cause product shipment delays and lost sales;

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require us to enter into royalty or licensing agreements, which may not be available on terms acceptable to us, if at all; or

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force us to discontinue selling or modify our products, or to develop new products.

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obtain prior clearance or approval from these agencies before we can market and sell our products;

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undergo rigorous inspections by domestic and international agencies; and

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satisfy content requirements for all of our sales and promotional materials.

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the difference between quarterly operating results and those expected by investors or securities analysts;

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changes in earnings estimates by analysts;

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the loss of significant orders;

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announcements of technological innovations or new products by our competitors;

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changes in the structure of healthcare financing and payment systems;

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general conditions in the medical industry or global economy;

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a lack of liquidity in the market for our stock; and

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significant sales of our common stock by one or more of our shareholders.

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change of control provisions in our license agreement with ATL, which require us to pay ATL:

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$150 million if, prior to April 6, 2003, any single person or entity obtains, directly or indirectly, voting control of a majority of our common stock or the power to elect our entire board of directors; or

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$75 million if, at any time between April 6, 2003 and April 6, 2006, any single person or entity engaged in the medical diagnostic imaging business, other than through the sale or manufacture of our products, obtains, directly or indirectly, voting control of a majority of our common stock or the power to elect our entire board of directors;

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acceleration provisions in benefit plans and change-in-control agreements with our employees; and

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our shareholder rights plan, which is designed to dilute a hostile acquiror’s interest so that the acquisition becomes prohibitively expensive. Under our rights plan, each of our shareholders has one share purchase right for each share of common stock held, with each right having an exercise price approximating our board of directors’ estimate of the long-term value of one share of our common stock. The rights are triggered if an acquiror acquires, or successfully makes a tender offer for, 15% or more of our outstanding common stock. In such event, each shareholder other than the acquiror would have the right to purchase, at the exercise price, a number of newly issued shares of our capital stock at a 50% discount. If the acquiror were to acquire 50% or more of our assets or earning power, each shareholder would have the right to purchase, at the exercise price, a number of shares of acquiror’s stock at a 50% discount. Our board of directors may redeem the rights at a nominal cost at any time before a person acquires 15% or more of our outstanding common stock, which allows board-approved transactions to proceed. In addition, our board of directors may exchange all or part of the rights (other than rights held by the acquiror) for such number of shares of our common stock equal in value to the exercise price. Such an exchange produces the desired dilution without actually requiring our shareholders to purchase shares. Our rights plan excludes SWIB’s ownership of our common stock so long as such ownership does not reach 20% of our outstanding common stock.

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