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Management's Discussion of Results of Operations (Excerpts)

For purposes of readability, Zenith attempts to strip out all tables in excerpts from the Management Discussion. That information is contained elsewhere in our articles. The idea of this summary is simply to review how well we believe Management does its reporting. Also, this highlights what Management believes is important.

In our Decision Matrix at the end of each article, a company with 0 to 2 gets a "-1", and 3 to 5 gets a "+1."

On a scale of 0 to 5, 5 being best, Zenith rates this company's Management's Discussion as a 5.


Overview

Our goal is to establish Invisalign clear aligners as the standard method for 
treating malocclusion and to establish the iTero intraoral scanner as the 
preferred scanning device for 3D digital scans, ultimately driving increased 
product adoption by dental professionals. We intend to achieve this by 
continued focus and execution of our strategic growth drivers set forth in the 
Business Strategy section in our Annual Report on Form 10-K. The successful 
execution of our business strategy in 2017 and beyond may be affected by a 
number of other factors including: • New Products, Feature Enhancements and 
Technology Innovation. Product innovation drives greater treatment 
predictability and clinical applicability and ease of use for our customers 
which supports adoption of Invisalign in their practices. Increasing 
applicability and treating more complex cases requires that we move away from 
individual features to more comprehensive solutions so that Invisalign 
providers can more predictably treat the whole case, such as with our 
Invisalign "G-Series" of product innovations, including our more recent October 
2016 release of Invisalign G7. Invisalign G7 delivers better upper lateral 
control, improved root control and features to address prevention of posterior 
open bites. In March 2017, we announced Invisalign Teen with mandibular 
advancement, the first clear aligner solution for Class II correction in 
growing tween and teen patients. This new offering combines the benefits of the 
most advanced clear aligner system in the world with features for moving the 
lower jaw forward while simultaneously aligning the teeth. Invisalign Teen with 
mandibular advancement is now available in Canada and select EMEA countries 
(United Kingdom, Ireland, France, Spain, Czechoslovakia, Slovakia, Poland, 
Belgium, Luxembourg, the Netherlands), select APAC countries (China, Japan with 
select availability in Hong Kong, Macao, Singapore, Taiwan, Australia, New 
Zealand) and select LATAM countries (Argentina, Brazil, Chile, Colombia, 
Mexico). Invisalign Teen with mandibular advancement is pending 510(k) 
clearance and is not yet available in the United States. We believe that over 
the long-term, clinical solutions and treatment tools will increase adoption of 
Invisalign and increase sales of our intraoral scanners; however, it is 
difficult to predict the rate of adoption which may vary by region and channel.

• Invisalign Adoption. Our goal is to establish Invisalign as the treatment of 
choice for treating malocclusion ultimately driving increased product adoption 
and frequency of use by dental professionals, also known as "utilization 
rates." Our quarterly utilization rates for the last 9 quarters are as follows:

* Invisalign utilization rates = # of cases shipped divided by # of doctors 
cases were shipped to


? Total utilization in the first quarter of 2017 increased to 5.4 cases per 
doctor compared to 4.9 in the first quarter of 2016.

? North America: Utilization among our North American orthodontist customers 
reached an all time high of 12.6 cases per doctor in the first quarter of 2017 
compared to 10.4 in the first quarter of 2016. The increase in North America 
orthodontist utilization reflects improvements in product and technology which 
continues to strengthen our doctors’ clinical confidence in the use of 
Invisalign such that they now utilize Invisalign more often and on more complex 
cases, including their teenage patients.

? International: International doctor utilization is 5.0 cases per doctor in 
the first quarter of 2017 compared to 4.7 in the first quarter of 2016. The 
International utilization reflects growth in both the Europe, Middle East and 
Africa ("EMEA") and Asia Pacific ("APAC") regions due to increasing adoption of 
the product and its ability to treat more complex cases.

We expect that over the long-term our utilization rates will gradually improve 
as a result of advancements in product and technology, which continue to 
strengthen our doctors’ clinical confidence in the use of Invisalign; however, 
we expect that our utilization rates may fluctuate from period to period due to 
a variety of factors, including seasonal trends in our business along with 
adoption rates of new products and features. • Number of New Invisalign Doctors 
Trained. We continue to expand our Invisalign customer base through the 
training of new doctors. In 2016, Invisalign growth was driven primarily by 
increased utilization across all regions as well as by the continued expansion 
of our customer base as we trained a total of 11,680 new Invisalign doctors, of 
which 60% were trained internationally. During the first quarter of 2017, we 
trained 3,260 new Invisalign doctors of which 980 were trained in North America 
and 2,280 in our International regions.

• International Invisalign Growth. We will continue to focus our efforts 
towards increasing Invisalign adoption by dental professionals in our direct 
international markets. On a year over year basis, international Invisalign 
volume increased 41.3% driven primarily by strong performance in our APAC and 
in EMEA regions. In 2017, we are continuing to expand in our existing markets 
through targeted investments in sales coverage and professional marketing and 
education programs, along with consumer marketing in selected country markets. 
We expect international Invisalign revenues to continue to grow at a faster 
rate than North America for the foreseeable future due to our continued 
investment in international market expansion, the size of the market 
opportunity, and our relatively low market penetration in this region (Refer to 
Item 1A Risk Factors - “We are exposed to fluctuations in currency exchange 
rates, which could negatively affect our financial condition and results of 
operations.” for information on related risk factors).

• Establish Regional Order Acquisition and Treatment Planning Facilities: We 
intend to establish additional order acquisition and treatment planning 
facilities closer to our international customers in order to improve our 
operational efficiency and provide doctors with a great experience to further 
improve their confidence in using Invisalign to treat more patients and more 
often (Refer to Item 1A Risk Factors - “As we continue to grow, we are subject 
to growth related risks, including risks related to excess or constrained 
capacity at our existing facilities.” for information on related risk factors).

• Operating Expenses. We expect operating expenses to increase in 2017 due in 
part to:

? investments in international expansion in new country markets particularly in 
the APAC, Latin America and Middle East regions;

? investments in manufacturing to enhance our regional capabilities;

? increases in legal expenses primarily related to the continued protection of 
our intellectual property rights, including our patents;

? increases in sales and customer support resources; and

? product and technology innovation to address such things as treatment times, 
indications unique to teens and predictability.

We believe that these investments will position us to increase our revenue and 
continue to grow our market share. • Provision (benefit) for Income Taxes. We 
expect our effective tax rate may vary significantly from period to period as a 
result of adoption of ASU 2016-09, "Improvements to Employee Share-Based 
Payment Accounting," during the first quarter of 2017. The effective tax rate 
for the first quarter of 2017 was (11.4)% which included $21.3 million of 
excess tax benefits related to stock-based compensation compared to 23.4% in 
the first quarter of 2016 when the excess tax benefits in the same nature were 
reflected in additional paid-in-capital (Refer to Item 1A Risk Factors - “Our 
effective tax rate may vary significantly from period to period.” for 
information on related risk factor and Note 1 "Summary of Significant 
Accounting Policies" and Note 12 "Accounting for Income Taxes" of the Notes to 
Condensed Consolidated Financial Statements for details on accounting 
treatment).

• Stock Repurchases:

? April 2014 Repurchase Program. During the three months ended March 31, 2017, 
we repurchased $3.8 million of our common stock repurchase in the open market. 
As of March 31, 2017, we completed our April 2014 Repurchase Plan.


? April 2016 Repurchase Program. On April 28, 2016, we announced that our Board 
of Directors had authorized a plan to repurchase up to $300.0 million of our 
stock. As of March 31, 2017, there were no repurchases under this plan. On May 
2, 2017, we entered into an ASR to repurchase $50.0 million of our common stock 
(the "2017 ASR"). We paid $50.0 million on May 3, 2017 and received an initial 
delivery of approximately 0.3 million shares based on current market prices. 
The final number of shares to be repurchased will be based on our 
volume-weighted average stock price under the term of the 2017 ASR, less an 
agreed upon discount.



• SmileDirectClub. We provided a revolving line of credit to SmileDirectClub, 
LLC ("SDC") of up to $15.0 million to fund their working capital and general 
corporate needs. As of March 31, 2017, $8.0 million under the Loan Facility was 
issued and outstanding. 

• New Corporate Headquarters Office Purchase. We completed the purchase of our 
new headquarters on January 26, 2017 for the purchase price of $44.1 million. 
During the first quarter of 2017, we incurred $0.8 million related to the 
building improvements and expect to incur an additional $29.7 million during 
2017.


Results of Operations

Net revenues by Reportable Segment

We group our operations into two reportable segments: Clear Aligner segment and 
Scanner segment


• Our Clear Aligner segment consists of our Invisalign System includes 
Invisalign Full, Teen and Assist ("Comprehensive Products"), Express/Lite 
("Non-Comprehensive Products"), Vivera retainers, along with our training and 
ancillary products for treating malocclusion ("Non-Case"). Clear Aligner 
segment also includes revenues from the sale of aligners to SDC under our 
supply agreement which commenced in the fourth quarter of 2016, which is 
recorded after eliminating outstanding intercompany transactions.

• Our Scanner segment consists of intraoral scanning systems and additional 
services available with the intraoral scanners that provide digital 
alternatives to the traditional cast models. This segment includes our iTero 
scanner and OrthoCAD services.

Clear Aligner revenues: Total net revenues increased by $71.6 million for the 
three months ended March 31, 2017 as compared to the same period in 2016 
primarily as a result of case volume growth across all regions and products as 
well as increased non-case revenues.

Clear Aligner - North America

North America net revenues increased by $29.2 million for the three months 
ended March 31, 2017 as compared to the same period in 2016 primarily due to 
case volume growth across all channels and products which increased net 
revenues by $31.5 million. The increase was offset in part by lower average 
selling prices (“ASP”) which decreased net revenues by $2.3 million. ASP 
declined for the three months ended March 31, 2017 as compared to the same 
period in 2016 as a result of higher promotional discounts of $5.4 million as 
well as a shift in product mix towards lower priced products which decreased 
revenues by $3.7 million. These declines were partially offset by price 
increases on our Comprehensive Products effective April 1, 2016 which 
contributed $7.1 million to net revenues.

Clear Aligner - International

International net revenues increased by $29.7 million for the three months 
ended March 31, 2017 as compared to the same period in 2016 primarily driven by 
case volume growth across all channels and products which increased net 
revenues by $28.7 million and, to a lesser extent, higher ASP. The increase in 
ASP was primarily a result of price increases in our Comprehensive Products 
effective July 1, 2016 which contributed $3.0 million to net revenues as well 
as an increase in additional aligner revenue of $2.9 million. These increases 
were offset in part by the decline in foreign exchange rates of $3.2 million 
primarily due to the weakening of the Euro and British Pound to the U.S. 
dollar.

Clear Aligner - Non-Case

Non-case net revenues, consisting of training fees and ancillary product 
revenues, increased by $3.8 million for the three months ended March 31, 2017 
as compared to the same period in 2016 primarily due to increased Vivera volume 
both in North America and International.

Scanner

Scanner net revenues increased $8.9 million for the three months ended March 
31, 2017 as compared to the same period in 2016 due to an increase in both 
scanner and services net revenues. Scanner net revenues increased primarily as 
a result of an increase in the number of scanners recognized and, to a lesser 
extent, an increase in ASP. The increase in services net revenue was primarily 
due to an increase in the volume of CAD/CAM services resulting from a larger 
installed base of scanners.

Cost of net revenues for our Clear Aligner and Scanner segments includes 
personnel-related costs including payroll and stock-based compensation for 
staff involved in the production process, the cost of materials, packaging, 
shipping costs, depreciation on capital equipment and facilities used in the 
production process, amortization of acquired intangible assets from Cadent and 
training costs.

Clear Aligner

The gross margin percentage for the three months ended March 31, 2017 declined 
as compared to the same period in 2016 primarily driven by a higher number of 
aligners per case which was partially offset by higher absorption as a result 
of increased production volumes.

Scanner

The gross margin for the three months ended March 31, 2017 increased compared 
to the same period in 2016 due to a higher ASP, a favorable product mix shift 
to our lower cost iTero Element scanner and lower service costs.

Selling, general and administrative expense includes personnel-related costs 
including payroll, commissions and stock-based compensation, marketing and 
administration in addition to media and advertising expenses, clinical 
education, trade shows and industry events, product marketing, outside 
consulting services, legal expenses, depreciation and amortization expense and 
allocations of corporate overhead expenses including facilities and IT.

Selling, general and administrative expense for the three months ended March 
31, 2017 increased compared to the same period in 2016 primarily due to higher 
compensation related costs of $17.6 million mainly as a result of increased 
headcount. We also incurred higher expenses from advertising and marketing of 
$8.2 million, equipment and material costs of $5.5 million and outside services 
costs of $5.3 million.

Research and development (in millions):

Changes and percentages are based on actual values. Certain tables may not sum 
or recalculate due to rounding. Research and development expense includes the 
personnel-related costs including payroll and stock-based compensation and 
outside consulting expenses associated with the research and development of new 
products and enhancements to existing products and allocations of corporate 
overhead expenses including facilities and IT.

Research and development expense for the three months ended March 31, 2017 
increased compared to the same period in 2016 due to higher compensation costs 
as a result of increased headcount.


Clear Aligner

Operating margin percentage for the three months ended March 31, 2017 declined 
compared to the same period in 2016 primarily due to higher compensation costs 
as a result of increased headcount, higher number of aligners manufactured per 
case and lower ASP.

Scanner

Operating margin percentage for the three months ended March 31, 2017 increased 
compared to the same period in 2016 due to a higher ASP, a favorable product 
mix shift to our lower cost iTero Element scanner and lower service costs. We 
also incurred lower operating expenses as a percentage of revenues as we 
leveraged our operating expenses on higher revenues.


Changes and percentages are based on actual values. Certain tables may not sum 
or recalculate due to rounding.

Interest and other income (expenses), net, includes foreign currency 
revaluation gains and losses, interest income earned on cash, cash equivalents 
and investment balances, gains and losses on foreign currency forward contracts 
and other miscellaneous charges.

Interest and other income (expenses), net for the three months ended March 31, 
2017 increased compared to the same period in 2016 mainly due to higher foreign 
exchange gains as a result of the Euro strengthening to the U.S. dollar.


Changes and percentages are based on actual values. Certain tables may not sum 
or recalculate due to rounding.

We invested $46.7 million in SDC on July 25, 2016 and account for this 
investment based on the equity method of accounting. For the three months ended 
March 31, 2017, we recorded a $1.1 million charge representing our share of 
losses attributable to equity method investments (Refer to Note 4 "Equity 
Method Investments" of the Notes to Condensed Consolidated Financial Statements 
for details on equity method investments).

Our provision (benefit) for income taxes was $(7.2) million and $12.4 million 
for the three months ended March 31, 2017 and 2016, respectively. This 
represents effective tax rates of (11.4)% and 23.4%, respectively. The decrease 
in effective tax rate for the three months ended March 31, 2017 compared to the 
same period in 2016 is primarily attributable to the adoption of ASU 2016-09 
which requires excess tax benefits related to stock-based compensation to be 
recognized as a reduction of income tax expense along with certain of our 
foreign earnings being taxed at a lower rate relative to the U.S. federal 
statutory rate as a result of our international corporate restructuring.For the 
three months ended March 31, 2017, we recognized excess tax benefits of $21.3 
million in our provision for income taxes.

On July 1, 2016, we implemented a new international corporate structure. This 
changed the structure of our international procurement and sales operations, as 
well as realigned the ownership and use of intellectual property among our 
wholly-owned subsidiaries. We continue to anticipate that an increasing 
percentage of our consolidated pre-tax income will be derived from, and 
reinvested in our foreign operations. We believe that income taxed in certain 
foreign jurisdictions at a lower rate relative to the U.S. federal statutory 
rate will have a beneficial impact on our worldwide effective tax rate over 
time.

In June 2009, the Costa Rica Ministry of Foreign Trade, an agency of the 
Government of Costa Rica, granted a twelve year extension of certain income tax 
incentives, which were previously granted in 2002. The incentive tax rates 
expire over various years, starting in June 2017. We are seeking a renewal of 
these income tax incentives before they expire. Under these incentives, all of 
the income in Costa Rica during these twelve year incentive periods is subject 
to a reduced tax rate. In order to receive the benefit of these incentives, we 
must hire specified numbers of employees and maintain certain minimum levels of 
fixed asset investment in Costa Rica. If we do not fulfill these conditions for 
any reason, our incentive could lapse, and our income in Costa Rica would be 
subject to taxation at higher rates, which could have a negative impact on our 
operating results. The Costa Rica corporate income tax rate that would apply, 
absent the incentives, is 30% for 2017 and 2016. For the three months ended 
March 31, 2017, the reduction in income taxes was minimal primarily due to the 
new international corporate structure implemented on July 1, 2016. For the 
three months ended March 31, 2016, income taxes were reduced by $8.6 million 
representing a benefit to diluted net income per share of $0.11 (Refer to Note 
12 "Accounting for Income Taxes for details on income taxes).

Liquidity and Capital Resources

We fund our operations primarily from product sales and available cash and cash 
equivalents and marketable securities.

As of March 31, 2017, we had $644.2 million in cash, cash equivalents and 
short-term and long-term marketable securities. Cash equivalents and marketable 
securities are comprised of money market funds and highly liquid debt 
instruments which primarily include commercial paper, corporate bonds, U.S. 
government agency bonds, U.S. government treasury bonds, municipal securities, 
asset-backed securities and certificates of deposit.

As of March 31, 2017, approximately $421.5 million of cash, cash equivalents 
and short-term and long-term marketable securities was held by our foreign 
subsidiaries. Amounts held by foreign subsidiaries are generally subject to 
U.S. income taxation on repatriation to the U.S. The costs to repatriate our 
foreign earnings to the U.S. would likely be material; however, our intent is 
to permanently reinvest our earnings from foreign operations, and our current 
plans do not require us to repatriate them to fund our U.S. operations as we 
generate sufficient domestic operating cash flow and have access to external 
funding under our current revolving line of credit.

Stock Repurchases

Refer to Note 11 "Common Stock Repurchase Program" of the Notes to Condensed 
Consolidated Financial Statements for details on stock repurchase program.


• April 2014 Repurchase Program. During the three months ended March 31, 2017, 
we repurchased $3.8 million of our common stock repurchase in the open market. 
As of March 31, 2017, we completed our April 2014 Repurchase Plan (Refer to 
Note 11 "Common Stock Repurchase Program" of the Notes to Condensed 
Consolidated Financial Statements for details on stock repurchase program).



• April 2016 Repurchase Program. On April 28, 2016, we announced that our Board 
of Directors had authorized a plan to repurchase up to $300.0 million of our 
stock. As of March 31, 2017, there were no repurchases under this plan. On May 
2, 2017, we entered into an ASR to repurchase $50.0 million of our common stock 
(the "2017 ASR"). We paid $50.0 million on May 3, 2017 and received an initial 
delivery of approximately 0.3 million shares based on current market prices. 
The final number of shares to be repurchased will be based on our 
volume-weighted average stock price under the term of the 2017 ASR, less an 
agreed upon discount.


Operating Activities

For the three months ended March 31, 2017, cash flows from operations of $47.6 
million resulted primarily from our net income of approximately $69.4 million 
as well as the following:

Significant non-cash activities


• Stock-based compensation was $14.8 million related to equity incentive 
compensation granted to employees and directors,

• Depreciation and amortization of $7.9 million related to our fixed assets and 
intangible assets, and

• Net change in deferred tax assets of $7.8 million.


Significant changes in working capital

•Decrease of $39.7 million in accrued and other long-term liabilities due to 
timing of payments and activities, • Increase of $24.5 million in accounts 
receivable which is a result of the increase in net revenues, and

• Increase of $11.7 million in deferred revenues corresponding to the increases 
in case shipments.


Investing Activities

Net cash used in investing activities was $145.3 million for the three months 
ended March 31, 2017 primarily consisted of purchases of marketable securities 
of $169.8 million, property and plant and equipment purchases of $59.6 million 
of which $44.1 million is related to new headquarters office purchase, $9.0 
million paid for the acquisitions of certain of our distributors, net of cash 
and $8.0 million loan advance to privately held companies. These outflows were 
partially offset by maturities and sales of marketable securities of $98.7 
million.

For the remainder of 2017, we expect to invest an additional $115.0 million to 
$125.0 million on capital expenditures primarily related to building 
improvements on our new corporate headquarters office and additional 
manufacturing capacity to support our international expansion. Although we 
believe our current investment portfolio has little risk of impairment, we 
cannot predict future market conditions or market liquidity and can provide no 
assurance that our investment portfolio will remain unimpaired.

Financing Activities

Net cash used in financing activities was $33.0 million for the three months 
ended March 31, 2017 primarily resulting from payroll taxes paid for vesting of 
restricted stock units through share withholdings of $36.5 million. These 
outflows were offset in part by $7.3 million from proceeds due to issuance of 
common stock.

Contractual Obligations

Our contractual obligations have not significantly changed since December 31, 
2016 as disclosed in our Annual Report on Form 10-K. We believe that our 
current cash, cash equivalents and short-term marketable securities combined 
with our existing borrowing capacity will be sufficient to fund our operations 
for at least the next 12 months. If we are unable to generate adequate 
operating cash flows and need more funds beyond our available liquid 
investments and those available under our credit facility, we may need to 
suspend our stock repurchase program or seek additional sources of capital 
through equity or debt financing, collaborative or other arrangements with 
other companies, bank financing and other sources in order to realize our 
objectives and to continue our operations. There can be no assurance that we 
will be able to obtain additional debt or equity financing on terms acceptable 
to us, or at all. If adequate funds are not available, we may need to make 
business decisions that could adversely affect our operating results such as 
modifications to our pricing policy, business structure or operations. 
Accordingly, the failure to obtain sufficient funds on acceptable terms when 
needed could have a material adverse effect on our business, results of 
operations and financial condition (Refer to Note 9 "Commitments and 
Contingencies", of the Notes to Condensed Consolidated Financial Statements for 
details on commitments and contingencies).

Off-Balance Sheet Arrangements

As of March 31, 2017, we had no off-balance sheet arrangements that have, or 
are reasonably likely to have, a current or future material effect on our 
consolidated financial condition, results of operations, liquidity, capital 
expenditures or capital resources.


QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the normal course of business, we are exposed to foreign currency exchange 
rate and interest rate risks that could impact our financial position and 
results of operations.

Interest Rate Risk

Changes in interest rates could impact our anticipated interest income on our 
cash equivalents and investments in marketable securities. Our cash equivalents 
and investments are fixed-rate short-term and long-term securities. Fixed-rate 
securities may have their fair market value adversely impacted due to a rise in 
interest rates, and, as a result, our future investment income may fall short 
of expectations due to changes in interest rates or we may suffer losses in 
principal if forced to sell securities which have declined in market value due 
to changes in interest rates. As of March 31, 2017, we had approximately $380.6 
million invested in available-for-sale marketable securities. An immediate 10% 
change in interest rates would not have a material adverse impact on our future 
operating results and cash flows.

We do not enter into investments for trading or speculative purposes and have 
not used any derivative financial instruments to manage our interest rate risk 
exposure. We do not have interest bearing liabilities as of March 31, 2017 and 
therefore, we are not subject to risks from immediate interest rate increases.

Currency Rate Risk

As a result of our international business activities, our financial results 
could be affected by factors such as changes in foreign currency exchange rates 
or economic conditions in foreign markets, and there is no assurance that 
exchange rate fluctuations will not harm our business in the future. We 
generally sell our products in the local currency of the respective countries. 
This provides some natural hedging because most of the subsidiaries’ operating 
expenses are generally denominated in their local currencies as discussed 
further below. Regardless of this natural hedging, our results of operations 
may be adversely impacted by exchange rate fluctuations.

We have in the past and may in the future enter into currency hedging 
transactions in an effort to cover some of our exposure to foreign currency 
exchange fluctuations on cash and certain trade and intercompany receivables 
and payables. These forward contracts are not designated as hedging instruments 
and do not subject us to material balance sheet risk due to fluctuations in 
foreign currency exchange rates. The gains and losses on these forward 
contracts are intended to offset the gains and losses in the underlying foreign 
currency denominated monetary assets and liabilities being economically hedged. 
These instruments are marked to market through earnings every period and 
generally are one month in original maturity. We do not enter into foreign 
currency forward contracts for trading or speculative purposes. As our 
international operations grow, we will continue to reassess our approach to 
managing the risks relating to fluctuations in currency rates. It is difficult 
to predict the impact hedging activities could have on our results of 
operations. As of March 31, 2017, we did not have any outstanding foreign 
exchange forward contracts.

Although we will continue to monitor our exposure to currency fluctuations, 
and, where appropriate, may use financial hedging techniques in the future to 
minimize the effect of these fluctuations, the impact of an aggregate change of 
10% in foreign currency exchange rates relative to the U.S. dollar on our 
results of operations and financial position could be material.