CYMI » Topics » ITEM 4. Controls and Procedures

This excerpt taken from the CYMI 10-Q filed May 6, 2008.

ITEM 4.    Controls and Procedures

        Evaluation of disclosure controls and procedures.    For the first quarter of 2008, our chief executive officer and our chief financial officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of March 31, 2008, and concluded that as of such date, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time period specified in the rules and forms of the Securities and Exchange Commission.

        Changes in internal control over financial reporting.    There has been no change in our internal control over financial reporting during the quarter ended March 31, 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


PART II. OTHER INFORMATION

These excerpts taken from the CYMI 10-K filed Feb 27, 2008.

Item 9A.    Controls and Procedures

1.
Evaluation of Disclosure Controls and Procedures. Our chief executive officer and our chief financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of December 31, 2007, have concluded that as of such date, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time period specified in the rules and forms of the Securities and Exchange Commission.

2.
Management's Report on Internal Control Over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over our financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act).

    We assessed the effectiveness of our internal control over financial reporting as of December 31, 2007, using the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based upon this assessment, we have concluded that, as of December 31, 2007, our internal control over financial reporting was effective.

    Management's assessment of the effectiveness of our internal control over financial reporting as of December 31, 2007, has been audited by KPMG LLP, an independent registered public accounting firm. Their report appears on page F-2 of this Annual Report on Form 10-K.

3.
Changes in Internal Control Over Financial Reporting. Per disclosures in our 2006 Form 10-K, our management determined that a material weakness in internal controls over financial reporting existed as of December 31, 2006. The material weakness related to our accounting for income taxes. Throughout fiscal 2007, we implemented and executed upon a plan which resulted in the successful remediation and elimination of this material weakness.

    During 2007, the steps that we took to remediate the material weakness over our accounting for income taxes were as follows;

      Redesigned, implemented and significantly increased the accounting department's involvement in new review and approval procedures and processes associated with all income tax provision workpapers and reconciliation schedules;

      Completed the implementation of an automated tax provision software tool that reduces the number of manual spreadsheets that we use to calculate our effective tax rate on a quarterly and annual basis;

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      Increased our use of outside tax consultants to assist us with all tax calculations and tax provision workpapers until we identify and hire all appropriate additional tax personnel;

      Restructured the income tax department, including the roles and responsibilities of our outside tax consultants, to allow for improved review and approval procedures and processes; and,

      Hired a vice president of tax to oversee all tax department personnel, policies, processes and internal controls.

    Except for the changes related to the remediated material weakness described above, there have been no other changes during the quarter ended December 31, 2007 in our internal controls over financial reporting that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.

4.
Inherent Limitations on the Effectiveness of Internal Control. There are inherent limitations in the effectiveness of any internal control, including the possibility of human error and the circumvention or overriding of controls. Accordingly, even effective internal controls can provide only reasonable assurances with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness of internal controls may vary over time.



Item 9A.    Controls and Procedures




1.
Evaluation
of Disclosure Controls and Procedures. Our chief executive officer and our chief financial officer, after evaluating the effectiveness of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of December 31, 2007, have
concluded that as of such date, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports that we file under the Exchange Act is
recorded, processed, summarized and reported within the time period specified in the rules and forms of the Securities and Exchange Commission.


2.
Management's
Report on Internal Control Over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over our financial reporting
(as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act).



    We
    assessed the effectiveness of our internal control over financial reporting as of December 31, 2007, using the criteria established in Internal Control—Integrated Framework
    issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based upon this assessment, we have concluded that, as of December 31, 2007, our internal control over
    financial reporting was effective.



    Management's
    assessment of the effectiveness of our internal control over financial reporting as of December 31, 2007, has been audited by KPMG LLP, an independent registered public
    accounting firm. Their report appears on page F-2 of this Annual Report on Form 10-K.





3.
Changes
in Internal Control Over Financial Reporting. Per disclosures in our 2006 Form 10-K, our management determined that a material weakness in internal controls
over financial reporting existed as of December 31, 2006. The material weakness related to our accounting for income taxes. Throughout fiscal 2007, we implemented and executed upon a plan which
resulted in the successful remediation and elimination of this material weakness.



    During
    2007, the steps that we took to remediate the material weakness over our accounting for income taxes were as follows;





      Redesigned,
      implemented and significantly increased the accounting department's involvement in new review and approval procedures and processes associated with all income
      tax provision workpapers and reconciliation schedules;


      Completed
      the implementation of an automated tax provision software tool that reduces the number of manual spreadsheets that we use to calculate our effective tax rate on a
      quarterly and annual basis;



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      Increased
      our use of outside tax consultants to assist us with all tax calculations and tax provision workpapers until we identify and hire all appropriate additional tax
      personnel;


      Restructured
      the income tax department, including the roles and responsibilities of our outside tax consultants, to allow for improved review and approval procedures and
      processes; and,


      Hired
      a vice president of tax to oversee all tax department personnel, policies, processes and internal controls.





    Except
    for the changes related to the remediated material weakness described above, there have been no other changes during the quarter ended December 31, 2007 in our internal controls over
    financial reporting that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.





4.
Inherent
Limitations on the Effectiveness of Internal Control. There are inherent limitations in the effectiveness of any internal control, including the possibility of human error and
the circumvention or overriding of controls. Accordingly, even effective internal controls can provide only reasonable assurances with respect to financial statement preparation. Further, because of
changes in conditions, the effectiveness of internal controls may vary over time.




This excerpt taken from the CYMI 10-Q filed Nov 7, 2007.
ITEM 4. Controls and Procedures

 

Evaluation of disclosure controls and procedures. For the third quarter of 2007, our chief executive officer and our chief financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of September 30, 2007, and concluded that as of such date, our disclosure controls and procedures were not effective in ensuring that information required to be disclosed by us in the reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time period specified in the rules and forms of the Securities and Exchange Commission.

 

This conclusion was based solely on our assessment of the company’s processes and controls related to our accounting for income taxes described in our Annual Report on Form 10-K for the year ended December 31, 2006, more specifically those policies and procedures which were not designed to include adequate management review of various income tax calculations, reconciliations and related supporting documentation to ensure that our accounting for income taxes was in accordance with generally accepted accounting principles. These deficiencies resulted in material errors in our consolidated tax provision for our year ended December 31, 2006. Such errors were corrected prior to the issuance of our consolidated financial statements at and for the year ended December 31, 2006. These deficiencies also resulted in a more than remote likelihood that a material misstatement to our consolidated financial statements would not be prevented or detected. As described in Part II, Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2006, we have developed a plan to remediate this material weakness and will implement all steps in the plan and any others that we deem necessary throughout 2007.

 

Changes in internal control over financial reporting. There has been no change in our internal control over financial reporting during the quarter ended September 30, 2007 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting other than the steps taken by us to remediate the material weakness that was disclosed by us in our Annual Report on Form 10-K for the year ended December 31, 2006, relating to our accounting for income taxes.

 

As described in Part II, Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2006, we have identified several steps we will take throughout 2007 with the goal of remediating this material weakness prior to December 31, 2007. Per our original remediation plan and our continued evaluation of the design of our internal controls in the tax area, we have made the following improvements in our internal controls over our accounting for income taxes for the nine months ended September 30, 2007:

 

                  Improved the communications between our tax department and our accounting department, and increased the level of involvement of our accounting department in the reviews of income tax reconciliations and certain key tax schedules;

                  Redesigned and implemented new review and approval procedures and processes associated with all income tax provision workpapers and the consolidated income tax reconciliation schedules;

                  Completed the implementation of an automated tax provision software tool that will reduce the number of manual spreadsheets that we use to calculate our effective tax rate on a quarterly and annual basis;

                  Increased our use of outside tax consultants to assist us with all tax calculations and tax provision workpapers until we can identify and hire all of the appropriate additional tax personnel;

                  Restructured the income tax department, including the roles and responsibilities of our outside tax consultants, to allow for proper review and approval procedures and processes; and,

                  Hired a vice president of tax to oversee all tax department personnel, policies, processes and internal controls.

 

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There are additional remediation steps that we have identified from our original remediation plan. Some of these were completed in the third quarter of 2007 and we intend to complete the remainder in the fourth quarter of 2007.

 

Since most of the more significant improvements to our internal controls over the accounting for income taxes were designed early in 2007 and were implemented as part of our first quarter and second quarter of 2007 tax provision calculations, we tested all of these internal control changes in the third quarter of 2007. No control deficiencies were identified during this testing. Further, we will test any additional changes that we make to our internal controls over our accounting for income taxes in the fourth quarter of 2007 or in early 2008, immediately following their completion and execution to ensure that they are properly designed and working effectively. We will continue to make any changes that management deems necessary to these new tax  internal controls based on the results of this testing.

 

PART II. OTHER INFORMATION

 

This excerpt taken from the CYMI 10-Q filed May 8, 2007.
ITEM 4.  Controls and Procedures

Evaluation of disclosure controls and procedures.  For the first quarter of 2007, our chief executive officer and our chief financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of March 31, 2007, and concluded that as of such date, our disclosure controls and procedures were not effective in ensuring that information required to be disclosed by us in the reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time period specified in the rules and forms of the Securities and Exchange Commission.

This conclusion was based solely on our assessment of the company’s processes and controls related to our accounting for income taxes described in our annual report on Form 10-K for the year ended December 31, 2006, more specifically those policies and procedures which were not designed to include adequate management review of various income tax calculations, reconciliations and related supporting documentation to ensure that our accounting for income taxes was in accordance with generally accepted accounting principles.  These deficiencies resulted in material errors in our consolidated tax provision for our year ended December 31, 2006. Such errors were corrected prior to the issuance of our consolidated financial statements at and for the year ended December 31, 2006.  These deficiencies also resulted in a more than remote likelihood that a material misstatement to our consolidated financial statements would not be prevented or detected.  As described in Part II, Item 9A of our annual report on Form 10-K for the year ended December 31, 2006, we have developed and started to implement a plan to remediate this material weakness.

Changes in internal control over financial reporting. There has been no change in our internal control over financial reporting during the quarter ended March 31, 2007 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting other than the steps taken by us to remediate the material weakness that was disclosed by us in our annual report on Form 10-K for the year ended December 31, 2006, relating to our accounting for income taxes.

As described in Part II, Item 9A of our annual report on Form 10-K for the year ended December 31, 2006, we have identified several steps we will take throughout 2007 with the goal of remediating this material weakness prior to December 31, 2007.  Per our remediation plan, we made the following improvements in our internal controls over our accounting for income taxes for the three months ended March 31, 2007:

·                  Improved the communications between our tax department and our accounting department, and increased the level of involvement of our accounting department in the reviews of income tax reconciliations;

·                  Redesigned and implemented new review and approval procedures and processes associated with all income tax provision workpapers and the consolidated income tax reconciliation schedules; and

·                  Identified and started the implementation of an automated tax provision software tool that will reduce the number of manual spreadsheets that we use to calculate and reconcile all income tax accounts on a quarterly and annual basis.

We have additional steps in our remediation plan from those identified above that we intend to implement within the next two quarters and we will report our progress with this remediation plan in future quarterly reports on Form 10-Q.  As each of the steps in our remediation plan are completed and

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implemented, we plan to test the internal control changes immediately to ensure that they are properly designed and working effectively and will make any changes that management deems necessary based on the results of this testing.

PART II.  OTHER INFORMATION

This excerpt taken from the CYMI 10-K filed Feb 28, 2007.
Item 9A.  Controls and Procedures

1.                                       Evaluation of Disclosure Controls and Procedures.  Our chief executive officer and our chief financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of December 31, 2006, have concluded that our disclosure controls and procedures were not effective as of such date because of the existence of a material weakness in our internal control over financial reporting related to our accounting for income taxes, as described below.

 

2.                                       Management's Report on Internal Control Over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over our financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act). 

 

We assessed the effectiveness of our internal control over financial reporting as of December 31, 2006, using the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  Based upon this assessment, we have concluded that, as of December 31, 2006, our internal control over financial reporting was not effective due to the material weakness related to our accounting for income taxes, described below. A material weakness in internal control over financial reporting is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.

 

Management’s assessment identified the following material weakness in our internal control over financial reporting as of December 31, 2006:

 

Our policies and procedures did not provide for effective oversight and review of our accounting for income taxes. Specifically, our policies and procedures did not include adequate management review of various income tax calculations, reconciliations and related supporting documentation to ensure that our accounting for income taxes was in accordance  with generally accepted accounting principles.  This material weakness resulted in material errors in our consolidated income tax provision that were corrected prior to the issuance of our 2006 consolidated financial statements.

 

Management's assessment of the effectiveness of our internal control over financial reporting as of December 31, 2006, has been audited by KPMG LLP, an independent registered public accounting firm.  Their report appears on page F-2 of this Annual Report on Form 10-K.

 

3.                                     Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting other than the following steps taken by us during the fourth quarter of 2006 in response to the material weakness that we disclosed in our 2005 Form 10-K related to our accounting for income taxes:

 

·     Improved the procedures for reviewing and reconciling all subsidiary office tax accounts; and

·     Increased the level of communications with our subsidiary office accountants over the preparation of our foreign quarterly and annual tax provisions.

 

4.                                       Management’s Remediation Plans.   Because 2006 is the second year in which we have identified and reported a material weakness in internal control over financial reporting associated with our accounting for income taxes, we plan to conduct significant remediation efforts throughout 2007 with the goal to remediate this material weakness prior to December

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31, 2007.  Although we are still discussing and finalizing the specifics of these plans, they currently include the following:

 

·              Hiring additional tax personnel and providing additional regulatory training for select tax personnel;

·              Redesigning and implementing new review and approval procedures and processes associated with all income tax provision workpapers and the consolidated income tax reconciliation schedules;

·              Restructuring of the income tax department to allow for the proper review and approval processes;

·              Identifying and implementing an automated tax provision software tool that will reduce the number of manual spreadsheets that we use to calculate and reconcile all income tax accounts on a quarterly and annual basis; and

·              Improving the communications between our tax department and our accounting department, and increasing the involvement of our accounting department in the reviews of income tax reconciliations.

 

We will monitor the effectiveness of these new processes, procedures and controls as they are implemented in 2007 and will make changes management determines to be appropriate.

 

5.                                       Inherent Limitations on the Effectiveness of Internal Control. There are inherent limitations in the effectiveness of any internal control, including the possibility of human error and the circumvention or overriding of controls.  Accordingly, even effective internal controls can provide only reasonable assurances with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness of internal controls may vary over time.

 

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This excerpt taken from the CYMI 10-Q filed Nov 7, 2006.
ITEM 4.  Controls and Procedures

Evaluation of disclosure controls and procedures.  For the third quarter of 2006, our chief executive officer and our chief financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of September 30, 2006, and concluded that as of such date, our disclosure controls and procedures were not effective in ensuring that information required to be disclosed by us in the reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time period specified in the rules and forms of the Securities and Exchange Commission.

This conclusion was based solely on our assessment of the company’s processes and controls related to our accounting for income taxes described in our 2005 Form 10-K, more specifically those policies and procedures over the reconciliation of income tax accounts which were not designed with adequate precision and our policies and procedures over foreign tax provisions that did not provide for adequate review.  These deficiencies resulted in errors in our consolidated tax provision for our year ended December 31, 2005. Such errors were corrected prior to the issuance of our consolidated financial statements at and for the year ended December 31, 2005.  These deficiencies also resulted in a more than remote likelihood that a material misstatement to our consolidated financial statements would not be prevented or detected.  As described in Part II, Item 9A of our Form 10-K for the year ended December 31, 2005, we have implemented a plan to remediate this material weakness.

Changes in internal control over financial reporting. There has been no change in our internal control over financial reporting during the quarter ended September 30, 2006 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting other than the steps taken by us to remediate the material weakness that was first disclosed by us in our 2005 Form 10-K relating to our accounting for income taxes.

We have taken the following remediation steps during the nine months ended September 30, 2006 to improve our internal controls over our accounting for income taxes:

·                  Improved the procedures for reviewing our consolidated tax provisions and reconciling all subsidiary office tax accounts; and

·                  Increased the level of communication with our subsidiary office accountants over the preparation of our foreign quarterly and annual tax provisions.

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We have been conducting our testing of these new internal controls since early 2006 and will continue to do so for the remainder of the year. We will not be able to completely remediate this material weakness in our accounting for income taxes until we can conduct testing of the 2006 end of year internal controls for income taxes in early 2007.

PART II.  OTHER INFORMATION

This excerpt taken from the CYMI 10-Q filed Aug 2, 2006.
ITEM 4. Controls and Procedures

 

Evaluation of disclosure controls and procedures. For the second quarter of 2006, our chief executive officer and our chief financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of June 30, 2006, and concluded that as of such date, our disclosure controls and procedures were not effective in ensuring that information required to be disclosed by us in the reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time period specified in the rules and forms of the Securities and Exchange Commission.

 

This conclusion was based solely on our assessment of the company’s processes and controls related to our accounting for income taxes described in our 2005 Form 10-K, more specifically those policies and procedures over the reconciliation of income tax accounts which were not designed with adequate precision and our policies and procedures over foreign tax provisions that did not provide for adequate review. These deficiencies resulted in errors in our consolidated tax provision for our year ended December 31, 2005. Such errors were corrected prior to the issuance of our consolidated financial statements at and for the year ended December 31, 2005. These deficiencies also resulted in a more than remote likelihood that a material misstatement to our consolidated financial statements would not be prevented or detected. As described in Part II, Item 9A of our Form 10-K for the year ended December 31, 2005, we have implemented a plan to remediate this material weakness.

 

Changes in internal control over financial reporting. There has been no change in our internal control over financial reporting during the quarter ended June 30, 2006 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting other than the steps taken by us to remediate the material weakness that was first disclosed by us in our 2005 Form 10-K relating to our accounting for income taxes.

 

We have taken the following remediation steps during the six months ended June 30, 2006 to improve our internal controls over our accounting for income taxes:

 

                  Improved the procedures for reviewing our consolidated tax provisions and reconciling all subsidiary office tax accounts; and

                  Increased the level of communication with our subsidiary office accountants over the preparation of our foreign quarterly and annual tax provisions.

 

We have been conducting our testing of these new internal controls over the last several months and will continue to do so for the remainder of this year. We will not be able to completely remediate this

 

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material weakness in our accounting for income taxes until we can conduct testing of the 2006 end of year internal controls for income taxes in early 2007.

 

PART II. OTHER INFORMATION

 

This excerpt taken from the CYMI 10-Q filed May 3, 2006.
ITEM 4. Controls and Procedures

 

Evaluation of disclosure controls and procedures. For the first quarter of 2006, our chief executive officer and our chief financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of March 31, 2006, and concluded that as of such date, our disclosure controls and procedures were not effective in ensuring that information required to be disclosed by us in the reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time period specified in the rules and forms of the Securities and Exchange Commission.

 

This conclusion was based solely on our assessment of the company’s processes and controls related to our accounting for income taxes described in our 2005 Form 10-K, more specifically those policies and procedures over the reconciliation of income tax accounts which were not designed with adequate precision and our policies and procedures over foreign tax provisions that did not provide for adequate review. These deficiencies resulted in errors in our consolidated tax provision for our year ended December 31, 2005. Such errors were corrected prior to the issuance of our consolidated financial statements at and for the year ended December 31, 2005. These deficiencies also resulted in a more than remote likelihood that a material misstatement to our consolidated financial statements would not be prevented or detected. As described in Part II, Item 9A of our Form 10-K for the year ended December 31, 2005, we have implemented a plan to remediate this material weakness.

 

Changes in internal control over financial reporting. There has been no change in our internal control over financial reporting during the quarter ended March 31, 2006 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting other than the steps taken by us to remediate the material weakness that was first disclosed by us in our 2005 Form 10-K relating to our accounting for income taxes.

 

We have taken the following remediation steps during the three months ended March 31, 2006 to improve our internal controls over our accounting for income taxes:

 

      Improved the procedures for reviewing our consolidated tax provisions and reconciling all subsidiary office tax accounts; and

      Increased the level of communication with our subsidiary office accountants over the preparation of our foreign quarterly and annual tax provisions.

 

We plan to conduct our testing of these new internal controls during the next several months so that this material weakness in our accounting for income taxes is completely remediated during the second or third quarter of 2006.

 

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PART II. OTHER INFORMATION

 

This excerpt taken from the CYMI 10-K filed Mar 15, 2006.
Item 9A.  Controls and Procedures

 

1.             Evaluation of Disclosure Controls and Procedures.  Our chief executive officer and our chief financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of December 31, 2005, have concluded that our disclosure controls and procedures were not effective as of such date because we identified a material weakness in our internal control over financial reporting related to our accounting for income taxes, as described below. Due to this material weakness, in preparing our financial statements at and for the year ended December 31, 2005, we performed additional analysis and other post-closing procedures related to our accounting for income taxes to reasonably assure that such financial statements were stated fairly in all material respects in accordance with U.S. generally accepted accounting principles.

 

2.             Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with the evaluation of our internal controls performed during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

3.             Management's Report on Internal Control Over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over our financial reporting. 

 

We assessed the effectiveness of our internal control over financial reporting as of December 31, 2005 using the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  Based upon this assessment, we have concluded that, as of December 31, 2005, our internal control over financial reporting was not effective due to the identification of a material weakness. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.

 

Management’s assessment identified the following material weakness in its internal control over financial reporting as of December 31, 2005:

 

We did not maintain effective internal controls over our accounting for income taxes. Specifically, our policies and procedures over the reconciliation of income tax accounts were not designed with adequate precision and our policies and procedures over foreign tax provisions did not provide for adequate review. These deficiencies resulted in errors in our consolidated tax provision. Such errors were corrected prior to the issuance of our consolidated financial statements at and for the year ended December 31, 2005. These deficiencies also resulted in a more than remote likelihood that a material misstatement to our consolidated financial statements would not be prevented or detected.  

 

Management's assessment of the effectiveness of our internal control over financial reporting as of December 31, 2005, has been audited by KPMG LLP, an independent registered public accounting firm.  Their report appears on page F-2 of this Annual Report on Form 10-K.

 

4.             Management’s Remediation Efforts. Subsequent to December 31, 2005, we have taken the following steps to improve our internal controls over our accounting for income taxes:

 

 

Improved the procedures for reviewing our consolidated tax provisions and reconciling all subsidiary office tax; and

 

 

 

 

Increased the level of communication with our subsidiary accountants over the preparation of our foreign quarterly and annual tax provisions.

 

We will monitor the effectiveness of these new processes, procedures and controls and will make any changes management determines appropriate.

 

5.             Inherent Limitations on the Effectiveness of Internal Control. There are inherent limitations in the effectiveness of any internal control, including the possibility of human error and the circumvention or overriding of controls.  Accordingly, even effective internal controls can provide only reasonable assurances with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness of internal controls may vary over time.

 

This excerpt taken from the CYMI 10-Q filed Nov 2, 2005.
ITEM 4.  Controls and Procedures

 

Evaluation of disclosure controls and procedures.  Our chief executive officer and our chief financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of September 30, 2005, have concluded that as of such date, our disclosure controls and procedures were adequate and sufficient to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time period specified in the rules and forms of the Securities and Exchange Commission.

 

Changes in internal control over financial reporting. There has been no change in our internal control over financial reporting during the quarter ended September 30, 2005 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II.  OTHER INFORMATION

 

This excerpt taken from the CYMI 10-Q filed May 5, 2005.
.  Controls and Procedures

 

Evaluation of disclosure controls and procedures.  Our chief executive officer and our chief financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) as of March 31, 2005, have concluded that as of such date, our disclosure controls and procedures were adequate and sufficient to ensure that information required to be disclosed by us in the reports that we file under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time period specified in the Commission’s rules and forms.

 

Changes in internal controls. There has been no change in our internal control over financial reporting during the quarter ended March 31, 2005 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

Item 9A.  Controls and Procedures

 

Evaluation of disclosure controls and procedures.  Our chief executive officer and our chief financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) as of December 31, 2004, have concluded that as of

 

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such date, our disclosure controls and procedures were adequate and sufficient to ensure that information required to be disclosed by us in the reports that we file under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time period specified in the Commission’s rules and forms.

 

Changes in internal controls. There has been no change in our internal control over financial reporting during the fiscal year ended December 31, 2004 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

Management’s report on internal control over financial reporting. The management of Cymer, Inc. is responsible for establishing and maintaining adequate internal control over the company’s financial reporting.  There are inherent limitations in the effectiveness of any internal control, including the possibility of human error and the circumvention or overriding of controls.  Accordingly, even effective internal controls can provide only reasonable assurances with respect to financial statement preparation.  Further, because of changes in conditions, the effectiveness of internal controls may vary over time.

 

We assessed the effectiveness of the company’s internal control over financial reporting as of December 31, 2004 using the criteria and framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  Based on our assessment, we believe that, as of December 31, 2004, Cymer, Inc.’s internal control over financial reporting is effective.

 

Management’s assessment of the effectiveness of Cymer’s internal controls over financial reporting as of December 31, 2004, has been audited by our external auditors, KPMG LLP, an independent registered public accounting firm.  Their report appears on page F-2 of this Annual Report on Form 10-K.

 

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