3Ware 1999 Annual Report Download - page 18

RESULTS OF OPERATIONS
The following table sets forth certain selected consolidated statements of income data in dollars and as a percentage
of revenues for the periods indicated:
Fiscal Year Ended March 31,
(in thousands, except per share data) 1997 1998 1999
$%$%$%
Net revenues $57,468 100.0% $76,618 100.0% $105,000 100.0%
Cost of revenues 30,057 52.3 34,321 44.8 37,937 36.1
Gross profit 27,411 47.7 42,297 55.2 67,063 63.9
Operating expenses:
Research and development 7,870 13.7 13,268 17.3 22,472 21.4
Selling, general and administrative 12,537 21.8 14,278 18.6 18,325 17.5
Merger-related costs — — — — 2,350 2.2
Total operating expenses 20,407 35.5 27,546 35.9 43,147 41.1
Operating income 7,004 12.2 14,751 19.3 23,916 22.8
Net interest income (expense) (29) (0.1) 871 1.1 3,450 3.3
Income before provision for income taxes 6,975 12.1 15,622 20.4 27,366 26.1
Provision for income taxes 659 1.1 406 0.5 10,233 9.8
Net income $ 6,316 11.0% $15,216 19.9% $ 17,133 16.3%
Diluted earnings per share:
Earnings per share $ 0.35 $ 0.75 $ 0.62
Shares used in calculating diluted
earnings per share 17,907 20,294 27,430
COMPARISON OF THE YEAR ENDED MARCH 31, 1999 TO THE YEAR ENDED MARCH 31, 1998
NET REVENUES. Net revenues for the year ended March 31, 1999 were approximately $105.0 million, representing an increase
of 37% over net revenues of approximately $76.6 million for the year ended March 31, 1998. Revenues from sales of com-
munications products increased 56% in the year ended March 31, 1999 from $36.6 million or 48% of net revenues for the
year ended March 31, 1998 to $57.3 million or 55% of net revenues for the year ended March 31, 1999, reflecting unit growth
in shipments of existing products as well as the introduction of new products for these markets. Revenues from sales of prod-
ucts to other markets, consisting of the ATE, high-speed computing and military markets, decreased from 52% of net revenues
for the year ended March 31, 1998 to 45% of net revenues for the year ended March 31, 1999, although revenues from sales
to these other markets increased in absolute dollars. The increase in absolute dollars in revenues attributed to these other mar-
kets was primarily due to $10.0 million of shipments in the year ended March 31, 1999, relating to the partial fulfillment of
an end-of-life order from Raytheon Systems Co. Total sales to Raytheon Systems Co. accounted for 16% of net revenues in
the year ended March 31, 1999 and were less than 10% of net revenues in the year ended March 31, 1998. Sales to Nortel
accounted for 20% and 21% of net revenues for the years ended March 31, 1999 and 1998, respectively. In the years ended
March 31, 1999 and 1998, Insight Electronics, Inc., the Company’s domestic distributor, accounted for 13% and 11% of net
revenues, respectively. Sales outside of North America accounted for 24% and 23% of net revenues for the years ended
March 31, 1999 and 1998, respectively. Although less than seven percent of the Company’s revenues were attributable to sales
in Asia for the year ended March 31, 1999, the recent economic instability in certain Asian countries could adversely affect
the Company’s business, financial condition and operating results, particularly to the extent that this instability impacts the
sales of products manufactured by the Company’s customers.
MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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1999 AMCC