3Ware 2001 Annual Report Download - page 20

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M A N A G E M E N T’S D I S C U S S I O N A N D A N A LY S I S O F F I N A N C I A L C O N D I T I O N A N D R E S U LT S O F O P E R AT I O N S
The following discussion of the financial condition and results of our operations should be read in conjunction with the consol-
idated financial statements and notes thereto included elsewhere in our Annual Re p o r t and in conjunction with our An n u a l
R e p o r t on Fo rm 10-K. This discussion contains forw a r d-looking statements that invo l v e risks and uncertainties. Our actual
results may differ materially from those anticipated in these forw a rd-looking statements as a result of certain factors, including,
but not limited to, those described in the “Risk Fa c t o r s .” Readers are cautioned not to place undue reliance on these forw a rd -
looking statements, which reflect our analysis only as of the date hereof. We assume no obligation to update these
f o rw a r d-looking statements to reflect actual results or changes in factors or assumptions affecting such forw a r d-looking statements.
R E S U LT S O F O P E R A T I O N S
The following table sets forth certain selected consolidated statement of operations data in dollars and as a percent-
age of revenues for the periods indicated:
Fiscal Year Ended March 31,
(in thousands, except per share data) 1999 2000 2001
Net revenues . . . . . . . . . . . . . . . . . . . . . . $ 105,000 100.0% $ 172,352 100.0% $ 435,543 100.0%
Cost of revenues(1) . . . . . . . . . . . . . . . . . . . 37,937 36.1 50,218 29.1 163,166 37.5
Gross profit . . . . . . . . . . . . . . . . . . . . . . . 67,063 63.9 122,134 70.9 272,377 62.5
Operating expenses:
Research and development(1) . . . . . . . . . 22,301 21.2 32,527 18.9 105,225 24.2
Selling, general and administrative(1) . . . 17,795 16.9 28,035 16.3 69,232 15.9
Stock-based compensation(1) . . . . . . . . . 701 0.7 452 0.3 79,730 18.3
Amortization of goodwill
and purchased intangibles . . . . . . . . — — — — 308,835 70.9
Acquired in-process research
and development . . . . . . . . . . . . . . — — — — 202,100 46.4
Merger-related costs . . . . . . . . . . . . . . . 2,350 2.2 — — — —
Total operating expenses . . . . . . . . . 43,147 41.1 61,014 35.4 765,122 175.7
Operating income (loss) . . . . . . . . . . . . . . 23,916 22.8 61,120 35.5 (492,745) (113.1)
Interest income, net . . . . . . . . . . . . . . . . . 3,450 3.3 12,872 7.5 55,449 12.7
Income (loss) before income taxes . . . . . . . 27,366 26.1 73,992 42.9 (437,296) (100.4)
Income tax expense (benefit) . . . . . . . . . . . 10,233 9.7 25,367 14.7 (1,081) (0.2)
Net income (loss) . . . . . . . . . . . . . . . . . . . $ 17,133 16.3% $ 48,625 28.2% $(436,215) (100.2)%
Diluted earnings (loss) per share:
Earnings (loss) per share . . . . . . . . . . . . $ 0.08 $ 0.20 $ (1.63)
Shares used in calculating . . . . . . . . . . .
diluted earnings (loss) per share . . . . 219,440 238,304 267,363
(1)For presentation purposes, the functional line items exclude stock-based compensation charges related to acquired
companies as follows (in thousands):
Cost of revenues . . . . . . . . . . . . . . . . . . . $ — —% $ — —% $ 2,820 0.6%
Research and development . . . . . . . . . . . . 171 0.2 288 0.2 41,303 9.5
Selling, general and administrative . . . . . . 530 0.5 164 0.1 35,607 8.2
$ 701 0.7% $ 452 0.3% $ 79,730 18.3%
C O M PA R I S O N O F T H E Y E A R E N D E D M A R C H 3 1, 2 00 1 T O T H E Y E A R E N D E D M A R C H 3 1, 2 0 0 0
On September 9, 1999, March 23, 2000 and October 30, 2000, we effected two-for-one stock splits (in the form of
100% stock dividends); accordingly, all share and per share amounts in this discussion of the results of operations
have been restated to reflect the stock splits.