3Ware 2004 Annual Report Download - page 40

Interest and Other Income and Expenses.The following table presents interest and other income and
expenses for the fiscal year ended March 31, 2004 and March 31, 2003 (in thousands):
Fiscal Years Ended March 31,
Increase
(Decrease) Change
2004 2003
Amount
%ofNet
Revenue Amount
%ofNet
Revenue
Interest income, net ........................ $35,007 26.7% $ 47,719 47.0% $(12,712) -26.6%
Other income (expense), net .................. 8,340 6.4% (11,952) -11.8% 20,292 -169.8%
Net Interest Income.Net interest income reflects interest earned on cash and cash equivalents and short-
term investment balances, as well as realized gains and losses from the sale of short-term investments, less
interest expense on our debt and capital lease obligations. The decrease in 2004 is primarily due to lower interest
income as a result of lower yields and lower cash balances.
Other Income (Expense). Other income (expense) primarily includes recorded gains and losses on strategic
equity investments as well as gains and losses from dispositions of real estate and equipment. Other income
(expense) for the year ended March 31, 2004 primarily consisted of a gain on the sale of a parcel of real estate
located in Poway, California of approximately $7.6 million and a gain on the sale of a strategic equity investment
of approximately $1.0 million. Other income (expense) for the year ended March 31, 2003 primarily consisted of
arecognized impairment charge of $13.3 million for certain strategic equity investments and losses of
$2.3 million for certain fixed asset disposals, offset by a $3.7 million gain from the sale of real estate.
Income Taxes. Our income tax benefit in fiscal 2004 was $1.8 million. The benefit primarily reflects the
reversal of our income tax accrual upon the completion of an IRS audit for the fiscal years through 2001. No
additional income tax benefits were accorded for our tax losses in fiscal 2004 or 2003 because we believe that it
is more likely that these assets will not be utilized because of our recent cumulative losses and full utilization of
our loss carrybacks. Accordingly, we have provided a full valuation allowance for these deferred tax assets. At
March 31, 2004, we provided a valuation allowance against our net deferred tax assets in the amount of $396.2
million.
Comparison of the Year Ended March 31, 2003 to the Year Ended March 31, 2002
Net Revenues.Net revenues for the year ended March 31, 2003 were approximately $101.6 million,
representing a decrease of 34% from the net revenues of approximately $152.8 million for the year ended
March 31, 2002. The decline in revenues was primarily due to a decrease in the volume of shipments of our
communications ICs, reflecting reduced demand for our communications products as our customers faced slower
demand for their products. This decrease in the volume of shipments of our communications ICs was partially
offset by increases in the revenues of our non-communications ICs. The increase in non-communications IC
revenues was driven by the fulfillment of certain last-time-buy orders generated as a result of the closure of our
wafer fabrication facility at which the majority of our non-communications ICs were made. See the following
table (in thousands):
Fiscal Years Ended March 31,
Increase
(Decrease) Change
2003 2002
Amount
%ofNet
Revenue Amount
%ofNet
Revenue
Communications ......................... $ 65,577 64.6% $128,273 83.9% $(62,696) -48.9%
Other .................................. 36,014 35.4% 24,567 16.1% 11,447 46.6%
Net revenue ............................. $101,591 100.0% $152,840 100.0% $(51,249) -33.5%
Revenues based on direct shipments outside of the United States of America accounted for 41% of net
revenues for the year ended March 31, 2003, compared to 42% for the year ended March 31, 2002.
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