3Ware 2005 Annual Report Download - page 33

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Interest and Other Income and Expenses. The following table presents interest and other income and
expenses for the fiscal years ended March 31, 2005 and March 31, 2004 (dollars in thousands):
Fiscal Years Ended March 31,
Increase
(Decrease) Change
2005 2004
Amount
%ofNet
Revenue Amount
%ofNet
Revenue
Interest income, net ........................ $18,699 7.4% $35,007 26.7% $(16,308) -46.6%
Other income (expense), net ................. $ — — $ 8,340 6.4% $ (8,340) -100.0%
Interest Income,net. 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 for the year ended March 31, 2005 is
primarily due to lower cash and short-term investment balances as well as lower net realized gains on the
portfolio.
Other Income, net. Other income, net includes recorded gains on strategic equity investments as well as
net gains from the sale of real estate, and property and equipment. The decrease is due to lower gains on strategic
equity investments, on the sales of real estate, and on the sale of property and equipment recognized in fiscal
2004 and not recognized in fiscal 2005.
Income Taxes. The following table presents our income tax expense (benefit) for the fiscal years ending
March 31, 2005 and March 31, 2004 (dollars in thousands):
Fiscal Years Ended March 31,
Increase Change
2005 2004
Amount
%ofNet
Revenue Amount
%ofNet
Revenue
Income tax expense (benefit) ................... $2,861 1.1% $(1,776) -1.4% $4,637 261.1%
The federal statutory income tax rate was 35% for the fiscal years ending March 31, 2005 and March 31,
2004. Our income tax expense (benefit) in 2005 and 2004 primarily represents taxes on our foreign operations
and in fiscal year 2004, the realization of a tax benefit resulting from the reversal of certain prior period tax
accruals related to the completion of IRS audits for the fiscal years through 2001. In addition, as a result of our
cumulative losses and the full utilization of our loss carry backs, we provided a full valuation allowance against
our net deferred tax assets in 2005 and 2004.
Comparison of the Year Ended March 31, 2004 to the Year Ended March 31, 2003
Net Revenues. Net revenues for the year ended March 31, 2004 were approximately $131.2 million,
representing an increase of 29% from the net revenues of approximately $101.6 million for the year ended March
31, 2003. The increase in total net revenues was attributable to an increase in communications revenue, including
revenues generated by the PRS business of $13.2 million from the date of acquisition, and the revenue generated
in the storage business from the acquisition of JNI Corporation of $13.0 million from the date of acquisition,
offset by decreases in other revenue of 61% as a result of higher shipments of last time buy products in the prior
year. See the following table (dollars in thousands):
Fiscal Years Ended March 31,
Increase
(Decrease) Change
2004 2003
Amount
%ofNet
Revenue Amount
%ofNet
Revenue
Communications ........................ $104,197 79.4% $ 65,577 64.6% $ 38,620 58.9%
Storage ............................... 13,038 9.9% — 0.0% 13,038 100.0%
Other ................................. 13,942 10.6% 36,014 35.4% (22,072) -61.3%
Net revenue ............................ $131,177 100.0% $101,591 100.0% $ 29,586 29.1%
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