8x8 2002 Annual Report Download - page 18

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3. Net loss and net loss per share include a restructuring charge of $33.3 million, an in-process research and
development charge of $4.6 million, and a $1.1 million charge for the cumulative effect of a change in
accounting principle.
4. Net loss and net loss per share include a $6.4 million charge for a discount on the issuance of common stock and
an in-process research and development charge of $10.1 million.
5. Net loss and net loss per share include a $5.7 million charge associated with the write off of ViaTV consumer
videophone inventories.
6. The convertible subordinated debentures, which had face value of $7.5 million, are presented net of the related
debt discount, which was amortized over the initial three-year term of the debentures. The debentures were
redeemed in December 2001.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This Discussion and Analysis of Financial Condition and Results of Operations contains forward-
looking statements
within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, including our
statements regarding our assumptions underlying our critical accounting determinations concerning revenue,
allowances for doubtful accounts, valuation of goodwill, tax allowances and reserves for legal issues; the anticipated
continued decline in videoconferencing semiconductor revenues; factors that could impact our gross margins; the
sufficiency of cash to fund our ongoing obligations through at least March 31, 2003, efforts to raise additional
financing, the acquisition of or investment in other businesses and products, commitment of resources, and reduction in
operating costs including the possible sale or cessation of certain business segments and the possible further reduction
of personnel and suspension of salary increases and capital expenditures. You should not place undue reliance on these
forward-looking statements. Actual results could differ materially from those anticipated in these forward-
statements as a result of a number of factors, including our good faith assumptions being incorrect, our business
expenses being greater than anticipated due to competitive factors or unanticipated development or sales costs;
revenues not resulting in the manner anticipated due to a continued slow down in technology spending, particularly in
the telecommunications market; our failure to generate investor interest or to sell certain of our assets or business
segments. The forward-
looking statements may also be impacted by the additional risks faced by us as described in this
Report, including those set forth under the section entitled "Factors that May Affect Future Results." All forward-
looking statements included in this Report are based on information available to us on the date hereof, and we assume
no obligation to update any such forward-looking statements.
OVERVIEW
8x8, Inc., or 8x8, and its subsidiaries (collectively, the Company) develop and market telecommunication technology
for Internet Protocol, or IP, telephony and video applications. The Company has three product lines: voice and video
semiconductors and related software; software that implements the functionality of a private branch exchange, or PBX,
over data networks; and telephones, videophones, and communication services that work over broadband networks.
The Company has two primary subsidiaries, Netergy Microelectronics, Inc. (Netergy) and Centile, Inc. (Centile).
Netergy provides voice and video semiconductors and related communication software to original equipment
manufacturers, or OEMs, of telephones, terminal adapters, and other endpoint communication devices and to other
semiconductor companies. Netergy's technologies are used to make IP telephones and to voice-
enable cable and digital
subscriber line, or DSL, modems, wireless devices, and other broadband technologies. Centile develops and markets
hosted iPBX solutions that allow service providers to offer to small and medium-
sized businesses over broadband
networks the features and functions that are commonly found in a typical business phone system. A hosted iPBX
solution is a software application that implements the functionality of a business phone system over the same data
connection that a business uses for connection to the Internet. The phone system software runs on servers that are
located at a central data center so that the only phone system equipment that is required at the customer site are
telephones. The phone system can also be accessed and controlled from any web browser on the Internet. 8x8 is