8x8 2002 Annual Report Download - page 61

YEAR ENDING MARCH 31,
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2003.............................................. $ 1,405
2004.............................................. 449
2005.............................................. 270
2006.............................................. 256
2007.............................................. 242
2008 and thereafter............................... 889
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Total minimum payments.................. $ 3,511
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Rent expense for the years ended March 31, 2002, 2001, and 2000 was $1.5 million, $1.8 million, and $1.3 million,
respectively.
The Company subleases office space under operating lease agreements expiring at various dates through 2005. The
total future minimum rentals to be received under these noncancelable sublease agreements are $64,000 in fiscal 2003,
$33,000 in fiscal 2004, $16,000 per year in each of fiscal 2005 and 2006, and $11,000 in fiscal 2007.
Legal Proceedings
In November 2001, the Company settled a lawsuit that was filed against it in April 2001 in British Columbia, Canada
by Milinx Business Services, Inc. and Milinx Business Group, Inc (collectively, Milinx). The Company was one of five
named defendants in the lawsuit, the others being Sun Microsystems, Inc., Netscape Communications Canada, Inc.,
Burntsand, Inc., and Intraware Canada, Inc. The Company has been released of any further obligations to Milinx in
exchange for returning a portion of the original license fee. As a result of the settlement agreement, the Company
recognized $309,000 of previously deferred revenue stemming from a March 2000 license agreement with Milinx.
The Company is also involved in various other legal claims and litigation that have arisen in the normal course of the
Company's operations. While the results of such claims and litigation cannot be predicted with certainty, the Company
believes that the final outcome of such matters will not have a significant adverse effect on the Company's financial
position or results of operations. However, should the Company not prevail in any such litigation, its operating results
and financial position could be adversely impacted.
NOTE 9 -- STOCKHOLDERS' EQUITY
Common Stock
In August 2000, the Company's stockholders authorized an amendment to the restated certificate of incorporation to
increase the authorized number of shares of common stock to 100,000,000 shares from 40,000,000 shares.
Exchangeable Shares and Preferred Stock
In conjunction with the acquisition of U|Force (see Note 2), the Company agreed to issue up to 2,107,780 shares of 8x8
common stock upon the exchange or redemption of the exchangeable shares (the Exchangeable Shares) of Canadian
entities held by employee shareholders of U|Force stock. The Exchangeable Shares held by U|Force employees were
subject to certain restrictions, including the Company's right to repurchase the Exchangeable Shares if an employee
departed the Company prior to vesting. Upon vesting, the Exchangeable Shares were convertible into 8x8 common
stock on a 1-for-
1 basis. The Company also issued one share of preferred stock (the Special Voting Share) that provides
holders of Exchangeable Shares with voting rights that are equivalent to the shares of common stock into which their
shares are convertible.
During the fourth quarter of fiscal 2001, the Company repurchased a total of 1,034,107 unvested Exchangeable Shares
at an average price of $0.49 per share when the beneficial holders of such shares resigned from the Company. In
addition, 812,866 Exchangeable Shares were converted into an equivalent number of shares of the Company's common