8x8 2003 Annual Report Download - page 15

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12
(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 a 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.
(7) Net loss and net loss per share include restructuring and other charges of $3.4 million
(8) Beginning 8x8’s fiscal year 2003, Statement of Financial Accounting Standards (SFAS) No. 142,
“Goodwill and Other Intangible Assets,” was adopted, and 8x8 ceased to amortize approximately $1.5
million of goodwill, net of amortization, including intangibles that were classified as goodwill upon
adoption of SFAS No. 142. The 2000 to 2002 consolidated financial data includes amortization of
goodwill and intangibles totaling $0.7 million for 2002, $11 million for 2001 and $0.6 million for 2000.
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 anticipated cost savings arising from the restructuring activities implemented during fiscal
2003; our assumptions underlying our critical accounting determinations concerning revenue, allowances for
doubtful accounts, valuation of goodwill, tax allowances and reserves for legal issues; factors that could impact our
gross margins; our cost estimates under contracts accounted for using the percentage of completion method; efforts
to raise additional financing; 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-looking 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 IP telephony and video applications. The Company has three product lines: internet protocol
telephone devices, videophones, and internet communication services; voice and video semiconductors and related
software; and software that implements the functionality of a private branch exchange, or PBX, over data networks.
8x8’s first product line includes consumer telephones, videophones, and communication software and services that
work over broadband networks. 8x8 sells internet protocol telephony software and services that enable customers to
provision and use IP dial-tone services with IP telephones and videophones. The service is marketed under the brand
name Packet8. 8x8 also sells videophones that work over normal phone lines.