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16
RESULTS OF OPERATIONS
The following table sets forth consolidated statement of operations data for each of the years ended March 31, 2003,
2002, and 2001, expressed as the percentage of our total revenues represented by each item. Cost of product
revenues is presented as a percentage of product revenues and cost of license and other revenues is presented as a
percentage of license and other revenues. You should read this information in conjunction with our Consolidated
Financial Statements and related notes included elsewhere in this Report.
REVENUES
Product revenues were $5.7 million in fiscal 2003, a decrease of $300,000 from the $6 million reported in fiscal
2002. The decrease in fiscal 2003 was due to a $1.1 million decrease in videoconferencing semiconductor sales,
offset by a $300,000 increase in voice over internet protocol (VoIP) semiconductor sales and a $500,000 increase in
sales of videophones and media hub systems. The significant decrease in videoconferencing semiconductor revenues
was due primarily to a slight decrease in unit shipments, combined with decreases in average selling prices, or ASPs.
The decrease in unit shipments of our videoconferencing semiconductors as compared to the prior year, is primarily
attributable to our announcement during fiscal 2003 of the end of life of our existing videoconferencing
semiconductors, as well as the factors set forth below explaining the decline for fiscal 2002 versus fiscal 2001. Our
remaining videoconferencing semiconductor customers have been designing out our products in anticipation of the
end of life. The increase in VoIP semiconductor sales was attributable to a significant increase in unit shipments,
offset by decreases in ASPs. The increase in videophone system sales was attributable to our commencement of
sales of these products in the fourth quarter of fiscal 2002, and as a result, fiscal 2003 includes four quarters of sales
versus only one quarter of sales in fiscal 2002. The increase in media hub system revenues was attributable to the
increase in licenses of our hosted iPBX product.
Product revenues were $6.0 million in fiscal 2002, a decrease of $6.8 million from the $12.8 million reported in
fiscal 2001. The decrease in product revenues in fiscal 2002 was due to decreases in sales of video monitoring and
Ye ar Ended March 31,
2003 2002 2001
Product revenues.....................................................
.
52 %41 %70 %
License and other revenues...................................... 48 %59 %30 %
Total revenues............................................... 100 %100 %100 %
Cost of product revenues.........................................
.
48 %43 %41 %
Cost of license and other revenues........................... 29 %2%32 %
Total cost of revenues................................... 39 %19 %38 %
Gross profit...................................................
.
61 %81 %62 %
Operating expenses:
Research and development..................................... 71 %85 %109 %
Selling, general and administrative.........................
.
68 %59 %93 %
In-process research and development..................... -- %-- %25 %
Amortization of intangibles................................... -- %5%60 %
Restructuring and other charges.............................
.
31 %-- %183 %
Total operating expenses............................... 170 %149 %470 %
Loss from operations............................................... (109)%(68)%(408)%
Other income, net...................................................
.
5
%7%14 %
Interest expense......................................................
.
--
%(6)%(8)%
Loss before provision for income taxes...................
.
(104)%(67)%(402)%
Provision for income taxes...................................... -- %-- %-- %
Net loss before extraordinary gain and cumulative
effect of change in accounting principle ...............
.
(104)%(67)%(402)%
Extraordinary gain on extinguishment of debt, net..
.
--
%5%-- %
Cumulative effect of change in accounting principle -- %-- %(6)%
N
et loss...................................................................
.
(104)%(62)%(408)%