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1
PART I
ITEM 1. BUSINESS
Forward-Looking Statements and Risk Factors
Statements contained in this Report on Form 10-K regarding our expectations, beliefs, estimates, intentions or
strategies are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E
of the Exchange Act and include statements regarding our research and development plans for our various product
groups; our expectation concerning the adequacy of our facilities; our estimates of litigation exposure and our
beliefs about the sufficiency of our manufacturing arrangements. 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. 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 a shifting of internal research and development focus based on changes in the market or adequacy
of funding; a failure of customers to adopt voice and video over internet protocol technology or advances in
competing systems and services; our business may grow in an unanticipated manner causing us to require different
types of facilities; ordinary course litigation may cause a greater than anticipated impact due to factual matters or
issues beyond our control; and our ability to source our products may be interrupted if our manufacturers cease
operations or no longer desire to do business with us. Please also see the section entitled "Factors That May Affect
Future Results" for additional risks that may impact our business.
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 was founded as Integrated
Information Technology, Inc. in 1987 and completed its initial public offering on July 2, 1997 under the name 8x8,
Inc. In August 2000, the Company changed its name to Netergy Networks, Inc., but subsequently changed it back to
8x8, Inc. in July 2001. The Company’s principal offices are located at 2445 Mission College Boulevard, Santa
Clara, California 95054, and its telephone number at that location is (408) 727-1885.
The Company has three product lines: voice and video communications services that are marketed under the Packet8
brand name (collectively Packet8), voice and video semiconductors and related software, and software that
implements the functionality of a private branch exchange, or PBX, over data networks. The Company has two
primary subsidiaries, Netergy Microelectronics, Inc., or Netergy, and Centile, Inc., or Centile, that comprise two of
its three product lines.
Within the parent company, 8x8 offers the Packet8 service that enables broadband internet users to add digital
telephone service to their high-speed internet connection. In addition, 8x8 offers videophones for use on both
traditional telephone networks and in conjunction with the Packet8 service.
Netergy, formed in December 2000, 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 media
hubs and to voice-enable cable and digital subscriber line, or DSL, modems, wireless devices, and other broadband
technologies.
Centile, formed in March 2001, 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 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