Exhibit 99.1
ITEM 6. SELECTED FINANCIAL DATA.
The following selected financial data as of and for the fiscal years ended January 31, 2006, 2005, 2004, 2003, and 2002, respectively, have been derived from our consolidated financial statements audited by KPMG LLP, independent registered public accounting firm. These historical results are not necessarily indicative of the results of operations to be expected for any future period.
The data set forth below (in thousands, except per share data) should be read in conjunction with Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data.”
The following tables reflect the impact of the accounting policy change on the January 31, 2006 fiscal year end consolidated financial statement. (See Note 2A in the Notes to the Consolidated Financial Statements.)
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Fiscal Year Ended January 31, | ||||||||||||||||||||
2006 | 2005 | 2004 | 2003 | 2002 | ||||||||||||||||
(As Adjusted - Note 2A) | ||||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||
Consolidated Statement of Operations Data: | ||||||||||||||||||||
Revenues | ||||||||||||||||||||
Service revenues | $ | 167,194 | $ | 107,166 | $ | 61,560 | $ | 39,261 | $ | 19,297 | ||||||||||
Technology revenues | 3,665 | 8,310 | 15,797 | 20,909 | 100 | |||||||||||||||
Hardware revenues | 72,093 | 111,275 | 72,882 | 45,620 | — | |||||||||||||||
Rebates, revenue share, and other payment to the channel | (47,027 | ) | (54,696 | ) | (9,159 | ) | (9,780 | ) | — | |||||||||||
Net Revenues | 195,925 | 172,055 | 141,080 | 96,010 | 19,397 | |||||||||||||||
Cost and Expenses | ||||||||||||||||||||
Cost of service revenues | 34,179 | 29,360 | 17,705 | 17,119 | 19,852 | |||||||||||||||
Cost of technology revenues | 782 | 6,575 | 13,609 | 8,033 | 62 | |||||||||||||||
Cost of hardware revenues | 86,817 | 120,323 | 74,836 | 44,647 | — | |||||||||||||||
Research and development | 41,087 | 37,634 | 22,167 | 20,714 | 27,205 | |||||||||||||||
Sales and marketing | 35,047 | 37,367 | 18,947 | 48,117 | 104,897 | |||||||||||||||
General and administrative | 38,018 | 16,593 | 16,296 | 14,465 | 18,875 | |||||||||||||||
Loss from operations | (40,005 | ) | (75,797 | ) | (22,480 | ) | (57,085 | ) | (151,494 | ) | ||||||||||
Interest income | 3,084 | 1,548 | 498 | 4,483 | 2,163 | |||||||||||||||
Interest expense and other | (14 | ) | (5,459 | ) | (9,587 | ) | (27,569 | ) | (7,374 | ) | ||||||||||
Loss before income taxes | (36,935 | ) | (79,708 | ) | (31,569 | ) | (80,171 | ) | (156,705 | ) | ||||||||||
Provision for income taxes | (64 | ) | (134 | ) | (449 | ) | (425 | ) | (1,000 | ) | ||||||||||
Net Loss | (36,999 | ) | (79,842 | ) | (32,018 | ) | (80,596 | ) | (157,705 | ) | ||||||||||
Less: Series A redeemable convertible preferred stock dividend | — | — | — | (220 | ) | (3,018 | ) | |||||||||||||
Less: Accretion to redemption value of Series A redeemable convertible preferred stock | — | — | — | (1,445 | ) | — | ||||||||||||||
Net loss attributable to common shareholder | $ | (36,999 | ) | $ | (79,842 | ) | $ | (32,018 | ) | $ | (82,261 | ) | $ | (160,723 | ) | |||||
Net loss per share | ||||||||||||||||||||
Basic and diluted | $ | (0.44 | ) | $ | (0.99 | ) | $ | (0.48 | ) | $ | (1.61 | ) | $ | (3.74 | ) | |||||
Weighted average shares used to calculate basic and diluted net loss per share | 83,683 | 80,264 | 66,784 | 51,219 | 42,956 | |||||||||||||||
As of January 31, | ||||||||||||||||||||
2006 | 2005 | 2004 | 2003 | 2002 | ||||||||||||||||
(As Adjusted - Note 2A) | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Consolidated Balance Sheet Data: | ||||||||||||||||||||
Cash and cash equivalents | $ | 85,298 | $ | 87,245 | $ | 138,210 | $ | 40,401 | $ | 46,527 | ||||||||||
Short-term investments | 18,915 | 19,100 | 5,025 | 3,800 | 5,800 | |||||||||||||||
Total assets | 159,008 | 160,052 | 183,891 | 82,320 | 149,934 | |||||||||||||||
Current redeemable convertible preferred stock | — | — | — | — | 2 | |||||||||||||||
Long-term portion of convertible notes payable | — | — | 6,005 | 4,265 | 18,315 | |||||||||||||||
Long-term portion of convertible notes payable-related parties | — | — | — | 3,920 | 9,426 | |||||||||||||||
Long-term portion of deferred revenues | 67,575 | 63,131 | 46,035 | 32,373 | 23,552 | |||||||||||||||
Long-term portion of obligations under capital lease | — | — | — | — | 2 | |||||||||||||||
Total paid-in capital for current redeemable convertible preferred stock and redeemable common stock | — | — | — | — | 46,553 | |||||||||||||||
Total stockholders’ equity (deficit) | (29,372 | ) | (2,692 | ) | 65,632 | (24,697 | ) | (29,944 | ) |
Quarterly Results of Operations
The following table represents certain unaudited statement of operations data for our eight most recent quarters ended January 31, 2006. In management’s opinion, this unaudited information has been prepared on the same basis as the audited annual financial statements and includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair representation of the unaudited information for the quarters presented. This information should be read in conjunction with our audited consolidated financial statements, including the notes thereto, included elsewhere in this Current Report. The results of operations for any quarter are not necessarily indicative of results that may be expected for any future period. Certain amounts in prior periods have been reclassified to conform to the current year presentation.
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The following table reflects the impact of the accounting policy change on the January 31, 2006 fiscal year end consolidated financial statement. (See Note 2A in the Notes to the Consolidated Financial Statements.)
Three Months Ended | ||||||||||||||||||||||||||||||||
Jan 31, 2006 | Oct 31, 2005 | Jul 31, 2005 | Apr 30, 2005 | Jan 31, 2005 | Oct 31, 2004 | Jul 31, 2004 | Apr 30, 2004 | |||||||||||||||||||||||||
(As Adjusted - Note 2A) | ||||||||||||||||||||||||||||||||
(unaudited, in thousands except per share data) | ||||||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||
Service revenues | $ | 46,305 | $ | 42,296 | $ | 40,249 | $ | 38,344 | $ | 32,996 | $ | 27,678 | $ | 24,333 | $ | 22,159 | ||||||||||||||||
Technology revenues | 663 | 901 | 425 | 1,676 | 1,169 | 699 | 3,427 | 3,015 | ||||||||||||||||||||||||
Hardware revenues | 32,266 | 24,652 | 4,649 | 10,526 | 50,452 | 27,894 | 18,592 | 14,337 | ||||||||||||||||||||||||
Rebates, revenue share, and other payments to channel | (19,167 | ) | (18,234 | ) | (5,988 | ) | (3,638 | ) | (25,188 | ) | (17,944 | ) | (6,576 | ) | (4,988 | ) | ||||||||||||||||
Net revenues | 60,067 | 49,615 | 39,335 | 46,908 | 59,429 | 38,327 | 39,776 | 34,523 | ||||||||||||||||||||||||
Cost of revenues | ||||||||||||||||||||||||||||||||
Cost of service revenues | 10,250 | 8,431 | 6,859 | 8,639 | 10,426 | 6,505 | 6,836 | 5,593 | ||||||||||||||||||||||||
Cost of technology revenues | (121 | ) | 77 | 599 | 227 | 440 | 1,465 | 2,708 | 1,962 | |||||||||||||||||||||||
Cost of hardware revenues | 38,811 | 24,667 | 7,697 | 15,642 | 52,267 | 28,486 | 22,720 | 16,850 | ||||||||||||||||||||||||
Total cost of revenues | 48,940 | 33,175 | 15,155 | 24,508 | 63,133 | 36,456 | 32,264 | 24,405 | ||||||||||||||||||||||||
Gross margin | 11,127 | 16,440 | 24,180 | 22,400 | (3,704 | ) | 1,871 | 7,512 | 10,118 | |||||||||||||||||||||||
Operating Expenses | ||||||||||||||||||||||||||||||||
Research and development | 10,693 | 9,712 | 9,778 | 10,904 | 11,206 | 9,291 | 8,138 | 8,999 | ||||||||||||||||||||||||
Sales and marketing | 10,637 | 10,006 | 7,574 | 6,830 | 11,529 | 14,212 | 6,026 | 5,600 | ||||||||||||||||||||||||
General and administrative | 11,769 | 11,702 | 8,409 | 6,138 | 4,194 | 4,366 | 3,794 | 4,239 | ||||||||||||||||||||||||
Loss from operations | (21,972 | ) | (14,980 | ) | (1,581 | ) | (1,472 | ) | (30,633 | ) | (25,998 | ) | (10,446 | ) | (8,720 | ) | ||||||||||||||||
Interest income | 900 | 826 | 734 | 624 | 458 | 397 | 366 | 327 | ||||||||||||||||||||||||
Interest expense and other | (1 | ) | (10 | ) | (2 | ) | (1 | ) | (3,464 | ) | (671 | ) | (668 | ) | (656 | ) | ||||||||||||||||
Income (loss) before income taxes | (21,073 | ) | (14,164 | ) | (849 | ) | (849 | ) | (33,639 | ) | (26,272 | ) | (10,748 | ) | (9,049 | ) | ||||||||||||||||
Provision for income taxes | (13 | ) | — | (43 | ) | (8 | ) | (26 | ) | (78 | ) | (12 | ) | (18 | ) | |||||||||||||||||
Net income (loss) | $ | (21,086 | ) | $ | (14,164 | ) | $ | (892 | ) | $ | (857 | ) | $ | (33,665 | ) | $ | (26,350 | ) | $ | (10,760 | ) | $ | (9,067 | ) | ||||||||
Net Income (loss) per common share basic and diluted | $ | (0.25 | ) | $ | (0.17 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.42 | ) | $ | (0.33 | ) | $ | (0.13 | ) | $ | (0.11 | ) | ||||||||
Weighted average common shares used to calculate basic net income (loss) per share | 84,643 | 84,201 | 83,506 | 82,381 | 80,793 | 80,267 | 80,197 | 79,800 | ||||||||||||||||||||||||
Weighted average common shares used to calculate diluted net income (loss) per share | 84,643 | 84,201 | 86,479 | 82,381 | 80,793 | 80,267 | 80,197 | 79,800 | ||||||||||||||||||||||||
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