(Mark
One)
|
|
R
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
For
the quarterly period ended September 30, 2006
|
|
£
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
For
the transition period from to
|
Delaware
|
93-1214598
|
(State
or Other Jurisdiction of Incorporation or Organization)
|
(I.R.S.
Employer Identification No.)
|
40
|
|
|
September
30, 2006
|
December
31, 2005
|
|||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
20,661
|
$
|
37,829
|
|||
Short-term
investments
|
85,397
|
146,727
|
|||||
Accounts
receivable, net of allowance for doubtful accounts of $3,077 and
$2,040,
respectively
|
29,733
|
23,347
|
|||||
Prepaid
expenses and other current assets
|
5,430
|
3,777
|
|||||
Short-term
deferred income tax assets
|
7,143
|
4,555
|
|||||
Total
current assets
|
148,364
|
216,235
|
|||||
Property
and equipment, net
|
10,757
|
9,210
|
|||||
Other
assets
|
3,093
|
1,561
|
|||||
Long-term
deferred income tax assets
|
9,816
|
—
|
|||||
Acquired
intangible assets, net
|
14,755
|
8,776
|
|||||
Goodwill
|
80,163
|
18,692
|
|||||
Total
assets
|
$
|
266,948
|
$
|
254,474
|
|||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
14,834
|
$
|
12,669
|
|||
Accrued
liabilities
|
17,150
|
12,523
|
|||||
Deferred
revenue — short-term
|
5,089
|
3,031
|
|||||
Total
current liabilities
|
37,073
|
28,223
|
|||||
Deferred
revenue — long-term
|
1,282
|
—
|
|||||
Other
long-term liabilities
|
274
|
—
|
|||||
Total
liabilities
|
38,629
|
28,223
|
|||||
Stockholders’
equity:
|
|||||||
Common
stock
|
65
|
64
|
|||||
Additional
paid-in capital
|
251,057
|
245,456
|
|||||
Deferred
stock-based compensation
|
—
|
(593
|
)
|
||||
Accumulated
other comprehensive loss
|
(106
|
)
|
(307
|
)
|
|||
Accumulated
deficit
|
(22,697
|
)
|
(18,369
|
)
|
|||
Total
stockholders’ equity
|
228,319
|
226,251
|
|||||
Total
liabilities and stockholders’ equity
|
$
|
266,948
|
$
|
254,474
|
|
Three
Months Ended September
30,
|
|
Nine
Months Ended September
30,
|
|
|||||||||
|
|
2006
|
|
2005
|
|
2006
|
|
2005
|
|||||
Revenues
|
$
|
45,900
|
$
|
41,881
|
$
|
137,554
|
$
|
129,078
|
|||||
Operating
expenses (1):
|
|||||||||||||
Network
access
|
14,622
|
10,568
|
41,384
|
31,423
|
|||||||||
Network
operations
|
8,483
|
5,117
|
24,045
|
15,797
|
|||||||||
Research
and development
|
5,461
|
4,271
|
17,155
|
13,227
|
|||||||||
Sales
and marketing
|
14,684
|
12,284
|
44,737
|
38,188
|
|||||||||
General
and administrative
|
5,754
|
4,366
|
17,828
|
13,488
|
|||||||||
Restructuring
charges
|
541
|
—
|
1,576
|
—
|
|||||||||
Amortization
of intangibles
|
1,050
|
592
|
2,921
|
1,775
|
|||||||||
Total
operating expenses
|
50,595
|
37,198
|
149,646
|
113,898
|
|||||||||
Operating
income (loss)
|
(4,695
|
)
|
4,683
|
(12,092
|
)
|
15,180
|
|||||||
Other
income, net
|
825
|
993
|
2,815
|
2,717
|
|||||||||
Income
(loss) before income taxes
|
(3,870
|
)
|
5,676
|
(9,277
|
)
|
17,897
|
|||||||
Provision
for (benefit from) income taxes
|
(1,661
|
)
|
1,466
|
(4,602
|
)
|
6,267
|
|||||||
Net
income (loss) before cumulative effect of change in accounting
principle
|
$
|
(2,209
|
)
|
$
|
4,210
|
$
|
(4,675
|
)
|
$
|
11,630
|
|||
Cumulative
effect of change in accounting principle, net of zero tax
effect
|
—
|
—
|
(347
|
)
|
—
|
||||||||
Net
income (loss)
|
$
|
(2,209
|
)
|
$
|
4,210
|
$
|
(4,328
|
)
|
$
|
11,630
|
|||
Net
income (loss) per share before cumulative effect of change in accounting
principle:
|
|||||||||||||
Basic
|
$
|
(0.03
|
)
|
$
|
0.07
|
$
|
(0.07
|
)
|
$
|
0.18
|
|||
Diluted
|
$
|
(0.03
|
)
|
$
|
0.06
|
$
|
(0.07
|
)
|
$
|
0.18
|
|||
Per
share effect of cumulative change in accounting principle:
|
|||||||||||||
Basic
|
$
|
—
|
$
|
—
|
$
|
(0.00
|
)
|
$
|
—
|
||||
Diluted
|
$
|
—
|
$
|
—
|
$
|
(0.00
|
)
|
$
|
—
|
||||
Net
income (loss) per share:
|
|||||||||||||
Basic
|
$
|
(0.03
|
)
|
$
|
0.07
|
$
|
(0.07
|
)
|
$
|
0.18
|
|||
Diluted
|
$
|
(0.03
|
)
|
$
|
0.06
|
$
|
(0.07
|
)
|
$
|
0.18
|
|||
Number
of shares used in per share calculations:
|
|||||||||||||
Basic
|
64,545,003
|
63,461,175
|
64,781,704
|
62,918,027
|
|||||||||
Diluted
|
64,545,003
|
66,122,504
|
64,781,704
|
65,773,335
|
(1) Amortization
of stock-based compensation is included in the operating expense
line
items, as follows:
|
|||||||||||||
Network
operations
|
$
|
283
|
$
|
32
|
$
|
792
|
$
|
132
|
|||||
Research
and development
|
300
|
34
|
949
|
143
|
|||||||||
Sales
and marketing
|
484
|
57
|
1,743
|
213
|
|||||||||
General
and administrative
|
527
|
114
|
1,328
|
424
|
|
Nine
Months Ended September
30,
|
||||||
|
2006
|
2005
|
|||||
Cash
flows from operating activities:
|
|||||||
Net
income (loss)
|
$
|
(4,328
|
)
|
$
|
11,630
|
||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|||||||
Amortization
of stock-based compensation for employees
|
4,812
|
912
|
|||||
Amortization
of acquired intangibles
|
2,921
|
1,775
|
|||||
Depreciation
and amortization
|
3,975
|
3,657
|
|||||
Deferred
income tax
|
(4,201
|
)
|
4,534
|
||||
Tax
benefit from employee stock option plans
|
—
|
881
|
|||||
Excess
tax benefit from stock option plans
|
(44 | ) | — | ||||
Provision
for doubtful accounts
|
615
|
200
|
|||||
Cumulative
affect of change in accounting principle
|
(347
|
)
|
—
|
||||
Realized
loss on investments, net
|
—
|
31
|
|||||
Changes
in operating assets and liabilities:
|
|||||||
Accounts
receivable
|
154
|
33
|
|||||
Prepaid
expenses and other current assets
|
(1,019
|
)
|
(42
|
)
|
|||
Other
assets
|
(1,187
|
)
|
52
|
||||
Accounts
payable
|
(33
|
)
|
1,029
|
||||
Other
liabilities and long-term deferred revenue
|
1,282
|
—
|
|||||
Accrued
liabilities
|
(1,035
|
)
|
504
|
||||
Net
cash provided by operating activities
|
1,565
|
25,196
|
|||||
Cash
flows from investing activities:
|
|||||||
Purchases
of short-term investments
|
(122,203
|
)
|
(126,313
|
)
|
|||
Maturities
of short-term investments
|
189,666
|
95,983
|
|||||
Cash
used in acquisitions, net of cash acquired
|
(77,960
|
)
|
—
|
||||
Purchases
of property and equipment
|
(4,139
|
)
|
(2,775
|
)
|
|||
Net
cash used in investing activities
|
(14,636
|
)
|
(33,105
|
)
|
|||
Cash
flows from financing activities:
|
|||||||
Proceeds
from issuance of common stock
|
5,835
|
2,483
|
|||||
Cash
used in repurchase of common stock
|
(9,976
|
)
|
—
|
||||
Excess
tax benefit from employee stock option plans
|
44
|
—
|
|||||
Net
cash provided by (used in) financing activities
|
(4,097
|
)
|
2,483
|
||||
Net
decrease in cash and cash equivalents
|
(17,168
|
)
|
(5,426
|
)
|
|||
Cash
and cash equivalents at beginning of period
|
37,829
|
34,395
|
|||||
Cash
and cash equivalents at end of period
|
$
|
20,661
|
$
|
28,969
|
|
Three
Months Ended September
30,
|
|
Nine
Months Ended September
30,
|
|
|||||||||
|
|
2006
|
|
2005
|
|
2006
|
|
2005
|
|||||
Net
income (loss)
|
$
|
(2,209
|
)
|
$
|
4,210
|
$
|
(4,328
|
)
|
$
|
11,630
|
|||
Comprehensive
income:
|
|||||||||||||
Net
change in accumulated unrealized gain (loss) on available-for- sale
securities
|
203
|
52
|
201
|
13
|
|
||||||||
Total
comprehensive income (loss)
|
$
|
(2,006
|
)
|
$
|
4,262
|
$
|
(4,127
|
)
|
$
|
11,643
|
|
|
For
The Period Ended September 30,
2006,
|
|||||
Three
Months
|
Nine
Months
|
||||||
Risk-free
rate
|
4.68%
- 5.11
|
%
|
4.44%
- 5.11
|
%
|
|||
Expected
dividend yield
|
0
|
%
|
0
|
%
|
|||
Expected
volatility
|
55
|
%
|
50
|
%
|
|||
Expected
life
|
6.1
years
|
6.1
years
|
|
Number
of Shares
|
Weighted
Average Exercise
Price
|
|||||
Balance
as of December 31, 2005
|
9,348,025
|
$
|
5.12
|
||||
Granted
|
2,016,423
|
$
|
6.90
|
||||
Assumed
in acquisition of GoRemote
|
1,710,353
|
$
|
17.26
|
||||
Exercised
|
(1,540,476
|
)
|
$
|
3.27
|
|||
Cancelled
|
(1,594,323
|
)
|
$
|
6.88
|
|||
Balance
as of September 30, 2006
|
9,940,002
|
$
|
7.84
|
|
Shares
|
|
Weighted
Average
Exercise
Price
per Share
|
|
Weighted
Average
Remaining
Contractual
Term
(Years)
|
|
Aggregate
Intrinsic
Value
|
||||||
(In
thousands, except share and per share amounts)
|
|||||||||||||
Options
outstanding at September 30, 2006
|
9,940,002
|
7.84
|
7.26
|
$
|
5,480
|
||||||||
Options
vested and expected to vest at September 30, 2006
|
9,415,018
|
7.91
|
7.17
|
$
|
5,476
|
||||||||
Options
exercisable at September 30, 2006
|
5,866,416
|
8.73
|
6.32
|
$
|
5,287
|
Options
Outstanding
|
Options
Exercisable
|
|||||||||||||||
Range
of Exercise Prices
|
Number
Outstanding
|
|
|
Weighted-
Average
Remaining
Contractual
Life
(in Years)
|
|
|
Weighted-
Average
Exercise
Price
per
Share
|
|
|
Number
Exercisable
|
|
|
Weighted-
Average
Exercise
Price
per
Share
|
|||
$
0.10 — 2.00
|
1,189,381
|
5.58
|
$
|
0.93
|
1,167,099
|
$
|
0.91
|
|||||||||
2.01
— 4.75
|
1,203,898
|
5.04
|
3.83
|
1,126,039
|
3.89
|
|||||||||||
4.86
— 5.05
|
738,759
|
7.67
|
5.04
|
329,168
|
5.03
|
|||||||||||
5.26
— 5.35
|
1,609,099
|
7.83
|
5.35
|
847,196
|
5.35
|
|||||||||||
5.38
— 5.87
|
1,122,904
|
8.56
|
5.71
|
627,625
|
5.69
|
|||||||||||
5.91
— 6.49
|
1,302,750
|
8.70
|
6.29
|
331,613
|
6.31
|
|||||||||||
6.51
— 7.59
|
1,117,954
|
9.05
|
7.01
|
196,744
|
7.31
|
|||||||||||
7.68
— 13.82
|
1,017,201
|
5.98
|
9.60
|
715,564
|
9.57
|
|||||||||||
14.00
— 160.00
|
630,006
|
6.35
|
40.68
|
517,318
|
45.63
|
|||||||||||
250.00 — 250.00
|
8,050
|
3.32
|
250.00
|
8,050
|
250.00
|
|||||||||||
Total
|
9,940,002
|
7.26
|
7.84
|
5,866,416
|
8.73
|
Shares
|
Weighted
Average Grant Date Fair Value
|
||||||
Nonvested
at December 31, 2005
|
—
|
—
|
|||||
Granted
|
428,436
|
$
|
6.27
|
||||
Vested
|
—
|
—
|
|||||
Forfeited
|
(33,200
|
)
|
|
6.36
|
|||
Nonvested
at September 30, 2006
|
395,236
|
$
|
6.27
|
For
the period ended September
30, 2006,
|
|||||||
Three
Months
|
Nine
Months
|
||||||
Risk-free
rate
|
4.5
|
%
|
4.5
|
%
|
|||
Expected
dividend yield
|
0
|
%
|
0
|
%
|
|||
Expected
volatility
|
50
|
%
|
50
|
%
|
|||
Expected
life
|
0.5
to 1 year
|
0.5
to 1 year
|
|
For
The Period Ended September 30, 2005,
|
||||||
|
Three
Months
|
Nine
Months
|
|||||
Net
income — as reported
|
$
|
4,210
|
$
|
11,630
|
|||
Add:
Stock-based employee compensation expense included in the reported
net
income, net of related tax effects
|
140
|
538
|
|||||
Deduct:
Stock-based employee compensation expense using the fair value method,
net
of related tax effects
|
(819
|
)
|
(2,872
|
)
|
|||
Pro
forma net income
|
$
|
3,531
|
$
|
9,296
|
|||
Basic
net income per share:
|
|||||||
As
reported
|
$
|
0.07
|
$
|
0.18
|
|||
Pro
forma
|
$
|
0.06
|
$
|
0.15
|
|||
Diluted
net income per share:
|
|||||||
As
reported
|
$
|
0.06
|
$
|
0.18
|
|||
Pro
forma
|
$
|
0.05
|
$
|
0.14
|
For
The Period Ended September 30, 2005
|
|||||||||||||
Employee
Stock Options
|
Employee
Stock Purchase Plan
|
||||||||||||
Three
Months
|
Nine
Months
|
Three
Months
|
Nine
Months
|
||||||||||
Risk-free
rate
|
4.0
|
%
|
3.9
|
%
|
3.2
|
%
|
3.2
|
%
|
|||||
Expected
dividend yield
|
0
|
%
|
0
|
%
|
0
|
%
|
0
|
%
|
|||||
Expected
volatility
|
37
|
%
|
37-41
|
%
|
41
|
%
|
41
|
%
|
|||||
Expected
life
|
3
Years
|
3
Years
|
0.5
Years
|
0.5
Years
|
|
Three
Months Ended September
30,
|
Nine
Months Ended September
30,
|
|||||||||||
|
2006
|
2005
|
2006
|
2005
|
|||||||||
Numerator:
|
|||||||||||||
Net
income (loss)
|
$
|
(2,209
|
)
|
$
|
4,210
|
$
|
(4,328
|
)
|
$
|
11,630
|
|||
Denominator:
|
|||||||||||||
Denominator
for basic net income (loss) per common share weighted average shares
outstanding
|
64,545,003
|
63,461,175
|
64,781,704
|
62,918,027
|
|||||||||
Effect
of dilutive securities:
|
|||||||||||||
Stock
options
|
—
|
2,661,329
|
—
|
2,855,308
|
|||||||||
Denominator
for diluted net income (loss) per common share — adjusted weighted average
shares outstanding
|
64,545,003
|
66,122,504
|
64,781,704
|
65,773,335
|
|||||||||
Basic
net income (loss) per common share
|
$
|
(0.03
|
)
|
$
|
0.07
|
$
|
(0.07
|
)
|
$
|
0.18
|
|||
Diluted
net income (loss) per common share
|
$
|
(0.03
|
)
|
$
|
0.06
|
$
|
(0.07
|
)
|
$
|
0.18
|
|
Three
Months Ended September
30,
|
Nine
Months Ended September
30,
|
|||||||||||
|
2006
|
2005
|
2006
|
2005
|
|||||||||
Options
to purchase common stock
|
10,245,438
|
2,791,920
|
10,245,438
|
1,984,603
|
Cash
consideration for common and preferred stockholders
|
$
|
75,806
|
||
Estimated
fair value of options assumed
|
5,826
|
|||
Direct
transaction costs
|
3,097
|
|||
Total
preliminary estimated purchase price
|
$
|
84,729
|
Net
tangible assets
|
$
|
6,380
|
||
Deferred
Revenues
|
(1,025
|
)
|
||
Restructuring
liabilities
|
(1,249
|
)
|
||
Amortizable
intangible assets:
|
||||
Customer
relationships
|
7,600
|
|||
Supplier
contracts
|
950
|
|||
Internally
developed software
|
350
|
|||
Goodwill
|
61,471
|
|||
Deferred
tax assets, net
|
10,252
|
|||
Total
preliminary estimated purchase price
|
$
|
84,729
|
Fiscal
Year
|
|
|||
2006
|
$
|
1,605
|
||
2007
|
1,834
|
|||
2008
|
1,834
|
|||
2009
|
1,834
|
|||
2010
|
685
|
|||
2011
|
521
|
|||
2012
|
521
|
|||
2013
|
66
|
|||
$
|
8,900
|
|
Three
Months Ended September
30,
|
Nine
Months Ended September
30,
|
|||||||||||
|
2006
|
2005
|
2006
|
2005
|
|||||||||
Total
revenue
|
$
|
45,900
|
$
|
52,549
|
$
|
142,577
|
$
|
162,952
|
|||||
Net
income (loss)
|
$
|
(2,209
|
)
|
$
|
1,822
|
$
|
(9,016
|
)
|
$
|
7,072
|
|||
Net
income (loss) per share:
|
|||||||||||||
Basic
|
$
|
(0.03
|
)
|
$
|
0.03
|
$
|
(0.14
|
)
|
$
|
0.11
|
|||
Diluted
|
$
|
(0.03
|
)
|
$
|
0.03
|
$
|
(0.14
|
)
|
$
|
0.11
|
|||
Number
of shares used in per share calculations:
|
|||||||||||||
Basic
|
64,545,003
|
63,461,175
|
64,781,704
|
62,918,027
|
|||||||||
Diluted
|
64,545,003
|
66,122,504
|
64,781,704
|
65,773,335
|
|
December
31, 2005
Balance
|
Acquisition
|
Amortization
|
September
30, 2006
Balance
|
|||||||||
Goodwill
|
$
|
18,692
|
$
|
61,471
|
$
|
—
|
$
|
80,163
|
|||||
Intangibles:
|
|||||||||||||
Existing
technology
|
5,973
|
—
|
(1,210
|
)
|
4,763
|
||||||||
Patent/Core
technology
|
2,127
|
—
|
(422
|
)
|
1,705
|
||||||||
Maintenance
agreements and certain relationships
|
322
|
—
|
(50
|
)
|
272
|
||||||||
Customer
relationships
|
354
|
7,600
|
(1,060
|
)
|
6,894
|
||||||||
Supplier
contracts
|
—
|
950
|
(148
|
)
|
802
|
||||||||
Internally
developed software
|
—
|
350
|
(31
|
)
|
319
|
||||||||
$
|
27,468
|
$
|
70,371
|
$
|
(2,921
|
)
|
$
|
94,918
|
|
Three
Months Ended September
30,
|
Nine
Months Ended September
30,
|
|||||||||||
|
2006
|
2005
|
2006
|
2005
|
|||||||||
Intangibles:
|
|||||||||||||
Existing
technology
|
$
|
(403
|
)
|
$
|
(403
|
)
|
$
|
(1,210
|
)
|
$
|
(1,209
|
)
|
|
Patent/Core
technology
|
(141
|
)
|
(141
|
)
|
(422
|
)
|
(422
|
)
|
|||||
Maintenance
agreements and certain relationships
|
(17
|
)
|
(17
|
)
|
(50
|
)
|
(50
|
)
|
|||||
Customer
relationships
|
(418
|
)
|
(31
|
)
|
(1,060
|
)
|
(94
|
)
|
|||||
Supplier
contracts
|
(58
|
)
|
—
|
(148
|
)
|
—
|
|||||||
Internally
developed software
|
(13
|
)
|
—
|
(31
|
)
|
—
|
|||||||
$
|
(1,050
|
)
|
$
|
(592
|
)
|
$
|
(2,921
|
)
|
$
|
(1,775
|
)
|
|
September
30, 2006
|
|
|||||||||||
|
|
Amortization
Life
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying Amount
|
|||||
Intangibles:
|
|||||||||||||
Existing
technology
|
4-8
yrs
|
$
|
7,900
|
$
|
(3,137
|
)
|
$
|
4,763
|
|||||
Patent/Core
technology
|
4-8
yrs
|
2,800
|
(1,095
|
)
|
1,705
|
||||||||
Maintenance
agreements and certain relationships
|
5
yrs
|
400
|
(128
|
)
|
272
|
||||||||
Customer
relationships
|
4-7
yrs
|
8,100
|
(1,206
|
)
|
6,894
|
||||||||
Supplier
contracts
|
4
yrs
|
950
|
(148
|
)
|
802
|
||||||||
Internally
developed software
|
7
yrs
|
350
|
(31
|
)
|
319
|
||||||||
$
|
20,500
|
$
|
(5,745
|
)
|
$
|
14,755
|
|
December
31, 2005
|
||||||||||||
|
Amortization
Life
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
Carrying Amount
|
|||||||||
Intangibles:
|
|||||||||||||
Existing
technology
|
4-8
yrs
|
$
|
7,900
|
$
|
(1,927
|
)
|
$
|
5,973
|
|||||
Patent/Core
technology
|
4-8
yrs
|
2,800
|
(673
|
)
|
2,127
|
||||||||
Maintenance
agreements and certain relationships
|
6
yrs
|
400
|
(78
|
)
|
322
|
||||||||
Customer
relationships
|
4
yrs
|
500
|
(146
|
)
|
354
|
||||||||
$
|
11,600
|
$
|
(2,824
|
)
|
$
|
8,776
|
Fiscal
Year
|
|
|||
Remaining
2006
|
$
|
1,050
|
||
2007
|
4,201
|
|||
2008
|
3,901
|
|||
2009
|
2,401
|
|||
2010
|
1,241
|
|||
Thereafter
|
1,961
|
|||
$
|
14,755
|
|
Accrued
Facility
Integration
Costs
|
Accrued
Severance Costs
|
|
Total
Restructuring Accrual
|
||||||
Balance
as of December 31, 2005
|
$
|
—
|
$
|
—
|
$
|
—
|
||||
Accrued
integration cost
|
1,249
|
—
|
1,249
|
|||||||
Payments
|
—
|
—
|
—
|
|||||||
Balance
as of March 31, 2006
|
1,249
|
—
|
1,249
|
|||||||
Restructuring
charges
|
—
|
1,035
|
1,035
|
|||||||
Payments
|
(161
|
)
|
(366
|
)
|
(527
|
)
|
||||
Balance
as of June 30, 2006
|
$
|
1,088
|
$
|
669
|
$
|
1,757
|
||||
Restructuring
charges
|
—
|
606
|
606
|
|||||||
Payments
|
(169
|
)
|
(681
|
)
|
(850
|
)
|
||||
Adjustments
to severance benefits accrued in the prior quarter
|
—
|
(65
|
)
|
(65
|
)
|
|||||
Balance
as of September 30, 2006
|
$
|
919
|
$
|
529
|
$
|
1,448
|
Three
Months Ended
|
|
Nine
Months Ended
|
|
||||||||||||||||||||||
|
|
September
30,
|
|
Change
|
|
September
30,
|
|
Change
|
|
||||||||||||||||
|
|
2006
|
|
2005
|
|
$
|
|
%
|
|
2006
|
|
2005
|
|
$
|
|
%
|
|||||||||
(In
thousands, except percentages)
|
|||||||||||||||||||||||||
Total
revenue
|
$
|
45,900
|
$
|
41,881
|
$
|
4,019
|
9.6
|
%
|
$
|
137,554
|
$
|
129,078
|
$
|
8,476
|
6.6
|
%
|
Three
Months Ended
|
|
Nine
Months Ended
|
|
||||||||||||||||||||||
|
|
September
30,
|
|
Change
|
|
September
30,
|
|
Change
|
|
||||||||||||||||
|
|
2006
|
|
2005
|
|
$
|
|
%
|
|
2006
|
|
2005
|
|
$
|
|
%
|
|||||||||
(In
thousands, except percentages)
|
|||||||||||||||||||||||||
Network
access expenses
|
$
|
14,622
|
$
|
10,568
|
$
|
4,054
|
38.4
|
%
|
$
|
41,384
|
$
|
31,423
|
$
|
9,961
|
31.7
|
%
|
|||||||||
As
a percent of revenue
|
31.9
|
%
|
25.2
|
%
|
30.1
|
%
|
24.3
|
%
|
|
Three
Months Ended
|
|
Nine
Months Ended
|
|
|||||||||||||||||||||
|
|
September
30,
|
|
Change
|
|
September
30,
|
|
Change
|
|
||||||||||||||||
|
|
2006
|
|
2005
|
|
$
|
%
|
2006
|
|
2005
|
S
|
%
|
|||||||||||||
(In
thousands, except percentages)
|
|||||||||||||||||||||||||
Network
operations expenses
|
$
|
8,483
|
$
|
5,117
|
$
|
3,366
|
65.8
|
%
|
$
|
24,045
|
$
|
15,797
|
$
|
8,248
|
52.2
|
%
|
|||||||||
As
a percent of revenue
|
18.5
|
%
|
12.2
|
%
|
17.5
|
%
|
12.2
|
%
|
|
Three
Months Ended
|
|
Nine
Months Ended
|
|
|||||||||||||||||||||
|
|
September
30,
|
|
Change
|
|
September
30,
|
|
Change
|
|
||||||||||||||||
|
|
2006
|
|
2005
|
|
$
|
%
|
2006
|
|
2005
|
S
|
%
|
|||||||||||||
(In
thousands, except percentages)
|
|||||||||||||||||||||||||
Research
and development expenses
|
$
|
5,461
|
$
|
4,271
|
$
|
1,190
|
27.9
|
%
|
$
|
17,155
|
$
|
13,227
|
$
|
3,928
|
29.7
|
%
|
|||||||||
As
a percent of revenue
|
11.9
|
%
|
10.2
|
%
|
12.5
|
%
|
10.2
|
%
|
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||||||||||
|
September
30,
|
Change
|
September
30,
|
|
Change
|
||||||||||||||||||||
|
|
2006
|
|
2005
|
$
|
%
|
2006
|
|
2005
|
|
$
|
%
|
|||||||||||||
(In
thousands, except percentages)
|
|||||||||||||||||||||||||
Sales
and marketing expenses
|
$
|
14,684
|
$
|
12,284
|
$
|
2,400
|
19.5
|
%
|
$
|
44,737
|
$
|
38,188
|
$
|
6,549
|
17.1
|
%
|
|||||||||
As
a percent of revenue
|
32.0
|
%
|
29.3
|
%
|
32.5
|
%
|
29.6
|
%
|
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||||||||||
|
September
30,
|
Change
|
September
30,
|
Change
|
|||||||||||||||||||||
|
2006
|
|
2005
|
$
|
%
|
|
2006
|
2005
|
$
|
%
|
|||||||||||||||
(In
thousands, except percentages)
|
|||||||||||||||||||||||||
General
and administrative expenses
|
$
|
5,754
|
$
|
4,366
|
$
|
1,388
|
31.8
|
%
|
$
|
17,828
|
$
|
13,488
|
$
|
4,340
|
32.2
|
%
|
|||||||||
As
a percent of revenue
|
12.5
|
%
|
10.4
|
%
|
13.0
|
%
|
10.4
|
%
|
Year
ending December 31:
|
||||
2006
|
$
|
630
|
||
2007
|
1,901
|
|||
2008
|
1,066
|
|||
2009
|
266
|
|||
Total |
$
|
3,863
|
Year
ending December 31:
|
||||
2006
|
$
|
1,047
|
||
2007
|
4,279
|
|||
2008
|
4,374
|
|||
2009
|
4,311
|
|||
2010
|
1,453
|
|||
$
|
15,464
|
|
Expected
Maturity Date for Par Value Amounts For the Year Ended December
31,
|
|
As
of September 30, 2006
|
|
|||||||||||||||
|
|
2006
|
|
2007
|
|
2008
|
|
2009
|
|
Total
Cost Value
|
|
Total
Fair Value
|
|||||||
U.S.
Government agencies
|
$
|
19,855
|
$
|
19,050
|
$
|
23,990
|
$
|
2,770
|
$
|
67,350
|
$
|
67,191
|
|||||||
Corporate
notes
|
1,500
|
—
|
—
|
—
|
1,537
|
1,537
|
|||||||||||||
Auction
rate and money market securities
|
16,500
|
—
|
—
|
—
|
16,668
|
16,669
|
|||||||||||||
Total
|
$
|
37,855
|
$
|
19,050
|
$
|
23,990
|
$
|
2,770
|
$
|
85,555
|
$
|
85,397
|
|
Expected
Maturity Date for
Par Value Amounts for
the
Year
Ended December
31,
|
|
As
of Dec.
31, 2005
|
|
||||||||||||
|
|
2006
|
|
2007
|
|
2008
|
|
Total
Cost Value
|
|
Total
Fair Value
|
||||||
U.S.
Government agencies
|
$
|
85,405
|
$
|
11,900
|
$
|
20,490
|
$
|
119,981
|
$
|
119,508
|
||||||
Corporate
notes
|
15,915
|
—
|
—
|
16,248
|
16,191
|
|||||||||||
Auction
rate and money market securities
|
11,000
|
—
|
—
|
11,000
|
11,028
|
|||||||||||
Total
|
$
|
112,320
|
$
|
11,900
|
$
|
20,490
|
$
|
147,229
|
$
|
146,727
|
In
thousands, except
share and per
share amounts
|
|
Total
Number of Shares
Purchased
|
|
Average
Price Paid per Share
|
|
Total
Number of Shares
Purchased as Part
of Publicly Announced
Program
|
|
Approximate
Dollar Value
of Shares that May
Yet Be Purchased under
the Program
|
|||||
July
1, 2006 to July 31, 2006
|
—
|
—
|
—
|
—
|
|||||||||
August
1, 2006 to August 31, 2006
|
375,000
|
$
|
4.40
|
1,327,564
|
$
|
22,351
|
|||||||
September
1, 2006 to September 30, 2006
|
490,910
|
$
|
4.69
|
1,818,474
|
$
|
20,050
|
|||||||
Total
|
865,910
|
$
|
4.56
|
1,818,474
|
$
|
20,050
|
Exhibit
Number
|
Description
|
2.1
|
Agreement
of Merger among iPass Inc., Keystone Acquisition Sub, Inc. and GoRemote
Internet Communications, Inc. dated December 9, 2005. (4)
|
3.1
|
Amended
and Restated Certificate of Incorporation (1)
|
3.2
|
Bylaws,
as amended (2)
|
4.1
|
Reference
is made to Exhibits 3.1 and 3.2
|
4.2
|
Specimen
stock certificate (2)
|
10.1
|
2003
Non-Employee Director Plan, as amended (3)
|
10.2
|
Changes
in Executive Compensation During the Third Quarter of 2006
(5)
|
31.1
|
Certification
of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
31.2
|
Certification
of the Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
32.1
|
Certification
of the Chief Executive Officer pursuant to 18 U.S.C Section 1350,
as
adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
|
32.2
|
Certification
of the Chief Financial Officer pursuant to 18 U.S.C Section 1350,
as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
iPass Inc. | ||
|
|
|
Date: November 8, 2006 | By: | /s/ Frank E. Verdecanna |
Frank
E. Verdecanna
|
||
Vice President and Chief Financial Officer (duly authorized officer and principal financial officer) |
Exhibit
Number
|
Description
|
2.1
|
Agreement
of Merger among iPass Inc., Keystone Acquisition Sub, Inc. and GoRemote
Internet Communications, Inc. dated December 9, 2005. (4)
|
3.1
|
Amended
and Restated Certificate of Incorporation (1)
|
3.2
|
Bylaws,
as amended (2)
|
4.1
|
Reference
is made to Exhibits 3.1 and 3.2
|
4.2
|
Specimen
stock certificate (2)
|
10.1
|
2003
Non-Employee Director Plan, as amended (3)
|
10.2
|
Changes
in Executive Compensation During the Third Quarter of 2006
(5)
|
31.1
|
Certification
of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
31.2
|
Certification
of the Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
32.1
|
Certification
of the Chief Executive Officer pursuant to 18 U.S.C Section 1350,
as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
32.2
|
Certification
of the Chief Financial Officer pursuant to 18 U.S.C Section 1350,
as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|