Extreme Networks Reports Q2 in Line With Previous Guidance
"Both EMEA and APAC posted solid performance, again this quarter," said
Rodriguez continued, "We have completed a review of our Company strategy. While we will continue to serve the broader Enterprise Campus, Data Center and Service Provider markets, we will specifically focus our efforts and resources on identified high-growth verticals within those broader markets. As a result, we believe this will enable us to grow revenue in high-growth vertical markets. Further, aimed at continuing to improve financial performance, during mid January, we took actions to reduce headcount by approximately 35 employees or roughly 5% of worldwide headcount. This action will result in a restructuring charge in Q3 between
Second quarter non-GAAP operating income was
In the second quarter the Company reported non-GAAP net income of
Operating income on a GAAP basis was
Net income on a GAAP basis for quarter was
For the quarter, total net revenue in
Total cash and investments increased
2011 Fiscal Third Quarter non-GAAP Financial Guidance
For its 2011 fiscal third quarter ending
Conference Call and Slide Presentation
Non-GAAP Financial Measures
This announcement contains forward-looking statements, including our guidance regarding future results, that involve risks and uncertainties, including statements regarding the Company's expectations regarding financial performance and product introduction. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including, but not limited to: a challenging macro-economic environment both in
EXTREME NETWORKS, INC. | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(In thousands, except share and per share amounts) | |||||||
December 26, | June 27, | ||||||
2010 | 2010 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ 46,878 | 51,944 | |||||
Short-term investments | 43,625 | 64,854 | |||||
Accounts receivable, net | 46,820 | 42,057 | |||||
Inventories, net | 24,218 | 21,842 | |||||
Deferred income taxes | 338 | 392 | |||||
Prepaid expenses and other current assets, net | 7,944 | 3,932 | |||||
Total current assets | 169,823 | 185,021 | |||||
Property and equipment, net | 42,722 | 43,572 | |||||
Marketable securities | 51,182 | 18,561 | |||||
Other assets, net | 15,572 | 15,731 | |||||
Total assets | $ 279,299 | 262,885 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ 16,109 | 18,543 | |||||
Accrued compensation and benefits | 17,751 | 16,305 | |||||
Restructuring liabilities | 1,693 | 3,097 | |||||
Accrued warranty | 2,811 | 3,169 | |||||
Deferred revenue, net | 32,982 | 29,552 | |||||
Deferred revenue, net of cost of sales to distributors | 17,106 | 18,345 | |||||
Other accrued liabilities | 18,608 | 13,381 | |||||
Total current liabilities | 107,060 | 102,392 | |||||
Restructuring liabilities, less current portion | - | 273 | |||||
Deferred revenue, less current portion | 7,145 | 7,633 | |||||
Deferred income taxes | 108 | 731 | |||||
Other long-term liabilities | 56 | 2,661 | |||||
Commitments and contingencies | - | - | |||||
Stockholders' equity: | |||||||
Convertible preferred stock, $.001 par value, issuable in series, 2,000,000 shares | |||||||
authorized; none issued | - | - | |||||
Common stock, $.001 par value, 750,000,000 shares authorized; | |||||||
130,881,110 issued at December 26, 2010 and 129,827,715 at June 27, 2010 | 131 | 130 | |||||
Treasury stock, 39,625,305 at December 26, 2010 and June 27, 2010 | (149,666) | (149,666) | |||||
Additional paid-in-capital | 959,530 | 956,792 | |||||
Accumulated other comprehensive income | 2,455 | 1,100 | |||||
Accumulated deficit | (647,520) | (659,161) | |||||
Total stockholders' equity | 164,930 | 149,195 | |||||
Total liabilities and stockholders' equity | $ 279,299 | 262,885 | |||||
EXTREME NETWORKS, INC. | |||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||
(In thousands, except per share amounts) | |||||||||||
(unaudited) | |||||||||||
Three Months Ended | Six Months Ended | ||||||||||
December 26, | December 27, | December 26, | December 27, | ||||||||
2010 | 2009 | 2010 | 2009 | ||||||||
Net revenues: | |||||||||||
Product | $ 70,334 | $ 64,469 | $ 139,547 | $ 115,228 | |||||||
Service | 14,797 | 14,928 | 29,421 | 30,478 | |||||||
Total net revenues | 85,131 | 79,397 | 168,968 | 145,706 | |||||||
Cost of revenues: | |||||||||||
Product | 30,893 | 27,199 | 61,723 | 50,917 | |||||||
Service | 6,257 | 6,435 | 12,428 | 12,266 | |||||||
Total cost of revenues | 37,150 | 33,634 | 74,151 | 63,183 | |||||||
Gross profit: | |||||||||||
Product | 39,441 | 37,270 | 77,824 | 64,311 | |||||||
Service | 8,540 | 8,493 | 16,993 | 18,212 | |||||||
Total gross profit | 47,981 | 45,763 | 94,817 | 82,523 | |||||||
Operating expenses: | |||||||||||
Sales and marketing | 25,087 | 24,613 | 49,993 | 46,282 | |||||||
Research and development | 12,028 | 12,444 | 24,889 | 26,055 | |||||||
General and administrative | 5,963 | 6,520 | 12,548 | 13,765 | |||||||
Restructuring charge, net of reversal | - | 4,145 | - | 3,633 | |||||||
Litigation settlement | (4,200) | - | (4,200) | - | |||||||
Total operating expenses | 38,878 | 47,723 | 83,230 | 89,735 | |||||||
Operating income (loss) | 9,103 | (1,960) | 11,587 | (7,212) | |||||||
Interest income | 332 | 388 | 661 | 710 | |||||||
Interest expense | (29) | (30) | (59) | (69) | |||||||
Other expense | 117 | (40) | (158) | (117) | |||||||
Income (loss) before income taxes | 9,523 | (1,642) | 12,031 | (6,688) | |||||||
Provision for income taxes | 594 | (263) | 390 | 173 | |||||||
Net income (loss) | $ 8,929 | $ (1,379) | $ 11,641 | $ (6,861) | |||||||
Basic and diluted net income (loss) per share: | |||||||||||
Net income (loss) per share - basic | $ 0.10 | $ (0.02) | $ 0.13 | $ (0.08) | |||||||
Net income (loss) per share - diluted | $ 0.10 | $ (0.02) | $ 0.13 | $ (0.08) | |||||||
Shares used in per share calculation - basic | 90,878 | 89,059 | 90,592 | 88,951 | |||||||
Shares used in per share calculation - diluted | 91,274 | 89,059 | 90,942 | 88,951 | |||||||
EXTREME NETWORKS, INC. | |||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||
(In thousands) | |||||
(unaudited) | |||||
Six Months Ended | |||||
December 26, | December 27, | ||||
2010 | 2009 | ||||
Cash flows from operating activities: | |||||
Net income (loss) | $ 11,641 | $ (6,861) | |||
Adjustments to reconcile net income (loss) to net cash | |||||
provided by operating activities: | |||||
Depreciation and amortization | 3,148 | 3,023 | |||
Change in value / loss on value of UBS option to put securities | 2,429 | 47 | |||
Auction rate securities mark to market, trading gain | (2,429) | (47) | |||
Provision for doubtful accounts | 30 | - | |||
Excess and obsolete inventory | (100) | 960 | |||
Deferred income taxes | (569) | (69) | |||
Loss on retirement of assets | 109 | 78 | |||
Stock-based compensation | 2,485 | 3,158 | |||
Restructuring charge, net of reversal | - | 3,633 | |||
Changes in operating assets and liabilities, net | |||||
Accounts receivable | (4,793) | (2,982) | |||
Inventories | (2,294) | (5,216) | |||
Prepaid expenses and other assets | (3,855) | (3) | |||
Accounts payable | (2,434) | 9,410 | |||
Accrued compensation and benefits | 1,447 | (689) | |||
Restructuring liabilities | (1,677) | (4,418) | |||
Accrued warranty | (359) | 60 | |||
Deferred revenue, net | 2,943 | 1,231 | |||
Deferred revenue, net of cost of sales to distributors | (1,239) | 6,365 | |||
Other accrued liabilities | 6,576 | 2,156 | |||
Other long-term liabilities | (2,605) | (1) | |||
Net cash provided by operating activities | 8,454 | 9,835 | |||
Cash flows used in investing activities: | |||||
Capital expenditures | (2,407) | (2,720) | |||
Purchases of investments | (70,147) | (18,958) | |||
Proceeds from maturities of investments and marketable securities | 11,800 | 8,775 | |||
Proceeds from sales of investments and marketable securities | 46,961 | 6,377 | |||
Net cash used in investing activities | (13,793) | (6,526) | |||
Cash flows provided by financing activities: | |||||
Proceeds from issuance of common stock | 273 | 397 | |||
Net cash provided by financing activities | 273 | 397 | |||
Net (decrease) increase in cash and cash equivalents | (5,066) | 3,706 | |||
Cash and cash equivalents at beginning of period | 51,944 | 49,233 | |||
Cash and cash equivalents at end of period | $ 46,878 | $ 52,939 | |||
EXTREME NETWORKS, INC. | ||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||
GAAP TO NON-GAAP RECONCILIATION | ||||||
(In thousands, except per share amounts) | ||||||
(Unaudited) | ||||||
Three Months Ended | Six Months Ended | |||||
December 26, | December 27, | December 26, | December 27, | |||
2010 | 2009 | 2010 | 2009 | |||
Net income (loss)- GAAP Basis | $ 8,929 | $ (1,379) | $ 11,641 | $ (6,861) | ||
Non-GAAP adjustments | ||||||
Stock-based compensation expense | $ 350 | $ 2,030 | $ 2,466 | $ 3,166 | ||
Litigation settlement | $ (4,200) | $ - | $ (4,200) | $ - | ||
Restructuring charge, net of reversal | $ - | $ 4,145 | $ - | $ 3,633 | ||
$ (3,850) | $ 6,175 | $ (1,734) | $ 6,799 | |||
Net income (loss) - Non-GAAP Basis | $ 5,079 | $ 4,796 | $ 9,907 | $ (62) | ||
Non-GAAP adjustments | ||||||
Cost of product revenue | $ 15 | 155 | $ 214 | $ 223 | ||
Cost of service revenue | 5 | 146 | 149 | 221 | ||
Sales and marketing | 388 | 683 | 960 | 979 | ||
Research and development | (118) | 611 | 493 | 986 | ||
General and administrative | 60 | 435 | 650 | 757 | ||
Litigation settlement | (4,200) | - | (4,200) | - | ||
Restructuring charge, net of reversal | - | 4,145 | - | 3,633 | ||
Total non-GAAP adjustments | $ (3,850) | $ 6,175 | $ (1,734) | $ 6,799 | ||
SOURCE
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