Extreme Networks Reports Second Quarter Financial Results
SANTA CLARA, Calif., Jan 28, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- Extreme Networks, Inc. (Nasdaq: EXTR) today announced financial results for its second quarter ended December 28, 2008. For the quarter, net revenue was $87.5 million, compared to $92.5 million in the year-ago quarter.
Net income on a GAAP basis was $2.5 million or $0.03 per diluted share. That compares to the year-ago net income of $4.1 million or $0.04 per diluted share.
Excluding stock-based compensation charges, non-GAAP net income for the second fiscal quarter of 2009 was $3.5 million or $0.04 per diluted share, which compares to non-GAAP net income of $5.5 million or $0.05 per diluted share in the year-ago quarter. A reconciliation of GAAP to non-GAAP financial measures is included in the accompanying financial tables.
"Our focus on high performance, cost-effective network solutions in the enterprise and carrier markets positions us well to deliver on the promise of converged networks in an economy where customers are demanding the greatest return on their investment," said Mark Canepa, president and CEO of Extreme Networks.
For the second fiscal quarter of 2009, revenues in North America (U.S., Canada, and Central America) were $33.4 million, revenues in EMEA (Europe, Middle East, Africa, and South America) were $42.2 million, and revenues in APAC (Asia Pacific and Japan) were $11.9 million. That compares to the year-ago revenues of $40.5 million in North America, $35.7 million in EMEA, and $16.3 million in APAC.
During the quarter, cash and investments increased by $0.9 million from the first fiscal quarter of 2009.
Conference Call
Extreme Networks will host a conference call to discuss these results today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). A live webcast and replay of the call will be available at http://investor.extremenetworks.com/. Financial information to be discussed during the conference call is posted on the Investor Relations section of the Company's website (http://www.extremenetworks.com).
Non-GAAP Financial Measures
Extreme Networks provides all financial information required in accordance with generally accepted accounting principles (GAAP). To supplement our consolidated financial statements presented in accordance with GAAP, we are also providing with this press release non-GAAP net income. In preparing our non-GAAP information, we have excluded, where applicable, stock compensation (a non-cash charge). Because of the non-cash nature of this charge, we believe that excluding it provides both management and investors with additional insight into our current operations, the trends affecting the Company and the Company's marketplace performance. In particular, management finds it useful to exclude the non-cash charge in order to more readily correlate the Company's operating activities with the Company's ability to generate cash from operations. Accordingly, management uses these non-GAAP measures, along with the comparable GAAP information, in evaluating our historical performance and in planning our future business activities. Please note that our non-GAAP measures may be different than those used by other companies. The additional non-GAAP financial information we present should be considered in conjunction with, and not as a substitute for, our financial information presented in accordance with GAAP. We have provided a non-GAAP reconciliation of the Consolidated Statement of Operations for the fiscal quarter ended December 30, 2007 and December 28, 2008, which are adjusted to exclude share-based compensation expense for these periods. These measures should only be used to evaluate the Company's results of operations in conjunction with the corresponding GAAP measures for comparable financial information and understanding of the Company's ongoing performance as a business. Extreme Networks uses both GAAP and non-GAAP measures to evaluate and manage its operations.
Extreme Networks, Inc.
Extreme Networks provides converged Ethernet networks that support data, voice and video for enterprises and service providers. The company's network solutions feature high performance and high availability switching that deliver insight and control enabling customers to solve their real-world business communications challenges. Operating in more than 50 countries, Extreme Networks provides wired and wireless secure LANs, data center infrastructure and service provider Ethernet transport solutions that are complemented by global, 24x7 service and support. For more information, visit: http://www.extremenetworks.com
Extreme Networks is either a trademark or registered trademark of Extreme Networks, Inc. in the United States and/or other countries.
This announcement contains forward-looking statements that involve risks and uncertainties, including statements regarding acceptance of the Company's newer products in the market and its expectations regarding its products. 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: fluctuations in demand for the Company's products and services; a highly competitive business environment for network switching equipment; its effectiveness in controlling expenses, the possibility that the Company might experience delays in the development of new technology and products; customer response to its new technology and products; the timing of any recovery in the global economy; risks related to pending or future litigation, and a dependency on third parties for certain components and for the manufacturing of the Company's products. The Company undertakes no obligation to update the forward-looking information in this release. More information about potential factors that could affect the Company's business and financial results is included in its filings with the Securities and Exchange Commission, including, without limitation, under the captions: "Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Risk Factors," which is on file with the Securities and Exchange Commission."
EXTREME NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
December 28, June 29,
2008 2008
(unaudited) (1)
ASSETS
Current assets:
Cash and cash equivalents $34,318 $70,370
Short-term investments 11,188 42,922
Accounts receivable, net 44,285 64,417
Inventories, net 22,275 13,942
Deferred income taxes 287 254
Prepaid expenses and other
current assets, net 5,023 4,654
Total current assets 117,376 196,559
Property and equipment, net 43,843 43,348
Marketable securities 98,013 112,380
Other assets, net 14,033 13,474
Total assets $273,265 $365,761
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $27,722 $16,921
Accrued compensation and
benefits 13,013 18,956
Restructuring liabilities 2,847 2,612
Accrued warranty 3,516 4,824
Deferred revenue, net 32,411 31,284
Deferred revenue, net of cost of
sales to distributors 15,220 14,138
Other accrued liabilities 24,056 27,728
Total current liabilities 118,785 116,463
Restructuring liabilities, less
current portion 5,213 6,777
Deferred revenue, less current
portion 8,079 9,006
Deferred income taxes 503 403
Other long-term liabilities 795 1,058
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;
128,108,535 issued at December
28, 2008 (127,358,570
June 29, 2008) and capital in
excess of par value 946,286 943,283
Treasury stock, 39,625,305
shares at December 28, 2008
(11,053,877 June 29, 2008) (149,665) (48,303)
Accumulated other comprehensive
income (loss) 1,367 (723)
Accumulated deficit (658,098) (662,203)
Total stockholders' equity 139,890 232,054
Total liabilities and
stockholders' equity $273,265 $365,761
(1) The information in this column is derived from the Company's
consolidated balance sheet included in the Company's Annual Report on
Form 10-K for the year ended June 29, 2008.
EXTREME NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(unaudited)
Three Months Ended Six Months Ended
December December December December
28, 30, 28, 30,
2008 2007 2008 2007
Net revenues:
Product $72,580 $77,427 $146,929 $151,572
Service 14,968 15,103 30,145 29,920
Total net revenues 87,548 92,530 177,074 181,492
Cost of revenues:
Product 31,411 31,039 61,544 62,295
Service 7,446 8,511 15,407 17,121
Total cost of
revenues 38,857 39,550 76,951 79,416
Gross profit:
Product 41,169 46,388 85,385 89,277
Service 7,522 6,592 14,738 12,799
Total gross profit 48,691 52,980 100,123 102,076
Operating expenses:
Sales and marketing 25,776 25,050 51,633 49,588
Research and development 13,924 17,154 30,529 33,645
General and administrative 7,412 8,592 15,851 15,115
Total operating
expenses 47,112 50,796 98,013 98,348
Operating income 1,580 2,184 2,110 3,728
Interest income 870 2,860 2,293 5,633
Interest expense (19) (21) (69) (41)
Other income / (expense), net 768 (249) 1,316 (491)
Income before income taxes 3,199 4,774 5,650 8,829
Provision for income taxes 733 638 1,546 1,060
Net Income $2,466 $4,136 $4,104 $7,769
Basic and diluted net income per
share:
Net income per share - basic 0.03 0.04 0.04 0.07
Net income per share - diluted 0.03 0.04 0.04 0.07
Shares used in per share
calculation - basic 88,323 114,530 99,823 114,217
Shares used in per share
calculation - diluted 88,363 115,725 99,925 115,498
EXTREME NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Six Months Ended
December 28, December 30,
2008 2007
Cash flows from operating activities:
Net income $4,105 $7,769
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 2,745 3,707
(Gain) loss on value of option
to put securities (6,778) -
Mark to market, trading loss
(gain) 6,778 -
Provision for doubtful accounts (56) 265
Provision for excess and
obsolete inventory 819 1,324
Deferred income taxes 68 (240)
Amortization of warrant - 1,349
(Loss) on retirement of assets 94 (7)
Stock-based compensation 1,396 2,429
Changes in operating assets and
liabilities, net
Accounts receivable 20,188 (6,709)
Inventories (9,157) 2,533
Prepaid expenses and other
assets (928) 2,830
Accounts payable 10,801 (4,926)
Accrued compensation and
benefits (5,943) 3,241
Restructuring liabilities (1,329) (4,182)
Accrued warranty (1,307) (474)
Deferred revenue, net 200 (21,972)
Deferred revenue, net of cost
of sales to distributors 1,082 22,361
Other accrued liabilities (4,970) (27)
Net cash provided by operating
activities 17,808 9,271
Cash flows provided by (used in)
investing activities:
Capital expenditures (3,334) (2,068)
Purchases of investments (25,166) (171,393)
Proceeds from maturities of
investments and marketable
securities 28,164 76,247
Proceeds from sales of investments
and marketable securities 46,225 59,679
Net cash provided by (used in)
investing activities 45,889 (37,535)
Cash flows (used in) provided by
financing activities:
Proceeds from issuance of common
stock 1,614 2,733
Repurchase of common stock,
including expenses (101,363) -
Net cash (used in) provided by
financing activities (99,749) 2,733
Net decrease in cash and cash
equivalents (36,052) (25,531)
Cash and cash equivalents at
beginning of period 70,370 71,573
Cash and cash equivalents at end of
period $34,318 $46,042
EXTREME NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
GAAP TO NON-GAAP RECONCILIATION
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
December 28, December 30,
2008 2007
Net income - GAAP Basis $2,466 $4,136
Non-GAAP adjustments
Stock-based compensation expense $1,004 $1,407
Total non-GAAP adjustments $1,004 $1,407
Net income - Non-GAAP Basis $3,470 $5,543
Non-GAAP adjustments
Cost of product revenue $75 $122
Cost of service revenue 61 65
Sales and marketing 328 410
Research and development 311 398
General and administrative 229 412
Total non-GAAP adjustments $1,004 1,407
SOURCE Extreme Networks, Inc.
http://www.extremenetworks.com
Copyright (C) 2009 PR Newswire. All rights reserved