UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 16, 2002
EXTREME NETWORKS, INC.
(Exact name of registrant as
specified in its charter)
| Delaware (State or other jurisdiction of incorporation) |
000-25711 (Commission File Number) |
77-0430270 (IRS Employer Identification No.)
|
3585
Monroe Street
Santa Clara, California 95051
(Address of principal executive offices) (Zip
Code)
Registrant’s telephone number,
including area code: (408) 579-2800
Not Applicable
(Former name or former address, if changed since last report)
Item 5. Other Matters.
On January 16, 2002, Extreme Networks, Inc. (“Extreme”) issued a press release announcing its second quarter financial results for the period ending December 31, 2001, which
press release included forward-looking statements relating to 2002. A copy of the press release issued by Extreme regarding the foregoing second quarter financial results, together with the forward-looking statements relating to 2002, is filed
herewith as Exhibit 99.1 and is incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
| Exhibit No. |
Description | |
| 99.1 |
Press Release dated January 16, 2002 regarding financial information for Extreme for the quarter ended December 31, 2001 and forward-looking statements relating to
2002. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly
authorized.
| EXTREME NETWORKS, INC. | ||
| By: |
/s/ Harold L. Covert Harold L. Covert Chief Financial Officer |
Date: February 20, 2002
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EXHIBIT INDEX
| Exhibit No. |
Description | |
| 99.1 |
Press Release dated January 16, 2002 regarding financial information for Extreme for the quarter ended December 31, 2001 and forward-looking statements relating to
2002. |
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EXHIBIT 99.1
Extreme Networks Reports Second
Quarter Results
Company Reports Expected Revenue and Earnings; Returns to Pro Forma Operating Profit
SANTA CLARA, Calif., Jan. 16 /PRNewswire-FirstCall/ — Extreme Networks, Inc., (Nasdaq: EXTR—news), a leader in Ethernet networking, today reported its second
quarter results for the period ending Dec. 31, 2001.
Net revenue for the second quarter of fiscal 2002 was $109.1 million, compared to $108.3 million
for the first quarter of fiscal 2002. On a pro forma basis Extreme Networks earned net income of $2.0 million, or $0.02 per share for the second quarter of fiscal 2002, compared with breakeven performance for the first quarter of fiscal 2002.
Actual net loss for the second quarter, which includes expenses for amortization of goodwill and intangible assets and deferred compensation, was $10.7
million or $(0.09) per share, compared to a loss of $36.0 million or ($0.32) per share for the first quarter of fiscal 2002. (See attached financial tables for reconciliation of GAAP and pro forma results.)
“The compelling value proposition we bring to the networking market, along with our ability to carefully manage our business, has enabled us to continuously perform well
and achieve operating profitability even during difficult business conditions,” said Gordon Stitt, president and CEO of Extreme Networks. “More and more, we are seeing our two key markets, the large enterprise and the Ethernet Metro,
converge. As a result, customers in both segments are seeking technology solutions to create a unified global network architecture. With our strong presence in the large enterprise market, our unmatched experience, and industry-leading Ethernet
solution set, we are uniquely positioned to capitalize on this convergence.”
Conference Call
Extreme Networks will host a conference call to discuss these results at 2 p.m. PT; for more information visit www.extremenetworks.com.
About Extreme Networks
Extreme Networks, Inc., delivers the most effective applications and services
infrastructure by creating networks that are faster, simpler and more cost-effective. Headquartered in Santa Clara, Calif., Extreme Networks markets its network switching solutions in more than 50 countries. For more information, visit
www.extremenetworks.com.
This announcement contains forward-looking statements that involve risks and uncertainties, including statements about
market trends and our market position, and steps that we plan to take with respect to the financial results or financial condition of our company. 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: (i) our rapid growth and potential risks associated with this
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growth, and a limited operating history and limited history of profitability that make it more difficult to predict results; (ii) current economic trends in
worldwide geographic markets; (iii) fluctuations in demand for our products and services; (iv) a highly competitive business environment for network switching equipment; and (v) the possibility that we might experience delays in the development of
new technology and products. More information about potential factors that could affect our business and financial results is included in our Annual Report on Form 10-K for the year ended June 30, 2001, and in our quarterly report on Form 10-Q for
the period ended September 30, 2001, including, without limitation, under the captions: “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Risk Factors,” which are on file with the
Securities and Exchange Commission (http://www.sec.gov).
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Table A
EXTREME NETWORKS, INC.
GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except
per-share amounts)
(Unaudited)
| Three Months Ended |
Six Months Ended | |||||||||
| December 31, 2001 |
December 31, 2000 |
December 31, 2001 |
December 31, 2000 | |||||||
| Net revenue |
$109,066 |
|
$144,715 |
$217,355 |
|
$264,057 | ||||
| Costs and expenses: |
||||||||||
| Cost of revenue |
51,450 |
|
69,774 |
134,762 |
|
127,864 | ||||
| Research and development |
14,604 |
|
13,034 |
31,015 |
|
24,776 | ||||
| Sales and marketing |
35,703 |
|
40,499 |
72,688 |
|
75,615 | ||||
| General and administrative |
5,974 |
|
4,879 |
14,087 |
|
9,158 | ||||
| Goodwill and deferred stock compensation |
15,235 |
|
6,931 |
29,961 |
|
13,781 | ||||
| Total costs and expenses |
122,966 |
|
135,117 |
282,513 |
|
251,194 | ||||
| Operating income (loss) |
(13,900 |
) |
9,598 |
(65,158 |
) |
12,863 | ||||
| Other income (expense), net |
1,701 |
|
2,805 |
(1,877 |
) |
6,514 | ||||
| Income (loss) before income taxes |
(12,199 |
) |
12,403 |
(67,035 |
) |
19,377 | ||||
| Provision (benefit) for income taxes |
(1,547 |
) |
4,341 |
(20,375 |
) |
6,782 | ||||
| Net income (loss) |
$ (10,652 |
) |
$ 8,062 |
$ (46,660 |
) |
$ 12,595 | ||||
| Net income (loss) per share—basic |
$ (0.09 |
) |
$ 0.08 |
$ (0.42 |
) |
$ 0.12 | ||||
| Net income (loss) per share—diluted |
$ (0.09 |
) |
$ 0.07 |
$ (0.42 |
) |
$ 0.11 | ||||
| Shares used in per share calculation—basic |
112,680 |
|
107,283 |
112,317 |
|
106,636 | ||||
| Shares used in per share calculation—diluted |
112,680 |
|
118,745 |
112,317 |
|
118,382 | ||||
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Table B
EXTREME
NETWORKS, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (i)
(In thousands, except per-share amounts)
(Unaudited)
| Three Months Ended |
Six Months Ended | ||||||||||||
| Dec. 31, 2001 |
Dec. 31, 2000 |
Dec. 31, 2001 |
Dec. 31, 2000 | ||||||||||
| Net revenue |
$ |
109,066 |
$ |
144,715 |
$ |
217,355 |
|
$ |
264,057 | ||||
| Costs and expenses: |
|||||||||||||
| Cost of revenue |
|
51,450 |
|
69,774 |
|
103,312 |
|
|
127,864 | ||||
| Research and development |
|
14,604 |
|
13,034 |
|
31,015 |
|
|
24,776 | ||||
| Sales and marketing |
|
35,703 |
|
40,499 |
|
72,688 |
|
|
75,615 | ||||
| General and administrative |
|
5,974 |
|
4,879 |
|
11,387 |
|
|
9,158 | ||||
| Total costs and expenses |
|
107,731 |
|
128,186 |
|
218,402 |
|
|
237,413 | ||||
| Operating income (loss) |
|
1,335 |
|
16,529 |
|
(1,047 |
) |
|
26,644 | ||||
| Other income, net |
|
1,701 |
|
2,805 |
|
4,123 |
|
|
6,514 | ||||
| Income before income taxes |
|
3,036 |
|
19,334 |
|
3,076 |
|
|
33,158 | ||||
| Provision for income taxes |
|
1,063 |
|
6,767 |
|
1,077 |
|
|
11,605 | ||||
| Net income |
$ |
1,973 |
$ |
12,567 |
$ |
1,999 |
|
$ |
21,553 | ||||
| Net income per share—basic |
$ |
0.02 |
$ |
0.12 |
$ |
0.02 |
|
$ |
0.20 | ||||
| Net income per share—diluted |
$ |
0.02 |
$ |
0.11 |
$ |
0.02 |
|
$ |
0.18 | ||||
| Shares used in per share calculation—basic |
|
112,680 |
|
107,283 |
|
112,317 |
|
|
106,636 | ||||
| Shares used in per share calculation—diluted |
|
117,424 |
|
118,745 |
|
117,951 |
|
|
118,382 | ||||
(i) This statement of operations information for the three and six months ended
December 31, 2000 and 2001 is for illustrative purposes only and is not prepared in accordance with generally accepted accounting principles. The following table reconciles our GAAP net income (loss) from Table A to our pro forma net income in Table
B:
| Three Months Ended |
Six Months Ended |
|||||||||||||||
| Dec. 31, 2001 |
Dec. 31, 2000 |
Dec. 31, 2001 |
Dec. 31, 2000 |
|||||||||||||
| GAAP net income (loss) |
$ |
(10,652 |
) |
$ |
8,062 |
|
$ |
(46,660 |
) |
$ |
12,595 |
| ||||
| Pro forma adjustments: |
||||||||||||||||
| Charges related to contract manufacturers and other costs associated with carrying value of inventory |
|
31,450 |
|
|||||||||||||
| Goodwill and deferred stock compensation |
|
15,235 |
|
|
6,931 |
|
|
29,961 |
|
|
13,781 |
| ||||
| Bad debt expense |
|
2,700 |
|
|||||||||||||
| Write-down of minority investments |
|
6,000 |
|
|||||||||||||
| Income tax benefit |
|
(2,610 |
) |
|
(2,426 |
) |
|
(21,452 |
) |
|
(4,823 |
) | ||||
| Pro forma net income |
$ |
1,973 |
|
$ |
12,567 |
|
$ |
1,999 |
|
$ |
21,553 |
| ||||
4
EXTREME NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
| December 31, 2001 |
June 30, 2001 | |||||
| Assets |
||||||
| Current assets: |
||||||
| Cash, cash equivalents and investments |
$ |
313,094 |
$ |
157,096 | ||
| Accounts receivable, net |
|
54,010 |
|
63,211 | ||
| Inventories, net |
|
48,030 |
|
60,529 | ||
| Deferred tax assets |
|
25,883 |
|
35,855 | ||
| Other current assets |
|
10,824 |
|
12,061 | ||
| Total current assets |
|
451,841 |
|
328,752 | ||
| Property and equipment, net |
|
62,342 |
|
57,251 | ||
| Restricted investments |
|
80,000 |
|
80,000 | ||
| Long-term investments |
|
71,591 |
|
34,406 | ||
| Goodwill and intangibles |
|
104,364 |
|
113,886 | ||
| Deferred tax assets |
|
72,144 |
|
40,028 | ||
| Other long-term assets |
|
12,348 |
|
12,025 | ||
| Total assets |
$ |
854,630 |
$ |
666,348 | ||
| Liabilities and stockholders’ equity |
||||||
| Current liabilities: |
||||||
| Accounts payable |
$ |
37,139 |
$ |
35,890 | ||
| Deferred revenue |
|
35,043 |
|
25,537 | ||
| Other accrued liabilities |
|
67,558 |
|
55,893 | ||
| Total current liabilities |
|
139,740 |
|
117,320 | ||
| Convertible subordinated notes and other long-term deposit |
|
200,266 |
|
266 | ||
| Total stockholders’ equity |
|
514,624 |
|
548,762 | ||
| Total liabilities and stockholders’ equity |
$ |
854,630 |
$ |
666,348 | ||
NOTE: Extreme Networks is a registered trademark of Extreme Networks, Inc. in the United States and other
countries.
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