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):
June 28, 2007
EXTREME NETWORKS, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 000-25711 | 77-0430270 | ||
| (State or other jurisdiction of incorporation) |
(Commission File No.) | (I.R.S. Employer Identification No.) |
3585 Monroe Street
Santa Clara, California 95051
(Address of principal executive offices)
Registrant’s telephone number, including area code:
(408) 579-2800
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
On June 28, 2007, Extreme Networks, Inc. issued a press release announcing it has completed its review of its historical stock option grant practices and filed with the Securities and Exchange Commission its Form 10-K for the fiscal year ended July 2, 2006 (“2006 Form 10-K”), as well as its Form 10-Qs for the fiscal quarters ended October 1, 2006, December 31, 2006, and April 1, 2007, and disclosing its financial results for the periods then ended.
A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description | |
| 99.1 | Press Release dated June 28, 2007 | |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: June 28, 2007
| EXTREME NETWORKS, INC. | ||
| By: | /s/ Karen M. Rogge | |
| Karen M. Rogge | ||
| Senior Vice President and Chief Financial Officer | ||
Exhibit 99.1
FOR IMMEDIATE RELEASE
For more information, contact:
Greg Cross
Extreme Networks Public Relations
408/579-3483
gcross@extremenetworks.com
EXTREME NETWORKS COMPLETES STOCK OPTIONS REVIEW AND SUBMITS SEC FILINGS
Schedules Q4’07 conference call
SANTA CLARA, Calif.; June 28, 2007 – Extreme Networks, Inc. (Nasdaq: EXTR), today announced that it has completed its review of its historical stock option grant practices and filed with the Securities and Exchange Commission its Form 10-K for the fiscal year ended July 2, 2006 (“2006 Form 10-K”), as well as its Form 10-Qs for the fiscal quarters ended October 1, 2006, December 31, 2006, and April 1, 2007. Those filings had been delayed pending the conclusion of a review of the Company’s historical stock option practices by a Special Committee of the Board of Directors, and the subsequent decision to restate financial results for certain prior periods.
Summary of Completed Stock Options Review
The Special Committee of the Board of Directors has completed its investigation into the Company’s historical stock option practices and reported its findings and recommendations to the Board. The Special Committee reviewed and tested over 8,000 grants, including all grants to Board members, officers, and executive level employees between April 9, 1999, the date of the Company’s initial public offering, and September 30, 2006, (the “Review Period”).
The Special Committee found deficiencies in the Company’s processes for approving and documenting option grants, which resulted in the Company erroneously treating the stated grant date as the measurement date for financial accounting purposes with respect to certain options. These deficiencies occurred predominantly during 1999 through 2001 (fiscal 2000 through 2002), but continued in some respects until fiscal 2004. No issues were found with the accounting for options granted during fiscal 2005 or 2006.
The Special Committee found no evidence of fraud and concluded that none of the Company personnel involved intended to mislead investors or were aware that the Company’s stock option granting and documentation practices had resulted or would result in a material misstatement of the Company’s financial results. The Special Committee found no evidence of misconduct by current management, and found no involvement by (among others) the current CEO, CFO, Controller, or Vice President, General Counsel in any of the grants for which inaccurate measurement dates were used. The Special Committee also confirmed that none of the affected options granted to the Company’s officers or directors has ever been exercised.
The Company’s processes for documenting and accounting for stock options improved substantially during fiscal 2004 and were effective in enabling the Company to account properly for all stock options granted during fiscal 2005 and fiscal 2006. The Special Committee also recommended additional new processes, which the Board adopted, with regard to grants of equity compensation awards to Board members, officers, and non-officer employees. These new processes are designed to ensure that the Company continues to employ best practices and procedures with respect to equity compensation awards.
Summary of Restatement
Based on the Special Committee’s investigation, with the concurrence of management and the Audit Committee, the Company determined that the Company should have recognized approximately $223.0 million of pre-tax, non-cash, share-based compensation expense during the Review Period that was not accounted for in the Company’s previously issued financial statements. In addition, the Company should have recorded approximately $0.3 million of income tax benefits. Therefore, the Company is restating financial information in its 2006 Form 10-K for each of the fiscal years ended July 3, 2005, June 27, 2004, June 29, 2003, and June 30, 2002. On a voluntary basis, the Company is including its restated consolidated statements of operations and consolidated balance sheet data for the years ended July 1, 2001, and July 2, 2000 in Item 6 in its 2006 Form 10-K. This restatement had no impact on the Company’s consolidated statement of operations for the fiscal year ended July 2, 2006 or on the Company’s previously reported revenues for any fiscal year. The restatement also had no impact on the Company’s previously reported cash positions for any period.
Further information regarding the stock options review, the restatement, and related matters is included in the Company’s Form 10-K for the fiscal year ended July 2, 2006. Previously filed annual reports on Form 10-K and quarterly reports on Form 10-Q for the periods affected by the restatement have not been amended and, as such, should not be relied upon, and are superseded in their entirety by the information in the filings made with the SEC today, available in the Real Time SEC Filings section at http://www.extremenetworks.com/about-extreme/investor-relations.aspx.
Status of Nasdaq Listing
On June 22, 2007, the Company received a letter from The Nasdaq Listing and Hearings Review Council (the “Listing Council”), which issued a ruling granting it an extension until July 3, 2007 to file the reports filed today with the SEC. On June 25, 2007, the Company received a letter from the Nasdaq Market advising that the Board of Directors of The NASDAQ Stock Market, Inc. (the “Nasdaq Board”) had stayed the decision of the Listing Council pending further consideration by the Nasdaq Board in July 2007.
Extreme Networks believes it is now current in its SEC reporting obligations and believes that it has complied with all conditions set forth for continued listing by the Nasdaq Listing Qualifications Panel at this time. However, the Company is required under the Nasdaq Listing Qualifications to hold an annual stockholder meeting each fiscal year, and it has not held such a meeting during Fiscal 2007. Extreme Networks has scheduled an annual stockholder meeting for July 30, 2007, and filed its definitive proxy statement for that meeting today. The Company expects that Nasdaq will now conclude its review of the Company’s listing status and grant continued listing of Extreme Networks’ common stock on the Nasdaq Global Market.
Fourth Quarter Conference Call and Webcast
Extreme Networks will discuss the financial results and other information presented in its SEC filings when it issues the results of its fiscal fourth quarter and year ended July 1, 2007. Those results will be released after the close of regular market trading on Wednesday, August 1, 2007 with a conference call to be held 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://www.extremenetworks.com/about-extreme/investor-relations.aspx.
Non-GAAP Financial Measures
Extreme Networks provides all financial information required in accordance with generally accepted accounting principles (GAAP). To supplement its consolidated financial statements presented in accordance with GAAP, the Company has provided a non-GAAP reconciliation of its Consolidated Statement of Operations for the quarters ended October 1, 2006, December 31, 2006 and April 1, 2007, which are adjusted to exclude share-based compensation expense, costs associated with the stock option Special Investigation and restructuring charges. These non-GAAP measures are not computed in accordance with GAAP and may differ from the methods used by other companies. These non-GAAP measures are not meant as a substitute for comparable GAAP measures. 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 designs, builds, and installs Ethernet infrastructure solutions that solve the toughest business communications challenges. Our commitment to open networking sets us apart from the alternatives by delivering meaningful insight and unprecedented control to applications and services. We believe openness is the best foundation for growth, freedom, flexibility, and choice. We focus on enterprises and service providers who demand high performance, converged networks that support voice, video and data, over a wired and wireless infrastructure.
###
This press release contains forward-looking statements, including statements regarding our belief that we have now become current in our filings with the SEC and are compliant with NASDAQ rules and the expectation that the Company will continue to be listed on the NASDAQ Global Select Market. These forward looking statements are subject to risks and uncertainties, and actual results could differ materially from those projected. These risks and uncertainties include, but are not limited to, the timing and outcome of the Nasdaq Board’s Listing Council’s, or Hearing Panel’s review of the matter. Information regarding other risks and uncertainties can be found in the Company’s most recently filed annual report on Form 10-K and other filings that have been made with the SEC.
Extreme Networks, BlackDiamond, Sentriant, and Summit are either trademarks or registered trademarks of Extreme Networks, Inc. in the United States and other countries. All other names and marks are the property of their respective owners. © 2007 Extreme Networks, Inc. All Rights Reserved.
EXTREME NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
| April 1, 2007 |
December 31, 2006 |
October 1, 2006 |
July 2, 2006 |
|||||||||||||
| ASSETS | ||||||||||||||||
| Current assets: |
||||||||||||||||
| Cash and cash equivalents |
$ | 84,549 | $ | 64,667 | $ | 138,282 | $ | 92,598 | ||||||||
| Short-term investments |
99,980 | 112,482 | 251,385 | 297,726 | ||||||||||||
| Accounts receivable, net |
25,088 | 30,248 | 27,845 | 27,681 | ||||||||||||
| Inventories, net |
22,246 | 23,202 | 24,077 | 19,303 | ||||||||||||
| Prepaid expenses and other current assets, net |
12,946 | 11,440 | 8,328 | 9,420 | ||||||||||||
| Total current assets |
244,809 | 242,039 | 449,917 | 446,728 | ||||||||||||
| Property and equipment, net |
44,006 | 45,020 | 44,820 | 46,499 | ||||||||||||
| Marketable securities |
30,220 | 27,010 | 33,750 | 42,781 | ||||||||||||
| Other assets, net |
22,714 | 24,207 | 22,196 | 22,710 | ||||||||||||
| TOTAL ASSETS |
$ | 341,749 | $ | 338,276 | $ | 550,683 | $ | 558,718 | ||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
| Current liabilities: |
||||||||||||||||
| Accounts payable |
$ | 19,169 | $ | 16,739 | $ | 24,353 | $ | 20,138 | ||||||||
| Accrued compensation and benefits |
13,103 | 12,223 | 11,992 | 11,758 | ||||||||||||
| Restructuring liabilities |
3,620 | 5,197 | 6,601 | 5,571 | ||||||||||||
| Accrued warranty |
7,273 | 6,990 | 7,168 | 7,027 | ||||||||||||
| Deferred revenue |
32,380 | 32,635 | 33,492 | 35,406 | ||||||||||||
| Convertible subordinated notes |
— | — | 200,000 | 200,000 | ||||||||||||
| Other accrued liabilities |
23,205 | 19,492 | 21,724 | 19,581 | ||||||||||||
| Total current liabilities |
98,750 | 93,276 | 305,330 | 299,481 | ||||||||||||
| Restructuring liabilities, less current portion |
8,979 | 9,626 | 10,443 | 11,471 | ||||||||||||
| Deferred revenue, less current portion |
10,327 | 10,851 | 9,265 | 9,699 | ||||||||||||
| Deferred income taxes |
674 | 654 | 604 | 579 | ||||||||||||
| Other long-term liabilities |
2,902 | 3,020 | 1,306 | 1,307 | ||||||||||||
| Commitments and contingencies |
||||||||||||||||
| Stockholders’ equity: |
||||||||||||||||
| Common stock and capital in excess of par value |
933,340 | 932,097 | 930,341 | 927,835 | ||||||||||||
| Treasury stock |
(48,303 | ) | (48,303 | ) | (44,901 | ) | (33,700 | ) | ||||||||
| Accumulated other comprehensive income (loss) |
620 | 230 | (390 | ) | (1,567 | ) | ||||||||||
| Accumulated deficit |
(665,540 | ) | (663,175 | ) | (661,315 | ) | (656,387 | ) | ||||||||
| Total stockholders’ equity |
220,117 | 220,849 | 223,735 | 236,181 | ||||||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ | 341,749 | $ | 338,276 | $ | 550,683 | $ | 558,718 | ||||||||
EXTREME NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
|
Three Months Ended |
Nine April 1, |
|||||||||||||||
| October 1, 2006 |
December 31, 2006 |
April 1, 2007 |
||||||||||||||
| Net revenues: |
||||||||||||||||
| Product |
$ | 67,982 | $ | 71,074 | $ | 69,578 | $ | 208,634 | ||||||||
| Service |
15,781 | 15,779 | 15,541 | 47,101 | ||||||||||||
| Total net revenues |
83,763 | 86,853 | 85,119 | 255,735 | ||||||||||||
| Cost of revenues: |
||||||||||||||||
| Product |
31,799 | 31,968 | 29,132 | 92,899 | ||||||||||||
| Service |
8,813 | 8,409 | 8,121 | 25,344 | ||||||||||||
| Total cost of revenues |
40,612 | 40,377 | 37,253 | 118,243 | ||||||||||||
| Gross margin: |
||||||||||||||||
| Product |
36,183 | 39,106 | 40,446 | 115,735 | ||||||||||||
| Services |
6,968 | 7,370 | 7,420 | 21,757 | ||||||||||||
| Total gross margin |
43,151 | 46,476 | 47,866 | 137,492 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Sales and marketing |
25,443 | 25,829 | 24,886 | 76,158 | ||||||||||||
| Research and development |
15,774 | 15,602 | 18,394 | 49,770 | ||||||||||||
| General and administrative |
7,605 | 8,790 | 8,929 | 25,324 | ||||||||||||
| Restructuring charge |
1,534 | (231 | ) | (157 | ) | 1,146 | ||||||||||
| Total operating expenses |
50,356 | 49,990 | 52,052 | 152,398 | ||||||||||||
| Operating (loss) |
(7,205 | ) | (3,514 | ) | (4,186 | ) | (14,906 | ) | ||||||||
| Other income, net |
3,064 | 2,227 | 2,018 | 7,309 | ||||||||||||
| (Loss) before income taxes |
(4,141 | ) | (1,287 | ) | (2,168 | ) | (7,597 | ) | ||||||||
| Provision for income taxes |
786 | 573 | 195 | 1,554 | ||||||||||||
| Net (loss) |
$ | (4,927 | ) | $ | (1,860 | ) | $ | (2,363 | ) | $ | (9,151 | ) | ||||
| Net (loss) per share — basic |
$ | (0.04 | ) | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.08 | ) | ||||
| Net (loss) per share — diluted |
$ | (0.04 | ) | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.08 | ) | ||||
| Shares used in per share calculation — basic |
115,653 | 113,644 | 113,585 | 114,294 | ||||||||||||
| Shares used in per share calculation — diluted |
115,653 | 113,644 | 113,585 | 114,294 | ||||||||||||
EXTREME NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
Three Months Ended |
Nine April 1, |
|||||||||||||||
| October 1, 2006 |
December 31, 2006 |
April 1, 2007 |
||||||||||||||
| Cash flows from operating activities: |
||||||||||||||||
| Net (loss) |
$ | (4,927 | ) | $ | (1,860 | ) | $ | (2,363 | ) | $ | (9,151 | ) | ||||
| Adjustments to reconcile net (loss) to net cash provided by (used in) operating activities: |
||||||||||||||||
| Depreciation and amortization |
2,361 | 1,907 | 1,963 | 6,231 | ||||||||||||
| Provision for doubtful accounts |
2 | — | — | 2 | ||||||||||||
| Provision for excess and obsolete inventory |
467 | 1,677 | 186 | 2,330 | ||||||||||||
| Deferred income taxes |
25 | (528 | ) | 598 | 95 | |||||||||||
| Amortization of warrant |
1,012 | 1,012 | 1,012 | 3,036 | ||||||||||||
| Restructuring charge |
1,534 | (231 | ) | (157 | ) | 1,146 | ||||||||||
| Loss on disposal of assets |
76 | (71 | ) | 12 | 17 | |||||||||||
| Stock-based compensation |
1,850 | 1,808 | 1,325 | 4,983 | ||||||||||||
| Changes in operating assets and liabilities, net |
||||||||||||||||
| Accounts receivable |
(218 | ) | (2,411 | ) | 5,150 | 2,521 | ||||||||||
| Inventories |
(5,239 | ) | (803 | ) | 769 | (5,273 | ) | |||||||||
| Prepaid expenses and other assets |
647 | (5,550 | ) | (1,594 | ) | (6,497 | ) | |||||||||
| Accounts payable |
4,215 | (7,615 | ) | 2,431 | (969 | ) | ||||||||||
| Accrued compensation and benefits |
234 | 231 | 880 | 1,345 | ||||||||||||
| Restructuring liabilities |
(1,532 | ) | (1,991 | ) | (2,066 | ) | (5,589 | ) | ||||||||
| Accrued warranty |
141 | (177 | ) | 281 | 245 | |||||||||||
| Deferred revenue |
(2,348 | ) | 729 | (780 | ) | (2,399 | ) | |||||||||
| Other accrued liabilities |
2,218 | (325 | ) | 2,107 | 4,000 | |||||||||||
| Other long-term liabilities |
— | 0 | 1,594 | 1,594 | ||||||||||||
| Net cash provided by (used in) operating activities |
518 | (14,198 | ) | 11,347 | (2,333 | ) | ||||||||||
| Cash flows from investing activities: |
||||||||||||||||
| Capital expenditures |
(758 | ) | (2,037 | ) | (960 | ) | (3,755 | ) | ||||||||
| Purchases of investments |
(76,980 | ) | (18,079 | ) | (49,011 | ) | (144,070 | ) | ||||||||
| Proceeds from sales and maturities of investments and marketable securities |
133,450 | 164,153 | 58,585 | 356,188 | ||||||||||||
| Net cash provided by investing activities |
55,712 | 144,037 | 8,614 | 208,363 | ||||||||||||
| Cash flows from financing activities: |
||||||||||||||||
| Proceeds from issuance of common stock, net of repurchases |
655 | (53 | ) | (79 | ) | 523 | ||||||||||
| Repurchase of common stock |
(11,201 | ) | (3,401 | ) | — | (14,602 | ) | |||||||||
| Principal payment on convertible debt |
— | (200,000 | ) | — | (200,000 | ) | ||||||||||
| Net cash used in financing activities |
(10,546 | ) | (203,454 | ) | (79 | ) | (214,079 | ) | ||||||||
| Net increase (decrease) in cash and cash equivalents |
45,684 | (73,615 | ) | 19,882 | (8,049 | ) | ||||||||||
| Cash and cash equivalents at beginning of period |
92,598 | 138,282 | 64,667 | 92,598 | ||||||||||||
| Cash and cash equivalents at end of period |
$ | 138,282 | $ | 64,667 | $ | 84,549 | $ | 84,549 | ||||||||
EXTREME NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
GAAP TO NON-GAAP RECONCILIATION
(In thousands, except per share amounts)
(Unaudited)
|
Three Months Ended |
Nine April 1, |
|||||||||||||||
| October 1, 2006 |
December 31, 2006 |
April 1, 2007 |
||||||||||||||
| Net income (loss) — GAAP Basis |
$ | (4,927 | ) | $ | (1,860 | ) | $ | (2,363 | ) | $ | (9,151 | ) | ||||
| Non-GAAP adjustments |
||||||||||||||||
| Stock-based compensation expense |
$ | 1,850 | $ | 1,808 | $ | 1,325 | $ | 4,983 | ||||||||
| Stock option investigation expenses |
— | 2,771 | 2,846 | 5,617 | ||||||||||||
| Restructuring charge |
1,534 | (231 | ) | (157 | ) | 1,146 | ||||||||||
| Total non-GAAP adjustments |
$ | 3,384 | $ | 4,348 | $ | 4,014 | $ | 11,746 | ||||||||
| Net income (loss) — Non-GAAP Basis |
$ | (1,543 | ) | $ | 2,488 | $ | 1,651 | $ | 2,595 | |||||||
| Non-GAAP adjustments |
||||||||||||||||
| Cost of product revenue |
$ | 197 | $ | 201 | $ | 189 | $ | 587 | ||||||||
| Cost of service revenue |
123 | 116 | 69 | 308 | ||||||||||||
| Sales and Marketing |
667 | 635 | 470 | 1,772 | ||||||||||||
| Research and Development |
558 | 564 | 395 | 1,517 | ||||||||||||
| General and Administrative |
305 | 3,063 | 3,048 | 6,416 | ||||||||||||
| Restructuring charge |
1,534 | (231 | ) | (157 | ) | 1,146 | ||||||||||
| Total non-GAAP adjustments |
$ | 3,384 | $ | 4,348 | $ | 4,014 | $ | 11,746 | ||||||||
Note: The non-GAAP adjustment for Cost of Revenues, Sales and Marketing, and Research and Development is related to share-based compensation expense. The non-GAAP adjustment for General and Administrative expenses includes both share-based compensation and costs associated with our stock option Special Investigation.
EXTREME NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
NON-GAAP PRESENTATION
(In thousands, except per share amounts)
(Unaudited)
|
Three Months Ended |
Nine April 1, |
||||||||||||||
| October 1, 2006 |
December 31, 2006 |
April 1, 2007 |
|||||||||||||
| Net revenues: |
|||||||||||||||
| Product |
$ | 67,982 | $ | 71,074 | $ | 69,578 | $ | 208,634 | |||||||
| Service |
15,781 | 15,779 | 15,541 | 47,101 | |||||||||||
| Total net revenues |
83,763 | 86,853 | 85,119 | 255,735 | |||||||||||
| Cost of revenues: |
|||||||||||||||
| Product |
31,602 | 31,767 | 28,943 | 92,312 | |||||||||||
| Service |
8,690 | 8,293 | 8,052 | 25,036 | |||||||||||
| Total cost of revenues |
40,292 | 40,060 | 36,995 | 117,348 | |||||||||||
| Gross margin: |
|||||||||||||||
| Product |
36,380 | 39,307 | 40,635 | 116,322 | |||||||||||
| Services |
7,091 | 7,486 | 7,489 | 22,065 | |||||||||||
| Total gross margin |
43,471 | 46,793 | 48,124 | 138,387 | |||||||||||
| Operating expenses: |
|||||||||||||||
| Sales and marketing |
24,776 | 25,194 | 24,416 | 74,386 | |||||||||||
| Research and development |
15,216 | 15,038 | 17,999 | 48,253 | |||||||||||
| General and administrative |
7,300 | 5,727 | 5,881 | 18,908 | |||||||||||
| Restructuring charge |
— | — | — | — | |||||||||||
| Total operating expenses |
47,292 | 45,959 | 48,296 | 141,547 | |||||||||||
| Operating income (loss) |
(3,821 | ) | 834 | (172 | ) | (3,160 | ) | ||||||||
| Other income, net |
3,064 | 2,227 | 2,018 | 7,309 | |||||||||||
| Income (loss) before income taxes |
(757 | ) | 3,061 | 1,846 | 4,149 | ||||||||||
| Provision for income taxes |
786 | 573 | 195 | 1,554 | |||||||||||
| Net income (loss) |
$ | (1,543 | ) | $ | 2,488 | $ | 1,651 | $ | 2,595 | ||||||
| Net income (loss) per share — basic |
$ | (0.01 | ) | $ | 0.02 | $ | 0.01 | $ | 0.02 | ||||||
| Net income (loss) per share — diluted |
$ | (0.01 | ) | $ | 0.02 | $ | 0.01 | $ | 0.02 | ||||||
| Shares used in per share calculation — basic |
115,653 | 113,644 | 113,585 | 114,294 | |||||||||||
| Shares used in per share calculation — diluted |
115,653 | 113,644 | 113,585 | 114,294 | |||||||||||
EXTREME NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
|
Three Months Ended |
Year July 2, | |||||||||||||||
| October 2, 2005 |
January 1, 2006 |
April 2, 2006 |
July 2, 2006 |
|||||||||||||
| Net revenues: |
||||||||||||||||
| Product |
$ | 81,917 | $ | 76,998 | $ | 69,148 | $ | 66,761 | $ | 294,824 | ||||||
| Service |
16,005 | 15,789 | 16,302 | 15,681 | 63,777 | |||||||||||
| Total net revenues |
97,922 | 92,787 | 85,450 | 82,442 | 358,601 | |||||||||||
| Cost of revenues: |
||||||||||||||||
| Product |
35,926 | 33,517 | 30,432 | 30,682 | 130,557 | |||||||||||
| Service |
8,708 | 8,488 | 8,806 | 8,166 | 34,168 | |||||||||||
| Total cost of revenues |
44,634 | 42,005 | 39,238 | 38,848 | 164,725 | |||||||||||
| Gross margin: |
||||||||||||||||
| Product |
45,991 | 43,481 | 38,716 | 36,079 | 164,267 | |||||||||||
| Services |
7,297 | 7,301 | 7,496 | 7,515 | 29,609 | |||||||||||
| Total gross margin |
53,288 | 50,782 | 46,212 | 43,594 | 193,876 | |||||||||||
| Operating expenses: |
||||||||||||||||
| Sales and marketing |
25,916 | 23,962 | 23,148 | 25,426 | 98,452 | |||||||||||
| Research and development |
16,263 | 15,670 | 14,456 | 15,577 | 61,966 | |||||||||||
| General and administrative |
7,175 | 6,052 | 6,505 | 5,766 | 25,498 | |||||||||||
| Restructuring charge |
3,268 | 3,268 | ||||||||||||||
| Total operating expenses |
49,354 | 45,684 | 44,109 | 50,037 | 189,184 | |||||||||||
| Operating income (loss) |
3,934 | 5,098 | 2,103 | (6,443 | ) | 4,692 | ||||||||||
| Other income, net |
929 | 1,427 | 1,383 | 1,876 | 5,615 | |||||||||||
| Income (loss) before income taxes |
4,863 | 6,525 | 3,486 | (4,567 | ) | 10,307 | ||||||||||
| Provision for income taxes |
510 | 875 | 645 | (232 | ) | 1,798 | ||||||||||
| Net income (loss) |
$ | 4,353 | $ | 5,650 | $ | 2,841 | $ | (4,335 | ) | $ | 8,509 | |||||
| Net income (loss) per share — basic |
$ | 0.04 | $ | 0.05 | $ | 0.02 | $ | (0.04 | ) | $ | 0.07 | |||||
| Net income (loss) per share — diluted |
$ | 0.03 | $ | 0.05 | $ | 0.02 | $ | (0.04 | ) | $ | 0.07 | |||||
| Shares used in per share calculation — basic |
123,018 | 123,007 | 120,940 | 118,453 | 121,286 | |||||||||||
| Shares used in per share calculation — diluted |
124,754 | 124,806 | 122,818 | 118,453 | 123,049 | |||||||||||
EXTREME NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
GAAP TO NON-GAAP RECONCILIATION
(In thousands, except per share amounts)
(Unaudited)
|
Three Months Ended |
Year July 2, | |||||||||||||||
| October 2, 2005 |
January 1, 2006 |
April 2, 2006 |
July 2, 2006 |
|||||||||||||
| Net income (loss) — GAAP Basis |
$ | 4,353 | $ | 5,650 | $ | 2,841 | $ | (4,335 | ) | $ | 8,509 | |||||
| Non-GAAP adjustments |
||||||||||||||||
| Stock-based compensation expense |
$ | 1,870 | $ | 1,574 | $ | 1,315 | $ | 2,236 | $ | 6,995 | ||||||
| Restructuring charge |
3,268 | 3,268 | ||||||||||||||
| Total non-GAAP adjustments |
$ | 1,870 | $ | 1,574 | $ | 1,315 | $ | 5,504 | $ | 10,263 | ||||||
| Net income — Non-GAAP Basis |
$ | 6,223 | $ | 7,224 | $ | 4,156 | $ | 1,169 | $ | 18,772 | ||||||
| Non-GAAP adjustments |
||||||||||||||||
| Cost of product revenue |
$ | 170 | $ | 196 | $ | 147 | $ | 205 | $ | 718 | ||||||
| Cost of service revenue |
$ | 108 | $ | 92 | $ | 77 | $ | 140 | 417 | |||||||
| Sales and Marketing |
$ | 782 | $ | 594 | $ | 500 | $ | 888 | 2,764 | |||||||
| Research and Development |
$ | 525 | $ | 442 | $ | 363 | $ | 663 | 1,993 | |||||||
| General and Administrative |
$ | 285 | $ | 250 | $ | 228 | $ | 340 | 1,103 | |||||||
| Restructuring charge |
$ | 3,268 | 3,268 | |||||||||||||
| Total non-GAAP adjustments |
$ | 1,870 | $ | 1,574 | $ | 1,315 | $ | 5,504 | $ | 10,263 | ||||||
EXTREME NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
NON-GAAP PRESENTATION
(In thousands, except per share amounts)
(Unaudited)
|
Three Months Ended |
Year July 2, | |||||||||||||||
| October 2, 2005 |
January 1, 2006 |
April 2, 2006 |
July 2, 2006 |
|||||||||||||
| Net revenues: |
||||||||||||||||
| Product |
$ | 81,917 | $ | 76,998 | $ | 69,148 | $ | 66,761 | $ | 294,824 | ||||||
| Service |
16,005 | 15,789 | 16,302 | 15,681 | 63,777 | |||||||||||
| Total net revenues |
97,922 | 92,787 | 85,450 | 82,442 | 358,601 | |||||||||||
| Cost of revenues: |
||||||||||||||||
| Product |
35,756 | 33,321 | 30,285 | 30,477 | 129,839 | |||||||||||
| Service |
8,600 | 8,396 | 8,729 | 8,026 | 33,751 | |||||||||||
| Total cost of revenues |
44,356 | 41,717 | 39,014 | 38,503 | 163,590 | |||||||||||
| Gross margin: |
||||||||||||||||
| Product |
46,161 | 43,677 | 38,863 | 36,284 | 164,985 | |||||||||||
| Services |
7,405 | 7,393 | 7,573 | 7,655 | 30,026 | |||||||||||
| Total gross margin |
53,566 | 51,070 | 46,436 | 43,939 | 195,011 | |||||||||||
| Operating expenses: |
||||||||||||||||
| Sales and marketing |
25,134 | 23,368 | 22,648 | 24,538 | 95,688 | |||||||||||
| Research and development |
15,738 | 15,228 | 14,093 | 14,914 | 59,973 | |||||||||||
| General and administrative |
6,890 | 5,802 | 6,277 | 5,426 | 24,395 | |||||||||||
| Restructuring charge |
— | — | — | — | — | |||||||||||
| Total operating expenses |
47,762 | 44,398 | 43,018 | 44,878 | 180,056 | |||||||||||
| Operating income (loss) |
5,804 | 6,672 | 3,418 | (939 | ) | 14,955 | ||||||||||
| Other income, net |
929 | 1,427 | 1,383 | 1,876 | 5,615 | |||||||||||
| Income before income taxes |
6,733 | 8,099 | 4,801 | 937 | 20,570 | |||||||||||
| Provision for income taxes |
510 | 875 | 645 | (232 | ) | 1,798 | ||||||||||
| Net income |
$ | 6,223 | $ | 7,224 | $ | 4,156 | $ | 1,169 | $ | 18,772 | ||||||
| Net income per share — basic |
$ | 0.05 | $ | 0.06 | $ | 0.03 | $ | 0.01 | $ | 0.15 | ||||||
| Net income per share — diluted |
$ | 0.05 | $ | 0.06 | $ | 0.03 | $ | 0.01 | $ | 0.15 | ||||||
| Shares used in per share calculation — basic |
123,018 | 123,007 | 120,940 | 118,453 | 121,286 | |||||||||||
| Shares used in per share calculation — diluted |
124,754 | 124,806 | 122,818 | 118,453 | 123,049 | |||||||||||