Extreme Networks Reports 5 Percent Sequential Revenue Growth
SANTA CLARA, Calif., July 30, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- Extreme Networks, Inc. (Nasdaq: EXTR) today announced financial results for its fiscal fourth quarter and year ended June 28, 2009. For the fourth quarter, net revenue was $81.3 million, above the prior range of $79-$81 million that the Company announced on July 17, 2009. This represents a sequential increase of 5 percent as compared to revenue of $77.2 million in the previous quarter and a 17 percent decrease as compared to revenue of $98.3 million in fourth quarter of last year.
Fourth quarter non-GAAP net income was $2.3 million or $0.03 per diluted share, compared to non-GAAP net income of $3.0 million or $0.03 per diluted share in the fourth quarter last year. Non-GAAP financial results exclude the impact of stock-based compensation and restructuring charges. A reconciliation of GAAP to non-GAAP financial measures is included in the accompanying financial tables.
For the fourth quarter, net revenue in North America was $34.9 million, revenue in EMEA was $31.6 million, and revenue in APAC was $14.8 million. That compares to revenue of $26.9 million in North America, $38.5 million in EMEA, and $11.8 million in APAC in the previous quarter.
"We delivered the highest non-GAAP operating income in five quarters while competing in a very difficult global economy," said Mark Canepa, president and CEO of Extreme Networks. "We launched three new product families during the fiscal year, adding to our broad set of products designed for the changing dynamics in the metro carrier, the data center, and converged enterprise markets."
Net income on a GAAP basis for the fourth quarter was $0.9 million or $0.01 per diluted share, compared to net income of $0.8 million or $0.01 per diluted share in the fourth quarter of last year.
Fiscal Year Results
For the fiscal year ended June 28, 2009, net revenue was $335.6 million, compared to $361.8 million for the prior fiscal year. Non-GAAP net income was $8.9 million or $0.09 per diluted share, compared to non-GAAP net income of $14.3 million or $0.12 per diluted share for the prior fiscal year.
GAAP net income for the fiscal year was $2.8 million or $0.03 per diluted share, compared to GAAP net income of $8.4 million or $0.07 per diluted share for the prior fiscal year.
For the fiscal year, net revenue in North America was $131.0 million, revenue in EMEA was $153.8 million, and revenue in APAC was $50.8 million. That compares to revenue of $158.2 million in North America, $143.5 million in EMEA, and $60.1 million in APAC in the prior fiscal year.
Cash from operations for the fiscal year was $4.7 million. Cash and investments were $127.4 million as of June 28, 2009, compared to $225.7 million as of June 29, 2008. Cash and investments decreased year-over-year primarily due to the Company's $100 million stock repurchase in its 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). The conference call may be heard by dialing 1-888-561-1721 (international callers dial 1-480-629-9869). A 48-hour replay will be available following the call by dialing 1-800-406-7325 (international callers dial 1-303-590-3030); the replay passcode is 4114946. In addition, 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 will be posted on the Investor Relations section of the Company's website 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 operating income and net income. In preparing our non-GAAP information, we have excluded, where applicable, the impact of restructuring charges (a non-recurring charge) and share-based compensation (a non-cash charge). Because of the non-recurring and/or non-cash nature of these charges, we believe that excluding them 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 these charges 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 periods presented in this release, which are adjusted to exclude restructuring charges and 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 the Company's financial performance, 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: a challenging macro-economic environment both in the United States and overseas; 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 are on file with the Securities and Exchange Commission."
EXTREME NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
June 28, June 29,
2009 2008
---- ----
(unaudited) (1)
ASSETS
Current assets:
Cash and cash equivalents $46,195 $70,370
Short-term investments 8,976 42,922
Accounts receivable, net 44,278 64,417
Inventories, net 12,380 13,942
Deferred income taxes 244 254
Prepaid expenses and other current
assets, net 4,368 4,654
----- -----
Total current assets 116,441 196,559
Property and equipment, net 44,229 43,348
Marketable securities 72,231 112,380
Other assets, net 13,736 13,474
------ ------
Total assets $246,637 $365,761
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $12,771 $16,921
Accrued compensation and benefits 12,320 18,956
Restructuring liabilities 3,559 2,612
Accrued warranty 3,170 4,824
Deferred revenue, net 30,058 31,284
Deferred revenue, net of cost of sales
to distributors 9,821 14,138
Other accrued liabilities 21,328 27,728
------ ------
Total current liabilities 93,027 116,463
Restructuring liabilities, less current
portion 3,519 6,777
Deferred revenue, less current portion 7,425 9,006
Deferred income taxes 564 403
Other long-term liabilities 592 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; 128,425,140 issued at
June 28, 2009 and 127,358,570 at June
29, 2008 128 127
Treasury stock, 39,625,305 shares at
June 28, 2009 and 11,053,877 at
June 29, 2008 (149,666) (48,303)
Additional paid-in-capital 949,113 943,156
Accumulated other comprehensive
income (loss) 1,323 (723)
Accumulated deficit (659,388) (662,203)
-------- --------
Total stockholders' equity 141,510 232,054
------- -------
Total liabilities and
stockholders' equity $246,637 $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 Twelve Months Ended
------------------ -------------------
June 28, June 29, June 28, June 29,
2009 2008 2009 2008
---- ---- ---- ----
Net revenues:
Product $64,824 $83,353 $273,772 $302,313
Service 16,458 14,960 61,787 59,522
------ ------ ------ ------
Total net revenues 81,282 98,313 335,559 361,835
------ ------ ------- -------
Cost of revenues:
Product (1) 29,045 33,911 116,731 123,333
Service (1) 6,251 8,272 28,300 33,194
----- ----- ------ ------
Total cost of revenues 35,296 42,183 145,031 156,527
------ ------ ------- -------
Gross profit:
Product 35,779 49,442 157,041 178,980
Service 10,207 6,688 33,487 26,328
------ ----- ------ ------
Total gross margin 45,986 56,130 190,528 205,308
------ ------ ------- -------
Operating expenses:
Sales and marketing (1) 23,311 28,432 99,237 103,252
Research and
development (1) 13,719 16,112 58,176 65,335
General and
administrative (1) 7,194 10,931 30,011 34,656
Restructuring charge 153 893 2,245 893
--- --- ----- ---
Total operating expenses 44,377 56,368 189,669 204,136
------ ------ ------- -------
Operating income (loss) 1,609 (238) 859 1,172
Interest income 395 1,904 3,360 10,229
Interest expense (54) (20) (147) (89)
Other income / (expense), net (512) (111) 1,215 (753)
---- ---- ----- ----
Income (loss) before income
taxes 1,438 1,535 5,287 10,559
Provision for income taxes 555 762 2,472 2,178
--- --- ----- -----
Net income $883 $773 $2,815 $8,381
==== ==== ====== ======
Basic and diluted net income
per share:
Net income per share - basic $0.01 $0.01 $0.03 $0.07
Net income per share - diluted $0.01 $0.01 $0.03 $0.07
Shares used in per share
calculation - basic 88,700 115,944 94,225 115,002
Shares used in per share
calculation - diluted 88,722 116,171 94,284 115,784
(1) Includes share-based
compensation expense
as follows:
Cost of product revenue $97 $127 $205 $479
Cost of service revenue 80 68 253 251
Sales and marketing 426 431 1,349 1,656
Research and development 392 423 1,240 1,554
General and administrative 229 286 807 1,119
--- --- --- -----
Total stock-based
compensation expense 1,224 1,335 3,854 5,059
Capitalized in inventory - (1) (3) (7)
--- -- -- --
Total stock-based
compensation
expense, net $1,224 $1,334 $3,851 $5,052
====== ====== ====== ======
EXTREME NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Year Ended
----------
June 28, June 29,
2009 2008
---- ----
Cash flows from operating activities:
Net income $2,815 $8,381
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 5,902 7,193
Gain on value of option to put
securities (4,520) -
Mark to market, trading loss 4,520 -
Provision for doubtful accounts 232 416
Provision for excess and obsolete
inventory 2,265 2,172
Deferred income taxes 170 578
Amortization of warrant - 1,349
Loss on retirement of assets 94 300
Stock-based compensation 3,854 5,059
Restructuring charge, net of reversal 2,244 893
Changes in operating assets and
liabilities, net
Accounts receivable 19,907 (18,413)
Inventories (706) 5,567
Prepaid expenses and other assets 26 5,813
Accounts payable (4,150) (4,382)
Accrued compensation and benefits (6,636) 4,115
Restructuring liabilities (4,553) (5,492)
Accrued warranty (1,654) (2,359)
Deferred revenue, net (2,807) (1,791)
Deferred revenue, net of cost of sales
to distributors (4,317) 2,151
Other accrued liabilities (7,518) 5,520
Other long-term liabilities (466) (904)
---- ----
Net cash provided by operating activities 4,702 16,166
----- ------
Cash flows provided by (used in) investing
activities:
Capital expenditures (6,877) (7,683)
Purchases of investments (44,479) (307,442)
Proceeds from maturities of investments
and marketable securities 28,164 122,063
Proceeds from sales of investments and
marketable securities 93,571 172,009
------ -------
Net cash provided by (used in) investing
activities 70,379 (21,053)
------ -------
Cash flows (used in) provided by financing
activities:
Proceeds from issuance of common stock 2,107 3,684
Repurchase of common stock, including
expenses (101,363) -
-------- ---
Net cash (used in) provided by financing
activities (99,256) 3,684
------- -----
Net decrease in cash and cash equivalents (24,175) (1,203)
------- ------
Cash and cash equivalents at beginning
of period 70,370 71,573
------ ------
Cash and cash equivalents at end of period $46,195 $70,370
======= =======
Supplemental disclosure of cash flow
information:
Interest paid $146 $88
Cash paid for income taxes, net $2,825 $996
EXTREME NETWORKS, INC.
GAAP TO NON-GAAP RECONCILIATION
(In thousands)
(unaudited)
Three Months Twelve Months
Ended Ended
------------------ -------------
June 28, June 29, June 28, June 29,
2009 2008 2009 2008
---- ---- ---- ----
NET INCOME
Net income - GAAP Basis $883 $773 $2,815 $8,381
==== ==== ====== ======
Non-GAAP adjustments
Stock-based compensation expense $1,224 $1,335 $3,854 $5,059
Restructuring charge 153 893 2,245 893
--- --- ----- ---
Total Non-GAAP adjustments $1,377 $2,228 $6,099 $5,952
------ ------ ------ ------
------ ------ ------ -------
Net income - Non-GAAP Basis $2,260 $3,001 $8,914 $14,334
====== ====== ====== =======
OPERATING INCOME (LOSS)
Operating income (loss) - GAAP
Basis $1,609 $(238) $859 $1,172
====== ===== ==== ======
Non-GAAP adjustments
Stock-based compensation expense $1,224 $1,335 $3,854 $5,059
Restructuring charge 153 893 2,245 893
--- --- ----- ---
Total Non-GAAP adjustments $1,377 $2,228 $6,099 $5,952
------ ------ ------ ------
------ ------ ------ ------
Operating income - Non-GAAP
Basis $2,986 $1,990 $6,958 $7,124
====== ====== ====== ======
NON-GAAP ADJUSTMENTS
Cost of product revenue $97 $127 $205 $479
Cost of service revenue 80 68 253 251
Sales and marketing 426 431 1,349 1,656
Research and development 392 423 1,240 1,554
General and administrative 229 286 807 1,119
Restructuring charge 153 893 2,245 893
--- --- ----- ---
Total Non-GAAP adjustments $1,377 $2,228 $6,099 $5,952
====== ====== ====== ======
SOURCE Extreme Networks, Inc.
http://www.extremenetworks.com
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