Extreme Networks Reports 12% Product Revenue Growth North America and EMEA Post Double Digit Performance

SANTA CLARA, Calif., Aug. 2 /PRNewswire-FirstCall/ -- Extreme Networks, Inc. (Nasdaq: EXTR) today announced financial results for its 2010 fiscal fourth quarter and year ended June 27, 2010.  For the quarter, net revenue was $85.5 million, which was in line with Company's revised guidance and compares to revenue of $78.2 million in the previous quarter and $81.3 million in the fourth quarter of last year.

"Product revenue in North America and EMEA increased by 17 percent and 22 percent, respectively from Q3, as we enter new markets and add new customers," said Bob L. Corey, CFO and acting President & CEO of Extreme Networks.  "Revenue per employee for the fourth quarter was the highest in more than 16 quarters, as we continue our focus on growing revenue and introducing innovative new products."

Fourth quarter non-GAAP operating income increased by 17 percent to $5.6 million or 6.6 percent of net revenue, compared to $4.8 million or 6.2 percent of net revenue in the previous quarter, and increased by 84 percent from $3.1 million or 3.8 percent of net revenue in the fourth quarter of last year.  Additionally, non-GAAP net income was $6.3 million or $0.07 per diluted share, compared to $5.5 million or $0.06 per diluted share in the previous quarter, and $2.3 million or $0.03 per diluted share in the fourth quarter of last year.  Non-GAAP financial results exclude the impact of stock-based compensation, restructuring charges and litigation settlement costs.  A reconciliation of GAAP to non-GAAP financial measures is included in the accompanying financial tables.

Operating income on a GAAP basis for the fourth quarter was $2.8 million, compared to $3.0 million in the previous quarter and $1.7 million for the fourth quarter of last year.  Net income on a GAAP basis for the fourth quarter was $3.4 million or $0.04 per diluted share, which included additional restructuring charge of $0.2 million, a charge of approximately $1.7 million related to stock based compensation and settlement cost related to patent litigation of $1.0 million.  That compares to net income on a GAAP basis of $3.7 million or $0.04 per diluted share in the previous quarter, and net income of $0.9 million or $0.01 per diluted share in the fourth quarter of last year.

For the fourth quarter, total net revenue in North America was $36.3 million, revenue in EMEA was $36.8 million, and revenue in APAC was $12.4 million.  That compares to revenue of $32.6 million in North America, $31.0 million in EMEA, and $14.6 million in APAC in the previous quarter.

Product revenue in North America increased by 17 percent to $28 million, product revenue in EMEA increased by 22 percent to $32 million, and product revenue in APAC declined by 18 percent to $10.6 million.  

Fiscal Year Results

For the fiscal year ended June 27, 2010, net revenue was $ 309.4 million, compared to $335.6 million in the prior fiscal year.  Non-GAAP net income was $ 11.7 million or $0.13 per diluted share, compared to $8.9 million or $0.09 per diluted share for the prior fiscal year.

GAAP net income for the fiscal year was $0.2 million or $0.00 per diluted share, compared to $2.8 million or $0.03 per diluted share for the prior fiscal year.

For the fiscal year, net revenue in North America was $123.2 million, net revenue in EMEA was $133.7 million, and net revenue in APAC was $52.4 million.  That compares to net revenue of $131.0 million in North America, $153.8 million in EMEA and $50.8 million in APAC in the prior fiscal year.

Cash from operations for the fiscal year almost doubled to $9.3 million from $4.7 million in the prior fiscal year.  Cash and investments increased by $5.0 million to $132.4 million from $127.4 million in the prior fiscal year.

2011 Fiscal First Quarter non-GAAP Financial Guidance

For its 2011 fiscal first quarter ending September 26, 2010, the Company currently expects net revenue to be in a range of $81-$84 million; gross margin of 57%-59%; non-GAAP operating income of $3.5 -$6.0 million; and non-GAAP net income of $0.04 to $0.06 per diluted share.

Conference Call and Slide Presentation

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 1-877-303-9826 (international callers dial 1-224-357-2194).  A 7-day replay will be available following the call by dialing 1-800-642-1687 (international callers dial 1-706-645-9291).  The conference call passcode is 86969241.  In addition, a live webcast and replay of the call will be available at http://investor.extremenetworks.com.  PLEASE NOTE: throughout the conference call, the Company will refer to a slide presentation that will be posted in the Investor Relations section of the Company's website at http://investor.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/(loss), non-GAAP operating income/(loss) and non-GAAP earnings/(loss) per diluted share.  In preparing our non-GAAP information, we have excluded, where applicable, the impact of restructuring charges, share-based compensation and litigation settlement costs.  We believe that excluding these charges 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, share-based compensation expense and litigation settlement cost 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 network infrastructure that support data, voice and video for enterprises and service providers. Extreme Networks' network solutions feature high performance, high availability and scalable switching solutions that enable organizations to address real-world communications challenges and opportunities. 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 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 the United States and overseas; fluctuations in demand for the Company's products and services; a highly competitive business environment for network switching equipment; the Company's 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."

SOURCE Extreme Networks, Inc.