EX-99.1 3 dex991.htm PRESS RELEASE DATED JANUARY 6, 2003 Press Release dated January 6, 2003
 
EXHIBIT 99.1
 
Extreme Networks Reports Q2 FY’03 Financial Results
 
SANTA CLARA, Calif., Jan. 6/PRNewswire-FirstCall/ — Extreme Networks, Inc., (Nasdaq: EXTR—News), a leader in Ethernet broadband networking solutions, today announced financial results for the second fiscal quarter ended Dec. 29, 2002.
 
Net revenue for the second quarter of fiscal 2003 was $90.2 million, compared to $100.6 million for the first quarter of fiscal 2003. Including special charges and deferred compensation totaling $28.6 million, the Company reported a net loss of $19.7 million or $0.17 per share for the second quarter of fiscal 2003, compared to a net loss of $4.7 million or $0.04 per share for the first quarter of fiscal 2003. Before special charges and deferred compensation was recorded during the quarter, the Company had a loss of $2.8 million compared to a loss of $3.1 million for the first quarter of fiscal 2003.
 
“Although the worldwide climate remains challenging, we are not satisfied with this quarter’s results and are committed to strong results independent of external factors,” said Gordon Stitt, Extreme Networks president and CEO. “During the past several quarters, we have implemented a number of programs that are beginning to show results and are planned to have a positive impact on our financial performance. One such area of focus is management of our supply chain where we are now experiencing lower overall costs.”
 
“In addition, we continue to expand our customer base by forming strategic partnerships with other worldwide market leading companies,” added Stitt. “We are also maintaining our strong investment in technology development, and this year our new technology introduction plan includes our third generation family of ASICs and innovative software, all ideally suited for the advanced networking applications being deployed today and planned for tomorrow. Our ongoing technology developments enable Extreme to offer valuable customer-focused networking solutions that allows for a lower total cost of ownership with superior performance and in turn will drive our market growth.”
 
Conference Call
 
Extreme Networks will host a conference call to discuss these results at 2:30 p.m. PT, for more information visit http://www.extremenetworks.com/aboutus/investor/
 
Extreme Networks, Inc.
 
Extreme Networks 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.
 
NOTE: Extreme Networks is a trademark of Extreme Networks, Inc., in the United States and other countries.

 
This announcement contains forward-looking statements that involve risks and uncertainties, including statements about achieving our strategic and financial goals, and other statements that include “expect,” “anticipate” or words of similar intent. 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) 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) the effectiveness of our cost reduction efforts; (iv) fluctuations in demand for our products and services; (v) a highly competitive business environment for network switching equipment; (vi) the possibility that we might experience delays in the development of new technology and products, and (vii) a dependency on third parties for certain components and for the manufacturing of our 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, 2002, 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 (http://www.sec.gov).

 
EXTREME NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per-share amounts)
(Unaudited)
 
    
Three Months Ended
     
Six Months Ended
  
    
Dec. 31,
2002
     
Dec. 31,
2001
     
Dec. 31,
2002
     
Dec. 31,
2001
  
Net revenue
   
$
90,216
 
   
$
109,066
 
   
$
190,785
 
   
$
217,355
 
Costs and expenses:
                                    
Cost of revenue
   
 
44,926
 
   
 
51,450
 
   
 
96,425
 
   
 
134,762
 
Sales, marketing and service
   
 
30,397
 
   
 
35,703
 
   
 
63,650
 
   
 
72,688
 
Research and development
   
 
13,418
 
   
 
14,604
 
   
 
27,927
 
   
 
31,015
 
General and administrative
   
 
6,729
 
   
 
5,974
 
   
 
13,664
 
   
 
14,087
 
Amortization of deferred stock compensation
   
 
1,783
 
   
 
2,655
 
   
 
3,784
 
   
 
5,528
 
Amortization of goodwill and purchased intangible assets
   
 
—  
 
   
 
12,580
 
   
 
—  
 
   
 
24,433
 
Restructuring charge
   
 
14,187
 
   
 
—  
 
   
 
14,187
 
   
 
—  
 
Property and equipment write-off
   
 
12,678
 
   
 
—  
 
   
 
12,678
 
   
 
—  
 
    
  
  
  
Total costs and expenses
   
 
124,118
 
   
 
122,966
 
   
 
232,315
 
   
 
282,513
 
    
  
  
  
Operating loss
   
 
(33,902
)
   
 
(13,900
)
   
 
(41,530
)
   
 
(65,158
)
Other income (expense), net
   
 
990
 
   
 
1,701
 
   
 
1,870
 
   
 
(1,877
)
    
  
  
  
Loss before income taxes
   
 
(32,912
)
   
 
(12,199
)
   
 
(39,660
)
   
 
(67,035
)
Benefit for income taxes
   
 
(13,173
)
   
 
(1,547
)
   
 
(15,190
)
   
 
(20,375
)
    
  
  
  
Net loss
   
$
(19,739
)
   
$
(10,652
)
   
$
(24,470
)
   
$
(46,660
)
    
  
  
  
Net loss per share—basic and diluted
   
$
(0.17
)
   
$
(0.09
)
   
$
(0.22
)
   
$
(0.42
)
    
  
  
  
Shares used in per share calculation—basic and diluted
   
 
114,819
 
   
 
112,680
 
   
 
113,409
 
   
 
112,317
 
    
  
  
  

 
EXTREME NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
    
Dec. 31,
2002
   
June 30,
2002
Assets
              
Current assets:
              
Cash, cash equivalents and investments
   
$
194,920
   
$
236,497
Accounts receivable, net
   
 
21,729
   
 
51,344
Inventories, net
   
 
28,039
   
 
24,627
Deferred income taxes
   
 
42,891
   
 
42,882
Other current assets
   
 
12,437
   
 
13,126
    
  
Total current assets
   
 
300,016
   
 
368,476
Property and equipment, net
   
 
82,282
   
 
99,551
Marketable securities
   
 
210,990
   
 
163,560
Deferred income taxes
   
 
105,817
   
 
90,617
Other assets
   
 
16,042
   
 
13,547
    
  
Total assets
   
$
715,147
   
$
735,751
    
  
Liabilities and stockholders’ equity
              
Current liabilities:
              
Accounts payable
   
$
22,331
   
$
29,215
Deferred revenue
   
 
43,493
   
 
40,772
Accrued warranty
   
 
10,211
   
 
9,055
Other accrued liabilities
   
 
67,303
   
 
67,479
    
  
Total current liabilities
   
 
143,338
   
 
146,521
Convertible subordinated notes and other long-term deposit
   
 
200,272
   
 
200,272
Total stockholders’ equity
   
 
371,537
   
 
388,958
    
  
Total liabilities and stockholders’ equity
   
$
715,147
   
$
735,751
    
  

 
EXTREME NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
    
Six Months Ended
  
    
Dec. 31,
2002
     
Dec. 31,
2001
  
Cash flows from operating activities:
                  
Net loss
   
$
(24,470
)
   
$
(46,660
)
Adjustments to reconcile net loss to net cash provided by operating activities:
                  
Depreciation
   
 
14,282
 
   
 
15,543
 
Amortization of goodwill and purchased intangible assets
   
 
—  
 
   
 
24,432
 
Provision for doubtful accounts
   
 
—  
 
   
 
2,700
 
Deferred income taxes
   
 
(15,209
)
   
 
(22,144
)
Restructuring charge and property and equipment write-off
   
 
26,865
 
   
 
—  
 
Amortization of deferred stock compensation
   
 
3,784
 
   
 
5,528
 
Write-down of investments
   
 
—  
 
   
 
6,000
 
Compensation expense for options granted to consultants
   
 
—  
 
   
 
420
 
Changes in operating assets and liabilities:
                  
Accounts receivable
   
 
29,615
 
   
 
6,501
 
Inventories
   
 
(3,412
)
   
 
12,499
 
Other current and noncurrent assets
   
 
(1,806
)
   
 
1,015
 
Accounts payable
   
 
(6,884
)
   
 
1,249
 
Deferred revenue
   
 
2,721
 
   
 
9,506
 
Accrued warranty
   
 
1,156
 
   
 
3,290
 
Other accrued liabilities
   
 
(12,470
)
   
 
8,375
 
    
  
Net cash provided by operating activities
   
 
14,172
 
   
 
28,254
 
Cash flows from investing activities:
                  
Capital expenditures
   
 
(11,584
)
   
 
(20,634
)
Purchases and maturities of investments, net
   
 
(40,966
)
   
 
(7,378
)
Acquisition of business
   
 
—  
 
   
 
(14,910
)
    
  
Net cash used in investing activities
   
 
(52,550
)
   
 
(42,922
)
Cash flows from financing activities:
                  
Proceeds from issuance of common stock
   
 
2,025
 
   
 
6,578
 
Proceeds from issuance of convertible subordinated notes, net
   
 
—  
 
   
 
193,899
 
Net cash provided by financing activities
   
 
2,025
 
   
 
200,477
 
Net increase (decrease) in cash and cash equivalents
   
 
(36,353
)
   
 
185,809
 
Cash and cash equivalents at beginning of period
   
 
71,830
 
   
 
87,722
 
    
  
Cash and cash equivalents at end of period
   
$
35,477
 
   
$
273,531