EX-99.1 3 dex991.txt PRESS RELEASE DATED 10/17/2001 Exhibit 99.1 ------------ FOR IMMEDIATE RELEASE For more information, contact: Extreme Networks: John Carvell Valerie Bellofatto Director of Investor Relations Sr. Director of Public Relations 408/579-3030 408/579-2963 investor_relations@extremenetworks.com vbellofatto@extremenetworks.com -------------------------------------- ------------------------------- EXTREME NETWORKS REPORTS FIRST QUARTER RESULTS Company met analysts revenue expectations, achieved breakeven performance and positive cash flow SANTA CLARA, Calif., Oct. 17, 2001 - Extreme Networks, Inc., (Nasdaq: EXTR), a leader in Ethernet networking, today reported its first quarter results for the period ending September 30, 2001. Net revenue for the first quarter of fiscal 2002 was $108.3 million, compared to $119.3 million for the same period last year. On a pro-forma basis Extreme Networks broke even for the first quarter of fiscal 2002, compared with pro-forma net income of $9.0 million, or $0.08 per share for the first quarter of fiscal 2001. Actual net loss for the first quarter, which includes a charge of $40.1 million, amortization of goodwill and intangible assets, and deferred compensation of $14.7 million, was $36.0 million or $0.32 per share, compared with net income of $4.5 million or $0.04 per share for the same period last year. "Although we were faced with the national tragedies of Sept. 11 at the most critical time during our quarter, we effectively managed all key aspects of our business," said Gordon Stitt, CEO and president of Extreme Networks. "We continue to gain new customers and increase our presence in existing installations, demonstrating that even during these difficult economic times our Ethernet switching systems remain very attractive to companies around the world. Our customer roster shows the strong inroads we made during the quarter in the regions that are actively building communications infrastructures, such as Japan and China. "We have a strong product introduction schedule that strengthens our unique position to offer networking solutions that are simpler to manage, offer higher performance, provide a better return on investment and makes us well poised for growth when the sector returns to a more stable state. And, while our strategy makes us feel optimistic about the future, we are closely monitoring economic conditions and our operations to ensure that we continue to provide value to our shareholders." 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 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 future events or trends, 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 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, 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). EXTREME NETWORKS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per-share amounts) (Unaudited)
Three Months Ended ------------------------------ September 30, September 30, 2001 2000 ------------- ------------- Net revenue $ 108,289 $ 119,342 Cost and expenses: Cost of revenue 83,312 58,090 Research and development 16,411 11,743 Sales and marketing 36,985 35,115 General and administrative 8,113 4,279 Goodwill and deferred stock compensation 14,726 6,850 ------------- ------------- Total costs and expenses 159,547 116,077 ------------- ------------- Operating income (loss) (51,258) 3,265 Other income (expense), net (3,578) 3,709 ------------- ------------- Income (loss) before income taxes (54,836) 6,974 Provision (benefit) for income taxes (18,828) 2,441 ------------- ------------- Net income (loss) $ (36,008) $ 4,533 ============= ============= Net income (loss) per share - basic $ (0.32) $ 0.04 ============= ============= Net income (loss) per share - diluted $ (0.32) $ 0.04 ============= ============= Shares used in per share calculation - basic 111,953 105,990 ============= ============= Shares used in per share calculation - diluted 111,953 118,892 ============= =============
EXTREME NETWORKS, INC. PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (i) (In thousands, except per-share amounts) (Unaudited)
Three Months Ended ---------------------------------------- September 30, September 30, 2001 2000 ------------------ ------------------ Net revenue $ 108,289 $ 119,342 Cost and expenses: Cost of revenue 51,862 58,090 Research and development 16,411 11,743 Sales and marketing 36,985 35,115 General and administrative 5,413 4,279 ------------------ ------------------ Total costs and expenses 110,671 109,227 ------------------ ------------------ Operating income (loss) (2,382) 10,115 Other income, net 2,422 3,709 ------------------ ------------------ Income before income taxes 40 13,824 Provision for income taxes 14 4,838 ------------------ ------------------ Net income $ 26 $ 8,986 ================== ================== Net income per share - basic $ 0.00 $ 0.09 ================== ================== Net income per share - diluted $ 0.00 $ 0.08 ================== ================== Shares used in per share calculation - basic 111,953 105,990 ================== ================== Shares used in per share calculation - diluted 118,416 118,892 ================== ==================
(i) The pro forma statements exclude the impact of charges relating to contract manufacturers of $12.5 million in Q1 of 2002, other costs associated with the carrying value of inventory of $19.0 million in Q1 of 2002, the amortization of goodwill, intangibles and deferred stock compensation in all periods, a provision for bad debts of $2.7 million in Q1 of 2002 and minority investment write-downs in Q1 of 2002 of $6.0 million. EXTREME NETWORKS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited)
September 30, June 30, 2001 2001 --------------------- --------------------- Assets Current assets: Cash, cash equivalents and investments $ 160,265 $ 157,096 Accounts receivable, net 52,077 63,211 Inventories, net 51,584 60,529 Deferred tax assets 25,883 35,855 Other current assets 414 2,235 --------------------- --------------------- Total current assets 290,223 318,926 Property and equipment, net 57,966 57,251 Restricted investments 80,000 80,000 Investments 45,145 34,406 Goodwill and intangibles 102,034 113,886 Deferred tax assets 69,857 40,028 Other long-term assets 6,243 12,025 --------------------- --------------------- Total assets $ 651,468 $ 656,522 ===================== ===================== Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 50,230 $ 35,890 Deferred revenue 30,860 25,537 Accrued liabilities 49,556 46,067 --------------------- --------------------- Total current liabilities 130,646 107,494 Long term deposit 266 266 Total stockholders' equity 520,556 548,762 --------------------- --------------------- Total liabilities and stockholders' equity $ 651,468 $ 656,522 ===================== =====================