Extr 4 q fy pr 2011
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Extreme Networks reported its fiscal Q4 and full year 2011 financial results. For Q4, total revenue was $89.8 million, up from $85.5 million in Q4 2010. Product revenue was $73.8 million, up 4% year-over-year. For fiscal year 2011, total revenue was $334.4 million, up 8% from 2010, with product revenue of $274.4 million, up 10% from 2010. The company reported a non-GAAP net income of $2.1 million for Q4 and $7.5 million for the full year. The company expects revenue of $74-80 million for Q1 2012 and $320-340 million for fiscal
Extr 4 q fy pr 2011
- 1. Extreme Networks Reports Fiscal Q4 and Fiscal Year 2011 Results FY11 Product Revenues Up 10% From Prior Year SANTA CLARA, Calif., Aug. 1, 2011 /PRNewswire/ -- Extreme Networks, Inc. (Nasdaq: EXTR) today announced financial results for its 2011 fiscal fourth quarter and fiscal year ended July 3, 2011. For the fourth quarter of fiscal 2011, total net revenue was $89.8 million, as compared to $85.5 million in the fourth quarter of fiscal 2010. Fourth quarter net product revenue was $73.8 million, up 4% as compared to the fourth quarter of fiscal 2010, and service revenue was $16.0 million, down 8% as compared to the fourth quarter of fiscal 2010. For fiscal year 2011, total net revenue was $334.4 million, up 8% from fiscal 2010, with net product revenue of $274.4 million, up 10% from fiscal 2010, and $60.0 million of service revenue, which was flat as compared to fiscal 2010. "We are pleased with our ability to achieve 10% product revenue growth for fiscal year 2011, and the progress we have made transforming the Company in the areas of sales and marketing focus and product realignment," said Oscar Rodriguez, President & CEO of Extreme Networks. "These changes, along with the recently announced restructuring to reduce our overall cost structure, lay the foundation for continued improvements in fiscal 2012. In FY12, the Company will focus on improving its operating income, and is expecting to significantly improve EPS over FY11. I believe Extreme Networks is positioned well to compete in the marketplace with our new products, marketing campaigns, and cost structure. The Company is focused on executing the new vertical market strategy to offer differentiated solutions to our customers, and improved returns to our investors." In the fourth quarter the Company reported estimated non-GAAP net income of $2.1 million or $0.02* per diluted share. That compares to non-GAAP net income of $6.3 million or $0.07 per diluted share in the fourth quarter of last year, and to a non- GAAP net loss of $4.6 million or a loss of $0.05 per diluted share in the 2011 fiscal third quarter. Non-GAAP financial results exclude the impact of stock-based compensation, restructuring charges and litigation settlements. A reconciliation of GAAP to non-GAAP financial measures is included in the accompanying financial tables. Estimated net loss on a GAAP basis for the quarter was $2.1 million or a loss of $0.02* per diluted share, including the impact of a $2.8 million charge for a previously announced restructuring, net of reversals, and $1.5 million in stock-based compensation. That compares to year-ago GAAP net income $3.4 million or $0.04 per diluted share. The Company's fiscal year 2011 fiscal year contained 53 weeks instead of the usual 52 weeks. As a result, the Company is still reviewing certain expense accruals that could impact its earnings per share numbers for both the fourth quarter and full year by reducing them, which if such reduction were to occur the Company believes would most likely be by a penny per share for both the fourth quarter and full year. However, the Company has elected to release the earnings per share (EPS) which may be revised depending on the outcome of the review. Final EPS numbers for both the fourth quarter and full year will be made available after the financial review related to the 53 week year is complete. For the quarter, total net revenue in North America was $40.0 million, revenue in EMEA was $34.9 million, and revenue in APAC was $14.9 million. That compares to year-ago revenue in North America of $36.3 million, revenue in EMEA of $36.8 million, and revenue in APAC of $12.4 million. Fiscal Year Results Net income on a non-GAAP basis for the year was $7.5 million or $0.08* per diluted share. That compares to non-GAAP net income of $11.7 million or $0.13 per diluted share in fiscal 2010. Net income on a GAAP basis for the year was $2.7 million or $0.03* per diluted share, including the impact of a $3.8 million charge for a previously announced restructuring, net of reversals, $5.2 million in stock-based compensation and $4.2 million in litigation settlement gain. That compares to year-ago GAAP net income of $0.2 million or $0.00 per diluted share, including $4.2 million in restructuring charge, net of reversal, $6.2 million in stock-based compensation and $1.0 million in litigation settlement loss. For the year, total net revenue in North America was $123.6 million, revenue in EMEA was $144.1 million, and revenue in APAC was $66.7 million. That compares to year-ago revenue in North America of $123.2 million, revenue in EMEA of $133.7 million, and revenue in APAC of $52.4 million. Total cash and investments increased $0.2 million from the fiscal 2011 third quarter to $147.0 million, which is an increase of
- 2. $11.6 million from the fiscal 2010 fourth quarter. The Company has no long-term debt. 2012 Fiscal First Quarter and Year non-GAAP Financial Guidance For its 2012 fiscal first quarter ending September 30, 2011, the Company currently expects net revenue to be in a range of $74-$80 million and non-GAAP net income in the range of $0.02 to $0.05 per diluted share. For Fiscal 2012, the Company currently expects net revenue to be in the range of $320-$340 million and non-GAAP net income to be in the range of $0.28- $0.35 per diluted share. * Preliminary numbers pending accounting review of the timing of expense accruals related to the 53rd week. Potential estimated adjustment of $0.01 downward. 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 1-855-859-2056 (international callers dial 1-404-537-3406). The conference call passcode is 83513736. 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 in 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 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 settlements. We believe that excluding these items 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 items 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 Condensed Consolidated Statement of Operations for the periods presented in this release, which are adjusted to exclude restructuring charges, share-based compensation expense and litigation settlements 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 delivers networks for the mobile world. The company's open network solutions enable a quality user experience, providing a platform for improved business agility. From the converged mobile edge of enterprises to virtualized clouds, and from data centers to global carrier networks that backhaul mobile traffic, Extreme Networks extensible services architecture helps set a foundation for mobility, user awareness and faster performance to empower people and machines to connect and move seamlessly. Extreme Networks is headquartered in Santa Clara, California, with offices in more than 50 countries worldwide. For more information, visit: www.extremenetworks.com Extreme Networks and the Extreme Networks logo are either registered trademarks or trademarks of Extreme Networks, Inc. in the United States and/or other countries. This announcement contains forward-looking statements, including our guidance regarding future results that involve risks and uncertainties, including statements regarding the Company's expectations regarding financial performance, vertical market strategy, 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: resolution of the pending accounting review for the Company's fiscal year 2011 related to the accrual of expenses due to a 53 week year instead of a 52 week year; 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.
- 3. 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. CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) July 3, June 27, 2011 2010 (unaudited) (1) ASSETS Current assets: Cash and cash equivalents $ 49,972 $ 51,944 Short-term investments 41,357 64,854 Accounts receivable, net of allowances of $1,052 at July 3, 2011 ($1,969 at June 27, 2010) 33,689 42,057 Inventories, net 21,583 21,842 Deferred income taxes 681 392 Prepaid expenses and other current assets, net 10,489 3,932 Total current assets 157,771 185,021 Property and equipment, net 41,877 43,572 Marketable securities 55,648 18,561 Other assets, net 15,677 15,731 Total assets $ 270,973 $ 262,885 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 15,091 $ 18,543 Accrued compensation and benefits 13,723 16,305 Restructuring liabilities 3,183 3,097 Accrued warranty 2,640 3,169 Deferred revenue, net 29,613 29,552 Deferred revenue, net of cost of sales to distributors 16,552 18,345 Other accrued liabilities 19,050 13,381 Total current liabilities 99,852 102,392 Restructuring liabilities, less current portion - 273 Deferred revenue, less current portion 7,360 7,633 Deferred income taxes 93 731 Other long-term liabilities 2,382 2,661 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; 132,147,451 issued at July 3, 2011 and 129,827,715 at June 27, 2010 132 130 Treasury stock, 39,625,305 at July 3, 2011 and June 27, 2010 (149,666) (149,666) Additional paid-in-capital 963,565 956,792 Accumulated other comprehensive income 3,703 1,100 Accumulated deficit (656,448) (659,161) Total stockholders' equity 161,286 149,195
- 4. Total liabilities and stockholders' equity $ 270,973 $ 262,885 (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 27, 2010. EXTREME NETWORKS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) (unaudited) Three Months Ended Year Ended July 3, June 27, July 3, June 27, 2011 2010 2011 2010 (1) (1) Net revenues: Product $ 73,778 $ 70,610 $ 274,388 $ 249,035 Service 15,983 14,842 60,040 60,319 Total net revenues 89,761 85,452 334,428 309,354 Cost of revenues: Product 34,770 30,388 129,556 107,994 Service 6,409 6,447 24,911 24,867 Total cost of revenues 41,179 36,835 154,467 132,861 Gross profit: Product 39,008 40,222 144,832 141,041 Service 9,574 8,395 35,129 35,452 Total gross margin 48,582 48,617 179,961 176,493 Operating expenses: Sales and marketing 28,454 25,806 103,277 96,621 Research and development 13,204 12,045 49,330 49,390 General and administrative 6,068 6,946 24,683 26,840 Litigation settlement - 829 (4,249) 829 Restructuring charge, net of reversal 2,764 235 3,806 4,238 Total operating expenses 50,490 45,861 176,847 177,918 Operating (loss) / income (1,908) 2,756 3,114 (1,425) Interest income 345 363 1,304 1,481 Interest expense (37) (43) (132) (141) Other (expense)/ income, net (255) (32) (574) (98) (Loss) / income before income taxes (1,855) 3,044 3,712 (183) Provision for income taxes 232 (368) 999 (410) Net (loss) / income $ (2,087) $ 3,412 $ 2,713 $ 227 Basic and diluted net income per share: Net (loss) / income per share - basic $ (0.02) $ 0.04 $ 0.03 $ 0.00 Net (loss) / income per share - diluted $ (0.02) $ 0.04 $ 0.03 $ 0.00 Shares used in per share calculation - basic 92,382 89,772 91,423 89,281 Shares used in per share calculation - diluted 92,382 90,144 92,795 89,477 (1) The net revenues disclosed are final. The cost of revenues and operating expenses disclosed are preliminary and may increase by $1.0 million in aggregate in
- 5. the course of finalizing the financial audit. Any increase in cost of revenues and operating expenses would reduce the earnings per share for both the fourth quarter and full year of fiscal year 2011. In the event of such a reduction, the Company believes the most likely case would be a reduction to earnings per share of one penny for both the fourth quarter and full year. EXTREME NETWORKS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (unaudited) Year Ended July 3, June 27, 2011 2010 Cash flows from operating activities: Net income $ 2,713 $ 227 Adjustments to reconcile net income to net cash provided by operating activities: (Decrease) / increase in accrued investment income (2,900) (1,194) Depreciation and amortization 6,811 5,588 Amortization of intangible assets 1,795 973 Change in value / loss (gain) on value of UBS option to put securities 2,429 2,091 Auction rate securities mark to market, trading (gain) loss (2,429) (2,091) Provision for doubtful accounts 255 (26) Provision for excess and obsolete inventory 2,232 1,866 Deferred income taxes (928) 21 Loss on retirement of assets 582 178 Stock-based compensation 5,248 6,235 Restructuring charge, net of reversal - 379 Unrealized (loss) / gain on FX (714) (167) Changes in operating assets and liabilities, net Accounts receivable 8,112 (4,414) Inventories (1,977) (11,320) Prepaid expenses and other assets (8,297) (2,533) Accounts payable (3,453) 5,773 Accrued compensation and benefits (2,581) 946 Restructuring liabilities (213) (3,734) Accrued warranty (529) (0) Deferred revenue, net (212) (299) Deferred revenue, net of cost of sales to distributors (1,793) 8,524 Other accrued liabilities 8,103 (536) Other long-term liabilities (1,278) 2,069 Net cash provided by operating activities 10,976 8,556 Cash flows (used in) provided by investing activities: Capital expenditures (5,698) (5,109) Purchases of investments (111,798) (51,552) Proceeds from maturities of investments and marketable securities 33,600 34,452 Proceeds from sales of investments and marketable securities 67,617 15,822 Net cash (used in) provided by investing activities (16,279) (6,387) Cash flows provided by (used in) financing activities: Proceeds from issuance of common stock 1,531 1,085 Repurchase of common stock, including expenses - - Deposits received from sale of building 1,000 - Net cash provided by (used in) financing activities 2,531 1,085
- 6. Foreign Currency Effect on Cash 800 (543) Net (decrease) increase in cash and cash equivalents (1,972) 2,711 Cash and cash equivalents at beginning of period 51,944 49,233 Cash and cash equivalents at end of period $ 49,972 $ 51,944 Supplemental disclosure of cash flow information: Interest paid $ 132 $ 141 Cash paid for income taxes, net $ 1,759 $ 1,197 EXTREME NETWORKS, INC. GAAP TO NON-GAAP RECONCILIATION (In thousands) (unaudited) Three Months Ended Year Ended July 3, June 27, July 3, June 27, 2011 2010 2011 2010 Net (loss) income - GAAP Basis $ (2,087) $ 3,412 $ 2,713 $ 227 Non-GAAP adjustments Stock-based compensation expense $ 1,468 $ 1,664 $ 5,249 $ 6,235 Litigation settlement - 968 (4,249) 968 Restructuring Charge, net of reversal 2,764 235 3,806 4,238 Total Non-GAAP adjustments $ 4,232 $ 2,867 $ 4,806 $ 11,441 Net income - Non-GAAP Basis $ 2,145 $ 6,279 $ 7,519 $ 11,668 Non-GAAP Adjustments Cost of product revenue $ 117 $ 285 $ 436 $ 628 Cost of service revenue 8 161 232 523 Sales and marketing 541 461 1,948 1,853 Research and development 373 372 1,113 1,695 General and administrative 429 524 1,520 1,675 Litigation settlement - 829 (4,249) 829 Restructuring charge, net of reversal 2,764 235 3,806 4,238 Total Non-GAAP adjustments $ 4,232 $ 2,867 $ 4,806 $ 11,441 SOURCE Extreme Networks, Inc. News Provided by Acquire Media