Extreme Networks Announces Fourth Quarter 1999

Financial Results Record / Revenues Increase 31% Over Q3 1999 / Up 276% Over Q4 1998 Santa Clara, Calif. (PROTEXT) - Extreme Networks, Inc., (Nasdaq: EXTR) a leader in providing networking solutions for the new enterprise and service providers, today announced financial results for its fourth fiscal quarter and year ended June 30, 1999. In a separate release today, Extreme Networks has announced an agreement with PSINet Inc. (Nasdaq: PSIX) to supply the switching systems to PSINet's Global Hosting Center. Net revenue for the fourth quarter of fiscal 1999 increased to $38.1 million, which compares to $29.1 million in the third quarter of fiscal 1999, and to $10.1 million in the fourth quarter of fiscal 1998, an increase of 31% and 276%, respectively. For the 12 months ended June 30, 1999, net revenue increased 316% to $98.0 million, from $23.6 million during the 12 months ended June 30, 1998. Extreme Networks revenue growth was strong across all product categories, including sales of the company's Summit(TM) stackables and BlackDiamond(TM) modular switching products. Net income for the fourth quarter of fiscal 1999 was $2.9 million, or $0.05 per share, compared with third quarter net income of $0.4 million, or $0.01 per share, and a net loss of $3.5 million or $0.10 per share in the fourth quarter of fiscal 1998. The net loss for the 12 months ended June 30, 1999 was $1.6 million, or $0.04 per share, as compared to a net loss of $13.9 million, or $0.44 per share, for the comparable year-ago period. All per share amounts are computed on a pro forma diluted basis, which assumes conversion of the convertible preferred stock (using the if-converted method) from the original date of issuance. Commenting on the results, Gordon Stitt, president and CEO of Extreme Networks said, "We are pleased with the results of this past quarter and the fiscal year just ended. Revenues for fiscal 1999 were more than four times that from the previous year resulting from our new product introductions and increased investments across North America, Europe and Asia. During our fourth quarter, we reached a major milestone by shipping more than 500,000 Layer 3 switch ports since the launch of our Summit product family in 1997. We continued to achieve broad market acceptance of our products within enterprise accounts as well as penetrating the service provider segment with major wins." Fourth Quarter Highlights * On June 28, Network Computing awarded Extreme Networks' BlackDiamond its "Editor's Choice" award for top backbone Layer 3 switches. * On May 24, Data Communications magazine awarded Extreme Networks its "Tester's Choice" top honor as part of its May 1999 Layer 4 Switch Lab Test. * On May 11, Network Computing magazine named Extreme Networks' Summit48(TM) Enterprise Desktop Switch "Hardware Product of the Year" for 1998. The switch was selected from more than 150 products. Network Computing also named the Summit48 the "Best Layer 3 Switch" for 1998. * On April 27, Extreme Networks announced the formation of its Tokyo-based Japanese subsidiary, Extreme Networks K.K. * On April 26, Extreme Networks unveiled its ExtremeWare(TM) policy networking system, a layer-independent, multivendor solution that enhances the company's existing Policy-Based Quality of Service for classifying traffic and allocating bandwidth at Layers 1 through 4, better enabling service providers to protect mission-critical applications. * On April 13, 1999, Extreme Networks completed its initial public offering. Company Background Extreme Networks designs, develops manufactures and sells high-performance LAN solutions that adapt swiftly to change and enable future applications for the new enterprise and service providers. The company's family of Summit stackables and BlackDiamond modular switching systems combine Ethernet and IP with wire speed Layer 3 switching to increase the flow of information and allow for future network growth. Extreme Networks' corporate headquarters are at 3585 Monroe Street, Santa Clara, Calif., 95051, 408-579-2800 or 888-257-3000; www.extremenetworks.com. This press release may contain forward-looking statements relating to future events or future financial performance that involve risks and uncertainties. Such statements can be identified by terminology such as "may," "will," "should, " "expects," "plans," "anticipates," "believes," 'estimates," "predicts," "potential" or "continue" or the negative of such terms or comparable terms. These statement are only predictions and actual results could differ materially from those anticipated in these statements based upon a number of factors including those identified in the Company's filings with the SEC. NOTE: Summit, Summit48, BlackDiamond and ExtremeWare are trademarks of Extreme Networks, Inc. which may be registered or pending registration in certain jurisdictions. EXTREME NETWORKS, INC. CONDENSED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) Three Months Ended Year Ended June 30, June 30, June 30, June 30, 1999 1998 1999 1998 (Unaudited) (Unaudited) Net revenue $38,124 $10,140 $98,026 $23,579 Cost of revenue 18,680 5,850 48,520 14,897 Gross profit 19,444 4,290 49,506 8,682 Operating expenses: Research and development 5,695 3,368 17,036 10,668 Selling and marketing 9,371 3,694 27,056 9,601 General and administrative 2,257 728 6,859 2,440 Total operating expenses 17,323 7,790 50,951 22,709 Income (loss) from operations 2,121 (3,500) (1,445) (14,027) Total other and interest income, net 1,415 40 1,478 91 Income (loss) before income taxes 3,536 (3,460) 33 (13,936) Provision for income taxes 650 - 1,650 - Net income (loss) $2,886 $(3,460) $(1,617) $(13,936) Net income (loss) per share: Pro forma basic $0.06 $(0.10) $(0.04) $(0.44) Pro forma diluted $0.05 $(0.10) $(0.04) $(0.44) Shares used in computing per share calculation: Pro forma basic 45,356 34,727 38,523 31,701 Pro forma diluted 52,661 34,727 38,523 31,701 EXTREME NETWORKS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) June 30, June 30, 1999 1998 Assets Current assets: Cash and investments $123,566 $20,505 Accounts receivable, net 20,797 7,808 Inventories, net 2,626 123 Other current assets 1,977 588 Total current assets 148,966 29,024 Property and equipment, net 6,506 4,469 Investments 16,097 - Other assets 234 238 Total assets $171,803 $33,731 Liabilities and stockholders' equity Current liabilities: Accounts payable $13,418 $9,993 Accrued liabilities 13,211 3,885 Income tax liability 1,650 -- Capital lease obligations and notes payable 1,648 1,350 Total current liabilities 29,927 15,228 Capital lease obligations and notes payable -- 2,634 Total stockholders' equity 141,876 15,869 Total liabilities and stockholders' equity $171,803 $33,731 ots Original Text Service: Extreme Networks, Inc. Internet: http://www.newsaktuell.de Contact: Vito Palermo, Chief Financial Officer, (in the USA) 408-579-3030, or investor_relations@extremenetworks.com, or Valerie Bellofatto, Senior Director of Public Relations, (in the USA) 408-579-2963, or vbellofatto@extremenetworks.com Web site: http://www.extremenetworks.com Subscribers please note that material bearing the slug "PROTEXT" is not part of CTK's news service and is not to be published under the "CTK" slug. Protext is a commercial service providing distribution of press releases from clients, who are identified in the text of Protext reports and who bear full responsibility for their contents.