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 thenew enterprise and service providers, today announced financialresults for its fourth fiscal quarter and year ended June 30,1999. In a separate release today, Extreme Networks has announcedan agreement with PSINet Inc. (Nasdaq: PSIX) to supply theswitching 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 thirdquarter of fiscal 1999, and to $10.1 million in the fourthquarter of fiscal 1998, an increase of 31% and 276%,respectively. For the 12 months ended June 30, 1999, net revenueincreased 316% to $98.0 million, from $23.6 million during the 12months ended June 30, 1998. Extreme Networks revenue growth wasstrong across all product categories, including sales of thecompany's Summit(TM) stackables and BlackDiamond(TM) modularswitching products. Net income for the fourth quarter of fiscal 1999 was $2.9million, or $0.05 per share, compared with third quarter netincome 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 fiscal1998. The net loss for the 12 months ended June 30, 1999 was $1.6million, or $0.04 per share, as compared to a net loss of $13.9million, 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 ofissuance. Commenting on the results, Gordon Stitt, president and CEO ofExtreme Networks said, "We are pleased with the results of thispast quarter and the fiscal year just ended. Revenues for fiscal1999 were more than four times that from the previous yearresulting from our new product introductions and increasedinvestments across North America, Europe and Asia. During ourfourth quarter, we reached a major milestone by shipping morethan 500,000 Layer 3 switch ports since the launch of our Summitproduct family in 1997. We continued to achieve broad marketacceptance of our products within enterprise accounts as well aspenetrating 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 3switches. * On May 24, Data Communications magazine awarded ExtremeNetworks its "Tester's Choice" top honor as part of its May 1999Layer 4 Switch Lab Test. * On May 11, Network Computing magazine named ExtremeNetworks' Summit48(TM) Enterprise Desktop Switch "HardwareProduct of the Year" for 1998. The switch was selected from morethan 150 products. Network Computing also named the Summit48 the"Best Layer 3 Switch" for 1998. * On April 27, Extreme Networks announced the formation of itsTokyo-based Japanese subsidiary, Extreme Networks K.K. * On April 26, Extreme Networks unveiled its ExtremeWare(TM)policy networking system, a layer-independent, multivendorsolution that enhances the company's existing Policy-BasedQuality of Service for classifying traffic and allocatingbandwidth at Layers 1 through 4, better enabling serviceproviders to protect mission-critical applications. * On April 13, 1999, Extreme Networks completed its initialpublic offering. Company Background Extreme Networks designs, develops manufactures and sellshigh-performance LAN solutions that adapt swiftly to change andenable future applications for the new enterprise and serviceproviders. The company's family of Summit stackables andBlackDiamond modular switching systems combine Ethernet and IPwith wire speed Layer 3 switching to increase the flow ofinformation and allow for future network growth. Extreme Networks' corporate headquarters are at 3585 MonroeStreet, Santa Clara, Calif., 95051, 408-579-2800 or 888-257-3000;www.extremenetworks.com. This press release may contain forward-looking statementsrelating to future events or future financial performance thatinvolve risks and uncertainties. Such statements can beidentified by terminology such as "may," "will," "should, ""expects," "plans," "anticipates," "believes," 'estimates,""predicts," "potential" or "continue" or the negative of suchterms or comparable terms. These statement are only predictionsand actual results could differ materially from those anticipatedin these statements based upon a number of factors includingthose identified in the Company's filings with the SEC. NOTE: Summit, Summit48, BlackDiamond and ExtremeWare aretrademarks of Extreme Networks, Inc. which may be registered orpending 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, June30,

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

$33,731ots Original Text Service: Extreme Networks, Inc. Internet:http://www.newsaktuell.de Contact: Vito Palermo, Chief FinancialOfficer, (in the USA) 408-579-3030, orinvestor_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

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