SAN JOSE, Calif., Aug. 6, 2015 /PRNewswire/ -- Extreme
Networks, Inc. (Nasdaq: EXTR) today released financial results for
the fourth quarter and fiscal year ended June 30, 2015. Fourth quarter GAAP revenue
was $149.9 million and non-GAAP
revenue was $150.6 million.
GAAP net loss for the fourth fiscal quarter was $15.7 million, or $0.16 per share, and non-GAAP net income was
$10.1 million, or $0.10 per share. For the full fiscal year 2015,
Extreme Networks reported GAAP revenue of $552.9 million, compared to $519.6 million for fiscal 2014. Fiscal year 2015
non-GAAP revenue was $556.0 million
compared to $524.8 million in fiscal
2014. GAAP net loss was $71.6
million, or $0.72 per share,
for fiscal 2015, compared to GAAP net loss of $57.3 million, or $0.60 per share, for fiscal 2014. On a non-GAAP
basis, net income for fiscal 2015 was $5.9
million, or $0.06 per diluted
share, compared to $29.5 million, or
$0.30 per diluted share for fiscal
2014.
"We had a strong finish to fiscal 2015 while reducing headcount
and realigning our functional groups to become more customer
focused," stated Ed Meyercord,
president and CEO of Extreme Networks. "We saw a nice
recovery across all geographies except Latin America where we are transitioning from
direct sales to channel distribution. Our US sales
team performed particularly well with several notable deals
with entertainment venues and K-12 education customers as the later
began to benefit from E-Rate funding. After successfully
streamlining our organization, reducing costs and sharpening our
focus on a solutions-based strategy, we enter fiscal 2016 on solid
footing," said Meyercord. "We anticipate E-Rate will have a
positive impact to our US based business in fiscal 2016, however
the pace at which the government funds the requests will dictate
the timing and impact to our business. Although EMEA and APAC
rebounded nicely this quarter, we continue to see currency, pricing
and competition as headwinds in these geographies."
Recent Key Events:
- Extreme Networks unveiled its new solutions-based go-to-market
strategy to enable businesses, manufacturing companies, health care
providers, educational institutions and government agencies to
adapt quickly to meet and exceed business objectives.
- Extreme Networks announced its advanced solutions portfolio
with new policy management capabilities. Expanding the Company's
software-driven networking solutions portfolio, secure, role-based
policy management technology is now available for the newly
launched Summit® X450-G2 family of fixed switches and several
previously released Summit families. This marks the integration of
proven policy and security management technology into the
ExtremeXOS® operating system.
- Extreme Networks announced expanded classroom solutions and
momentum in customer adoption. Customers include Hardin County
School District, Stonington Public School District and Aldine
School District.
- Extreme Networks, in partnership with US Ignite, announced the
winners of the first annual Extreme Networks SDN Innovation
Challenge. The Company awarded prizes to the top three teams for
applications that leveraged the Extreme Networks SDN platform to
best drive innovation.
- Extreme Networks continued to showcase customer momentum across
the global education, healthcare, manufacturing, sports and
entertainment, government and financial services markets. Notable
customer wins include the European Investment Bank, State of
Connecticut General Assembly, Manipal Hospitals, Gyeonggi-do Fire
Service, Aldine Independent School District, Baylor University, Viadrina and the NFL's Buffalo
Bills.
- Extreme Networks' Sandra Cheek
was honored as one of CRN's 2015 Women of the Channel. The honor
recognizes top female executives whose expertise and vision in the
channel have made them leaders in the channel market.
Fiscal Q4 2015 Financial Metrics:
|
Fourth
Quarter
|
|
|
|
|
|
(in millions, except
per share amounts and percentages)
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
2015
|
|
2014
|
|
Change
|
GAAP Net
Revenue
|
|
|
|
|
|
|
|
Product
|
$
|
116.3
|
|
|
$
|
121.8
|
|
|
$
|
(5.5)
|
|
|
(5)%
|
Service
|
$
|
33.6
|
|
|
$
|
33.5
|
|
|
$
|
0.1
|
|
|
—%
|
Total Net
Revenue
|
$
|
149.9
|
|
|
$
|
155.3
|
|
|
$
|
(5.4)
|
|
|
(3)%
|
Gross
Margin
|
50.9%
|
|
|
53.4%
|
|
|
(2.5)%
|
|
|
(5)%
|
Operating (Loss)
Margin
|
(9.0)%
|
|
|
(8.7)%
|
|
|
(0.3)%
|
|
|
3%
|
Net Loss
|
$
|
(15.7)
|
|
|
$
|
(16.2)
|
|
|
$
|
0.5
|
|
|
(3)%
|
Loss per diluted
share
|
$
|
(0.16)
|
|
|
$
|
(0.17)
|
|
|
$
|
0.01
|
|
|
(6)%
|
|
|
|
|
|
|
|
|
Non-GAAP Net
Revenue
|
|
|
|
|
|
|
|
Product
|
$
|
116.3
|
|
|
$
|
121.8
|
|
|
$
|
(5.5)
|
|
|
(5)%
|
Service
|
$
|
34.3
|
|
|
$
|
35.1
|
|
|
$
|
(0.8)
|
|
|
(2)%
|
Total Net
Revenue
|
$
|
150.6
|
|
|
$
|
156.9
|
|
|
$
|
(6.3)
|
|
|
(4)%
|
Gross
Margin
|
54.4%
|
|
|
56.9%
|
|
|
(2.5)%
|
|
|
(4)%
|
Operating
Margin
|
8.2%
|
|
|
7.2%
|
|
|
1.0%
|
|
|
14%
|
Net Income
|
$
|
10.1
|
|
|
$
|
8.5
|
|
|
$
|
1.6
|
|
|
19%
|
Earnings per diluted
share
|
$
|
0.10
|
|
|
$
|
0.09
|
|
|
$
|
0.01
|
|
|
11%
|
- Cash and investments ended the quarter at $76.2 million, as compared to $75.6 million from the prior quarter.
- Accounts receivable balance ending Q4 was $92.7 million, with days sales outstanding (DSO)
of 56.
- Inventory ending Q4 was $58.0
million, a decrease of $8.8
million from the prior quarter.
Business Outlook:
For its first quarter of fiscal 2016 ending September 30, 2015, the Company is targeting GAAP
revenue in a range of $119.6 million to
$129.6 million with non-GAAP revenue in a range of
$120 million to $130 million. GAAP
gross margin is targeted between 49.5% and 51.0% and non-GAAP gross
margin targeted between 54.0% and 55.0%. Operating expenses are
targeted to be between $73.0 million and
$75.5 million on a GAAP basis and $62.5 million to $65.0 million on a non-GAAP
basis. GAAP net loss is targeted to be between $10.5 million to $15.0 million, or $0.11 to $0.15 per share. Non-GAAP earnings
are targeted in a range of a net income of $0.75 million to $5.0 million, or $0.01 to $0.05 per share. The GAAP and non-GAAP
net income (loss) targets are based on an estimated 102 million and
104 million average outstanding shares, respectively. Targeted
non-GAAP earnings exclude expenses related to stock-based
compensation expense, the amortization of acquired intangibles,
acquisition and integration related expenses, restructuring
expenses and the purchase accounting adjustment related to deferred
service revenue.
Conference Call:
Extreme Networks will host a
conference call at 8:00 a.m. Eastern
(5:00 a.m. Pacific) today to review
the fourth fiscal quarter and fiscal year end results and first
fiscal quarter 2016 business outlook, including significant factors
and assumptions underlying the targets noted above. The conference
call will be available to the public through a live audio web
broadcast via the Internet at http://investor.extremenetworks.com
and a replay of the call will be available on the website through
August 5, 2016.
The conference call may also be heard by
dialing 1-877-303-9826 (international callers dial
1-224-357-2194). Supplemental 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 including
the non-GAAP reconciliation attached to this press release. The
encore recording can be accessed by dialing (855) 859-2056 /or
international 1 (404) 537-3406; Conference ID #:74553850.
About Extreme Networks:
Extreme Networks,
Inc. (EXTR) is a software and services-led networking
solutions company committed to solving IT's toughest networking
challenges. Extreme Networks is headquartered in San
Jose, CA with more than 14,000 customers in over 80 countries. For
more information, visit Extreme's website.
Extreme Networks and the Extreme Networks logo,
ExtremeXOS, and Summit are either trademarks or registered
trademarks of Extreme Networks, Inc. in the United
States and/or other countries. All other names are the
property of their respective owners.
Non-GAAP Financial Measures:
Extreme Networks provides
all financial information required in accordance with generally
accepted accounting principles (GAAP). The Company is providing
with this press release non-GAAP revenue, non-GAAP gross margins,
non-GAAP operating expenses, and non-GAAP income/(loss) per share.
In preparing non-GAAP information, the Company has excluded, where
applicable, the impact of acquisition and integration costs,
purchase accounting adjustments, amortization of acquired
intangibles, restructuring charges, executive transition
expenses, share-based compensation and litigation
settlements. The Company believes that excluding these items
provides both management and investors with additional insight into
its current operations, the trends affecting the Company, the
Company's marketplace performance, and the Company's ability to
generate cash from operations. Please note that the Company's
non-GAAP measures may be different than those used by other
companies. The additional non-GAAP financial information the
Company presents should be considered in conjunction with, and not
as a substitute for, the Company's GAAP financial
information. The Company has provided a non-GAAP
reconciliation of the results for the periods presented in this
release, which are adjusted to exclude certain items as
indicated. 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.
Forward Looking Statements:
Statements in this
release, including those concerning the Company's business
prospects, future financial and operating results, and overall
future prospects are forward-looking statements within the meaning
of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements
speak only as of the date of this release. Actual results or events
could differ materially from those anticipated in those
forward-looking statements as a result of certain factors,
including: failure to achieve targeted revenues, increased price
competition, product technology developments, ongoing uncertainty
in global economic conditions, infrastructure development or
customer demand, collectability of receivables, the ability to
integrate the business of Extreme and Enterasys effectively,
the ability to meet current financial covenants, inability to
anticipate demand from end customers, dependencies on third parties
to manufacture our products, delays in development and
commercialization of products under development, and ongoing
litigation.
More information about potential factors that could affect the
Company's business and financial results is included in the
Company's 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". Except as required under the
U.S. federal securities laws and the rules and regulations of
the SEC, Extreme Networks disclaims any obligation
to update any forward-looking statements after the date of this
release, whether as a result of new information, future events,
developments, changes in assumptions or otherwise.
EXTREME NETWORKS,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In thousands,
except share and per share amounts)
|
(Unaudited)
|
|
|
June 30,
2015
|
|
June 30,
2014
|
|
|
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
76,225
|
|
|
$
|
73,190
|
|
Short-term
investments
|
—
|
|
|
32,692
|
|
Accounts receivable,
net of allowances of $2,396 at June 30, 2015 and $3,618 at June 30,
2014
|
92,737
|
|
|
124,664
|
|
Inventories
|
58,014
|
|
|
57,109
|
|
Deferred income
taxes
|
760
|
|
|
1,058
|
|
Prepaid expenses and
other current assets
|
10,258
|
|
|
14,143
|
|
Total current
assets
|
237,994
|
|
|
302,856
|
|
Property and
equipment, net
|
39,862
|
|
|
46,554
|
|
Intangible assets,
net
|
52,132
|
|
|
87,459
|
|
Goodwill
|
70,877
|
|
|
70,877
|
|
Other
assets
|
27,795
|
|
|
18,686
|
|
Total
assets
|
$
|
428,660
|
|
|
$
|
526,432
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Current portion of
long-term debt
|
$
|
11,375
|
|
|
$
|
29,688
|
|
Accounts
payable
|
40,135
|
|
|
37,308
|
|
Accrued compensation
and benefits
|
25,195
|
|
|
26,677
|
|
Accrued
warranty
|
8,676
|
|
|
7,551
|
|
Deferred revenue,
net
|
76,551
|
|
|
74,735
|
|
Deferred distributors
revenue, net of cost of sales to distributors
|
40,875
|
|
|
31,992
|
|
Other accrued
liabilities
|
32,623
|
|
|
38,357
|
|
Total current
liabilities
|
235,430
|
|
|
246,308
|
|
Deferred revenue,
less current portion
|
23,231
|
|
|
22,942
|
|
Long-term debt, less
current portion
|
55,500
|
|
|
91,875
|
|
Deferred income
taxes
|
2,979
|
|
|
—
|
|
Other long-term
liabilities
|
7,285
|
|
|
8,595
|
|
Commitments and
contingencies
|
|
|
|
Stockholders'
equity
|
104,235
|
|
|
156,712
|
|
Total liabilities and
stockholders' equity
|
$
|
428,660
|
|
|
$
|
526,432
|
|
EXTREME NETWORKS,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(In thousands,
except per share amounts)
|
(Unaudited)
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
June 30,
2015
|
|
June 30,
2014
|
|
June 30,
2015
|
|
June 30,
2014
|
Net
revenues:
|
|
|
|
|
|
|
|
Product
|
$
|
116,347
|
|
|
$
|
121,761
|
|
|
$
|
418,046
|
|
|
$
|
411,761
|
|
Service
|
33,523
|
|
|
33,532
|
|
|
134,894
|
|
|
107,793
|
|
Total net
revenues
|
149,870
|
|
|
155,293
|
|
|
552,940
|
|
|
519,554
|
|
Cost of
revenues:
|
|
|
|
|
|
|
|
Product
|
60,736
|
|
|
60,561
|
|
|
225,018
|
|
|
213,673
|
|
Service
|
12,807
|
|
|
11,810
|
|
|
48,185
|
|
|
38,552
|
|
Total cost of
revenues
|
73,543
|
|
|
72,371
|
|
|
273,203
|
|
|
252,225
|
|
Gross
profit:
|
|
|
|
|
|
|
|
Product
|
55,611
|
|
|
61,200
|
|
|
193,028
|
|
|
198,088
|
|
Service
|
20,716
|
|
|
21,722
|
|
|
86,709
|
|
|
69,241
|
|
Total gross
profit
|
76,327
|
|
|
82,922
|
|
|
279,737
|
|
|
267,329
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Research and
development
|
22,242
|
|
|
24,048
|
|
|
93,447
|
|
|
77,146
|
|
Sales and
marketing
|
41,322
|
|
|
48,634
|
|
|
169,299
|
|
|
156,666
|
|
General and
administrative
|
11,001
|
|
|
11,511
|
|
|
42,092
|
|
|
40,912
|
|
Acquisition and
integration costs
|
923
|
|
|
6,890
|
|
|
10,205
|
|
|
25,716
|
|
Restructuring charge,
net of reversals
|
9,819
|
|
|
11
|
|
|
9,819
|
|
|
510
|
|
Amortization of
intangibles
|
4,467
|
|
|
5,267
|
|
|
17,869
|
|
|
16,711
|
|
Litigation
settlement
|
—
|
|
|
—
|
|
|
—
|
|
|
(100)
|
|
Total operating
expenses
|
89,774
|
|
|
96,361
|
|
|
342,731
|
|
|
317,561
|
|
Operating
loss
|
(13,447)
|
|
|
(13,439)
|
|
|
(62,994)
|
|
|
(50,232)
|
|
Interest
income
|
70
|
|
|
148
|
|
|
541
|
|
|
751
|
|
Interest
expense
|
(757)
|
|
|
(796)
|
|
|
(3,177)
|
|
|
(2,085)
|
|
Other expense,
net
|
(174)
|
|
|
(217)
|
|
|
(1,206)
|
|
|
(1,555)
|
|
Loss before income
taxes
|
(14,308)
|
|
|
(14,304)
|
|
|
(66,836)
|
|
|
(53,121)
|
|
Provision for income
taxes
|
1,349
|
|
|
1,927
|
|
|
4,807
|
|
|
4,189
|
|
Net loss
|
$
|
(15,657)
|
|
|
$
|
(16,231)
|
|
|
$
|
(71,643)
|
|
|
$
|
(57,310)
|
|
Basic and diluted net
loss per share:
|
|
|
|
|
|
|
|
Net loss per share -
basic
|
$
|
(0.16)
|
|
|
$
|
(0.17)
|
|
|
$
|
(0.72)
|
|
|
$
|
(0.60)
|
|
Net loss per share -
diluted
|
$
|
(0.16)
|
|
|
$
|
(0.17)
|
|
|
$
|
(0.72)
|
|
|
$
|
(0.60)
|
|
Shares used in per
share calculation - basic
|
100,226
|
|
|
96,713
|
|
|
99,000
|
|
|
95,515
|
|
Shares used in per
share calculation - diluted
|
100,226
|
|
|
96,713
|
|
|
99,000
|
|
|
95,515
|
|
EXTREME NETWORKS,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In
thousands)
|
(Unaudited)
|
|
|
Year
Ended
|
|
June 30,
2015
|
|
June 30,
2014
|
|
|
|
|
Net cash provided
by (used in) operating activities
|
$
|
37,423
|
|
|
$
|
(26,843)
|
|
Cash flows from
investing activities:
|
|
|
|
Capital
expenditures
|
(7,205)
|
|
|
(22,373)
|
|
Acquisition, net of
cash acquired
|
—
|
|
|
(180,000)
|
|
Purchases of
investments
|
—
|
|
|
(9,045)
|
|
Purchases of
non-marketable equity investments
|
(3,000)
|
|
|
—
|
|
Proceeds from
maturities of investments and marketable securities
|
23,321
|
|
|
28,722
|
|
Proceeds from sales
of investments and marketable securities
|
9,051
|
|
|
56,594
|
|
Purchases of
intangible assets
|
(569)
|
|
|
(87)
|
|
Net cash provided by
(used in) investing activities
|
21,598
|
|
|
(126,189)
|
|
Cash flows from
financing activities:
|
|
|
|
Borrowings under
Revolving Facility
|
24,000
|
|
|
83,000
|
|
Issuance of Term
Loan
|
—
|
|
|
65,000
|
|
Repayment of
debt
|
(78,688)
|
|
|
(26,437)
|
|
Proceeds from
issuance of common stock
|
2,218
|
|
|
8,017
|
|
Net cash (used in)
provided by financing activities
|
(52,470)
|
|
|
129,580
|
|
|
|
|
|
Foreign currency
effect on cash
|
(3,516)
|
|
|
839
|
|
Net increase
(decrease) in cash and cash equivalents
|
3,035
|
|
|
(22,613)
|
|
Cash and cash
equivalents at beginning of period
|
73,190
|
|
|
95,803
|
|
Cash and cash
equivalents at end of period
|
$
|
76,225
|
|
|
$
|
73,190
|
|
Extreme Networks, Inc.
Non-GAAP
Measures of Financial Performance
To supplement the Company's consolidated financial statements
presented in accordance with generally accepted accounting
principles, ("GAAP"), Extreme Networks uses non-GAAP measures of
certain components of financial performance. These non-GAAP
measures include non-GAAP net income, non-GAAP earnings per diluted
share, non-GAAP gross margin, non-GAAP operating expenses and free
cash flow.
Reconciliation to the nearest GAAP measure of all historical
non-GAAP measures included in this press release can be found in
the tables included with this press release. In this press
release, Extreme Networks also presents its target for non-GAAP
expenses, which is expenses less stock based compensation expense,
acquisition and integration costs, purchase accounting adjustments,
amortization of intangibles, restructuring expenses, litigation
settlement and executive transition expenses.
Non-GAAP measures presented in this press release are not in
accordance with or alternative measures prepared in accordance with
GAAP and may be different from non-GAAP measures used by other
companies. In addition, these non-GAAP measures are not based
on any comprehensive set of accounting rules or principles.
Non-GAAP measures have limitations in that they do not reflect all
of the amounts associated with Extreme Networks' results of
operations as determined in accordance with GAAP. These
non-GAAP measures should only be used to evaluate Extreme Networks'
results of operations in conjunction with the corresponding GAAP
measures.
Extreme Networks believes that these non-GAAP measures when
shown in conjunction with the corresponding GAAP measures enhance
investors' and management's overall understanding of the Company's
current financial performance and the Company's prospects for the
future, including cash flows available to pursue opportunities to
enhance shareholder value. In addition, because Extreme
Networks has historically reported certain non-GAAP results to
investors, the Company believes that the inclusion of non-GAAP
measures provides consistency in the Company's financial
reporting.
For its internal planning process, and as discussed further
below, Extreme Networks' management uses financial statements that
do not include stock-based compensation expense, acquisition and
integration costs, purchase accounting adjustments, amortization
of intangibles, restructuring expenses, litigation settlement
and executive transition expenses. Extreme Networks'
management also uses non-GAAP measures, in addition to the
corresponding GAAP measures, in reviewing the Company's financial
results.
As described above, Extreme Networks excludes the following
items from one or more of its non-GAAP measures when
applicable.
Stock based compensation expense. This expense consists
of expenses for stock options, restricted stock and employee stock
purchases through its ESPP. Extreme Networks excludes stock
based compensation expenses from its non-GAAP measures primarily
because they are non-cash expenses that the Company does not
believe are reflective of ongoing cash requirement related to
operating results. Extreme Networks expects to incur stock-based
compensation expenses in future periods.
Acquisition and integration costs. Acquisition and
integration costs primarily consist of legal and professional fees,
severance costs, and other expenses related to the acquisition and
integration of Enterasys Inc. Extreme Networks excludes these
expenses since they result from an event that is outside the
ordinary course of continuing operations.
Amortization of intangibles. Amortization of
intangibles includes the monthly amortization expense of acquired
intangible assets such as developed technology, customer
relationships, trademarks and order backlog. The amortization
of the developed technology intangible is recorded in product cost
of goods sold, while the amortization for the other intangibles are
recorded in operating expenses. Extreme Networks excludes
these non-cash expenses since they result from an intangible asset
and for which the period expense does not impact the operations of
the business.
Purchase accounting adjustments relating to deferred
revenue. Purchase accounting adjustments relating to
deferred revenue consists of adjustments to the carrying value of
deferred revenue. We have recorded adjustments to the assumed
deferred revenue to reflect only a fulfillment margin and thereby
excluding the profit margin and revenue which would have been
incurred had Extreme Networks entered into the service contract
post-acquisition.
Purchase accounting adjustments relating to
inventory. Purchase accounting adjustments relating to
inventory consists of the amortization of the step up value from
the valuation of the inventory at fair value in cost of revenues as
part of business combination accounting. Extreme Networks
excludes these expenses since they result from an event that is out
the ordinary course of continuing operations.
Restructuring expenses. Restructuring expenses primarily
consists of cash severance and termination benefits. Extreme
Networks excludes restructuring expenses since they result from
events that often occur outside of the ordinary course of
continuing operations. Extreme Networks expects to incur
restructuring expenses in future periods.
Executive transition expenses. Executive transition
expenses consists of severance and termination benefits and
acceleration of share-based compensation expense. The
expenses are incurred through execution of pre-established
employment contracts with senior executives. The severance
and termination benefits are cash transactions, while the
share-based compensation are non-cash expenses the Company does not
believe these expenses are reflective of ongoing cash requirements
related to its operating results.
Litigation settlement expense. Litigation
settlement income is related to settled legal issues for which the
Company received adjustments. The Company does not believe
these are reflective of ongoing cash benefits related to its
operating results.
In addition to the non-GAAP measures discussed above, Extreme
Networks uses free cash flow as a measure of operating
performance. Free cash flow represents operating cash flows
less net purchase of property and equipment on a GAAP basis.
Extreme Networks considers free cash flows to be a liquidity
measure that provides useful information to management and
investors about the amount of cash generated by the business after
the purchases of property and equipment, which can then be used to,
among other things, invest in Extreme Networks business, make
strategic acquisitions, and strengthen the balance sheet. A
limitation of the utility of free cash flows as a measure of
financial performance is that it does not represent the total
increase or decrease in the Company's cash balance for the
period.
EXTREME NETWORKS,
INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
GAAP TO NON-GAAP
RECONCILIATION
|
(In thousands,
except per share amounts and percentages)
|
(Unaudited)
|
|
Non-GAAP
Revenue
|
Three Months
Ended
|
|
Year
Ended
|
|
June 30,
2015
|
|
June 30,
2014
|
|
June 30,
2015
|
|
June 30,
2014
|
|
|
|
|
|
|
|
|
Revenue - GAAP
Basis
|
$
|
149,870
|
|
|
$
|
155,293
|
|
|
$
|
552,940
|
|
|
$
|
519,554
|
|
Adjustments:
|
|
|
|
|
|
|
|
Purchase accounting
adjustments
|
$
|
766
|
|
|
$
|
1,579
|
|
|
$
|
3,065
|
|
|
$
|
5,256
|
|
Revenue - Non-GAAP
Basis
|
$
|
150,636
|
|
|
$
|
156,872
|
|
|
$
|
556,005
|
|
|
$
|
524,810
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Gross
Margin
|
Three Months
Ended
|
|
Year
Ended
|
|
June 30,
2015
|
|
June 30,
2014
|
|
June 30,
2015
|
|
June 30,
2014
|
|
|
|
|
|
|
|
|
Gross profit - GAAP
Basis
|
$
|
76,327
|
|
|
$
|
82,922
|
|
|
$
|
279,737
|
|
|
$
|
267,329
|
|
Gross margin - GAAP
Basis percentage
|
50.9
|
%
|
|
53.4
|
%
|
|
50.6
|
%
|
|
51.5
|
%
|
Adjustments:
|
|
|
|
|
|
|
|
Stock based
compensation expense
|
496
|
|
|
540
|
|
|
2,135
|
|
|
1,730
|
|
Purchase accounting
adjustments
|
766
|
|
|
1,579
|
|
|
3,065
|
|
|
16,383
|
|
Amortization of
intangibles
|
4,291
|
|
|
4,292
|
|
|
17,166
|
|
|
11,028
|
|
Gross profit -
Non-GAAP Basis
|
$
|
81,880
|
|
|
$
|
89,333
|
|
|
$
|
302,103
|
|
|
$
|
296,470
|
|
Gross margin -
Non-GAAP Basis percentage
|
54.4
|
%
|
|
56.9
|
%
|
|
54.3
|
%
|
|
56.5
|
%
|
|
|
|
|
|
|
|
|
Non-GAAP Operating
Income
|
Three Months
Ended
|
|
Year
Ended
|
|
June 30,
2015
|
|
June 30,
2014
|
|
June 30,
2015
|
|
June 30,
2014
|
|
|
|
|
|
|
|
|
Operating loss - GAAP
Basis
|
$
|
(13,447)
|
|
|
$
|
(13,439)
|
|
|
$
|
(62,994)
|
|
|
$
|
(50,232)
|
|
Operating loss - GAAP
Basis percentage
|
(9.0)
|
%
|
|
(8.7)
|
%
|
|
(11.4)
|
%
|
|
(9.7)
|
%
|
Adjustments:
|
|
|
|
|
|
|
|
Stock based
compensation expense
|
3,470
|
|
|
6,047
|
|
|
17,405
|
|
|
15,922
|
|
Acquisition and
integration costs
|
923
|
|
|
6,890
|
|
|
10,205
|
|
|
25,716
|
|
Restructuring charge,
net of reversal
|
9,819
|
|
|
11
|
|
|
9,819
|
|
|
510
|
|
Amortization of
intangibles
|
8,758
|
|
|
9,559
|
|
|
35,035
|
|
|
27,739
|
|
Purchase accounting
adjustments
|
766
|
|
|
1,579
|
|
|
3,065
|
|
|
16,383
|
|
Litigation settlement
income
|
—
|
|
|
—
|
|
|
—
|
|
|
(100)
|
|
Executive transition
expenses
|
1,989
|
|
|
600
|
|
|
1,989
|
|
|
600
|
|
Total
adjustments to GAAP operating income
|
$
|
25,725
|
|
|
$
|
24,686
|
|
|
$
|
77,518
|
|
|
$
|
86,770
|
|
Operating income -
Non-GAAP Basis
|
$
|
12,278
|
|
|
$
|
11,247
|
|
|
$
|
14,524
|
|
|
$
|
36,538
|
|
Operating income -
Non-GAAP Basis percentage
|
8.2
|
%
|
|
7.2
|
%
|
|
2.6
|
%
|
|
7.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Net
Income
|
Three Months
Ended
|
|
Year
Ended
|
|
June 30,
2015
|
|
June 30,
2014
|
|
June 30,
2015
|
|
June 30,
2014
|
|
|
|
|
|
|
|
|
Net loss - GAAP
Basis
|
$
|
(15,657)
|
|
|
$
|
(16,231)
|
|
|
$
|
(71,643)
|
|
|
$
|
(57,310)
|
|
Adjustments:
|
|
|
|
|
|
|
|
Stock based
compensation expense
|
3,470
|
|
|
6,047
|
|
|
17,405
|
|
|
15,922
|
|
Acquisition and
integration costs
|
923
|
|
|
6,890
|
|
|
10,205
|
|
|
25,716
|
|
Restructuring charge,
net of reversal
|
9,819
|
|
|
11
|
|
|
9,819
|
|
|
510
|
|
Amortization of
intangibles
|
8,758
|
|
|
9,559
|
|
|
35,035
|
|
|
27,739
|
|
Purchase accounting
adjustments
|
766
|
|
|
1,579
|
|
|
3,065
|
|
|
16,383
|
|
Litigation settlement
income
|
—
|
|
|
—
|
|
|
—
|
|
|
(100)
|
|
Executive transition
expenses
|
1,989
|
|
|
600
|
|
|
1,989
|
|
|
600
|
|
Total
adjustments to GAAP net income
|
$
|
25,725
|
|
|
$
|
24,686
|
|
|
$
|
77,518
|
|
|
$
|
86,770
|
|
Net income - Non-GAAP
Basis
|
$
|
10,068
|
|
|
$
|
8,455
|
|
|
$
|
5,875
|
|
|
$
|
29,460
|
|
|
|
|
|
|
|
|
|
Earnings per
share
|
|
|
|
|
|
|
|
Diluted net
income per share - Non-GAAP Basis
|
$
|
0.10
|
|
|
$
|
0.09
|
|
|
$
|
0.06
|
|
|
$
|
0.30
|
|
Shares used in
diluted net income per share calculation
|
101,205
|
|
|
99,125
|
|
|
100,802
|
|
|
98,171
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash
Flow
|
Three Months
Ended
|
|
Year
Ended
|
|
June 30,
2015
|
|
June 30,
2014
|
|
June 30,
2015
|
|
June 30,
2014
|
|
|
|
|
|
|
|
|
Cash flow
provided by (used in) operations
|
$
|
3,856
|
|
|
$
|
3,774
|
|
|
$
|
37,423
|
|
|
$
|
(26,843)
|
|
Less: PP&E CapEx
spending
|
$
|
1,594
|
|
|
$
|
4,988
|
|
|
7,205
|
|
|
22,373
|
|
Total free cash
flow
|
$
|
2,262
|
|
|
$
|
(1,214)
|
|
|
$
|
30,218
|
|
|
$
|
(49,216)
|
|
|
|
|
|
|
|
|
|
Logo - http://photos.prnewswire.com/prnh/20140602/93419
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/extreme-networks-reports-fourth-quarter-and-fiscal-year-2015-financial-results-300124592.html
SOURCE Extreme Networks, Inc.