Ixia (XXIA) 8-K Ixia Announces First Quarter Results

Exhibit 99.1

For more information, contact:
Tom Miller Chief Financial Officer (818) 444-2325 tmiller@ixiacom.com	Michael Attar Director Investor Relations (818) 444-2330 mattar@ixiacom.com

Ixia Announces First Quarter Results

CALABASAS, CA— April 20, 2006—Ixia (Nasdaq: XXIA) today reported financial results for the first quarter ended March 31, 2006.

Net revenues for the first quarter of 2006 were $38.9 million, which represents a year-over-year increase of 1% from the first quarter of last year. During the first quarter of 2006 Ixia adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (“FAS 123R”). Net income on a GAAP basis for the first quarter of 2006 was $0.5 million, or $0.01 per diluted share, compared to net income of $9.3 million, or $0.14 per diluted share, for the first quarter of 2005.

Ixia’s 2006 first quarter GAAP results include non-cash charges of $4.9 million related to stock-based compensation, $1.5 million for the amortization of acquired intangible assets, and a net tax benefit of $1.9 million related to these items. Excluding the effects of these items, non-GAAP net income for the first quarter of 2006 was $5.0 million, or $0.07 per diluted share, compared to $8.8 million, or $0.13 per diluted share, for the comparable period in 2005. First quarter 2005 non-GAAP results excluded non-cash charges of $1.3 million related to the amortization of acquired intangible assets and a net tax benefit of

$1.8 million related to the tax effects of the amortization of the acquired intangible assets and tax benefits related to previously recognized stock-based compensation.

“While the first quarter was a challenging one, Ixia continued to position itself for future growth opportunities,” commented Errol Ginsberg, President and Chief Executive Officer of Ixia. “During the quarter, we added over 70 new customers and had strong results in key international markets, notably China and India. Additionally, our carrier business generated strong sequential sales growth, as we benefit from demand generated by our customers’ roll-out of triple play services. We had our best quarter ever for 10 Gigabit Ethernet and a record quarter for important software products IxScriptMate and IxLoad. All of these results point to the underlying long term strength of our business.”

“I remain confident that Ixia is on the right course,” added Mr. Ginsberg. “I believe that Ixia is better positioned now, with a more robust suite of products, increased development capabilities, and broader sales reach than at any time in the Company’s history. Underlying trends, from increasingly complex networks, to the rapid adoption of new technologies like 10 Gigabit Ethernet and the roll-out of triple play services, underscore the importance of advanced IP performance test systems and the opportunities ahead for Ixia.”

During the first quarter ended March 31, 2006, Ixia increased its cash, cash equivalents and investments by nearly $2 million to over $203 million, after taking into account approximately $5 million paid during the quarter to acquire the mobile video and multimedia test business of Dilithium Networks.

Ixia will host a conference call today for analysts and investors to discuss its 2006 first quarter results at 5:00 p.m. Eastern Time. Open to the public, a live Web cast of the conference call will be accessible from the “Investors” section of Ixia’s Web site (www.ixiacom.com). Following the live Web cast, an archived version will be available in the “Investors” section on the Ixia Web site for 90 days.

Non-GAAP Information

Certain non-GAAP financial measures are included in this press release. These non-GAAP financial measures are provided to enhance the user’s overall understanding of our financial performance. By excluding certain non-cash charges, as well as the related tax effects, our non-GAAP results provide information to both management and investors that is useful in assessing Ixia’s core operating performance and in evaluating and comparing our results of operations on a consistent basis from period to period. These non-GAAP financial measures are also used by management to evaluate financial results and to plan and forecast future periods. The presentation of this additional information is not meant to be considered a substitute for the corresponding financial measures prepared in accordance with generally accepted accounting principles. Investors are encouraged to review the reconciliations of GAAP to non-GAAP financial measures which are included below in this press release.

About Ixia

Ixia is a leading provider of performance test systems for IP-based infrastructure and services. Its highly scalable solutions generate, capture, characterize, and emulate network and application traffic, establishing definitive performance and conformance metrics of network devices or systems under test. Ixia’s test systems are used by network and telephony equipment manufacturers, semiconductor manufacturers, service providers, governments, and enterprises to validate the functionality and reliability of complex IP networks, devices, and applications. Ixia’s Triple Play test systems address the growing need to test voice, video, and data services and network capability under real-world conditions. Ixia’s vision is to be the world’s pre-eminent provider of solutions to enable testing of next generation IP Triple Play networks. Ixia’s test systems utilize a wide range of industry-standard interfaces, including Ethernet, SONET, ATM, and wireless connectivity, and are distinguished by their performance, accuracy, reliability, and adaptability to the industry’s constant evolution.

For more information, contact Ixia at 26601 W. Agoura Road, Calabasas, CA 91302; 818-871-1800, Fax: 818-871-1805; Email: info@ixiacom.com or visit our Web Site at http://www.ixiacom.com.

Ixia and the Ixia four petal logo are registered trademarks of Ixia. IxScriptMate and IxLoad are trademarks of Ixia. Other trademarks are the property of their respective owners.

Safe Harbor Under the Private Securities Litigation Reform Act of 1995:

Certain statements made in this press release are forward-looking statements, including, without limitation, statements regarding possible future revenues, growth and profitability and future business and market share. In some cases, such forward-looking statements can be identified by terms such as “may,” “will,” “expect,” “plan,” “believe,” “estimate,” “predict” or the like. Such statements reflect the Company’s current intent,

belief and expectations and are subject to risks and uncertainties that could cause the Company’s actual results to differ materially from those expressed or implied in the forward-looking statements. Factors that may cause future results to differ materially from the Company’s current expectations include, among other things: consistency of orders from significant customers, our success in developing and producing new products, and market acceptance of our products. These and other risk factors that may affect Ixia’s financial results in the future are discussed in Ixia’s periodic SEC filings, including its Annual Report on Form 10-K for the year ended December 31, 2005. Ixia undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

IXIA
Condensed Consolidated Balance Sheets
(in thousands)

	March 31,		December 31,
	2006		2005
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	50,663	$	51,837
Short-term investments in marketable securities		139,333		124,456
Accounts receivable, net		30,358		31,565
Inventories		10,616		9,846
Deferred income taxes		5,237		4,401
Prepaid expenses and other current assets		3,872		3,519
Total current assets		240,079		225,624
Investments in marketable securities		13,379		25,392
Property and equipment, net		21,652		19,750
Deferred income taxes		4,910		10,004
Goodwill		16,717		13,468
Other intangible assets, net		21,482		20,462
Other assets		549		315
Total assets	$	318,768	$	315,015
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	2,511	$	2,872
Accrued expenses		12,840		12,399
Deferred revenues		8,524		8,338
Income taxes payable		5,089		4,131
Total current liabilities		28,964		27,740
Deferred revenues		417		528
Deferred income taxes		—		4,651
Total liabilities		29,381		32,919
Shareholders’ equity:
Common stock, without par value; 200,000 shares authorized, 66,785 and 66,580 shares issued and outstanding as of March 31, 2006 and December 31, 2005, respectively		128,260		126,792
Additional paid-in capital		73,432		68,098
Retained earnings		87,695		87,206
Total shareholders’ equity		289,387		282,096
Total liabilities and shareholders’ equity	$	318,768	$	315,015

IXIA
Condensed Consolidated Statements of Income
(in thousands, except per share data)

	Three months ended
	March 31,
	2006			2005
	(unaudited)
Net revenues	$	38,852		$	38,414
Cost of revenues(1)		6,999			5,845
Amortization of purchased technology		1,056			942
Gross profit		30,797			31,627
Operating expenses(2):
Research and development		10,560			7,546
Sales and marketing		14,744			9,475
General and administrative		5,654			3,605
Amortization of intangible assets		399			342
Total operating expenses		31,357			20,968
Income (loss) from operations		(560	)		10,659
Interest and other, net		2,101			896
Income before income taxes		1,541			11,555
Income tax expense		1,052			2,226
Net income	$	489		$	9,329
Earnings per share:
Basic	$	0.01		$	0.15
Diluted	$	0.01		$	0.14
Weighted average number of common and common equivalent shares outstanding:
Basic		66,635			63,355
Diluted		69,035			68,516

(1)Stock-based compensation included in:
Cost of revenues	$	237	$	—
(2)Stock-based compensation included in:
Research and development	$	1,842	$	—
Sales and marketing		2,032		—
General and administrative		791		—
	$	4,665	$	—

IXIA
Impact of Non-GAAP Adjustments on Net Income
(in thousands, except percentages and per share data)
(unaudited)

	Three months ended March 31, 2006
	GAAP			Adjustments			Non-GAAP
Net revenues	$	38,852		$	—		$	38,852
Cost of revenues		6,999			(237	)(1)		6,762
Amortization of purchased technology		1,056			(1,056	)(2)		—
Gross profit		30,797			1,293			32,090
		79.3	%					82.6	%
Operating expenses:
Research and development		10,560			(1,842	)(1)		8,718
Sales and marketing		14,744			(2,032	)(1)		12,712
General and administrative		5,654			(791	)(1)		4,863
Amortization of intangible assets		399			(399	)(2)		—
Total operating expenses		31,357			(5,064	)		26,293
		80.7	%					67.7	%
Income (loss) from operations		(560	)		6,357			5,797
Interest and other, net		2,101			—			2,101
Income before income taxes		1,541			6,357			7,898
Income tax expense		1,052			1,878	(3)		2,930
Net income	$	489		$	4,479		$	4,968
Earnings per share:
Basic	$	0.01		$	0.06	(4)	$	0.07
Diluted	$	0.01		$	0.06	(4)	$	0.07
Weighted average number of common and common equivalent shares outstanding:
Basic		66,635			—			66,635
Diluted		69,035			17	(5)		69,052

(1)	The adjustment represents stock-based compensation expense recognized under Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (“FAS 123R”).
(2)	The adjustment represents the amortization of intangible assets related to the acquisition of the ANVLTM product line from Empirix, Inc., the acquisition of certain rights associated with the Chariot® product line from NetIQ Corporation, the acquisition of the mobile video and multimedia test business of Dilithium Networks, and the acquisitions of G3 Nova Technologies, Inc. and Communication Machinery Corporation.
(3)	The adjustment represents the income tax effects of the adjustments noted in footnotes (1) and (2).
(4)	The adjustment represents the earnings per share effect of the adjustments noted in footnotes (1), (2) and (3).
(5)	The adjustment represents the impact of FAS 123R on diluted common equivalent shares outstanding.

IXIA
Impact of Non-GAAP Adjustments on Net Income
(in thousands, except percentages and per share data)
(unaudited)

	Three months ended March 31, 2005
	GAAP			Adjustments			Non-GAAP
Net revenues	$	38,414		$	—		$	38,414
Cost of revenues		5,845			—			5,845
Amortization of purchased technology		942			(942	)(1)		—
Gross profit		31,627			942			32,569
		82.3	%					84.8	%
Operating expenses:
Research and development		7,546			—			7,546
Sales and marketing		9,475			—			9,475
General and administrative		3,605			—			3,605
Amortization of intangible assets		342			(342	)(1)		—
Total operating expenses		20,968			(342	)		20,626
		54.6	%					53.7	%
Income from operations		10,659			1,284			11,943
Interest and other, net		896			—			896
Income before income taxes		11,555			1,284			12,839
Income tax expense		2,226			1,765	(2)		3,991
Net income	$	9,329		$	(481	)	$	8,848
Earnings per share:
Basic	$	0.15		$	(0.01	)(3)	$	0.14
Diluted	$	0.14		$	(0.01	)(3)	$	0.13
Weighted average number of common and common equivalent shares outstanding:
Basic		63,355			—			63,355
Diluted		68,516			—			68,516

(1)	The adjustment represents the amortization of intangible assets related to the acquisition of the ANVLTM product line from Empirix, Inc., the acquisition of certain rights associated with the Chariot® product line from NetIQ Corporation, and the acquisition of G3 Nova Technologies, Inc.
(2)	The adjustment represents the income tax effects of footnote (1) and tax benefits related to previously recognized stock-based compensation.
(3)	The adjustment represents the earnings per share effect of the adjustments noted in footnotes (1) and (2).