Exhibit 99.1
(IXIA LOGO)
FOR IMMEDIATE RELEASE
For more information, contact:
Tom Miller the blueshirt group
Chief Financial Officer Chris Danne, Brinlea Johnson
(818) 444-2325 (415) 217-7722
tmiller@ixiacom.com chris or brinlea@blueshirtgroup.com
IXIA ANNOUNCES THIRD QUARTER RESULTS
REVENUES INCREASE 28.3% YEAR-OVER-YEAR AND 8.0% SEQUENTIALLY
22ND CONSECUTIVE QUARTER OF PROFITABILITY
CALABASAS, Calif. -- October 16, 2003--Ixia (Nasdaq: XXIA) today reported
financial results for the third quarter ended September 30, 2003.
Net revenues for the third quarter of 2003 increased 28.3% on a year-over-year
basis to $21.6 million compared to $16.9 million for the third quarter of 2002.
Net income on a GAAP basis for the third quarter of 2003 was $2.4 million or
$0.04 per diluted share, compared to $1.2 million, or $0.02 per diluted share,
for the third quarter of 2002.
Ixia's third quarter GAAP results included non-cash charges of $893,000 for the
amortization of acquisition related intangible assets, $397,000 for stock-based
compensation and a tax benefit of $582,000 associated with these items.
Excluding the effects of these items, non-GAAP net income was $3.1 million, or
$0.05 per diluted share, compared to $2.4 million, or $0.04 per diluted share,
for the same period last year.
"Revenues increased 8.0% over the prior quarter as we continued to expand our
market opportunity and add new customers," commented Errol Ginsberg, President
and Chief Executive Officer of Ixia. "Growth was driven by our 10 Gig product
line and software
sales of ANVL and Chariot, as well as continuing demand for our Ethernet TXS
cards. A solid performance domestically with customers such as Ciena, Cisco,
Hewlett Packard and Motorola was complemented by a strong performance in the
Asia Pacific region. Last year, we restructured our sales effort in this
important region, and revenues for the quarter have shown healthy increases in
China, Japan, Korea and Taiwan among other key markets."
"The integration of the Chariot product line is on track and sales of Chariot
are ahead of schedule," Mr. Ginsberg added. "During the quarter, we added an
impressive 93 new customers, largely due to the acquisition. We are having
success selling Chariot and our other software products into our core customer
base of network equipment manufacturers and carriers, while expanding into the
enterprise market with leading companies like Edward Jones, Enterprise
Rent-A-Car and Mary Kay. Importantly, many of these customers are purchasing
both hardware and software products from Ixia. Non-GAAP gross margins were
impacted by the royalty payment related to the acquisition, but remained
strong."
During the quarter, Ixia acquired a perpetual license to the source code for the
Chariot product line from NetIQ Corporation and the exclusive U.S. and Canadian
distribution rights through December 31, 2004 for $17.5 million, plus royalties
on sales of the existing Chariot product. Ixia has an option to purchase for
$2.5 million the remaining assets of the Chariot product line after December 31,
2004.
As of September 30, 2003, Ixia had approximately $117.6 million in cash and
investments with no debt.
Ixia will host a conference call today for analysts and investors to discuss its
quarterly results at 5:00 p.m. ET. 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 and our prospects for the future.
Specifically, we believe non-GAAP measures can provide useful information to
both management and investors that is useful in assessing underlying trends in
Ixia's business. These non-GAAP financial measures are 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
reconciliation of GAAP to non-GAAP financial measures which is included below.
ABOUT IXIA
Ixia delivers powerful, distributed, multiport traffic generators, and
performance and conformance analyzers for wire-speed verification of optical
networking equipment, LAN, MAN, WAN, and SAN multilayer switches and routers.
Our analysis systems are used in the design, manufacture, and quality assurance
stages of network equipment development. Our Real World Traffic solutions
address the growing need to test enterprise networks prior to deployment under
real load conditions with actual business application traffic. Our network
operations applications address the carrier's needs for a higher level of
control over the network itself. Ixia's analysis solutions utilize a variety of
interfaces - 10/100/1000 Mbps Ethernet, 10 Gigabit Ethernet, Packet Over SONET,
BERT, and USB, and are distinguished by their 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 logo are registered trademarks of Ixia. ANVL is a trademark of
Ixia. Other trademarks used in this release are the trademarks or registered
trademarks of their respective owners.
SAFE HARBOR UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995:
Certain statements made in this news release are forward-looking statements,
including, without limitation, statements regarding possible future revenues and
earnings per share, 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:
the current economic slowdown in general and decreasing capital availability and
investment in the telecommunications and data communications industries in
particular, consistency of orders from significant customers, our success in
exploiting the rights acquired from NetIQ Corporation with respect to the
Chariot product, the timing of new product releases, 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 SEC filings, including its Annual Report on Form 10-K for
the year ended December 31, 2002. Ixia undertakes no obligation to update any
forward-looking statements, whether as a result of new information, future
events or otherwise.
IXIA
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
SEPTEMBER 30, DECEMBER 31,
2003 2002
--------- ---------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 43,045 $ 58,865
Short-term investments in marketable 24,254 12,050
securities
Accounts receivable, net 15,004 9,351
Inventories 5,403 5,121
Prepaid expenses and other current assets 5,791 6,232
--------- ---------
Total current assets 93,497 91,619
Investments in marketable securities 50,300 51,306
Property and equipment, net 6,838 7,003
Goodwill 1,592 1,592
Purchased technology and other intangible
assets, net 21,154 4,030
Other assets 2,511 2,111
--------- ---------
Total assets $ 175,892 $ 157,661
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,322 $ 960
Accrued expenses 8,667 4,049
Deferred revenues 4,458 1,958
Income taxes payable 1,692 1,527
--------- ---------
Total liabilities 16,139 8,494
Shareholders' equity:
Common stock, without par value; 200,000
shares authorized, 58,716 and 57,595
shares issued and outstanding as of September 30,
2003 and December 31, 2002, respectively 81,060 79,206
Additional paid-in capital 47,166 47,045
Deferred stock-based compensation (816) (3,036)
Retained earnings 32,343 25,952
--------- ---------
Total shareholders' equity 159,753 149,167
--------- ---------
Total liabilities and shareholders' equity $ 175,892 $ 157,661
========= =========
IXIA
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -------------------
2003 2002 2003 2002
------- ------- ------- -------
Net revenues $21,635 $16,864 $60,484 $49,560
Cost of revenues(1) 4,153 3,417 11,235 9,777
Amortization of purchased technology 588 -- 588 --
------- ------- ------- -------
Gross profit 16,894 13,447 48,661 39,783
Operating expenses:
Research and development 5,169 4,585 15,291 12,776
Sales and marketing 6,234 4,919 18,288 14,089
General and administrative 2,312 1,751 6,583 5,293
Amortization of intangible
assets 305 258 770 684
Stock-based compensation(2) 364 1,013 1,420 3,972
------- ------- ------- -------
Total operating expenses 14,384 12,526 42,352 36,814
------- ------- ------- -------
Income from operations 2,510 921 6,309 2,969
Interest income, net 716 692 2,329 2,071
------- ------- ------- -------
Income before income taxes 3,226 1,613 8,638 5,040
Income tax expense 813 459 2,247 1,855
------- ------- ------- -------
Net income $ 2,413 $ 1,154 $ 6,391 $ 3,185
======= ======= ======= =======
Earnings per share:
Basic $ 0.04 $ 0.02 $ 0.11 $ 0.06
Diluted $ 0.04 $ 0.02 $ 0.10 $ 0.05
Weighted average number of common
and common equivalent shares outstanding:
Basic 58,436 57,137 58,028 56,724
Diluted 62,455 60,162 61,674 60,625
(1) Stock-based compensation
included in Cost of revenues $ 33 $ 74 $ 125 $ 314
======= ======= ======= =======
(2) Stock-based compensation:
Research and development $ 209 $ 593 $ 1,094 $ 2,356
Sales and marketing 99 272 96 1,072
General and administrative 56 148 230 544
------- ------- ------- -------
$ 364 $ 1,013 $ 1,420 $ 3,972
======= ======= ======= =======
IXIA
NON-GAAP CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -------------------
2003 2002 2003 2002
------- ------- ------- -------
Net revenues $21,635 $16,864 $60,484 $49,560
Cost of revenues 4,120 3,343 11,110 9,463
------- ------- ------- -------
Gross profit 17,515 13,521 49,374 40,097
Operating expenses:
Research and development 5,169 4,585 15,291 12,776
Sales and marketing 6,234 4,919 18,288 14,089
General and administrative 2,312 1,751 6,583 5,293
------- ------- ------- -------
Total operating expenses 13,715 11,255 40,162 32,158
------- ------- ------- -------
Income from operations 3,800 2,266 9,212 7,939
Interest income, net 716 692 2,329 2,071
------- ------- ------- -------
Income before income taxes 4,516 2,958 11,541 10,010
Income tax expense 1,395 594 3,287 2,733
------- ------- ------- -------
Non-GAAP net income $ 3,121 $ 2,364 $ 8,254 $ 7,277
======= ======= ======= =======
Non-GAAP earnings per share:
Basic $ 0.05 $ 0.04 $ 0.14 $ 0.13
Diluted $ 0.05 $ 0.04 $ 0.13 $ 0.12
Weighted average number of common
and common equivalent shares
outstanding:
Basic 58,436 57,137 58,028 56,724
Diluted 62,455 60,162 61,674 60,625
Reconciliation of Non-GAAP net income to GAAP net income (in thousands, except
per share data):
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ ------------------
2003 2002 2003 2002
------ ------ ------ -----
Net income, Non-GAAP $3,121 $2,364 $8,254 $7,277
Amortization of purchased (588) -- (588) --
technology
Amortization of intangible (305) (258) (770) (684)
assets
Stock-based compensation (397) (1,087) (1,545) (4,286)
Income tax effect 582 135 1,040 878
------ ------ ------ ------
GAAP net income $2,413 $1,154 $6,391 $3,185
====== ====== ====== ======
Diluted weighted average
number of common shares 62,455 60,162 61,674 60,625
Non-GAAP diluted earnings per
share $ 0.05 $ 0.04 $ 0.14 $ 0.13
GAAP diluted earnings per share $ 0.04 $ 0.02 $ 0.10 $ 0.05