From correspondents in Karnataka, India, 10:52 PM IST

Foundry Networks™, Inc. (Nasdaq: FDRY), a performance and total solutions leader for end-to-end switching and routing, today announced financial results for its second quarter ended June 30, 2008.

Foundry's revenue for the second quarter of 2008 was $160.7 million, compared to $143.2 million in the second quarter of 2007, and compared to $150.1 million in the first quarter of 2008, an increase of 12% and 7% respectively. Net income was $18.3 million or $0.12 per diluted share, compared to net income of $15.6 million, or $0.10 per diluted share in the second quarter of 2007, and net income of $13.9 million, or $0.09 per diluted share in the first quarter of 2008.

Revenue for the first six months of 2008 was $310.7 million, compared to $279.1 million for the first six months of 2007, an increase of 11%.Net income for the first six months of 2008 was $32.2 million, or $0.21 per diluted share, compared to net income of $24.7 million, or $0.16 per diluted share, for the same period in 2007.

Included in Foundry's results for the second quarter of 2008 was $11.2 million of non-cash stock-based compensation expense.Excluding these expenses and the related tax effect, non-GAAP net income in the second quarter of 2008 was $25.3 million and non-GAAP net income per diluted share was $0.17 per share. Please refer to the table below for a reconciliation of GAAP to non-GAAP net income.

In the second quarter of 2008, North American non-Federal commercial revenue represented 58.2% of total revenue; a record for the segment, primarily due to increased revenue from service provider customers. Sales to Europe, the Middle East and Africa (EMEA) represented 14.8% of total revenue and were essentially flat in absolute dollars from the first quarter of 2008. Sales to Japan represented 3.1% of total revenue while the rest of Asia represented 6.6%. Sales to the U.S. Federal Government represented approximately 17.3% of total sales.

The Company's cash and investments balance was $950.1 million in the second quarter of 2008.During the quarter, the Company spent $15.7 million repurchasing 1.2 million shares of Foundry common stock at an average price of $12.84 per share. To date, the Company has spent $158.7 million to repurchase 10.0 million shares of Foundry common stock at an average price of $15.82 per share.

• Revenue breakdown: US Commercial = 58.2%, Federal = 17.3%, EMEA = 14.8%, Japan = 3.1%, Rest of Asia = 6.6%
• Technology breakdown: Layer 2/3 Switching = 50.7%, Internet & Metro Routers = 24.8%, Layer 4-7 = 8.6%, Support = 15.9%
• Chassis revenue = 71.7%, stackable revenue = 28.3%
• Enterprise revenue = 73.0%, service provider = 27.0%
• Total headcount as of June 30, 2008 = 1,068
• DSO = 63 days
• Book-to-bill was greater than one
• Gross margin improvement driven primarily by stable pricing and cost reduction

Click here to view the financial tables

Foundry uses non-GAAP net income and non-GAAP net income per share for internal planning purposes, to assess the results of its business on an ongoing basis, to determine management compensation, and for the convenience of analysts and investors. These measures are not in accordance with, or an alternative to, similarly-named measures under GAAP. The measures are intended to supplement GAAP financial information, and may be different from non-GAAP financial measures used by other companies. Foundry believes these measures provide useful information to its management, board of directors and investors regarding Foundry's performance when used in conjunction with GAAP information. Foundry believes it is useful to investors to receive information about how items in the statement of operations are affected by stock-based compensation, litigation settlement charges, the expenses related to the stock option investigation and restatement of the Company's consolidated financial statements and the related income tax effect.Stock-based compensation expense consists of expenses recorded under SFAS 123(R), "Share-Based Payment," in connection with awards granted under the Company's equity incentive plans and shares issued pursuant to the Company's employee stock purchase plan. The Company excludes stock-based compensation expense from non-GAAP financial measures because it is a non-cash measurement that does not reflect the Company's ongoing business and because the Company believes that investors want to understand the impact on the Company of the adoption of SFAS 123(R); the Company believes that the provision of non-GAAP information that excludes stock-based compensation improves the ability of investors to compare its period-over-period operating results, as there is significant variability and unpredictability across companies with respect to this expense. The Company also excludes legal, accounting and one-time employee compensation costs related to the stock option investigation and restatement of the Company's consolidated financial statements in addition to litigation settlement charges because these payments do not reflect the Company's ongoing business and the exclusion of these payments improves the ability of investors to compare its period-over-period operating results. However, investors should be aware that non-GAAP measures have inherent limitations and should be read in conjunction with our consolidated financial statements prepared in accordance with GAAP.

Source: Press Release Distribution via India PRwire