Foundry Profits in Q4

SAN JOSE, Calif. -- Foundry Networks(TM), Inc. (NASDAQ:FDRY) , today reported financial results for its fourth quarter and full year ended December 31, 2004.

Revenues for the fourth quarter of 2004 were $104.8 million, compared to $102.5 million for the third quarter of 2004, and $111.1 million for the fourth quarter of 2003. Net income was $16.7 million, or $0.12 per diluted share, in the fourth quarter of 2004, compared to a net loss of $(3.6) million, or $(0.03) per share, in the third quarter of 2004, and net income of $24.1 million, or $0.17 per diluted share, in the fourth quarter of 2003. Excluding a non-recurring expense associated with a litigation settlement and patent cross-license agreement, net income was $14.9 million, or $0.11 per diluted share, in the third quarter of 2004.

Revenues for the year ended December 31, 2004 were $409.1 million, compared to $399.6 million for 2003. Net income for 2004 was $48.0 million, or $0.34 per diluted share, compared to net income of $75.1 million, or $0.55 per diluted share, for 2003. Excluding a non-recurring expense associated with a litigation settlement and patent cross-license agreement, net income for 2004 was $66.7 million, or $0.47 per diluted share. Foundry's cash position increased $112 million from 2003.

In the fourth quarter, Foundry's U.S. enterprise business delivered its highest level of revenue ever. The U.S. Federal government business, which represented approximately 28% of Foundry's revenue during the past several quarters, declined to 23% of revenue in the fourth quarter as government IT procurement slowed.

"We are delighted to conclude 2004 having achieved record revenues for the year," stated Bobby Johnson, President and CEO of Foundry Networks. "We are also pleased with the number of new products introduced in 2004, including the ServerIron(R) GT E-series family of application and traffic management switches, the NetIron 40G Internet Router, the Company's fourth generation of 10-GbE chassis and stackable switches, and new families of SSL accelerators and enterprise WAN access routers.

"During the past year we continued to focus on the Company's core fundamentals of profitable growth, product leadership, high-quality customer service, and intelligent investment in building future opportunities. Looking ahead, we will continue to broaden our enterprise and service provider offerings to create a comprehensive single-vendor solution set. We intend to continue the expansion of our sales and support organization while investing in more research and development to address current and future market opportunities. By capitalizing on our reputation for delivering high- performance products and our leadership position in Layer 3 10-Gigabit Ethernet, we believe we can continue to deliver long-term growth," continued Johnson.

Outlook

"Based on current business trends and normal seasonality, we expect first quarter revenues to be in the range of $100-$110 million and diluted EPS to be in the range of $0.08-$0.12 per share," concluded Johnson.

Foundry Networks Inc.