Ixia Announces 2009 Year End Results and Record Revenues for 2009 Fourth Quarter

Ixia (Nasdaq:XXIA) today reported its financial results for the fourth quarter and year ended December 31, 2009.

Total revenues for the 2009 fourth quarter were a record $56.1 million, an increase of 37% over $41.0 million reported in the 2008 fourth quarter and an increase of 21% over the $46.4 million reported for the immediately preceding third quarter. Revenues for the 2009 fourth quarter include $6.9 million attributable to the acquisition of Agilent Technologies’ N2X Data Network Testing Product line on October 30, 2009 and $6.9 million related to the acquisition of Catapult Communications in June 2009.

On a GAAP basis, the Company recorded a net loss for the 2009 fourth quarter of $31.3 million, or $0.50 per share, compared to a net loss of $18.3 million, or $0.29 per share, for the 2008 fourth quarter. Results for the 2009 fourth quarter include a $27.6 million, or $0.44 per share, income tax charge to write-down the value of U.S. deferred tax assets. Non-GAAP net income for the 2009 fourth quarter was $4.1 million, or $0.06 per diluted share, compared to non-GAAP net income of $1.4 million, or $0.02 per diluted share, for the 2008 fourth quarter. Ixia’s non-GAAP 2009 fourth quarter results exclude charges of $2.5 million related to stock-based compensation, $2.8 million for acquisition-related costs, $4.9 million for the amortization of acquired intangible assets, $1.1 million related to restructuring expenses, and a net tax charge of $24.1 million related to (i) the items above and (ii) a valuation allowance recorded against the Company’s U.S. deferred tax assets. Non-GAAP results for the 2008 fourth quarter exclude charges of $2.9 million related to stock-based compensation, $1.4 million for the amortization of acquired intangible assets, $15.9 million for the impairment of certain investments (primarily auction rate securities), and a net tax benefit of $0.6 million related to these items.

"2009 was a pivotal year for Ixia, and the fourth quarter offered strong evidence of the success of our strategy,” commented Atul Bhatnagar, Ixia’s president and chief executive officer. "In the fourth quarter, we returned to sequential and year-over-year growth as core revenues increased by 9% sequentially and we got contributions from both of our acquisitions. Demand was broad-based on both a product line and geographic basis and we are cautiously optimistic that this demand will continue into 2010.”

"In the last year, we closed two significant acquisitions that extended our product line, expanded our addressable market and improved our prospects for continued growth,” continued Bhatnagar. "Integration of our Catapult acquisition is nearly complete and we were pleased with the bookings momentum in Q4. During the fourth quarter, we also closed the acquisition of Agilent Technologies’ N2X Data Network Testing Product line, clearly establishing Ixia as a global leader in Converged Ethernet IP and LTE testing. While the integration of N2X will continue through the first half of the year, we are already recognizing significant synergies and have announced total cost saving programs that are estimated to reduce our operating expenses by $22 million on an annualized basis. We are very excited about the growth potential of the new Ixia and believe that we are now optimally positioned to capitalize on any increase in demand for high performance testing as the market improves.”

On a GAAP basis, the Company realized a net loss for the 2009 full year of $44.2 million, or $0.70 per share, compared to a net loss of $15.9 million, or $0.24 per share, for the 2008 full year. Results for the 2009 full year include a $28.1 million, or $0.45 per share, income tax charge to write-down the value of U.S. deferred tax assets.

Ixia’s 2009 full year GAAP results include non-cash charges of $10.5 million related to stock-based compensation, $11.4 million for the amortization of acquired intangible assets, $1.8 million for certain inventory write-downs, $2.8 million for the impairment of certain investments, and a net tax charge of $14.9 million related to (i) the items above and (ii) a valuation allowance recorded against the Company’s U.S. deferred tax assets. Excluding the effects of these items, non-GAAP net income for the 2009 full year was $8.0 million, or $0.13 per diluted share, compared to $14.9 million, or $0.23 per diluted share, for the 2008 full year. Non-GAAP results for the 2008 full year exclude non-cash charges of $10.6 million related to stock-based compensation, $5.7 million for the amortization of acquired intangible assets, $20.2 million for the impairment of certain investments, and a net tax benefit of $5.8 million related to these items.

As of December 31, 2009, Ixia had cash, cash equivalents and investments of $79.0 million and no debt.

Ixia will host a conference call today, at 5:00 p.m., Eastern Time, for analysts and investors to discuss its 2009 fourth quarter results and its business outlook for the 2010 first quarter. Open to the public, a live Web cast of the conference call, along with supplemental financial information, 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

To supplement our consolidated financial results prepared in accordance with Generally Accepted Accounting Principles ("GAAP”), we have included certain non-GAAP financial measures in this press release and in the attachments hereto. Specifically, we have provided non-GAAP financial measures (e.g., non-GAAP cost of revenues, non- GAAP operating expenses, non-GAAP operating income, non-GAAP income tax expense, non-GAAP net income, and non-GAAP diluted earnings per share) that exclude certain charges such as stock-based compensation expenses, acquisition related costs incurred in 2009, the amortization of acquisition-related intangible assets, restructuring expenses, certain inventory write-downs, the impairment charges related to certain investments, and the related income tax effects of these items, as well as the income tax impacts of valuation allowances recorded against certain deferred tax assets. The aforementioned charges represent charges that may be difficult to estimate from period to period and that are not directly attributable to the underlying performance of our business operations. These non-GAAP financial measures are provided to enhance the user’s overall understanding of our financial performance. We believe that by excluding certain charges, as well as the related income tax effects, our non-GAAP measures provide supplemental information to both management and investors that is useful in assessing our core operating performance, in evaluating our ongoing business operations and in comparing our results of operations on a consistent basis from period to period. These non-GAAP financial measures are also used by management to plan and forecast future periods and to assist in making operating and strategic decisions. The presentation of this additional information is not prepared in accordance with GAAP. The information therefore may not necessarily be comparable to that of other companies and should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. 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 supplier of test, measurement and service verification solutions to Internet equipment manufacturers, carriers, service providers, government agencies and enterprises. Ixia’s platform is used to test IP networking equipment of all types and sizes, with powerful and flexible test applications that handle the widest range of Internet usage – from routing and switching to converged applications traffic to validating the service quality of live networks and services. Ixia’s multiplay test solutions are acknowledged as the market leader - addressing the growing need to test voice, video, and data services and network capability under real-world conditions.

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 or 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, cost savings, 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,” "should,” "could,” "would,” "expect,” "plan,” "anticipate,” "believe,” "estimate,” "project,” "predict,” "potential,” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements reflect our current views with respect to future events and are based on assumptions and are subject to risks and uncertainties. These risks, uncertainties and other factors may cause our future results, performances or achievements to be materially different from those expressed or implied by our forward-looking statements and include, among other things: the current global economy, our success with the integration of our 2009 acquisitions of Catapult and Agilent Technologies’ N2X Data Network Testing Product line, competition, our ability to successfully defend any claims from taxing authorities in the various countries where we conduct business, consistency of orders from significant customers, our success in developing and producing new products, market acceptance of our products and our ability to realize all of the expected benefits of our restructuring plan. The factors that may cause future results to differ materially from our current expectations also include, without limitation, the risks identified in our Annual Report on Form 10-K for the year ended December 31, 2008, and in our other filings with the Securities and Exchange Commission. Many of these risks and uncertainties are outside of our control and are difficult for us to forecast or mitigate. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.