Ixia Announces It Will Restate Previously Issued Financial Statements

Ixia (NASDAQ:XXIA) announced today that it has filed a Current Report on Form 8-K (the "Form 8-K") with the Securities and Exchange Commission (the "Commission") disclosing that it will restate previously issued financial statements for (i) the year ended December 31, 2003, (ii) the year ended December 31, 2004 and each of the quarters and year-to-date periods therein, (iii) the year ended December 31, 2005 and each of the quarters and year-to-date periods therein, and (iv) the quarter ended March 31, 2006 and the quarter ended June 30, 2006 and the year-to-date period therein. As a result of the foregoing, the Company's financial statements for these periods and management's report on internal control filed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005 should no longer be relied upon. The Company concluded that restatement is required because, as a result of a previously unidentified material weakness in internal control over financial reporting, the Company did not properly account for certain implied post contract customer support and maintenance ("PCS”) obligations. The Company also announced that it has filed a Form 12b-25 Notification of Late Filing with the Commission stating that it was unable to timely file its Quarterly Report on Form 10-Q for the quarter ended September 30, 2006 (the "Form 10-Q”), but that it is working expeditiously to file it as soon as possible. As discussed in the Form 8-K filed today, the Company anticipates that The Nasdaq Stock Market ("Nasdaq”) will notify the Company that because of its inability to timely file the Form 10-Q, Nasdaq intends to delist the Company’s Common Stock. Ixia intends to request that Nasdaq grant to the Company an extension in which to comply with the applicable listing requirement. As previously announced, Ixia’s management, under the direction of the Audit Committee of the Board of Directors, has been conducting a review of the Company’s accounting for revenue recognition with respect to certain of its software upgrade and support practices and the potential impact on the Company's previously reported financial results. As reported in the Form 8-K, the Company has identified practices that have given rise to certain implied PCS obligations that extend beyond the Company's standard PCS period. In addition, in connection with the Company’s continuing review of its software upgrade and support practices and related implied PCS obligations, it is possible that the Company will identify issues which may require further adjustments to the Company’s financial statements for one or more prior fiscal years or periods. The application of accounting guidance contained in the American Institute of Certified Public Accountants Statement of Position 97-2, Software Revenue Recognition, with respect to such implied PCS obligations will result in a re-allocation of certain previously reported revenue from product revenue to implied PCS revenue. Any revenue that is re-allocated to implied PCS obligations will be recognized as revenue over multi-year periods (typically beginning 12 months after product shipment), whereas the previously reported product revenue was generally recognized in the period in which the products were shipped. Although the Company has determined that the adjustments relating to the PCS obligations will be material on an aggregate basis and to one or more individual reporting periods, the Company cannot at this time estimate the impact of the re-allocations on any previously issued financial statements for any individual reporting period. The restatement adjustments are not expected to affect the total revenue ultimately to be earned, or the amount or timing of cash to be received, from individual sales transactions. Rather, the restatement adjustments allocate, and then defer, a portion of the total revenue from an individual sales transaction to the implied PCS. This deferred revenue amount is recognized as non-cash revenue subsequent to the period of the sale transaction over the term of the implied PCS. Therefore, while the restatement adjustments impact previously reported revenue and operating results for individual prior periods, the restatement adjustments are not expected to affect the Company's liquidity or cash flow for any prior period. "We are working to complete the review and restatement as quickly as possible,” commented Errol Ginsberg, President and Chief Executive Officer of Ixia. "As we commented previously, our business in the third quarter was healthy, as reflected in a sequential increase in bookings.” For the third quarter ended September 30, 2006, Ixia estimates it had cash, cash equivalents and investments of approximately $210 million, with no debt. 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. 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, in addition to those identified in the Company's Annual Report on Form 10-K for the year ended December 31, 2005 and in its other filings with the Commission, the final amounts of the adjustments described above and any adjustments in the Company's historical financial statements in addition to those described above; the ramifications of the Company’s inability to file the Form 10-Q with the Commission on a timely basis; and any failure by the Company to comply with the listing requirements of The Nasdaq Stock Market as a result of its inability to timely file the Form 10-Q with the Commission. Ixia undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.