Ixia Announces Second Quarter Results

Net revenues for the second quarter of 2006 were $39.9 million,which represents a sequential increase of 3% from the immediatelypreceding first quarter and compares to $41.3 million in the secondquarter of last year. Net income on a GAAP basis for the secondquarter of 2006 was $0.3 million, or $0.00 per diluted share, comparedto net income of $9.8 million, or $0.14 per diluted share, for thesecond quarter of 2005. Ixia adopted Statement of Financial AccountingStandards No. 123 (revised 2004), "Share-Based Payment" ("FAS 123R"),effective January 1, 2006.

Ixia's 2006 second quarter GAAP results include non-cash chargesof $4.5 million related to stock-based compensation, $1.6 million forthe amortization of acquired intangible assets, and a net tax benefitof $1.8 million related to these items. Excluding the effects of theseitems, non-GAAP net income for the second quarter of 2006 was $4.5million, or $0.07 per diluted share, compared to $9.8 million, or$0.14 per diluted share, for the comparable period in 2005. Secondquarter 2005 non-GAAP results excluded non-cash charges of $1.2million related to the amortization of acquired intangible assets anda net tax benefit of $1.2 million related to the tax effects of theamortization of the acquired intangible assets and tax benefitsrelated to previously recognized stock-based compensation.

"Ixia's results in the second quarter reflect a number of positivetrends," commented Errol Ginsberg, President and Chief ExecutiveOfficer of Ixia. "During the quarter we added 85 new customers and hadrecord non-Cisco bookings and revenues, demonstrating that we aremaking progress in diversifying our customer base. Carrier sales werealso a record, at 14% of revenues. Our government and enterprisebusiness showed strong growth due to increased military spending andsome renewed investment by enterprise customers. Geographically, wesaw strong demand in EMEA and a record quarter in the China region,which includes Taiwan."

"While generally we continued to experience some pricing pressuredue to competitive dynamics, we are starting to see strong demand fromcarriers, as they roll out and test the infrastructure to supporttriple play services," added Mr. Ginsberg. "Demand for 10 GigabitEthernet testing products remains healthy, with near record revenues,as operators upgrade their core networks. Finally, we had our bestquarter ever for software sales, led by IxLoad, our Layer 4 through 7testing application, used to test advanced services like IPTV."

As of the end of the second quarter on June 30, 2006, Ixia hadcash, cash equivalents and investments of approximately $202 million.

Ixia will host a conference call today for analysts and investorsto discuss its 2006 second quarter results at 5:00 p.m. Eastern Time.Open to the public, a live Web cast of the conference call, along withsupplemental financial information, will be accessible from the"Investors" section of Ixia's Web site (www.ixiacom.com). Followingthe 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 inaccordance with Generally Accepted Accounted Principles ("GAAP"), wehave included certain non-GAAP financial measures in this pressrelease and in the attachments hereto. Specifically, we have providednon-GAAP financial measures (e.g., non-GAAP gross profit (or margin),non-GAAP operating expenses, non-GAAP operating income, non-GAAP netincome, and non-GAAP diluted earnings per share) that exclude certainnon-cash expenses such as the amortization of acquisition-relatedintangible assets and stock-based compensation, as well as the relatedincome tax effects of such items. The amortization ofacquisition-related intangible assets and stock-based compensationrepresent non-cash charges that may be difficult to estimate fromperiod to period and that are not directly attributable to theunderlying performance of our business operations. These non-GAAPfinancial measures are provided to enhance the user's overallunderstanding of our financial performance. We believe that byexcluding certain non-cash charges, as well as the related income taxeffects, our non-GAAP measures provide supplemental information toboth management and investors that is useful in assessing our coreoperating performance, in evaluating our ongoing business operationsand in comparing our results of operations on a consistent basis fromperiod to period. These non-GAAP financial measures are also used bymanagement to plan and forecast future periods and to assist s inmaking operating and strategic decisions. The presentation of thisadditional information is not prepared in accordance with GAAP. Theinformation therefore may not necessarily be comparable to that ofother companies and should be considered as a supplement to, not asubstitute for, or superior to, the corresponding measures calculatedin accordance with GAAP. Investors are encouraged to review thereconciliations of GAAP to non-GAAP financial measures which areincluded below in this press release.

About Ixia

Ixia is a leading provider of performance test systems forIP-based infrastructure and services. Its highly scalable solutionsgenerate, capture, characterize, and emulate network and applicationtraffic, establishing definitive performance and conformance metricsof network devices or systems under test. Ixia's test systems are usedby network and telephony equipment manufacturers, semiconductormanufacturers, service providers, governments, and enterprises tovalidate the functionality and reliability of complex IP networks,devices, and applications. Ixia's Triple Play test systems address thegrowing need to test voice, video, and data services and networkcapability under real-world conditions. Ixia's vision is to be theworld's pre-eminent provider of solutions to enable testing of nextgeneration IP Triple Play networks. Ixia's test systems utilize a widerange 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 constantevolution.

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 ofIxia. IxLoad is a trademark of Ixia. Other trademarks are the propertyof their respective owners.

Safe Harbor Under the Private Securities Litigation Reform Act of1995:

Certain statements made in this press release are forward-lookingstatements, including, without limitation, statements regardingpossible future revenues, growth and profitability and future businessand market share. In some cases, such forward-looking statements canbe identified by terms such as "may," "will," "expect," "plan,""believe," "estimate," "predict" or the like. Such statements reflectthe Company's current intent, belief and expectations and are subjectto risks and uncertainties that could cause the Company's actualresults to differ materially from those expressed or implied in theforward-looking statements. Factors that may cause future results todiffer materially from the Company's current expectations include,among other things: consistency of orders from significant customers,our success in developing and producing new products, and marketacceptance of our products. These and other risk factors that mayaffect Ixia's financial results in the future are discussed in Ixia'speriodic SEC filings, including its Annual Report on Form 10-K for theyear ended December 31, 2005. Ixia undertakes no obligation to updateany forward-looking statements, whether as a result of newinformation, future events or otherwise.

IXIA
Condensed Consolidated Balance Sheets
(in thousands)

June 30, December 31,
2006 2005
----------------------------------------
(unaudited)


Assets
Current assets:
Cash and cash equivalents $37,360 $51,837
Short-term investments in marketable securities 160,372 124,456
Accounts receivable, net 39,344 31,565
Inventories 9,910 9,846
Deferred income taxes 6,322 4,401
Prepaid expenses and other current assets 3,569 3,519
------------------

Total current assets 256,877 225,624

Investments in marketable securities 4,350 25,392
Property and equipment, net 22,533 19,750
Deferred income taxes 4,302 10,004
Goodwill 16,728 13,468
Other intangible assets, net 23,564 20,462
Other assets 488 315
------------------

Total assets $328,842 $315,015
==================


Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $3,445 $2,872
Accrued expenses 14,228 12,399
Deferred revenues 9,216 8,338
Income taxes payable 4,240 4,131
------------------

Total current liabilities 31,129 27,740

Deferred revenues and other liabilities 1,115 528
Deferred income taxes -- 4,651
------------------

Total liabilities 32,244 32,919
------------------

Shareholders' equity:
Common stock, without par value; 200,000 shares
authorized, 67,080 and 66,580 shares issued and
outstanding as of June 30, 2006 and December 31,
2005, respectively 130,592 126,792
Additional paid-in capital 78,015 68,098
Retained earnings 87,991 87,206
------------------

Total shareholders' equity 296,598 282,096
------------------

Total liabilities and shareholders' equity $328,842 $315,015
==================



IXIA
Condensed Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)

Three months Six months
ended ended
June 30, June 30,
-------------------------------------
2006 2005 2006 2005
-------------------------------------



Net revenues $39,900 $41,326 $78,752 $79,740
Cost of revenues(1) 8,112 6,349 15,111 12,194
Amortization of purchased technology 1,137 943 2,193 1,885
--------------------------------
Gross profit 30,651 34,034 61,448 65,661
--------------------------------

Operating expenses:
Research and development(1) 11,063 7,974 21,623 15,520
Sales and marketing(1) 15,174 9,950 29,918 19,425
General and administrative(1) 5,149 3,914 10,803 7,519
Amortization of intangible assets 424 286 823 628
--------------------------------
Total operating expenses 31,810 22,124 63,167 43,092
--------------------------------

Income (loss) from operations (1,159) 11,910 (1,719) 22,569
Interest and other, net 2,209 1,229 4,310 2,125
--------------------------------
Income before income taxes 1,050 13,139 2,591 24,694
Income tax expense 754 3,373 1,806 5,599
--------------------------------
Net income $296 $9,766 $785 $19,095
================================

Earnings per share:
Basic $0.00 $0.15 $0.01 $0.30
Diluted $0.00 $0.14 $0.01 $0.28

Weighted average number of common and
common equivalent shares outstanding:
Basic 66,955 64,862 66,796 64,112
Diluted 68,802 69,391 68,887 68,944


--------------------------------------

(1) Stock-based compensation included in:
Cost of revenues $188 $-- $425 $--
Research and development 1,593 -- 3,435 --
Sales and marketing 1,996 -- 4,028 --
General and administrative 686 -- 1,477 --



IXIA
Non-GAAP Information and Reconciliation to
Comparable GAAP Financial Measures
(in thousands, except percentages and per share data)
(unaudited)

Three months ended June 30,
-----------------------------------
2006 2005
----------------- -----------------
Amount % of Net Amount % of Net
($) Revenues ($) Revenues
-------- -------- -------- --------
Gross profit - GAAP $30,651 76.8% $34,034 82.4%
Amortization of purchased
technology(a) 1,137 2.8% 943 2.2%
Stock-based compensation(b) 188 0.5% -- 0.0%
-------- -------- -------- --------
Gross profit - Non-GAAP $31,976 80.1% $34,977 84.6%
======== ======== ======== ========

Operating expenses - GAAP $31,810 79.7% $22,124 53.5%
Amortization of intangible
assets(a) (424) -1.1% (286) -0.7%
Stock-based compensation(b) (4,275) -10.7% -- 0.0%
-------- -------- -------- --------
Operating expenses - Non-GAAP $27,111 67.9% $21,838 52.8%
======== ======== ======== ========

Income (loss) from operations -
GAAP $(1,159) -2.9% $11,910 28.8%
Effect of reconciling items(c) 6,024 15.1% 1,229 3.0%
-------- -------- -------- --------
Income (loss) from operations -
Non-GAAP $4,865 12.2% $13,139 31.8%
======== ======== ======== ========

Income tax expense - GAAP $754 1.9% $3,373 8.2%
Effect of reconciling items(d) 1,779 4.4% 1,244 3.0%
-------- -------- -------- --------
Income tax expense - Non-GAAP $2,533 6.3% $4,617 11.2%
======== ======== ======== ========

Net income - GAAP $296 0.7% $9,766 23.6%
Effect of reconciling items(e) 4,245 10.7% (15) 0.0%
-------- -------- -------- --------
Net income - Non-GAAP $4,541 11.4% $9,751 23.6%
======== ======== ======== ========

Diluted earnings per share - GAAP $0.00 $0.14
Effect of reconciling items(f) 0.07 0.00
-------- --------
Diluted earnings per share - Non-
GAAP $0.07 $0.14
======== ========



(a) This reconciling item represents the amortization of
intangible assets related to the acquisition of the ANVL(TM) product
line from Empirix, Inc., the acquisition of certain rights associated
with the Chariot(R) product line from NetIQ Corporation, the
acquisition of the mobile video and multimedia test business of
Dilithium Networks (affects 2006 only), the acquisition of certain
technology from Bell Canada (affects 2006 only), the acquisition of G3
Nova Technologies, Inc. and the acquisition of Communication Machinery
Corporation (affects 2006 only). As the amortization expense
represents a non-cash charge that is not directly attributable to the
underlying performance of our business operations, we believe that by
excluding the amortization of acquisition-related intangible assets,
investors are provided with supplemental information that is useful in
evaluating our ongoing operations and performance. While the
amortization of acquisition-related intangible assets is expected to
continue in the future, management also excludes this expense when
evaluating current performance, forecasting future results, measuring
core operating results, and making operating and strategic decisions.

(b) This reconciling item represents stock-based compensation
expense recognized under Statement of Financial Accounting Standards
No. 123 (revised 2004), "Share-Based Payment" ("FAS 123R"). We adopted
FAS 123R effective January 1, 2006. As stock-based compensation
represents a non-cash charge that is not directly attributable to the
underlying performance of our business operations, we believe that by
excluding stock-based compensation, investors are provided with
supplemental information that is useful in comparing our operating
results from period to period and in evaluating our core operations
and performance. While we expect to continue to recognize stock-based
compensation expense in the future, management also excludes this
expense when evaluating current performance, forecasting future
results, measuring core operating results, and making operating and
strategic decisions.

(c) This adjustment represents the effects of the reconciling
items noted in footnotes (a) and (b).

(d) This adjustment represents the income tax effects of the
reconciling items noted in footnotes (a) and (b).

(e) This adjustment represents the effects of
the reconciling items noted in footnotes (a) and (b), net of tax.

(f) This adjustment represents the effects of the reconciling
items noted in footnotes (a) and (b), net of tax, on a diluted per
share basis.


IXIA
Non-GAAP Information and Reconciliation to
Comparable GAAP Financial Measures
(in thousands, except percentages and per share data)
(unaudited)

Six months ended June 30,
-----------------------------------
2006 2005
----------------- -----------------
Amount % of Net Amount % of Net
($) Revenues ($) Revenues
-------- -------- -------- --------
Gross profit - GAAP $61,448 78.0% $65,661 82.3%
Amortization of purchased
technology(a) 2,193 2.8% 1,885 2.4%
Stock-based compensation(b) 425 0.6% -- 0.0%
-------- -------- -------- --------
Gross profit - Non-GAAP $64,066 81.4% $67,546 84.7%
======== ======== ======== ========

Operating expenses - GAAP $63,167 80.2% $43,092 54.0%
Amortization of intangible
assets(a) (823) -1.0% (628) -0.7%
Stock-based compensation(b) (8,940) -11.4% -- 0.0%
-------- -------- -------- --------
Operating expenses - Non-GAAP $53,404 67.8% $42,464 53.3%
======== ======== ======== ========

Income (loss) from operations -
GAAP $(1,719) -2.2% $22,569 28.3%
Effect of reconciling items(c) 12,381 15.7% 2,513 3.2%
-------- -------- -------- --------
Income (loss) from operations -
Non-GAAP $10,662 13.5% $25,082 31.5%
======== ======== ======== ========

Income tax expense - GAAP $1,806 2.3% $5,599 7.0%
Effect of reconciling items(d) 3,657 4.6% 3,009 3.8%
-------- -------- -------- --------
Income tax expense - Non-GAAP $5,463 6.9% $8,608 10.8%
======== ======== ======== ========

Net income - GAAP $785 1.0% $19,095 23.9%
Effect of reconciling items(e) 8,724 11.1% (496) -0.6%
-------- -------- -------- --------
Net income - Non-GAAP $9,509 12.1% $18,599 23.3%
======== ======== ======== ========

Diluted earnings per share - GAAP $0.01 $0.28
Effect of reconciling items(f) 0.13 (0.01)
-------- --------
Diluted earnings per share - Non-
GAAP $0.14 $0.27
======== ========

(a) This reconciling item represents the amortization of
intangible assets related to the acquisition of the ANVL(TM) product
line from Empirix, Inc., the acquisition of certain rights associated
with the Chariot(R) product line from NetIQ Corporation, the
acquisition of the mobile video and multimedia test business of
Dilithium Networks (affects 2006 only), the acquisition of certain
technology from Bell Canada (affects 2006 only), the acquisition of G3
Nova Technologies, Inc. and the acquisition of Communication Machinery
Corporation (affects 2006 only). As the amortization expense
represents a non-cash charge that is not directly attributable to the
underlying performance of our business operations, we believe that by
excluding the amortization of acquisition-related intangible assets,
investors are provided with supplemental information that is useful in
evaluating our ongoing operations and performance. While the
amortization of acquisition-related intangible assets is expected to
continue in the future, management also excludes this expense when
evaluating current performance, forecasting future results, measuring
core operating results, and making operating and strategic decisions.

(b) This reconciling item represents stock-based compensation
expense recognized under Statement of Financial Accounting Standards
No. 123 (revised 2004), "Share-Based Payment" ("FAS 123R"). We adopted
FAS 123R effective January 1, 2006. As stock-based compensation
represents a non-cash charge that is not directly attributable to the
underlying performance of our business operations, we believe that by
excluding stock-based compensation, investors are provided with
supplemental information that is useful in comparing our operating
results from period to period and in evaluating our core operations
and performance. While we expect to continue to recognize stock-based
compensation expense in the future, management also excludes this
expense when evaluating current performance, forecasting future
results, measuring core operating results, and making operating and
strategic decisions.

(c) This adjustment represents the effects of the reconciling
items noted in footnotes (a) and (b).

(d) This adjustment represents the income tax effects of the
reconciling items noted in footnotes (a) and (b).

(e) This adjustment represents the effects of the reconciling
items noted in footnotes (a) and (b), net of tax.

(f) This adjustment represents the effects of the reconciling
items noted in footnotes (a) and (b), net of tax, on a diluted per
share basis.