<SEC-DOCUMENT>0001078271-15-000087.txt : 20150721
<SEC-HEADER>0001078271-15-000087.hdr.sgml : 20150721
<ACCEPTANCE-DATETIME>20150609123944
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001078271-15-000087
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20150609

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			EXTREME NETWORKS INC
		CENTRAL INDEX KEY:			0001078271
		STANDARD INDUSTRIAL CLASSIFICATION:	COMPUTER COMMUNICATIONS EQUIPMENT [3576]
		IRS NUMBER:				770430270
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0630

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		145 RIO ROBLES
		CITY:			SAN JOSE
		STATE:			CA
		ZIP:			95134
		BUSINESS PHONE:		4085792800

	MAIL ADDRESS:	
		STREET 1:		145 RIO ROBLES
		CITY:			SAN JOSE
		STATE:			CA
		ZIP:			95134
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
<!DOCTYPE html PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd">
<html>
	<head>
		<!-- Document created using Wdesk 1 -->
		<!-- Copyright 2015 Workiva -->
		<title>Comment Letter Response 6.9.15</title>
	</head>
	<body style="font-family:Times New Roman;font-size:10pt;">
<a name="s790840ef01df4174abe68144c4d93c52"></a><div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div></div><br><div style="line-height:120%;padding-top:12px;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">June 9, 2015</font></div><div style="line-height:120%;padding-top:12px;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">Patrick Gilmore, Accounting Branch Chief </font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">United States Securities and Exchange Commission </font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">Division of Corporation Finance </font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">100 F Street, N.E. </font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">Washington, D.C. 20549-6010 </font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">&#160;</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-weight:bold;">Extreme Networks, Inc. </font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-weight:bold;">Form 10-K for the Fiscal Year Ended June 30, 2014 </font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-weight:bold;">Filed September 15, 2014 </font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-weight:bold;">Form 10-Q for the Quarterly Period Ended March 31, 2015 </font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-weight:bold;">Filed May 7, 2015 </font></div><div style="line-height:120%;padding-top:6px;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-weight:bold;">File No. 000-25711 </font></div><div style="line-height:120%;padding-top:6px;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;padding-top:6px;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">Dear Mr. Gilmore: </font></div><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">Extreme Networks, Inc. (&#8220;Extreme&#8221; or the &#8220;Company&#8221;) is submitting the following responses to the comments received from the staff of the Securities and Exchange Commission (the &#8220;Staff&#8221;) in a letter to the Company dated May 26, 2015, with respect to the Company&#8217;s Form 10-K for the fiscal year ended June&#160;30,&#160;2014 and the Company&#8217;s Form 10-Q for the quarterly period ended March 31, 2015. The </font><font style="font-family:inherit;font-size:11pt;font-style:italic;">italicized</font><font style="font-family:inherit;font-size:11pt;">&#32;paragraphs below restate the comments of the Staff&#8217;s comment letter, and the discussion that follows is the Company&#8217;s response to the Staff&#8217;s comments.  </font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;text-decoration:underline;">Form 10-K for the Fiscal Year Ended June 30, 2014 </font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;text-decoration:underline;">Part III (Incorporated by reference to the Definitive Proxy Statement filed on October 2, 2014) </font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;text-decoration:underline;">Executive Compensation and Other Matters </font></div><div style="line-height:120%;padding-bottom:8px;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;text-decoration:underline;">2014 Compensation Decisions, Annual Short-Term Incentives, page 33</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman; font-size:10pt;"><tr><td style="width:24px;"></td><td></td></tr><tr><td style="vertical-align:top"><div style="line-height:120%;font-size:11pt;padding-left:0px;"><font style="font-family:inherit;font-size:10pt;">1.</font></div></td><td style="vertical-align:top;"><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-style:italic;">We note your response to prior comment 4. Please confirm that in future filings, as applicable, you will disclose the quarterly and full year corporate performance targets and bonus payouts for each of your named executive officers. Also, confirm that you will clearly disclose if any performance measures are non-GAAP financial measures and, if so, that you will explain how the measures are calculated from your audited financial statements. Refer to Instruction 5 to Item 402(b) of Regulation S-K</font><font style="font-family:inherit;font-size:11pt;">.</font></div></td></tr></table><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-align:left;padding-left:24px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">The Company acknowledges that in future filings, the quarterly and annual performance targets specific to that plan year and bonus payments made to each named executive officer will be disclosed.  The Company will also disclose if any performance measures are non-GAAP financial measures and, if so, the Company will explain how the measures are calculated from our audited financial statements.    </font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;text-decoration:underline;">Signatures, page 86 </font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman; font-size:10pt;"><tr><td style="width:24px;"></td><td></td></tr><tr><td style="vertical-align:top"><div style="line-height:120%;font-size:11pt;padding-left:0px;"><font style="font-family:inherit;font-size:10pt;">2.</font></div></td><td style="vertical-align:top;"><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-style:italic;">We note your response to prior comment 5. It appears you have yet filed an amendment to your Form 10-K to correct the signature page. Please advise. </font></div></td></tr></table><div style="line-height:120%;text-align:left;padding-left:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;padding-left:24px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">The Company corrected the signature page and filed the amended Form 10-K/A on June 3, 2015.  </font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;text-decoration:underline;">Form 10-Q for the Quarterly Period Ended March 31, 2015 </font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;text-decoration:underline;">Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations </font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;text-decoration:underline;">Results of Operations, page 19 </font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><br><div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div></div><hr style="page-break-after:always"><a name="s790840ef01df4174abe68144c4d93c52"></a><div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div></div><br><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman; font-size:10pt;"><tr><td style="width:24px;"></td><td></td></tr><tr><td style="vertical-align:top"><div style="line-height:120%;font-size:11pt;padding-left:0px;"><font style="font-family:inherit;font-size:10pt;">3.</font></div></td><td style="vertical-align:top;"><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-style:italic;">We note your disclosure that the acquisition of Enterasys had positive impact on product revenues for the nine-months ended March 31, 2015 and service revenues for the quarter and nine-months ended March 31, 2015. Please tell us the amount, if determinable, of product and service revenues for the quarter and nine-months ended March 31, 2015 attributable to the acquisition of Enterasys. </font></div></td></tr></table><div style="line-height:120%;text-align:left;padding-left:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;padding-left:24px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">In the first full quarter following the acquisition by the Company of Enterasys, the Company integrated the sales force and product lines of the two companies.  At the end of the second calendar quarter 2014, the Company operated from an integrated enterprise software system.  Products and services from each legacy company were selected by customers based on their needs, and individual tracking of legacy products was not maintained or used by management to manage the business.  For these reasons, we are not able to determine the product or service revenues which are uniquely attributable to the acquisition of Enterasys.  </font></div><div style="line-height:120%;text-align:left;padding-left:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;padding-left:24px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">However, management believes that the Company&#8217;s material increase in revenues was due to the enhanced product and services portfolio afforded through the Enterasys acquisition.  For the period July 1, 2014 through March 31, 2015 (9 months) the reported revenues reflect the combined selling efforts of our integrated sales force.  </font></div><div style="line-height:120%;text-align:left;padding-left:24px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman; font-size:10pt;"><tr><td style="width:24px;"></td><td></td></tr><tr><td style="vertical-align:top"><div style="line-height:120%;font-size:11pt;padding-left:0px;"><font style="font-family:inherit;font-size:10pt;">4.</font></div></td><td style="vertical-align:top;"><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-style:italic;">Your disclosure qualitatively discusses various factors impacting the quarterly and nine-month period revenues. Please tell us the extent to which you are able to determine in quantified terms, the relative contribution for the identified factors</font><font style="font-family:inherit;font-size:11pt;">. </font></div></td></tr></table><div style="line-height:120%;text-align:left;padding-left:24px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">The qualitative disclosures made were associated with the product revenue decline.  In the preparation of the Form 10-Q for the period ending March 31, 2015, the Company considered its ability to specifically quantify these items and determined that they were not accurately quantifiable due to the level of estimation required.  By way of example, based on feedback from customers and the channels in which we operate, it was noted that the change in the foreign exchange conversion rates impacted some customers&#8217; ability to purchase.  Although we had anecdotal evidence of the impact of the foreign exchange conversion rate on customers&#8217; buying decisions, and accordingly noted this qualitatively, we are unable to accurately measure this impact quantitatively.  We examined rough data that upon analysis created the basis for qualitative disclosure, yet was not comprehensive enough to quantify the aggregate impacts to total revenue levels.  The Company believes that each of the items noted are subjective yet relevant to the qualitative disclosure. The Company acknowledges that in future filings, we will disclose the quantifiable impacts of the qualitative factors if they are accurately quantifiable and material.</font></div><div style="line-height:120%;text-align:left;padding-left:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman; font-size:10pt;"><tr><td style="width:24px;"></td><td></td></tr><tr><td style="vertical-align:top"><div style="line-height:120%;font-size:11pt;padding-left:0px;"><font style="font-family:inherit;font-size:10pt;">5.</font></div></td><td style="vertical-align:top;"><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-style:italic;">We note your response to prior comment 6 that sales allowances increased $1.8 million from June 30, 2014 to December 31, 2015. In light of the decrease in the allowance for doubtful accounts as of March 31, 2015 compared to December 31, 2014 and the increase in the provision for doubtful accounts and allowances for sales returns for the nine-months ended March 31, 2015, please tell us what consideration was given to separately disclosing the impact of the allowance for sales returns and any sales promotional program</font><font style="font-family:inherit;font-size:11pt;">.</font></div></td></tr></table><div style="line-height:120%;padding-bottom:16px;padding-top:16px;text-align:left;padding-left:24px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">The Company notes that the principal fluctuation in the allowances for sales returns in a given quarter is due to the timing of when the Company accrues credits for transactions and when the Company settles the related liability.&#160;The net decline in the allowance accounts from December 31, 2014 to March 31, 2015 was due to the settlement credits for sales returns accrued in previous periods. Additionally, during the third quarter the issuance of previously earned sales promotional credits exceeded the credits earned for the current period. When evaluating the extent of disclosure for the increases noted for the nine-months ended March 31, 2015, there was not any particular aspect of the increase that was representative of an individual transaction or trend and therefore did not warrant separate disclosure.</font></div><div style="line-height:120%;padding-bottom:16px;padding-top:16px;text-align:left;padding-left:24px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">In regards to the evaluation of disclosure for the impact, if any, of sales promotion programs, the charges will vary due to the Company&#8217;s programs offered to its distributors and customers and the success of such programs.&#160; Accordingly, we factor the impact of our sales promotion programs into our determination of disclosures of the impact of company-wide customer discounts, if any, when we discuss changes in Net Revenues in the Results of Operations. </font></div><br><div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div></div><hr style="page-break-after:always"><a name="s790840ef01df4174abe68144c4d93c52"></a><div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div></div><br><div style="line-height:120%;padding-bottom:16px;padding-top:16px;text-align:left;padding-left:24px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">In our discussion of net cash flows provided by operating activities, we determined there was not any particular aspect of the increase in our accounts receivable allowances for the nine-months ended March 31, 2015, that was representative of a material activity or trend that necessitated separate disclosures relative to our outstanding accounts receivable balance. Therefore, we only cited the decline in our sales and the impact of our enhanced cash collections efforts as relevant factors for the change in accounts receivable.</font></div><div style="line-height:120%;padding-bottom:16px;padding-top:16px;text-align:left;padding-left:24px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">We will continue to review these accounts in the future and disclose material or relevant trends.</font></div><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-align:center;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">* * * * *</font></div><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">In responding to the Staff&#8217;s comments, the Company acknowledges that: </font></div><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman; font-size:10pt;"><tr><td style="width:48px;"></td><td></td></tr><tr><td style="vertical-align:top"><div style="line-height:120%;font-size:11pt;padding-left:24px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;"><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">the Company is responsible for the adequacy and accuracy of the disclosure in the filings;</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman; font-size:10pt;"><tr><td style="width:48px;"></td><td></td></tr><tr><td style="vertical-align:top"><div style="line-height:120%;font-size:11pt;padding-left:24px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;"><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filings; and</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman; font-size:10pt;"><tr><td style="width:48px;"></td><td></td></tr><tr><td style="vertical-align:top"><div style="line-height:120%;font-size:11pt;padding-left:24px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;"><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">The Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.</font></div></td></tr></table><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">If you have any questions regarding the Company&#8217;s responses to the comments of the Staff or require additional information from the Company, please contact the undersigned at (408)&#160;579-2670. </font></div><div style="line-height:120%;padding-top:12px;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">Very truly yours, </font></div><div style="line-height:120%;padding-top:6px;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-weight:bold;">Extreme Networks, Inc.</font></div><div style="line-height:120%;padding-top:6px;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-weight:bold;text-decoration:underline;">/s/ Ken Arola</font></div><div style="line-height:120%;padding-top:12px;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">Ken Arola</font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">Executive Vice President and Chief Financial Officer </font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><br><div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div></div>	</body>
</html>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
