ENTERASYS UPDATES SALES RECOGNITION MODEL TO REFLECT SHIFT TO CHANNEL FOCUS Tuesday 30 October 2001 PDF Print Announces Results for New Fiscal Third Quarter October 30, 2001 – Enterasys Networks, Inc. (NYSE: ETS), a leader in enterprise network solutions, today announced that it has implemented a new sales recognition model to reflect its shift toward a channel-focused, high-touch strategy. In addition, Enterasys announced that it had implemented the previously announced change to a calendar-based year. “Our new sales recognition policy provides investors with more visibility into sales out activity and better aligns our accounting with our channel strategy,” stated Henry Fiallo, Chairman and CEO of Enterasys Networks. “This accounting change does not affect our competitive position and has no impact on future quarters. We remain highly confident in our ability to outperform the market, meet expectations and deliver strong profits even during these challenging economic times.” The Company also announced its financial results for its third quarter ended September 29, 2001. Pro forma revenue and fully diluted, pro forma earnings per share for the third quarter of 2001 were 7 million, or $.05 per share. These pro forma results excluded one-time adjustments relating to the transition to the company's new revenue recognition policy, reserves for excess and obsolete inventory, a charge for contractual penalties to contract manufacturers relating to changes in production plans and other previously disclosed charges relating to the company's transformation. These adjustments are detailed in a separate financial table provided below. “Although the month of September was extremely challenging in the aftermath of the September 11th tragedy, Enterasys business fundamentals are solid and our sales pipeline has stabilised and improved in October,” said Fiallo. “Enterprises continue to elevate the importance of network security, secure remote connectivity and expanded mobility which play into areas of relative strength for Enterasys.” Fiallo concluded, “Enterasys will continue to gain market share as we deliver new products in the fourth quarter that will significantly enhance our competitive positioning in the enterprise market.” Enterasys Conference Call Highlights: · Enterasys completes transition to new sales out revenue recognition policy: The Company transitioned to its new sales out revenue recognition policy in the third quarter. Under this new policy, revenue from products sold through two-tier distribution partners will be recognised upon sale by the distributors to their customers. This accounting change and the one-time adjustments recorded in the third quarter will not impact future quarters. The new sales out recognition policy required minimal long-term contractual changes to distributor agreements and maintains Enterasys’ strong relationships with these partners. · Enterasys strengthens product position: Continuing its commitment to network security, Enterasys announced the latest version of its award-winning Dragon Intrusion Detection System, Dragon 5.0. This new release introduces more scalability, availability, and flexibility into the underlying IDS architecture to enhance the security of enterprise networks. In addition, Enterasys will be announcing significant new products in its Matrix Layer 3 Switch line that will dramatically effect its competitive position in the gigabit switching market. · Enterasys transitions to a calendar fiscal year: Enterasys new fiscal year ends December 29, 2001 and will include the ten month period beginning March 4, 2001. · Aprisma spin-off proceeding on schedule, continuing February fiscal year end: As previously announced, the spin-off of the Company's wholly-owned subsidiary, Aprisma Management Technologies, Inc., is proceeding toward completion by the end of the calendar year. Accordingly, Aprisma will retain its February fiscal period reporting schedule and will report its stand-alone third quarter results for the period ending December 1, 2001 in a separate press release in December. Discontinued Operations: Riverstone Networks, which was spun off in a tax free distribution of shares on August 6, 2001, is reflected as a discontinued operation. Additionally, the results of Enterasys’ wholly owned subsidiary, Aprisma, are also reported as a discontinued operation in the Enterasys consolidated results based on the pending spin-off of that business. About Enterasys Networks: Enterasys Networks (NYSE: ETS) is a leading worldwide provider of communications infrastructures for enterprise-class customers. Enterasys' networking hardware and software offerings deliver the innovative security, availability and mobility solutions required by Global 2000 organizations coupled with the industry's strongest service and support. For more information, visit enterasys.com. This press release contains contain projections and other forward-looking statements regarding the future financial performance of the Company or other future events and circumstances, and actual results, events and circumstances could differ materially. These forward-looking statements are not historical facts or guarantees of future performance, and are based on current estimates and numerous assumptions. These estimates and assumptions reflect subjective judgments concerning future events and circumstances and may be incomplete or incorrect, and unanticipated events or circumstances may occur causing these estimates and assumptions to be wrong. Risks that could cause actual events or results to differ materially from those described in the projections or forward-looking statements include business disruption and market perceptions associated with the recent terrorist activity experienced in the United States and any possible continuation or repercussions thereof or respon! ses thereto, as well as risks associated with the timing and execution of the Company's strategy for Aprisma Management Technologies, Inc., competitive conditions, pricing and margin pressures as a result of product shifts and changes in market dynamics, greater use of, and expenses associate with, distributors and resellers, limited management resources, the Company's acquisition strategy, extension or deterioration of prevailing economic conditions, volatility in the stock markets and market valuations being placed on communications infrastructure and service companies, technological changes, intellectual property protection and related issues, dependence on suppliers and contract manufacturers, and potential volatility in operating results, among others. For a more detailed discussion of these and other risks and uncertainties related to the company's business, please refer to the most recent filings of Enterasys Networks, Inc. and Cabletron Systems Inc. with the Securiti! es and Exchange Commission, including Cabletron's annual report on Form 10-K for the fiscal year ended March 3, 2001 and their other more recent reports on Form 10-Q and Form 8-K. Editorial Contacts: Annmarie Dickson, Enterasys Networks, Tel: +44 1635 810723, E: firstname.lastname@example.org Martin Brindley, MCC International, Tel: +44 1962 888100, E. email@example.com This press release was distributed by ResponseSource Press Release Wire on behalf of MCC International Ltd in the following categories: Consumer Technology, Personal Finance, Business & Finance, Computing & Telecoms, for more information visit https://pressreleasewire.responsesource.com/about.