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Enterasys Networks, Inc. (NYSE: ETS) today reaffirmed its preliminary revenue estimate of $120 million for the third fiscal quarter ended September 28, 2002, consistent with the Company’s previous guidance. The Company also stated that its results for the third quarter are expected to show a significant reduction in cash usage, to approximately $25 million compared to approximately $75 million (excluding income tax refunds) in the preceding quarter. Management stated that the revenue and cash usage estimates for the third quarter reflect the continuing success of its strategies to stabilise revenue, reduce the overall cost structure of the business, and return the Company to cash-positive, profitable operations as soon as possible.

Included in the estimated $25 million cash use for the third fiscal quarter are non-recurring items of approximately $22 million relating to the settlement of prior period tax liabilities and approximately $11 million of expenses associated with the Company’s previously announced internal review and the separate investigation by the Securities and Exchange Commission (SEC). These amounts were offset by approximately $12 million related to the net proceeds of the previously announced sale of a business and other non-operating cash receipts.

The Company anticipates making further progress toward its goal of achieving cash-positive operations, with cash usage in the fourth quarter expected to be considerably lower than the third quarter, although the Company will continue to incur costs related to the internal review and other related matters. It also stated that its cash and marketable securities balance of approximately $270 million as of September 28, 2002 is currently expected to be sufficient to meet the Company’s operating and non-operating cash needs for the foreseeable future. The Company indicated that it expects to receive approximately $30 million of federal income tax refunds in the first half of 2003, relating to anticipated tax loss carrybacks for the year ending December 28, 2002. Additionally, the Company’s potential non-operating cash requirements could be affected by the right of its preferred stockholders to redeem all of their preferred stock for approximately $90-100 million at any time on or after February 23, 2003, as discussed in more detail in the Company’s Form 10-K for the fiscal year ended March 3, 2001. The Company said it expects to engage in discussions with the preferred stockholders concerning alternatives to this potential redemption, although there can be no assurance as to the outcome of any such discussions.

Separately, the Company announced that it has completed its internal review of historical revenue recognition and other financial reporting practices. All matters subject to the review have been resolved, with the exception of one accounting issue, which the Company expects to resolve shortly. Accordingly, the Company intends to file its Form 10-K for the ten month period ended December 29, 2001 (“transition year 2001”) with the SEC promptly thereafter. The Company indicated that this financial report will include the cumulative impact of the restatements for the first three quarters of transition year 2001 and the fiscal year ended March 3, 2001. As previously announced, these restatements are expected to contain adjustments relating primarily to sales/investment transactions, pricing allowances and return rights, relationships with certain Asia/Pacific and Latin American distributors, and other financial reporting issues. The Company has discontinued the historical pr!
actices giving rise to these issues or has changed its policies and procedures in order to assure that these matters are appropriately reflected in its financial statements and revenue estimates.

The Company also noted that it intends to complete and file its financial reports on Form 10-Q for the quarters ended March 30, 2002, June 29, 2002 and September 28, 2002 as soon as practicable after the filing of its Form 10-K for transition year 2001. Following these filings, the Company anticipates that it will hold a conference call to discuss its fiscal 2002 year to date financial results in more detail.

About Enterasys Networks

Enterasys Networks (NYSE: ETS) is a leading worldwide provider of broad-line data networking infrastructures for enterprise-class customers. Enterasys’ product and service offerings are the foundation for today’s business-driven networks™ enabling Global 2000 companies to better align IT resources with the changing goals and demands of the organisation. The result is an enterprise that delivers the critical security, availability and mobility required for day-to-day operations, while also providing measurable, long-term value to the customer. For more information on Enterasys and its products, including multilayer switches and routers, wireless LANs, VPN, network management, and intrusion detection systems (IDS), visit

Safe Harbour Statement:

This press release contains projections and other forward-looking statements regarding the future cash flows and other financial performance of the Company and 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 company’s internal review and the Securities and Exchange Commission’s investigation relating to the Compa!
ny’s financial reporting, economic trends associated with the recent terrorist activities experienced in the United States and abroad and any continuation or repercussions thereof or responses thereto, as well as risks associated with competitive conditions, pricing and margin pressures as a result of product shifts and changes in market dynamics, greater use of, and expenses associated with, distributors and resellers, limited management resources and recent management changes, the Company's market and technology development strategies, extension or deterioration of prevailing economic conditions, risks related to the timing, completion and results of the Company’s independent audit, internal review, and investigation being conducted by the Securities and Exchange Commission, volatility in the stock markets and market valuations being placed on communications infrastructure and service companies, technological changes, intellectual property protection and related issues, de!
pendence on suppliers and contract manufacturers, and potential volatility in operating results, among others. The Company's estimates that it will achieve breakeven cash flow from operations by the fourth quarter of 2002 and that its existing cash balance will be sufficient to meet its on-going cash needs for the foreseeable future are based on projections of, among other things, revenues, margins, costs and expenses, any of which could be adversely affected by many of the factors described above. Adverse changes in assumptions relating to revenues, margins, costs and expenses could have the effect of delaying the Company's achievement of breakeven cash flow from operations beyond 2002, if at all. 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 Securities 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:

Review copies, interviews, screen shots and information on all Enterasys products are available from Martin Brindley and Adrian Brophy at MCC International.

Martin Brindley/Adrian Brophy

MCC International Ltd

Tel: +44 1962 888100


Investor Contact:

Kristen Sheppard

Investor Relations

Tel: +1 (978-684-1127)


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