Enterasys Networks Agrees to Settle Shareholder Suit Against Its Predecessor, Cabletron Systems
Company expects to record $500,000 charge in fourth quarter of 2004.
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Andover, MA — Jan 18, 2005
Enterasys Networks Inc. (NYSE: ETS) announced today that it has entered into an agreement in principle to settle shareholder litigation filed in 1997 against its predecessor, Cabletron Systems, Inc., and certain Cabletron directors and officers. The settlement, which is subject to execution of a final settlement agreement and subsequent court approval, does not reflect any admission of wrongdoing by the defendants.
We are very pleased to be putting this matter behind the Company with minimal financial impact, said William K. O'Brien, chief executive officer of Enterasys Networks. Our current management team inherited a significant number of legacy issues that needed to be dealt with. In settling the last pending shareholder lawsuit, we are closing a difficult chapter in the Company's history.
Under the terms of the agreement, Enterasys has agreed to pay $10.5 million. The Company expects all but approximately $500,000 of this amount to be recovered from proceeds of certain Company insurance policies. As a result, Enterasys expects to recognize a one-time net charge of approximately $500,000 in the fourth quarter of fiscal 2004.
The settlement resolves all claims made in nine class action lawsuits originally filed in the United States District Court for the District of New Hampshire against Cabletron Systems, Inc., and various individual defendants, which were consolidated into a single class action known as In re Cabletron Systems, Inc. Securities Litigation (C.A. No. 97-542-SD)
. The litigation does not involve any current executives of Enterasys Networks. The agreement in principle provides that the final settlement agreement be signed no later than January 25, 2005.
About Enterasys Networks
Enterasys Networks (NYSE: ETS) is a global provider of Business-Driven NetworksTM for enterprise-class customers. Enterasys' innovative network infrastructure offerings deliver the security, productivity and adaptability benefits required by Global 2000 organizations, coupled with the industry's strongest service and support. For more information on Enterasys and its products, including multilayer switches and routers, wireless LANs, VPN, network management, and intrusion detection systems (IDS), visit enterasys.com.
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