Enterasys Networks Announces Delay in the Release of Fourth Quarter Financial Results
Contact:
Kristen Sheppard
Investor Relations
(603) 337-1502
ksheppar@enterasys.com
PORTSMOUTH, NH-- February 1, 2002--Enterasys Networks, Inc. (NYSE: ETS), announced today that the release of its fourth quarter and fiscal year ended December 29, 2001 financial results has been delayed. The delay results from the need to complete a review of certain issues identified by management on January 31, 2002 arising from the terms of a $4 million sales contract recorded by its Asia Pacific operations. The Company has informed its independent auditor, KPMG, LLP, of the discovery and is implementing a rigorous review of sales practices and revenue recognition in the Asia Pacific region. Further, management is committed to taking all necessary actions to bring this matter to a swift and appropriate conclusion.
Historically, the Asia Pacific region has represented approximately 13% of the Company’s worldwide revenue. At present, the Company is not able to estimate the amount of Asia Pacific revenue that will be recognized in the fourth quarter or determine the impact, if any, on prior periods. On the Company’s October 29, 2001 third quarter earnings call and during fourth quarter presentations to investors, management disclosed anticipated weakness in the region and stated that it was in the process of strengthening the management team in the Asia Pacific region.
The Company also announced that preliminary unaudited results for the fourth quarter ended December 29, 2001 in its North American and European regions, which historically have accounted for approximately 80% of worldwide sales, were in line with internal expectations. In addition, the preliminary unaudited results in Latin America were approximately $7 million below internal expectations due primarily to the timing of certain sales.
In a development apparently unrelated to the Company’s Asia Pacific review, the Company announced that it was informed after the close of business on January 31, 2002 that the U.S. Securities and Exchange Commission has issued an order of investigation relating to Enterasys and certain affiliated companies. The Company intends to fully cooperate with the SEC’s investigation.
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.