Enterasys Networks announced that it has reached an accord with the US Securities and Exchange Commission (SEC), pursuant to which Enterasys settled an investigation initiated by the SEC in January 2002.
The company added that it has filed its quarterly report on Form 10-Q for the third fiscal quarter ended 28 September 2002, bringing the company current with its financial reporting obligations. A copy of the filing can be viewed and downloaded at http://www.enterasys.com/corporate/ir/sec.html.
The company also announced that it expects revenue for the fourth quarter ended 28 December 2002 to show continued stability in a range approximating $120 million, and that it has achieved its goal of break-even operating cash flow in the fourth quarter, ending the fiscal year with approximately $305 million of cash and marketable securities.
The settlement with the SEC does not require any further adjustment to the company`s historical financial statements and does not impose any civil penalties or fines. Pursuant to the settlement, Enterasys, without admitting or denying any allegations, agreed to a cease and desist order requiring future compliance with the federal securities laws and regulations, and to appoint an internal auditor reporting directly to the Audit Committee of Enterasys` board of directors. The company confirmed that a director of internal audit, reporting to the Audit Committee, was appointed in October 2002.
"We are extremely pleased to have this matter behind us," stated William K O`Brien, Chief Executive Officer of Enterasys Networks, Inc. "This settlement effectively resolves the company`s outstanding issues with the SEC - bringing closure to historical reporting matters and marking the end of a long and difficult process."
O`Brien continued: "We cooperated fully with the SEC in a very thorough review of complex accounting issues and are pleased that the settlement recognises the company`s efforts. In addition, we conducted our own comprehensive internal review, completed the appropriate restatements, and have now brought all of our periodic reporting up to date. Having implemented additional internal controls, established and expanded the internal audit function and introduced other process improvements over the past year, Enterasys is committed to the highest level of integrity in its financial reporting."
"Since new management was appointed by the board of directors in early 2002, we have focused intensely on delivering business-driven solutions to our loyal installed customer base, making dramatic improvements in our operations, executing on key product roadmaps, and resolving the historical accounting issues," said O`Brien.
"With the historical matters firmly behind us, we can now also focus significant resources on expanding new business in the market. We have a powerful product roadmap that will deliver tangible benefits to customers. As we deliver on this roadmap by launching significant new products in the months ahead, the market will begin to see a reinvigorated Enterasys Networks."
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Enterasys Networks (NYSE: ETS) is a leading worldwide provider of Business-Driven Networks for enterprise-class customers. Enterasys` innovative network infrastructure offerings deliver the security, productivity and agility benefits required by Global 2000 organisations, 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 www.enterasys.com.
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