Enterasys Networks Settles SEC Probe
Posted on: Thursday, 27 February 2003, 06:00 CST
Enterasys Networks Settles SEC Probe
source: Associated Press Tech News
By STEPHEN FROTHINGHAM, Associated Press Writer
CONCORD, N.H. - Enterasys Networks Inc. said it has reached an agreement with federal regulators to settle a yearlong investigation into its accounting practices.
The computer networking company said on Wednesday it has agreed with the Securities and Exchange Commission to appoint an internal auditor who will report to the board of directors audit committee.
The agreement does not require Enterasys to adjust previous financial statements or pay penalties or fines, chief executive William O'Brien said. Last year, after an internal review, the company restated finances to show larger losses than previously reported.
"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 said in a statement.
Company officials would not comment on an investigation by state regulators, which was announced last month.
Enterasys, based in Rochester, N.H., is a spinoff from Cabletron Systems Inc., which Gov. Craig Benson co-founded. The SEC investigation became an issue in the gubernatorial campaign last year when opponents said Benson should have known what was going on.
Benson was an Enterasys director and a member of the audit committee before resigning from the board just before taking office.
Last week Enterasys announced third quarter losses of $31.5 million, or 16 cents per share, on revenues of $123 million. On Wednesday Enterasys said it expects revenue for the fourth quarter, which ended December 28, to be about $120 million.
The agreement was announced after the market closed on a day when Enterasys was down 5 cents to $1.75 a share on the New York Stock Exchange. In after hours trading the stock was up 25 cents to $2 a share.
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