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Enterasys Networks Achieves Profitable Revenue Growth in Q3 2006

Posted on: Tuesday, 31 October 2006, 12:00 CST

ANDOVER, Mass., Oct. 31 /PRNewswire/ -- Enterasys Networks, Inc., the Secure Networks Company(TM), today announced that its financial results once again met Company expectations for the fiscal third quarter ended September 30, 2006. Enterasys achieved positive net income in Q3 and posted back-to- back quarters of revenue growth for the first time since the Company was formed in 2001.

Gross margins increased over the prior quarter, remaining strong at more than 50 percent. Enterasys has now posted five consecutive quarters of pro-forma operating profitability. These results do not reflect any purchase accounting adjustments that may be applied related to the Company's acquisition in March 2006 by a group of private investors led by The Gores Group, LLC, and Tennenbaum Capital Partners, LLC.

"Enterasys made very solid progress in the third quarter, maintaining revenue growth momentum, posting positive net income, and adding a large number of new customers," said Mike Fabiaschi, president and CEO of Enterasys Networks. "These results are a significant milestone in our ongoing effort to expand our thought leadership by bringing the unique business benefits of Secure Networks(TM) technologies to enterprise customers around the world.

"To demonstrate our commitment to the philosophy that there is nothing more important than our customers, we are in the midst of a 30-city worldwide tour of executive briefings where we share our technology vision and hear directly from customers and partners how Enterasys is helping them achieve their business goals. Live demonstrations are enabling us to show the full capabilities of Secure Networks to automatically predict/prevent, sense and respond to security threats across infrastructure from multiple vendors," Fabiaschi said.

Highlights for the third quarter of 2006 include: * Added more than 150 new customers for the second consecutive quarter. * Key vertical markets grew in Q3 from the previous quarter, including: - Energy - Federal Government - Healthcare - Manufacturing * New customers in the United States included: - EDS Managed Security Services - J Jill Group - The Motion Picture Association of America - Petroleum Development Corp. - Samaritan Healthsystems * New customers in the EMEA region included: - Barzliay Hospital in Israel - Brand Rex in the UK - The Carabinieri in Italy - Hellenic Police in Greece - Indra Sistemas in Spain - Old Mutual Insurance in South Africa * New customers in Latin America included: - Fondo de la Vivienda del ISSSTE in Mexico - Iveco Motores in Brazil - Ministerio do Exercito in Brazil - Tanglewood Investments in the Caribbean - Tribunal Federal de Justicia Fiscal y Administrativa in Mexico * New customers in Asia-Pacific included: - ChangSha University of Technology in China - The Four Seasons Hotel in China - Ohu University in Japan - Oracle in Australia - Seoul Medical Center in South Korea * Sales of Dragon Intrusion Defense products increased dramatically quarter-over-quarter. * Total port shipments rose 6 percent sequentially in Q3 and 10 percent compared to the year-ago quarter.

Layer 2 switching, led by the SecureStack A2 and B2 edge switches, posted a seventh consecutive quarter of revenue and port shipment growth. Matrix N-Series modular Layer 3 switches posted increases in both revenue and port shipments for the third consecutive quarter.

More than 700 partners, customers and prospects have attended the Enterasys customer briefing roadshow. The successful tour visited 25 major North American and European cities and is currently taking place in the largest cities in Asia before concluding in Latin America.

About Enterasys Networks

Enterasys Networks -- the Secure Networks Company -- is privately owned by an investor group led by The Gores Group, LLC and Tennenbaum Capital Partners, LLC. Enterasys' unique Secure Networks solutions secure any network from any vendor and ensure the integrity and performance of IT services and the business users that rely on them. Thousands of leading companies, government agencies and educational institutions in more than 70 countries rely on Secure Networks solutions to maintain business continuity and protect vital information. The company's culture is centered on the principle "There is nothing more important than our customers." Delivering on that commitment, Secure Networks provides granular, policy-based command and control of individual user, application, device, port and flow performance, and security. Enterasys' architectural approach to network security offers a long technology lifecycle and significant operational and business benefits, while reducing total cost of ownership. Information about Enterasys' award-winning policy- enabled switches, routers, wireless products, security software, and services is available at http://www.enterasys.com/.

About The Gores Group

Founded in 1987, The Gores Group is a private equity firm focused on acquiring controlling interests in mature and growing businesses which can benefit from the firm's operating experience and flexible capital base. The firm combines the operational expertise and detailed due diligence capabilities of a strategic buyer with the seasoned M&A team of a traditional financial buyer. The Gores Group has become a leading investor, primarily in the technology and telecommunications sectors, having demonstrated over time a reliable track record of creating substantial value in its portfolio companies alongside management. Headquartered in Los Angeles, California, The Gores Group maintains offices in Boulder, Colorado and London. For more information, please visit http://www.gores.com/.

About Tennenbaum Capital Partners, LLC

Tennenbaum Capital Partners is a Santa Monica, California-based private investment firm managing over $3.8 billion in assets through private funds. The firm's investment strategy is grounded in a long-term, value approach, and it assists - both financially and operationally - transitional middle-market companies in such industries as technology, healthcare, energy, aerospace, business services, retail and general manufacturing. Tennenbaum's core strengths include its in-depth knowledge of equity and debt-financing vehicles in the public and private markets, as well as a thorough understanding of special situations. For more information, please visit http://www.tennenbaumcapital.com/

Enterasys Networks, Inc.

CONTACT: Kevin Flanagan of Enterasys Networks, +1-978-684-1473,kflanaga@enterasys.com

Web site: http://www.enterasys.com/

Source: PRNewswire

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