Cabletron Systems Fourth Quarter and Fiscal Year 2001 Financial Results Press Release

Summary

Cabletron Systems, a holding company for networking and telecommunications firms, announced its financial results for the fourth quarter and fiscal year ending March 3, 2001. The release highlights increased revenues and improved net income for its subsidiaries, including Aprisma Management Technologies and Enterasys Networks. The document also discusses new products, major customer wins, and provides forward-looking statements about future performance. This press release is intended to inform investors and the public about the company's financial health and recent business developments.

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EX-2.1 2 0002.txt CABLETRON SYSTEMS 4TH QTR AND FISCAL END Exhibit 2.1 FOR IMMEDIATE RELEASE CABLETRON SYSTEMS REPORTS FOURTH QUARTER AND FISCAL YEAR END 2001 FINANCIAL RESULTS Q4 2001 Pro Forma Net Income Up 53.7% and Revenue Increases 10% from Prior Quarter CONTACT: Kristen Sheppard Senior Director of Investor Relations ###-###-#### ***@*** Jennifer Kirn Public Relations ###-###-#### ***@*** ROCHESTER, NH MARCH 28, 2001 --Cabletron Systems (NYSE: CS) a holding company for leading networking and telecommunications companies, today reported its fourth quarter results of fiscal year 2001 for the period ended March 3, 2001. "We are very pleased with our results for the fourth quarter," said Piyush Patel, CEO and Chairman of Cabletron Systems. "Overall, the company's growth was driven by continued demand for its innovative products and solutions, along with strong business in the international market." The combined revenues of the four subsidiaries for the fourth quarter of fiscal 2001 were $291.0 million compared with $265.3 million in the prior quarter and $203.6 million in the fourth quarter of fiscal 2000. This represents a sequential quarterly growth rate of 10%, or an annualized growth rate of 46%." On a pro forma basis, Cabletron's subsidiary companies net income increased to $10.7 million, or $0.06 per diluted common, compared with pro forma net income of $6.9 million or $0.04 per diluted common share, in the prior quarter. This compares to Wall Street's estimate of $0.05 per share for the fourth quarter of fiscal 2001. Cabletron has met or exceeded Wall Street's expectations for the ninth consecutive quarter. The combined revenues of the four subsidiaries for the year ended March 3, 2001 were $1,015.8 million, compared with $763.1 million for the year ended February 29, 2000. On a pro forma basis, net income for the four subsidiaries was $7.6 million or $0.04 per diluted common share during the year ended March 3, 2001. This compares with pro forma net loss of $67.7 million or $0.38 per diluted common share during the year ended February 29, 2000. Cabletron's consolidated net loss to common stockholders was $628.9 million or $3.40 per diluted common share during the year ended March 3, 2001, compared with net income to common stockholders of $464.3 million or $2.46 per diluted common share during 2000. CABLETRON ANNOUNCES Q4FY2001 RESULTS 2-2-2-2 Aprisma Management Technologies is a leader in the rapidly growing infrastructure management market. Aprisma's core product is the award winning SPECTRUM management software. Aprisma is capitalizing on its proven ability to guarantee performance and availability of key business services within carrier and enterprise networks. Aprisma had revenues of $21.9 million in the quarter, compared with revenues of $19.7 million in Q3. This represents a sequential quarterly growth rate of approximately 11.1%. This result compares to $13.8 million in Q4 of fiscal 2000, reflecting a year-over-year growth rate of approximately 58.7%. . Important customer wins during the quarter include: Bed Bath & Beyond, Corefuzion, Covad, GWT in China, GTE Puerto Rico, Lucent, Purdue University and ThirdRail. . Aprisma announced the SPECTRUM Security Manager, which integrates and manages multi-vendor security devices and applications. This innovative technology allows customers to eliminate significant operating costs associated with the constant surveying of disparate network equipment, security devices, systems, and applications. ENTERASYS NETWORKS is a provider of enterprise network solutions required to serve emerging bandwidth-intensive enterprise and e-business applications, including converged voice and video, distributed supply chain management, and e-commerce. Enterasys solutions are deployed in some of the world's most complex enterprise networks. Enterasys had revenues of $221.1 million in the quarter, compared with revenues of $205.8 million in Q3. This represents a sequential quarterly growth rate of approximately 7.4%. This result compares to $169.4 million in Q4 of fiscal 2000, reflecting a year-over-year growth rate of 30.5%. . New customers during the quarter include Toyota Canada, National Aerospace and Technical Institute of Spain, the German Federal Government, Network Plus, University Medical Center (UNLV), National Space Agency of Japan, Greatwall Broadband, Tinshan Telecom, the Brazilian Justice Institute, the City of Yoksuka Japan, Toshiba American Electronics, and Ferrari. . Building on its Layer 3 leadership, Enterasys launched the X-Pedition ER16 in Q4. This high performance switch router provides four times the Gigabit routing capacity of its other offerings, and provides a comprehensive set of advanced application services critical for e-business. -MORE- CABLETRON ANNOUNCES Q4FY2001 RESULTS 3-3-3-3 . Enterasys also unveiled the industry's first User Personalized Network. This new system understands the relationships between the users of a network system and their business roles in an organization and leverages that understanding to dynamically provide secure, personalized access to IT services. . Enterasys expanded Secure Harbour, the industry's first holistic security solution, with support for the emerging IEEE 802.1X industry standard. RIVERSTONE NETWORKS (NASDAQ: RSTN) is a leading provider of metropolitan area Internet infrastructure solutions focused on converting commodity bandwidth into profitable services for carriers and service providers. Riverstone announced Q4 FY01 results on March 22, 2001. For more information on Riverstone, a copy of their press release or to listen to a replay of their conference call, visit their web site at: www.riverstonenet.com. ABOUT CABLETRON SYSTEMS Cabletron Systems, based in Rochester, NH, was founded in 1983. Initially a provider of world-class networking solutions, Cabletron announced its corporate transformation to a holding company in 2000. Today, Cabletron is a holding company for four of the most innovative, customer-focused organizations in the telecommunications and networking industry: Aprisma Management Technologies, Enterasys Networks, GlobalNetwork Technology Services, and Riverstone Networks. For more information on Cabletron Systems, visit www.cabletron.com. This release may contain projections or other forward-looking statements regarding the future financial performance of the Company or other future events and circumstances. Such forward-looking statements by their nature involve risks and uncertainties, and actual results or events could differ materially. Risks that could cause actual events or results to differ materially from those in described in the projections or forward-looking statements include business disruption and market perceptions associated with the Company's plan to transform its business into four independent operating subsidiaries, as well as risks associated with competitive conditions, pricing and margin pressures as a result of product shifts and changes in market dynamics, greater use of, and expenses associate with, distributors and resellers, limited management resources, the Company's acquisition strategy, volatility in the stock markets and market valuations being placed on communications infrastructure and service companies, technological changes, intellectual property protection and related issues, dependence on suppliers and contract manufacturers, and potential volatility in operating results, among others. For a more detailed discussion of these and other risks and uncertainties related to the company's business, please refer to the Company's most recent filings with the Securities and Exchange Commission, including the Company's most recent annual report on Form 10-K, and the Company's other recent reports on Form 10-Q and Form 8-K. -MORE- CABLETRON ANNOUNCES Q4FY2001 RESULTS 4-4-4-4
SUMMARY OF PRO FORMA FINANCIAL INFORMATION ($ in thousands) - -------------------------------------------------------------------------------------------------------------- THREE MONTHS ENDED YEAR ENDED - -------------------------------------------------------------------------------------------------------------- March 3, 2001 February 29, 2000 March 3, 2001 February 29, 2000 -------------------- ------------------- -------------- ----------------- - -------------------------------------------------------------------------------------------------------------- (Unaudited) (Q4 FY 2001) (Q4 FY 2000) - -------------------------------------------------------------------------------------------------------------- APRISMA - -------------------------------------------------------------------------------------------------------------- Revenue 21,917 13,788 74,071 52,308 - -------------------------------------------------------------------------------------------------------------- Gross Margin 72.1% 72.5% 68.9% 67.1% - -------------------------------------------------------------------------------------------------------------- Revenue Growth 11.1% 5.2% 41.6% - -------------------------------------------------------------------------------------------------------------- Earnings Before Taxes 664 (6,653) - -------------------------------------------------------------------------------------------------------------- ENTERASYS - -------------------------------------------------------------------------------------------------------------- Revenue 221,054 169,423 794,663 660,978 - -------------------------------------------------------------------------------------------------------------- Gross Margin 50.6% 37.9% 49.9% 42.0% - -------------------------------------------------------------------------------------------------------------- Revenue Growth 7.4% (1.6%) 20.2% - -------------------------------------------------------------------------------------------------------------- Earnings Before Taxes 28,160 63,220 - -------------------------------------------------------------------------------------------------------------- GNTS - -------------------------------------------------------------------------------------------------------------- Revenue 12,898 7,655 48,845 26,767 - -------------------------------------------------------------------------------------------------------------- Gross Margin 43.7% 51.8% 44.7% 47.5% - -------------------------------------------------------------------------------------------------------------- Revenue Growth (1.1%) 12.7% 82.5% - -------------------------------------------------------------------------------------------------------------- Earnings Before Taxes (5,139) (18,098) - -------------------------------------------------------------------------------------------------------------- RIVERSTONE - -------------------------------------------------------------------------------------------------------------- Revenue 35,142 12,761 98,258 23,077 - -------------------------------------------------------------------------------------------------------------- Gross Margin 56.7% 52.3% 56.0% 48.1% - -------------------------------------------------------------------------------------------------------------- Revenue Growth 31.2% 155.6% 325.8% - -------------------------------------------------------------------------------------------------------------- Earnings Before Taxes (5,533) (32,780) - -------------------------------------------------------------------------------------------------------------- OPERATING COMPANY REVENUE 291,011 203,627 1,015,837 763,130 - --------------------------------------------------------------------------------------------------------------
NOTE: These results are unaudited and except for Riverstone are compilations for purposes of segment reporting only. -MORE- CABLETRON ANNOUNCES Q4FY2001 RESULTS 5-5-5-5 CABLETRON SYSTEMS PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (in thousands, except per share data)
THREE MONTHS ENDED YEAR ENDED - ------------------------------------------------------------------------------------------------------------------------------ Q4 FY2001 Q4 FY2000 - ------------------------------------------------------------------------------------------------------------------------------ March 3, February 29, -------- ------------ March 3, February 29, 2001 2000 2001 2000 -------- -------- ---------- --------- - ------------------------------------------------------------------------------------------------------------------------------ NET SALES $291,011 $203,627 $1,015,837 $ 763,130 - ------------------------------------------------------------------------------------------------------------------------------ Cost of Sales 137,793 118,731 491,734 426,770 - ------------------------------------------------------------------------------------------------------------------------------ GROSS MARGIN 153,218 84,896 524,103 336,360 - ------------------------------------------------------------------------------------------------------------------------------ Operating expenses: - ------------------------------------------------------------------------------------------------------------------------------ Research and development 35,520 39,124 141,004 160,004 - ------------------------------------------------------------------------------------------------------------------------------ Selling, general and administrative 110,203 76,861 407,234 293,028 - ------------------------------------------------------------------------------------------------------------------------------ OPERATING INCOME (LOSS) 7,495 (31,089) (24,135) (116,672) - ------------------------------------------------------------------------------------------------------------------------------ Interest income, net 7,941 6,535 35,179 18,587 - ------------------------------------------------------------------------------------------------------------------------------ INCOME (LOSS) FROM OPERATIONS BEFORE INCOME TAXES 15,436 (24,554) 11,044 (98,085) - ------------------------------------------------------------------------------------------------------------------------------ Income tax expense (benefit) 4,785 (7,612) 3,424 (30,406) - ------------------------------------------------------------------------------------------------------------------------------ NET INCOME (LOSS) TO COMMON STOCKHOLDERS $ 10,651 $(16,942) $ 7,620 $ (67,679) - ------------------------------------------------------------------------------------------------------------------------------ Net income (loss) per common share $0.06 $(0.09) $0.04 $(0.38) - ------------------------------------------------------------------------------------------------------------------------------ Weighted avg. number of diluted common shares - 189,676 182,497 190,988 177,541 - ------------------------------------------------------------------------------------------------------------------------------
The above pro forma statement has been adjusted to exclude the following items: - ----------------------------------------------------------------------------------------------------------------------------- Non-Core Business and Intercompany Eliminations (4,995) 178,141 55,616 696,463 - ----------------------------------------------------------------------------------------------------------------------------- Changes related to discontinuation of non-core businesses effecting cost of sales 2,810 87,829 66,616 377,050 - ----------------------------------------------------------------------------------------------------------------------------- Non-core research and development 0 3,178 5,130 24,610 - ----------------------------------------------------------------------------------------------------------------------------- Changes related to transformation of the company effecting selling, general and 11,548 31,635 64,509 121,540 administrative - ----------------------------------------------------------------------------------------------------------------------------- Stock based compensation charges 1,440 0 4,980 0 - ----------------------------------------------------------------------------------------------------------------------------- Amortization of goodwill and other acquisition-related charges 6,281 18,968 37,280 41,270 - ----------------------------------------------------------------------------------------------------------------------------- Purchased in-process R&D technology 25,600 0 25,600 0 - ----------------------------------------------------------------------------------------------------------------------------- Special charges 0 (2,640) 25,550 21,096 - ----------------------------------------------------------------------------------------------------------------------------- Net (losses) gains realized on minority investments (410,910) 697,100 (541,127) 746,209 - ----------------------------------------------------------------------------------------------------------------------------- Income tax expense (benefit) effect (27,942) 288,140 (101,387) 325,156 - -----------------------------------------------------------------------------------------------------------------------------
-MORE- CABLETRON ANNOUNCES Q4FY2001 RESULTS 6-6-6-6 CABLETRON SYSTEMS CONSOLIDATED STATEMENTS OF OPERATIONS The following financials include certain items, including amortization of goodwill, that were excluded from the pro-forma results (in thousands, except per share data.)
THREE MONTHS ENDED YEAR ENDED - --------------------------------------------------------------------------------------------------------------------------------- March 3, February 29, March 3, February 29, 2001 2000 2001 2000 ---------- -------- ---------- ---------- - --------------------------------------------------------------------------------------------------------------------------------- (Unaudited) (Q4 FY2001) (Q4 FY2000) - --------------------------------------------------------------------------------------------------------------------------------- NET SALES $ 286,016 $381,768 $1,071,453 $1,459,593 - --------------------------------------------------------------------------------------------------------------------------------- Cost of Sales 140,603 206,560 558,350 803,820 - --------------------------------------------------------------------------------------------------------------------------------- GROSS MARGIN 145,413 175,208 513,103 655,773 - --------------------------------------------------------------------------------------------------------------------------------- Operating expenses: - --------------------------------------------------------------------------------------------------------------------------------- Research and development 35,520 42,302 146,134 184,614 - --------------------------------------------------------------------------------------------------------------------------------- Selling, general and administrative 121,751 108,496 471,743 414,568 - --------------------------------------------------------------------------------------------------------------------------------- Amortization of certain acquired intangible assets 6,281 18,968 37,280 41,270 - --------------------------------------------------------------------------------------------------------------------------------- In-process research and development 25,600 0 25,600 0 - --------------------------------------------------------------------------------------------------------------------------------- Stock based compensation 1,440 0 4,980 0 - --------------------------------------------------------------------------------------------------------------------------------- Special charges 0 (2,640) 25,550 21,096 - --------------------------------------------------------------------------------------------------------------------------------- OPERATING INCOME (LOSS) (45,179) 8,082 (198,184) (5,775) - --------------------------------------------------------------------------------------------------------------------------------- Interest income, net 7,941 6,535 35,179 18,587 - --------------------------------------------------------------------------------------------------------------------------------- Other income, net (410,910) 697,100 (541,127) 746,209 - --------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM OPERATIONS BEFORE INCOME TAXES (448,148) 711,717 (704,132) 759,021 - --------------------------------------------------------------------------------------------------------------------------------- Income tax expense (benefit) (23,157) 280,528 (97,963) 294,750 - --------------------------------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) (424,991) 431,189 (606,169) 464,271 - --------------------------------------------------------------------------------------------------------------------------------- Dividend effect of beneficial conversion feature to Series A 0 0 (16,854) 0 and Series B Preferred Stockholders - --------------------------------------------------------------------------------------------------------------------------------- Accretive dividend of Series A and Series B Preferred Shares (3,037) 0 (6,044) 0 - --------------------------------------------------------------------------------------------------------------------------------- Minority interest 166 0 166 0 - --------------------------------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) TO COMMON STOCKHOLDERS ($427,862) $431,189 ($628,901) $ 464,271 - --------------------------------------------------------------------------------------------------------------------------------- Net income (loss) per common share - basic ($2.30) $2.36 ($3.40) $2.62 - --------------------------------------------------------------------------------------------------------------------------------- Net income (loss) per common share - diluted ($2.30) $2.23 ($3.40) $2.46 - --------------------------------------------------------------------------------------------------------------------------------- Weighted avg. number of common shares - Basic 185,976 182,497 184,770 177,541 - --------------------------------------------------------------------------------------------------------------------------------- Weighted avg. number of common shares - Diluted 185,976 193,132 184,770 188,618 - ---------------------------------------------------------------------------------------------------------------------------------
Certain prior period balances have been reclassified to conform to the current year presentation. -MORE- CABLETRON ANNOUNCES Q4FY2001 RESULTS 7-7-7-7 Cabletron Systems Consolidated Balance Sheets (in thousands)
(UNAUDITED) March 3, February 29, 2001 2000 ---------- ---------- - ------------------------------------------------------------------------------------------------------- ASSETS - ------------------------------------------------------------------------------------------------------- CURRENT ASSETS: - ------------------------------------------------------------------------------------------------------- Cash and cash equivalents $ 354,543 $ 350,980 - ------------------------------------------------------------------------------------------------------- Short-term investments 185,491 221,981 - ------------------------------------------------------------------------------------------------------- Accounts receivable (net) 210,862 228,372 - ------------------------------------------------------------------------------------------------------- Inventories (net) 98,183 85,016 - ------------------------------------------------------------------------------------------------------- Deferred income taxes 20,443 82,813 - ------------------------------------------------------------------------------------------------------- Other current assets 91,064 38,211 ---------- ---------- - ------------------------------------------------------------------------------------------------------- TOTAL CURRENT ASSETS 960,586 1,007,373 ---------- ---------- - ------------------------------------------------------------------------------------------------------- Investments 545,053 1,903,858 - ------------------------------------------------------------------------------------------------------- Property plant & equipment (net) 91,271 124,992 - ------------------------------------------------------------------------------------------------------- Intangible assets (net) 194,302 130,284 - ------------------------------------------------------------------------------------------------------- Long-term deferred income taxes 87,453 0 - ------------------------------------------------------------------------------------------------------- TOTAL ASSETS $1,878,665 $3,166,507 ========== ========== - ------------------------------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY: - ------------------------------------------------------------------------------------------------------- CURRENT LIABILITIES: - ------------------------------------------------------------------------------------------------------- Accounts payable $ 91,351 $ 117,631 - ------------------------------------------------------------------------------------------------------- Accrued expenses 111,690 132,701 - ------------------------------------------------------------------------------------------------------- Deferred revenue 99,840 119,011 - ------------------------------------------------------------------------------------------------------- Other current liabilities 143,593 189,862 ---------- ---------- - ------------------------------------------------------------------------------------------------------- Total Current Liabilities 446,474 559,205 ---------- ---------- - ------------------------------------------------------------------------------------------------------- Deferred income taxes 0 459,863 ---------- ---------- - ------------------------------------------------------------------------------------------------------- Total Liabilities 446,474 1,019,068 ---------- ---------- - ------------------------------------------------------------------------------------------------------- Minority interest 34,567 0 - ------------------------------------------------------------------------------------------------------- Redeemable preferred stock 109,589 0 - ------------------------------------------------------------------------------------------------------- Stockholders' equity 1,288,035 2,147,439 ---------- ---------- - ------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND $1,878,665 $3,166,507 STOCKHOLDERS' EQUITY ========== ========== - -------------------------------------------------------------------------------------------------------
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