Cabletron Finalizes Review With Securities and Exchange Commission.ROCHESTER, N.H.--(BUSINESS WIRE)--June 3, 1999-- Cabletron Systems (NYSE NYSE See: New York Stock Exchange :CS) today announced that the staff of the Securities and Exchange Commission ("SEC") has indicated that it has no further comments on Cabletron Systems' financial statements, based upon the revisions Cabletron Systems has agreed to make to its accounting for certain prior acquisitions. Details regarding the Company's revisions are set forth in its Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. filed yesterday. As previously disclosed in its Form 10-Q Form 10-Q See 10-Q. for the second quarter of fiscal 1999, Cabletron Systems received comments from the staff of the SEC principally focused on its accounting for certain prior acquisitions. The comments were similar to comments received by other companies in the high technology industry concerning the accounting for acquisitions. These comments relate primarily to the characterization A rather long and fancy word for analyzing a system or process and measuring its "characteristics." For example, a Web characterization would yield the number of current sites on the Web, types of sites, annual growth, etc. and timing of certain charges associated with the acquisition and to the allocation of the acquisition purchase price to in-process research and development and other intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. . In connection with the acquisition of the Network Products Group of Digital Equipment Corporation "DNPG" in the fourth quarter of fiscal 1998, Cabletron agreed to reduce the amount allocated to in-process research and development from $325 million to $199.3 million and, correspondingly, to increase the amounts allocated to intangible assets by $125.7 million. The resulting intangible assets will be amortized, in the form of a non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. to income, over periods of 5 to 10 years. As previously disclosed in its fiscal year 1999 second quarter Form 10-Q, the Company has also reduced the amount of its special charges recorded in the fiscal year 1998 fourth quarter in connection with the acquisition of DNPG by $33.2 million. The Company has also reduced the amount of the purchase price allocated to in-process research and development in connection with the fiscal year 1999 acquisitions of the CSG CSG - constructive solid geometry division of Ariel, FlowPoint, and NetVantage from an aggregate of $74.7 million to an aggregate of $67.4 million and, correspondingly, increased the amounts allocated to intangible assets by $7.3 million. The company has also reduced the amount of its write down of inventory recorded in fiscal year 1997 relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the ZeitNet acquisition by $6.0 million and has recorded the write down in fiscal year 1998, upon disposal of the inventory. As reflected in the Company's Form 10-K filed yesterday and as a result of the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. revisions, net income for fiscal 1997, as restated, was $226.1 million ($1.42 per share), $4 million ($0.02 per share) greater than the amount originally reported. Net loss for fiscal 1998, as restated, was $35 million ($0.22 per share), $92.1 million ($0.59 per share) less than the amount originally reported. Net loss for fiscal year 1999 was $245.4 million ($1.47 per share), $5.4 million ($0.04 per share) greater than the amount previously reported in a press release dated March 22, 1999. The change for fiscal year 1999 reflects the reduced charges 1. The smaller of the two propelling charges available for naval guns. 2. Charge employing a reduced amount of propellant to fire a gun at short ranges as compared to a normal charge. See also normal charge. for in-process research and development associated with the fiscal 1999 acquisitions of $7.3 million offset by increased amortization of intangible assets of approximately $18.0 million, primarily related to the DNPG. The Company expects non-cash amortization charges for future periods to be increased by approximately $4.5 million per quarter; these charges will have no impact on the Company's operating performance or cash flow. These revisions to the Company's consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge are fully reflected in its Annual Report on Form 10-K for fiscal 1999 filed yesterday with the SEC; in addition, the Company expects to promptly file amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. Form 10-Q and 10-K reports, as appropriate, to reflect the revisions. Any forward looking statements in this release are necessarily subject to uncertainties based on various factors, including the possibility of future comments from the SEC pursuant to review of reports or registration statements filed by the Company. Further information on potential factors which could affect the financial results of Cabletron are included in the Company's amended Form 10-K for the year ended February 28, 1999. About Cabletron Systems Cabletron Systems, a premier provider of high-performance networking solutions, delivers dependable network access and communications to millions of people worldwide. With scaleable products designed for Fortune 1000 enterprise networks, service providers and small businesses, Cabletron is the e-business communications specialist for the information age. Cabletron's web site can be reached on the Internet at http://www.cabletron.com. |
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