Enterasys Networks Announces Settlement of 2002 Shareholder Lawsuits

ANDOVER, MA-- October 18, 2003--Enterasys Networks Inc. (NYSE: ETS) announced today that it has reached agreement to settle all outstanding shareholder litigation against Enterasys, its directors and former officers filed in connection with the Company's restatement of financial results for the 2001 fiscal and transition years. The settlements, which are subject to final court approval, do not reflect any admission of wrongdoing by Enterasys or its directors or former officers.

"We are very pleased to achieve this resolution. Settling all of these cases at one time will put this litigation completely behind us, allowing management to focus on running the Company's business," stated William K. O'Brien, Chief Executive Officer of Enterasys Networks. "The Company believes that resolution of the lawsuits at this time is in the best interests of its shareholders."

In full settlement of all claims in the various lawsuits, the Company has agreed to pay approximately $17.4 million in cash and to distribute shares of common stock with a value of $33.0 million, and to adopt corporate governance changes. In connection with the settlements, Enterasys will record a special charge of approximately $15.9 million or $.08 per share in the third quarter ended September 27, 2003, reflecting the cost of the settlements net of cash proceeds of approximately $34.5 million to be received by the Company from certain of its insurers. The Company is currently engaged in legal proceedings against certain other insurers to recover a portion of the remaining expenses incurred by the Company in connection with these and other related matters. In the event of any such recovery, the amount of the settlement charge may be adjusted in the future.

The settlements agreement resolve all claims made in 6 class action lawsuits filed in the United States District Court for the District of New Hampshire against Enterasys and former officers in 2002, which were later consolidated into a single class action, as well as shareholder derivative actions filed in New Hampshire and Delaware.

The Company expects that the settlement approval and claim administration process could be completed as early as December, 2003. The terms of the settlement and the procedures which shareholders may follow will be set forth in a notice to be sent to a class of persons who purchased Enterasys stock between June 28, 2000 and February 1, 2002.

About Enterasys Networks

Enterasys Networks (NYSE: ETS) is a global provider of Business-Driven NetworksTM for enterprise-class customers. Enterasys' innovative network infrastructure offerings deliver the security, productivity and adaptability benefits required by Global 2000 organizations, 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 http://enterasys.com.

Contact:
Kristen Sheppard, Esq.
Enterasys Networks
(978) 684-1127
ksheppar@enterasys.com

Drew Miale
Enterasys Networks
(978) 684-1201
dmiale@enterasys.com

Source: Enterasys Networks