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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(MARK ONE)

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

OR

     FOR THE TRANSITION PERIOD FROM                          TO                         

Commission file number 000-31517

INRANGE TECHNOLOGIES CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Registrant’s telephone number, including area code: (609) 518-4000

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Title of Class

Class B Common Stock, par value $0.01 per share.

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Form 10-K or any amendment to this Form 10-K.  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes  ¨    No  x

The aggregate market value of our Class B common stock held by non-affiliates of the registrant as of June 28, 2002, was approximately $33,357,858.

The number of shares of Class B common stock outstanding on June 28, 2002 was 7,074,218. The number of shares of Class A common stock outstanding on that date was 75,633,333.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s Proxy Statement dated March 27, 2003 for the Annual Meeting of Stockholders to be held on April 25, 2003 are incorporated by reference into Part III.

PART I.

ITEM 1.    BUSINESS

SAFE HARBOR STATEMENT

Certain statements in this Annual Report on Form 10-K are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created thereby. The words “believe,” “expect,” “anticipate,” “estimate,” “guidance,” “target,” and similar expressions identify forward-looking statements. Due to the risks and uncertainties of our business, including, but not limited to those described in “Factors That May Affect Results,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business” sections of this Annual Report on Form 10-K and the other reports we file from time to time with the Securities and Exchange Commission, readers are cautioned not to place undue reliance on any of these forward-looking statements, which speak only as of the date of this report. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Further, we assume no obligation to update any forward-looking statements as a result of new information or future events or developments.

Overview

Inrange designs, manufactures, markets and services switching and networking products for storage and data networks. Our products provide fast and reliable connections among networks of computers and related devices, allowing customers to manage and expand large, complex storage networks efficiently, without geographic limitations. We serve Fortune 1000 businesses and other large enterprises that operate large-scale systems where reliability and continuous availability are critical. Inrange’s solutions solve the growing data storage challenges facing IT organizations, while providing investment protection and a proven foundation for future growth.

Our flagship product, the FC/9000, is the most scalable storage networking director-class switch available for Storage Area Networks (SANs). With an ability for customers to upgrade and scale to 256 ports without disrupting existing systems, the FC/9000 provides a platform from which enterprises can build storage networks that can be used in systems where reliability and continuous availability are critical. Our products are designed to be compatible with various vendors’ products and multiple communication standards and protocols. We distribute and support our products through a combination of our direct sales and service operations and indirect channels.

Market Opportunity

Over the last decade, the volume of information that is transmitted, captured, processed and stored over SANs has increased as a result of a number of factors, including:

The Inrange business strategy is based on the following tenets:

Our Products and Services

IN-VSN FC/9000 Fibre Channel Director

Presently, data is transported across SANs using two communications protocols: Fibre Channel and FICON. Fibre Channel is used to package data and transport it in a SAN environment from the application servers to storage disk arrays. FICON, which is based on Fibre Channel, is an IBM-proprietary protocol for transporting data from server to storage in a mainframe computing application.

The FC/9000 director is engineered with several key competitive advantages for both Fibre Channel and FICON environments that include scalability, high availability, non-blocking performance, interoperability and investment protection:

9801 and 9811 Storage Networking Systems

The Inrange 9801 and 9811 storage networking systems allow an IT organization to easily and quickly transmit data over thousands of miles between multiple locations over multiple interfaces such as ATM, OC-3, T3/E3, T1/E1, and HSSI. Competitive advantages of the 9801 and 9811 systems include:

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8200 Channel Extension System

The 8200 is a channel extension system that utilizes advanced emulation and communication techniques to enable devices to be remotely located from their processors. For example, a mainframe can be located thousands of miles away from the device to which it is sending data. Pertinent applications for the 8200 include:

2700 Switching Platform

The 2700 Platform has been the market leader in test access and connectivity management over the last 10 years and is ideally suited for Service Level Management of SNA, IP and Frame Relay networks. The 2700 insures availability of network resources while providing the flexibility required to accommodate the constantly changing environments network managers experience. Scalability to 24,000 ports of connectivity is available, as well as a rich feature set including full-time circuit monitoring and alarming, cable consolidation, interface conversion and distance extension.

The 2700 Switching System enables operators at local and remote management consoles to instantly perform such critical tasks as testing and monitoring of network circuits, rearranging network configurations, swapping-out failed networking equipment, and broadcasting data. Applications include networks where there is a need for test access, connectivity management, and/or performance monitoring, particularly companies that have invested heavily in high-speed LAN and internet equipment.

OEM and Resold Products

In order to maximize the utilization of the Inrange sales and service force, and to provide a complete toolkit of data connectivity solutions to the enterprise customers we serve, we also distribute and service certain products manufactured by our business partners. These products include:

Spectrum Optical Networking Solutions

Spectrum optical networking solutions deliver full bandwidth for metropolitan storage networking, LAN extension, open systems and more. The Spectrum family of products, manufactured by Adva Optical Networking, enables data associated with data mirroring, data backup and recovery, video applications, data mining and other applications to be transported over high-speed fiber optic lines. Spectrum products are designed for enterprise connectivity applications and split a single fibre optic connection into multiple independent channels (light frequencies), each of which becomes an independent data channel. This allows the enterprise to obtain maximum utilization of its dark fiber connectivity.

FC/9000 Edge Switches

FC/9000 Edge Switches are manufactured by QLogic Corporation. The FC/9000 1 and 2 Gbps edge switches are entry points to the switched storage environment with up to 16 self-configuring ports. The FC16-2 and the SANbox 8 and 16 are edge or departmental switches that include such features as the data stream facility (a requirement for tape backup applications), public and

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private loop support, port auto discovery and a browser based SAN management system. With these products we support applications such as backup/restore, connectivity of SAN islands and server consolidation.

Consulting Services and Product Support

Our global services and support organization consists of approximately 269 customer service and support personnel, systems engineers, and consultants, provides a variety of network consulting services, product maintenance and technology support. Given the rapid evolution of networking technologies and the increasing costs our customers face to develop adequate internal networking expertise, we believe that there will be increasing demand for these services and that our networking expertise, combined with our installed, high-end customer base, positions us to compete effectively for consulting services business. In connection with sales of our products we offer:

Our Competitive Strengths

We believe that the following attributes of our products and our company position us to take advantage of market opportunities:

Experience with High-End Storage and Data Networks

Our focus on providing high-end, large-scale, fault-tolerant products for storage and data networks allows us to apply our expertise across networks and architectures. This enables us to design our products to be compatible with various vendors’ products and multiple communication standards and protocols. For example, we used our experience building 24,000 port mega-matrix switches for use in data communications environments to build the industry leading 256 port FC/9000.

Leadership in High-End Fibre Channel Products

We provide director-class switches that operate under the Fibre Channel communication standard. Throughout our history we have focused on scalability, flexibility and ultra-high availability as our competitive advantage. The FC/9000 is the most scalable and flexible Fibre Channel director-class switch currently available, with the ability to scale nondisruptively from 24 to 256 ports, and the ability to intermix protocols and transport speeds without limitation or performance penalty. The FC/9000 provides a platform from which enterprises can establish storage networks that have the scalability, flexibility and reliability to manage applications that are critical to a business’ operations.

Extensive Installed Customer Base

We have installed our products at approximately 2,000 sites in over 90 countries, primarily in Fortune 1000 businesses and other large enterprises. Our long-term relationships and close collaboration with our customers provide us with direct insight into their changing requirements and enable us to remain abreast of market developments.

Research and Development Expertise

Our research and development efforts focus on two main areas: providing additional hardware and software platforms that accommodate emerging information transmission protocols, and developing enhanced features to improve SAN management, security and functionality. As storage networking technologies evolve, we will continue to evaluate and prioritize our research and development strategy to provide products and features that meet the needs of our customers and provide for continued revenue growth.

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Significant Direct Sales Resources

Our large direct sales force maintains close relationships with our customers and, together with our systems engineering department, provides comprehensive pre-sale and post-sale support.

Service and Support Capabilities

Our service organization provides our customers with resources that help them address often complex and challenging technical issues. We provide assistance in network design, site surveys, preventive maintenance, repair and training, as well as help desk support and remote diagnostic capabilities.

Established International Presence

Our internationally-based sales and service professionals generated sales to international customers that represented approximately 40% of our total revenue during 2002. Our international presence allows us to meet the broad geographic needs of our customers. We use our direct sales channel, alliances and an established network of distributors and resellers to provide sales and support in over 90 countries worldwide.

Our Strategy

We intend to capitalize on our competitive strengths by pursuing the following strategies:

Leverage Our Intellectual Capital

We seek to leverage our intellectual capital and intellectual property across storage and data networks. In the short term, this allows us to share common competencies in scalable, complex systems across these networks. We believe that over the long term this process will position us to identify, establish and capitalize on current and emerging trends and technologies in network management and architecture.

Cross-sell to Existing Customer Base

We believe that there are significant opportunities for selling additional products and providing additional services to our existing customer base. For example, we believe that our large ESCON customer base has a significant need for Fibre Channel storage networks, presenting an attractive targeted customer base for our FC/9000. In addition, these customers also are creating virtual storage networks to implement more effective disaster recovery and business continuance procedures, presenting an attractive targeted customer base for our channel extension and optical networking products.

Expand Alliances and Indirect Channels of Distribution and Pursue Strategic Acquisitions

We pursue a multi-tiered strategy to leverage our market presence and resources with the activities of other industry leaders. In addition, we actively participate in standard-setting organizations to remain at the forefront of industry developments and emerging technologies. These alliances help us design our products and management systems to function seamlessly with key offerings from other industry leaders. For example, our storage networking products are compatible with storage products produced by leaders such as EMC, Hitachi, and IBM, and our storage management control systems operate with major software platforms from vendors such as Tivoli and Veritas. In addition, we may pursue strategic acquisitions to add economies of scale and technical expertise, to reduce time to market and to increase our access to target markets.

Leverage Our Consulting Business

To expand and improve upon our maintenance and support service business, we have made significant investments in integrating Inrange Global Consulting. We provide value-added consulting services to enable turnkey deployments of our products. These consulting services include storage area network assessment and design, as well as disaster recovery planning and implementation.

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We believe that there is a significant opportunity for us to grow and expand our consulting business as a result of the scarcity of skilled information technology personnel and the high cost of maintaining internal information technology departments.

Research and Development

In order to maintain and increase our position in the markets in which we compete, we place considerable emphasis on research and development to expand the capabilities of our existing products and to develop new products and product lines. Because we are focused on large-scale products that are critical to a business’s operations, we believe that our future success depends upon our ability to maintain our technological expertise and to introduce, on a timely basis, enhancements to our existing products and new commercially viable products that will continue to address the needs of our customers.

Our total gross research and development expenditures were $31.6 million, $37.3 million and $29.3 million for 2002, 2001 and 2000, respectively. Our research and development program focuses on the development of new and enhanced systems and products that can accommodate emerging data transmission protocols while continuing to accommodate current and legacy technologies.

Customers

We have installed our products at approximately 2,000 sites in over 90 countries, including many of the largest public and private users of information technology. We have a global, diversified customer base, consisting primarily of corporate enterprises, such as financial institutions, insurance companies, telecommunications carriers, airlines, and original equipment manufacturers. We believe that there are significant opportunities for selling additional products and providing additional services to our existing customer base.

During the year ended December 31, 2002, our top 25 customers accounted for approximately 44% of our revenue. IBM, a reseller of our FC/9000 director, was our largest customer and represented 17.1% of our 2002 revenues. No other customer accounted for more than ten percent of our 2002 revenues. In 2001, no customer represented more than ten percent of our revenues.

See Note 21 of Notes to Consolidated Financial Statements for more information on our geographic presence.

Intellectual Property

We believe that our success and ability to compete depends in part upon our ability to develop and protect the proprietary technology contained in our products. To protect our proprietary rights, we rely on a combination of patents, trademarks, copyrights, contractual rights, trade secrets, know-how and understanding of the market. For example, proprietary information disclosed by us in the course of our discussions with suppliers, distributors and customers is generally protected by non-disclosure agreements.

We own 24 U.S. patents and have 26 additional patent applications pending with the U.S. Patent and Trademark Office.

We also have been granted registered trademark protection for a number of trademarks, including our corporate logo.

Manufacturing and Operations

Substantially all of our manufacturing and operations are contained in our Lumberton, New Jersey headquarters location, which we first occupied in 2001.

We assemble printed circuit boards and complete the assembly of most of our products at our Lumberton facility. We carry out full system testing prior to shipping products to customers. In addition, we determine the components that are incorporated in our products and select the appropriate suppliers of the components.

In January 2002, we began transitioning the manufacture of the FC/9000 into our Lumberton facility, and this was completed in March 2002. We previously used a contract manufacturer, Sanmina Corporation, to manufacture the FC/9000.

We obtain materials for our manufacturing needs from suppliers and subcontractors, with an emphasis on quality, availability and cost. For most components, we have alternate sources of supply, although these raw materials could become difficult to obtain in the future, based on market conditions for these items or technology changes.

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Sales and Marketing

We bring our products to market via a multi-tiered approach, which includes a global direct sales force and a global distribution and reseller network.

The majority of our current business is generated by our direct sales organization, which has offices in the United States, Canada, the United Kingdom, Germany, Switzerland, Belgium, France and Italy. As of December 31, 2002, we had 145 personnel in our sales organization.

We also sell our products indirectly, through a worldwide network of distributors, resellers and alliance partners. This network allows us to expand the reach of our sales and service channels cost-effectively.

Sales through our indirect channel accounted for approximately 28% of total revenue in 2002. Although gross margins are typically lower in this channel, we believe that selling our products through the indirect channel allows us to expand our sales by reaching customers we would not be able to reach with our direct sales channel. In addition, having multiple sales channels may reduce the adverse effect that weakness in any single sales channel could have on our financial condition.

Our marketing strategy is to establish brand and product recognition and maintain our reputation as a provider of technologically advanced, high-quality products and related services for our customers’ needs. Our marketing efforts are directed principally at developing brand awareness and include a number of programs, such as the following:

Competition

The markets in which we sell our products are highly competitive. We believe that these markets will continue to be competitive and will be continually evolving and subject to rapid technological change. We believe that the principal competitive factors in each of the markets in which we compete are:

We believe that we compare favorably with our competitors with respect to many of these competitive factors.

While the Fibre Channel switching market has yet to develop fully, we believe that the market for our products will be highly competitive, continually evolving and subject to rapid technological change. We compete principally against Brocade Communications Systems, Cisco Systems Inc., McDATA Corporation and QLogic Corporation. As the market for storage area

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network products grows, we may face competition from traditional networking companies and other manufacturers of networking equipment who may enter the storage area network market with their own switching products.

In SAN Extension and Channel Extension products, we compete with numerous other companies, including Akara Corporation, Ciena, Cisco, Computer Networking Technologies, Inc., LightSANd, Lucent Technologies, Nishan Systems, Nortel, SAN Castle, and SAN Valley. We also compete with numerous records and information management services companies such as Iron Mountain, who have recently introduced services that allow for the direct transfer, storage and retrieval of data between customer sites and its storage facilities. We also face competition from major systems integrators and other established and emerging companies.

Employees

As of December 31, 2002, we had 785 employees, including contract employees. Our employees are not represented by any labor unions. We have experienced no work stoppages and believe that our relationship with our employees is good.

Additional information

Copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge through our website, www.inrange.com, as soon as reasonably practicable after we electronically file the material with, or furnish it to, the Securities and Exchange Commission.

ITEM 2.    PROPERTIES

In January 2001, we completed a move to our new corporate offices in Lumberton, New Jersey, where we lease approximately 162,000 square feet of office space to accommodate our headquarters, as well as our manufacturing, marketing and New Jersey-based research and development staff. We have an option to expand this facility to up to 200,000 square feet. The lease continues through January 31, 2011. We believe that the Lumberton facility will provide sufficient space for us for the foreseeable future.

We lease approximately 42,000 square feet in Shelton, Connecticut. This space housed our research and development department, our product verification laboratory and a sales and service center through September 2002. During 2002, we underwent a facility consolidation project and our product verification laboratory and engineering facilities have been moved to the Lumberton headquarters. The space now houses a sales center. We lease approximately 3,300 square feet of office space in Westford, Massachusetts for research and development efforts. We lease approximately 24,000 square feet of space for our Carmel, Indiana operations and approximately 8,000 square feet of space for our Roseland, New Jersey operations, both related to our operations of Inrange Global Consulting.

We own a 28,800 square foot building in Pittsburgh, Pennsylvania that housed marketing and customer support of our channel extension products. As part of our 2002 facility consolidation, the marketing and customer support functions were moved to the Lumberton headquarters. In connection with this consolidation, we have decided to sell the Pittsburgh facility. The facility is reflected as property held for sale as of December 31, 2002.

We lease office space from time to time for our regional sales offices. These leases typically provide for an initial lease term with a number of successive renewal options. This arrangement gives us the flexibility to pursue extension or relocation opportunities that arise from changing market conditions. We believe that, as current leases expire, we will be able to renew these leases or lease other space on approximately equivalent terms.

ITEM 3.    LEGAL PROCEEDINGS

From time to time, we are involved in litigation relating to claims arising out of our operations in the normal course of business. In our opinion, the outcome of these matters will not have a material adverse effect on our financial condition, liquidity or results of operations.

During the second quarter of 2001, we filed a breach of contract lawsuit against Qwest Communications, Inc. following its refusal to pay us for approximately $5 million of custom manufactured telecommunications equipment. We settled this lawsuit in the first quarter of 2003 for $6 million.

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A shareholder class action was filed against us and certain of our officers on November 30, 2001, in the United States District Court for the Southern District of New York, seeking recovery of damages caused by our alleged violation of securities laws. The complaint, which was also filed against the various underwriters that participated in our initial public offering (IPO), is identical to hundreds of shareholder class actions pending in this Court in connection with other recent IPOs and is generally referred to as In re Initial Public Offering Securities Litigation. The complaint alleges, in essence, (a) that the underwriters combined and conspired to increase their respective compensation in connection with the IPO by (i) receiving excessive, undisclosed commissions in exchange for lucrative allocations of IPO shares, and (ii) trading in our stock after creating artificially high prices for the stock post-IPO through “tie-in” or “laddering” arrangements (whereby recipients of allocations of IPO shares agreed to purchase shares in the aftermarket for more than the public offering price for Inrange shares) and dissemination of misleading market analysis on our prospects; and (b) that we violated federal securities laws by not disclosing these underwriting arrangements in our prospectus. The defense has been tendered to the carriers of our director and officer liability insurance, and a request for indemnification has been made to the various underwriters in the IPO, but at this point the insurers have refused coverage and the underwriters have refused indemnification. The court has granted our motion to dismiss claims under Section 10(b) of the Securities Exchange Act of 1934 because of the absence of a pleading of intent to defraud with leave to replead; however, the court has denied our motion to dismiss claims under Section 11 of the Securities Act of 1933 because no pleading of fraud is required. The court has also dismissed our individual officers without prejudice. The parties are also working on settlement proposals for this action. At this point, it is too early to form a definitive opinion concerning the ultimate outcome. Management believes, after consultation with legal counsel, that none of these contingencies will have a material adverse effect on our financial condition or results of operations.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

ADDITIONAL ITEM—DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

As of March 1, 2003, our directors were:

John B. Blystone, 49, has been a member of our board of directors and Chairman of the Board since June 2000. He has been Chairman, President and Chief Executive Officer of SPX Corporation since 1995. Mr. Blystone also serves on the boards of directors of SPX Corporation and Worthington Industries, Inc.

Kenneth H. Koch, 47, has been a member of our board of directors since July 2002. He became our President and Chief Executive Officer in July 2002. Mr. Koch joined Inrange in July 2000, as our Vice President, General Counsel and Secretary. Prior to joining Inrange, he was Vice President, General Counsel and Secretary at Insilco Corporation from October 1993 to July 1999.

Lewis M. Kling, 58, has been a member of our board of directors since June 2000. Since December 1998, Mr. Kling has been President, Communications and Technology Systems, of SPX Corporation. From June 1997 through October 1998, he served as President, Dielectric Communications, a subsidiary of General Signal Corp.

Patrick J. O’Leary, 45, has been a member of our board of directors since October 1998. He has been Vice President, Finance, Treasurer and Chief Financial Officer of SPX Corporation since September 1996. From 1994 through 1996, Mr. O’Leary served as Chief Financial Officer and director at Carlisle Plastics, Inc.

Bruce J. Ryan, 59, has been a member of our board of directors since September 2000. He was Executive Vice President and Chief Financial Officer of Global Knowledge Network, Inc., a provider of information technology and computer software training programs and certifications, from 1998 to 2002. From 1994 to 1998, Mr. Ryan was Executive Vice President and Chief Financial Officer of Amdahl Corporation, a provider of Internet based information technology solutions. Mr. Ryan also serves on the boards of directors of Ross Systems, Inc., Axeda Systems, Inc. and Infinicon Systems, Inc.

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David B. Wright, 53, has been a member of our board of directors since September 2000. He has been Chairman and Chief Executive Officer of Legato Systems since October 2000. He previously had been President and Chief Executive Officer of Amdahl Corporation since 1997.

Charles K. Carson, 74, has served as a member of our board of directors since July 2002. He was Senior Vice President of General Electric Company managing a group of domestic and internal businesses from 1978 until his retirement in 1988.

Robert B. Foreman, 45, has been a member of our board of directors since June 2000. He has been Vice President, Human Resources of SPX Corporation since May 1999. From 1991 through April 1999, he served as Vice President, Human Resources at PepsiCo International, based in Asia-Pacific, where he worked for both the Pepsi and the Frito-Lay International businesses.

Christopher J. Kearney, 47, has been a member of our board of directors since October 1998. He has been Vice President, Secretary and General Counsel of SPX Corporation since February 1997.

EXECUTIVE OFFICERS

Our executive officers serve at the pleasure of the Board of Directors. In addition to Kenneth H. Koch, our President and Chief Executive Officer, our only other executive officer at March 1, 2003 is John R. Schwab, Vice President and Chief Financial Officer.

John R. Schwab, 35, has been our Vice President and Chief Financial Officer since October 2001. From September 2000 to October 2001, he served as our Corporate Controller. From 1989 until 2000, he was employed by Arthur Andersen LLP in the Growth Company Practice, most recently as a Senior Manager overseeing audit engagements for technology clients.

PART II

ITEM 5.    MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our Class B common stock has been quoted on the Nasdaq National Market under the symbol “INRG” since September 21, 2000. Prior to that time, there was no public market for our Class B common stock. The following table shows, for the periods indicated, the high and low closing prices per share of Inrange Class B common stock as reported on the Nasdaq National Market.

On March 14, 2003, we had 58 holders of record of our Class B common stock, with approximately 99.4% of our Class B common stock held in street name through Depository Trust Co.

Since we have been a public company, we have not declared or paid cash dividends on our Class B common stock. We currently intend to retain all available funds and any future earnings for use in the operation and expansion of our business and do not anticipate

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paying any cash dividends in the foreseeable future. Payment of future cash dividends, if any, will be at the discretion of our board of directors after taking into account various factors, including applicable Delaware law, contractual restrictions, our financial condition, operating results, current and anticipated cash needs and plans for expansion.

ITEM 6.    SELECTED FINANCIAL DATA

The tables on the following pages present our selected consolidated financial data. You should read the information in the tables together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our historical consolidated financial statements and the notes to those statements included elsewhere in this Form 10-K. The consolidated statement of operations data set forth below for the year ended December 31, 2002 and consolidated balance sheet data as of December 31, 2002 are derived from our audited consolidated financial statements included herein, which have been audited by independent auditors Deloitte & Touche, LLP.

The consolidated statement of operations data for the years ended December 31, 2001 and 2000 and the consolidated balance sheet data as of December 31, 2001, are derived from our audited consolidated financial statements, which have been audited by Arthur Andersen LLP. Arthur Andersen LLP previously issued their report for these years on February 1, 2002 and has not reissued the report.

The consolidated statement of operations data for the years ended December 31, 1999 and 1998 and the consolidated balance sheet data as of December 31, 2000, 1999 and 1998 are derived from our audited consolidated financial statements that are not included in this filing. The 1999 and 1998 financial statements were audited by Arthur Andersen LLP. In 2000, SPX transferred assets, liabilities, revenue and expenses of various other units of SPX Corporation comprising the storage networking, data networking and telecommunications networking business of SPX, which are included in our consolidated financial statements.

Following our acquisition by SPX and beginning in the fourth quarter of 1998, we implemented several initiatives to rationalize revenue, streamline operations and improve profitability. As part of this process, we discontinued sales of non-strategic, low volume product lines and products that were at the end of their life cycles. We also closed two manufacturing facilities and consolidated all of our operations into one manufacturing location, consolidated duplicative selling and administration functions into one location, and reduced headcount in non-strategic areas. These actions were substantially completed by July 1999. In connection with these initiatives, we recorded special charges of $7.0 million in 1998 and $10.6 million in 1999. In 2000, we recorded a reversal of special charges to reflect the actual costs incurred and revision of estimates for the remaining costs to be incurred.

In 2001, we decided to focus on our storage networking business and announced in the second and fourth quarters that we would restructure the operations. In connection with these decisions, we recorded restructuring, special and asset impairment charges that totaled $32.4 million. The restructuring and special charges primarily include severance, lease abandonment costs and the settlement of contractual obligations from a discontinued product totaling $11.4 million. The asset impairment charges totaled $16.1 million and included the write-off of goodwill related to an acquisition completed in 2000, the write-down of investments made in certain business partners and asset write-downs associated with discontinued product lines. In addition, we recorded inventory write-offs totaling $4.9 million as a component of cost of sales.

In 2002, we announced steps to reduce costs in response to revenue and margin pressures and recorded restructuring, special and asset impairment charges totaling $17.3 million. Special charges of $12.0 million were attributable to restructuring costs associated with our actions to streamline operations, reduce costs and improve efficiencies. These actions included the consolidation of our engineering facilities. The charges include $7.6 million for a reduction in sales, marketing, operations, engineering and administrative headcount of approximately 200 employees in selected non-strategic product areas. Other costs included in special charges were $4.1 million related to lease abandonment costs and $1.8 million related to travel and relocation costs associated with the facility consolidation.

In the fourth quarter 2002, we revised our estimate of the remaining costs related to the 2001 and 2002 restructurings that we expect to incur, resulting in the reversal of $1.5 million. Amounts totaling $1.2 million and $0.3 million related to 2002 and 2001, respectively. These reversals related primarily to severance and facility consolidation estimates.

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Asset impairment charges for the year ended December 31, 2002 were $5.3 million. The charges related primarily to asset write-downs associated with facility consolidation and the write-off of purchased software.

Our other income (expense) for 1999 includes a gain of $13.9 million realized upon the sale of common stock of a public company that we received upon the exercise of warrants.