Acquisition of ArcaDACS 100/Sechtor 300 Expands Verilink's Reach to Network
Edge; Provides Continuity with Verilink's Largest Customer and Improves
Gross Margin
CENTENNIAL, CO – October 3,
2005 (MARKET WIRE via COMTEX News Network) –
Verilink Corporation (Nasdaq: VRLK),
a leading provider of broadband access solutions, today announced
the acquisition of the
ArcaDACS(TM) 100
Digital Access
Cross-Connect System (DACS) and the Sechtor(R) 300 Multiservice Edge
Concentrator product lines from Zhone Technologies, Inc. (NASDAQ: ZHNE).
The all-stock transaction, which closed on September 30, 2005, follows a
successful three-year OEM relationship with Zhone under which Verilink has
marketed, sold and supported the
ArcaDACS 100. The ArcaDACS 100 is being
deployed by Verilink's largest customer, the largest domestic ILEC, as part of a
fully managed voice and data bundled T1 service intended for small- to mid-sized
businesses in the U.S. Through this asset acquisition, Verilink gains all rights
and interests in the ArcaDACS 100 and Sechtor 300 products, including rights to
the product designs and all associated intellectual property, saleable
inventory, existing customer contracts, as well as future manufacturing rights.
No employees were included in this acquisition.
"This acquisition is strategic to Verilink as the
ArcaDACS is an integral part
of the solution we provide to our largest customer, and we look forward to
enhancing our value to all customers including those gained through this
agreement," said Leigh S. Belden, President and CEO of Verilink. "This
acquisition also complements the margin improvement initiatives that we launched
in recent quarters. Structured as an all-stock transaction, the terms were
attractive from an ROI and balance sheet perspective when combined with the
saleable inventory we gained through this transaction."
Mory Ejabat, Chairman and CEO of Zhone, said, "We are pleased that Verilink has
chosen to include the ArcaDACS and Sechtor 300 products in its family of
telecommunications product portfolio. With this transaction, our customers
benefit from continued sales of these products as well as from Verilink's
experience in servicing these products at its largest customers."
The ArcaDACS 100 is a new generation 3/1/0 DACS product designed to consolidate
and groom circuits to increase trunk efficiency. The Sechtor 300, a combines the
DACS functionality of the ArcaDACS 100 with GR-303 voice concentration and to
further increase trunk efficiencies and enable voice over-subscription services
between the edge access network and the serving office equipment.
The ArcaDACS 100 and Sechtor 300 products are ideally suited for grooming
fractional T1s at the network access facility, allowing carriers to choose
switching granularity from DS3 down to DS0, all in one efficient, effective, and
economical platform. The ArcaDACS 100 and Sechtor 300 are OSMINE-certified and
Network Equipment Building Standard (NEBS) Level-3 compliant. Both are
carrier-class products designed to deliver reliable 99.999% service with no
single-point-of-failure. The products also comply with all physical, power, and
software requirements needed for installation in a central office, remote node,
or customer site.
As an important component of this deployment, both the ArcaDACS 100 and Sechtor
300 have completed the
OSMINE Services certification process for Telcordia(TM)
Network Configuration Manager (NCON) and Telcordia(TM) Loop Facilities
Assignment and Control System (LFACS) support. This certification helps to
ensure operations systems automation to deliver services in a timely fashion and
on a volume basis. Customers also will benefit from improved billing, ordering,
repair and account management services.
The OSMINE services process is an important aspect of a carrier's service
offering. The completion of the OSMINE services process allows carriers to
pre-qualify the ordering, circuit engineering and provisioning of the service.
This flow-through integration reduces provisioning intervals and associated
costs. The result for the subscriber is quicker turn-up of service.
"Building on our strong IAD and CPE portfolio, with the addition of the ArcaDACS
100 and Sechtor 300 product lines, we have expanded our market position to
encompass both the customer premise and the network edge and improved our
competitive position with all carriers," Belden added.
Notice Under Nasdaq Rule 4350(b)
Verilink filed its Annual Report on Form 10-K for the fiscal year ended July 1,
2005 with the Securities and Exchange Commission on September 27, 2005. As
required under Nasdaq Rule 4350(b), Verilink is providing notice that the report
of Ehrhardt Keefe Steiner & Hottman PC , Verilink's registered independent
public accounting firm, on Verilink's financial statements as of July 1, 2005
contains an explanatory paragraph, which refers to our working capital
deficiency, operating loss, and negative cash flow and notes that these matters
raise substantial doubt about Verilink's ability to continue as a going concern.
Verilink has initiated several actions that are intended to address the issues
cited in the auditors opinion. Although no such assurance can be given,
Management believes that our cash and cash equivalents, anticipated cash flow
from operations and anticipated proceeds from the sale of the facility located
at 950 Explorer Boulevard, Huntsville, Alabama will be sufficient to fund our
operations through the next twelve months.
For additional information, see Verilink's Annual Report on Form 10-K, which is
available from the SEC's website at http://www.sec.gov or the "News" or
"Investor" section of Verilink's website at
http://www.verilink.com. The
information in this release and our Annual Report on Form 10-K on file with the
Securities and Exchange Commission supersedes the information in our July 28,
2004 press release.
About Verilink Corporation
Verilink Corporation (NASDAQ: VRLK) is a leading provider of next-generation
broadband access solutions for today's and tomorrow's networks. The company
develops, manufactures and markets a broad suite of products that enable
carriers (ILECs, CLECs, IXCs, and IOCs) and enterprises to build converged
access networks to cost-effectively deliver next-generation communications
services to their end customers. The company's products include a complete line
of VoIP, VoATM, VoDSL and TDM-based integrated access devices (IADs), optical
access products, wire-speed routers, and bandwidth aggregation solutions
including CSU/DSUs, multiplexers and DACS. The company also provides turnkey
professional services to help carriers plan, manage and accelerate the
deployment of new services. Verilink is headquartered in Centennial, CO (metro
Denver area), with operations in Madison, AL, and Newark, CA, and sales offices
in the U.S., Europe and Asia. To learn more about Verilink, visit the company's
website at http://www.verilink.com.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995
Except for the historical information contained herein, the matters set forth in
this press release, including the statements as to value enhancement to
customers as a result of the acquisition and sufficient cash flow to fund
operations through the next twelve months, are forward-looking statements within
the meaning of the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are subject to risks and
uncertainties that may cause actual results to differ materially, including, but
not limited to, the ability of Verilink to implement cost reductions and adjust
spending levels, and to sell Verilink's Explorer Boulevard facility, risks
associated with Verilink's working capital deficiency, operating loss, and
negative cash flow and "going concern" explanatory paragraph in the auditor's
report and the ability to successfully integrate acquisitions and achieve
expected synergies.
A detailed discussion of these and other risks and uncertainties that could
cause actual results and events to differ materially from such forward-looking
statements are included in Verilink's most recent Annual Report on Form 10-K and
Quarterly Reports on Form 10-Q. These forward-looking statements speak only as
of the date hereof. Verilink disclaims any intention or obligation to update or
revise any forward-looking statements.
Verilink and the Verilink logo are registered trademarks of Verilink
Corporation. All other trademarks or registered trademarks are the property of
the respective owners.
Contact:
Gary W. Gray
Verilink Corporation
510.771.3354
Contact via
http://www.marketwire.com/mw/emailprcntct?id=8AD619F3845927F1
SOURCE: Verilink Corporation
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