new switch faster than FC. Who is going to use it and when?
Company Press Release
ODS Networks to Acquire Essential Communications
Products From Leader in HIPPI Technology Enhance Offerings for High-Speed Enterprise Networks
RICHARDSON, Texas--(BUSINESS WIRE)--April 30, 1998--ODS Networks, Inc. (Nasdaq:ODSI - news) today announced
it has signed a definitive agreement to acquire Essential Communications Corporation (Essential), a privately held company based in
Albuquerque, New Mexico. Essential is a market leader in High Performance Parallel Interface (HIPPI) switches and network
interface cards and Gigabit Ethernet network interface cards. The combined ODS Networks(tm) (ODS) and Essential product
lines will allow companies with high-performance scientific and technical computing, image processing, data warehousing, data
mining, transaction processing, and video and film archiving applications to interconnect their HIPPI networks to more common
desk-top interfaces, including Gigabit Ethernet, for real-time network solutions. By the end of 1998, ODS and Essential also plan
to offer a next generation Gigabyte System Network (GSN), also known as HIPPI-6400, switch that can move media at more
than six times the speed of current Fibre Channel or Gigabit Ethernet solutions.
''Essential Communications is a leader in the next generation 6.4 gigabits per second GSN technology,'' said G. Ward Paxton,
chairman, CEO and president of ODS. ''By combining ODS' LANBlazer(tm) Gigabit Ethernet switch and Essential's 6.4 gigabits
per second GSN technology, we will be able to offer unique, high-speed, standards-based solutions to customers in the
government, entertainment, petroleum and other industries that require the timely movement of large amounts of information.''
''The combination of ODS and Essential will offer many benefits to Essential's customers,'' said Michael McGowen, CEO of
Essential. ''Now they can connect numerous environments at very high speeds through HIPPI and move that data across to their
existing desktops in real-time.''
Financial Details
The acquisition will be accounted for as a purchase with ODS exchanging a combination of $5.8 million of cash and approximately
305,500 shares of ODS common stock (worth approximately $2.6 million based upon ODS' April 29, 1998 closing price of
$8.375) for all outstanding shares of Essential. In addition, ODS will assume the Essential stock option plan, and ODS will reserve
approximately 100,500 shares of ODS stock to be issued upon the exercise of such options.
In connection with the acquisition, ODS expects to recognize a one-time charge against after-tax earnings of between $4.5 million
and $5.5 million, or $0.27 to $0.33 per share, for in-process technology in the second fiscal quarter of 1998. The acquisition has
been approved by the Board of Directors of each company and is expected to be completed in May of 1998 subject to various
customary closing conditions including Essential stockholder approval.
When the transaction is complete, Michael McGowen, CEO of Essential, will report to G. Ward Paxton, ODS chairman, CEO
and president. Essential's sales organization will be integrated with ODS' sales force immediately. The other Essential employees
will continue to operate under McGowen's leadership in Albuquerque, New Mexico.
Strategic Industry Relationships
Essential's current product line includes HIPPI switches delivering 800 million bits per second per port bi-directionally and HIPPI
network interface cards and drivers for most UNIX workstation vendors including Silicon Graphics Inc. (NYSE:SGI - news), Sun
Microsystems Inc. (Nasdaq:SUNW - news; Sun), Hewlett-Packard Co. (NYSE:HWP - news; HP), Digital Equipment
Corporation (NYSE:DEC - news) and International Business Machines Corp. (NYSE:IBM - news). Essential also offers Gigabit
Ethernet network interface cards for Windows NT environments and Gigabit Ethernet network interface cards for SGI's Octane
and Origin products. Essential's Gigabit Ethernet drivers are expected to be available for Sun's Solaris systems by mid-1998 and
IBM's AIX systems by the end of 1998.
Essential is currently collaborating with Raytheon E-Systems and SGI to develop a GSN switch designed to support up to 32
non-blocking ports at 6.4 gigabits per second per port, providing an aggregate bandwidth of over 400 gigabits per second. With
significantly more capacity than Gigabit Ethernet or Fibre Channel, GSN technology will enable a cluster of commodity computers,
servers and storage devices, located throughout a building or across a campus, to operate as the equivalent of a massively parallel
supercomputer. Essential's first GSN switches are slated to ship by the end of 1998. SGI workstations and servers will be among
the first in the industry to support GSN in 1998. GSN network interface cards for Sun, HP, DEC and IBM are also anticipated to
pave the way for commodity supercomputing and numerous high-throughput applications.
Access to HIPPI and GSN Solutions
By tightly coupling ODS' LANBlazer Gigabit Ethernet switch with Essential's HIPPI and GSN (HIPPI-6400) switches, ODS will
be able to offer a real-time solution that is unique in the industry. ''We envision a significant opportunity in the market for offering a
SuperLAN architecture that utilizes GSN and HIPPI-800 switches for supercomputer clusters and 400 gigabit per second
backbones connected to numerous LANBlazer switches. With HIPPI-800, ATM OC3 and OC12 uplinks, along with high Gigabit
and Fast Ethernet port density, the LANBlazer combined with the Essential switch will offer a unique solution for desk-top to
high-speed network connectivity,'' stated G. Ward Paxton.
ODS' LANBlazer 7000 represents one of the highest capacity Gigabit Ethernet switches in the industry. ''The combination of
ODS' LANBlazer Gigabit Ethernet switches with Essential's Gigabit Ethernet network interface cards, HIPPI switches and
network interface cards, and GSN switches and network interface cards will position ODS as a single-source solution for Gigabit
and Gigabyte networking solutions,'' concluded Paxton.
About Essential Communications
Founded in 1992, Essential has focused on providing affordable, end-to-end gigabit networking solutions used in workgroups,
backbones, cluster computing, storage management and visual computing. Its HIPPI and Gigabit Ethernet networking product
families include switches and network interface cards. Essential's vertical markets cover film post production, petroleum, design
engineering, scientific research, medical imaging, data mining, data warehousing and data backup.
About ODS Networks
ODS develops, manufactures and markets a complete range of enterprise, workgroup, and remote access networking products for
large and mid-range organizations, including its award-winning InfiniteSwitch(tm). ODS Networks' InfiniteSwitch and LANBlazer
switch families features a highly flexible architecture that supports Ethernet, Fast Ethernet, Gigabit Ethernet, FDDI, ATM and
Token Ring and remote access while providing up to 45 Gigabits of switch throughput capacity and industry-leading performance
in management, security, and fault tolerance. ODS also recently introduced a full line of security products. The ODS
SecureCom(tm) and CryptoCom(tm) security product families provide a complete suite of infrastructure and remote access-based
solutions for both detecting security violations to your network and preventing them. ODS Networks can be reached at
888-ODS-7770; 972-234-6400; or on the Internet at http:\\www.ods.com.
This release, other than historical financial information, includes forward-looking statements with respect to completing the
acquisition of Essential Communications Corporation, developing HIPPI-6400 and other products, and certain other matters.
These statements are made under the ''safe harbor'' provisions of the Private Securities Litigation Reform Act of 1995 and involve
risks and uncertainties which could cause actual results to differ materially from those in the forward-looking statements, including
but not limited to the following: approval of the Essential Communications Corporation acquisition by its stockholders, delays in the
development of HIPPI-6400 or other products, the rate of adoption of new technology, competitive product introductions,
competitive pricing actions and marketing programs, as well as risks concerning future technology and others identified in the
Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other Securities and Exchange Commission
filings. These filings can be obtained by contacting ODS Investor Relations.
Note to Editors: ODS and ODS Networks are registered trademarks of ODS Networks, Inc. LANBlazer, InfiniteSwitch,
CryptoCom and SecureCom are trademarks of ODS Networks, Inc. All other trademarks are the property of their respective
companies. |
