ANTEC and Nortel Complete Arris - LANcity Combination Creating the
Leading Voice and Internet Access Equipment Supplier for Cable
Networks
PR Newswire - April 13, 1999 07:17
ANTEC Also Recognizes Gain of $.79 Per Share
DULUTH, Ga., April 13 /PRNewswire/ -- ANTEC Corporation (Nasdaq: ANTC) today provided further details of the
completion of the combination of the Broadband Technology Division of Nortel Networks (NYSE: NT) (previously LANcity) with Arris Interactive, LLC, a joint venture between ANTEC and Nortel Networks as contemplated in the previously announced Memorandum of Understanding.
"By combining LANcity with Arris Interactive, a new capability has been created that is unique in voice, video and data transport," said John Egan, ANTEC Chairman & CEO. "The combination of LANcity's data and Internet access product portfolio with the Arris Cornerstone cable telephony products positions Arris to be the world's leader in digital voice, data and Internet access over hybrid fiber coax (HFC) networks. By any measure, size, volume, installed base, technology, or breadth of product, Arris is the leader. Long before the actual combination, Arris and LANcity were collaborating on a breakthrough product for cable operators. This product, called Packet Port(R), has been developed and will have initial field installations in Europe and the United States beginning in June of this year."
"The new product represents a major advance for cable operators by providing field-hardened, low-power, carrier
class telephone service combined with data over cable interface standard (DOCSIS) compliant data in a single outdoor or indoor configuration," continued Egan. "The new Arris will be able to offer product for constant bit rate telephony, Internet protocol (IP) telephony, proprietary data modems, DOCSIS compliant data headends and
modems and in any combination of indoor or outdoor, network powered or home powered, with or without intelligent battery backup. Arris is also working with General Instrument on interoperability with their DCT 5000 video terminal and the work is progressing very well. Arris can provide cable operators a platform for voice, data and Internet access in any configuration or location, inside or outside, in the video converter, at the computer or at the telephone."
"With the strength of its parents, Nortel Networks and ANTEC, customers are offered unparalleled end-to-end products and support for switching, digital transport, IP networking, HFC transmission products and services in addition to the products offered by Arris. This powerful combination insures our customers that any phone or computer can communicate with any other phone or computer throughout the world," concluded Egan.
The combination was effected by the contribution of the LANcity assets and business into Arris Interactive. ANTEC's interest in the joint venture was reduced by 6.25% from 25% to 18.75%, while Nortel's interest was increased from 75% to 81.25%. In addition, based on the achievement of certain revenue goals for LANcity
products, up to an additional 6.25% of dilution in ANTEC's interest (to 12.5%) may occur. Nortel, however, has the option to take, in lieu of the additional interest in Arris, up to 2,747,252 shares of ANTEC stock. In order to achieve the full amount of ANTEC shares or the full additional 6.25% ownership interest in Arris Interactive, sales of
LANcity products from January 1, 1999 to June 30, 2000 must reach or exceed $300 million during such period. The amount of additional Arris interest or ANTEC stock will be prorated on a straight-line basis for sales between $180 million and $300 million. No additional interest or stock ownership will occur if sales of LANcity products during the
18-month period are less than $180 million. The transaction will be accounted for, in effect, as if it were a gain on the sale of the 6.25% interest. As a result, a pre-tax gain of approximately $60 million ($.79 per share after tax on a diluted basis) will be recognized in the first quarter. ANTEC will be the exclusive distributor of LANcity products to domestic cable operators.
"By combining the LANcity cable modem and networking business with the market leader in cable telephony we've
taken a major step toward providing fully integrated voice and data over HFC networks," said Egan. "In addition, the LANcity customers will benefit from the strong HFC expertise of ANTEC and Nortel Networks strengths in building end-to-end data, voice and video networks for service providers across the world."
The LANcity transaction will enable ANTEC to enter into the exciting and fast growing cable modem business.
LANcity is a leading supplier in the market with a reported market share of approximately 30% and was one of the
eading architects of the DOCSIS I modem standard adopted by Cable Labs, the cable industry standards and technology review body. If the $300 million 18-month sales earn-out target were met, ANTEC estimates that sales to domestic cable operators sold through its sales channels during such period would approximate $150 million. In addition, the core LANcity strength is its Internet protocol (IP) engineering talent and know-how which, coupled with the Arris telephony expertise and market position, should assure Arris a leading position in circuit switched telephony, IP telephony and the Internet/Cable data market.
"We believe that this combination of products and talent into one organization further underscores Nortel Networks' commitment to this market," said Clarence Chandran, Chairman of Arris Interactive and President of Nortel Networks Carrier Packet Solutions, "and recognizes the new Arris Interactive as a key part of Nortel
Networks' packet and Internet protocol strategy."
Work on the IP Packet Ports(R) by the Cornerstone engineering team and the LANcity engineers is already underway at the Arris Interactive headquarters in Suwanee, Georgia and field trials of this new product will begin in June of this year. This development effort will allow for a graceful migration from the current constant bit rate Cornerstone product through IP gateways and then to full IP telephony capabilities. In the meantime, the Cornerstone platform remains the world market leader in telephony. Cornerstone is now accessible to nearly two million homes worldwide and lines in service increased over 300% in 1998 to over 100,000 lines in service. The
accelerating demand for cable telephony and the closing of the LANcity transaction positions ANTEC to be a major supplier for the burgeoning telephony and data markets and the related hybrid fiber coax (HFC) infrastructure products.
A conference call to discuss this announcement will be held today at 11:00 a.m. EDT and may be accessed by dialing 800-865-4460 and asking for the ANTEC conference call. ANTEC will release final first quarter earnings results on April 22, 1999 at 7:00 a.m. EDT and will conduct a conference call at 11:00 a.m. EDT.
ANTEC Corporation (http://www.antec.com) is an international communications technology company serving the
broadband information transport industries. ANTEC specializes in the manufacturing, materials management and distribution of products for hybrid fiber/coax broadband networks, as well as the design and engineering of these networks. Headquartered in Duluth, Georgia, ANTEC has sales offices in Europe, Asia/Pacific and Latin America; major divisional offices in Duluth, Georgia and Denver, Colorado; and manufacturing facilities in Juarez, Mexico, El Paso, Texas, Tinton Falls, New Jersey and Rock Falls, Illinois.
Forward-looking statements: The statements in this press release that use such words as "believe," "expect,"
"intend," "anticipate," "contemplate," "estimate," or "plan" or similar expressions are forward-looking statements.
Our business is dependent upon general economic conditions as well as competitive, technological, and regulatory
developments and trends specific to our industry and customers. These conditions and events could be
substantially different than we believe or expect and these differences may cause our actual results to differ
materially from the forward-looking statements we have made or the results, which could be expected to accompany
such statements. Specific factors which could cause such material differences include the following: design or
manufacturing defects in our products which could curtail sales and subject us to substantial costs for removal,
replacement and reinstallation of such products; manufacturing or product development problems that we do not
anticipate because of our relative experience with these activities; an inability to absorb or adjust our costs in
response to lower sales volumes than we anticipate; unanticipated costs or inefficiencies from the ongoing
consolidation of certain of our activities; loss of key management, sales or technical employees; decisions by our
larger customers to cancel contracts or orders as they are entitled to do or not to enter into new contracts or orders
with us because of dissatisfaction, technological or competitive changes, changes in control or other reasons; and
inability as a result of our relative experience to deliver construction services within anticipated costs and time
frames which could cause loss of business, operating losses and damage claims. The above listing of factors is
representative of the factors which could affect our forward-looking statements and is not intended as an all
encompassing list of such factors. In providing forward-looking statements we are not undertaking any obligation
to update, publicly or otherwise, these statements, whether as a result of new information, future events or
otherwise.
SOURCE ANTEC Corporation
/CONTACT: Jim Bauer, Investor Relations of ANTEC Corporation,
847-439-4444, or jim.bauer@antec.com/
/Web site: antec.com
(ANTC NT)
Headlines Next Story
ANTC NT %TLS %MLM %JVN V%PRN P%PRN
|
