Monday July 31, 2000
Company Press Release
Cylink Corporation to Acquire Celotek Corporation to Expand Its Leadership in
ATM Network Security
SANTA CLARA, Calif.--(BUSINESS WIRE)--July 31, 2000--Cylink Corp. (Nasdaq:CYLK -
news) today announced a definitive agreement to acquire Celotek Corp., a
privately held developer of high-performance Asynchronous Transfer Mode (ATM)
network security appliances used to secure voice, video and data transmission
over high-speed public and private wide area networks.
The definitive agreement calls for Cylink to issue $21.5 million in common stock
and the acquisition will be treated for accounting purposes as a purchase. The
transaction will be dilutive to net earnings in the third quarter of this year,
but the Company expects it will contribute to achievement of its goal of
reaching fourth quarter profitability. Completion of the acquisition is
conditioned, among other matters, upon approval by Celotek's shareholders, and
is expected to close by the end of the current quarter.
Celotek, headquartered in the Research Triangle Park area of North Carolina,
supplies the ATM encryption appliances that Cylink, under private label, sells
to Fortune 500 companies, government agencies, and major financial organizations
around the world.
"This acquisition is compelling any way you look at it - from strategic,
financial, technical and marketing perspectives," said William P. Crowell,
Cylink's president and chief executive officer. "It will enable us to manage all
elements of a large and growing part of our core business, reduce our cost of
goods and improve our margins, while providing additional product development
and engineering capabilities. At the same time, this will increase our
flexibility in driving market acceptance of ATM security as a means of securing
backbone telecommunications.
"It also will enable us to add an highly talented group, including a team of 20
ATM engineers who have worked together in successfully developing and delivering
state-of-the-art products demanded by the marketplace. And, finally, Celotek
will bring new channel partners to Cylink, some of whom may expand their product
portfolios to include our full product and solution set for securing
e-business," Crowell said.
About Celotek
Celotek is a global leader in high performance security solutions. CellCase(TM)
cryptographic systems set the standard for Asynchronous Transfer Mode (ATM)
network security, providing transparent Triple DES encryption at speeds ranging
from 1.5 Mbps to 622 Mbps. Mode information about the company and its products
can be found at www.celotek.com. Celotek is headquartered in the Research
Triangle Park area of North Carolina.
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About Cylink Corp.
Cylink Corp. develops, markets and supports a comprehensive family of secure
e-business solutions. Founded in 1983, the Company was the first created to
market security solutions that protect communications with public key
cryptography. Cylink and its wholly owned subsidiaries serve Fortune 500
companies, multinational financial institutions, and government agencies
worldwide. For more information, visit the Company's web site at
http://www.cylink.com.
Except for the historical information contained herein, matters discussed in
this release are forward-looking statements that involve risks and
uncertainties, and actual results could be materially different. Forward-looking
statements include this successful completion and expected time required to
close the acquisition, the improvement in Cylink's margins, cost of goods and
other financial benefits of the acquisition, improvements in Cylink's management
of its ATM business, success in future product developments, its ability to
retain and integrate the Celotek engineering team into Cylink, future market
acceptance of Celotek's ATM encryption products, and opportunities with
Celotek's existing resellers. Factors that could cause actual results to differ
include: business conditions in the computer security industry; competitive
factors, including but not limited to the entry of large, well-capitalized
companies; price-cutting pressures; and the possible introduction of new
technologies and other risk factors listed from time to time in the company's
SEC reports, including but not limited to the report on Form 10-K and the Annual
Report to shareholders for the year ended Dec. 31, 1999 and its reports on From
10-Q.
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