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Filed by Polycom, Inc.
pursuant to Rule 425 under the Securities Act of 1933
Subject Company: ACCORD NETWORKS LTD.
Registration No. 000-30887
QUESTION AND ANSWER PERIOD FOR DECEMBER 6, 2000 CONFERENCE CALL:
JASON ADER - THOMAS WEISEL PARTNERS:
Congratulations on the deal. Have a few questions for you, first of
all, just some housekeeping, you had said that for the next few quarters Mike, I
guess after the close, G&A and Sales and Marketing would be slightly above the
target. Is what you said?
MIKE KOUREY - POLYCOM:
Yes that's correct.
MR. ADER:
R&D too or just.....
MR. KOUREY:
Yeah R&D and G&A just slightly above, and we are just talking slightly.
MR. ADER:
Okay. Jules, you will be running the Accord Networks group out of
Polycom. Polycom historically has not done or has stopped doing direct sales.
How much of Accords revenue have been direct and going forward and what is this
going to require in terms of direct sales force?
JULES DEVIGNE - ACCORD NETWORKS:
Well, percentage of direct sales up to this point is about 25-30%, if
you go back to the beginning, our model has always been to move from direct to
reseller or channel model. And I expect our direct sales to be in this range and
maybe dropping down to 20-25%, but you need to understand that most of the
direct sales that we do is to service providers.
MR. ADER:
Right, okay, So there's not a huge among of overhead there?
MR. DEVIGNE:
No.
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MR. ADER:
And secondly, the branding - is this going to continue to be the Accord
branding or is it possible that is could change at some point to Polycom
branding?
BOB HAGERTY - POLYCOM
I think we will absolutely have Polycom branding associated with the
Accord product line. We have yet to made decisions associated with exactly how
it is going to work out that particular branding. But Polycom as the master
brand absolutely will be prominent.
MR. ADER:
Okay, last question. Its kind of a high level question, in terms of
Polycom, in the eyes of the investors, I think everybody that has known Polycom
for the last few years has been very impressed with your focus and ability to
have a razor sharp focus on certain areas, especially at the CPE edge level of
the network, now you are moving into the core. Does this auger a lot of movement
into the core in the future, because I think one of your reasons for being so
successful, because you have been kink of agnostic to what's in the core. And
know that you are moving into the core in this particular area, is this a
precursor to some strategic decisions inside the company that you need to be in
the core.
MR. HAGERTY:
It absolutely represents a strategic decision that we need to be in the
core, but it also represents an opportunity to work closer with our strategic
partners. We view this as a unique position in the infrastructure market, it's
an area where we bring a lot of core competence. There is an enormous amount of
synergy between our development teams, the type of work being done by Accord and
the type of work being done by Polycom, voice over IP and in video end points,
makes enormous sense and enormous synergy. The deployment of broadband is going
to leverage this, we see that there is an enormous opportunity as video and
voice over IP and even continuous ISDN and circuit switch deployments continue
to grow that this is an enormous opportunity to deploy more and more of this
infrastructure gear. But again I think it is important to know that we will work
with our strategic partners and enhance the total of service provider and
enterprise offerings with our partners.
MR. ADER:
Okay thanks.
PETER LEPPIK - DAIN RAUSCHER WESSELS, INCORPORATED:
Thanks Jules, Bob and Mike. I'm not sure where to start here and who to
congratulate more, but this is a great deal here. Lets poke a little more if we
could into the distribution question. Do you have a sense for how much overlap
there is between Polycom's channels and Accord's channels. In other words,
basically how many or what percentage of Accords channels actually currently
carry Polycom products and sell those to their customers?
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MR. HAGERTY:
We did not do a specific analysis, so I can't give you a percentage. As
we went through the customer list, there is a large amount of overlap, there is
a lot of synergy between the end point sale and the multi-point conferencing
infrastructure sale. I think everybody is fairly comfortable that our channels
are going to gain a lot from this. I don't know, maybe Jules can add a little
more color to that.
MR. DEVIGNE:
I would agree with what Bob said, the other think that you have to
understand is that at the end of the day the organizations who sell to the end
users are the resellers that many of the end point manufactures sell to. We are
quite hopeful that trend will continue and that the volumes will continue in the
right direction.
MR. LEPPIK:
Gotcha, now at this stage of the game are there plans to integrate some
of Accords, what I would consider more feature rich, more functional NCU
technology in to some of the higher end view stations?
MR. HAGERTY:
I'd say yes and yes, I think we do expect that our development teams
will work together. They will share technology, and there is no question that
technology that has been developed by Accord will end up in Polycom devices and
Polycom-developed technology will end up in Accord devices. That is certainly,
absolutely 100% on our minds and part of this decision to acquire.
MR. LEPPIK:
Okay, and then a couple quick cleanup questions. Is there a cap or a
collar on this transaction?
MR. KOUREY:
No, it's a fixed exchange ratio.
MR. LEPPIK:
Okay, then there are no rails here.
MR. KOUREY:
On either side, no.
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MR. LEPPIK:
Okay, and the other question, I'm probably one of the few people who
actually have models from both companies sitting on my hard drive right now. For
the benefit of everyone else are you planning to publish consolidated
historicals before the close, or is that going to be after the close?
MR. KOUREY:
That will be after the close.
MR. LEPPIK:
Perfect, thank you very much.
GENE HOLMSTEAD - H C WAINWRIGHT AND COMPANY, INCORPORATED:
Good morning gentlemen, congratulations. You had said on the call that
you thought that with this transaction Polycom may get involved in helping to
develop standards for the IP Networks. Could you talk a little bit more about
that?
MR. HAGERTY:
Well you know there are a lot of standards that have merged in the
short period of time, relatively speaking that video communication that been
standardized. We have had enormous work in the standards bodies and we see now
with wireless coming on there is going to be even more work that is required. So
we see this positioning with the combination of the technology and development
teams as a logical opportunity to help not only Polycom and the Polycom-Accord
combination, but the industry as a whole to move forward. And standards and
operability are essential and we intend to make that a cornerstone of our
positioning in the future and we assure everyone that the Accord platform will
be the most interoperable out there.
MR. HOLMSTEAD:
How does this get you into wireless and what is your plan with
wireless?
MR. HAGERTY:
If you just look into some emerging new areas in the broadband space,
with the G3 Wireless developments that are happening, more and more around the
world, we expect and will fully support the standards that are coming, as you
know right now there is quite a lot of interest in Japan with mobile video
products and we expect that trend to continue and we will support that fully.
MR. HOLMSTEAD:
Has this acquisition changed Accord's project plan going forward.
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MR. DEVIGNE:
No it has not.
MR. HOLMSTEAD:
Okay, thank you.
RANDY SCHERAGO - PRUDENTIAL SECURITIES, INCORPORATED:
Good morning, congratulations. Just a couple of quick questions as far
as price points on some of the product lines for Accord Networks and also could
you give us some sort of a sense of what is going on in Accords basically
service provider market as far as what sort of outlook looks like for this
quarter and basically Q1 and how there sort of feeling any slow down, any
robustness, or anything that could sort of give us a sort of a tone as to their
customer base. What's going on with it?
MR. DEVIGNE:
To answer the second question. We typically don't break those numbers
out, but we don't see any slow down in purchases from service providers of our
technology.
MR. SCHERAGO:
Okay.
MR. DEVIGNE:
And what was the first question?
MR. SCHERAGO:
Basically, various price points for the priceline.
MR. DEVIGNE:
A fully configured system that a typical service provider might buy
would be around the $500,000 range as a list price. The least expensive system
that an enterprise could buy would be about $48,000 as a list price and off of
those prices, based upon buying commitments there are discounts.
MR. SCHERAGO:
Okay, terrific. What was the geography as far as your split, North
America versus Europe and Asia?
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MR. DEVIGNE:
In a case of Accord, its 70% North America and 30% rest of world and
depending upon the quarter that is split down the middle.
MR. SCHERAGO:
Okay, thanks guys, congratulations.
TOM WOODEN - ARTISAN PARTNERS LIMITED PARTNERSHIP
Hey guys, congratulations. The one question that I've got is the split
of what did Accord do in revenues last years?
MR. DEVIGNE:
Accord did about $25 million in revenues last year.
MR. WOODEN:
And guidance for the forward year?
MR. DEVIGNE:
For next year or this year?
MR. WOODEN:
For the 01 year.
MR. DEVIGNE:
01 year the analysts have a number of about $55-56 million.
MR. WOODEN:
And any change in that guidance today given the integration of your two
companies?
MR. KOUREY:
No we are not declaring any revenue synergies and clearly, Bob talked
about the huge cross selling opportunities, as has Jules. But we are not saying
that's going to occur at this time.
MR. WOODEN:
Thanks guys.
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SCOTT SUTHERLAND - WEDBUSH MORGAN SECURITIES, INCORPORATED:
Hello Bob, Mike, Jules, congratulations on the acquisition it looks
very positive at this point. A few questions, just going after the synergies
again, one thing that Polycom does is that you get a lot of big manufacturing
over at Celestica. What happens to the manufacturing of the Accord products at
this point, and you have any road map for the future?
MR. HAGERTY:
We will do some amount of integration mostly on the X-factory side of
the equation, just trying to build up better aid and logistics support through
the world, utilizing the support that Polycom already has in place, but we
intend to leave manufacturing where it is. I think that I'll hand it off to
Jules to talk a little bit about some of the programs that already exist inside
Accord.
MR. DEVIGNE:
Right now from a product gross margin point of view, we are generating
north of 75% product gross margin, so we are operating our facility in Israel
pretty effectively. In addition to that, we are looking at other optimization
techniques such as turnkey manufacturing and other locations for assembly and
test.
MR. SUTHERLAND:
Second question is, with distribution, are there are regions where
Accord is strong and where Polycom is weak and visa versa, that you could see
the leverage for resale opportunities to increase revenues for both of the
companies' product lines?
MR. HAGERTY:
Well you know, I think the opportunity here is enormous because we do
sell to a lot of the same customers, clearly service providers are in an area
where Accord is strong, not that Polycom is weak but they have strong intimate
relationships with the Service Provider Network. I think Polycom brings some
very good strategic partners with some of the other network folks out there. So
I think those two would be the most notable areas.
MR. SUTHERLAND:
Great thank you.
END
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Additional Information: Polycom plans to file a Registration Statement
on SEC Form S-4 in connection with the merger and Accord expects to mail a Proxy
Statement/Prospectus to its security holders containing information about the
merger. Investors and security holders are urged to read the Registration
Statement and the Proxy Statement/Prospectus carefully when they are available.
The Registration Statement and the Proxy Statement/Prospectus will contain
important information about Polycom, Accord, the merger and related matters.
Investors and security holders will be able to obtain free copies of these
documents through the web site maintained by the U.S. Securities and Exchange
Commission at http//www.sec.gov. In addition to the Registration Statement and
the Proxy Statement/Prospectus, Polycom and Accord file annual, quarterly and
special reports, proxy statements and other information with the Securities and
Exchange Commission. You may read and copy any reports, statements and other
information filed by Polycom and Accord at the SEC public reference rooms at 450
Fifth Street, N.W., Washington, D.C. 20549 or at the Commission's other public
reference rooms in New York, New York and Chicago, Illinois. Please call the
Commission at 1-800-SEC-0330 for further information on public reference rooms.
Polycom's and Accord's filings with the Commission also are available to the
public from commercial document-retrieval services and at the web site
maintained by the Commission at http//www.sec.gov.
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