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EXHIBIT 99.1
DITECH COMMUNICATIONS TO ACQUIRE ATMOSPHERE NETWORKS
ACQUISITION GIVES DITECH KEY OPTICAL NETWORKING SYSTEMS EXPERTISE
Mountain View, California, June 22, 2000 -- Ditech Communications Corporation
(Nasdaq: DITC) today announced it has signed an agreement to acquire
privately-held Atmosphere Networks, Inc. of Campbell, California in a stock and
cash merger. Atmosphere Networks is an emerging provider of optical networking
products, enabling carriers to combine various types of traffic (voice, data and
video) onto an optical network.
Under the terms of the agreement, the stockholders of Atmosphere Networks will
receive merger consideration valued at $88.5 million, provided that if the
average closing price of a share of Ditech common stock for a designated period
prior to the closing is less than $73.75, the merger consideration will be
valued at 1,200,000 shares of Ditech common stock, and if such average closing
price is greater than $88.50, the merger consideration will be valued at
1,000,000 shares of Ditech common stock. The actual merger consideration will
consist primarily of Ditech common stock, provided that certain holders of
Atmosphere Networks common stock will receive cash (estimated not to exceed
approximately $10 million) upon the consummation of the merger. Ditech is also
expected to grant the Atmosphere Networks employees 4-year vesting stock options
covering up to 750,000 shares of Ditech common stock at a price representing up
to a 50% discount to market.
The acquisition will be accounted for under purchase accounting and is expected
to close in the first quarter of Ditech's fiscal year 2001. The Company is still
evaluating the extent of any purchased in-process R&D write-off associated with
this acquisition. To the extent such a write-off is recognized, it will be
reported as part of the Company's first quarter operating results. The
acquisition has been approved by the respective boards of directors of Ditech
and Atmosphere Networks, and is subject to the approval of the stockholders of
Atmosphere Networks as well as other customary closing conditions. The
acquisition is expected to be dilutive to earnings per share excluding
amortization of goodwill, purchase technology, and other acquisition related
costs in the near term, but is not expected to result in a material deviation
from Ditech's operating plan for 2001 exclusive of acquisition related costs.
"This acquisition is a bold move to expand our optical business, instantly
giving us critical mass in optical networking disciplines which should
dramatically improve the time-to-market for our new optical projects," said Tim
Montgomery, Ditech's President and CEO. "Through the development of our DWDM
subsystem products, including our optical amplifiers, we have developed
tremendous photonics and optical transport expertise. When combined with the
network control plane expertise provided by Atmosphere Networks, we are poised
to deliver industry-leading solutions for the optical transport layer."
Continued Montgomery, "With this acquisition, Ditech is sending a strong signal
that we are aggressively expanding our optical networking development plans
beyond our current suite of products. We double our optical engineering team and
add critical personnel in sales and
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marketing. Furthermore, we will fill a significant percentage of our current
headcount needs, which we believe is a significant achievement in a very
challenging hiring environment. With our optical transport expertise and
Atmosphere Networks' data networking system expertise, Ditech is poised to
drive to a leadership position in the optical networking business."
ATMOSPHERE NETWORKS
Founded in 1997, Atmosphere Networks is a leading player in providing solutions
for the optical network. Atmosphere Networks enables telecommunications carriers
to take full advantage of optical networks' capacities and offer their customers
flexible voice-and-data service packages. With Atmosphere Networks' products,
carriers can boost their competitiveness while lowering their network costs. The
privately held company is backed by Benchmark Capital, Foundation Capital,
Institutional Venture Partners (IVP), Bowman Capital, Volpe Brown Whelan &
Company and other venture firms. For more information on Atmosphere Networks,
visit the web site at: www.atmospherenetworks.com.
DITECH COMMUNICATIONS CORPORATION
Ditech Communications Corporation is a global telecommunications equipment
supplier for voice and data networks. Ditech's voice products are high-capacity
echo cancellers that utilize advanced software and digital signal processor
(DSP) technology. This unique combination of software and hardware allows Ditech
to deliver Voice Quality of Service (VQoS(TM)), a robust and cost-effective
solution for voice enhancement and echo cancellation. Ditech's products for data
networks provide building blocks for high-speed, high-capacity backbone
networks. These products are based on wavelength division multiplexing (WDM), a
technology that enables many wavelengths of light, each carrying multiple
gigabits of information, to be carried on one fiber optic connection. With
Ditech's WDM products, network equipment companies and service providers can
quickly and cost-effectively expand their network capacity to meet the growing
demands of the Internet age without incurring the vast time and expense of
laying new fiber optic cable. Ditech (DITC) is listed on the Nasdaq National
Market and is headquartered in Mountain View, California (Web site:
http://www.ditechcom.com).
This press release contains forward-looking statements regarding Ditech's
products and business. The benefits Ditech expects to realize as a result of the
Atmosphere Networks acquisition could vary materially as a result of
unanticipated factors and events, including those detailed from time to time in
the reports and other filings Ditech makes with the Securities and Exchange
Commission, including in Ditech's prospectus dated October 5, 1999.
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