C COR NET CORP, S-3/A, 1999-11-04

C COR NET CORP
S-3/A, 1999-11-04
RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT

Previous: MORGAN STANLEY DEAN WITTER NATURAL RESOURCE DEVELOPEMENT SEC, N-30D, 1999-11-04

Next: BALCOR PENSION INVESTORS II, 10-Q, 1999-11-04

<PAGE>

As filed with the Securities and Exchange Commission on November 4, 1999

Registration No. 333-87909
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

----------------

AMENDMENT NO. 2
to
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933

----------------
C-COR.net Corp.
(Exact name of registrant as specified in its charter)

----------------

Pennsylvania 24-0811591
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

60 Decibel Road
State College, Pennsylvania 16801
(814) 238-2461
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

David A. Woodle, President
60 Decibel Road
State College, Pennsylvania 16801-7530
(814) 238-2461
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

----------------

Copies to:

Robert C. Gerlach, Esq. Philip P. Rossetti, Esq.
Ballard Spahr Andrews & Ingersoll, Hale and Dorr LLP
LLP 60 State Street
1735 Market Street, 51st Floor Boston, Massachusetts 02109
Philadelphia, PA 19103 (617) 526-6000
(215) 665-8500

----------------

Approximate date of commencement of proposed sale to the public: As soon as
practicable after this registration statement is declared effective.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]

If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

----------------

The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

Subject to Completion, Dated November 4, 1999
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information contained in this prospectus is not complete and may be +
+changed. These securities may not be sold until the registration statement +
+filed with the Securities and Exchange Commission is effective. This +
+prospectus is not an offer to sell these securities and it is not soliciting +
+an offer to buy these securities in any state where the offer or sale is not +
+permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

2,500,000 Shares

[C-Cor.net Corp.]

Common Stock

$ per share

- --------------------------------------------------------------------------------

C-COR.net Corp. is offering 2,500,000 shares of common stock with this
prospectus. This is a firm commitment underwriting.

The common stock is traded on the Nasdaq National Market under the symbol
"CCBL." On November 3, 1999, the last reported sale price of the common stock
on the Nasdaq National Market was $40.8125 per share.

Investing in the common stock involves a high degree of risk. See "Risk
Factors" beginning on page 5.

<TABLE>
<CAPTION>
Per
Share Total
----- ------
<S> <C> <C>
Price to the public........................................... $ $
Underwriting discount......................................... $ $
Proceeds to C-COR.net......................................... $ $
</TABLE>

C-COR.net has granted an over-allotment option to the underwriters. Under this
option, the underwriters may elect to purchase a maximum of 375,000 additional
shares from C-COR.net within 30 days following the date of this prospectus to
cover over-allotments.

- --------------------------------------------------------------------------------

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.

CIBC World Markets Donaldson, Lufkin & Jenrette

Warburg Dillon Read LLC

Josephthal & Co. Inc.

The date of this Prospectus is , 1999.
<PAGE>

[Picture with the caption "The Evolving Hybrid Fiber Coax (HFC) Network" which
depicts the different segments of the HFC network including the Network
Operations Center, headend, traditional node and mininode. There is also a list
of C-COR.net's primary products and services.]
<PAGE>

Table of Contents

<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary....................................................... 3
Risk Factors............................................................. 5
Forward Looking Statements............................................... 11
Use of Proceeds.......................................................... 12
Dividend Policy.......................................................... 12
Price Range of Common Stock.............................................. 13
Capitalization........................................................... 14
Selected Consolidated Financial Data..................................... 15
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 16
Business................................................................. 27
Management............................................................... 36
Description of Capital Stock............................................. 38
Underwriting............................................................. 40
Legal Matters............................................................ 42
Experts.................................................................. 42
Where You Can Find More Information...................................... 42
Incorporation of Certain Documents by Reference.......................... 43
Index to Financial Statements............................................ F-1
</TABLE>

-------------------------

As used in this prospectus, the terms "we," "us," "our" and "C-COR.net" mean
C-COR.net Corp. and its subsidiaries (unless the context indicates a different
meaning) and the term "common stock" means our common stock, $0.10 par value
per share. Unless otherwise stated, all information contained in this
prospectus assumes no exercise of the over-allotment option granted to the
underwriters. In addition, unless otherwise stated, all financial data gives
retroactive effect to the mergers of C-COR.net Corp., Convergence.com
Corporation and Silicon Valley Communications, Inc., which have been accounted
for using the pooling-of-interest method of accounting.

For discussion other than what is contained herein regarding our fiscal quarter
ended September 24, 1999, please refer to our report on Form 10-Q filed with
the Commission which is incorporated herein and made a part hereof.

The underwriters are offering the shares subject to various conditions and may
reject all or part of any order. The shares should be ready for delivery on or
about , 1999, against payment in immediately available funds.

The following trademarks of C-COR.net Corp. are used throughout this
prospectus: C-COR, NAVICOR, FlexNet, FlexNode and CNM.

2
<PAGE>

Prospectus Summary

You should read the following summary together with the more detailed
information regarding our company and the common stock being sold in this
offering and our financial statements and accompanying notes that appear
elsewhere in this prospectus.

About C-COR.net

Cable operators worldwide have begun upgrading and rebuilding their existing
networks to offer high-speed, two-way, broadband services such as Internet
delivery, telephony, video-on-demand and digital television. These investments
are a result of competitive pressures, industry consolidation, deregulation and
technical advancements, particularly in the use of fiber optic equipment. As
cable operators have consolidated to achieve economies of scale, non-cable
operators, such as Microsoft, Paul Allen and AT&T, have made substantial
investments in the HFC system design, not only validating it as a competitive
broadband medium, but increasing the available capital to spend on network
upgrades.

We acquired Silicon Valley Communications in September 1999 to broaden our
product line and increase our technology base to include dense wave division
multiplexing, or DWDM, technology and end-to-end fiber optic and RF
transmission equipment. Additionally, we acquired Convergence.com in July 1999
to enhance our broadband management services capability to include an
integrated package of network management and support services, such as enhanced
management software and a network operations center.

We recently introduced two new fiber optic products that are currently being
used in a field trial of AT&T's LightWire Neighborhood Broadband System in Salt
Lake City, Utah. We believe these two products, the MuxNode and the MiniNode,
are key components of the next generation of HFC networks. These products
provide bi-directional signal transmission featuring multiple forward and
reverse paths that support analog and digital video, high-speed data and
telephony. This system design provides for the broader deployment of fiber into
the network which provides increased bandwidth and network reliability.

The increasing size, complexity and traffic over cable networks requires
consistent, reliable network performance to meet customer demands. We believe
cable network operators will need to substantially increase their investment in
high quality, value added services such as network design, activation, Internet
enablement, advice on system upgrades and proactive performance management.
Given the increased complexity and cost associated with designing, monitoring
and maintaining next generation HFC networks, we also believe cable operators
will turn to third party providers, such as C-COR.net, to assist them in
enhancing network integrity.

Our core business strategy is to leverage our over 45 year reputation for
quality and service, our strong customer relationships and our extensive
installed base of transmission equipment to provide a broad line of flexible,
reliable and cost effective network products and service solutions.

Our principal executive offices are located at 60 Decibel Road, State College,
Pennsylvania 16801. Our telephone number is (814) 238-2461.

3
<PAGE>

The Offering

Common stock offered by C-COR.net....... 2,500,000 shares

Common stock to be outstanding after
the offering............................ 14,875,792 shares

Use of proceeds......................... For the repayment of debt, capital
expenditures, working capital and
general corporate purposes

Nasdaq National Market symbol........... CCBL

Summary Consolidated Financial Information
(In thousands, except for per share data)

The restated amounts give retroactive effect to the recent mergers of C-COR.net
Corp. and Convergence.com Corporation and Silicon Valley Communications, Inc.,
which have been accounted for using the pooling-of-interest method of
accounting. This method requires that the historical financial statements of
the merged companies be combined and presented as if the companies had always
operated as one entity. The as adjusted balance sheet data in the table below
give effect to the sale of 2,500,000 shares of common stock offered by us at an
assumed offering price of $42.28125 per share, and the application of the net
proceeds from the sale of the shares, after deducting the underwriting discount
and estimated offering expenses payable by us.

<TABLE>
<CAPTION>
Thirteen
Years Ended Weeks Ended
------------------------------------------------------- ------------------
Historical Restated Restated
--------------------------- --------------------------- -------- --------
June 27, June 26, June 25, June 27, June 26, June 25, Sep. 25, Sep. 24,
1997 1998 1999 1997 1998 1999 1998 1999
-------- -------- -------- -------- -------- -------- -------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Statements of Operations
Data:
Net sales............... $131,941 $152,144 $171,281 $133,780 $154,041 $183,425 $34,654 $64,503
Income (loss) from
continuing operations.. 4,257 7,317 10,455 898 918 (683) (1,116) 19
Loss from discontinued
operations............. (6,605) -- -- (6,605) -- -- -- --
Gain (loss) from
disposal of
discontinued
operations............. (3,830) 928 397 (3,830) 928 397 288 36
-------- -------- -------- -------- -------- -------- ------- -------
Net income (loss)....... $ (6,178) $ 8,245 $ 10,852 $ (9,537) $ 1,846 $ (286) $ (828) $ 55
======== ======== ======== ======== ======== ======== ======= =======
Net income (loss) per
share - basic:
Continuing operations.. $ 0.45 $ 0.80 $ 1.15 $ 0.07 $ 0.08 $ (0.06) $ (0.09) $ --
Discontinued
operations............ (0.70) -- -- (0.54) -- -- -- --
Disposal of
discontinued
operations............ (0.40) 0.10 0.04 (0.32) 0.08 0.04 0.02 --
-------- -------- -------- -------- -------- -------- ------- -------
Net income (loss)....... $ (0.65) $ 0.90 $ 1.19 $ (0.79) $ 0.16 $ (0.02) $ (0.07) $ --
======== ======== ======== ======== ======== ======== ======= =======
Net income (loss) per
share - diluted:
Continuing operations.. $ 0.44 $ 0.78 $ 1.10 $ 0.07 $ 0.07 $ (0.06) $ (0.09) $ --
Discontinued
operations............ (0.68) -- -- (0.53) -- -- -- --
Disposal of
discontinued
operations............ (0.40) 0.10 0.04 (0.31) 0.08 0.04 0.02 --
-------- -------- -------- -------- -------- -------- ------- -------
Net income (loss)....... $ (0.64) $ 0.88 $ 1.14 $ (0.77) $ 0.15 $ (0.02) $ (0.07) $ --
======== ======== ======== ======== ======== ======== ======= =======
</TABLE>

<TABLE>
<CAPTION>
September 24, 1999
--------------------
As Adjusted
-------- -----------
<S> <C> <C>
Balance Sheet Data:
Cash, cash equivalents and marketable securities......... $ 938 $ 91,156
Working capital.......................................... 34,522 131,962
Total assets............................................. 108,900 199,118
Total long-term obligations, including current
maturities.............................................. 4,326 1,876
Shareholders' equity..................................... 62,108 161,398
</TABLE>

4
<PAGE>

Risk Factors

You should carefully consider the following factors before deciding to invest
in the shares. The risks and uncertainties described below are not the only
ones we face. Additional risks and uncertainties not presently known to us or
which are similar to those faced by other companies in our industry or business
in general, may also impair our business operations. If any of the following
risks actually occur, our business, financial condition or results of future
operations could be materially and adversely affected. In such case, the
trading price of our common stock could decline, and you may lose all or part
of your investment. This prospectus also contains forward looking statements
that involve risks and uncertainties. Our actual results could differ
materially from those anticipated in these forward looking statements as a
result of certain factors, including the risks we face as described below and
elsewhere in this prospectus. Please refer to "Forward Looking Statements" on
page 11.

Our customer base consists of a small number of customers in a single industry.

Historically, we have provided cable network transmission equipment to cable
operators in the United States and internationally. Most of our sales have been
to relatively few customers. Sales to our ten largest customers accounted for
approximately 72% of net sales in fiscal 1997, 74% of net sales in fiscal 1998
and 76% of net sales in fiscal 1999.

During the past 18 months there has been significant consolidation of ownership
of domestic cable systems. As a result, we expect that the concentration of our
sales among a small number of customers will continue for the foreseeable
future. Almost all of our sales are made on a purchase order basis and none of
our customers has entered into a long-term agreement requiring the purchase of
our products. The loss of, or any reduction in orders from, a significant
customer would harm our business. We expect that the consolidation of our
customer base may result in delays in receiving new orders or a reduction in
the size of orders for our products.

A decline in capital spending in the cable industry could substantially reduce
our revenue.

Almost all of our sales have been to cable operators and we expect this to
continue for the foreseeable future. Demand for our products depends
significantly on the size and timing of capital spending by cable operators for
constructing, rebuilding or upgrading their systems. We cannot accurately
predict the growth patterns of cable operators' spending, but we believe these
patterns depend on a variety of factors, including:

. overall demand for cable services and the acceptance of new broadband
services, such as Internet, telephony, video-on-demand and digital
television;

. competitive pressures, including the availability of alternative
delivery technologies, such as direct broadcast satellite, digital
subscriber line and local multipoint distribution services;

. cable operators' access to financing;

. cable operators' annual budget cycles;

. the status of federal, local and foreign government regulation of
telecommunications and television broadcasting; and

. fewer construction and upgrade projects typically occurring in winter
months, and during inclement weather.

We may be unable to manage the numerous risks and challenges associated with
our recent acquisitions of Convergence.com and Silicon Valley Communications,
which could adversely affect our operations and financial condition.

Recently, we have experienced significant growth, including the acquisitions of
Convergence.com and Silicon Valley Communications. These acquisitions have
placed, and we expect will continue to place, a significant strain on our
personnel, management and other resources.

We acquired Convergence.com in July 1999 to enable us to offer an integrated
package of technical services and products, including access to broadband
Internet and high speed data capabilities. Our ability
to successfully market these newly acquired services and products depends on:

. the evolution and growth of the market for high speed Internet and
broadband services;

5
<PAGE>

. assimilating Convergence.com's operations, research and development,
products, personnel and culture with ours;

. our ability to successfully develop, manufacture and gain market
acceptance of Convergence.com's services and products; and

. retaining Convergence.com's key personnel.

Our acquisition of Silicon Valley Communications in September 1999 presents us
with several challenges, including:

. interfacing and integrating Silicon Valley Communications' fiber optic
product line with our existing product line;

. maintaining quality control of our expanded product line;

. integrating Silicon Valley Communications' operations and culture with
ours, including the consolidation of separate sales organizations,
engineering capabilities, manufacturing operations and support
functions; and

. retaining Silicon Valley Communications' key employees, particularly in
the engineering and sales areas.

We cannot assure you that we will be able to successfully address the
challenges that these acquisitions present. Our failure to do so would likely
materially and adversely affect our business, financial condition and operating
results.

Reselling of stock issued in connection with our recent acquisitions may
adversely affect our stock price.

Subject to the effectiveness of certain registration statements we have filed
with the Securities and Exchange Commission and certain contractual limitations
relating to affiliates, shares issued to the Convergence.com and Silicon Valley

Communications shareholders will become eligible for resale. On various dates
beginning in September 1999 and ending in December 1999, 1,392,950 shares will
become eligible for resale. On various dates between January and February 2000,
1,585,454 shares will become eligible for resale. Together, these shares will
account for approximately 25% of our outstanding shares. Furthermore, 35,845
shares issuable upon exercise of options at a weighted average exercise price
of $1.89 and warrants to purchase 443,319 shares at a weighted average exercise
price of $12.18 will become eligible for resale on various dates beginning in
September 1999 and ending in December 1999. Additionally, 16,697 shares
issuable upon exercise of options at a weighted average exercise price of $2.06
and warrants to purchase 173,370 shares at a weighted average exercise price of
$26.58 will become eligible for resale on various dates between January and
February 2000. If a large portion of these shares is sold during these time
periods, our stock price will likely experience volatility and may fall.

If AT&T decides not to deploy our fiber optic products currently being used in
the Salt Lake City, Utah field trial, then our financial results would likely
be adversely affected.

Our next generation MiniNode and MuxNode fiber optic products are being used in
AT&T's LightWire Neighborhood Broadband System concept testing field trial in
Salt Lake City, Utah. If the field trial does not result in widespread
deployment of the LightWire system, our future revenues would be adversely
affected. Likewise, if this new system is deployed but does not include our
MiniNode and MuxNode products, our future revenues would be adversely affected.

We could be adversely affected if broadband communications do not develop
rapidly.

Our core products are cable network transmission equipment for hybrid fiber
coax networks, commonly known as HFC networks. HFC networks can be used to
transport Internet, telephony, video-on-demand and digital television. A
significant part of the current demand for our products depends on our
customers' desire to upgrade their existing networks and offer Internet and
telephony services in addition to cable television service. There are, however,
competing technologies such as direct broadcast satellite, digital subscriber
line and local multipoint distribution services that can provide these upgraded
services to end users. Improvements in a competing technology could result in
significant price and/or performance advantages for that technology which, in
turn, could reduce demand for our core products.

It is difficult for us to accurately predict the broadband communications
market's future growth

6
<PAGE>

rate, size and technological direction because the market is in a relatively
early stage of development. As this market matures, it is possible that cable
operators, telephone companies or other suppliers of broadband wireless and
satellite services will decide to adopt alternative technologies or standards
that are incompatible with our products. If we are unable to design,
manufacture and market products that incorporate or are compatible with these
new technologies or standards, our business would suffer.

If we are unable to design, manufacture and market new products in a timely
manner, then we may not remain competitive.

The broadband communications market, which includes Internet and telephony
services, is characterized by continuing technological advancement, changes in
customer requirements and evolving industry standards. To compete successfully,
we must design, manufacture and market new products that provide increasingly
higher levels of performance and reliability. Our inability to design,
manufacture and market these products or to achieve broad commercial acceptance
of these products would have an adverse effect on our business.

If we are unable to profitably increase network management service revenue, our
financial results would be adversely affected.

Our ability to increase network management service revenue depends on many
factors that are beyond our control. For example:

. our customers may decide not to outsource to third parties;

. we may be unable to compete effectively with our competitors,
particularly those with greater financial, technical, marketing and
other resources; and

. we may be unable to hire and retain enough qualified technical and
management personnel to support our growth plans.

In addition, the pricing structure and investment required in the network
management services
business are not well established. We may be unable to establish a business
strategy that generates adequate profitability or an adequate return on
investment.

If we are unable to retain our key personnel or recruit additional key
personnel in the future, then we may be unable to execute our business
strategy.

Our success depends on our ability to hire, retain and motivate highly
qualified personnel. Competition for qualified technical and other personnel is
intense and we may not successfully attract or retain such personnel.
Competitors and others in the past have recruited our employees and may do so
in the future. While we require our employees to sign customary agreements
concerning confidentiality and ownership of inventions, we generally do not
have employment contracts or noncompetition agreements with our personnel. If
we lose any of our key personnel, are unable to attract qualified personnel or
are delayed in hiring required personnel, particularly engineers and other
technical personnel, our business could be negatively affected.

Our reliance on several key components, subassemblies and modules used in the
manufacture of our products could restrict production.

We obtain many components, subassemblies and modules necessary for
manufacturing our products from a sole supplier or a limited group of
suppliers. Our reliance on sole or limited suppliers, particularly foreign
suppliers, and our increasing reliance on subcontractors, involves several
risks. These risks include a potential inability to obtain an adequate supply
of required components, subassemblies or modules, and reduced control over
pricing, quality and timely delivery of these components, subassemblies or
modules. We do not generally maintain long-term agreements with any of our
suppliers or subcontractors. We are currently experiencing a limited allocation
of a component for our amplifiers from Motorola, a major supplier. This could
affect near-term product shipments because this is a key component in several
of our products. An inability to obtain adequate deliveries or any other
circumstance, requiring us to seek alternative sources of supply, could affect
our ability to ship our products on a timely basis, which could damage our
relationships with current and prospective customers and harm our business.

7
<PAGE>

Changes in international trade laws, regulations or the political climate in
Mexico could hinder our production capacity.

We operate a manufacturing facility in Tijuana, Mexico that provides a
significant portion of our production capacity. This operation is exposed to
certain risks as a result of its location, including:

. changes in international trade laws, such as the North American Free
Trade Agreement, affecting our import and export activities;

. changes in, or expiration of, the Mexican government's Maquiladora
program, which provides economic benefits to us;

. changes in labor laws and regulations affecting our ability to hire and
retain employees;

. fluctuations of foreign currency and exchange controls;

. potential political instability and changes in the Mexican government;

. potential regulatory changes; and

. general economic conditions in Mexico.

Any of these risks could interfere with the operation of this facility and
result in reduced production, increased costs, or both. In the event that this
facility's production capacity is reduced, we could fail to ship products on
schedule and could face a reduction in future orders from dissatisfied
customers. If our costs to operate this facility increase, our margins would
decrease. Reduced shipments and margins would have an adverse affect on our
financial results and could lead to a decline in our stock price.

Our competitors, some of whom are larger and more established, may have a
competitive advantage over us.

The market for cable network transmission equipment is extremely competitive
and is characterized by rapid technological change. Our current competitors
include significantly larger companies with greater financial, technical,
marketing and other resources. Additional competition could come from new
entrants in the broadband communications equipment market.
These existing and potential competitors may be in a better position to
withstand any significant reduction in capital spending by cable operators and
to keep pace with changes in technology. If any of our competitors' products or
technologies become the industry standard, our business could be seriously
harmed. We cannot assure you that we will be able to compete successfully in
the future or that competition will not harm our business.

We expect to need additional capital in the future and may not be able to
secure adequate funds on terms acceptable to us.

We currently anticipate that our existing cash balance, available line of
credit, cash flow expected to be generated from future operations, together
with the proceeds from this offering, will be sufficient to meet our operating
needs for the next 12 to 24 months. If our cash flows are less than expected,
we may need to raise additional funds sooner to respond to unforeseen
technological or marketing hurdles, satisfy unforeseen liabilities or take
advantage of unanticipated opportunities. A future transaction could require
significant amounts of capital, as could the integration of our acquisitions of
Convergence.com and Silicon Valley Communications. We may not be able to obtain
funds at the time or times needed on terms acceptable to us, or at all. If we
are unable to obtain adequate funds on acceptable terms, we may not be able to
take advantage of market opportunities, develop new products or otherwise
respond to competitive pressures.

If our sales forecasts are not realized in a given period or if our operating
results fluctuate in any given quarter, our stock price may fall.

While we receive periodic forecasts from our customers as to their future
requirements, these forecasts may not accurately reflect future purchase orders
for our products. In addition, the sales cycles of many of our products,
particularly our newer products and products sold internationally, are
typically unpredictable and usually involve:

. a significant technical evaluation by our customers;

. a commitment of capital and other resources by cable operators;

. delays associated with cable operators' internal procedures to approve
large capital expenditures;

8
<PAGE>

. time required to engineer the deployment of new technologies or services
within broadband networks; and

. testing and acceptance of new technologies that affect key operations.

For these and other reasons, our sales cycles generally last three to six
months, but can last up to 12 months.

In addition, because a limited number of large customers account for a
significant portion of our sales, the timing of their orders can cause
significant fluctuation in our quarterly operating results. A portion of our
expenses for any given quarter is typically based on expected sales and if
sales are below expectations in any given quarter, the negative impact on our
operating results may be increased if we are unable to adjust our spending to
compensate for the lower sales. Accordingly, variations in the timing of sales
can cause significant fluctuation in our quarterly operating results and may
result in a fall in the price of our common stock.

Our stock price may be volatile and you may not be able to resell your shares
at or above the offering price.

The market price of our common stock has fluctuated widely in the past and is
likely to fluctuate in the future.

Factors affecting our stock price may include:

. variations in operating results from quarter to quarter;

. changes in earning estimates by analysts;

. market conditions in the industry; and

. general economic conditions.

For example, between August 17, 1999 and August 30, 1999, the price of our
common stock dropped from approximately $33.88 to $21.00 per share. Between
August 30, 1999 and October 18, 1999, the price of our common stock rose from
approximately $21.00 to $47.50 per share. Consequently, the current market
price of our common stock may not be indicative of future market prices, and
you may be unable to resell your shares of our common stock at or above the
offering price.

If our international sales do not meet our expectations, then our growth may be
less than expected.

Sales to customers outside of the United States represented 19% of net sales in
fiscal 1997, 21% of net sales in fiscal 1998 and 11% of net sales in fiscal
1999. We expect that international sales will represent a substantial portion
of our net sales in the future. Although we plan to invest resources to grow
our international sales, there can be no guarantee that this investment will
succeed. Our international operations are subject to a number of risks,
including:

. spending patterns of international cable operators;

. import and export license requirements, tariffs, taxes and other trade
barriers;

. fluctuations in currency exchange rates;

. difficulty in collecting accounts receivable;

. complying with a wide variety of foreign laws, treaties and
telecommunications standards;

. difficulty in staffing and managing foreign operations; and

. political and economic instability.

We may be harmed if we are unable to adequately protect our proprietary rights.

We currently hold 16 United States patents and have a number of patent
applications pending. We intend to continue to file patent applications in the
future, where we believe appropriate, and to pursue such applications with
United States and foreign patent authorities, but we cannot be sure that any
other patents will be issued on such applications or that our patents will not
be contested. Also, because issuance of a valid patent does not prevent other
companies from using alternative, non-infringing technology, we cannot be sure
that any of our patents will provide significant commercial protection. In
addition to patent protection, we also rely on trade secrets, technical know-
how, copyright and other unpatented proprietary information relating to our
product development and manufacturing activities. We try to protect this
information with confidentiality agreements with our employees and other
parties. We cannot be sure that these agreements will not be breached, that we
will have adequate remedies for any breach or that our trade secrets and
proprietary know-how will not

9
<PAGE>

otherwise become known or independently discovered by others.

Particular aspects of our technology could be found to infringe on the claims
of other existing or future patents. Other companies may hold or obtain patents
on inventions or may otherwise claim proprietary rights to technology necessary
to our business which could prevent us from developing new products. We cannot
predict the extent to which we may be required to seek licenses, or the extent
to which they will be available to us on acceptable terms, if at all.

We may be harmed if we have problems with Year 2000 issues.

We have assessed the Year 2000 readiness of our computer systems and date
sensitive equipment, which are comprised predominantly of third party software
and hardware. We are currently assessing the Year 2000 risks associated with
Convergence.com and Silicon Valley Communications. We have also contacted our
principal customers, suppliers, vendors and subcontractors to ascertain their
readiness for the Year 2000, and, where we believe necessary, made upgrades to
our systems and equipment.

Based upon our assessments to date, we believe that the products we presently
sell, and those we have installed in customers' networks in the past, are Year
2000 compliant. Undetected errors or defects may remain which could result in
litigation or other unexpected costs. If we, or any of our key suppliers or
customers, fail to mitigate internal or external Year 2000 risks, we may be
unable to process transactions, manufacture products, send invoices or engage
in similar normal business activities. We may experience additional costs and a
decline in sales for an indefinite period of time, which could materially and
adversely affect our business, financial condition and results of operations.

10
<PAGE>

Forward Looking Statements

This prospectus and the documents we have filed with the Securities and
Exchange Commission which we have referenced under "Where You Can Find More
Information" on page 40 contain forward looking statements made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
These forward looking statements include, among others, statements regarding
our ability to provide complete network solutions, the demand for network
integrity, the trend toward more fiber in the HFC network, global demand for
our products and services and our ability to integrate Convergence.com and
Silicon Valley Communications. Forward looking statements represent our
judgment regarding future events. Although we believe we have a reasonable
basis for these forward looking statements, we cannot guarantee their accuracy
and actual results may differ materially from those we anticipated due to a
number of uncertainties, many of which we are not aware. Factors that could
cause actual results to differ from expectations include, among others, capital
spending patterns of the communications industry, our ability to develop new
and enhanced products, the unsuccessful deployment of our fiber optic products
in the AT&T field trial, or failure of the field trial more generally,
continued industry consolidation, the development of competing technology or
our ability to assimilate Convergence.com and Silicon Valley Communications. We
urge you to consider the risks and uncertainties discussed under "Risk Factors"
and elsewhere in this prospectus and in the other documents filed with the SEC
in evaluating our forward looking statements. We have no plans to update our
forward looking statements to reflect events or circumstances after the date of
this prospectus.

11
<PAGE>

Use of Proceeds

We estimate that the net proceeds from the sale of the 2,500,000 shares of
common stock we are offering will be approximately $99.3 million. If the
underwriters fully exercise the over-allotment option, the net proceeds will be
approximately $114.3 million. For the purposes of estimating net proceeds, we
have assumed a public offering price of $42.28125 per share. "Net proceeds" is
what we expect to receive after we pay the underwriting discount and other
estimated expenses for this offering.

We expect to use the net proceeds as follows:

. repayment of indebtedness of $2.5 million under a term loan which bears
interest at a rate of 6.14%, which at September 24, 1999 had a balance
of $2.5 million;

. repayment of approximately $8.3 million under a working capital and
acquisition facility which bears interest at the LIBOR 3 month rate plus
a margin ranging from 0.75% to 1.35%, approximately $1.7 million of
which we have borrowed since September 24, 1999; and

. the balance will be used for general corporate purposes, including
working capital and capital expenditures.

In addition, we may use a portion of the net proceeds to acquire complementary
products, technologies or businesses. We intend to invest the net proceeds from
this offering in short-term, investment grade, interest-bearing instruments
until they are used.

Dividend Policy

We have not paid cash dividends since our inception. We anticipate that we will
retain all future earnings for use in the expansion of the business and for
general corporate purposes and, therefore, do not anticipate paying any cash
dividends in the foreseeable future. Any future payment of dividends will be at
the discretion of our board of directors and will depend upon, among other
things, earnings, financial condition, capital requirements, level of
indebtedness, contractual restrictions with respect to the payment of dividends
and other relevant factors. Our senior credit facility prohibits the
distribution of dividends without the prior written consent of the lenders.

12
<PAGE>

Price Range of Common Stock

Our common stock started trading on the Nasdaq National Market in February 1981
under the symbol CCBL. On July 9, 1999, we changed our name from C-COR
Electronics, Inc. to C-COR.net Corp. The following table sets forth, for the
periods indicated, the high and low sales prices for our common stock, as
reported on the Nasdaq National Market.

<TABLE>
<CAPTION>
High Low
-------- --------
<S> <C> <C>
Fiscal 1998:
First Quarter............................................. $ 17.500 $ 8.750
Second Quarter............................................ 18.375 13.500
Third Quarter............................................. 16.500 12.750
Fourth Quarter............................................ 18.125 12.000
Fiscal 1999:
First Quarter............................................. $ 20.000 $ 10.875
Second Quarter............................................ 18.375 8.875
Third Quarter............................................. 20.500 13.500
Fourth Quarter............................................ 32.125 16.000
Fiscal 2000:
First Quarter............................................. $ 39.500 $ 21.000
Second Quarter (through November 3, 1999)................. 47.50 26.625
</TABLE>

On November 3, 1999, the last reported sale price on the Nasdaq National Market
for our common stock was $40.8125 per share. On November 3, 1999, there were
approximately 601 holders of record of the common stock.

13
<PAGE>

Capitalization

The following table presents our capitalization as of September 24, 1999 on:

. a restated basis giving effect to our acquisitions of Convergence.com
and Silicon Valley Communications pursuant to the pooling-of-interests
method of accounting; and

. as adjusted to reflect the sale of 2,500,000 shares of common stock that
we are offering with this prospectus at an assumed offering price of
$42.28125 per share, and the application of the proceeds, net of the
estimated underwriting discount and our estimated expenses for this
offering.

The total number of shares of outstanding common stock of September 24, 1999,
as adjusted for this offering, excludes options to purchase 1,996,245 shares at
a weighted average exercise price of $16.15 per share and warrants to purchase
616,689 shares at a weighted average exercise price of $16.23.

<TABLE>
<CAPTION>
September 24, 1999
--------------------
As Adjusted
------- -----------
(In thousands)
<S> <C> <C>
Cash, cash equivalents and marketable securities.......... $ 938 $ 91,156
======= ========
Long-term debt, less current portion...................... $ 3,513 $ 1,663
Shareholders' equity:
Preferred stock, no par; authorized 2,000,000 shares;
issued, none........................................... -- --
Common stock, $0.10 par; authorized shares 24,000,000;
issued shares of 12,919,160 restated and 15,419,160 as
adjusted............................................... 1,292 1,542
Additional paid-in capital ............................. 46,790 145,830
Accumulated other comprehensive loss.................... (100) (100)
Unearned compensation................................... (14) (14)
Retained earnings....................................... 21,120 21,120
Treasury stock at cost, shares of 600,723............... (6,980) (6,980)
------- --------
Total shareholders' equity............................ 62,108 161,398
------- --------
Total capitalization................................ $65,621 $163,061
======= ========
</TABLE>

14
<PAGE>

Selected Consolidated Financial Data

The selected data presented below under the captions "Statement of Operations
Data" and "Balance Sheet Data" for, and as of the end of, each of the fiscal
years in the five-year period ended June 25, 1999, are derived from the
historical Consolidated Financial Statements of C-COR.net Corp., which
financial statements have been audited by KPMG LLP, independent certified
public accountants. Such historical financial statements do not appear
separately herein. The restated amounts as of June 26, 1998 and June 25, 1999
and for each of the years in the three-year period ended June 25, 1999 are
derived from the supplemental financial statements, which give retroactive
effect to our mergers with Convergence.com Corporation on July 9, 1999 and
Silicon Valley Communications, Inc. on September 17, 1999, which have been
accounted for using the pooling-of-interests method of accounting. Such
supplemental restated financial statements have been audited by KPMG LLP,
independent certified public accountants. The supplemental restated financial
statements and the report thereon are included elsewhere in this prospectus.
Our financial statements for the thirteen week periods ended September 24, 1999
and September 25, 1998 are unaudited, and in our opinion include all
adjustments consisting of normal adjustments necessary for a fair presentation
of the results for the unaudited periods. You should not rely on interim
results as being indicative of results we may expect for the full year. You
should read this information in conjunction with our financial statements and
other financial data included elsewhere herein or incorporated by reference
from our reports filed with the SEC and the section of this prospectus entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

<TABLE>
<CAPTION>
Years Ended Thirteen Weeks Ended
------------------------------------------------------------------------------ ---------------------
Historical Restated Restated
------------------------------------------------ ---------------------------- -------- -----------
June 30, June 28, June 27, June 26, June 25, June 27, June 26, June 25, Sep. 25, Sep. 24,
1995 1996 1997 1998 1999 1997 1998 1999 1998 1999
-------- -------- -------- -------- -------- -------- -------- -------- -------- -----------
(In thousands, except per share data) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Statement of
Operations Data:
Net sales............. $121,269 $139,539 $131,941 $152,144 $171,281 $133,780 $154,041 $183,425 $34,654 $ 64,503
Cost and expenses:
Cost of sales........ 88,373 104,852 104,702 117,557 129,124 106,485 121,986 138,793 27,128 48,278
Selling and
administrative...... 15,949 15,917 15,787 15,020 16,545 18,521 19,724 27,153 5,355 7,109
Research and product
development......... 3,786 4,857 5,681 7,459 9,038 7,706 9,988 11,833 2,789 3,175
Merger related
costs............... -- -- -- -- -- -- -- -- 0 3,673
Provision for
restructuring
costs............... -- -- -- 625 -- -- 625 -- 0 --
Interest............. 706 960 318 335 229 380 399 1,384 57 621
Other expense
(income), net....... (264) (341) (250) 384 151 (861) 19 110 (30) 307
-------- -------- -------- -------- -------- -------- -------- -------- ------- --------
108,550 126,245 126,238 141,380 155,087 132,231 152,741 179,273 35,299 63,163
-------- -------- -------- -------- -------- -------- -------- -------- ------- --------
Income (loss) from
continuing operations
before income taxes.. 12,719 13,294 5,703 10,764 16,194 1,549 1,300 4,152 (645) 1,340
Income tax expense
(benefit):
Current.............. 4,977 3,875 1,298 3,564 7,130 1,299 3,565 7,133 607 1,984
Deferred............. (786) 405 148 (117) (1,391) (648) (3,183) (2,298) (136) (663)
-------- -------- -------- -------- -------- -------- -------- -------- ------- --------
4,191 4,280 1,446 3,447 5,739 651 382 4,835 471 1,321
-------- -------- -------- -------- -------- -------- -------- -------- ------- --------
Income (loss) from
continuing
operations........... 8,528 9,014 4,257 7,317 10,455 898 918 (683) (1,116) 19
-------- -------- -------- -------- -------- -------- -------- -------- ------- --------
Discontinued
operations:
Loss from operations
of discontinued
business segment,
net of tax.......... (213) (3,095) (6,605) -- -- (6,605) -- -- 0 --
Gain (loss) on
disposal of
discontinued
business segment,
net of tax.......... -- -- (3,830) 928 397 (3,830) 928 397 288 36
-------- -------- -------- -------- -------- -------- -------- -------- ------- --------
Net income
(loss).......... $ 8,315 $ 5,919 $ (6,178) $ 8,245 $ 10,852 $ (9,537) $ 1,846 $ (286) $ (828) $ 55
======== ======== ======== ======== ======== ======== ======== ======== ======= ========
Net income (loss) per
share - basic:
Continuing
operations.......... $ 0.91 $ 0.94 $ 0.45 $ 0.80 $ 1.15 $ 0.07 $ 0.08 $ (0.06) $ (0.09) $ 0.00
Discontinued
operations:
Loss from
operations......... (0.02) (0.32) (0.70) -- -- (0.54) -- -- -- --
Gain (loss) on
disposal.......... -- -- (0.40) 0.10 0.04 (0.32) 0.08 0.04 0.02 0.00
-------- -------- -------- -------- -------- -------- -------- -------- ------- --------
Net income
(loss).......... $ 0.89 $ 0.62 $ (0.65) $ 0.90 $ 1.19 $ (0.79) $ 0.16 $ (0.02) $ (0.07) $ 0.00
======== ======== ======== ======== ======== ======== ======== ======== ======= ========
Net income (loss) per
share - diluted:
Continuing
operations.......... $ 0.86 $ 0.91 $ 0.44 $ 0.78 $ 1.10 $ 0.07 $ 0.07 $ (0.06) $ (0.09) $ 0.00
Discontinued
operations:
Loss from
operations......... (0.02) (0.31) (0.68) -- -- (0.53) -- -- -- --
Gain (loss) on
disposal.......... -- -- (0.40) 0.10 0.04 (0.31) 0.08 0.04 0.02 0.00
-------- -------- -------- -------- -------- -------- -------- -------- ------- --------
Net income
(loss).......... $ 0.84 $ 0.60 $ (0.64) $ 0.88 $ 1.14 $ (0.77) $ 0.15 $ (0.02) $ (0.07) $ 0.00
======== ======== ======== ======== ======== ======== ======== ======== ======= ========
Weighted average
common shares and
common share
equivalents:
Basic................ 9,332 9,554 9,504 9,148 9,137 12,143 11,895 12,098 12,124 12,224
Diluted.............. 9,859 9,868 9,638 9,401 9,498 12,402 12,340 12,098 12,124 13,266
<CAPTION>
Historical Restated
------------------------------------------------ ------------------ -----------
June 30, June 28, June 27, June 26, June 25, June 26, June 25, Sep. 24,
1995 1996 1997 1998 1999 1998 1999 1999
-------- -------- -------- -------- -------- -------- -------- -----------
(In thousands) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash, cash equivalents
and marketable secu-
rities............... $ 1,938 $ 1,838 $ 811 $ 2,669 $ 3,385 $ 3,386 $ 5,140 $ 938
Working capital....... 24,442 35,452 22,745 27,313 34,381 27,584 32,246 34,522
Total assets.......... 85,868 77,278 71,119 75,518 93,664 84,074 102,949 108,900
Total long-term
obligations,
including current
maturities .......... 2,172 8,030 7,201 6,367 4,392 6,493 4,540 4,326
Shareholders' equity.. 44,725 53,317 41,678 50,190 61,327 58,660 59,914 62,108
</TABLE>

15
<PAGE>

Management's Discussion and Analysis of Financial Condition
and Results of Operations

All statements, trend analysis and other information contained in the following
discussion relative to markets for our products and trends in sales, gross
margin and anticipated expense levels, as well as other statements, including
words such as "may," "will," "anticipate," "believe," "plan," "estimate,"
"expect" and "intend" and other similar expressions constitute forward looking
statements. These forward looking statements are subject to business and
economic risks and uncertainties, and our actual results of operations may
differ materially from those contained in the forward looking statements.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed in "Risk Factors" as well as other risks and
uncertainties referenced in this prospectus. The following discussion should be
read in conjunction with our financial statements and related notes and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" which are part of this prospectus or incorporated here by reference
to our reports filed with the SEC.

Overview

We design, manufacture and market cable network transmission products and
provide services and support to information service providers. Our principal
customers are cable operators who operate hybrid fiber coax networks, commonly
referred to as HFC networks, for delivering video, voice and data services.
Almost all of our sales have been derived from the sale of radio frequency
amplifiers, commonly referred to as RF amplifiers, fiber optic nodes and
technical services to cable operators that are upgrading or rebuilding their
networks. With the acquisition of Silicon Valley Communications in September
1999, we broadened our product line to include end-to-end fiber optic and RF
transmission equipment for cable operators continuing to upgrade their
networks. With the acquisition of Convergence.com in July 1999, we broadened
our service offering to include an integrated package of network management and
support services.

Business Combinations. On July 9, 1999, we consummated a merger with
Convergence.com, a Georgia corporation, whereby Convergence.com became our
wholly owned subsidiary. The merger will enable us to offer an integrated
package of network management and support services and products. The expertise
of Convergence.com in enabling high-speed digital data transmission and
Internet delivery over HFC networks by providing network design, activation and
support services will augment our existing technical service capabilities. In
the merger, each outstanding share of common stock of Convergence.com was
converted into one share of our common stock, resulting in the issuance of
1,433,323 shares of our common stock. Each outstanding warrant to acquire
Convergence.com common stock was converted into a warrant to acquire our common
stock for an aggregate of warrants to acquire 366,930 shares of our common
stock. The merger was accounted for under the pooling-of-interests method of
accounting.

On September 17, 1999, we consummated a merger with Silicon Valley
Communications, a California corporation, whereby Silicon Valley Communications
became our wholly owned subsidiary. This acquisition will enable us to broaden
and strengthen our network transmission product offering by adding advanced
fiber optic products to our existing RF and fiber optic products. In
particular, our product offering will be strengthened with respect to headend
fiber optic equipment. As consideration in the merger, each outstanding share
of common stock of Silicon Valley Communications was converted into 0.094534
shares of our common stock, resulting in the issuance of 1,545,081 shares of
our common stock (subject to reduction pursuant to certain escrow
arrangements). Outstanding stock options and warrants to acquire Silicon Valley
Communications common stock were converted into stock options and warrants to
acquire our common stock using the same conversion ratio (with appropriate
adjustment to the exercise price) for an aggregate of stock options and
warrants to acquire 383,844 shares of our common stock. The merger was
accounted for under the pooling-of-interests method of accounting.

We recorded a one-time charge of $3.7 million ($3.1 million net of tax) related
to the business combinations in the quarter ended September 24, 1999. The one-
time charge includes the merger transaction costs, as well as restructuring
costs which included severance payments for approximately 40 employees affected
by

16
<PAGE>

consolidation of positions and administrative functions resulting from the
mergers, and write-off of assets related to existing fiber optic products that
became redundant as a result of the acquisition of Silicon Valley
Communications.

Pooling-of-Interests Accounting. Both of these mergers were accounted for using
the pooling-of-interests method of accounting. This method requires that
historical financial results of the merged companies be combined and presented
as if we had always operated as one entity. Accordingly, our financial
statements are presented on a restated combined basis as if the mergers had
occurred as of the beginning of quarters ended September 24, 1999 and September
25, 1998. The restated combined financial statements are not necessarily
indicative of the results that would have occurred if the three companies had
actually been one entity during the entire quarters ended September 24, 1999
and September 25, 1998.

On an historical, separate company basis, our income from continuing operations
grew from $4.3 million in fiscal 1997 to $7.3 million in fiscal 1998 and to
$10.5 million in fiscal 1999. However, during this period both Convergence.com
and Silicon Valley Communications were investing in technology and capability
development and incurred net losses. Thus, on a combined basis our financial
statements reflect significantly reduced income from continuing operations in
fiscal 1997 and fiscal 1998 and a net loss from continuing operations in fiscal
1999. In addition to the investment in technology and capability development
that occurred during this period, these results reflect operating expenses for
three separate companies that were higher than those that likely would have
been incurred if the three companies were actually one entity during this
period. For example, sales and administrative staffs could have been reduced to
avoid duplicative efforts.

Results of Discontinued Operations. On July 10, 1997, we announced the
discontinuation of our Digital Fiber Optics Transmission Products segment
located in Fremont, California through a nine-month wind-down process.
Anticipated wind-down costs were recorded as a loss on disposal of the
discontinued segment in the results of discontinued operations for fiscal 1997.
We completed the wind-down of this operation in March 1998. A gain on disposal
of the discontinued business segment of $397,000, net of tax expense, was
recorded in fiscal 1999. This compared to a gain on disposal of the
discontinued business segment for fiscal 1998 of $928,000, which included a net
tax benefit. The gains in fiscal 1999 and 1998 represented adjustments of the
estimated loss on the disposal of the business segment of $3.8 million, net of
tax recorded in fiscal 1997. The gain in fiscal 1999 resulted primarily from
settlement of certain warranty claims. In fiscal 1998, the gain was derived
primarily from higher than anticipated proceeds associated with the disposal of
assets, primarily inventory, and lower than anticipated operating costs from
the measurement date to the disposal date.

The after-tax loss from operations of the discontinued business segment was
$6.6 million for fiscal 1997, which was primarily attributable to increased
warranty costs of $3.3 million and an impairment loss on goodwill of $571,000.

17
<PAGE>

Results of Operations

Our consolidated statements of operations from continuing operations for the
fiscal years ended June 27, 1997, June 26, 1998 and June 25, 1999 as a
percentage of net sales, on an historical separate company and restated basis,
are as follows:

<TABLE>
<CAPTION>
Thirteen Weeks
Years Ended Ended
----------------------------------------------------- -----------------
Historical Restated Restated
-------------------------- -------------------------- -------- -------
June 27, June 26, June 25, June 27, June 26, June 25, Sep 25, Sep 24,
1997 1998 1999 1997 1998 1999 1998 1999
-------- -------- -------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales............... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales........... 79.4 77.3 75.4 79.6 79.2 75.7 78.3 74.8
----- ----- ----- ----- ----- ----- ----- -----
Gross margin ........... 20.6 22.7 24.6 20.4 20.8 24.3 21.7 25.2
Operating expenses:
Selling and adminis-
trative.............. 12.0 9.9 9.7 13.8 12.8 14.8 15.4 11.0
Research and product
development.......... 4.3 4.9 5.3 5.8 6.5 6.5 8.0 5.0
Merger-related costs.. -- -- -- -- -- -- -- 5.7
Provision for restruc-
turing costs......... -- 0.4 -- -- 0.4 -- -- --
----- ----- ----- ----- ----- ----- ----- -----
Total operating
expenses........... 16.3 15.2 15.0 19.6 19.7 21.3 23.4 21.7
----- ----- ----- ----- ----- ----- ----- -----
Income (loss) from
continuing
operations............. 4.3 7.5 9.6 0.8 1.1 3.0 (1.7) 3.5
Interest and other
expense (income), net.. -- 0.5 0.2 (0.4) 0.3 0.8 0.1 1.4
----- ----- ----- ----- ----- ----- ----- -----
Income (loss) from
continuing operations
before income taxes.... 4.3 7.0 9.4 1.2 0.8 2.2 (1.8) 2.1
Provision for income
taxes.................. 1.1 2.2 3.3 0.5 0.2 2.6 1.4 2.1
----- ----- ----- ----- ----- ----- ----- -----
Net income (loss) from
continuing operations.. 3.2% 4.8% 6.1% 0.7% 0.6% (0.4)% (3.2)% 0.0%
===== ===== ===== ===== ===== ===== ===== =====
</TABLE>

The effect of the acquisitions on restated historical results is a slight
reduction in gross margins and significant reductions in operating and net
after-tax margins. Operating expenses as a percentage of sales increase by four
to six percentage points when the historical financial results of the three
companies are combined. This increase reflects the cost of the separate
corporate offices and sales organizations of the three companies, as well as
the investment in research and product development at Silicon Valley
Communications.

Quarter Ended September 24, 1999 and Restated Quarter Ended September 25, 1998

Net Sales. Net sales for the quarter ended September 24, 1999 increased 86.1%
to $64.5 million from $34.7 for the same period in the prior fiscal year. The
increase in sales was primarily attributable to increased capital spending for
cable network transmission equipment by domestic cable operators and from
increased sales of technical services related to design, activation and support
of cable networks.

Domestic sales increased 84.2% during the quarter ended September 24, 1999 and
represented 89.7% of total net sales for the quarter ended September 24, 1999
compared to 90.7% for the same period in the prior fiscal year. The increase
was the result of additional domestic sales of HFC transmission equipment and
related services during the quarter by domestic cable operators continuing to
upgrade and rebuild their systems, principally to offer new services including
two-way Internet access.

International sales increased 104.8% during the quarter ended September 24,
1999 and represented 10.3% for the quarter ended September 24, 1999 compared to
9.3% for the same period in the prior fiscal year. The increase for the quarter
resulted primarily from demand from a customer in Canada. We expect
international

18
<PAGE>

markets will represent a substantial portion of our sales base, but we believe
demand will continue to be highly variable.

Gross Margin. Gross margin for quarter ended September 24, 1999 was 25.2%
compared 21.7% for the same period in the prior fiscal year. Reductions in
material costs, changes in customer and product mix, lower manufacturing costs
resulting from our operation in Mexico and efficiencies resulting from higher
production volume and manufacturing automation initiatives contributed to the
increase in the margin during the quarter ended September 24, 1999 compared to
the same period in the prior fiscal year.

Selling and Administrative. Selling and administrative expenses for the quarter
ended September 24, 1999 increased 32.8% to $7.1 million (11.0% of net sales)
from $5.4 million (15.4% of net sales) for the same period in the prior fiscal
year. The increase was due to various selling and administrative costs,
including personnel costs associated with higher sales volumes, expansion of
our technical customer services business unit and our domestic sales force.

Research and Product Development. Research and product development costs for
the quarter ended September 24, 1999 increased 13.8% to $3.2 million (5.0% of
net sales) from $2.8 million (8.0% of net sales) for the same period in the
prior fiscal year. The increased expenditures resulted from higher personnel
costs and additional expenses primarily for development of fiber optic
transmission products, including transmitters, receivers and Erbium-Doped Fiber
Amplifiers, or EDFAs, for advanced HFC networks and network management
products, including continued development of our CNM System 2 software. These
products include our new mini-fiber nodes and multiplexing nodes, for which
initial delivery has been made to AT&T Broadband and Internet Services for
deployment in the Salt Lake City trial of AT&T's LightWire Neighborhood
Broadband System. Both node products form part of the foundation for the
experimental LightWire architecture developed by AT&T. The trial deployment in
Salt Lake City will be used for concept testing of this architecture. We
anticipate research and product development expenses to increase in future
periods related to ongoing initiatives, although these expenses may vary as a
percentage of sales.

Interest and Other Expense (Income), Net. Interest expense for the quarter
ended September 24, 1999 was $621,000 compared to $57,000 for the same period
in the prior fiscal year. Interest expense for the quarter ended September 24,
1999 included $381,000 of additional amortization related to the fair market
value of warrants issued in fiscal year 1999 in connection with certain debt
financing arrangements. In addition, interest expense increased for the quarter
as a result of an increase in short-term borrowings on our revolving line-of-
credit agreement and other short-term credit facilities during the period.

Other expense for the quarter ended September 24, 1999 was $355,000 compared to
$18,000 for the same period in the prior fiscal year. The increase in other
expense resulted primarily from adjustment of the carrying value of property
held-for-sale and losses on disposal of property, plant, and equipment during
the quarter ended September 24, 1999.

Income Taxes. The effective income tax rate for the quarter ended September 24,
1999 was 98.6% compared to 73.0% for the same period in the prior fiscal year.
Our effective tax rate for the quarter ended September 24, 1999, excluding non-
recurring business combination costs, was approximately 37.5%. The higher
effective tax rate for the quarter ended September 24, 1999 is a result of
permanent differences for non-deductible business combination costs incurred in
relation to the mergers with Convergence.com and Silicon Valley Communications.
The higher effective tax rate for the quarter ended September 25, 1998 resulted
from limited tax benefit related to operating losses at both Silicon Valley
Communications and Convergence.com

Restated Fiscal Years Ended June 25, 1999, June 26, 1998 and June 27, 1997

Net Sales. Net sales increased 19.1% to $183.4 million in fiscal 1999 from
$154.0 million in fiscal 1998. The increase in sales was primarily attributable
to increased capital spending for cable network transmission equipment by
domestic cable operators and from increased sales of technical services related
to design, activation and support of cable networks. Net sales increased 15.1%
to $154.0 million in fiscal 1998 from

19
<PAGE>

$133.8 million in fiscal 1997. The increase in sales was a result of increased
demand for HFC equipment, as well as technical services to both domestic and
international customers, primarily to cable operators.

Domestic sales increased by 35.0% to $163.9 million in fiscal 1999 from $121.4
million in fiscal 1998. Domestic sales increased 12.7% to $121.4 million in
fiscal 1998 from $107.7 million in fiscal 1997. Domestic sales of HFC network
transmission equipment and related services increased in fiscal 1999 and fiscal
1998 as a result of domestic cable operators continuing to upgrade and rebuild
their systems. Total domestic sales were 89.4% of consolidated net sales in
fiscal 1999, 78.8% in fiscal 1998 and 80.5% in fiscal 1997.

Convergence.com contributed $6.6 million to domestic sales in fiscal 1999, $1.1
million in fiscal 1998 and $889,000 in fiscal 1997. The growth in sales
reflected cable operators' increasing demand for network management products
and services. Silicon Valley Communications contributed $5.1 million to
domestic sales in fiscal 1999, $12,000 in fiscal 1998 and $49,000 in fiscal
1997. The increase in domestic sales was based on the introduction of a new
product line of fiber optic equipment designed for cable networks.

International sales decreased 40.4% to $19.5 million in fiscal 1999 from $32.7
million in fiscal 1998. The decrease primarily reflected weaker sales in all
international markets, with the exception of Asia. International sales
increased 25.3% to $32.7 million in fiscal 1998 from $26.1 million in fiscal
1997, resulting primarily from equipment by domestic cable operators and from
increased sales of technical services related to design, activation and support
of cable networks. Net sales increased 15.1% to $154.0 million in fiscal 1998
from $133.8 million in fiscal 1997. The increase in sales was a result of
increased demand for HFC equipment, as well as technical services to both
domestic and international customers, primarily to cable operators.

International sales decreased 40.4% to $19.5 million in fiscal 1999 from $32.7
million in fiscal 1998. The decrease primarily reflected weaker sales in all
international markets, with the exception of Asia. International sales
increased 25.3% to $32.7 million in fiscal 1998 from $26.1 million in fiscal
1997, resulting primarily from increased sales to Canada, Europe and Latin
America. We expect international markets will represent a substantial portion
of our sales base, but we believe demand will continue to be highly variable.
Our total international sales were 10.6% of consolidated net sales in fiscal
1999, 21.2% in fiscal 1998 and 19.5% in fiscal 1997.

Convergence.com contributed $17,000 to international sales in fiscal 1999,
$154,000 in fiscal 1998 and $215,000 in fiscal 1997. Silicon Valley
Communications contributed $350,000 to international sales in fiscal 1999 and
$609,000 in fiscal 1998. The decrease in international sales primarily
reflected the phasing out of a transmission equipment product line that had
been designed principally for the Asian market.

Gross Margin. Gross margin was 24.3% in fiscal 1999, 20.8% in fiscal 1998 and
20.4% in fiscal 1997. Reductions in material costs, changes in customer and
product mix, lower manufacturing costs resulting from our operation in Mexico
and efficiencies resulting from higher production volume and manufacturing
automation initiatives contributed to the increase in the gross margin in
fiscal 1999 compared to fiscal 1998. The gross margin increase in fiscal 1998
compared to fiscal 1997 was primarily attributable to material cost reductions,
changes in customer and product mix, and efficiencies resulting from higher
production volumes.

20
<PAGE>

Silicon Valley Communications' gross margin was 12.6% in fiscal 1999. In fiscal
1998, Silicon Valley Communications incurred cost of sales of $3.3 million on
sales of $621,000. This large cost of sales was primarily attributable to an
inventory write-off due to obsolescence. Convergence.com's gross margin was
26.9% in fiscal 1999, 10.8% in fiscal 1998 and 35.9% in fiscal 1997.

Selling and Administrative. Selling and administrative expenses were $27.2
million (14.8% of net sales) in fiscal 1999, $19.7 million (12.8% of net sales)
in fiscal 1998 and $18.5 million (13.8% of net sales) in fiscal 1997. The
increase in selling and administrative expenses in fiscal 1999 was due
primarily to various selling and administrative costs to support higher sales
volumes, including personnel costs associated with expansion of our offering of
technical services. In addition, Silicon Valley Communications expanded its
domestic sales force in conjunction with introducing a new product line of
fiber optic equipment designed for use in cable networks. Silicon Valley
Communications also added to its administrative and management headcount to
handle growing sales volume. Convergence.com increased selling and
administrative expenses in fiscal 1999 as its sales volume grew. The increase
in selling and administrative expenses for fiscal 1998 was due to an expected
rise in demand for Silicon Valley Communications' and Convergence.com's
products and services. The increase in expenses at Silicon Valley
Communications and Convergence.com was partially offset by a decrease of
expenditures at preacquisition C-COR.net resulting from reconfiguration of our
worldwide sales territories and the consolidation of our sales organization
implemented in the fourth quarter of fiscal 1997. We anticipate increased
selling and administrative expenses in fiscal 2000, although these expenses may
vary as a percentage of net sales.

Silicon Valley Communications incurred selling and administrative expenses of
$6.3 million in fiscal 1999 and $3.0 million in fiscal 1998. Convergence.com
incurred selling and administrative expenses of $4.3 million in fiscal 1999,
$1.7 million in fiscal 1998 and $838,000 in fiscal 1997.

Research and Product Development. Research and product development expenses
were $11.8 million (6.5% of net sales) in fiscal 1999, $10.0 million (6.5% of
net sales) in fiscal 1998 and $7.7 million (5.8% of net sales) in fiscal 1997.
The increase in research and product development expenses in fiscal 1999 was
primarily due to our continued investment in new products and technologies. The
increased expenditures resulted from higher personnel costs and additional
expenses primarily for development of fiber optic and network management
products, including continued development of our CNM System 2 software. We
anticipate increased research and product development expenditures in fiscal
2000 related to ongoing initiatives, although these expenses may vary as a
percentage of net sales.

Silicon Valley Communications incurred research and product development
expenses of $2.8 million in fiscal 1999 and $2.5 million in fiscal 1998.
Convergence.com did not classify any costs as research and product development
during these fiscal years.

Provision for Restructuring Costs. In fiscal 1998, we recorded a restructuring
charge of $625,000 related to our decision on June 25, 1998, to close our
manufacturing plant located in Reedsville, Pennsylvania in order to reduce
costs and improve productivity and asset utilization. The restructuring charge
represented salaries and benefits for approximately 143 employees affected by
the plant closing.

Interest and Other Expense (Income), Net. Interest expense was $1.4 million in
fiscal 1999, $399,000 in fiscal 1998 and $380,000 in fiscal 1997. The increase
in interest expense in fiscal 1999 resulted from increased borrowing at Silicon
Valley Communications and the amortization of the fair market value of warrants
issued by Silicon Valley Communications in conjunction with obtaining
financing. This amortization resulted in $911,000 in interest expense in fiscal
1999.

Other expense was $110,000 in fiscal 1999 and $19,000 in fiscal 1998 and other
income was $861,000 in fiscal 1997. The increased expense in fiscal 1999
resulted from a reduction in investment income for Silicon Valley
Communications partially offset by greater investment income and lower foreign
currency transaction losses for historical C-COR.net. The increased expense in
fiscal 1998 resulted from costs accrued in relation to the settlement of
certain litigation and foreign exchange losses resulting primarily from the
weakened Canadian dollar as well as reduction in investment income for Silicon
Valley Communications.

21
<PAGE>

Income Taxes. Our effective income tax rate was 116.5% in fiscal 1999, 29.4% in
fiscal 1998 and 42.0% in fiscal 1997. The higher effective tax rate for fiscal
1999 resulted from a limited tax benefit from the operating losses at Silicon
Valley Communications and Convergence.com, and reduced tax benefits from our
Foreign Sales Corporation and higher state income taxes. The lower effective
tax rate for fiscal 1998 resulted from tax benefits of approximately $3.1
million resulting from the operating losses at Silicon Valley Communications
and Convergence.com. In addition, fluctuations in the effective income tax rate
from period to period reflect changes in permanent non-deductible amounts, the
relative profitability related to both domestic and international operations
and differences in statutory rates. For fiscal years after fiscal 1999, we
expect to have an effective annual tax rate that approximates statutory rates.

22
<PAGE>

Quarterly Operating Results

The following are our (unaudited) consolidated quarterly operating results from
continuing operations in dollar amounts and as a percentage of net sales for
the periods indicated after giving retroactive effect to the mergers with
Convergence.com and Silicon Valley Communications. This data is derived, in
part, from our annual and quarterly consolidated financial statements which are
incorporated into this prospectus by reference. In our opinion, the quarterly
financial information has been prepared on the same basis as our annual
financial statements and includes all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly the financial results.
Results of operations for previous quarters are not necessarily indicative of
results for future quarters. The following discussion is qualified by the more
detailed discussion of the quarterly results contained in our quarterly
filings. Such filings do not include the results of Convergence.com and Silicon
Valley Communications.

<TABLE>
<CAPTION>
Three Months Ended
----------------------------------------------------------------------------------------------
Fiscal 1998 Fiscal 1999 Fiscal 2000
--------------------------------------- --------------------------------------- -----------
Sep. 27, Dec. 27, Mar. 27, Jun. 26, Sep. 25, Dec 25, Mar. 26, Jun. 25, Sep. 24,
1997 1997 1998 1998 1998 1998 1999 1999 1999
-------- -------- -------- -------- -------- ------- -------- -------- -----------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Net sales.................... $37,559 $37,758 $40,607 $38,117 $34,654 $39,651 $47,291 $61,829 $64,503
Cost of sales................ 29,225 29,801 32,289 30,671 27,128 30,052 36,413 45,200 48,278
------- ------- ------- ------- ------- ------- ------- ------- -------
Gross profit................. 8,334 7,957 8,318 7,446 7,526 9,599 10,878 16,629 16,225
Operating expenses:
Selling and administrative.. 4,126 4,873 5,072 5,653 5,355 6,484 6,511 8,803 7,109
Research and product
development................ 2,366 2,175 2,319 3,128 2,789 3,172 2,480 3,392 3,175
Merger-related costs........ -- -- -- -- -- -- -- -- 3,673
Provision for restructuring
costs...................... -- -- -- 625 -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- ------- -------
Total operating expenses.... 6,492 7,048 7,391 9,406 8,144 9,656 8,991 12,195 13,957
------- ------- ------- ------- ------- ------- ------- ------- -------
Operating income (loss)...... 1,842 909 927 (1,960) (618) (57) 1,887 4,434 2,268
Interest and other expense
(income), net............... 273 151 (52) 46 27 244 58 1,165 928
------- ------- ------- ------- ------- ------- ------- ------- -------
Income (loss) from continuing
operations before income
taxes....................... 1,569 758 979 (2,006) (645) (301) 1,829 3,269 1,340
Provision for income tax
expense (benefit)........... 394 86 132 (230) 471 691 1,241 2,432 1,321
------- ------- ------- ------- ------- ------- ------- ------- -------
Income (loss) from continuing
operations.................. $ 1,175 $ 672 $ 847 $(1,776) $(1,116) $ (992) $ 588 $ 837 $ 19
======= ======= ======= ======= ======= ======= ======= ======= =======
<CAPTION>
Three Months Ended
----------------------------------------------------------------------------------------------
Fiscal 1998 Fiscal 1999 Fiscal 2000
--------------------------------------- --------------------------------------- -----------
Sep. 27, Dec. 27, Mar. 27, Jun. 26, Sep. 25, Dec 25, Mar. 26, Jun. 25, Sep. 24,
1997 1997 1998 1998 1998 1998 1999 1999 1999
-------- -------- -------- -------- -------- ------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales.................... 100.0% 100.0% 100.0 % 100.0 % 100.0 % 100.0 % 100.0% 100.0% 100.0 %
Cost of sales................ 77.8 78.9 79.5 80.5 78.3 75.8 77.0 73.1 74.8
------- ------- ------- ------- ------- ------- ------- ------- -------
Gross margin................. 22.2 21.1 20.5 19.5 21.7 24.2 23.0 26.9 25.2
Operating expenses:
Selling and administrative.. 11.0 12.9 12.5 14.8 15.4 16.4 13.8 14.2 11.0
Research and product
development................ 6.3 5.8 5.7 8.2 8.0 8.0 5.3 5.5 5.0
Merger-related costs........ -- -- -- -- -- -- -- -- 5.7
Provision for restructuring
costs...................... -- -- -- 1.6 -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- ------- -------
Total operating expenses.... 17.3 18.7 18.2 24.6 23.4 24.4 19.1 19.7 21.7
------- ------- ------- ------- ------- ------- ------- ------- -------
Operating income (loss)...... 4.9 2.4 2.3 (5.1) (1.7) (0.2) 3.9 7.2 3.5
Interest and other expense
(income), net............... 0.7 0.4 (0.1) 0.1 0.1 0.6 0.1 1.9 1.4
------- ------- ------- ------- ------- ------- ------- ------- -------
Income (loss) from continuing
operations before income
taxes....................... 4.2 2.0 2.4 (5.2) (1.8) (0.8) 3.8 5.3 2.1
Income tax expense
(benefit)................... 1.1 0.2 0.3 (0.6) 1.4 1.7 2.6 3.9 2.1
------- ------- ------- ------- ------- ------- ------- ------- -------
Income (loss) from continuing
operations.................. 3.1% 1.8% 2.1 % (4.6)% (3.2)% (2.5)% 1.2% 1.4% 0.0 %
======= ======= ======= ======= ======= ======= ======= ======= =======
</TABLE>

23
<PAGE>

Our net sales increased in each consecutive quarter of fiscal 1999 as a result
of increased demand for our HFC transmission products and network management
services. In each of the second through fourth quarters, we received orders in
excess of $50 million. In the second quarter we initiated actions to increase
our production capacity, including ordering additional manufacturing equipment,
automating certain parts of the manufacturing process to alleviate production
bottlenecks and hiring additional manufacturing employees. These actions
allowed us to increase our production capacity and shipments in the third and
fourth quarters. The large increase in net sales in the fourth quarter
reflected growth in our services business as well as increased shipments of
fiber optic products and expanded production capacity for building RF
amplifiers.

Gross margins improved sequentially in fiscal 1999 with the exception of the
third quarter. The dip in the third quarter was caused by additional costs
incurred to increase manufacturing capacity and expand capacity in the services
business. The improvement in gross margin in the fourth quarter reflected
operating leverage from the increased sales volume, increased production from
our Mexico facility, improved pricing from our suppliers and the benefit of
manufacturing automation initiatives.

Selling and administrative costs increased in the fourth quarter as a result of
many factors including higher sales commissions related to the higher sales
level and an expansion of the sales and marketing force at Silicon Valley
Communications.

Interest and other expense increased in the fourth quarter mainly as a result
of the amortization of the fair market value of warrants issued by Silicon
Valley Communications in connection with obtaining financing. Of the total fair
market value of $1.3 million, $911,000 was amortized in the fourth quarter.

Liquidity and Capital Resources

As of September 24, 1999, cash and cash equivalents totaled $500,000 compared
to $4.7 million at June 25, 1999. Net cash and cash equivalents used in
operating activities was $4.5 million for the quarter ended September 24, 1999
compared to cash and cash equivalents provided by operating activities of $2.6
million for the same period in the prior fiscal year. The increase in cash and
cash equivalents used in operating activities for the quarter ended September
24, 1999 was primarily due to business combination costs associated with the
mergers of Convergence.com and Silicon Valley Communications, and increased
inventory purchases and accounts receivables resulting from a higher level of
production and sales volume during the quarter.

As of June 25, 1999, cash and cash equivalents totaled $4.7 million up from
$3.0 million at June 26, 1998. Net cash and cash equivalents provided by
operating activities were $4.5 million in fiscal 1999, $7.1 million in fiscal
1998 and $4.7 million in fiscal 1997. The decrease in cash provided by
operating activities from fiscal 1998 to fiscal 1999 was primarily due to the
losses generated by Convergence.com and Silicon Valley Communications. The
improvement in cash provided by operating activities from fiscal 1997 to fiscal
1998 was primarily due to operations discontinued in 1997.

Net cash and cash equivalents used in investing activities was $3.2 million for
the quarter ended September 24, 1999 compared to $1.0 million for the same
period in the prior fiscal year. The increase in cash and cash equivalents used
in investing activities was primarily due to increased purchases of property,
plant and equipment to expand and automate our manufacturing operations.

Net cash used in investing activities was $6.1 million in fiscal 1999, $11.5
million in fiscal 1998 and $8.2 million in fiscal 1997. The increased cash used
in investing activities in fiscal 1998 was due primarily to higher purchases
and replacements of property, plant and equipment to expand and automate
manufacturing operations, including the start-up of our manufacturing operation
in Tijuana, Mexico, as well as a loan to an affiliate by Silicon Valley
Communications. The decrease in cash used in investing activities in fiscal
1999 was due primarily to the repayment of the loan.

Net cash and cash equivalents provided by financing activities totaled $3.5
million for the quarter ended September 24, 1999 compared to net cash and cash
equivalents used in financing activities of $3.6 million for

24
<PAGE>

the same period in the prior fiscal year. Our financing activities consist
primarily of borrowings and payments on short-term and long-term debt. During
the quarter ended September 24, 1999 we increased our net borrowings on our
short-term credit facilities by $1.6 million for working capital purposes. In
addition, we generated $2.1 million in cash as a result of employee stock
option exercises during the quarter ended September 24, 1999.

Net cash generated from financing activities totaled $3.3 million in fiscal
1999, compared to net cash used of $1.4 million in fiscal 1998 and net cash
generated of $10.6 million in fiscal 1997. The increase in net cash generated
from financings from fiscal 1998 to fiscal 1999 was primarily due to proceeds
from loans received by Silicon Valley Communications. The decrease in net cash
generated from fiscal 1997 to fiscal 1998 was primarily due to the issuance of
preferred stock by Silicon Valley Communications in fiscal 1997. This amount
was offset by our repurchase of 500,000 shares of our common stock for $5.8
million in fiscal 1997 under a stock repurchase program adopted in December
1996.

During fiscal 1998 and 1999 we had a line of credit which was committed through
December 31, 1999. On August 9, 1999, we entered into a new credit agreement
established with three banks under which we may borrow up to $70.0 million for
working capital, strategic acquisitions and investments. Borrowing on this
facility is unsecured, subject to a negative pledge on all business assets, and
we are required to maintain certain financial ratios and meet certain
indebtedness tests.

We anticipate that significant future uses of cash will include increased
working capital due to sales growth, capital expenditures, additional
investment in the infrastructure and technology required for network management
services and investment required to expand our international business. We
believe that the proceeds from this offering, operating cash flow, and our
$70.0 million line of credit agreement, will be adequate to provide for all
operating cash requirements for the next 12 to 24 months, subject to
requirements that additional growth or strategic development might dictate.

Year 2000 Readiness Disclosure

We are aware of the issues associated with the limitations of the programming
code in many existing computer systems, whereby the computer systems may not
properly recognize or process date-sensitive information as the Year 2000
approaches. Our date-sensitive systems include test equipment, computer systems
embedded in production equipment, products containing computer systems,
business data processing systems, production management and planning systems,
and personal computers. Systems that do not properly recognize such information
could generate erroneous data or cause a system to fail.

During fiscal 1999, our Year 2000 project team (consisting of representatives
from our information technology, finance, manufacturing, product development,
quality assurance, and sales and marketing departments) completed its
assessment of our internal date-sensitive equipment to determine Year 2000
compliance. As of June 25, 1999, prior to the acquisitions of Convergence.com
and Silicon Valley Communications, we concluded that approximately 7% of our
date-sensitive equipment was non-compliant. Most of these non-compliant items
can and will be upgraded to be compliant before January 1, 2000 at minimal
cost. The non-compliant hardware and software were determined not to be in
critical systems.

At this time, all critical systems have been designated compliant by their
manufacturers. To verify manufacturers' assertions, we developed a testing plan
for our critical systems and began compliance testing during the third quarter
of fiscal 1999. We have completed compliance testing, other than our payroll
system, which we anticipate completing early in the second quarter of fiscal
2000. At this time, there are no exceptions identified with these
manufacturers' assertions.

Throughout fiscal 1999, we corresponded with our principal customers,
suppliers, vendors and subcontractors to ascertain their readiness for the Year
2000 and requested assurances that they are addressing the Year 2000 issue.
These actions were intended to help mitigate the possible external impact of
Year 2000 issues. However, we are unable to fully assess the potential
consequences in the event of unforeseen compliance issues with the systems
operated by our customers, suppliers, vendors or subcontractors.

25
<PAGE>

We have assessed our products presently being sold and those installed in
customers' networks. Only our network management system has inherent software
embedded in it and we have assessed our network management software and
firmware, both present and previously sold versions, and found them to be Year
2000 compliant.

As a result of the mergers consummated with Convergence.com on July 9, 1999 and
with Silicon Valley Communications on September 17, 1999, we are in the process
of assessing each of Convergence.com's and Silicon Valley Communications' Year
2000 initiatives. We will focus on the compliance attainment efforts of their
customers and suppliers and Convergence.com's and Silicon Valley
Communications' internal date-sensitive equipment. This activity is expected to
last into the second quarter of fiscal 2000. Our preliminary assessment is that
the Year 2000 costs associated with these mergers will be minimal.

Based on our assessment to date, we believe we will not experience any material
disruption as a result of Year 2000 problems with our internal financial,
manufacturing and other computer systems. Our most reasonably likely worst case
scenario would be disruption of our operations and lost revenues as a result of
non-compliance of our systems and those operated by our customers, suppliers,
vendors and subcontractors. We have established a contingency plan detailing
how we will operate under this scenario. This plan will be refined during the
first and second quarters of fiscal 2000, but includes provisions for
increasing production and inventory levels, altering third-party business
relationships, if necessary, ensuring adequate financial and personnel
resources exist to adequately remedy problems as soon as detected, and other
contingency efforts.

While the total estimated cost of assessing Year 2000 issues is difficult to
predict with accuracy, based on our evaluation and assessment thus far, we
estimate that our total costs will not exceed $500,000 and should not have a
material adverse impact on our operating results or financial condition.
However, Year 2000 issues could have a significant impact on our operations and
our financial results if modifications cannot be completed on a timely basis,
if unforeseen needs or problems arise, or if there are unforeseen compliance
problems with the systems operated by our customers, suppliers, vendors or
subcontractors. Moreover, the change to the Year 2000 may negatively impact our
customers or the cable television industry as a whole, causing reduced demand
and market disruption in anticipation of, or following, the start of the Year
2000.

Recent Accounting Changes

In fiscal 1999, we adopted Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" or Statement 130, which was effective for
fiscal years beginning after December 15, 1997. This Statement establishes
standards for reporting and classifying components of comprehensive income in
the financial statements and requires that the accumulated balance of other
comprehensive income be displayed separately from retained earnings and
additional paid-in-capital in the equity section of the financial statements.
In addition, we also adopted Statement of Financial Accounting Standards No.
131, "Disclosures about Segments of an Enterprise and Related Information" or
Statement 131, which was effective for fiscal years beginning after December
15, 1997. This Statement establishes standards for providing disclosures
related to products and services, geographic area and major customers.
Implementation of these Statements did not have a material effect on our
consolidated financial statements.

In 1998, the Financial Accounting Standards Board, or FASB, issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" or Statement 133, which was effective for fiscal years
beginning after June 15, 1999. In July 1999, the FASB announced it was delaying
the effective date of Statement 133 for one year to fiscal years beginning
after June 15, 2000. This Statement establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts and for hedging activities. We anticipate adopting
this Statement in our fiscal 2001 consolidated financial statements as
required. Implementation of this Statement is not expected to have a material
effect on our consolidated financial statements.

26
<PAGE>

Business

Overview

We design, manufacture and market cable network transmission products and
provide services and support to cable network operators. Our customers include
the largest cable operators in the United States, such as Time Warner and AT&T,
many of the smaller domestic cable operators and several large international
cable operators. Our customers primarily operate hybrid fiber coax networks,
commonly referred to as HFC networks, for delivering video, voice and data
services. We offer a comprehensive range of products, including radio frequency
amplifiers, or RF amplifiers, and fiber optic components for the cable headend,
node and RF plant. Our services focus on enabling reliable, high-speed,
broadband communications over HFC networks, and include network design,
activation, optimization, management and maintenance. Our core business
strategy is to leverage our over 45 year reputation for quality and service,
our strong customer relationships and our extensive installed base of
transmission equipment to provide a broad line of flexible, reliable and cost
effective network products and service solutions.

Industry Background

Cable networks consist of a headend where information is received from a
satellite, Internet gateway or telephony network, a transmission infrastructure
that distributes the signal throughout the network and connections from the
transmission network to the subscribers. Historically, these systems offered
one-way only video service. Recently, the cable industry, like other segments
of the communications industry, has been undergoing substantial change as a
result of:

. deregulation that allows competition among communications companies,
including wireline and wireless telephone companies and cable operators,
for communications services;

. demand by consumers for two-way, high-speed broadband communications to
accommodate Internet, telephony and other new information services; and

. the desire to customize services for specific customers, which requires
flexible and easy to configure networks.

For the cable industry, these factors are resulting in:

. upgrades to existing cable networks to provide two-way, interactive
broadband services which will allow cable operators to compete against
other broadband communications technologies, including dense wave
division multiplexing, commonly referred to as DWDM, digital subscriber
line, or DSL, and local multipoint distribution service, commonly known
as LMDS;

. greater utilization of fiber optic technology in the cable network;

. consolidation among cable operators;

. investments in cable operators by non-cable operators; and

. increased demand for more flexible and reliable cable networks.

Cable Operators are Upgrading their Systems. High-speed, two-way voice, video
and data transmission has been limited by the existing cable network, which was
originally designed for one-way analog video signals. Recently, cable operators
worldwide have begun upgrading their existing networks to offer high-speed,
two-way broadband digital transmission for new interactive services, such as
always-on Internet, telephony, video-on-demand and digital television. Major
upgrade activities include:

. expanding downstream bandwidth from 550 MHz up to either 750 MHz or 860
MHz;

. introducing and upgrading return path capabilities for two-way
communications; and

. increasing the number of optical nodes in the network to reduce the
number of homes served by each node, thereby increasing available
bandwidth in both directions.

Paul Kagan Associates estimates that in 1999 only 26% of the worldwide cable
plant is two-way capable, but that by 2002, 53% of the worldwide cable plant
will be two-way capable, as measured by the number of homes

27
<PAGE>

served by cable plant. In the United States, where the upgrade of HFC networks
to increase bandwidth and to make them capable of two-way transmission has
begun, these networks require advanced return path equipment for transmission
of voice and data from the subscriber to the headend to accommodate the
interactive nature of telephony and Internet services. In addition, the growth
of telephony and Internet service will require extending fiber further in the
network and increasing the amount of fiber optic equipment in an HFC network.
Current network system designs have fiber optic nodes that serve 500 to 3,000
homes. Reliable delivery of telephony and data services to large numbers of
subscribers may require fiber optic nodes that serve only 50 to 250 homes.

Consolidation in the Cable Television Industry. Until recently, many cable
operators have been slow to upgrade their networks due to capital constraints
and the need to achieve significant economies of scale to support the required
capital expenditures. Major cable operators are achieving economies of scale by
increasing the size of their cable systems through cable system exchanges and
the acquisition of smaller cable operators and independent operators. We
believe that consolidation of cable operators is substantially complete thereby
allowing them to focus on upgrading their systems.

Investments in Cable Operators by Non-Cable Operators. Recently, computer and
telephone companies have made substantial investments in cable operators in
order to compete for the ability to provide both new and existing services. We
believe these investments have increased the available capital for cable
network upgrades and have further validated the HFC network system design as a
competitive broadband medium. Some examples of these investments include:

. in 1997, Microsoft invested $1 billion in Comcast;

. in 1998, Paul Allen purchased a controlling interest in Marcus Cable for
$2.8 billion and acquired Charter Communications for $4.5 billion; and

. in 1999, AT&T completed the acquisition of TCI for approximately $60
billion and announced the acquisition of MediaOne for approximately $58
billion.

Network Integrity Required. Cable operators will need to increase network
integrity to address consumer demands for reliability arising from:

. the increased size, complexity and traffic over cable networks; and

. new communications services such as telephony, electronic commerce and
Internet access which involve the consistent delivery of more critical
information than traditional entertainment services.

We believe that cable operators will need to substantially increase their
investment in high quality, value added network services, such as comprehensive
network design, activation, Internet enablement, advice on system upgrades and
cable modems, proactive performance management and 24 hours a day, 7 days a
week customer support. Given the complexity and cost to implement these
services, we believe that this will lead to more third-party outsourcing for
these services.

Strategy

We have been providing HFC transmission products and services to cable
operators for over 45 years. Our customers include the largest cable operators
in the United States, many of the smaller domestic cable operators and several
large international cable operators. Our core business strategy is to leverage
our over 45 year reputation for quality and service, our strong customer
relationships and our extensive installed base of cable network transmission
equipment to provide a full line of flexible, reliable and cost-effective
network solutions. We are seeking to implement this strategy through both
internal development of new products and services as well as acquisitions.
Specific aspects of our strategy include:

Providing a Comprehensive HFC Network Product Line. We offer a full range of
fiber optic and electronic equipment to transmit signals in both directions
over HFC networks from "the headend to the curb." We have undertaken several
initiatives to broaden our product line to capture the additional investment
being made by cable operators. First, in December 1998, we introduced our
NAVICOR family of optical node products.

28
<PAGE>

Second, in July 1999, we acquired Convergence.com, which allows us to resell
headend and network equipment such as servers, routers and cable modem
termination systems that are required to transmit high speed data across cable
networks. Third, in September 1999, we acquired Silicon Valley Communications,
which added a broad complement of advanced fiber optic headend equipment and
optical transmitters and receivers. We have delivered these new products to
enable next generation, fiber rich, two-way HFC networks such as those being
deployed in field trial by AT&T in Salt Lake City.

We expect the next major wave of upgrade activity in the United States will
focus on adding fiber optic nodes to the network to reduce the number of homes
served by a node from between 500 to 3,000 homes to between 50 to 250 homes. We
believe future node size reduction will be achieved by using separate
transmitters to feed nodes, using dense wave division multiplexing, or DWDM, to
add dedicated signals to individual nodes, adding reverse path transmitters,
segmenting multi-output nodes or upgrading existing amplifiers into nodes. We
supply products for all of these upgrades.

Leveraging Extensive Installed Base of Equipment for Upgrade and Rebuild
Sales. We intend to leverage our large installed base of transmission equipment
in our customers' networks through upgrades, rebuilds and node size reductions.
Over the past four years we have shipped approximately one million RF
amplifiers. We provide a more cost effective upgrade path for our customers due
to our ability to upgrade existing components for our installed product base
rather than requiring our customers to purchase all new equipment. As our
customers continue to upgrade their networks, we believe that this path will
provide us with a competitive advantage in providing this equipment.

Providing Next Generation Network Management Services to Enhance Network
Integrity. The requirement for HFC network integrity and reliability has become
much greater as traffic and complexity have grown and as networks become
increasingly used for critical communications such as telephony and electronic
commerce. However, current approaches to managing HFC networks focus on
monitoring limited, individual elements of the network such as the cable modem
or power supplies. Through our network management software and Network
Operations Center, we can provide a comprehensive, proactive view of the
network from the set top box and/or cable modem to the headend. We intend to
continue developing our network management services to address the various
types of equipment and the unique characteristics of the different information
types that will be delivered over future HFC networks.

Delivering Total Network Solutions to Meet Cable Operators' Emerging Broadband
Needs. We believe that we are able to offer a broad network solution to cable
operators by delivering both a comprehensive line of equipment and the network
services that cable operators require across the entire HFC network. We are
able to design the network to enhance reliability, deliver the equipment and
software, furnish installation and activation services, and provide ongoing
network management and support services.

Increasing International Sales. We currently supply products and services to a
number of large international customers, including cable operators in Canada,
Europe, Asia and Latin America. We intend to invest in further developing our
international distribution channels and in providing localized versions of our
products. With our broadened product and service offering, we intend to supply
comprehensive network solutions to these and other operators in various
international markets who generally prefer to purchase products and services
from suppliers offering a more complete product line.

HFC Products

An HFC network connects a central information source, typically referred to as
the headend, to individual residential users through a physical plant of fiber
optic and coaxial cables, and a variety of electrical and fiber optic devices
that transmit, receive, modulate and amplify the signals as they move through
the network. A typical HFC network consists of three major segments: the
headend, the node and the RF plant. We offer a comprehensive range of products
for each of these segments.

29
<PAGE>

Headend Equipment

The headend receives information from a satellite transmission, Internet
gateway, telephony network or other source and converts this information to
laser modulated optical signals for transmission across the network. Larger
networks feature both primary headends and a series of secondary headends or
hubs. We offer a broad range of headend equipment that features advanced
technology such as dense wave division multiplexing, DWDM, which allows
multiple signal wavelengths to be transmitted on one fiber across the network.

Nodes

The general function of the node in the HFC network is to convert information
from optical signals to RF signals for distribution to the home. Our NAVICOR
family of node products are upgradeable, scalable, modular and fully integrated
with our RF amplifiers. These features allow RF amplifiers to be upgraded to
nodes and simple nodes to be upgraded to telecommunication nodes with
narrowcasting and redundant configurations. Narrowcasting refers to customizing
content for certain subscribers by dedicating fibers or wavelengths to that
content. We designed the optical components of the nodes to fit into the lid,
or cover, of the amplifier housing so that upgrades from amplifiers to nodes
are easily accomplished by replacing the lid. Recently, we introduced a new
family of fiber optic nodes, the MuxNode and the MiniNode, that are used in
networks designed for node sizes of 50 to 250 homes.

RF Plant

The RF plant comprises products that transmit information between nodes and
subscribers. These products are essentially RF amplifiers that come in various
configurations such as trunks, bridgers and line extenders. A trunk amplifier
handles a large amount of information in a network when the node size is
greater than 500 homes. A bridger amplifier splits the signal to send it to a
greater number of destinations. Line extenders move the information to the
home.

30
<PAGE>

The following table summarizes our major products and their primary functions
and features:

<TABLE>
<CAPTION>
Network
Segment Our Products Functions and Features
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Headend Universal Chassis . houses components of the headend equipment
. features modular, one and three rack unit design
. compact design maximizes limited headend rack
space
---------------------------------------------------------------------------------------
1310nm and 1550nm . convert RF signals to laser-modulated optical
Transmitters signals
. incorporate predistortion technology
. 1550nm transmitters available for dense wave
division multiplexing applications
. satisfy primary channel requirements for North
America, Latin America and parts of Asia and
Europe
---------------------------------------------------------------------------------------
Erbium Doped Fiber . used to amplify optical signals
Amplifiers, or EDFA . suitable for wave division multiplexing, or WDM,
and dense wave division multiplexing, or DWDM,
. used for both analog and digital applications
---------------------------------------------------------------------------------------
Forward Path Receiver . converts optical signals to RF signals
. features low noise contribution for clear signal
conversion
---------------------------------------------------------------------------------------
Return Path Transmitter . conveys digital and video return path signals
. used for data monitoring and other interactive
applications
---------------------------------------------------------------------------------------
Dual Return Path Receiver . plug-in module that includes two independent return
path receivers
. receives digital and video return path signals
- -----------------------------------------------------------------------------------------------------
Nodes NAVICOR Quadrant . provides four optical transmitters, four optical
Node/Bridger receivers and four active RF outputs
. includes a variety of reverse path transmitters for
data, telephony and video services
. modular design increases operating flexibility
---------------------------------------------------------------------------------------
NAVICOR Flexnet Nodes . can be configured with single or dual optical
receivers and transmitters
. available in cost effective version for less complex
networks
---------------------------------------------------------------------------------------
Node Return Path . available in both Fabry-Perot and distributed
Transmitter feedback versions for analog and digital applications
- -----------------------------------------------------------------------------------------------------
RF Plant FlexNet Trunk . high performance, high capacity amplifier with three
outputs
. field upgradable to a node
. available in 750 and 862 MHz bandwidth versions
---------------------------------------------------------------------------------------
FlexNet Terminating Bridger . amplifier with two distribution outputs
. field upgradable to a node
. available in 750 and 862 MHz bandwidth versions
---------------------------------------------------------------------------------------
NAVICOR and FlexNet Line . used to transmit information at the end of the line
Extenders to residential users
. available in 750 and 862 MHz bandwidth versions
---------------------------------------------------------------------------------------
I-Flex Amplifiers and Nodes . European version of the FlexNet product line
</TABLE>

31
<PAGE>

New HFC Products

MuxNode and MiniNode. We recently introduced two new fiber optic products that
are currently in field trial with AT&T's LightWire Neighborhood Broadband
System in Salt Lake City, Utah. We believe these two products, the MuxNode and
the MiniNode, are key components of the next generation of HFC networks. This
system design provides for the broader deployment of fiber into the network,
thereby providing increased bandwidth per home and greater network reliability.
The MuxNode is an advanced, scalable, bi-directional fiber optic network
device. The MuxNode is used to transmit and receive fiber optic signals to as
many as 12 MiniNodes. The MiniNode is a high output receiver which replaces
many of the amplifiers in the network and is designed to serve approximately 50
to 250 homes. The MiniNodes feature multiple forward and reverse paths that
support analog video, digital video, high speed data and telephone
applications. This new system design facilitates high speed, interactive
broadband communications that allow operators to provide new and enhanced
services to customers with greater network reliability.

The MuxNode and MiniNode feature dense wave division multiplexing, or DWDM,
technology which allows multiple signal wavelengths to be transmitted on one
fiber. This increases the volume of information that can be conveyed over the
network. It also allows cable operators greater flexibility in customizing
content for individual subscribers by dedicating certain wavelengths to that
content, for example, video-on-demand.

Broadband Management Services

We also offer a broad array of services to assist our customers in operating
reliable networks with high integrity. These services include design,
activation, network management and optimization, as well as ongoing support,
repair and maintenance.

Network Design. Network design provides customized plans for high-reliability
and cost-effective HFC network upgrades and rebuilds. Each customized plan
takes into account the current state of the network and the target applications
including such factors as channel capacity, two-way requirements, performance
specifications, powering needs, high speed data transmission, Internet access
and network management options. The plan details the quantity, type and
configuration of equipment required in the headend and throughout the remainder
of the network. Deliverables include design services, highly accurate maps,
bill-of-materials and custom drafting.

Activation Services. Activation services are required for a newly installed or
upgraded network to become operational. They include activation/energizing,
sweep and balance, and proof of performance testing. These services identify
and correct any problems that may exist within the newly configured system and
validate whether the construction is sound and the system is operating
optimally.

Network Management Software. Our network management software offering, CNM
System 2, is a third generation product that automatically identifies new units
in the network and receives signals from intelligent agents that provide early
notice of equipment and other network related problems. CNM System 2 is based
on industry standards which facilitate use with numerous network elements and
maximize interoperability with other software applications. Our NAVICOR and I-
Flex product lines are fully integrated with CNM System 2.

We have implemented additional network management software in our Network
Operations Center in Suwanee, Georgia. This software facilitates proactive
monitoring and management of networks by identifying usage trends, pinpointing
customers that consume large amounts of bandwidth for special billing, and
providing real-time fault detection and provisioning advice. The Center's
software collects data and other information from cable modems installed in the
home thereby increasing the amount and reliability of data available to
proactively manage the network. We are currently working to integrate our CNM
System 2 software with the Network Operations Center software to provide a more
comprehensive network management product both for use in our Network Operations
Center and for licensing to customers.

Network Management Services. Our Network Operations Center currently provides a
number of network management services to smaller cable operators. These
services include server management, RF technician help-desk support and end-
user help-desk support, as well as monitoring the overall network integrity.
Server

32
<PAGE>

management monitors the servers and routers installed in the customer headend
that control the flow of high-speed data traffic. This service includes remote
backups, problem diagnosis and secondary service. RF technician help-desk
support uses the cable modems as telemetry devices and aids the operator in
troubleshooting, problem diagnosis and maintenance of the RF cable plant. End-
user help-desk services take inbound calls from cable operators' subscribers
with problems and questions on Internet service and browser network
applications.

Network Operations Center Consulting and System Integration Services. We
provide program management, engineering and technical resources for cable
operators to assist them in the design, development, implementation and
operation of their own network operations centers. Typical deliverables during
the planning and design phase include the site survey, business process
assessment, services architecture planning, customer capability assessment,
concept of operations document, systems architecture document and detailed
bill-of-materials. We also procure and install all equipment and software,
regardless of the manufacturer. We offer customized software development to
integrate the network management software with other customer applications such
as billing, dispatching and geographic information systems.

Equipment Service Center. Our Equipment Service Center provides repair and
maintenance services on transmission equipment from all manufacturers. Repair
services include documentation of parts, labor and problem identification.
Upgrade services include bandwidth increases and frequency changes.

CUSTOMERS

Our principal customers are cable operators and distributors including
Adelphia, Armstrong, AT&T, Blue Ridge, Charter, Comcast, Cox, Fanch,
Intermedia, Mediacom, MediaOne, Pan Asian Systems, PTK, Rifkin, Rogers, TCA,
Time Warner and 21st Century. Our largest customers during fiscal 1999 were
Time Warner, which accounted for 26% of net sales, and AT&T, which accounted
for 17% of net sales. Our largest customer during fiscal 1998 and fiscal 1997
was Time Warner, which accounted for 31% of net sales in fiscal 1998 and 36% in
fiscal 1997. No other customer accounted for more than 10% of net sales during
fiscal 1999, fiscal 1998 and fiscal 1997. Sales to customers outside of the
United States represented 11% of net sales in fiscal 1999, 21% of net sales in
fiscal 1998 and 19% of net sales in fiscal 1997.

SALES AND DISTRIBUTION

Our sales and distribution department is organized into regions that address
areas in the United States, Canada, Latin America, Europe and Asia. In the
United States, we utilize a direct sales force and address our customers both
at the corporate and cable system levels. In Europe, we utilize both direct
sales personnel and distributors. In the other regions, we mainly use
distributors. In addition, we have a number of sales professionals focusing on
selling network management and technical services.

Our sales representatives are supported by sales engineers and customer support
personnel that provide extensive technical support both during and after the
sale. We also provide training to customers and distributors, either at our
facility or at their site.

Our marketing organization is responsible for product planning and management.
This function includes forecasting technology trends, market dynamics and
customer requirements so that new products and services can be developed and
introduced in a timely fashion and at competitive price points. Our marketing
organization provides support to the sales force by developing marketing
brochures, product catalogs and other materials. In addition, the organization
conducts public relation activities and an advertising campaign to heighten
industry awareness of our company and our products and services.

BACKLOG

We schedule production of our products based on our backlog, informal
commitments from customers and sales projections. Our backlog consists of firm
orders by customers for delivery within the next 12 months. At September 24,
1999, backlog of sales orders amounted to $43.4 million. At June 25, 1999,
backlog of sales orders amounted to $57.6 million, at June 26, 1998, backlog of
sales orders amounted to $25.4 million and, at June 27, 1997, backlog of sales
orders amounted to $35.6 million.

33
<PAGE>

Anticipated orders from customers may fail to materialize and delivery
schedules may be deferred or canceled for a number of reasons, including
reductions in capital spending by cable operators. In addition, due to weather-
related seasonal factors and annual capital spending budget cycles of many
customers, our backlog may not necessarily be indicative of actual sales for
any succeeding period.

Facilities

Our manufacturing facilities and processes are ISO 9001 compliant, except for
our Santa Clara facility, which we acquired in connection with the Silicon
Valley Communications acquisition and for which we are currently undertaking
efforts to make compliant. We operate within a progressive assembly environment
for the manufacture of top-level finished products. Our progressive assembly
process includes component preparation, printed circuit board assembly, final
mechanical assembly and test. For certain products, we augment this
manufacturing approach using subcontractors for the printed circuit board
assembly. We perform product audits throughout the factories to ensure customer
quality requirements are met. We operate six principal facilities that we
believe are sufficient for our present operations. Our principal facilities are
as follows:

<TABLE>
<CAPTION>
Approximate Owned /
Location Principal Use Square Feet Leased
- -------- ------------- ----------- -------
<S> <C> <C> <C>
State College, Pennsyl- 133,000 Owned
vania.................. Administrative Offices and Manufacturing
Tijuana, Mexico......... Manufacturing 61,900 Leased
Tipton, Pennsylvania.... Manufacturing 45,000 Owned
Santa Clara, Califor- 24,500 Leased
nia.................... Development Engineering and Manufacturing
Suwanee, Georgia........ Network Operations Center 13,650 Leased
Almere, The Nether- 5,100 Leased
lands.................. Administrative Offices
</TABLE>

Research and Product Development

We are engaged in ongoing research and product development activities that are
intended to advance existing product lines, provide custom-designed variations
of existing product lines, and develop or evaluate new products. Research and
product development activities for the major product groups are conducted at
our headquarters and Santa Clara, California and Suwanee, Georgia facilities.
During fiscal 1999, research and product development expenditures were
primarily directed at expanding our fiber optic technology, network management
systems and RF amplifier line. During fiscal 1999, we also continued with
product development process improvements to reduce cycle time to design,
manufacture and market new products, reduce manufacturing costs and improve
design quality.

During fiscal 1999, we spent approximately $11.8 million on research and
product development related to fiber optic systems, RF transmission equipment,
and network management. Expenditures in these areas totaled approximately $10.0
million during fiscal 1998 and approximately $7.7 million during fiscal 1997.

Competition

Cable equipment markets are highly competitive, requiring substantial resources
and skilled and experienced personnel. We compete based on quality, technology,
customer service, breadth of product offering, pricing and delivery schedule.
We compete with other companies in each of the markets in which we operate,
including General Instrument, Scientific-Atlanta, ADC Telecommunications, Antec
and Harmonic, some of which are large publicly traded companies that may have
greater financial, technical and marketing resources than we do. As we move
forward with our strategy, we may face additional competition from other
broadband management services providers. We have competed successfully in these
markets for over 45 years.

Employees

As of June 25, 1999, we had 1,947 employees, approximately 68% of whom were
engaged in manufacturing, inspection and quality control activities and 8% of
whom were engaged in research and development. The remaining 24% were engaged
in executive, administrative, sales and technical customer services activities.
None of our employees is represented by a labor union with respect to his or
her employment by C-COR.net. We have not experienced any work stoppages and we
consider our relations with our employees to be good.

34
<PAGE>

Suppliers

We closely monitor supplier delivery performance and quality, and employ a
strategy of limiting the total number of global suppliers to those who are
quality leaders in their respective specialties and who will work with us as
partners in the supply chain. Typical items purchased are die cast aluminum
housings, RF hybrids, printed circuit boards, fiber optic lasers and standard
electronic components. Although a few of the components we use are single-
sourced, we have experienced no significant difficulties to date in obtaining
adequate quantities of raw materials and component parts.

We are currently experiencing a limited allocation of RF hybrids that are
manufactured by Motorola and Phillips. We believe we will be able to obtain
sufficient quantities to meet production commitments, but may incur higher
costs in doing so, which would adversely affect gross margins in the short
term.

We use in-house vendor supply relationships to gain access to key parts needed
in the manufacturing process on a "just-in-time" basis. We have implemented a
number of in-house vendor supply relationships to date, and will continue to
establish such relationships in the future in order to decrease vendor lead
times and reduce on-hand inventory.

Intellectual Property

We hold 16 United States patents for various inventions relating to fiber optic
and RF transmission equipment and network management techniques. We attempt to
protect our intellectual property through patents, trademarks, copyrights and a
program of maintaining certain technology as trade secrets. We intend to apply
for patent protection for new inventions in the future as they are developed.

35
<PAGE>

Management

<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Richard E. Perry......... 69 Chairman of the Board of Directors
David A. Woodle.......... 43 President and Chief Executive Officer, Director
David R. Ames............ 50 Senior Vice President-Strategic Development and Corporate Marketing
David J. Eng............. 46 Senior Vice President-Worldwide Sales
Gerhard B. Nederlof...... 51 Senior Vice President-Broadband Management Services
Terry L. Wright.......... 49 Senior Vice President-Technology
Mary G. Beahm............ 39 Vice President-Human Resources
Lawrence R. Fisher, Jr... 49 Vice President-Science and Technology
William T. Hanelly....... 43 Vice President-Finance, Secretary and Treasurer
Donald F. Miller......... 57 Vice President-Operations and Manufacturing
Donald M. Cook, Jr....... 68 Director
Michael J. Farrell....... 49 Director
I.N. Rendall Harper,
Jr...................... 62 Director
Anne P. Jones............ 65 Director
John J. Omlor............ 65 Director
Dr. Frank Rusinko, Jr.... 69 Director
Dr. James J. Tietjen..... 67 Director
</TABLE>

Richard E. Perry has been our Chairman since June 1986. He has also served as
our Chief Executive Officer from July 1985 to August 1996 and from March 1998
to July 1998 and as our President from July 1985 to December 1992.

David A. Woodle has been our President and Chief Executive Officer since July
20, 1998. Before that he was General Manager-Strategic Systems of Raytheon
Systems Company, a company providing computer systems integration services to
government and commercial customers, from January 1998 to July 1998, Vice
President and General Manager, Raytheon E-Systems, HRB Systems from June 1996
to January 1998 and Vice President, Strategic Programs and TMS, Raytheon E-
Systems, HRB Systems from October 1990 to June 1996.

David R. Ames has been our Senior Vice President-Strategic Development and
Corporate Marketing since July 1999. Before that he served as Chairman,
President and Chief Executive Officer and co-founder of Convergence.com
Corporation from May 1994 to July 1999.

David J. Eng has been our Senior Vice President-Worldwide Sales since March
1997. Before that he served as our Vice President-Sales, North, Central and
South America from August 1996 to March 1997 and Vice President-Sales &
Marketing from August 1994 to August 1996. He has also served as Director,
Regional Telephony Sales, Scientific Atlanta, Inc. from March 1993 to July 1994
and Regional Sales Manager, Scientific Atlanta, Inc. from April 1985 to
February 1993.

Gerhard B. Nederlof has been our Senior Vice President-Broadband Management
Services since July 1999. Bhefore that he served as our Senior Vice President-
Marketing from September 1998 to July 1999, Senior Vice President- Marketing,
Business Development and Services from March 1997 to September 1998, Vice
President-Sales, Europe and Pacific Rim from August 1996 to March 1997 and Vice
President-International from January 1992 to August 1996. He also served as
Managing Director of DataCable B.V. from November 1981 to January 1992.

Terry L. Wright has been our Senior Vice President-Technololgy since July 1999.
Before that he served as Chief Technology Officer and co-founder of
Convergence.com Corporation from May 1994 to July 1999.

Mary G. Beahm has been our Vice President-Human Resources since November 1998.
Before that she served as Human Resources Consultant, Westinghouse Electric
Corporation from August 1987 to November 1998.

36
<PAGE>

Lawrence R. Fisher, Jr. has been our Vice President-Science and Technology
since July 1999. Before that he was our Vice President-Engineering from August
1996 to July 1999, Director, RF Engineering Product Development from June 1995
to July 1996 and Manager, RF Engineering from June 1994 to May 1995. He also
served as Director of Engineering, Calan, Inc. from January 1993 to May 1994.

William T. Hanelly has been our Vice President-Finance, Secretary and Treasurer
since October 1998. Before that he served as Division Controller of three
divisions for Raytheon Systems Company from May 1998 to October 1998 and as
Vice President, Finance of HRB Systems from June 1994 to May 1998.

Donald F. Miller has been our Vice President-Operations & Manufacturing since
August 1995. Before that he served as our Plant Manager from September 1987 to
August 1995.

Donald M. Cook, Jr. is retired. Formerly, he was the President and Chief
Operating Officer of SEMCOR, Inc., a corporation providing systems engineering
and management services, from May 1990 to January 1996. He also serves as a
Director of RMS Information Systems, Inc.

Michael J. Farrell has been President of Farrell & Co., an investment banking
firm specializing in investing in and organizing mergers involving
manufacturing companies, since 1982. Before that, he was President and CEO, MK
Rail Corporation from 1995 to 1996 and President and COO from 1994 to 1995. He
also serves as Director, Farrell & Co., American Alloys and Pittsburgh Flatroll
Company, Freedom Forge, Federated Investors, Inc. and Board of Visitors,
Pennsylvania State University Smeal College of Business Administration.

I. N. Rendall Harper, Jr. has been the President, Chief Executive Officer and
Treasurer of American Micrographics Company, Inc., a computer graphics company,
since 1977. He also serves as Director, Federal Reserve Bank of Cleveland,
Keystone Minority Capital Fund and Duquesne University.

Anne P. Jones has been a Telecommunications Consultant since October 1994. She
was also a Partner in the Washington, D.C. office of the law firm of
Sutherland, Asbill & Brennan from September 1983 to October 1994. She also
serves as a Director of Motorola, Inc. and American Express Funds.

John J. Omlor has been the President and Chief Executive Officer, John J. Omlor
Associates, Ltd., a general business consulting firm, since 1981. He has also
been Executive Vice President and Chief Financial Officer, Paper Manufacturers
Co., a manufacturer of office consumables, from September 1987 to September
1997. He currently serves as a Director of Paper Manufacturers Co. and FCG,
Inc.

Dr. Frank Rusinko, Jr. has been a Scientist and Director of Consortium for
Premium Carbon Products from Coal since June 1998. Since August 1991, he has
also served as Senior Scientist and Director, Carbon Research Center of College
of Earth and Mineral Sciences, The Pennsylvania State University. He served as
a Senior Scientist and Director, The Anthracite Institute and The Cooperative
Program in Coal Research, from July 1992 to December 1995, College of Earth and
Mineral Sciences, The Pennsylvania State University; Honorary President, Intech
EDM, a division of Intech Technology, N.V., a supplier to the electrical
discharge machining after-market, from August 1991 to December 1993; and
Chairman, Transor Filter, U.S.A., a supplier of EDM filtration systems, since
August 1991.

Dr. James J. Tietjen has been the Dean, School of Technology Management, The
Stevens Institute of Technology, since July 1996. He also served as Head of
Department of Management and Engineering Management, The Stevens Institute of
Technology, from August 1994 to July 1996; President and Chief Executive
Officer, SRI International, a non-profit scientific research firm, from
December 1990 to January 1994; and President and Chief Operating Officer, David
Sarnoff Research Center, Inc., a contract research laboratory, from April 1987
through November 1990.

37
<PAGE>

Description of Capital Stock

General. We are authorized to issue 50,000,000 shares of common stock, par
value $.10 per share and 2,000,000 shares of preferred stock, no par value per
share. All outstanding shares of common stock are fully paid and nonassessable.
As of November 3, 1999, there were 12,375,792 shares of common stock
outstanding and no shares of preferred stock outstanding.

Common Stock. Each holder of common stock is entitled to one vote for each
share owned of record on all matters submitted to the vote of shareholders,
subject to any voting rights of holders of preferred stock that may be issued
in the future. We have three classes of Directors which have staggered terms of
three years. Subject to preferences that may be applicable to any preferred
stock that may be issued in the future and the restrictions on payment of
dividends imposed by our credit facilities and other agreements, the holders of
common stock will be entitled to such dividends as may be declared from time to
time by the Board of Directors from funds legally available therefor and will
be entitled, after payment of all prior claims, to receive, on a pro rata
basis, all of our assets upon liquidation, dissolution or winding up. The
common stock is not redeemable and does not have any conversion rights. Holders
of shares of common stock generally have no preemptive rights to maintain their
respective percentage of ownership in future offers and sales of stock. The
rights, preferences and privileges of holders of common stock are subject to
the rights, preferences and privileges of any preferred stock which we may
issue in the future which could have priority with respect to dividends and
liquidation distributions. We have never paid dividends on our common stock and
have no current intention to do so.

Preferred Stock. No preferred stock that has been authorized is issued or
outstanding. The Board of Directors is authorized to issue one or more series
of preferred stock and to determine the voting rights and the number of shares
constituting the series and the designations, preferences, qualifications,
privileges, limitations, restrictions, options, conversion rights and other
special or relative rights. The Board of Directors may, without shareholder
approval, issue preferred stock with voting and other rights that could
adversely affect the voting power of the holders of common stock. The Board has
designated one series of Preferred Stock in connection with our shareholder
rights plan which is more fully described below.

Anti-Takeover. We have the following provisions in our Articles of
Incorporation or Bylaws which could be viewed as having anti-takeover effects:
(a) a provision requiring advance notice for shareholder nominations of
directors, (b) a staggered Board, (c) "blank check" preferred stock, (d)
removal of directors only for cause, (e) no shareholder action by partial
written consent and (f) a supermajority (66 2/3%) vote required to approve
certain transactions between the Company and an "interested shareholder." In
addition, on August 17, 1999, our Board of Directors adopted a shareholder
rights plan which provided a dividend distribution of one preferred share
purchase right for each outstanding share of our common stock payable September
9, 1999 to shareholders of record on August 30, 1999. Each purchase right
entitles shareholders to buy one one-hundredth of a share of newly created
Series A Junior Participating Preferred Stock at an exercise price $150.00.
Generally, the rights will be exercisable if a person or group hereafter
acquires or commences a tender offer or exchange offer for 20% or more of our
common stock and shares of preferred stock purchasable upon exercise of the
rights will be entitled to a preferential quarterly dividend, voting rights and
a stipulated return in the event of any merger or similar transaction. If we
are acquired after a person or group becomes an "Acquiring Person"(as defined
in the rights plan), each right will entitled its holder to purchase, at the
right's exercise price, a number of shares of common stock of the acquiring
person or group having a market value at that time of twice the right's
exercise price. The rights are designed to assure that all of our shareholders
receive fair and equal treatment in the event of any proposed takeover.

The Pennsylvania Business Corporation Law contains certain provisions
applicable to us that restrict the ability of a person or entity to acquire
control of a Pennsylvania corporation through a business combination, such as a
merger, consolidation or share exchange, or through the acquisition of shares
constituting at least twenty

38
<PAGE>

percent of the votes that can be cast in the election of directors of the
corporation. In general, these provisions operate, under certain circumstances,
to (i) disenfranchise certain shares owned by a person or group that acquires
voting power over 20%, 33 1/3% or 50% or more of the voting shares of the
corporation that are designated as control shares, unless the voting rights of
such shares are restored by shareholder vote, (ii) permit a corporation to
redeem control shares at their then fair market value, (iii) require a person
or group that acquires or announces an intention to acquire 20% or more of the
voting power of the corporation's securities during certain specified time
periods to give notice to each shareholder and the court and (iv) give
shareholders of the corporation the right to receive the fair value of their
shares in cash from a person or group that has acquired 20% of the voting power
of the corporation.

Registration of Shares issued to the Convergence.com and Silicon Valley
Communications Shareholders. Pursuant to the terms of the acquisitions of
Convergence.com and Silicon Valley Communications, we are required to register
the shares of our common stock issued and issuable upon exercise of warrants
and options which we assumed in connection with the acquisitions. We have
already obtained effectiveness of a registration statement covering the resale
of 1,800,253 shares and have filed a registration statement covering the resale
of an additional 1,929,432 shares.

Transfer Agent and Registrar. The Transfer Agent and Registrar for our common
stock is American Stock Transfer & Trust Company.

39
<PAGE>

Underwriting

We have entered into an underwriting agreement with the underwriters named
below. CIBC World Markets Corp., Donaldson, Lufkin & Jenrette Securities
Corporation, Warburg Dillon Read LLC and Josephthal & Co. Inc. are acting as
representatives of the underwriters. The underwriting agreement provides for
the purchase of a specific number of shares of common stock by each of the
underwriters. The underwriters' obligations are several, which means that each
underwriter is required to purchase a specified number of shares, but is not
responsible for the commitment of any other underwriter to purchase shares.
Subject to the terms and conditions of the underwriting agreement, each
underwriter has severally agreed to purchase the number of shares of common
stock set forth opposite its name below:

<TABLE>
<CAPTION>
Underwriter Number of Shares
----------- ----------------
<S> <C>
CIBC World Markets Corp.....................................
Donaldson, Lufkin & Jenrette Securities Corporation.........
Warburg Dillon Read LLC.....................................
Josephthal & Co. Inc........................................

---
Total.....................................................
===
</TABLE>

This is a firm commitment underwriting. This means that the underwriters have
agreed to purchase all of the shares offered by this prospectus (other than
those covered by the over-allotment option described below) if any are
purchased. Under the underwriting agreement, if an underwriter defaults in its
commitment to purchase shares, the commitments of non-defaulting underwriters
may be increased or the underwriting agreement may be terminated, depending on
the circumstances.

The representatives have advised us that the underwriters propose to offer the
shares directly to the public at the public offering price that appears on the
cover page of this prospectus. In addition, the representatives may offer some
of the shares to certain securities dealers at such price less a concession of
$ per share. The underwriters may also allow, and such dealers may reallow, a
concession not in excess of $ per share to certain other dealers. After the
shares are released for sale to the public, the representatives may change the
offering price and other selling terms at various times.

We have granted the underwriters an over-allotment option. This option, which
is exercisable for up to 30 days after the date of this prospectus, permits the
underwriters to purchase a maximum of 375,000 additional shares from us to
cover over-allotments. If the underwriters exercise all or part of this option,
they will purchase shares covered by the option at the public offering price
that appears on the cover page of this prospectus, less the underwriting
discount. If this option is exercised in full, the total price to the public
will be $121.6 million, and the total proceeds to us will be $114.9 million.
The underwriters have severally agreed that, to the extent the over-allotment
option is exercised, they will each purchase a number of additional shares
proportionate to the underwriter's initial amount reflected in the foregoing
table.

40
<PAGE>

The following table provides information regarding the amount of the discount
to be paid to the underwriters by us:

<TABLE>
<CAPTION>
Total
-----------------------------------------
Without Exercise of With Full Exercise of
Per Share Over-Allotment Over-Allotment
--------- ------------------- ---------------------
<S> <C> <C>
</TABLE>

We estimate that the total expenses of the offering, excluding the underwriting
discount, will be approximately $600,000.

We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933.

We, as well as our executive officers and Directors, have agreed to a 90-day
"lock up" with respect to approximately 1,438,302 shares of common stock, and
certain other of our securities that they beneficially own, including
securities that are convertible into shares of common stock and securities that
are exchangeable or exercisable for shares of common stock. This means that,
subject to certain exceptions, for a period of 90 days following the date of
this prospectus, we and such persons may not offer, sell, pledge or otherwise
dispose of these securities without the prior written consent of CIBC World
Markets Corp.

Rules of the Securities and Exchange Commission may limit the ability of the
underwriters to bid for or purchase shares before the distribution of the
shares is completed. However, the underwriters may engage in the following
activities in accordance with the rules:

. Stabilizing transactions--The representatives may make bids or purchases
for the purposes of pegging, fixing or maintaining the price of the
shares, so long as stabilizing bids do not exceed a specified maximum.

. Over-allotments and syndicate covering transactions--The underwriters
may create a short position in the shares by selling more shares than
are set forth on the cover page of this prospectus. If a short position
is created in connection with the offering, the representatives may
engage in syndicate covering transactions by purchasing shares in the
open market. The representatives may also elect to reduce any short
position by exercising all or part of the over-allotment option.

. Penalty bids--If the representatives purchase shares in the open market
in a stabilizing transaction or syndicate covering transaction, they may
reclaim a selling concession from the underwriters and selling group
members who sold those shares as part of this offering.

. Passive market making--Market makers in the shares who are underwriters
or prospective underwriters may make bids for or purchases of shares,
subject to certain limitations, until the time, if ever, at which a
stabilizing bid is made.

Stabilization and syndicate covering transactions may cause the price of the
shares to be higher than it would be in the absence of such transactions. The
imposition of a penalty bid might also have an effect on the price of the
shares if it discourages resales of shares.

Neither we nor the underwriters make any representation or prediction as to the
effect that the transactions described above may have on the price of the
shares. These transactions may occur on the Nasdaq National Market or
otherwise. If such transactions are commenced, they may be discontinued without
notice at any time.

41
<PAGE>

Legal Matters

The validity of the shares of common stock offered hereby will be passed upon
for us by Ballard Spahr Andrews & Ingersoll, LLP, Philadelphia, Pennsylvania.
Certain legal matters will be passed upon for the underwriters by Hale and Dorr
LLP, Boston, Massachusetts.

Experts

The supplemental consolidated financial statements of the Registrant and
subsidiaries as of June 25, 1999 and June 26, 1998, and for each of the years
in the three-year period ended June 25, 1999, which have been restated to
reflect pooling-of-interests combinations with Convergence.com Corporation and
Silicon Valley Communications, Inc. have been included herein and in the
Registration Statement in reliance upon the report of KPMG LLP, independent
certified public accountants, appearing elsewhere herein, and upon the
authority of said firm as experts in accounting and auditing.

Where You Can Find More Information

This prospectus, which constitutes a part of a registration statement on Form
S-3 filed by us with the Commission under the Securities Act, omits certain of
the information set forth in the registration statement. Reference is hereby
made to the registration statement and to the exhibits thereto for further
information with respect to us and the securities offered hereby. Copies of the
registration statement and the exhibits thereto are on file at the offices of
the Commission and may be obtained upon payment of the prescribed fee or may be
examined without charge at the public reference facilities of the Commission
described below or via the Commission's web site described below.

Statements contained herein concerning the provisions of documents are
necessarily summaries of such documents, and each statement is qualified in its
entirety by reference to the copy of the applicable document filed with the
Commission.

We are subject to the informational requirements of the Exchange Act, and,
accordingly, file reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, NW, Washington,
D.C. 20549, and at the Commission's Regional Offices located at Seven World
Trade Center, Suite 1300, New York, New York 10048 and Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such documents may also be obtained from the Public Reference Room of the
Commission at Judiciary Plaza, 450 Fifth Street, NW, Washington, D.C. 20549, at
prescribed rates. Information regarding the operation of the Public Reference
Room may be obtained by calling the Commission at 1-800-SEC-0330. The
Commission maintains a web site (http://www.sec.gov) that contains material
regarding issuers that file electronically with the Commission.

42
<PAGE>

Incorporation Of Certain Documents By Reference

The following documents or portions of documents filed by us (File No. 0-10726)
with the Commission are incorporated herein by reference:

(a) Annual Report on Form 10-K, as amended by Form 10-K/A, for the fiscal
year ended June 25, 1999.

(b) Reports on Form 8-K filed on July 15, 1999, July 26, 1999 (as amended
by Form 8-K/A filed on August 2, 1999), August 30, 1999 and September 24,
1999 (as amended by Form 8-K/A filed on October 13, 1999).

(d) The description of our common stock contained in our registration
statement on Form 8-A filed with the Commission under the Exchange Act on
October 27, 1982, as amended by the Form 8 filed with the Commission on
July 3, 1990.

(e) The description of our Series A Junior Participating Preferred Stock
Purchase Rights contained in our registration statement on Form 8-A filed
with the Commission under the Exchange Act on August 30, 1999.

All reports and other documents subsequently filed by us pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act, after the date of this
prospectus and prior to the filing of a post-effective amendment which
indicates that all securities offered hereby have been sold or which
deregisters all securities remaining unsold, shall be deemed to be incorporated
by reference into this prospectus and to be a part hereof from the date of the
filing of such reports or documents. Any statement contained in a document, all
or a portion of which is incorporated by reference herein, shall be deemed to
be modified or superseded for purposes of this prospectus to the extent that a
statement contained or incorporated by herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this prospectus.

Upon written or oral request, we will provide without charge to each person,
including any beneficial owner, to whom this prospectus is delivered a copy of
any or all of such documents which are incorporated herein by reference (other
than exhibits to such documents unless such exhibits are specifically
incorporated by reference into the documents that this prospectus
incorporates). Written or oral requests for copies should be directed to
William T. Hanelly, Vice President-Finance, Secretary and Treasurer, 60 Decibel
Road, State College, PA 16801, (814) 238-2461.

43
<PAGE>

Index to Supplemental Consolidated Financial Statements
<TABLE>
<S> <C>
Independent Auditors' Report............................................... F-2
Supplemental Consolidated Balance Sheets as of September 24, 1999
(unaudited), June 25, 1999, and June 26, 1998............................. F-3
Supplemental Consolidated Statements of Operations for the thirteen weeks
ended September 24, 1999 and September 25, 1998 (unaudited), and for the
years ended June 25, 1999, June 26, 1998, and June 27, 1997............... F-4
Supplemental Consolidated Statements of Cash Flows for the for the thirteen
weeks ended September 24, 1999 and September 25, 1999 (unaudited), and for
the years ended June 25, 1999, and June 26, 1998, and June 27, 1997....... F-5
Supplemental Consolidated Statements of Shareholders' Equity for the
thirteen weeks ended September 24, 1999 (unaudited) and for the years
ended June 25, 1999, June 26, 1998, and June 27, 1997..................... F-6
Notes to Supplemental Consolidated Financial Statements.................... F-7
</TABLE>

F-1
<PAGE>

Independent Auditors' Report

The Board of Directors and Shareholders
C-COR.net Corp.:

We have audited the accompanying supplemental consolidated balance sheets of C-
COR.net Corp. as of June 25, 1999, and June 26, 1998, and the related
supplemental consolidated statements of operations, cash flows and
shareholders' equity for each of the years in the three-year period ended June
25, 1999. These supplemental consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these supplemental consolidated financial statements based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

The supplemental consolidated financial statements give retroactive effect to
the mergers of C-COR.net Corp. and Convergence.com and Silicon Valley
Communications, Inc. on July 9, 1999 and September 17, 1999, respectively,
which have been accounted for as poolings-of-interests as described in the
description of business section of the notes to the supplemental consolidated
financial statements. Generally accepted accounting principles proscribe giving
effect to consummated business combinations accounted for by the pooling-of-
interests method in financial statements that do not include the dates of
consummation. These financial statements do not extend through the dates of the
consummation. However, they will become the historical consolidated financial
statements of C-COR.net Corp. after financial statements covering the dates of
consummation of the business combinations are issued.

In our opinion, the supplemental consolidated financial statements referred to
above present fairly, in all material respects, the financial position of C-
COR.net Corp. as of June 25, 1999, and June 26, 1998, and the results of their
operations and their cash flows for each of the years in the three-year period
ended June 25, 1999, in conformity with generally accepted accounting
principles applicable after financial statements are issued for a period which
includes the dates of consummation of the business combinations.

KPMG LLP

State College, Pennsylvania
September 20, 1999

F-2
<PAGE>

C-COR.net Corp. (as restated to reflect pooling-of-interest combinations with

Convergence.com Corporation and Silicon Valley Communications, Inc., with

respect to periods prior to the thirteen-week period ended September 24, 1999.)

Supplemental Consolidated Balance Sheets
(In thousands, except share data)

<TABLE>
<CAPTION>
September 24, June 25, June 26,
1999 1999 1998
------------- -------- --------
(Unaudited)
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents..................... 500 $ 4,695 $ 3,030
Marketable securities......................... 438 445 356
Accounts and notes receivables, less allowance
of $1,322 on September 24, 1999, $1,007 on
June 25, 1999 and $923 on June 26, 1998 ..... 34,269 31,314 19,823
Inventories................................... 27,931 23,565 17,809
Deferred taxes................................ 6,974 6,335 2,797
Other current assets.......................... 5,905 3,457 2,575
Net current assets of discontinued
operations................................... 305 433 --
-------- -------- -------
Total current assets...................... 76,322 70,244 46,390
Property, plant, and equipment, net........... 28,664 27,792 29,853
Intangible assets, net of accumulated
amortization of $76 on September 24, 1999,
$172 on June 25, 1999 and $-0- on
June 26, 1998................................ 182 1,131 1,295
Other long-term assets........................ 3,732 3,782 6,536
-------- -------- -------
Total assets.............................. $108,900 $102,949 $84,074
======== ======== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable.............................. $ 15,145 $ 16,286 $ 6,532
Accrued liabilities........................... 19,220 16,242 10,831
Line-of-credit and short-term credit
obligations.................................. 6,622 4,638 --
Current portion of long-term debt............. 813 832 926
Net current liabilities of discontinued
operations................................... -- -- 517
-------- -------- -------
Total current liabilities................. 41,800 37,998 18,806
Long-term debt, less current portion.......... 3,513 3,708 5,567
Other long-term liabilities................... 1,479 1,329 1,041
Commitments and contingent liabilities........
-------- -------- -------
Total liabilities......................... 46,792 43,035 25,414
-------- -------- -------
Shareholders' equity
Preferred stock, no par; authorized 2,000,000
shares; issued, none......................... -- -- --
Common stock, $.10 par; authorized shares
24,000,000; issued shares of 12,919,160 on
September 24, 1999, 12,761,485 on June 25,
1999 and 12,631,166 on June 26, 1998......... 1,292 1,276 1,263
Additional paid-in capital.................... 46,790 44,649 42,041
Accumulated other comprehensive loss.......... (100) (96) (99)
Unearned compensation......................... (14) -- --
Retained earnings............................. 21,120 21,065 21,351
Treasury stock at cost, shares of 600,723 on
September 24, 1999, 600,723 on June 25, 1999
and 510,342 on June 26, 1998................. (6,980) (6,980) (5,896)
-------- -------- -------
Total shareholders' equity................ 62,108 59,914 58,660
-------- -------- -------
Total liabilities and shareholders'
equity................................... $108,900 $102,949 $84,074
======== ======== =======
</TABLE>

See notes to consolidated financial statements.

F-3
<PAGE>

C-COR.net Corp. (as restated to reflect pooling-of-interest combinations with

Convergence.com Corporation and Silicon Valley Communications, Inc., with

respect to periods prior to the thirteen-week period ended September 24, 1999.)

Supplemental Consolidated Statements of Operations
(In thousands, except per share data)

<TABLE>
<CAPTION>
Thirteen Weeks Ended Years Ended
--------------------------- ----------------------------
September 24, September 25, June 25, June 26, June 27,
1999 1998 1999 1998 1997
------------- ------------- -------- -------- --------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Net sales............... $64,503 $34,654 $183,425 $154,041 $133,780
Cost and expenses:
Cost of sales.......... 48,278 27,128 138,793 121,986 106,485
Selling and
administrative........ 7,109 5,355 27,153 19,724 18,521
Research and product
development........... 3,175 2,789 11,833 9,988 7,706
Merger-related costs... 3,673 -- -- -- --
Provision for
restructuring costs... -- -- -- 625 --
Interest............... 621 57 1,384 399 380
Other expense (income),
net................... 307 (30) 110 19 (861)
------- ------- -------- -------- --------
63,163 35,299 179,273 152,741 132,231
------- ------- -------- -------- --------
Income from continuing
operations before
income taxes........... 1,340 (645) 4,152 1,300 1,549
Income tax expense
(benefit):
Current................ 1,984 607 7,133 3,565 1,299
Deferred............... (663) (136) (2,298) (3,183) (648)
------- ------- -------- -------- --------
1,321 471 4,835 382 651
------- ------- -------- -------- --------
Income (loss) from con-
tinuing operations..... 19 (1,116) (683) 918 898
------- ------- -------- -------- --------
Discontinued operations:
Loss from operations of
discontinued business
segment, net of tax... -- -- -- -- (6,605)
Gain (loss) on disposal
of discontinued
business segment, net
of tax................ 36 288 397 928 (3,830)
------- ------- -------- -------- --------
Net income
(loss)........... $ 55 $ (828) $ (286) $ 1,846 $ (9,537)
======= ======= ======== ======== ========
Net income (loss) per
share--(basic):
Continuing operations.. $ 0.00 $ (0.09) $ (0.06) $ 0.08 $ 0.07
Discontinued
operations:
Loss from
operations......... 0.00 0.00 -- -- (0.54)
Gain (loss) on
disposal........... 0.00 0.02 0.04 0.08 (0.32)
------- ------- -------- -------- --------
Net income
(loss)........... $ 0.00 $ (0.07) $ (0.02) $ 0.16 $ (0.79)
======= ======= ======== ======== ========
Net income (loss) per
share--(diluted):
Continuing operations.. $ 0.00 $ (0.09) $ (0.06) $ 0.07 $ 0.07
Discontinued
operations:
Loss from
operations......... 0.00 0.00 -- -- (0.53)
Gain (loss) on
disposal........... 0.00 0.02 0.04 0.08 (0.31)
------- ------- -------- -------- --------
Net income
(loss)........... $ 0.00 $ (0.07) $ (0.02) $ 0.15 $ (0.77)
======= ======= ======== ======== ========
Weighted average common
shares and common share
equivalents
Basic.................. 12,224 12,124 12,098 11,895 12,143
Diluted................ 13,266 12,124 12,098 12,340 12,402
</TABLE>

See notes to consolidated financial statements.

F-4
<PAGE>

C-COR.net Corp. (as restated to reflect pooling-of-interest combinations with

Convergence.com Corporation and Silicon Valley Communications, Inc., with

respect to periods prior to the thirteen-week period ended September 24, 1999.)

Supplemental Consolidated Statements of Cash Flows
(In thousands)

<TABLE>
<CAPTION>
Thirteen Weeks Ended Years Ended
--------------------------- ----------------------------
September 24, September 25, June 25, June 26, June 27,
1999 1998 1999 1998 1997
------------- ------------- -------- -------- --------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Operating Activities:
Net income (loss)....... $ 55 $ (828) $ (286) $ 1,846 $(9,537)
Adjustments to reconcile
net income to net cash
and cash equivalents
provided by operating
activities:
Depreciation and
amortization.......... 2,164 2,086 8,860 6,967 5,433
Amortization of debt
discount.............. 381 -- 911 -- --
Amortization of
unearned
compensation.......... 7 --
(Gain) loss on disposal
of discontinued
operations, net of
tax................... (36) (288) (397) (928) 3,830
Provision for deferred
retirement salary
plan.................. 150 125 204 292 252
Loss (gain) on sale of
property, plant, and
equipment............. 333 -- 229 (14) 22
Changes in operating
assets and
liabilities:
Accounts receivable.... (2,955) 970 (11,491) (50) 1,127
Inventories............ (4,366) (242) (5,756) 2,748 (1,454)
Other assets........... (1,603) 1,598 (165) (2,793) (221)
Accounts payable....... (1,141) 1,643 9,754 (2,574) 3,005
Accrued liabilities.... 2,978 (2,129) 5,493 3,801 (113)
Deferred income taxes.. (663) (136) (2,298) (3,189) (929)
Discontinued
operations--working
capital changes and
noncash charges....... 164 (209) (553) 1,051 3,236
------- ------- -------- -------- -------
Net cash and cash
equivalents provided by
operating activities... (4,532) 2,590 4,505 7,157 4,651
------- ------- -------- -------- -------
Investing Activities:
Purchase of property,
plant, and equipment... (3,190) (1,074) (8,159) (10,053) (7,244)
Purchase of marketable
securities............. -- -- (84) -- (200)
Proceeds from sale of
marketable securities.. -- -- -- 15 258
Issuance of (payments
on) notes receivable,
net.................... -- -- 1,972 (2,011) 7
Change in other assets.. -- 45 94 (146) (317)
Proceeds from sale of
property, plant, and
equipment.............. 2 -- 28 14 15
Proceeds from (investing
activities of)
discontinued
operations............. -- -- -- 656 (698)
------- ------- -------- -------- -------
Net cash and cash
equivalents used in
investing activities... (3,188) (1,029) (6,149) (11,525) (8,179)
------- ------- -------- -------- -------
Financing Activities:
Payment of debt and
capital lease
obligations............ (214) (4,481) (5,050) (966) (941)
Proceeds from long-term
debt borrowing......... -- -- 3,097 -- --
Proceeds from (payments
on) short-term credit
facilities, net........ 1,603 980 4,638 (3,466) 1,127
Proceeds from issuance
of convertible
preferred stock........ -- 5 336 2,780 15,710
Tax benefit deriving
from exercise and sale
of stock option
shares................. -- -- 94 57 71
Issue common stock to
employee stock purchase
plan................... 25 15 76 51 88
Proceeds from exercise
of stock options....... 2,111 213 1,202 277 278
Purchase of treasury
stock.................. -- (364) (1,084) (131) (5,765)
------- ------- -------- -------- -------
Net cash and cash
equivalents provided by
(used in) financing
activities............. 3,525 (3,632) 3,309 (1,398) 10,568
------- ------- -------- -------- -------
Increase (decrease) in
cash and cash
equivalents............ (4,195) (2,071) 1,665 (5,766) 7,040
Cash and cash
equivalents at
beginning of year...... 4,695 3,030 3,030 8,796 1,762
------- ------- -------- -------- -------
Cash and cash
equivalents at end of
year................... $ 500 $ 959 $ 4,695 $ 3,030 $ 8,802
======= ======= ======== ======== =======
</TABLE>

See notes to consolidated financial statements.

F-5
<PAGE>

C-COR.net Corp. (as restated to reflect pooling-of-interest combinations with

Convergence.com Corporation and Silicon Valley Communications, Inc., with

respect to periods prior to the thirteen-week period ended September 24, 1999.)

Supplemental Consolidated Statements of Shareholders' Equity
(In thousands)

<TABLE>
<CAPTION>
Accumulated
Additional Other
Comprehensive Common Paid-in Comprehensive Unearned Retained Treasury
Income Stock Capital Income (Loss) Compensation Earnings Stock
------------- ------ ---------- ------------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, June 28, 1996,
as reported............ $ 960 $19,602 $ (55) -- $32,810 $ --
Poolings of interest
with Convergence and
SVCI................... 252 4,082 -- -- (4,200) --
------ ------- ----- ----- ------- --------
Balance, June 28, 1996,
as restated............ 1,212 23,684 (55) -- 28,610 --
Net loss................ $(9,537) -- -- -- -- (9,537) --
Other comprehensive in-
come: -- -- -- -- -- --
Net unrealized holding
gains on marketable
securities............ 7 -- -- -- -- -- --
Foreign currency trans-
lation (loss)......... (67) -- -- -- -- -- --
-------
Other comprehensive in-
come (loss)............ (60) -- -- (60) -- -- --
-------
Comprehensive loss...... $(9,597) -- -- -- -- -- --
=======
Shares issued........... 21 15,698 -- -- -- --
Exercise of stock op-
tions.................. 4 273 -- -- -- --
Tax benefit deriving
from exercise and sale
of stock option
shares................. -- 71 -- -- -- --
Issue shares to employee
stock purchase plan.... 1 87 -- -- -- --
Purchase of treasury
stock.................. -- -- -- -- -- (5,765)
------- ------ ------- ----- ----- ------- --------
Balance, June 27, 1997.. 1,238 39,813 (115) -- 19,073 (5,765)
Net income.............. $ 1,846 -- -- -- -- 1,846 --
Other comprehensive in-
come: -- -- -- -- -- --
Net unrealized holding
gains on marketable
securities............ 7 -- -- -- -- -- --
Foreign currency trans-
lation gain........... 9 -- -- -- -- -- --
-------
Other comprehensive in-
come................... 16 -- -- 16 -- -- --
-------
Comprehensive income.... $ 1,862 -- -- -- -- -- --
=======
Adjustment related to
merger (Note A)........ -- -- -- -- 432 --
Shares issued........... 17 1,850 -- -- -- --
Exercise of stock op-
tions.................. 8 270 -- -- -- --
Tax benefit deriving
from exercise and sale
of stock option
shares................. -- 57 -- -- -- --
Issue shares to employee
stock purchase plan.... -- 51 -- -- -- --
Purchase of treasury
stock.................. -- -- -- -- -- (131)
------- ------ ------- ----- ----- ------- --------
Balance, June 26, 1998.. 1,263 42,041 (99) -- 21,351 (5,896)
Net loss................ $ (286) -- -- -- -- (286) --
Other comprehensive in-
come: -- -- -- -- -- --
Net unrealized holding
gains on marketable
securities............ 4 -- -- -- -- -- --
Foreign currency trans-
lation loss........... (1) -- -- -- -- -- --
-------
Other comprehensive in-
come................... 3 -- -- 3 -- -- --
-------
Comprehensive loss...... $ (283) -- -- -- -- -- --
=======
Shares issued........... 1 1,254 -- -- -- --
Exercise of stock op-
tions.................. 11 1,185 -- -- -- --
Tax benefit deriving
from exercise and sale
of stock option
shares................. -- 94 -- -- -- --
Issue shares to employee
stock purchase plan.... 1 75 -- -- -- --
Purchase of treasury
stock.................. -- -- -- -- -- (1,084)
------- ------ ------- ----- ----- ------- --------
Balance, June 25, 1999.. 1,276 44,649 (96) -- 21,065 (6,980)
Net income.............. $ 55 -- -- -- -- 55 --
Other comprehensive
income................. -- -- -- -- -- --
Net unrealized holding
loss on marketable se-
curities.............. (4) -- -- -- -- -- --
-------
Other comprehensive
loss................... (4) -- -- (4) -- -- --
-------
Comprehensive income.... $ 51 -- -- -- -- -- --
=======
Shares issued........... -- -- -- -- -- --
Exercise of stock op-
tions.................. 16 2,095 -- -- -- --
Tax benefit deriving
from exercise and sale
of stock options
shares................. -- -- -- -- -- --
Issue shares to employee
stock purchase plan.... -- 25 -- -- -- --
Issue restricted stock.. -- 21 -- (21) -- --
Amortization of unearned
compensation .......... -- -- -- 7 -- --
------ ------- ----- ----- ------- --------
Balance, September 24,
1999................... $1,292 $46,790 $(100) $(14) $21,120 $(6,980)
====== ======= ===== ===== ======= ========
</TABLE>

See notes to consolidated financial statements.

F-6
<PAGE>

C-COR.net Corp. (as restated to reflect pooling-of-interest combinations with

Convergence.com Corporation and Silicon Valley Communications, Inc., with

respect to periods prior to the thirteen-week period ended September 24, 1999.)

Notes to Consolidated Financial Statements

(Information as of September 24, 1999 and September 25, 1998 and for the
thirteen weeks

ended September 24, 1999 and September 25, 1998 is unaudited)

Description of Business

The Company designs and manufactures network distribution products and provides
technical services in support of two-way hybrid fiber coax (HFC) networks. The
Company has predominately operated in the Electronic Distribution Products
segment, which provides HFC equipment for signal distribution applications
primarily to the cable television (CATV) market. In order to expand the
Company's product offering in the Electronics Distribution Products segment, on
September 17, 1999, subsequent to the fiscal year ended June 25, 1999, the
Company completed a merger with Silicon Valley Communications, Inc. ("SVCI"),
whereby SVCI became a wholly-owned subsidiary of the Company. In addition, on
July 9, 1999, also subsequent to the fiscal year ended June 25, 1999, the
Company completed a merger with Convergence.com Corporation ("Convergence"),
whereby Convergence became a wholly owned subsidiary of the Company. These
transactions were accounted for under the pooling-of-interest method of
accounting and accordingly, the accompanying financial statements have been
retroactively restated to give effect to the Convergence and SVCI mergers as if
they had occurred on June 28, 1996. As a result of the merger with Convergence,
the Company now operates a separate business unit called Broadband Management
Services, which provides design, activation, network management and
optimizations, as well as ongoing support, repair and maintenance to broadband
operators in the United States.

A. Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the
Company and its foreign and domestic subsidiaries. Intercompany accounts and
transactions have been eliminated in consolidation.

Reporting Periods

Management has adopted a fiscal year which ends on the last Friday in June. For
the 13-week reporting periods presented herein, the quarters ended on September
24, 1999 and September 25, 1998. For the 52-week reporting periods presented
herein, the years ended on June 25, 1999, June 26, 1998, and June 27, 1997.
Convergence had operated and reported on a calendar year basis prior to the
merger. Operating results for the fiscal year ended June 25, 1999 and June 26,
1998, include the operations of Convergence for the 12-month periods ended June
30, 1999 and June 30, 1998, respectively. Operating results for the fiscal year
ended June 27, 1997, include the operations of Convergence for the 12-month
period ended December 31, 1997. This results in an overlapping period (July
1997 through December 1997) for Convergence's results of operations being
included in the restated consolidated financial statements. Accordingly, the
statement of shareholders' equity for the year ended June 26, 1998 includes a
$432 adjustment to eliminate the impact on retained earnings for the overlap
period.

Use of Estimates

The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

F-7
<PAGE>

C-COR.net Corp. (as restated to reflect pooling-of-interest combinations with

Convergence.com Corporation and Silicon Valley Communications, Inc., with

respect to periods prior to the thirteen-week period ended September 24, 1999.)

Notes to Consolidated Financial Statements--(Continued)

(Information as of September 24, 1999 and September 25, 1998 and for the
thirteen weeks

ended September 24, 1999 and September 25, 1998 is unaudited)

Revenue Recognition

The Company's revenues derive principally from equipment sales, which are
generally recognized when the equipment has been shipped. Revenue from Internet
service is recognized monthly as services are provided to subscribers. Other
service revenues, consisting of system design, field services and other
consulting engagements, are generally recognized as services are rendered.

Fair Value of Financial Instruments

The carrying value of cash, accounts receivable, accounts payable and accrued
liabilities approximate their fair value due to the short-term nature of those
instruments. The carrying value of the Company's long-term borrowings
approximates fair value.

Inventories

Inventories are stated at the lower of cost or market. Cost is determined on
the first-in, first-out method.

Property, Plant and Equipment

Property, plant and equipment, which includes leased property under capital
leases, is stated at cost. Cost includes interest associated with capital
additions. Capitalized interest was $-0- for fiscal years 1999, 1998 and 1997,
respectively. Depreciation or amortization is calculated on the straight-line
method for financial statement purposes based upon the following estimated
useful lives:

<TABLE>
<S> <C>
Building and improvements under capital lease................. 15 years
Buildings..................................................... 15 to 25 years
Machinery and equipment under capital lease................... 5 years
Machinery and equipment....................................... 3 to 10 years
Leasehold improvements........................................ 7 to 15 years
</TABLE>

Computer Software

Under Statement of Financial Accounting Standards No. 86, "Accounting for the
Costs of Computer Software to be Sold, Leased or Otherwise Marketed" (Statement
86), the Company capitalizes certain internal and purchased software
development and production costs once technological feasibility has been
achieved. For the fiscal years ended 1999 and 1998, the Company capitalized
$389 and $670, respectively, of purchased software development costs, which is
included in other long-term assets in the consolidated financial statements.
The Company did not capitalize any software development costs during fiscal
year 1997. Amortization will commence upon initial product release, which the
Company anticipates will occur during the first quarter of its fiscal year
2000, and as such no amortization has been recorded in fiscal years 1999 and
1998.

Intangible Assets

Patents, trademarks and licenses are carried at cost less accumulated
amortization, which is calculated on a straight-line basis over the estimated
three year useful life of the asset. The patents, trademarks and license costs
relate to purchased and internally developed product lines. For fiscal years
ended 1999, 1998 and 1997, the Company recorded $172, $-0- and $-0- of
amortization, respectively.

Income Taxes

Under Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes" (Statement 109), deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences

F-8
<PAGE>

C-COR.net Corp. (as restated to reflect pooling-of-interest combinations with

Convergence.com Corporation and Silicon Valley Communications, Inc., with

respect to periods prior to the thirteen-week period ended September 24, 1999.)

Notes to Consolidated Financial Statements--(Continued)

(Information as of September 24, 1999 and September 25, 1998 and for the
thirteen weeks

ended September 24, 1999 and September 25, 1998 is unaudited)

between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. Under Statement
109, the effect on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment date.

Shareholders' Equity

In fiscal years 1999 and 1998, the Company repurchased 90,381 shares for $1,084
and 10,342 shares for $131, respectively, of its common stock under a stock
repurchase program adopted in September 1997. In fiscal year 1997, the Company
repurchased 500,000 shares of its common stock for $5,765, under a stock
repurchase program adopted in December 1996. The Company used its available
capital resources to fund the purchases under both repurchase programs. The
repurchased stock is being held by the Company as treasury stock and is
available to be used in meeting the Company's obligations under its present and
future stock option plans and for other corporate purposes. In May 1999, the
Company terminated the stock repurchase program adopted in September 1997.

Cash Equivalents

The Company considers all highly liquid investments, with a maturity of three
months or less when purchased, to be cash equivalents. Cash equivalents are
reflected at the lower of cost or market.

Marketable Securities

Marketable securities at June 25, 1999, consisted of municipal bonds and equity
securities. The Company follows the provisions of Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" (Statement 115), in accounting for marketable securities.
Under Statement 115, the Company classifies all of its marketable securities as
available-for-sale and records them at fair value. Unrealized holding gains and
losses are excluded from income and are recorded directly to shareholders'
equity in accumulated other comprehensive income, net of related deferred
income taxes.

Net income (loss) per share

Statement of Financial Accounting Standards No. 128, "Earnings Per Share"
(Statement 128), became effective for financial statements issued for periods
ending after December 15, 1997. The Company adopted this statement in the
second quarter of fiscal year 1998, and has restated prior periods presented as
required. Implementation of this Statement did not have a material effect on
the Company's consolidated financial statements.

F-9
<PAGE>

C-COR.net Corp. (as restated to reflect pooling-of-interest combinations with

Convergence.com Corporation and Silicon Valley Communications, Inc., with

respect to periods prior to the thirteen-week period ended September 24, 1999.)

Notes to Consolidated Financial Statements--(Continued)

(Information as of September 24, 1999 and September 25, 1998 and for the
thirteen weeks

ended September 24, 1999 and September 25, 1998 is unaudited)

Basic earnings (loss) per share are computed based on the weighted average
number of common shares outstanding, excluding any dilutive options and awards.
Dilutive net income (loss) per share is computed based on the weighted average
number of common shares outstanding plus the dilutive effect of options. The
dilutive effect of options is calculated under the treasury stock method using
the average market price for the period. Net income (loss) per share is
calculated as follows:

<TABLE>
<CAPTION>
Thirteen Weeks Ended Years Ended
------------------------------------------------
June
Sept 24, Sept 25, June 25, 26, June 27,
1999 1998 1999 1998 1997
--------- -------------------- ------- --------
<S> <C> <C> <C> <C> <C>
Income (loss) from
continuing operations.. $ 19 $ (1,116) $ (683) $ 918 $ 898
Gain (loss) from
discontinued
operations............. 36 288 397 928 (10,435)
--------- ---------- ------- ------- --------
Net income (loss)....... $ 55 $ (828) $ (286) $ 1,846 $ (9,537)
========= ========== ======= ======= ========
Basic shares
outstanding............ 12,224 12,124 12,098 11,895 12,143
Common stock
equivalents............ 1,042 -- -- 445 259
--------- ---------- ------- ------- --------
Dilutive potential
common shares.......... 13,266 12,124 12,098 12,340 12,402
========= ========== ======= ======= ========
Net income (loss) per
share--(basic)
Continuing operations.. $ 0.00 $ (0.09) $ (0.06) $ 0.08 $ 0.07
Discontinued
operations............ 0.00 0.02 0.04 0.08 (0.86)
--------- ---------- ------- ------- --------
Net income (loss)....... $ 0.00 $ (0.07) $ (0.02) $ 0.16 $ (0.79)
========= ========== ======= ======= ========
Net income (loss) per
share--(diluted)
Continuing operations.. $ 0.00 $ (0.09) $ (0.06) $ 0.07 $ 0.07
Discontinued
operations............ 0.00 0.02 0.04 0.08 (0.84)
--------- ---------- ------- ------- --------
Net income (loss)....... $ 0.00 $ (0.07) $ (0.02) $ 0.15 $ (0.77)
========= ========== ======= ======= ========
</TABLE>

Product Warranty

The Company warrants its products against defects in materials and workmanship,
generally for three to five years depending upon product lines. A provision for
estimated future costs relating to warranty expense is recorded when product is
shipped, based upon historical claims history and specifically identified
warranty exposures.

Restructuring Costs

On June 25, 1998, the Company announced the closing of its manufacturing plant
located in Reedsville, Pennsylvania. As a result of this action, the Company
incurred restructuring charges in the fourth quarter of its fiscal year 1998 of
$625. The restructuring charge represented salaries and benefits for
approximately 143 employees affected by the plant closing. The work force
reduction occurred during the first quarter of fiscal year 1999, thereby
eliminating the restructuring accrual at June 25, 1999.

At June 26, 1998, the Company had a Lease/Option to Purchase Agreement with the
Mifflin County Industrial Development Corporation (MCIDC) for the building and
improvements located in Reedsville, Pennsylvania. On August 10, 1998, the
Company purchased the facility using its available capital resources and
expects to sell the facility at a price in excess of its net carrying value.
The facility has been reclassified from property, plant and equipment to
property held-for-sale, which is included in other current assets on the
consolidated balance sheet as of June 25, 1999, with a carrying value of
$1,281.

F-10
<PAGE>

C-COR.net Corp. (as restated to reflect pooling-of-interest combinations with

Convergence.com Corporation and Silicon Valley Communications, Inc., with

respect to periods prior to the thirteen-week period ended September 24, 1999.)

Notes to Consolidated Financial Statements--(Continued)

(Information as of September 24, 1999 and September 25, 1998 and for the
thirteen weeks

ended September 24, 1999 and September 25, 1998 is unaudited)

Comprehensive Income

In fiscal year 1999, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" (Statement 130), which
requires net unrealized investment gains or losses on the Company's available-
for-sale securities and net foreign exchange gains or losses on translation,
which previously were reported directly in shareholders' equity, to be included
in accumulated other comprehensive income in the consolidated balance sheet and
in the disclosure of comprehensive income. The totals of other comprehensive
income items and comprehensive income (which includes net income) are displayed
separately in the consolidated statements of shareholders' equity. The adoption
of this statement had no effect on net income or shareholders' equity.

The components of other comprehensive income (loss) and the related tax effects
are as follows:

<TABLE>
<CAPTION>
Income
Amount Tax Amount
Before Expense Net of
Tax (Benefit) Taxes
------ --------- ------
<S> <C> <C> <C>
Thirteen weeks ended Sept. 24, 1999
Unrealized holding loss during the period.......... $ (6) $ (2) $ (4)
----- ---- ----
Total other comprehensive loss..................... $ (6) $ (2) $ (4)
===== ==== ====
Thirteen weeks ended Sept. 25, 1998
Net foreign exchange gain.......................... $ 40 $ 16 $ 24
----- ---- ----
Total other comprehensive income................... $ 40 $ 16 $ 24
===== ==== ====
Fiscal year ended June 25, 1999
Unrealized holding gain during the fiscal year..... $ 7 $ 3 $ 4
Net foreign exchange loss.......................... (2) (1) (1)
----- ---- ----
Total other comprehensive income................... $ 5 $ 2 $ 3
===== ==== ====
Fiscal year ended June 26, 1998
Unrealized holding gain during the fiscal year..... $ 12 $ 5 $ 7
Net foreign exchange gain.......................... 15 6 9
----- ---- ----
Total other comprehensive income................... $ 27 $ 11 $ 16
===== ==== ====
Fiscal year ended June 27, 1997
Unrealized holding gain during the fiscal year..... $ 12 $ 5 $ 7
Net foreign exchange loss.......................... (112) (45) (67)
----- ---- ----
Total other comprehensive income (loss)............ $(100) $(40) $(60)
===== ==== ====
</TABLE>

Accounting and Disclosure Changes

In June 1998, the FASB issued Statement of Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging Activities" (Statement
133), which was effective for fiscal years beginning after June 15, 1999. In
July 1999, the FASB announced it was delaying the effective date of Statement
133 for one year, to fiscal years beginning after June 15, 2000. This statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. The Company anticipates adopting this Statement in its
fiscal year 2001 consolidated financial statements as required. Implementation
of this Statement is not expected to have a material effect on the Company's
consolidated financial statements.

F-11
<PAGE>

C-COR.net Corp. (as restated to reflect pooling-of-interest combinations with

Convergence.com Corporation and Silicon Valley Communications, Inc., with

respect to periods prior to the thirteen-week period ended September 24, 1999.)

Notes to Consolidated Financial Statements--(Continued)

(Information as of September 24, 1999 and September 25, 1998 and for the
thirteen weeks

ended September 24, 1999 and September 25, 1998 is unaudited)

B. Discontinued Operations

On July 10, 1997, the Company announced that it would discontinue its Digital
Fiber Optics Transmission Products segment located in Fremont, California, in a
nine-month wind-down process. An estimated loss on disposal, including write-
offs of inventory and fixed assets and other costs from the measurement to the
disposal date, were recorded in fiscal year 1997. The estimated loss, net of
tax benefit of $1,974 on the disposal of the discontinued business segment, was
$3,830 in fiscal year 1997.

The Company completed the phase-down of this operation as of March 1998. A gain
on disposal of the discontinued business segment of $397, net of tax expense of
$477, was recorded during the fiscal year ended 1999. The gain in fiscal year
1999 resulted primarily from settlement of certain warranty claims. The Company
recorded a gain of $928, which includes a net tax benefit of $94 on the
disposal of the discontinued segment in fiscal year 1998. In fiscal year 1998,
the gain derived primarily from higher than anticipated proceeds associated
with the disposal of assets, primarily inventory, and lower than anticipated
operating costs from the measurement date to the disposal date.

The after-tax loss from operations of the discontinued business segment was
$6,605 for fiscal year 1997. The primary factors contributing to the loss from
operations of the discontinued business segment in fiscal year 1997 were
increased warranty costs of $3,300 and an impairment loss on goodwill of $571,
recorded in the fourth quarter of fiscal year 1997.

Operating results for the discontinued business segment are segregated and
reported as discontinued operations in the accompanying consolidated statements
of operations. Summarized information relating to the discontinued operation
for fiscal year 1997 is as follows:

<TABLE>
<CAPTION>
June 27,
1997
--------
<S> <C>
Net sales......................................................... $ 7,994
Costs and expenses................................................ (17,351)
--------
Loss before income taxes.......................................... (9,357)
Income tax benefit................................................ 2,752
--------
Net loss.......................................................... $ (6,605)
========
</TABLE>

F-12
<PAGE>

C-COR.net Corp. (as restated to reflect pooling-of-interest combinations with

Convergence.com Corporation and Silicon Valley Communications, Inc., with

respect to periods prior to the thirteen-week period ended September 24, 1999.)

Notes to Consolidated Financial Statements--(Continued)

(Information as of September 24, 1999 and September 25, 1998 and for the
thirteen weeks

ended September 24, 1999 and September 25, 1998 is unaudited)

The assets and liabilities of the discontinued operations have been
reclassified in the accompanying consolidated financial statements to
separately identify them as net current assets (liabilities) related to the
discontinued operations. These net assets consist of net working capital and
other assets, less related liabilities as follows as of June 25, 1999, and June
26, 1998:

<TABLE>
<CAPTION>
June 25, June 26,
1999 1998
-------- --------
<S> <C> <C>
Current assets:
Accounts receivable.................................... $ 16 $ 150
Notes receivable....................................... 796 981
Deferred tax assets.................................... 474 1,602
Other assets........................................... -- 156
----- ------
1,286 2,889
----- ------
Current liabilities:
Accrued warranty and other............................. (728) (2,806)
Allowance for disposal of discontinued operations...... (125) (600)
----- ------
(853) (3,406)
----- ------
Net current assets (liabilities) of discontinued
operations.............................................. $ 433 $ (517)
===== ======
</TABLE>

C. Marketable Securities

Marketable securities as of June 25, 1999, and June 26, 1998, consisted of the
following:

<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized
Amortized Holding Holding Fair
Cost Gains Losses Value
--------- ---------- ---------- -----
<S> <C> <C> <C> <C>
June 25, 1999:
Available-for-sale:
Municipal bonds....................... $351 $ -- $ (9) $342
Equity securities..................... 101 2 -- 103
---- ----- ----- ----
$452 $ 2 $ (9) $445
==== ===== ===== ====
June 26, 1998:
Available-for-sale:
Municipal bonds....................... $366 $ -- $ (12) $354
Equity securities..................... 2 -- -- 2
---- ----- ----- ----
$368 $ -- $ (12) $356
==== ===== ===== ====
</TABLE>

Maturities of investment securities classified as available-for-sale at June
25, 1999, were as follows:

<TABLE>
<CAPTION>
Amortized Fair
Cost Value
--------- -----
<S> <C> <C>
Available-for-sale:
Due after one year through five years....................... $351 $342
Equity securities........................................... 101 103
---- ----
$452 $445
==== ====
</TABLE>

F-13
<PAGE>

C-COR.net Corp. (as restated to reflect pooling-of-interest combinations with

Convergence.com Corporation and Silicon Valley Communications, Inc., with

respect to periods prior to the thirteen-week period ended September 24, 1999.)

Notes to Consolidated Financial Statements--(Continued)

(Information as of September 24, 1999 and September 25, 1998 and for the
thirteen weeks

ended September 24, 1999 and September 25, 1998 is unaudited)

D. Inventories

<TABLE>
<CAPTION>
Sept
24, June 25, June 26,
1999 1999 1998
------- -------- --------
<S> <C> <C> <C>
Finished goods..................................... $ 4,928 $ 3,287 $ 2,850
Work-in-process.................................... 5,338 3,038 1,874
Raw materials...................................... 17,665 17,240 13,085
------- ------- -------
$27,931 $23,565 $17,809
======= ======= =======
</TABLE>

Included in the amounts above were reserves of $4,034 at September 24, 1999,
$2,231 at June 25, 1999, and $3,213 at June 26, 1998.

E. Property, Plant and Equipment

<TABLE>
<CAPTION>
June 25, June 26,
1999 1998
-------- --------
<S> <C> <C>
Land....................................................... $ 468 $ 468
Building and improvements under capital lease.............. -- 1,727
Buildings.................................................. 10,760 10,683
Machinery and equipment under capital lease................ 343 217
Machinery and equipment.................................... 50,874 44,393
Leasehold improvements..................................... 1,326 1,123
------- -------
63,771 58,611
Less accumulated depreciation and amortization............. 35,979 28,758
------- -------
$27,792 $29,853
======= =======
</TABLE>

F. Intangible Assets

<TABLE>
<CAPTION>
June 25, June 26,
1999 1998
-------- --------
<S> <C> <C>
Cost of intangibles:
Patents and trademarks................................... $1,045 $1,045
Licensing costs.......................................... 258 250
------ ------
1,303 1,295
------ ------
Less accumulated amortization:
Patents and trademarks................................... $ (116) $ --
Licensing costs.......................................... (56) --
------ ------
(172) --
------ ------
Net book value............................................. $1,131 $1,295
====== ======
</TABLE>

F-14
<PAGE>

C-COR.net Corp. (as restated to reflect pooling-of-interest combinations with

Convergence.com Corporation and Silicon Valley Communications, Inc., with

respect to periods prior to the thirteen-week period ended September 24, 1999.)

Notes to Consolidated Financial Statements--(Continued)

(Information as of September 24, 1999 and September 25, 1998 and for the
thirteen weeks

ended September 24, 1999 and September 25, 1998 is unaudited)

G. Credit Facilities

The Company has a line-of-credit with a bank, whereby the Company may borrow
the lesser of $25,000, net of outstanding letters of credit up to a $2,000 sub-
limit, or a percentage of eligible accounts receivable and inventory. The
borrowings bear interest at various rates generally equal to the London
Interbank Offered Rate (LIBOR) plus 1.00% and require compliance with certain
covenants. Interest is payable in 30 days as billed. The line-of-credit
agreement is committed through December 31, 1999. Accounts receivable and
inventory collateralize the borrowings. At June 25, 1999, and June 26, 1998,
the Company had no short-term borrowings outstanding on this revolving line-of-
credit. Based upon the Company's analysis of eligible accounts receivable and
inventory, approximately $23,300 was available to borrow as of June 25, 1999.
On August 9, 1999, the Company replaced this revolving line-of-credit agreement
with a new credit agreement (Reference Note T).

As a result of the Company's merger with SVCI, the Company has an additional
line of credit with a bank, which provided for borrowings of up to $3,000, a
bank bridge loan, which provided for borrowings of up to $1,000, and a bank
equipment term loan of $300. The line of credit and term loan bear annual
interest at the bank's prime rate plus 0.50% (8.25% as of June 25, 1999), with
maturity dates of June 30, 1999, and August 30, 2000, respectively. The bridge
loan bears interest at the bank's prime rate plus 1.5% (9.25% as of June 25,
1999), with a maturity date of September 4, 1999. The outstanding balances on
the line of credit, bridge loan, and the term loan are $2,515, $500, and $188,
respectively, as of June 25, 1999. The line of credit and loans are fully
collateralized by a continuing security interest in substantially all assets
presently owned or subsequently acquired by SVCI. The line of credit and loans
contain certain restrictive financial covenants. As of June 25, 1999, the SVCI
was not in compliance with certain of the covenants. The bank agreed to defer
action on the noncompliance event pending the signing of a merger agreement. A
merger agreement was signed with the Company on July 13, 1999.

From March to May 1999, the Company borrowed $1,817 from certain founders and
shareholders of SVCI under promissory notes payable. As of June 25, 1999, the
balance was $1,435. The notes bear interest at an annual rate of 9% and are due
in July 1999. In connection with these notes, the Company issued warrants to
purchase the Company's common stock (See Note J).

In connection with the bridge loan, warrants to purchase 4,727 shares of the
Company's common stock were issued at an exercise price of $42.31 per share.
These warrants have a fair value of $41 and are being amortized over the life
of the bridge loan.

In fiscal year 1998, in connection with the line of credit and term loan,
warrants to purchase 3,025 shares of the Company's common stock were issued at
an exercise price of $74.05 per share. The purchase rights represented by these
warrants expire on January 4, 2002. The warrants have a fair value of $13 and
are being amortized over the life of the related debt instruments.

On October 21, 1998, a then existing bank line of credit and term loan was
restructured. In consideration for the restructuring, warrants to purchase 945
shares of the Company's common stock were issued at an exercise price of $74.05
per share. The warrants are exercisable upon issuance and expire on January 4,
2002. The warrants have a fair value of $4 and are being amortized over the
life of the related debt instruments.

F-15
<PAGE>

C-COR.net Corp. (as restated to reflect pooling-of-interest combinations with

Convergence.com Corporation and Silicon Valley Communications, Inc., with

respect to periods prior to the thirteen-week period ended September 24, 1999.)

Notes to Consolidated Financial Statements--(Continued)

(Information as of September 24, 1999 and September 25, 1998 and for the
thirteen weeks

ended September 24, 1999 and September 25, 1998 is unaudited)

H. Long-term Debt

<TABLE>
<CAPTION>
June 25, June 26,
1999 1998
-------- --------
<S> <C> <C>
Notes payable.............................................. $4,392 $4,909
Capital lease obligations.................................. 148 1,584
------ ------
4,540 6,493
Less current portion....................................... 832 926
------ ------
$3,708 $5,567
====== ======
</TABLE>

Notes Payable: The Company obtained funding through the Pennsylvania Industrial
Development Authority (PIDA) of $539 for construction of the Tipton,
Pennsylvania, manufacturing facility. The PIDA borrowing has an interest rate
of 3%, which is contingent upon meeting certain job creation commitments.
Monthly payments of principal and interest of $4 are required through 2006.
Certain property, plant and equipment collateralize the borrowing. The
principal balance at June 25, 1999, was $264.

The Company obtained funding through the Pennsylvania Industrial Development
Authority (PIDA) of $1,952 for 40% of the cost of building expansion at its
manufacturing facility in State College, Pennsylvania. The PIDA borrowing has
an interest rate of 2%, which is contingent upon meeting certain job creation
commitments. Monthly payments of principal and interest of $13 are required
through 2010. Certain property, plant and equipment collateralize the
borrowing. The principal balance at June 25, 1999, was $1,528.

On October 19, 1998, the Company borrowed $3,000 under a term loan facility
with a bank. The term loan requires monthly principal payments of $50, plus
interest based on a one-to-three month variable rate at LIBOR plus 1.15%,
through 2003. The Company is using a derivative financial instrument to reduce
its exposure to market risk resulting from interest rates. On October 20, 1998,
the Company entered into an interest rate swap agreement that fixes the
interest rate at 6.14% on the notional amount of floating rate debt through
October 21, 2003. The financial institution, as counterparty to the agreement,
will pay the Company a floating interest rate based on a one-month LIBOR rate
during the term of the agreement in exchange for the Company paying the fixed
interest rate. Interest payments are made monthly. The Company is at risk of
loss from this swap agreement in the event of nonperformance by the
counterparty. The Company believes this risk to be minimal. The principal
balance under this term loan at June 25, 1999, was $2,600.

On August 20, 1998, the Company paid off the remaining balances of two loans
obtained from the Pennsylvania Sunny Day Fund. The original principal balance
of the loans totaled $4,500, which funded the expansion and renovation of the
Company's State College facility. The two notes evidencing the funding had an
interest rate of 2%, which was contingent upon meeting certain job creation
commitments. The first note was for $488 with an original maturity of 15 years,
and the second was for $4,012 with an original maturity of 7 years. Monthly
payments of principal and interest of $3 and $51, respectively, were required
on these notes through the years 2010 and 2002, respectively. Certain equipment
collateralized the borrowing. The loan balances were paid off in order to
eliminate certain restrictive covenants associated with the loan agreements.
The principal balances of the two loans paid off were $409 and $2,506,
respectively.

Capital Lease Obligations: As a result of the Company's decision on June 25,
1998, to close its manufacturing facility located in Reedsville, Pennsylvania,
the Company executed its option to purchase the building and improvements for
approximately $1,454, plus closing costs, under the Lease/Option to Purchase
Agreement it had with the MCIDC on August 10, 1998. The Company was the
guarantor of several borrowing

F-16
<PAGE>

C-COR.net Corp. (as restated to reflect pooling-of-interest combinations with

Convergence.com Corporation and Silicon Valley Communications, Inc., with

respect to periods prior to the thirteen-week period ended September 24, 1999.)

Notes to Consolidated Financial Statements--(Continued)

(Information as of September 24, 1999 and September 25, 1998 and for the
thirteen weeks

ended September 24, 1999 and September 25, 1998 is unaudited)

commitments by the MCIDC for financing the $1,727 cost of the project. The
lease called for a monthly payment of $14, which was equal to the monthly
principal and interest of the various borrowing commitments by the MCIDC
through 2010. The original term of the lease was for 15 years with the option
to purchase the leased premises at any time during the lease term for the
outstanding balance of the borrowing commitments plus closing costs. The
borrowing commitments carried a weighted-average interest rate of 4.7%. For
financial accounting purposes, the lease was accounted for during fiscal year
1998 as a capital lease and, accordingly, an asset and liability were recorded.
As of June 25, 1999, the building and improvements were reclassified as
property held-for-sale, as part of other current assets in the consolidated
balance sheet.

As a result of the mergers with Convergence and SVCI, the Company acquired
various capital leases for machinery and equipment, office equipment and
furniture and fixtures that expire through 2003.

Long-term debt at June 25, 1999, had scheduled maturities as follows:

<TABLE>
<S> <C>
Fiscal year ending:
2000................................................................ $ 832
2001................................................................ 788
2002................................................................ 796
2003................................................................ 789
2004................................................................ 173
Thereafter.......................................................... 1,162
------
$4,540
======
</TABLE>

At June 25, 1999, the future minimum payments required under capital lease
arrangements are as follows:

<TABLE>
<S> <C>
Fiscal year ending:
2000................................................................. $ 91
2001................................................................. 36
2002................................................................. 36
2003................................................................. 22
----
$185
Less amount representing interest...................................... 37
----
Present value of future minimum lease payments......................... 148
Less current portion of obligation under capital leases................ 73
----
Long-term obligations under capital lease.............................. $ 75
====
</TABLE>

Total interest paid on the short-term credit facilities (Reference Note G) and
long-term debt was $387, $372 and $341 for fiscal years ended 1999, 1998 and
1997, respectively.

F-17
<PAGE>

C-COR.net Corp. (as restated to reflect pooling-of-interest combinations with

Convergence.com Corporation and Silicon Valley Communications, Inc., with

respect to periods prior to the thirteen-week period ended September 24, 1999.)

Notes to Consolidated Financial Statements--(Continued)

(Information as of September 24, 1999 and September 25, 1998 and for the
thirteen weeks

ended September 24, 1999 and September 25, 1998 is unaudited)

Operating Leases: The Company leases real property and other equipment under
operating leases. Certain leases are renewable and provide for the payment of
real estate taxes and other occupancy expenses. At June 25, 1999, the future
minimum lease payments for noncancelable leases with remaining lease terms in
excess of one year were as follows:

<TABLE>
<S> <C>
Fiscal year ending:
2000................................................................ $2,096
2001................................................................ 2,123
2002................................................................ 2,090
2003................................................................ 861
2004................................................................ 572
Thereafter.......................................................... 1,129
------
$8,871
======
</TABLE>

Rent expense relating to continuing operations was $2,132, $1,226 and $866 for
fiscal years ended 1999, 1998 and 1997, respectively.

I. Stock Award Plans

In October 1998, the Company adopted a Stock Incentive Plan ("1998 Incentive
Plan"), which provides for several types of equity-based incentive compensation
awards. Awards, when made, may be in the form of stock options, restricted
shares, performance shares and performance units. Stock options granted to
employees and directors are at a price not less than 100% of the fair market
value of such shares on the date of grant. Stock options granted to certain
employees begin vesting in cumulative annual installments of 25% per year
beginning one year after the date of grant. Options granted to non-employee
directors are exercisable one year after grant. During fiscal year 1999, 2,000
restricted shares and 11,000 performance shares were awarded under the 1998
Incentive Plan. The restricted shares had an aggregate value of $22, which is
being amortized over a vesting period through June 2001. The performance shares
represent a right to receive common stock of the Company based upon achievement
of certain performance criteria over a performance period through June 2000.
Compensation expense related to the performance shares is based on current
market price of the Company's common stock at the time the performance criteria
is satisfied.

The Company's previous stock option plans provided for the grant of options to
employees with an exercise price per share of at least the fair market value of
such shares on the date prior to grant, and to directors with an exercise price
equal to the fair market value on the date of grant. Stock options granted to
certain employees vest in cumulative annual installments of either 20% or 25%
per year beginning one year after the date of grant. Options granted to non-
employee directors were exercisable one year after grant. Certain options held
by the Chairman were exercisable immediately.

In connection with the merger with SVCI, outstanding incentive and nonqualified
stock options to acquire SVCI common stock were converted into stock options to
acquire the Company's common stock at a conversion ratio of .094534 (with
appropriate adjustment to the exercise price). Incentive stock options
generally vest over 4 or 5 years, with 25% or 20% vesting after one year and
the remainder monthly thereafter, and expire 10 years from the date of grant.
Nonqualified options are generally fully vested upon issuance and expire 10
years from date of grant.

F-18
<PAGE>

C-COR.net Corp. (as restated to reflect pooling-of-interest combinations with

Convergence.com Corporation and Silicon Valley Communications, Inc., with

respect to periods prior to the thirteen-week period ended September 24, 1999.)

Notes to Consolidated Financial Statements--(Continued)

(Information as of September 24, 1999 and September 25, 1998 and for the
thirteen weeks

ended September 24, 1999 and September 25, 1998 is unaudited)

The Company adopted the disclosure requirements of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" (Statement 123).
As allowed by Statement 123, the Company has chosen to continue to account for
stock based compensation using Accounting Principles Board Opinion No 25,
"Accounting for Stock Issued to Employees," and related interpretations.
Accordingly, compensation cost for stock options is measured as the excess, if
any, of the quoted market price of the Company's stock at the grant date over
the amount an employee must pay to acquire the stock. Accordingly, no
compensation cost has been recognized. Had compensation cost for the Company's
plans been determined under Statement 123, the Company's net income (loss) and
net income (loss) per share would have been adjusted to the pro forma amounts
indicated below:

<TABLE>
<CAPTION>
Years Ended
---------------------------
June 25, June 26, June 27,
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Net income (loss):
As reported.................................. $ (286) $1,846 $(9,537)
Pro forma.................................... $(3,392) $ 381 $(9,789)
Net income (loss) per share:
Basic
As reported................................ $ (0.02) $ 0.16 $ (0.79)
Pro forma.................................. $ (0.28) $ 0.03 $ (0.81)
Diluted
As reported................................ $ (0.02) $ 0.15 $ (0.77)
Pro forma.................................. $ (0.28) $ 0.03 $ (0.79)
</TABLE>

The per share weighted-average fair values of stock options granted during
fiscal years 1999, 1998 and 1997, were $16.49, $10.92 and $4.36, respectively,
on the date of grant using the Black-Scholes option-pricing model with the
following weighed-average assumptions:

Fiscal year 1999-expected dividend yield 0%, risk-free interest rate of 5.0 %,
a volatility factor of the expected market price of the Company's common stock
of .7395, and a weighted-average expected life of approximately 4 years.

Fiscal year 1998-expected dividend yield 0%, risk-free interest rate of 5.72%,
a volatility factor of the expected market price of the Company's common stock
of .4913, and a weighted-average expected life of approximately 4 years.

Fiscal year 1997-expected dividend yield 0%, risk-free interest rate of 6.38%,
a volatility factor of the expected market price of the Company's common stock
of .5941, and a weighted-average expected life of approximately 4 years.

The fair value of stock options included in the pro forma amounts for fiscal
years 1999, 1998 and 1997 is not necessarily indicative of future effects on
net income and net income per share.

F-19
<PAGE>

C-COR.net Corp. (as restated to reflect pooling-of-interest combinations with

Convergence.com Corporation and Silicon Valley Communications, Inc., with

respect to periods prior to the thirteen-week period ended September 24, 1999.)

Notes to Consolidated Financial Statements--(Continued)

(Information as of September 24, 1999 and September 25, 1998 and for the
thirteen weeks

ended September 24, 1999 and September 25, 1998 is unaudited)

A summary of the status of the Company's stock option plans, as of June 25,
1999, June 26, 1998, and June 27, 1997, and changes during the years ended on
those dates is presented below:

<TABLE>
<CAPTION>
Years Ended
----------------------------------------------------------------------------
June 25, 1999 June 26, 1998 June 27, 1997
------------------------- ------------------------- ------------------------
Weighted- Weighted- Weighted-
Average Average Average
Shares Exercise Price Shares Exercise Price Shares Exercise Price
--------- -------------- --------- -------------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning
of year................ 1,565,166 $12.61 804,624 $13.74 873,048 $13.42
Granted................. 819,778 $18.40 1,031,168 $10.83 118,000 $14.99
Exercised............... (128,219) $ 9.54 (45,879) $ 6.13 (44,893) $ 5.08
Canceled................ (169,676) $ 7.52 (224,747) $ 9.42 (141,531) $15.59
--------- --------- --------
Outstanding at end of
year................... 2,087,049 $15.48 1,565,166 $12.67 804,624 $13.74
========= ========= ========
Options exercisable at
end of year............ 646,197 498,658 451,147
</TABLE>

The following table summarizes information about the Company's stock option
plans as of June 25, 1999:

<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------------------- --------------------------
Number Weighted-Avg. Number
Range of Outstanding Remaining Weighted-Avg. Exercisable Weighted-Avg.
Exercise Prices at 6/25/99 Contractual Life Exercise Price at 6/25/99 Exercise Price
- --------------- ----------- ---------------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$ 0.11 to $ 8.38....... 329,068 6.0 years $ 4.71 223,041 $ 5.95
$ 8.50 to $14.13....... 386,209 6.2 years $10.60 102,802 $10.86
$14.375 to $19.75....... 587,699 7.0 years $15.23 156,187 $15.00
$20.12 to $25.50....... 712,363 7.7 years $21.89 112,299 $21.89
$25.75 to $31.25....... 71,710 6.1 years $27.31 51,868 $27.32
--------- --------- ------ ------- ------
2,087,049 6.9 years $15.48 646,197 $13.40
========= ========= ====== ======= ======
</TABLE>

J. Warrants

As a result of the consummated mergers with Convergence and SVCI, warrants to
acquire Convergence and SVCI common stock were converted into warrants to
acquire common stock of the Company. These warrants have been issued in
connection with various financing and employment arrangements.

The following table summarizes information about warrants issued and
outstanding as of June 25, 1999:

<TABLE>
<CAPTION>
Warrants issued in connection
with:
Fiscal Year ------------------------------
Warrants Issued Range of Warrants Debt Equity Employment
Issued as of 6/25/99 Exercise Prices Expire Financing Financing Services
------ --------------- ---------------- ----------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Fiscal Year 1997........ 132,348 $21.16 2001 132,348
Fiscal Year 1998........ 3,025 $74.05 2002 3,025
300,000 $10.00 2005 300,000
Fiscal Year 1999........ 114,386 $31.73 to $74.05 2002 114,386
66,930 $ 0.75 to $10.00 2003 66,930
------- ------- ------- ------
616,689 117,411 432,348 66,930
======= ======= ======= ======
</TABLE>

F-20
<PAGE>

C-COR.net Corp. (as restated to reflect pooling-of-interest combinations with

Convergence.com Corporation and Silicon Valley Communications, Inc., with

respect to periods prior to the thirteen-week period ended September 24, 1999.)

Notes to Consolidated Financial Statements--(Continued)

(Information as of September 24, 1999 and September 25, 1998 and for the
thirteen weeks

ended September 24, 1999 and September 25, 1998 is unaudited)

The fair value of the warrants issued in fiscal years 1998 and 1999, in
connection with debt financing transactions, were calculated by the Company
using the Black-Scholes pricing model. In fiscal year 1999, warrants to
purchase 114,386 shares of the Company's stock, in connection with these debt
financing arrangements, had a fair value of $1,293 which is being amortized
over the life of the related loans. Amortization in fiscal year 1999 totaled
$911, which is included in interest expense in the accompanying statement of
operations. In fiscal year 1998, in connection with these debt financing
arrangements, the Company had calculated the estimated fair value of warrants
issued and determined that the amount was not significant to the accompanying
financial statements taken as a whole, and as such, no amortization expense has
been included. No separate fair values were calculated in connection with the
432,348 warrants in fiscal years 1997 and 1998, as these were issued in
connection with an equity financing transaction. Also in fiscal year 1999, the
Company recognized compensation expense of $248 in connection with the issuance
of warrants to an employee, as the exercise price was less than the fair value
of the stock on the date of grant.

K. Income Taxes

Total income tax expense (benefit) was allocated as follows:

<TABLE>
<CAPTION>
Years Ended
--------------------------
June 25, June 26, June 27,
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Income from continuing operations............... $4,835 $382 $ 651
Results of discontinued operations.............. -- -- (2,752)
Gain (loss) on disposal of discontinued
operation...................................... 477 (94) (1,974)
Stockholders' equity, for tax benefit derived
from exercise and sale of stock option shares.. (94) (57) (71)
------ ---- -------
$5,218 $231 $(4,146)
====== ==== =======
</TABLE>

Income tax expense (benefit) attributable to continuing operations consisted of
the following components:

<TABLE>
<CAPTION>
Years Ended
----------------------------
June 25, June 26, June 27,
1999 1998 1997
-------- --------- --------
<S> <C> <C> <C>
Current:
Federal........................................ $ 6,459 $ 3,262 $1,493
State.......................................... 615 264 (96)
Foreign........................................ 59 39 (98)
------- ------- ------
7,133 3,565 1,299
------- ------- ------
Deferred:
Federal........................................ (1,910) (2,675) (531)
State.......................................... (388) (508) (117)
------- ------- ------
(2,298) (3,183) (648)
------- ------- ------
$ 4,835 $ 382 $ 651
======= ======= ======
</TABLE>

F-21
<PAGE>

C-COR.net Corp. (as restated to reflect pooling-of-interest combinations with

Convergence.com Corporation and Silicon Valley Communications, Inc., with

respect to periods prior to the thirteen-week period ended September 24, 1999.)

Notes to Consolidated Financial Statements--(Continued)

(Information as of September 24, 1999 and September 25, 1998 and for the
thirteen weeks

ended September 24, 1999 and September 25, 1998 is unaudited)

A reconciliation of the effective income tax rate from continuing operations
with the U.S. federal income tax rate of 35 percent applied to pretax income
from continuing operations was as follows:

<TABLE>
<CAPTION>
Years Ended
--------------------------
June 25, June 26, June 27,
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Statutory rate.................................. 35.0% 35.0% 35.0%
State income taxes, net of federal tax.......... (10.7) (26.5) (19.8)
Tax effect of foreign income and losses......... -- -- (10.3)
Tax effect of foreign sales corporation......... (0.4) (24.6) (42.7)
Loss of net operating loss attributable to S
corporation period............................. -- 1.6 3.6
Increase in the valuation allowance for deferred
tax assets..................................... 92.3 66.2 55.0
Permanent differences........................... 0.3 1.9 11.0
Other........................................... -- (24.2) 10.2
----- ----- -----
116.5% 29.4% 42.0%
===== ===== =====
</TABLE>

A tax benefit of $593, deriving from the Company's Foreign Sales Corporation
(FSC), was recorded in the third quarter of fiscal year 1997. The tax benefit
resulted from reassessment of the Company's foreign sales transactions for
fiscal years 1994, 1995 and 1996.

F-22
<PAGE>

C-COR.net Corp. (as restated to reflect pooling-of-interest combinations with

Convergence.com Corporation and Silicon Valley Communications, Inc., with

respect to periods prior to the thirteen-week period ended September 24, 1999.)

Notes to Consolidated Financial Statements--(Continued)

(Information as of September 24, 1999 and September 25, 1998 and for the
thirteen weeks

ended September 24, 1999 and September 25, 1998 is unaudited)

The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at June 25, 1999, and
June 26, 1998, relating to continuing operations are presented below:

<TABLE>
<CAPTION>
June 25, June 26,
1999 1998
-------- --------
<S> <C> <C>
Gross deferred tax assets:
Accounts receivable, principally due to allowance for
doubtful accounts..................................... $ 391 $ 255
Inventories, principally due to additional costs for
tax purposes.......................................... 220 168
Inventories, principally due to accrual for
obsolescence.......................................... 809 628
Compensated absence, principally due to accrual for
financial reporting purposes.......................... 837 483
Workers' compensation expense accrual for financial
reporting purposes.................................... 689 449
Warranty expense accrual for financial reporting
purposes.............................................. 650 583
Employee benefit plan accrual for financial reporting
purposes.............................................. 375 224
Deferred research and development for tax purposes..... 3,180 2,286
Net operating loss carryforwards....................... 8,676 4,647
Alternative minimum tax credit carryforwards........... 600 228
Other.................................................. 392 142
------- -------
Total gross deferred tax assets....................... 16,819 10,093
------- -------
Less valuation allowance................................ (7,433) (2,740)
------- -------
Net total deferred tax assets......................... 9,386 7,353
------- -------
Gross deferred tax liabilities
Plant and equipment, principally due to differences in
depreciation.......................................... (1,707) (1,850)
Other.................................................. (96) (218)
------- -------
Total gross deferred tax liabilities.................. (1,803) (2,068)
------- -------
Net deferred tax assets................................. $ 7,583 $ 5,285
------- -------
Reflected on attached consolidated balance sheets as:
Current deferred tax assets............................ $ 6,335 $ 2,797
Non-current deferred tax assets........................ 1,248 2,488
------- -------
Net deferred tax assets, pertaining to continuing
operations............................................. $ 7,583 $ 5,285
======= =======
</TABLE>

The valuation allowance for deferred tax assets as of the beginning of the
fiscal year was $2,740 and $1,957 in 1999 and 1998, respectively. The net
change in valuation allowance for the years ended June 25, 1999 and June 26,
1998 was an increase of $4,693 and $783, respectively. In assessing the
realizability of deferred tax assets, management considers whether it is more
likely than not that some portion or all of the deferred tax assets will not be
realized. The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during periods in which those temporary
differences become deductible. Management considers the scheduled reversal of
deferred tax liabilities, projected future taxable income and tax planning
strategies in making this assessment. In order to fully realize the net total
deferred tax assets, the Company will need to generate future taxable income
prior to the expiration of the net operating loss carryforwards which expire at
various years through 2019. Based upon the level of historical taxable income
and projections for future taxable income over the periods in which the
deferred tax assets are deductible, management believes it is more likely than
not the Company will realize the benefits of these deductible differences, net
of the valuation allowance at

F-23
<PAGE>

C-COR.net Corp. (as restated to reflect pooling-of-interest combinations with

Convergence.com Corporation and Silicon Valley Communications, Inc., with

respect to periods prior to the thirteen-week period ended September 24, 1999.)

Notes to Consolidated Financial Statements--(Continued)

(Information as of September 24, 1999 and September 25, 1998 and for the
thirteen weeks

ended September 24, 1999 and September 25, 1998 is unaudited)

June 25, 1999. The amount of the deferred tax asset considered realizable,
however, could be reduced in the near term if estimates of future taxable
income during the carryforward period are reduced.

Subsequently recognized tax benefits relating to the valuation allowance for
deferred tax assets as of June 25, 1999 will be allocated to income tax benefit
that would be reported in the consolidated statements of operations.

At June 25, 1999, the Company had a federal net operating loss carryforward of
approximately $20,850 and state net operating loss carryforwards of
approximately $26,650, which are available to offset future federal and state
taxable income, and expire at various dates through fiscal year 2019. In
addition, at June 25, 1999, the Company has research and development credit
carryovers for federal and state income tax purposes of approximately $400 and
$200, respectively. The federal credit carryforwards expire in the years 2010
and 2019, and the state carryforwards can be carried forward indefinitely.

The Company has not recognized a deferred tax liability for the basis
differences and the undistributed earnings related to its foreign subsidiaries
since the investment is essentially permanent in duration. Undistributed
earnings were approximately $720 at June 25, 1999.

Cash paid for income taxes was $2,897, $1,915, and $1,072 in fiscal years 1999,
1998, and 1997, respectively.

L. Retirement Plans

The Company has a retirement savings and profit sharing plan, which qualifies
under Section 401(k) of the Internal Revenue Code. Participation is available
to all employees meeting minimum service and age requirements.

The Company has a deferred compensation plan that does not qualify under
Section 401 of the Internal Revenue Code, which provides officers and key
executives with the opportunity to participate in an unqualified deferred
compensation plan. The total of net participant deferrals, which is reflected
in other long-term liabilities, was $464 and $382 at June 25, 1999, and June
26, 1998, respectively.

The Company also has a deferred retirement salary plan, which is limited to
certain officers. The Company has accrued the present value of the estimated
future retirement benefit payments over the periods from the date of the
agreements. The accrued balance of these plans, included in other long-term
liabilities, was $865 and $659 at June 25, 1999, and June 26, 1998,
respectively.

Total expenses for these plans were $1,158, $1,349 and $1,375 for fiscal years
ended 1999, 1998 and 1997, respectively.

F-24
<PAGE>

C-COR.net Corp. (as restated to reflect pooling-of-interest combinations with

Convergence.com Corporation and Silicon Valley Communications, Inc., with

respect to periods prior to the thirteen-week period ended September 24, 1999.)

Notes to Consolidated Financial Statements--(Continued)

(Information as of September 24, 1999 and September 25, 1998 and for the
thirteen weeks

ended September 24, 1999 and September 25, 1998 is unaudited)

M. Accrued Liabilities

<TABLE>
<CAPTION>
Sept
24, June 25, June 26,
1999 1999 1998
------- -------- --------
<S> <C> <C> <C>
Accrued incentive plan expense................... $ 987 $ 2,285 $ 1,716
Accrued vacation expense......................... 1,814 2,000 1,512
Accrued salary expense........................... 4,759 1,297 835
Accrued payroll and sales tax expense............ 1,024 1,519 917
Accrued sales commissions and rebates payable.... 547 951 789
Accrued warranty expense......................... 1,918 1,742 1,733
Accrued workers compensation self-insurance
expense......................................... 1,904 1,724 1,319
Accrued merger-related costs..................... 1,365 -- --
Accrued restructuring costs...................... -- -- 625
Accrued income tax payable....................... 3,119 3,304 473
Accrued other.................................... 1,783 1,420 912
------- ------- -------
$19,220 $16,242 $10,831
======= ======= =======
</TABLE>

N. Other Expense (Income)

<TABLE>
<CAPTION>
Years Ended
--------------------------
June 25, June 26, June 27,
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Investment income................................ $(259) $(392) $(721)
Loss (gain) on foreign currency transactions..... 4 164 (58)
Other, net....................................... 365 247 (82)
----- ----- -----
$ 110 $ 19 $(861)
===== ===== =====
</TABLE>

O. Concentration of Credit Risk

The Company's customers are primarily in the cable television CATV industry.
The Company performs periodic credit evaluations of its customers' financial
conditions and generally does not require collateral. At June 25, 1999 and June
26, 1998, accounts receivables from customers in the CATV industry were
approximately $31,240 and $19,705, respectively. Receivables are generally due
within 30 days. Credit losses are provided for in the consolidated financial
statements and have consistently been within management's expectations.

Sales to two customers were $47,700 (26%) and $31,304 (17%), respectively, in
fiscal year 1999. Sales to one customer were $47,098 (31%) in fiscal year 1998.
Sales to one customer were $48,026 (36%) in fiscal year 1997.

P. Commitments and Contingencies

The Company had an established letter of credit of $1,700 at June 25, 1999, for
its self-insured workers' compensation program.

F-25
<PAGE>

C-COR.net Corp. (as restated to reflect pooling-of-interest combinations with

Convergence.com Corporation and Silicon Valley Communications, Inc., with

respect to periods prior to the thirteen-week period ended September 24, 1999.)

Notes to Consolidated Financial Statements--(Continued)

(Information as of September 24, 1999 and September 25, 1998 and for the
thirteen weeks

ended September 24, 1999 and September 25, 1998 is unaudited)

Q. Quarterly Results of Operations (Unaudited)

<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter 1999
------- ------- ------- ----------- --------
<S> <C> <C> <C> <C> <C>
1999
Net sales..................... $34,654 $39,651 $47,291 $61,829 $183,425
Gross profit.................. 7,526 9,599 10,878 16,629 44,632
Income (loss) from continuing
operations................... (1,116) (992) 588 837 (683)
Discontinued operations....... 288 16 -- 93 397
------- ------- ------- ------- --------
Net income (loss)............. (828) (976) 588 930 (286)
======= ======= ======= ======= ========
Net income (loss) per share--
(basic):
Continuing operations....... $ (0.09) $ (0.08) $ 0.05 $ 0.07 $ (0.06)
Discontinued operations..... 0.02 -- -- 0.01 0.04
------- ------- ------- ------- --------
Net income (loss)............. $ (0.07) $ (0.08) $ 0.05 $ 0.08 $ (0.02)
======= ======= ======= ======= ========
Net income (loss) per share--
(diluted):
Continuing operations....... $ (0.09) $ (0.08) $ 0.05 $ 0.06 $ (0.06)
Discontinued operations..... 0.02 -- -- 0.01 0.04
------- ------- ------- ------- --------
Net income (loss)............. $ (0.07) $ (0.08) $ 0.05 $ 0.07 $ (0.02)
======= ======= ======= ======= ========
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter (1) 1998
------- ------- ------- ----------- --------
<S> <C> <C> <C> <C> <C>
1998
Net sales..................... $37,559 $37,758 $40,607 $38,117 $154,041
Gross profit.................. 8,334 7,957 8,318 7,446 32,055
Income (loss) from continuing
operations................... 1,175 672 847 (1,776) 918
Discontinued operations....... -- -- 363 565 928
------- ------- ------- ------- --------
Net income (loss)............. 1,175 672 1,210 (1,211) 1,846
======= ======= ======= ======= ========
Net income (loss) per share--
(basic):
Continuing operations....... $ 0.10 $ 0.06 $ 0.07 $ (0.15) $ 0.08
Discontinued operations..... -- -- 0.03 0.05 0.08
------- ------- ------- ------- --------
Net income (loss)............. $ 0.10 $ 0.06 $ 0.10 $ (0.10) $ 0.16
======= ======= ======= ======= ========
Net income (loss) per share--
(diluted):
Continuing operations....... $ 0.10 $ 0.06 $ 0.07 $ (0.14) $ 0.07
Discontinued operations..... -- -- 0.03 0.04 0.08
------- ------- ------- ------- --------
Net income (loss)............. $ 0.10 $ 0.06 $ 0.10 $ (0.10) $ 0.15
======= ======= ======= ======= ========
</TABLE>
- --------
(1) Results from continuing operations for the fourth quarter of fiscal year
1998 include a provision for restructuring costs of $625.

R. Litigation

As previously reported in the Company's Annual Report for the fiscal year ended
June 27, 1997, on or about March 31, 1995, certain shareholders of the Company
filed a complaint in the United States District Court for the Eastern District
of Pennsylvania against the Company and its Chief Executive Officer alleging
violations of Sections 10 (b) and 20 (a) of the Securities Exchange Act of 1934
and common law. On September 27, 1997, a tentative settlement was reached with
respect to this litigation and the settlement amount was recorded in the

F-26
<PAGE>

C-COR.net Corp. (as restated to reflect pooling-of-interest combinations with

Convergence.com Corporation and Silicon Valley Communications, Inc., with

respect to periods prior to the thirteen-week period ended September 24, 1999.)

Notes to Consolidated Financial Statements--(Continued)

(Information as of September 24, 1999 and September 25, 1998 and for the
thirteen weeks

ended September 24, 1999 and September 25, 1998 is unaudited)

financial statements during the first quarter of fiscal year 1998. On July 14,
1998, the United States District Court for the Eastern District of Pennsylvania
approved the settlement reached by the parties and dismissed the case with
prejudice.

S. Segment Information

The Company adopted the Statement of Financial Accounting Standards No. 131,
"Disclosures About Segments of an Enterprise and Related Information"
(Statement 131), in fiscal year 1999. For the thirteen-week period ended
September 24, 1999, the Company operated in two industry segments; the
Electronic Distribution Products segment, which provides HFC equipment for
signal distribution applications, primarily to the CATV market, and the
Broadband Management Services segment, which provides HFC technical services
and Internet enabling technical services and support to broadband operators in
the United States. For the thirteen-week period ended September 25, 1998, and
fiscal years 1999 and 1998, the Company also operated in two industry segments;
the Electronic Distribution Product segment during the thirteen-week period
ended September 25, 1998. The Company believes it is impracticable to disclose
the impact of this change on a restated segment basis for prior periods
presented and does not believe the change to be significant. In fiscal year
1997, the Company operated in three industry segments: the Electronic
Distribution Products segment, the Broadband Management Services discontinued
business segment and provided products for long-distance point-to-point video,
voice and data signal transmission applications primarily for telephony,
distance learning and other non-CATV markets. On July 10, 1997, the Company
announced the discontinuation of its Digital Fiber Optics Transmission Products
segment.

F-27
<PAGE>

C-COR.net Corp. (as restated to reflect pooling-of-interest combinations with

Convergence.com Corporation and Silicon Valley Communications, Inc., with

respect to periods prior to the thirteen-week period ended September 24, 1999.)

Notes to Consolidated Financial Statements--(Continued)

(Information as of September 24, 1999 and September 25, 1998 and for the
thirteen weeks

ended September 24, 1999 and September 25, 1998 is unaudited)

Information about industry segments for fiscal years 1999, 1998, and 1997 and
for the thirteen-week periods ended September 24, 1999 and September 25, 1998
is as follows:

<TABLE>
<CAPTION>
Discontinued
Continuing Operations Operations
----------------------- ------------
Digital
Electronic Broadband Fiber Optics
Distribution Management Transmission
Products Services Products Total
------------ ---------- ------------ --------
<S> <C> <C> <C> <C>
Thirteen-week period ended
September 24, 1999
Total revenue................ $ 60,461 $ 4,042 $ -- $ 64,503
Operating income (loss)...... 7,172 (1,231) -- 5,941
Interest income.............. -- -- -- 48
Interest expense............. -- -- -- 621
Income tax expense........... -- -- -- 1,321
Identifiable assets at
September 24, 1999.......... 100,674 8,226 1,154 110,054
Capital expenditures......... 2,683 507 -- 3,190
Depreciation and
amortization................ 1,976 188 -- 2,164
Thirteen-week period ended
September 25, 1998
Total revenue................ $ 33,758 $ 886 $ -- $ 34,654
Operating income (loss)...... (112) (506) -- (618)
Interest income.............. -- -- -- 48
Interest expense............. -- -- -- 57
Income tax expense........... -- -- -- 471
Identifiable assets at
September 25, 1998.......... 100,458 2,491 2,885 105,834
Capital expenditures......... 1,054 20 -- 1,074
Depreciation and
amortization................ 2,011 75 -- 2,086
Year ended June 25, 1999
Total revenue................ $176,790 $ 6,635 $ -- $183,425
Operating income (loss)...... 8,044 (2,508) -- 5,536
Interest income.............. 150 109 -- 259
Interest expense............. 1,376 8 -- 1,384
Income tax expense........... 4,835 -- 477 5,312
Identifiable assets at June
25, 1999.................... 101,105 1,844 1,286 104,235
Capital expenditures......... 6,828 1,331 -- 8,159
Depreciation and
amortization................ 9,407 364 -- 9,771
Year ended June 26, 1998
Total revenue................ $152,765 $ 1,276 $ -- $154,041
Operating income (loss)...... 3,259 (1,560) -- 1,699
Interest income.............. 369 23 -- 392
Interest expense............. 390 9 -- 399
Income tax expense
(benefit)................... 972 (590) (94) 288
Identifiable assets at June
26, 1998.................... 82,319 1,755 2,889 86,963
Capital expenditures......... 9,287 766 -- 10,053
Depreciation and
amortization................ 6,792 175 -- 6,967
Year ended June 27, 1997
Total revenue................ $132,676 $ 1,104 $7,994 $141,774
Operating income (loss)...... 2,362 (433) (9,357) (7,428)
Interest income.............. 712 9 -- 721
Interest expense............. 371 9 -- 380
Income tax expense
(benefit)................... 788 (137) (2,752) (2,101)
Identifiable assets at June
27, 1997.................... 82,099 815 7,530 90,444
Capital expenditures......... 6,989 255 698 7,942
Depreciation and
amortization................ 5,371 62 1,388 6,821
</TABLE>

F-28
<PAGE>

C-COR.net Corp. (as restated to reflect pooling-of-interest combinations with

Convergence.com Corporation and Silicon Valley Communications, Inc., with

respect to periods prior to the thirteen-week period ended September 24, 1999.)

Notes to Consolidated Financial Statements--(Continued)

(Information as of September 24, 1999 and September 25, 1998 and for the
thirteen weeks

ended September 24, 1999 and September 25, 1998 is unaudited)

The Company and subsidiaries operate in various geographic areas as indicated
by the following:

<TABLE>
<CAPTION>
U.S. Canada Europe Eliminations Total
-------- ------ ------ ------------ --------
<S> <C> <C> <C> <C> <C>
Thirteen-week period ended
September 24, 1999
Sales to unaffiliated
customers:
Domestic...................... $ 57,874 $ 42 $ 43 -- $ 57,959
Export........................ 6,544 -- -- -- 6,544
Transfers between geographic
areas......................... 12 -- -- (12) --
Total revenue.................. 64,430 42 43 (12) 64,503
Operating income (loss)........ 6,198 (66) (191) -- 5,941
Interest income................ -- -- -- -- 48
Interest expense............... -- -- -- -- 621
Income tax expense............. -- -- -- -- 1,321
Identifiable assets at
September 24, 1999............ 108,281 455 164 -- 108,900
Capital expenditures........... 3,189 -- 1 -- 3,190
Depreciation and amortization.. 2,159 -- 5 -- 2,164
Thirteen-week period ended
September 25, 1998
Sales to unaffiliated
customers:
Domestic...................... $ 31,417 $ 200 $ 40 -- $ 31,657
Export........................ 2,997 -- -- -- 2,997
Transfers between geographic
areas......................... 52 -- -- (52) --
Total revenue.................. 34,466 200 40 (52) 34,654
Operating income (loss)........ (624) (23) 29 -- (618)
Interest income................ -- -- -- -- 48
Interest expense............... -- -- -- -- 57
Income tax expense............. -- -- -- -- 471
Identifiable assets at
September 25, 1998............ 101,556 954 439 -- 102,949
Capital expenditures........... 1,074 -- -- -- 1,074
Depreciation and amortization.. 2,078 3 5 -- 2,086
Year ended June 25, 1999
Sales to unaffiliated
customers:
Domestic...................... $163,889 $ 421 $236 $ -- $164,546
Export........................ 18,879 -- -- -- 18,879
Transfers between geographic
areas......................... 162 -- -- (162) --
Total revenue.................. 182,930 421 236 (162) 183,425
Operating income (loss)........ 5,848 (280) (32) -- 5,536
Interest income................ 259 -- -- -- 259
Interest expense............... 1,384 -- -- -- 1,384
Income tax expense............. 4,835 -- -- -- 4,835
Identifiable assets at June 25,
1999.......................... 101,957 509 483 -- 102,949
Capital expenditures........... 8,159 -- -- -- 8,159
Depreciation and amortization.. 9,735 12 24 -- 9,771
Year ended June 26, 1998
Sales to unaffiliated
customers:
Domestic...................... $121,371 $1,635 $146 $ -- $123,152
Export........................ 30,889 -- -- -- 30,889
Transfers between geographic
areas......................... 798 -- -- (798) --
Total revenue.................. 153,058 1,635 146 (798) 154,041
Operating income............... 1,220 290 189 -- 1,699
Interest income................ 390 -- 2 -- 392
Interest expense............... 398 -- 1 -- 399
Income tax expense............. 405 8 (31) -- 382
Identifiable assets at June 26,
1998.......................... 82,839 954 281 -- 84,074
Capital expenditures........... 10,052 1 -- -- 10,053
Depreciation and amortization.. 6,931 12 24 -- 6,967
Year ended June 27, 1997
Sales to unafifiliated
customers:
Domestic...................... $107,723 $1,523 $751 $ -- $109,997
Export........................ 23,783 -- -- -- 23,783
Transfers between geographic
areas......................... (95) -- -- 95 --
Total revenue.................. 131,411 1,523 751 95 133,780
Operating income............... 1,750 162 17 -- 1,929
Interest income................ 716 -- 5 -- 721
Interest expense............... 379 -- 1 -- 380
Income tax expense............. 553 100 (2) -- 651
Identifiable assets at June 27,
1997.......................... 80,774 1,542 598 -- 82,914
Capital expenditures........... 7,212 6 26 -- 7,244
Depreciation and amortization.. 5,370 12 51 -- 5,433
</TABLE>

F-29
<PAGE>

C-COR.net Corp. (as restated to reflect pooling-of-interest combinations with

Convergence.com Corporation and Silicon Valley Communications, Inc., with

respect to periods prior to the thirteen-week period ended September 24, 1999.)

Notes to Consolidated Financial Statements--(Continued)

(Information as of September 24, 1999 and September 25, 1998 and for the
thirteen weeks

ended September 24, 1999 and September 25, 1998 is unaudited)

T. Subsequent Events

Business Combinations

On July 9, 1999, the Company consummated a merger with Convergence, a Georgia
corporation, whereby Convergence became a wholly-owned subsidiary of the
Company. As consideration for the merger, each outstanding share of common
stock of Convergence was converted into one share of the Company's common stock
for an aggregate of 1,433,323 shares of the Company's common stock. Each
outstanding warrant to acquire Convergence common stock was converted into a
warrant to acquire the Company's common stock for an aggregate of warrants to
acquire 366,930 shares of the Company's common stock. The merger is being
accounted for under the pooling-of-interests method of accounting.

On September 17, 1999, the Company consummated a merger with SVCI, a California
corporation, whereby SVCI became a wholly-owned subsidiary of the Company. As
consideration for the merger, each outstanding share of common stock of SVCI
was converted into the right to receive .094534 shares of the Company's common
stock for an aggregate of 1,542,215 shares of the Company's common stock
(subject to reduction pursuant to certain escrow arrangements). Outstanding
stock options and warrants to acquire SVCI common stock were converted into
stock options and warrants to acquire the Company's common stock, using the
same conversion ratio (with appropriate adjustment to the exercise price) for
an aggregate of stock options and warrants to acquire 387,227 shares of the
Company's common stock. The merger is being accounted for under the pooling-of-
interests method of accounting.

The Company recorded a one-time charge of $3,673, ($3,113, net of tax), related
to the business combinations in the thirteen-week period ended September 24,
1999. The one-time charge includes the merger transaction costs, as well as
restructuring costs which included severance payments for approximately 40
employees affected by consolidation of positions and administrative functions
resulting from the mergers, and write-off of assets related to existing fiber
optic products that became redundant as a result of the acquisition of SVCI.

Credit Facilities

On August 9, 1999, the Company replaced its $25,000 revolving line of credit
agreement, with a new credit agreement established with three banks under which
it may borrow up to $70,000. The agreement has two parts; $20,000 is available
as a revolving line of credit, subject to an aggregate sub-limit of $2,000 for
issuance of letters of credit. This revolving line of credit is committed
through December 31, 1999. A pricing matrix has been established for credit
pricing on this facility as a function of the Company's total funded
indebtedness to earnings before interest, taxes, depreciation and amortization
(EBITDA) ratio, and is subject to adjustment quarterly. Interest on the
borrowings under the credit agreement is determined at the Company's option by
(a) LIBOR plus a margin ranging from .75%-1.35%, (b) Federal funds rate plus a
margin ranging from 1.15%-1.75% or (c) Prime rate plus a margin ranging from
.25%-.50%. The second part is a 364 day standby acquisition facility which
enables the Company to borrow up to $50,000, for strategic acquisitions and/or
investments. Each draw on the facility may be extended for up to 84 months. A
pricing matrix has also been established for credit pricing on this facility
which is also a function of the Company's total funded indebtedness to EBITDA
ratio, and is subject to adjustment quarterly. Interest on the borrowings under
this part of the credit agreement would be determined, at the Company's option
by (a) LIBOR plus a margin ranging from .90%-1.50% (b) Prime rate plus a margin
ranging from .25%-.50% or (c) fixed at the bank 5 or 7 year fixed rates through
an interest rate swap.

F-30
<PAGE>

C-COR.net Corp. (as restated to reflect pooling-of-interest combinations with

Convergence.com Corporation and Silicon Valley Communications, Inc., with

respect to periods prior to the thirteen-week period ended September 24, 1999.)

Notes to Consolidated Financial Statements--(Continued)

(Information as of September 24, 1999 and September 25, 1998 and for the
thirteen weeks

ended September 24, 1999 and September 25, 1998 is unaudited)

In addition, the Company amended its existing $3,000 term loan to eliminate
terms and conditions that govern that facility and replaced them with terms and
conditions that have been entered into the revolving line-of-credit and the
standby facility. The outstanding balance on the term loan will be split among
the three participating banks based on their pro-rated share of the total
balance of combined credit facilities.

Borrowings on these facilities are unsecured, subject to a negative pledge on
all business assets, and the Company is required to maintain certain financial
ratios and indebtedness tests.

F-31
<PAGE>

[Picture of several C-COR.net's products and services which includes; MiniNode,
NAVICOR Node, Headend Equipment, FlexNet Amplifier, MuxNode, Field Engineering,
Network Operations Center and CNM System2.]
<PAGE>

[C-Cor.net Corp.]

C-COR.net Corp.
2,500,000 Shares
Common Stock

------------
PROSPECTUS
------------

, 1999

CIBC World Markets

Donaldson, Lufkin & Jenrette

Warburg Dillon Read LLC

Josephthal & Co. Inc.
- --------------------------------------------------------------------------------
You should rely only on the information contained in this prospectus. No
dealer, salesperson or other person is authorized to give information that is
not contained in this prospectus. This prospectus is not an offer to sell nor
is it seeking an offer to buy these securities in any jurisdiction where the
offer or sale is not permitted. The information contained in this prospectus is
correct only as of the date of this prospectus, regardless of the time of the
delivery of this prospectus or any sale of these securities.
<PAGE>

Part II

Information Not Required In Prospectus

ITEM 14. Other Expenses of Issuance and Distribution

The following table sets forth the estimated costs and expenses of the sale and
distribution of the securities being registered, all of which are being borne
by us.

<TABLE>
<S> <C>
Securities and Exchange Commission filing fee...................... $ 26,101
National Association of Securities Dealers, Inc. filing fee........ $ 9,889
Printing expenses.................................................. $150,000
Legal, accounting and other professional services.................. $250,000
Miscellaneous...................................................... $164,010
--------
Total............................................................ $600,000
========
</TABLE>

All of the amounts shown are estimates except for the fees payable to the
Securities and Exchange Commission and the National Association of Securities
Dealers, Inc.

ITEM 15. Indemnification of Directors and Officers

Sections 1741 through 1750 of the Pennsylvania Business Corporation Law of 1988
permits, and in some cases requires, the indemnification of officers, directors
and employees of the Registrant. Article VII-Section 7-1 of the Registrant's
bylaws provides that the Registrant shall indemnify any director or officer of
the Registrant against expenses (including legal fees), judgments, fines and
amounts paid in settlement, actually and reasonably incurred by him or her, to
the fullest extent now or hereafter permitted by law in connection with any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, brought or threatened to be brought
against him, including actions or suits by or in the right of the Registrant,
by reason of the fact that he or she is or was a director or officer of the
Registrant, its parent or any of its subsidiaries, or acted as a director or
officer or in any other capacity on behalf of the Registrant, its parent or any
of its subsidiaries or is or was serving at the request of the Registrant as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise.

The board of directors by resolution may similarly indemnify any person other
than a director or officer of the Registrant to the fullest extent now or
hereafter permitted by law for liabilities incurred by him in connection with
services rendered by him for or at the request of the Registrant, its parent or
any of its subsidiaries.

II-1
<PAGE>

ITEM 16. Exhibits

The following is a list of exhibits filed as part of this registration
statement.

<TABLE>
<CAPTION>
Exhibit
Number Description and Method of Filing
------- --------------------------------
<C> <S>
1 Form of Underwriting Agreement.

4.1 Specimen copy of common stock certificate./1/

4.2 Rights Agreement dated August 17, 1999 between the Registrant and
American Stock Transfer & Trust Company (incorporated by reference to
the Registrant's Registration Statement on Form 8-A filed on August
30, 1999, File No. 0-10726).

5 Opinion of Ballard Spahr Andrews & Ingersoll, LLP./1/

23.1 Consent of KPMG LLP (State College, PA).
23.2 Consent of KPMG LLP (Atlanta, GA).
23.3 Consent of KPMG LLP (Mountain View, CA).

23.4 Consent of Ballard Spahr Andrews & Ingersoll, LLP (included in Exhibit
5)./1/

24 Power of Attorney (included in signature page previously filed)./1/
</TABLE>
- --------

/1/Previously filed

II-2
<PAGE>

ITEM 17. Undertakings

(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.

(b) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the
registrant has-been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to
be part of this registration statement as of the time it was declared
effective.

(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.

II-3
<PAGE>

Signatures

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of State College, Commonwealth of Pennsylvania, on
November 4, 1999.

C-COR.net CORP.

/s/ David A. Woodle
By: _________________________________
David A. Woodle
President and Chief Executive
Officer

Pursuant to the requirements of the Securities Act of 1933, this registration
statement on Form S-3 has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----

<S> <C> <C>
/s/ David A. Woodle President and Chief November 4, 1999
______________________________________ Executive Officer and
David A. Woodle Director (Principal
Executive Officer)

/s/ William T. Hanelly Vice President--Finance, November 4, 1999
______________________________________ Secretary and Treasurer
William T. Hanelly (Principal Financial
Officer)

/s/ Joseph Zavacky Controller (Principal November 4, 1999
______________________________________ Accounting Officer)
Joseph Zavacky

* Director and Chairman November 4, 1999
______________________________________
Richard E. Perry

* Director November 4, 1999
______________________________________
Donald M. Cook, Jr.

* Director November 4, 1999
______________________________________
I. N. Rendall Harper, Jr.

* Director November 4, 1999
______________________________________
Anne P. Jones
</TABLE>

II-4
<PAGE>

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----

<S> <C> <C>
* Director November 4, 1999
______________________________________
John J. Omlor

* Director November 4, 1999
______________________________________
Frank Rusinko, Jr.

* Director November 4, 1999
______________________________________
James J. Tietjen

/s/ William T. Hanelly
*By: ____________________________ November 4, 1999
William T. Hanelly pursuant
to a power of attorney
previously filed.
</TABLE>

II-5
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit
Number Description and Method of Filing
------- --------------------------------
<C> <S>
1 Form of Underwriting Agreement.

4.1 Specimen copy of common stock certificate./1/

4.2 Rights Agreement dated August 17, 1999 between the Registrant and American
Stock Transfer Trust & Company (incorporated by reference to the
Registrant's Registration Statement on Form 8-A filed on August 30, 1999,
File No. 0-10726).

5 Opinion of Ballard Spahr Andrews & Ingersoll, LLP./1/

23.1 Consent of KPMG LLP (State College, PA).

23.2 Consent of KPMG LLP (Atlanta, GA).

23.3 Consent of KPMG LLP (Mountain View, CA).

Consent of Ballard Spahr Andrews & Ingersoll, LLP (included in Exhibit
23.4 5)./1/

24 Power of Attorney (included in signature page previously filed)./1/
</TABLE>
- --------

/1/Previously filed

<PAGE>

2,500,000 Shares

C-COR.net Corp.

Common Stock

UNDERWRITING AGREEMENT
----------------------

November __, 1999

CIBC World Markets Corp.
Donaldson, Lufkin & Jenrette, Inc.
Warburg Dillon Read
Josephthal & Co., Inc.
c/o CIBC World Markets Corp.
Oppenheimer Tower
World Financial Center
New York, New York 10281

On behalf of the Several
Underwriters named on
Schedule I attached hereto.

Ladies and Gentlemen:

C-COR.net Corp., a Pennsylvania corporation (the "Company"), proposes to
sell to you and the other underwriters named on Schedule I to this Agreement
(the "Underwriters"), for whom you are acting as Representatives, an aggregate
of 2,500,000 shares (the "Firm Shares") of the Company's Common Stock, $.10 par
value (the "Common Stock"). The respective amounts of the Firm Shares to be
purchased by each of the several Underwriters are set forth opposite their names
on Schedule I hereto. In addition, the Company proposes to grant to the
Underwriters an option to purchase up to an additional 375,000 shares (the
"Option Shares") of Common Stock for the purpose of covering over-allotments in
connection with the sale of the Firm Shares. The Firm Shares and the Option
Shares are together called the "Shares."
<PAGE>

1. Sale and Purchase of the Shares.
-------------------------------

On the basis of the representations, warranties and agreements
contained in, and subject to the terms and conditions of, this Agreement:

(a) The Company agrees to sell to each of the Underwriters, and each
of the Underwriters agrees, severally and not jointly, to purchase from the
Company, at $_____ per share (the "Initial Price"), the number of Firm Shares
set forth opposite the name of such Underwriter on Schedule I to this Agreement,
subject to adjustment in accordance with Section 10 hereof.

(b) The Company grants to the several Underwriters an option to
purchase, severally and not jointly, all or any part of the Option Shares at the
Initial Price. The number of Option Shares to be purchased by each Underwriter
shall be the same percentage (adjusted by the Representatives to eliminate
fractions) of the total number of Option Shares to be purchased by the
Underwriters as such Underwriter is purchasing of the Firm Shares. Such option
may be exercised only to cover over-allotments in the sales of the Firm Shares
by the Underwriters and may be exercised in whole or in part at any time on or
before 12:00 noon, New York City time, on the business day before the Firm
Shares Closing Date (as defined below), and only once thereafter within 30 days
after the date of this Agreement, in each case upon written or telegraphic
notice, or verbal or telephonic notice confirmed by written or telegraphic
notice, by the Representatives to the Company no later than 12:00 noon, New York
City time, on the business day before the Firm Shares Closing Date or at least
two business days before the Option Shares Closing Date (as defined below), as
the case may be, setting forth the number of Option Shares to be purchased and
the time and date (if other than the Firm Shares Closing Date) of such purchase.

2. Delivery and Payment. Delivery by the Company of the Firm Shares to
--------------------
the Representatives for the respective accounts of the Underwriters, and payment
of the purchase price by wire transfer (same day) funds to the Company, shall
take place at the offices of CIBC World Markets Corp., at Oppenheimer Tower,
World Financial Center, New York, New York 10281, at 10:00 a.m., New York City
time, on the third business day following the date of this Agreement, or at such
time on such other date, not later than 10 business days after the date of this
Agreement, as shall be agreed upon by the Company and the Representatives (such
time and date of delivery and payment are called the "Firm Shares Closing
Date").

In the event the option with respect to the Option Shares is exercised,
delivery by the Company of the Option Shares to the Representatives for the
respective accounts of the Underwriters and payment of the purchase price by
wire transfer (same day) funds to the Company shall take place at the offices of
CIBC World Markets Corp, specified above at the time and on the date (which may
be the same date as, but in no event shall be earlier than, the Firm Shares
Closing Date) specified in the notice referred to in

-2-
<PAGE>

Section 1(b) (such time and date of delivery and payment are called the "Option
Shares Closing Date"). The Firm Shares Closing Date and the Option Shares
Closing Date are called, individually, a "Closing Date" and, together, the
"Closing Dates."

Certificates evidencing the Shares shall be registered in such names and
shall be in such denominations as the Representatives shall request at least two
full business days before the Firm Shares Closing Date or, in the case of Option
Shares, on the day of notice of exercise of the option as described in Section
1(b) and shall be made available to the Representatives for checking and
packaging, at such place as is designated by the Representatives, on the full
business day before the Firm Shares Closing Date (or the Option Shares Closing
Date in the case of the Option Shares).

3. Registration Statement and Prospectus; Public Offering.
------------------------------------------------------

(a) A registration statement (No. 333-87909) relating to the Shares,
including a form of prospectus, has been filed with the Securities and Exchange
Commission ("Commission") and either (A) has been declared effective under the
Securities Act of 1933 (the "Securities Act") and is not proposed to be amended
or (B) is proposed to be amended by post-effective amendment. If such
registration statement (the "initial registration statement") has been declared
effective, (A) an additional registration statement (the "additional
registration statement") relating to the Shares may have been filed with the
Commission pursuant to Rule 462(b) ("Rule 462(b)") under the Securities Act and,
if so filed, has become effective upon filing pursuant to such Rule and the
Shares all have been duly registered under the Securities Act pursuant to the
initial registration statement and, if applicable, the additional registration
statement or (B) such an additional registration statement may be proposed to be
filed with the Commission pursuant to Rule 462(b) in which case it will become
effective upon filing pursuant to such Rule and upon such filing the Shares will
all have been duly registered under the Securities Act pursuant to the initial
registration statement and such additional registration statement. If the
Company does not propose to amend the initial registration statement or if an
additional registration statement has been filed and the Company does not
propose to amend it, and if any post-effective amendment to either such
registration statement has been filed with the Commission prior to the execution
and delivery of this Agreement, the most recent amendment (if any) to each such
registration statement has been declared effective by the Commission or has
become effective upon filing pursuant to Rule 462(c) ("Rule 462(c)") under the
Securities Act or, in the case of an additional registration statement, Rule
462(b). For purposes of this Agreement, "Effective Time" with respect to each of
the initial registration statement and, if filed prior to the execution and
delivery of this Agreement, the additional registration statement means (A) if
the Company has advised the Representatives that it does not propose to amend
such registration statement, the date and time as of which such registration
statement, or the most recent post-effective amendment thereto (if any) filed
prior to the execution and delivery of this Agreement, was declared effective by
the Commission or has become effective upon filing pursuant to Rule 462(c), or
(B) if the Company has advised the Representatives that it proposes to file an
amendment or post-effective amendment to such registration statement, the date
and time as of which such registration statement, as amended by such amendment
or post-effective amendment, as the case may be, is

-3-
<PAGE>

declared effective by the Commission. If an additional registration statement
has not been filed prior to the execution and delivery of this Agreement but the
Company has advised the Representatives that it proposes to file one, "Effective
Time" with respect to such additional registration statement means the date and
time as of which such registration statement is filed and becomes effective
pursuant to Rule 462(b). "Effective Date" with respect to the initial
registration statement and the additional registration statement (if any) means
the date of the Effective Time thereof. The initial registration statement, as
amended at its Effective Time, including all material incorporated by reference
therein, including all information contained in the additional registration
statement (if any) and deemed to be a part of the initial registration statement
as of the Effective Time of the additional registration statement pursuant to
the General Instructions of the Form on which it is filed and including all
information (if any) deemed to be a part of the initial registration statement
as of its Effective Time pursuant to Rule 430A(b) ("Rule 430A(b)") under the
Securities Act, is hereinafter referred to as the "Initial Registration
Statement." The additional registration statement, as amended at its Effective
Time, including the contents of the initial registration statement incorporated
by reference therein and including all information (if any) deemed to be a part
of the additional registration statement as of its Effective Time pursuant to
Rule 430A(b), is hereinafter referred to as the "Additional Registration
Statement." The Initial Registration Statement and the Additional Registration
Statement, if any, are hereinafter referred to collectively as the "Registration
Statements" and individually as a "Registration Statement." The form of
prospectus relating to the Shares, as first filed with the Commission pursuant
to and in accordance with Rule 424(b) ("Rule 424(b)") under the Securities Act
or (if no such filing is required) as included in a Registration Statement,
including all material incorporated by reference in such prospectus, is
hereinafter referred to as the "Prospectus." No document has been or will be
prepared or distributed in reliance on Rule 434 under the Securities Act.

(b) The Company understands that the Underwriters propose to make a
public offering of the Shares, as set forth in and pursuant to the Prospectus,
as soon after the Effective Time and the date of this Agreement as the
Representatives deem advisable. The Company hereby confirms that the
Underwriters and dealers have been authorized to distribute or cause to be
distributed the preliminary prospectus dated ___________, as it may be amended
(the "Preliminary Prospectus") and are authorized to distribute the Prospectus
(as from time to time amended or supplemented if the Company furnishes
amendments or supplements thereto to the Underwriters).

4. Representations and Warranties of the Company. The Company hereby
---------------------------------------------
represents and warrants to each Underwriter as follows:

(a) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement: (i) on the Effective Date
of the Initial Registration Statement, the Initial Registration Statement
conformed in all respects to the requirements of the Securities Act and the
rules and regulations of the Commission (the "Rules") and did not include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading,
(ii) on the Effective Date of the Additional Registration Statement (if

-4-
<PAGE>

any), each Registration Statement conformed or will conform, in all respects to
the requirements of the Securities Act and the Rules and did not include, or
will not include, any untrue statement of a material fact and did not omit, or
will not omit, to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and (iii) on the date
of this Agreement, the Initial Registration Statement and, if the Effective Time
of the Additional Registration Statement is prior to the execution and delivery
of this Agreement, the Additional Registration Statement each conforms, and at
the time of filing of the Prospectus pursuant to Rule 424(b) or (if no such
filing is required) at the Effective Date of the Additional Registration
Statement in which the Prospectus is included, each Registration Statement and
the Prospectus will conform, in all respects to the requirements of the
Securities Act and the Rules, and neither of such documents includes, or will
include, any untrue statement of a material fact or omits, or will omit, to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading. If the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of this
Agreement: on the Effective Date of the Initial Registration Statement, the
Initial Registration Statement and the Prospectus will conform in all respects
to the requirements of the Act and the Rules, neither of such documents will
include any untrue statement of a material fact or will omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and no Additional Registration Statement has been or
will be filed. Notwithstanding the foregoing, the Company makes no
representation or warranty as to the statements contained in the third paragraph
under the caption "Underwriting" in the Prospectus. The Company acknowledges
that the statements referred to in the previous sentence constitute the only
information furnished in writing by the Representatives on behalf of the several
Underwriters specifically for inclusion in the Registration Statements, any
preliminary prospectus or the Prospectus. The Company and the transactions
contemplated by this Agreement meet the requirements for using Form S-3 under
the Securities Act.

(b) All contracts and other documents required to be filed as
exhibits to the Registration Statements have been filed with the Commission as
exhibits to the Registration Statements. The documents incorporated by reference
in the Registration Statement and the Prospectus, at the time they were filed
with the Commission, complied in all material respects with the requirements of
the Exchange Act and, when read together and with the other information in the
Registration Statement and the Prospectus, do not contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

(c) The consolidated financial statements of the Company (including
all notes and schedules thereto) included or incorporated by reference in the
Registration Statements and Prospectus present fairly the financial position,
the results of operations and cash flows and the shareholders' equity of the
Company at the respective dates and for the respective periods to which they
apply; and such financial statements have been prepared in conformity with
generally accepted accounting principles, consistently applied throughout the
periods involved, and all adjustments necessary for a fair presentation of the
results for such periods have been

-5-
<PAGE>

made. The summary and selected financial data included in the Prospectus present
fairly the information shown therein as at the respective dates and for the
respective periods specified and the summary and selected financial data have
been presented on a basis consistent with the consolidated financial statements
so set forth in the Prospectus and other financial information.

(d) KPMG LLP, whose reports are filed with the Commission as a part
of the Registration Statements, are and, during the periods covered by their
reports, were independent public accountants as required by the Securities Act
and the Rules.

(e) The Company and its subsidiaries have each been duly incorporated
and are validly existing as corporations in good standing under the laws of the
jurisdiction of its incorporation. Each of the Company and its subsidiaries is
duly qualified and in good standing as a foreign corporation in each
jurisdiction in which the character or location of its assets or properties
(owned, leased or licensed) or the nature of its business makes such
qualification necessary except for such jurisdictions where the failure to so
qualify would not have a material adverse effect on the assets or properties,
business, results of operations or financial condition of the Company and its
subsidiaries, taken as a whole. Each of the Company and its subsidiaries has all
requisite corporate power and authority, and all necessary authorizations,
approvals, consents, orders, licenses, certificates and permits of and from all
governmental or regulatory bodies or any other person or entity, to own, lease
and license its assets and properties and conduct its businesses as now being
conducted and as described in the Registration Statements and the Prospectus
except for such authorizations, approvals, consents, orders, material licenses,
certificates and permits the failure to so obtain would not have a material
adverse effect upon the assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the Company and its
subsidiaries, taken as a whole; and the Company has all such corporate power and
authority, and such authorizations, approvals, consents, orders, licenses,
certificates and permits to enter into, deliver and perform this Agreement and
to issue and sell the Shares.

(f) Each of the Company and its subsidiaries owns or possesses
adequate and enforceable rights to use all trademarks, trademark applications,
trade names, service marks, copyrights, copyright applications, licenses, know-
how and other similar rights and proprietary knowledge (collectively,
"Intangibles") necessary for the conduct of its business as described in the
Registration Statements and the Prospectus. Neither the Company nor any of its
subsidiaries has received any notice of, or is aware of, any infringement of or
conflict with asserted rights of others with respect to any Intangibles.

-6-
<PAGE>

(g) There is no litigation or governmental or other proceeding or
investigation before any court or before or by any public body or board pending
or, to the Company's best knowledge, threatened against, or involving the
assets, properties or business of, the Company or any of its subsidiaries which
would materially adversely affect the value or the operation of any such assets
or properties or the business, results of operations, prospects or condition
(financial or otherwise) of the Company and its subsidiaries taken as a whole or
which is required to be disclosed in the Registration Statement and the
Prospectus that is not so disclosed.

(h) Subsequent to the respective dates as of which information is
given in the Registration Statements and the Prospectus, except as described
therein, (i) there has not been any material adverse change in the assets or
properties, business, results of operations, prospects or condition (financial
or otherwise), of the Company and its subsidiaries taken as a whole, whether or
not arising from transactions in the ordinary course of business; (ii) the
Company and its subsidiaries taken as a whole have not sustained any material
loss or interference with its assets, businesses or properties (whether owned or
leased) from fire, explosion, earthquake, flood or other calamity, whether or
not covered by insurance, or from any labor dispute or any court or legislative
or other governmental action, order or decree; and (iii) since the date of the
latest balance sheet included in the Registration Statements and the Prospectus,
except as reflected therein, neither the Company nor any of its subsidiaries has
(A) issued any securities or incurred any liability or obligation, direct or
contingent, for borrowed money, except for such liabilities or obligations
incurred in the ordinary course of business and such securities issued to
employees in connection with the grant or exercise of options to acquire the
Company's Common Stock consistent with past practice and securities issued in
connection with the transactions with Convergence.com Corporation and Silicon
Valley Communications, Inc., (B) entered into any transaction not in the
ordinary course of business or (C) declared or paid any dividend or made any
distribution on any shares of its stock or redeemed, purchased or otherwise
acquired or agreed to redeem, purchase or otherwise acquire any shares of its
stock.

(i) There is no document or contract of a character required to be
described in the Registration Statements or Prospectus or to be filed as an
exhibit to the Registration Statements which is not described or filed as
required. Except for this Agreement if only a form has been previously filed,
each agreement listed in the Exhibits to the Registration Statements or
incorporated by reference therein is in full force and effect and is valid and
enforceable by and against the Company in accordance with its terms, assuming
the due authorization, execution and delivery thereof by each of the other
parties thereto. Neither the Company, nor to the best of the Company's
knowledge, any other party is in default in the observance or performance of any
term or obligation to be performed by it under any such agreement, and no event
has occurred which with notice or lapse of time or both would constitute

-7-
<PAGE>

such a default, in any such case which default or event would have a material
adverse effect on the assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the Company and its
subsidiaries taken as a whole. No default exists, and no event has occurred
which with notice or lapse of time or both would constitute a default, in the
due performance and observance of any term, covenant or condition, by the
Company or any of its subsidiaries of any other agreement or instrument to which
the Company or any such subsidiary is a party or by which it or its properties
or business may be bound or affected which default or event would have a
material adverse effect on the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of the Company and
its subsidiaries taken as a whole.

(j) Neither the Company nor any of its subsidiaries is in violation
of any term or provision of its charter or by-laws or of any franchise, license,
permit, judgment, decree, order, statute, rule or regulation, where the
consequences of such violation would have a material adverse effect on the
assets or properties, business, results of operations, prospects or condition
(financial or otherwise) of the Company.

(k) Neither the execution, delivery and performance of this Agreement
by the Company nor the consummation of any of the transactions contemplated
hereby (including, without limitation, the issuance and sale by the Company of
the Shares) will give rise to a right to terminate or accelerate the due date of
any payment due under, or conflict with or result in the breach of any term or
provision of, or constitute a default (or an event which with notice or lapse of
time or both would constitute a default) under, or require any consent or waiver
under, or result in the execution or imposition of any lien, charge or
encumbrance upon any properties or assets of the Company or any of its
subsidiaries pursuant to the terms of, any indenture, mortgage, deed of trust or
other agreement or instrument to which the Company or any of its subsidiaries is
a party or by which it or any of its properties or businesses is bound, or any
franchise, license, permit, judgment, decree, order, statute, rule or regulation
applicable to the Company or any of its subsidiaries or violate any provision of
the charter or by-laws of the Company or any of its subsidiaries, except for
such consents or waivers which have already been obtained and are in full force
and effect.

(l) The Company has an authorized and outstanding capital stock as
set forth under the caption "Capitalization" in the Prospectus. All of the
outstanding shares of Common Stock have been duly and validly issued and are
fully paid and nonassessable and none of them was issued in violation of any
preemptive or other similar right. The Shares, when issued and sold pursuant to
this Agreement, will be duly and validly issued, fully paid and nonassessable
and none of them will be issued in violation of any preemptive or other similar
right. Except as disclosed in the Registration Statements and the Prospectus,
and except for securities issued to employees in connection with the grant of
options to acquire the Company's Common Stock consistent with past practice and
securities issued in connection with the transactions with Convergence.com
Corporation and Silicon Valley Communications, Inc., there is no outstanding
option, warrant or other right calling for the issuance of, and there is no
commitment, plan or arrangement to issue, any share of stock of the Company or
any

-8-
<PAGE>

security convertible into, or exercisable or exchangeable for, such stock. The
Common Stock and the Shares conform in all material respects to all statements
in relation thereto contained or incorporated by reference in the Registration
Statements and the Prospectus. All outstanding shares of capital stock of each
subsidiary have been duly authorized and validly issued, and are fully paid and
nonassessable and are owned directly by the Company or by another wholly-owned
subsidiary of the Company free and clear of any security interests, liens,
encumbrances, equities or claims, other than those described in the Prospectus.

(m) No holder of any security of the Company has the right to have
any security owned by such holder included in the Registration Statements or to
demand registration of any security owned by such holder during the period
ending 90 days after the date of this Agreement, except any such rights as may
have been duly waived. Each director and executive officer of the Company has
delivered to the Representatives his enforceable written agreement that he will
not, for a period of 90 days after the date of this Agreement, without the prior
written consent of CIBC World Markets Corp., on behalf of the Representatives,
offer for sale, sell, distribute, grant any option for the sale of, or otherwise
dispose of, directly or indirectly, or exercise any registration rights with
respect to, any shares of Common Stock (or any securities convertible into,
exercisable for, or exchangeable for any shares of Common Stock) owned by him
(each, a "Lock-Up Agreement").

(n) All necessary corporate action has been duly and validly taken by
the Company to authorize the execution, delivery and performance of this
Agreement and the issuance and sale of the Shares by the Company. This Agreement
has been duly and validly authorized, executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except (A) as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles and (B) to the extent that rights
to indemnity or contribution under this Agreement may be limited by Federal and
state securities laws or the public policy underlying such laws.

(o) Neither the Company nor any of its subsidiaries is involved in
any labor dispute nor, to the knowledge of the Company, is any such dispute
threatened, which dispute would have a material adverse effect on the assets or
properties, business, results of operations, prospects or condition (financial
or otherwise) of the Company and its subsidiaries taken as a whole.

-9-
<PAGE>

(p) No transaction has occurred between or among the Company or any
of its subsidiaries and any of its officers or directors or any affiliate or
affiliates of any such officer or director that is required to be described in
and is not described in the Registration Statements and the Prospectus.

(q) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be expected to
cause or result in, or which has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of any of the Shares.

(r) The Company and its subsidiaries has filed all Federal, state,
local and foreign tax returns which are required to be filed through the date
hereof, or has received extensions thereof, and has paid all taxes shown on such
returns and all assessments received by it to the extent that the same are
material and have become due. There are no tax audits or investigations pending,
which if adversely determined would have a material adverse effect on the
Company, its business, financial condition or results of operations; nor are
there any material proposed additional tax assessments against the Company and
any of its subsidiaries.

(s) The Shares have been duly authorized for quotation on the
National Association of Securities Dealers Automated Quotation ("Nasdaq")
National Market System.

(t) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of the net proceeds therefrom as
described in the Prospectus, will not be, an "investment company" as defined in
the Investment Company Act of 1940.

(u) The Company has not distributed and, prior to the later of (i)
the Closing Date and (ii) the completion of the distribution of the Shares, will
not distribute any offering material in connection with the offering and sale of
the Shares other than the Registration Statement or any amendment thereto, any
Preliminary Prospectus or the Prospectus or any amendment or supplement thereto,
or other materials, if any permitted by the Act.

(v) The Company and C-COR Acquisition, Inc. have taken and fulfilled
any and all stockholder and other actions necessary to the completion and
consummation of the transactions contemplated by that certain Agreement and Plan
of Merger dated as of May 15, 1999 among C-COR Electronics, Inc., C-COR
Acquisition Corp. and Convergence.com Corporation and have successfully
completed the actions required of them thereunder.

(w) The Company and C-COR.net Acquisition Corp. have taken and
fulfilled any and all stockholder and other actions necessary to the completion
and consummation of the transactions contemplated by

-10-
<PAGE>

that certain Agreement and Plan of Merger dated as of July 13, 1999 among the
Company, C-COR.net Acquisition Corp. and Silicon Valley Communications, Inc. and
have successfully completed the actions required of them thereunder.

(x) Each approval, consent, order, authorization, designation,
declaration or filing of, by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery by the
Company of this Agreement and the consummation of the transactions herein
contemplated required to be obtained or performed by the Company (except such
additional steps as may be required by the National Association of Securities
Dealers, Inc. (the "NASD") or may be necessary to qualify the Shares for public
offering by the Underwriters under the state securities or Blue Sky laws) has
been obtained or made and is in full force and effect.

(y) There are no affiliations with the NASD among the Company's
officers, directors or, to the best of the knowledge of the Company, any five
percent or greater stockholder of the Company, except as set forth in the
Registration Statement or otherwise disclosed in writing to the
Representatives.

(z) Each of the Company and its subsidiaries is in compliance in all
material respects with all rules, laws and regulation relating to the use,
treatment, storage and disposal of toxic substances and protection of health or
the environment which are applicable to its business, except where such failure
to comply would not have a material adverse effect on the Company and its
subsidiaries taken as a whole.

(aa) The Company, its subsidiaries, or any other person associated
with or acting on behalf of the Company or its subsidiaries including, without
limitation, any director, officer, agent or employee of the Company or its
subsidiaries has not, directly or indirectly, while acting on behalf of the
Company or its subsidiaries (i) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity; (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns from corporate funds; (iii) violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or (iv) made any other unlawful
payment.

(bb) The Company has reviewed its operations and that of its
subsidiaries to evaluate the extent to which the business or operations of the
Company or any of its subsidiaries will be affected by the Year 2000 Problem
(that is, any significant risk that computer hardware or software applications
used by the Company and its subsidiaries will not, in the case of dates or time
periods occurring after December 31, 1999, function at least as effectively as
in the case of dates or time

-11-
<PAGE>

periods occurring prior to January 1, 2000); as a result of such review, (i) the
Company has no reason to believe, and does not believe, that (A) there are any
issues related to the Company's preparedness to address the Year 2000 Problem
that are of a character required to be described or referred to in the
Registration Statement or Prospectus which have not been accurately described in
the Registration Statement or Prospectus and (B) the Year 2000 Problem will have
a material adverse effect, or result in any material loss or interference with
the business or operations of the Company and its subsidiaries, taken as a
whole; and (ii) the Company reasonably believes, after due inquiry, that the
suppliers, vendors, customers or other material third parties used or served by
the Company and such subsidiaries are addressing or will address the Year 2000
Problem in a timely manner, except to the extent that a failure to address the
Year 2000 by a supplier, vendor, customer or material third party would not have
a material adverse effect on its business or financial condition.

5. Conditions of the Underwriters' Obligations. The obligations of the
-------------------------------------------
Underwriters under this Agreement are several and not joint. The respective
obligations of the Underwriters to purchase the Shares on each Closing Date are
subject to each of the following terms and conditions:

(a) The Prospectus shall have been timely filed with the Commission
in accordance with Section 6(A)(a) of this Agreement.

(b) No order preventing or suspending the use of any preliminary
prospectus or the Prospectus shall have been or shall be in effect and no order
suspending the effectiveness of the Registration Statement shall be in effect
and no proceedings for such purpose shall be pending before or threatened by the
Commission, and any requests for additional information on the part of the
Commission (to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the satisfaction of the
Representatives.

(c) The representations and warranties of the Company contained in
this Agreement and in the certificates delivered pursuant to Section 5(d) shall
be true and correct when made and on and as of each Closing Date as if made on
such date and the Company shall have performed all covenants and agreements and
satisfied all the conditions contained in this Agreement required to be
performed or satisfied by it at or before such Closing Date.

(d) The Representatives shall have received on each Closing Date a
certificate, addressed to the Representatives and dated such Closing Date, of
the chief executive or chief operating officer and the chief financial officer
or chief accounting officer of the Company to the effect that the signers of
such certificate have carefully examined the Registration Statement, the
Prospectus and this Agreement and that the representations and warranties of the
Company in this Agreement are true and correct on and as of such Closing Date
with the same effect as if made on such Closing Date and the Company has
performed all covenants and agreements and satisfied all conditions contained in
this Agreement required to be performed or satisfied by it at or prior to such
Closing Date.

-12-
<PAGE>

(e) The Representatives shall have received on the Effective Time, at
the time this Agreement is executed and on each Closing Date a signed letter
from KPMG LLP addressed to the Representatives and dated, respectively, the
Effective Time, the date of this Agreement and each such Closing Date, in form
and substance reasonably satisfactory to the Representatives, confirming that
they are independent accountants within the meaning of the Securities Act and
the Rules that the response to Item 10 of the Registration Statement is correct
insofar as it relates to them and stating in effect that:

(A) in their opinion the audited financial statements and
financial statement schedules examined by them and included in the Registration
Statements and the Prospectus and reported on by them comply as to form in all
material respects with the applicable accounting requirements of the Securities
Act and the Rules.

(B) they have performed the procedures specified by the American
Institute of Certified Public Accountants for a review of interim financial
information as described in Statement of Auditing Standards No. 71, Interim
Financial Information, on the unaudited financial statements for the three
months ended September 24, 1999 and September 25, 1998 included in the
Registration Statements;

(C) on the basis of the review referred to in clause (B) above,
a reading of the latest available interim financial statements of the Company
and of the amounts included in the Registration Statement and the Prospectus
under the headings "Summary Financial Information" and "Selected Financial
Data," carrying out certain procedures (but not an examination in accordance
with generally accepted auditing standards) which would not necessarily reveal
matters of significance with respect to the comments set forth in such letter, a
reading of the minutes of the meetings of the stockholders and directors of the
Company, and inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the Company as to
transactions and events subsequent to the date of the latest audited financial
statements, except as disclosed in the Registration Statement and the
Prospectus, nothing came to their attention that caused them to believe that:

(I) the amounts in "Summary Consolidated Financial
Information," and "Selected Consolidated Financial Data" included in the
Registration Statements and the Prospectus do not agree with the corresponding
amounts in the audited and unaudited financial statements from which such
amounts were derived; or

(II) with respect to the Company, there were, at a
specified date not more than three business days prior to the date of the
letter, any increases in the current liabilities and long term liabilities of
the Company or any decreases in net income or in working capital or the
stockholders' equity in the Company, as compared with the amounts shown on the
Company's audited balance sheet for the fiscal year ended June 25, 1999 and the
three months ended September 24, 1999 included in the Registration Statement;
and

-13-
<PAGE>

(D) they have performed certain other procedures as a result of
which they determined that certain information of an accounting, financial or
statistical nature (which is limited to accounting, financial or statistical
information derived from the general accounting records of the Company) set
forth in the Registration Statements and the Prospectus and reasonably specified
by the Representatives agrees with the accounting records of the Company.

(E) based upon the procedures set forth in clauses (B) and (C)
above and a reading of the amounts included in the Registration Statement under
the headings "Summary Financial and Other Data" and "Selected Financial Data"
included in the Registration Statement and Prospectus and a reading of the
financial statements from which certain of such data were derived, nothing has
come to their attention that gives them reason to believe that the "Summary
Financial and Other Data" and "Selected Financial Data" included in the
Registration Statement and Prospectus do not comply as to the form in all
material respects with the applicable accounting requirements of the Securities
Act and the Rules or that the information set forth therein is not fairly stated
in relation to the financial statements included in the Registration Statement
or Prospectus from which certain of such data were derived are not in conformity
with generally accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included in the
Registration Statement and Prospectus.

References to the Registration Statement and the Prospectus in this paragraph
(e) are to such documents as amended and supplemented at the date of the letter.

For purposes of this subsection, (i) if the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of this
Agreement, "Registration Statements" shall mean the initial registration
statement as proposed to be amended by the amendment or post-effective amendment
to be filed shortly prior to its Effective Time, (ii) if the Effective Time of
the Initial Registration Statement is prior to the execution and delivery of
this Agreement but the Effective Time of the Additional Registration Statement
is subsequent to such execution and delivery, "Registration Statements" shall
mean the Initial Registration Statement and the additional registration
statement as proposed to be filed or as proposed to be amended by the post-
effective amendment to be filed shortly prior to its Effective Time, and (iii)
"Prospectus" shall mean the prospectus included in the Registration Statements.
All financial statements and schedules included in material incorporated by
reference into the Prospectus shall be deemed included in the Registration
Statements for purposes of this subsection.

(f) The Representatives shall have received on each Closing Date from
Ballard Spahr Andrews & Ingersoll, LLP, counsel for the Company, an opinion,
addressed to the Representatives and dated such Closing Date, and stating in
effect that:

(i) The Company has been duly organized and is validly existing
as a corporation in good standing under the laws of Pennsylvania. The Company is
duly qualified and in good standing as a foreign corporation in each
jurisdiction in which

-14-
<PAGE>

the character or location of its assets or properties (owned, leased or
licensed) or the nature of its businesses makes such qualification necessary,
except for such jurisdictions where the failure to so qualify would not have a
material adverse effect on the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of the Company.

(ii) The Company has all requisite corporate power and authority
to own, lease and license its assets and properties and conduct its business as
now being conducted and as described in the Registration Statements and the
Prospectus; and the Company has all requisite corporate power and authority and
all necessary authorizations, approvals, consents, orders, licenses,
certificates and permits to enter into, deliver and perform this Agreement and
to issue and sell the Shares.

(iii) The Company has authorized and issued capital stock as set
forth in the Registration Statements and the Prospectus; the certificates
evidencing the Shares are in due and proper legal form and have been duly
authorized for issuance by the Company; all of the outstanding shares of Common
Stock of the Company have been duly and validly authorized and have been duly
and validly issued and are fully paid and nonassessable and none of them was
issued in violation of any preemptive or other similar right. The Shares when
issued and sold pursuant to this Agreement, will be duly and validly issued,
outstanding, fully paid and nonassessable and none of them will have been issued
in violation of any preemptive or other similar right. To such counsel's
knowledge, except as disclosed in the Registration Statements and the
Prospectus, there is no outstanding option, warrant or other right calling for
the issuance of, and no commitment, plan or arrangement to issue, any share of
stock of the Company or any security convertible into, exercisable for, or
exchangeable for stock of the Company. The Common Stock and the Shares conform
in all material respects to the descriptions thereof contained in the
Registration Statements and the Prospectus.

(iv) All necessary corporate action has been duly and validly
taken by the Company to authorize the execution, delivery and performance of
this Agreement and the issuance and sale of the Shares. This Agreement has been
duly and validly authorized, executed and delivered by the Company.

(v) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the transactions
contemplated hereby (including, without limitation, the issuance and sale by the
Company of the Shares) will violate any provision of the charter or by-laws of
the Company or any of its subsidiaries or give rise to a right to terminate or
accelerate the due date of any payment due under, or conflict with or result in
the breach of any term or provision of, or constitute a default (or any event
which with notice or lapse of time, or both, would constitute a default) under,
or require any consent or waiver under, or result in the execution or imposition
of any lien, charge or encumbrance upon any properties or assets of the Company
or any of its subsidiaries pursuant to the terms of any indenture, mortgage,
deed of trust, note or other agreement or instrument of which such counsel is
aware and to which the Company or any of its subsidiaries is a party or by

-15-
<PAGE>

which it or any of its properties or businesses is bound, or any franchise,
license, permit, judgment, decree, order, statute, rule or regulation of which
such counsel is aware.

(vi) No consent, approval, authorization or order of any court
or governmental agency or body is required for the performance of this Agreement
by the Company or the consummation of the transactions contemplated hereby or
thereby, except such as have been obtained under the Securities Act and such as
may be required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the several Underwriters.

(vii) To such counsel's knowledge, there is no litigation or
governmental or other proceeding or investigation, before any court or before or
by any public body or board pending or threatened against, or involving the
assets, properties or businesses of, the Company or any of its subsidiaries
which would have a material adverse effect upon the assets or properties,
business, results of operations, prospects or condition (financial or otherwise)
of the Company and its subsidiaries taken as a whole.

(viii) The statements in the Prospectus in Item 15 of the
Registration Statement, insofar as such statements constitute a summary of
documents referred to therein or matters of law, are fair summaries in all
material respects and accurately present the information called for with respect
to such documents and matters. Accurate copies of all contracts and other
documents required to be filed as exhibits to, or described in, each
Registration Statement have been so filed with the Commission or are fairly
described in such Registration Statement, as the case may be.

(ix) Each Registration Statement, all preliminary prospectuses
and the Prospectus and each amendment or supplement thereto (except for the
financial statements and schedules and other financial and statistical data
included therein, as to which such counsel expresses no opinion) comply as to
form in all material respects with the requirements of the Securities Act and
the Rules.

(x) Each Registration Statement has become effective under
the Securities Act, and to such counsel's knowledge, no stop order suspending
the effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are threatened, pending or
contemplated.

(xi) The capital stock of the Company conforms in all material
respects to the description thereof contained in the Prospectus under the
caption "Description of Capital Stock."

(xii) The Company is not an "investment company" or an entity
controlled by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.

-16-
<PAGE>

To the extent deemed advisable by such counsel, they may rely as to matters
of fact on certificates of responsible officers of the Company and public
officials and on the opinions of other counsel satisfactory to the
Representatives as to matters which are governed by laws other than the laws of
the Commonwealth of Pennsylvania and the Federal laws of the United States;
provided that such counsel shall state that in their opinion the Underwriters
and they are justified in relying on such other opinions. Copies of such
certificates and other opinions shall be furnished to the Representatives and
counsel for the Underwriters.

In addition, such counsel shall state that such counsel has participated in
conferences with officers and other representatives of the Company,
representatives of the Representatives and representatives of the independent
certified public accountants of the Company, at which conferences the contents
of the Registration Statement and the Prospectus and related matters were
discussed and, although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Prospectus (except as specified
in the foregoing opinion), on the basis of the foregoing, no facts have come to
the attention of such counsel which lead such counsel to believe that any
Registration Statement at the time it became effective (except with respect to
the financial statements and notes and schedules thereto and other financial
data, as to which such counsel need express no belief) contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
that the Prospectus as amended or supplemented (except with respect to the
financial statements and notes schedules thereto and other financial data, as to
which such counsel need make no statement) on the date thereof contained any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

(g) All proceedings taken in connection with the sale of the Firm
Shares and the Option Shares as herein contemplated shall be reasonably
satisfactory in form and substance to the Representatives and their counsel and
the Underwriters shall have received from Hale and Dorr LLP a favorable opinion,
addressed to the Representatives and dated such Closing Date, with respect to
the Shares, the Registration Statement and the Prospectus, and such other
related matters, as the Representatives may reasonably request, and the Company
shall have furnished to Hale and Dorr LLP such documents as they may reasonably
request for the purpose of enabling them to pass upon such matters.

(h) The Representatives shall have received copies of the Lock-up
Agreements executed by each entity or person described in Section 4(n).

(i) The Company shall have furnished or caused to be furnished to the
Representatives such further certificates or documents as the Representatives
shall have reasonably requested.

-17-
<PAGE>

6. Covenants of the Company.
------------------------

(A) The Company covenants and agrees as follows:

(a) The Company shall prepare the Prospectus in a form approved
by the Representatives and file such Prospectus pursuant to Rule 424(b) under
the Securities Act not later than the Commission's close of business on the
second business day following the execution and delivery of this Agreement, or,
if applicable, such earlier time as may be required by Rule 430A(a)(3) under the
Securities Act, and shall promptly advise the Representatives (i) when any
amendment to the Registration Statement shall have become effective, (ii) of any
request by the Commission for any amendment of the Registration Statement or the
Prospectus or for any additional information, (iii) of the prevention or
suspension of the use of any preliminary prospectus or the Prospectus or of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any proceeding for
that purpose and (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose. Other than with respect to the Company's reporting requirements under
the Securities Exchange Act of 1934, as amended, the Company shall not file any
amendment of the Registration Statement or supplement to the Prospectus unless
the Company has furnished the Representatives a copy for its review prior to
filing and shall not file any such proposed amendment or supplement to which the
Representatives reasonably object. The Company shall use its best efforts to
prevent the issuance of any such stop order and, if issued, to obtain as soon as
possible the withdrawal thereof.

(b) If, at any time when a prospectus relating to the Shares is
required to be delivered under the Securities Act and the Rules, any event
occurs as a result of which the Prospectus as then amended or supplemented would
include any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein in the light of the circumstances
under which they were made not misleading, or if it shall be necessary to amend
or supplement the Prospectus to comply with the Securities Act or the Rules, the
Company promptly shall prepare and file with the Commission, subject to the
second sentence of paragraph (a) of this Section 6(A), an amendment or
supplement which shall correct such statement or omission or an amendment which
shall effect such compliance.

(c) The Company shall make generally available to its security
holders and to the Representatives as soon as practicable, but not later than 45
days after the end of the 12-month period beginning at the end of the fiscal
quarter of the Company during which the Effective Time occurs (or 90 days if
such 12-month period coincides with the Company's fiscal year), an earnings
statement (which need not be audited) of the Company, covering such 12-month
period, which shall satisfy the provisions of Section 11(a) of the Securities
Act.

-18-
<PAGE>

(d) The Company shall furnish to the Representatives and counsel
for the Underwriters, without charge, signed copies of the Registration
Statements (including all exhibits thereto and amendments thereof) and to each
other Underwriter a copy of the Registration Statements (without exhibits
thereto) and all amendments thereof and, so long as delivery of a prospectus by
an Underwriter or dealer may be required by the Securities Act or the Rules, as
many copies of the Preliminary Prospectus and the Prospectus and any amendments
thereof and supplements thereto as the Representatives may reasonably request.

(e) The Company shall cooperate with the Representatives and
their counsel in endeavoring to qualify the Shares for offer and sale under the
laws of such jurisdictions as the Representatives may designate and shall
maintain such qualifications in effect so long as required for the distribution
of the Shares; provided, however, that the Company shall not be required in
connection therewith, as a condition thereof, to qualify as a foreign
corporation or to execute a general consent to service of process in any
jurisdiction or subject itself to taxation as doing business in any
jurisdiction.

(f) For a period of five years after the date of this Agreement,
the Company shall supply to the Representatives, and to each other Underwriter
who may so request in writing, copies of such financial statements and other
periodic and special reports as the Company may from time to time distribute
generally to the holders of any class of its capital stock and to furnish to the
Representatives a copy of each annual or other report it shall be required to
file with the Commission.

(g) Without the prior written consent of CIBC World Markets
Corp., on behalf of the Representatives, for a period of 90 days after the date
of this Agreement, the Company shall not issue, sell or register with the
Commission (other than on Form S-8 or on any successor form or on Form S-3 with
respect to shares of the Company's capital stock issued, or to be issued, by the
Company in connection with its acquisition of Silicon Valley Communications,
Inc.), or otherwise dispose of, directly or indirectly, any equity securities of
the Company (or any securities convertible into or exercisable or exchangeable
for equity securities of the Company), except for the issuance of the Shares
pursuant to the Registration Statement and the issuance of shares pursuant to
the Company's existing stock option plan or bonus plan.

(h) On or before completion of this offering, the Company shall
make all filings required under applicable securities laws and by the Nasdaq
National Market System (including any required registration under the Exchange
Act).

(B) The Company agrees to pay, or reimburse if paid by the
Representatives, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses incident to
the public offering of the Shares and the performance of the obligations of the
Company under this Agreement including those relating to: (i) the preparation,
printing, filing and distribution of the Registration Statements including all
exhibits thereto, each preliminary prospectus, the Prospectus, all amendments
and supplements to the Registration Statements

-19-
<PAGE>

and the Prospectus, and the printing, filing and distribution of this Agreement;
(ii) the preparation and delivery of certificates for the Shares to the
Underwriters; (iii) the registration or qualification of the Shares for offer
and sale under the securities or Blue Sky laws of the various jurisdictions
referred to in Section 6(A)(e), including the reasonable fees and disbursements
of counsel for the Underwriters in connection with such registration and
qualification and the preparation, printing, distribution and shipment of
preliminary and supplementary Blue Sky memoranda; (iv) the furnishing (including
costs of shipping and mailing) to the Representatives and to the Underwriters of
copies of each preliminary prospectus, the Prospectus and all amendments or
supplements to the Prospectus, and of the several documents required by this
Section to be so furnished, as may be reasonably requested for use in connection
with the offering and sale of the Shares by the Underwriters or by dealers to
whom Shares may be sold; (v) the filing fees of the National Association of
Securities Dealers, Inc. in connection with its review of the terms of the
public offering; (vi) the furnishing (including costs of shipping and mailing)
to the Representatives and to the Underwriters of copies of all reports and
information required by Section 6(A)(f); (vii) inclusion of the Shares for
quotation on the Nasdaq National Market System; and (viii) all transfer taxes,
if any, with respect to the sale and delivery of the Shares by the Company to
the Underwriters. Subject to the provisions of Section 9, the Underwriters agree
to pay, whether or not the transactions contemplated hereby are consummated or
this Agreement is terminated, all costs and expenses incident to the performance
of the obligations of the Underwriters under this Agreement not payable by the
Company pursuant to the preceding sentence, including, without limitation, the
fees and disbursements of counsel for the Underwriters.

7. Indemnification.
---------------

(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act against any
and all losses, claims, damages and liabilities, joint or several (including any
reasonable investigation, legal and other expenses incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted), to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other Federal or state law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in (i) any Registration Statement, or arise out of
or are based upon any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading or (ii) in the Preliminary Prospectus or the Prospectus or arise
out of or are based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, provided, however, that (1) such indemnity shall not inure to the
benefit of any Underwriter (or any person controlling such Underwriter) on
account of any losses, claims, damages or liabilities arising from the sale of
the Shares to any person by such Underwriter if such untrue statement or
omission or alleged untrue statement or omission was made in such preliminary
prospectus, such Registration Statement or the Prospectus, or such amendment or
supplement, in reliance upon and in

-20-
<PAGE>

conformity with information furnished in writing to the Company by the
Representatives on behalf of any Underwriter specifically for use therein and
(2) the indemnity agreement contained in this paragraph (a) with respect to any
Preliminary Prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting any such losses, claims, damages, liabilities or
expenses purchased the Shares which is the subject thereof (or to the benefit of
any person controlling such Underwriter) if at or prior to the written
confirmation of the sale of such Shares a copy of the Prospectus (or the
Prospectus as amended or supplemented) was not sent or delivered to such person
and the untrue statement or omission of a material fact contained in such
Preliminary Prospectus was corrected in the Prospectus (or the Prospectus as
amended or supplemented) unless such failure is the result of noncompliance by
the Company with Section 6(A) hereof. This indemnity agreement will be in
addition to any liability which the Company may otherwise have.

(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, each director of the Company and each officer of the Company who
signs any Registration Statement, to the same extent as the foregoing indemnity
from the Company to each Underwriter, but only insofar as such losses, claims,
damages or liabilities arise out of or are based upon an untrue statement or
omission or alleged untrue statement or omission which was made in the
Preliminary Prospectus, such Registration Statement or the Prospectus, or any
amendment thereof or supplement thereto, and was contained in the third
paragraph under the caption "Underwriting" in the Prospectus; provided, however,
that the obligation of each Underwriter to indemnify the Company (including any
controlling person, director or officer thereof) shall be limited to the net
proceeds received by the Company from such Underwriter.

(c) Any party that proposes to assert the right to be indemnified
under this Section will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Section, notify each
such indemnifying party of the commencement of such action, suit or proceeding,
enclosing a copy of all papers served. No indemnification provided for in
Section 7(a) or 7(b) or contribution provided for in Section 8 shall be
available to any party who shall fail to give notice as provided in this Section
7(c) if the party to whom notice was not given was unaware of the proceeding to
which such notice would have related and was prejudiced by the failure to give
such notice but the omission so to notify such indemnifying party of any such
action, suit or proceeding shall not relieve it from any liability that it may
have to any indemnified party for contribution or otherwise than under this
Section. In case any such action, suit or proceeding shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in, and, to the extent that it shall wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense thereof
and the approval by the indemnified party of such counsel, the

-21-
<PAGE>

indemnifying party shall not be liable to such indemnified party for any legal
or other expenses, except as provided below and except for the reasonable costs
of investigation subsequently incurred by such indemnified party in connection
with the defense thereof. The indemnified party shall have the right to employ
its counsel in any such action, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the employment of counsel
by such indemnified party has been authorized in writing by the indemnifying
parties, (ii) the indemnified party shall have reasonably concluded that there
may be a conflict of interest between the indemnifying parties and the
indemnified party in the conduct of the defense of such action (in which case
the indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party) or (iii) the indemnifying parties
shall not have employed counsel to assume the defense of such action within a
reasonable time after notice of the commencement thereof, in each of which cases
the fees and expenses of counsel shall be at the expense of the indemnifying
parties. An indemnifying party shall not be liable for any settlement of any
action, suit, proceeding or claim effected without its written consent.

8. Contribution. In order to provide for just and equitable contribution
------------
in circumstances in which the indemnification provided for in Section 7(a) is
due in accordance with its terms but for any reason is held to be unavailable
from the Company, the Company and the Underwriters shall contribute to the
aggregate losses, claims, damages and liabilities (including any investigation,
legal and other expenses reasonably incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claims asserted,
but after deducting any contribution received by the Company from persons other
than the Underwriters, such as persons who control the Company within the
meaning of the Securities Act, officers of the Company who signed any
Registration Statement and directors of the Company, who may also be liable for
contribution) to which the Company and one or more of the Underwriters may be
subject in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other from
the offering of the Shares or, if such allocation is not permitted by applicable
law or indemnification is not available as a result of the indemnifying party
not having received notice as provided in Section 7 hereof, in such proportion
as is appropriate to reflect not only the relative benefits referred to above
but also the relative fault of the Company on the one hand and the Underwriters
on the other in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the
Company and the Underwriters shall be deemed to be in the same proportion as (x)
the total proceeds from the offering (net of underwriting discounts but before
deducting expenses) received by the Company, as set forth in the table on the
cover page of the Prospectus, bear to (y) the underwriting discounts received by
the Underwriters, as set forth in the table on the cover page of the Prospectus.
The relative fault of the Company or the Underwriters shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or alleged omission to state a material fact related to
information supplied by the Company or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this Section 8
were determined by pro rata allocation (even if the Underwriters were treated as
one entity

-22-
<PAGE>

for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to above. Notwithstanding the
provisions of this Section 8, (i) in no case shall any Underwriter (except as
may be provided in the Agreement Among Underwriters) be liable or responsible
for any amount in excess of the underwriting discount applicable to the Shares
purchased by such Underwriter hereunder, and (ii) the Company shall be liable
and responsible for any amount in excess of such underwriting discount;
provided, however, that no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the Securities Act
or Section 20(a) of the Exchange Act shall have the same rights to contribution
as such Underwriter, and each person, if any, who controls the Company within
the meaning of the Section 15 of the Securities Act or Section 20(a) of the
Exchange Act, each officer of the Company who shall have signed any Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to clauses (i) and (ii) in the
immediately preceding sentence of this Section 8. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this Section,
notify such party or parties from whom contribution may be sought, but the
omission so to notify such party or parties from whom contribution may be sought
shall not relieve the party or parties from whom contribution may be sought from
any other obligation it or they may have hereunder or otherwise than under this
Section. Upon notification to the contributing party of the commencement
thereof, the contributing party shall be entitled to participate in, and to the
extent that it shall wish, jointly with any other contributing party, to assume
the defense thereof, with counsel reasonably satisfactory to such contributing
party, and after notice from the contributing party to such party seeking
contribution of its election so to assume the defense thereof and the approval
by the party seeking contribution of such counsel, the contributing party shall
not be liable to such party seeking contribution for any legal or other
expenses, except as provided below and except for the reasonable costs of
investigation subsequently incurred by such party seeking contribution in
connection with the defense thereof. The party seeking contribution shall have
the right to employ its counsel in any such action, but the fees and expenses of
such counsel shall be at the expense of such party unless (i) the employment of
counsel by such party has been authorized in writing by the contributing
parties, (ii) the party seeking contribution shall have reasonably concluded
that there may be a conflict of interest between the contributing parties and
the party seeking contribution in the conduct of the defense of such action (in
which case the contributing parties shall not have the right to direct the
defense of such action on behalf of the party seeking contribution) or (iii) the
contributing parties shall not have employed counsel to assume the defense of
such action within a reasonable time after notice of the commencement thereof,
in each of which cases the fees and expenses of counsel shall be at the expense
of the contributing parties. No party shall be liable for contribution with
respect to any action, suit, proceeding or claim settled without its written
consent. The Underwriters' obligations to contribute pursuant to this Section 8
are several in proportion to their respective underwriting commitments and not
joint.

-23-
<PAGE>

9. Termination. This Agreement may be terminated with respect to the
-----------
Shares to be purchased on a Closing Date by the Representatives by notifying the
Company at any time

(a) in the absolute discretion of the Representatives at or before any
Closing Date: (i) if there shall have occurred any change, or any development or
event involving a prospective change, in the condition (financial or other),
business, properties or results of operation of the Company and its subsidiaries
taken as a whole which, in the judgment of the Representatives, is material and
adverse and makes it impractical or inadvisable to proceed with completion of
the public offering or the sale of and payment for the Shares; (ii) if on or
prior to such date, any domestic or international event or act or occurrence has
materially disrupted, or in the opinion of the Representatives will in the
future materially disrupt, the securities markets; (iii) if there has occurred
any new outbreak or material escalation of hostilities or other calamity or
crisis the effect of which on the financial markets of the United States is such
as to make it, in the judgment of the Representatives, inadvisable to proceed
with the offering; (iv) if there shall be such a material adverse change in
general financial, political or economic conditions or the effect of
international conditions on the financial markets in the United States is such
as to make it, in the judgment of the Representatives, inadvisable or
impracticable to market the Shares; (v) if trading in the Shares has been
suspended by the Commission or trading generally on the New York Stock Exchange,
Inc. or on the Nasdaq American Stock Market Exchange, Inc. has been suspended or
limited, or minimum or maximum ranges for prices for securities shall have been
fixed, or maximum ranges for prices for securities have been required, by said
exchanges or by order of the Commission, the National Association of Securities
Dealers, Inc., or any other governmental or regulatory authority; or (vi) if a
banking moratorium has been declared by any state or Federal authority, or

(b) at or before any Closing Date, that any of the conditions
specified in Section 5 shall not have been fulfilled when and as required by
this Agreement.

If this Agreement is terminated pursuant to any of its provisions, the
Company shall not be under any liability to any Underwriter, and no Underwriter
shall be under any liability to the Company, except that (y) if this Agreement
is terminated by the Representatives or the Underwriters because of any failure,
refusal or inability on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, the Company will reimburse the
Underwriters for all out-of-pocket expenses (including the reasonable fees and
disbursements of their counsel) incurred by them in connection with the proposed
purchase and sale of the Shares or in contemplation of performing their
obligations hereunder and (z) no Underwriter who shall have failed or refused to
purchase the Shares agreed to be purchased by it under this Agreement, without
some reason sufficient hereunder to justify cancellation or termination of its
obligations under this Agreement, shall be relieved of liability to the Company
or to the other Underwriters for damages occasioned by its failure or refusal.

10. Substitution of Underwriters. If one or more of the Underwriters
----------------------------
shall fail (other than for a reason sufficient to justify the cancellation or
termination of this Agreement under Section 9) to purchase on any Closing Date
the Shares agreed to be purchased on such Closing Date by such

-24-
<PAGE>

Underwriter or Underwriters, the Representatives may find one or more substitute
underwriters to purchase such Shares or make such other arrangements as the
Representatives may deem advisable or one or more of the remaining Underwriters
may agree to purchase such Shares in such proportions as may be approved by the
Representatives, in each case upon the terms set forth in this Agreement. If no
such arrangements have been made by the close of business on the business day
following such Closing Date,

(a) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall not exceed 10% of the Shares that all
the Underwriters are obligated to purchase on such Closing Date, then each of
the nondefaulting Underwriters shall be obligated to purchase such Shares on the
terms herein set forth in proportion to their respective obligations hereunder;
provided, that in no event shall the maximum number of Shares that any
Underwriter has agreed to purchase pursuant to Section 1 be increased pursuant
to this Section 10 by more than 10% of such number of Shares without the written
consent of such Underwriter, or

(b) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall exceed 10% of the Shares that all the
Underwriters are obligated to purchase on such Closing Date, then the Company
shall be entitled to an additional business day within which it may, but is not
obligated to, find one or more substitute underwriters reasonably satisfactory
to the Representatives to purchase such Shares upon the terms set forth in this
Agreement.

In any such case, either the Representatives or the Company shall have the
right to postpone the applicable Closing Date for a period of not more than five
business days in order that necessary changes and arrangements (including any
necessary amendments or supplements to the Registration Statements or
Prospectus) may be effected by the Representatives and the Company. If the
number of Shares to be purchased on such Closing Date by such defaulting
Underwriter or Underwriters shall exceed 10% of the Shares that all the
Underwriters are obligated to purchase on such Closing Date, and none of the
nondefaulting Underwriters or the Company shall make arrangements pursuant to
this Section within the period stated for the purchase of the Shares that the
defaulting Underwriters agreed to purchase, this Agreement shall terminate with
respect to the Shares to be purchased on such Closing Date without liability on
the part of any nondefaulting Underwriter to the Company and without liability
on the part of the Company, except in both cases as provided in Sections 6(B),
7, 8 and 9. The provisions of this Section shall not in any way affect the
liability of any defaulting Underwriter to the Company or the nondefaulting
Underwriters arising out of such default. A substitute underwriter hereunder
shall become an Underwriter for all purposes of this Agreement.

11. Miscellaneous. The respective agreements, representations,
-------------
warranties, indemnities and other statements of the Company or its officers and
of the Underwriters set forth in or made pursuant to this Agreement shall remain
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter or the Company or any of the officers, directors or
controlling persons

-25-
<PAGE>

referred to in Sections 7 and 8 hereof, and shall survive delivery of and
payment for the Shares. The provisions of Sections 6(B), 7, 8 and 9 shall
survive the termination or cancellation of this Agreement.

This Agreement has been and is made for the benefit of the Underwriters,
the Company and their respective successors and assigns, and, to the extent
expressed herein, for the benefit of persons controlling any of the
Underwriters, or the Company, and directors and officers of the Company, and
their respective successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser of Shares from any Underwriter merely
because of such purchase.

All notices and communications hereunder shall be in writing and mailed or
delivered or by telephone or telegraph if subsequently confirmed in writing, (a)
if to the Representatives, c/o CIBC World Markets Corp., Oppenheimer Tower,
World Financial Center, New York, New York 10281 Attention: Richard D. White,
and (b) if to the Company, to its agent for service as such agent's address
appears on the cover page of the Initial Registration Statement.

This Agreement shall be governed by and construed in accordance with the
laws of the State of New York without regard to principles of conflict of laws.

This Agreement may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.

[Remainder of page intentionally left blank.]

-26-
<PAGE>

Please confirm that the foregoing correctly sets forth the agreement among
us.

Very truly yours,

C-COR.NET CORP.

By: _________________________________
Name:

Title:

Confirmed:

CIBC WORLD MARKETS CORP.
DONALDSON, LUFKIN & JENRETTE, INC.
WARBURG DILLON READ
JOSEPHTHAL & CO., INC.

Acting severally on behalf of itself
and as representative of the several
Underwriters named in Schedule I annexed
hereto.

By: CIBC WORLD MARKETS CORP.

By: _________________________________________
Title:

-27-
<PAGE>

SCHEDULE I

Number of
Firm Shares to
Name Be Purchased
---- ------------

CIBC World Markets Corp.
Donaldson, Lufkin & Jenrette, Inc.
Warburg Dillon Read
Josephthal & Co., Inc.

_______________

-28-

<PAGE>

Exhibit 23.1

CONSENT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders
C-COR.net Corp.:

We consent to the use of our report dated September 20, 1999 relating to the
supplemental consolidated balance sheets of C-COR.net Corp. as of June 25, 1999
and June 26, 1998, and the related supplemental consolidated statements of
operations, cash flows and shareholders' equity for each of the years in the
three-year period ended June 25, 1999, included herein. The supplemental
consolidated financial statements give retroactive effect to the mergers of C-
COR.net Corp. and Convergence.com Corporation, which occurred on July 9, 1999,
and Silicon Valley Communications, Inc., which occurred on September 17, 1999.
We also consent to incorporation by reference herein of our reports dated August
16, 1999, relating to the consolidated balance sheets of C-COR.net Corp. as of
June 25, 1999 and June 26, 1998, and the related consolidated statements of
operations, cash flows and shareholders' equity for each of the years in the
three-year period ended June 25, 1999 and related schedule, which reports appear
in the June 25, 1999 annual report on Form 10-K of C-COR.net Corp.

We also consent to the references to our firm under the heading "Experts" and
"Selected Consolidated Financial Data" in the prospectus.

KPMG LLP

State College, Pennsylvania
November 4, 1999

<PAGE>
Exhibit 23.2

Consent of Independent Auditors

The Board of Directors and Stockholders
C-COR.net Corp.:

We consent to incorporation herein by reference in Amendment No. 2 to the
registration statement on Form S-3 of C-COR.net Corp. of our report dated May
28, 1999, with respect to the consolidated balance sheets of Convergence.com
Corporation as of December 31, 1998 and 1997, and the related consolidated
statements of operations, stockholders' equity (deficit), and cash flows for the
years then ended, which report appears in the Form 8-K/A of C-COR.net Corp.
dated July 9, 1999.

KPMG LLP

Atlanta, Georgia
November 4, 1999

<PAGE>

Exhibit 23.3

Consent of Independent Auditors

The Board of Directors and Stockholders
C-COR.net Corp.:

We consent to incorporation herein by reference in Amendment No. 2 to the
registration statement on Form S-3 of C-COR.net Corp. of our report dated July
30, 1999, except as to Note 2, which is as of August 4, 1999, with respect to
the balance sheets of Silicon Valley Communications, Inc. (formerly Qualop
Systems Corporation) as of June 25, 1999 and June 30, 1998, and the related
statements of operations, shareholders' (deficit) equity, and cash flows for the
years then ended, which report appears in the Form 8-K/A of C-COR.net Corp.
dated September 17, 1999.

Our report dated July 30, 1999, except as to Note 2, which is as of August 4,
1999, contains an explanatory paragraph that states that the Company has
suffered recurring losses from operations, has negative working capital and an
accumulated deficit, and is in violation of certain debt covenants that raise
substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of that uncertainty.

KPMG LLP

Mountain View, California
November 4, 1999