UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM 10-K
Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the fiscal year ended June 25, 1999
Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from to .
Commission file number: 0-25684
PREMISYS COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-3153847
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
48664 Milmont Drive, Fremont, California 94538
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (510) 353-7600
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 par value
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No__
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
The aggregate market value of the voting stock held by non-affiliates of
the registrant as of August 31, 1999, was approximately $163,993,000.
As of August 31, 1999, Registrant had outstanding 24,191,963 shares of
Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company's definitive proxy statement to be filed with the
Securities and Exchange Commission relative to the Company's 1998 annual meeting
of stockholders are incorporated by reference in Part III of this Form 10-K.
<PAGE>
PREMISYS COMMUNICATIONS, INC.
ANNUAL REPORT ON
FORM 10-K
For the Year Ended June 25, 1999
TABLE OF CONTENTS
Form 10-K Name of Item
Item No. Page
PART I
Item 1 Business 3
Item 2 Properties 17
Item 3 Legal Proceedings 17
Item 4 Submission of Matters to a Vote of Security Holders 17
PART II
Item 5 Market for the Registrant's Common Equity and Related
Stockholder Matters 18
Item 6 Selected Financial Data 19
Item 7 Management's Discussion and Analysis of Financial Condition and
Results of Operations 21
Item 7A Quantitative and Qualitative Disclosures About Market Risk 31
Item 8 Financial Statements and Supplementary Data 32
Item 9 Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 32
PART III
Item 10 Directors and Executive Officers of the Registrant 49
Item 11 Executive Compensation 49
Item 12 Security Ownership of Certain Beneficial Owners and Management 49
Item 13 Certain Relationships and Related Transactions 49
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K 49
Signatures 54
-----------
Premisys(R) is a registered trademark of the Company. This Form 10-K also
includes trade names and trademarks of other companies.
<PAGE>
PART I
Item 1. Business
This Form 10-K contains forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A
of the Securities Act of 1933, as amended. These forward-looking statements
involve a number of risks and uncertainties which are described throughout this
Form 10-K, including: demand from and its relationships with its strategic
partners and major customers, including ADC Telecommunications ("ADC"), AT&T
Local Services ("ALS") formerly Teleport Communications Group, Motorola, Inc.
("Motorola"), Paradyne Corporation ("Paradyne") and XEL Communications, Inc.
("XEL"); limited order backlog and quarterly fluctuations; delays and
cancellations of actual and projected customer orders; new product development
and introductions by the Company and its competitors including products based on
the technology licensed by the Company from Positron Fiber Systems Corporation
("Positron") and Switched Network Technologies ("SNT"); deregulation of, and
legislation regarding the domestic and international telecommunications
industry; continued success of competitive local exchange carriers ("CLECs") in
taking market share from incumbent carriers in the U.S. business communications
services market; market acceptance of the SlimLine, StreamLine and Q-155
products; rapidly changing technologies and the Company's ability to respond to
them; the growth of demand for telecommunications services such as wireless,
cellular and the Internet; competition; changes in the mix of products or
customers or in the level of operating expenses; and other factors described
throughout this Form 10-K, including under "Revenues" and "Other Factors That
May Affect Future Operating Results" in Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations", of this Form 10-K.
The actual results that the Company achieves may differ materially from any
forward-looking statements due to such risks and uncertainties. The Company has
identified, using asterisks (*) (italics in the non-EDGAR version of this Form
10-K), various sentences within this Form 10-K which contain such
forward-looking statements, and words such as "believes", "anticipates",
"expects", "intends" and similar expressions are intended to identify
forward-looking statements, but these are not the exclusive means of identifying
such statements. In addition, the section labeled "Other Factors That May Affect
Future Operating Results" in Item 7 of this Form 10-K, which does not include
asterisks (italics in the non-EDGAR version of this Form 10-K) for improved
readability, consists primarily of forward-looking statements and associated
risks. The Company undertakes no obligation to revise any forward-looking
statements in order to reflect events or circumstances that may arise after the
date of this report. Readers are urged to carefully review and consider the
various disclosures made by the Company in this report and in the Company's
other reports filed with the Securities and Exchange Commission that attempt to
advise interested parties of the risks and factors that may affect the Company's
business.
Overview
Premisys Communications, Inc. (the "Company" or "Premisys") designs,
manufactures and markets integrated access products for telecommunications
service providers. The Company pioneered the integrated access device ("IAD")
equipment market with the introduction of the first of a family of integrated
multiple access communications systems ("IMACS") products in December 1991. The
IMACS products are designed to enable public carriers to provide their business
customers with flexible, cost-effective and reliable access to
telecommunications services. The IMACS products provide access to numerous
services, including plain old telephone service ("POTS"), Centrex, digital data
networks ("DDN"), integrated services digital networks ("ISDN"), frame relay,
and asynchronous transfer mode ("ATM") services. The IMACS platform allows
carriers to offer a variety of value-added services, switching technologies and
transmission technologies to their business customers through a single access
device. The IMACS products' modular design and standards-based architecture
enable carriers to offer advanced telecommunications services more quickly and
cost-effectively than single purpose access equipment and to enhance the
manageability of their networks. In fiscal 1998, the Company introduced two new
integrated access products, the SlimLine and the StreamLine, which address
simpler, single T1 access applications, and, in fiscal 1999, the Company
introduced the Q-155 broadband IAD that combines Synchronous Optical Network
("SONET")/Synchronous Digital Hierarchy ("SDH"), time division multiplexing
("TDM") and ATM technologies in a single platform.
The Company's products are distributed and serviced worldwide primarily
through strategic distribution relationships with significant telecommunications
equipment vendors. The Company considers its relationships with these
telecommunications equipment suppliers to be strategic in that they enable the
Company to gain access to public carriers worldwide, to establish the Company's
products as essential value added elements of the public carriers' business
communications solutions and, in some cases, to incorporate proprietary
technology into the IMACS products. The Company's products are typically sold as
access components of the suppliers' communications equipment solutions. The
Company's strategic distribution relationships, from which the Company has
derived most of its revenues to date, include ADC, ALS, Motorola and Paradyne.
To a lesser degree the Company also sells its products directly to carriers and
end user customers and through value-added reseller relationships.
Premisys Communications, Inc. was incorporated in California in July 1990,
and Premisys Communications Pte. Ltd. was incorporated in August 1990 under the
laws of Singapore to be its parent. Premisys Communications Holdings, Inc. was
incorporated in California in January 1992 to serve as a holding company for
both Premisys Communications Pte. Ltd. and Premisys Communications, Inc. This
reorganization was completed in March 1992. Premisys Communications, Inc., a
Delaware corporation, was incorporated in October 1994 to be the Delaware
successor corporation to the California corporations Premisys Communications
Holdings, Inc. and Premisys Communications, Inc. The Delaware reincorporation
was effected in March 1995. As a result of the reincorporation, Premisys
Communications Holdings, Inc. and Premisys Communications, Inc., a California
corporation, merged with and into Premisys Communications, Inc., a Delaware
corporation, and Premisys Communications Pte. Ltd. and Premisys Communications
Limited, a United Kingdom corporation incorporated in May 1994, became
wholly-owned subsidiaries of the Delaware corporation. The Company also has a
wholly owned Canadian subsidiary formed in July 1997. The Company's principal
executive offices are located at 48664 Milmont Drive, Fremont, California 94538,
and its telephone number is (510) 353-7600.
Background
Industry Trends
The market for telecommunications products and services is changing rapidly
because of deregulation and resulting competition, evolving requirements of
business communications, the drive for higher capacity and more cost-effective
technologies and services, and the shift from private to public networks. The
resulting proliferation of value-added services and technologies has created the
need for solutions that permit carriers' business customers to access the
variety of telecommunications services provided by these carriers.
Deregulation and Resulting Competition. Deregulation and competition are
accelerating throughout the worldwide telecommunications industry. In 1984, the
United States government deregulated the domestic telecommunications industry
and forced AT&T Corporation ("AT&T") to divest its monopoly and create the seven
regional bell operating companies ("RBOCs"). Since that time, continuing
domestic deregulation, including the Telecommunications Reform Act of 1996, has
led to fierce competition for the provision of both long distance and local
telecommunications services. In the long distance market, MCI WorldCom, Inc.
("MCI WorldCom"), U.S. Sprint Communications Company ("Sprint") and others have
emerged as competitors to AT&T. In regional and local markets, the incumbent
local exchange carriers ("ILECs") are facing stiff and intensifying competition
from a variety of competitive access providers and CLECs, such as MCI WorldCom
and ALS, formerly Teleport Communications Group Inc. ("Teleport"). Over the last
several years, many new CLECs have been formed, have raised substantial capital
to build new networks and have focused on servicing commercial customers. The
international market is also opening up as a result of deregulation,
privatization and the presence of new wireline and wireless Alternative Carriers
( the international equivalent of CLECs). The intense competition resulting from
the deregulation of these markets requires carriers to differentiate themselves
by offering enhanced value-added services based on new and emerging
technologies.
Evolving Requirements of Business Communications. In recent years, businesses
have become increasingly dependent on the flow of voice, data and video through
various telecommunications systems. This increased dependence on
telecommunications has resulted from several business trends: the growth of the
Internet, the shift to client/server computing; the increase in local area and
wide area networking; the demand for new telecommunications services such as
video conferencing; and the increase in cellular telephone and facsimile use
nationally and internationally. In addition, businesses have expanded beyond
their traditional corporate walls to include remote sales offices, employees
working at home, mobile offices and far-flung customers and suppliers. As a
result, these businesses require telecommunications services that provide
significantly higher bandwidth, the flexibility to choose among services with
varying bandwidth and the ability to access such services from remote locations.
Drive for New Technologies and Services. The changing communications patterns
of business users and the fierce competition among carriers have fueled a drive
for technologies that allow carriers to provide additional value-added services
and to effectively deliver a growing portion of communications services based on
packet-switched networks. Carriers are under pressure to invest aggressively in
new technologies that can deliver services quickly, reliably and
cost-effectively. Having invested in new switching and transmission
technologies, many carriers have initiated aggressive programs focused on
expanding their access infrastructure to broadly deliver new services
efficiently. In addition, carriers are offering a range of services (e.g.,
Internet access, ISDN, LAN interconnection, video conferencing) on a bundled
basis to their business subscribers, and integrated access devices facilitate
these offerings. Bundled services give business subscribers turnkey solutions
that free them from the burden of managing their own private networks, and they
often provide higher margins to carriers than other services.
The Shift from Private to Public Networks. During the 1980s, most large
corporations established and maintained their own private networks to transmit
voice and data because the data transmission services offered by public carriers
were limited and expensive. To build these private networks, corporations leased
transmission lines from the public carriers at fixed monthly rates and purchased
vendor-specific networking equipment. However, these corporations are now
increasingly favoring public carrier services as traditional and emerging
carriers have improved the price, performance and range of services they offer.
Corporations are also seeking to shift to the carriers the costs and burdens of
maintaining the network infrastructure and the risks of investing in new
technologies in the absence of a single technological standard.
Access to Telecommunications Services
In response to the industry trends described above, new and emerging public
carriers are aggressively investing in switching and transmission technologies
to construct new and to upgrade existing telecommunications networks.
Telecommunications equipment suppliers are offering more sophisticated central
office switching equipment that enables carriers to provide new, value-added
services. In addition, carriers are upgrading to fiber optic networks to provide
additional bandwidth to their customers. Traditionally, customer access to data
and voice services had been provided by multiple single purpose access devices.
This solution was adequate until recently because only a limited number of
services were offered. However, with the proliferation of new switching and
transmission technologies and services, the traditional approach for accessing
carrier services via separate devices resulted in a very complex access solution
that was expensive, consumed valuable space and was difficult to manage and
maintain.
The diagram below illustrates the complexity of having numerous dedicated
discrete access devices.
[Diagram of Inegrated Access Solution-OBJECT OMITTED]
The need has developed for a new generation of access equipment that
enabled carriers to provide their business customers with flexible,
cost-effective and reliable access to the increasing number of available public
carrier services without requiring a different access device on the customer's
premises for each technology or type of service. Accordingly, public carriers
are looking for access devices that:
o Integrate circuit, packet and cell switching technologies and support
wireless, fiber optic cable, coaxial cable and copper wire transmission
technologies;
o Accommodate a variety of different business communications equipment
types (such as PBXs, LAN routers, automatic call distribution devices and
modems) at end-user locations;
o Operate within the carrier's existing network management system for
operations, administration, maintenance and provisioning;
o Have the flexibility and open architecture to accommodate both the
requirements of existing installed equipment and the technology developments of
the future; and
o Are reliable, easy to maintain and can be configured and serviced
remotely.
Such devices would facilitate faster connections to new services as they are
offered and reduce the carriers' costs of providing these services.
The Premisys Solution
Since 1990, Premisys has been involved in developing integrated access
devices that would enable public carriers to provide their business customers
flexible, cost-effective and reliable access to present and future
telecommunications technologies and services. The diagram below illustrates the
advantages of a single IAD compared to the approach shown above using numerous
dedicated discrete access devices.
[picture of integrated access solution]
The Company's IADs are designed to serve as a single connection point
between a broad variety of carrier services, such as ISDN, frame relay and ATM,
as well as various business communications equipment types, such as PBXs and LAN
routers. The Company designs its products with high levels of system redundancy,
ease-of-maintenance and hardware safety to conform to established reliability
and maintenance standards, practices and processes. Premisys has four distinct
IADs covering a wide range of needs and applications. The Company's flagship
product was the IMACS. The architecture of the IMACS product line is designed to
permit integrated access to a wide variety of voice and data services,
independent of the carriers' switching or transmission technologies. The
modular, software-based design of the IMACS product allows carriers to upgrade
easily to new communications services as they become available. The IMACS
product can be managed remotely and have remote testing, monitoring and
diagnostic features that allow carriers to minimize expensive on-site testing
and trouble shooting. In addition, the Company's IMACS products provide access
to network management information, such as line performance, traffic volume,
configuration and alarm data, to the carriers' existing network management
systems. The IMACS product is based on open industry standards for multi-vendor
interoperability and enables carriers to deliver a comprehensive set of services
without building proprietary overlay networks or management systems.
In fiscal 1998, Premisys, in response to a growing demand for smaller,
lower-cost IADs, introduced two new IADs with more limited feature sets, the
StreamLine and the SlimLine. The StreamLine product is a scaled down version of
the IMACS product. It is an IAD designed for deployment of multiple services at
small business locations. Using a single T1/E1 access line, the StreamLine
product has expansion slots for up to 4 IMACS compatible voice, data, ISDN or
frame relay cards. Because of its compatibility with the IMACS product, the
StreamLine minimizes the cost of carrying spare modules, reduces training costs
and provides a migration path to the larger IMACS system.
The SlimLine product, the smallest of Premisys' IADs and designed for
low-cost applications, accommodates a single T1 access line and is offered in
two fixed configurations for rapid deployment of voice and data services. It
comes in either 12 or 24 port voice and 2 port data configurations. The
SlimLine, a plug-and-play product, has a sleek, low-profile chassis designed to
minimize space requirements.
In fiscal 1999, the Company shipped its first Q-155 product. The Q-155
accommodates 72 T1/E1 access lines and is designed to deliver a variety of
narrowband and broadband services to customers.
The design and features of the Company's IAD products provide carriers
with four major benefits:
o Lower Cost. The integration of multiple switching technologies in a
single IAD platform reduces carriers' costs of providing access to these
technologies. These reductions are realized in part by eliminating the need for
numerous dedicated discrete access devices, thereby decreasing equipment costs.
In addition, the Company's IAD products are able to concentrate multiple sources
of low and high-speed traffic into fewer high-speed channels, thereby increasing
utilization of carrier network capacity. The Company's IAD products allow
carriers to deliver multiple communications products and services, while
minimizing their risks of technology obsolescence or incompatibility.
o Ability to Offer Services Rapidly. The scaleable, upgradeable design of
the Company's IAD products enables carriers to add revenue generating services
such as ISDN, frame relay and ATM, more quickly, cost-effectively and targeted
to only those areas with demand.
o Remote Manageability. The remote management features of the Company's
IAD products enhance the manageability of carriers' networks without requiring
additional network management systems.
o Reliability. The redundancy, diagnostic, testing and monitoring features
of the Company's IAD products enhance the reliability of carriers' networks.
Company Strategy
The Company's strategic objective is to establish itself as the leading
worldwide provider of access equipment to public carriers for business services.
The key elements of the Company's strategy are described below.
Focus on Public Carrier Access Market
The Company's IAD products were designed in anticipation of a shift from
private to public networks. The Company believes that its IAD products were the
first standards-based integrated access devices specifically targeted to the
public carriers. The Company's IAD products are designed to deliver voice, data
and video applications regardless of whether the carrier uses circuit, packet or
cell switching technologies and whether the carrier network uses copper wire,
fiber optic cable, coaxial cable or wireless transmission. In recent years,
carriers have focused on upgrading existing or building new networks by
investing in switching and transmission technologies. The remaining links needed
by the carriers in order to offer these new services are access devices, and the
Company believes that a single integrated access device offers carriers the most
cost-effective access solution. Carriers that deployed the Company's IAD
products into their networks during fiscal 1999 included:
<PAGE>
Domestic Wireline Carriers International Carriers
-------------------------- ----------------------
AT&T AT&T Network Services International
AT&T Local Services Comcore (Russia)
Alltel Mobile Communications DACOM (Korea)
Cablevision Systems Corporation Macomnet (Russia)
MCI/WorldCom Metrocom (Russia)
MediaOne Saudi Telecommunications Company
Southwestern Bell Telephone Company Telmex (Mexico)
Telmos (Russia)
Domestic Wireless Carriers
AT&T
Airtouch Communications
Bell Atlantic Nynex Mobile
GTE Mobilnet Service Corporation
Sprint Spectrum
Increase Market Penetration Through Strategic Relationships
The Company has focused on forming strategic relationships with leading
telecommunications equipment suppliers in order to gain market acceptance and
penetration of its IAD products. This distribution strategy has enabled the
Company:
o To take advantage of distribution capabilities and established
relationships between leading telecommunications equipment suppliers and their
public carrier customers and thereby gain access to public carriers worldwide,
which do not generally purchase important infrastructure equipment from smaller
companies such as Premisys;
o To establish the IAD products as essential value-added elements of the
public carriers' business communications solutions; and
o To incorporate proprietary next-generation technology developed by or
with these strategic telecommunications equipment suppliers into one or more
elements of the IAD products, which are then distributed by the
telecommunications equipment suppliers.
The Company believes that the joint development of technology with certain
of these strategic telecommunications equipment suppliers demonstrates the
commitment of these suppliers to the Company's IAD product line and encourages a
longer term relationship with the Company. Relationships with Paradyne, Lucent
Technologies ("Lucent"), Motorola and others have allowed the Company to
incorporate advanced technology into its IAD products and have broadened the
Company's markets worldwide.
Market Premisys Access Solutions Directly to CLECs
The recent, rapid growth of CLECs has stimulated demand for IADs. In
addition to supporting the efforts of its strategic distribution partners in
servicing their CLEC customers, the Company's sales force also calls directly on
CLECs. This direct coverage of CLECs ensures that these carriers are aware of
the advantages of Premisys' access solutions and provides input to Premisys for
defining new products and features. Purchases of Premisys products by CLECs are
made through both strategic distribution partners and direct contact with the
Company.
International Markets
A major portion of the telecommunications equipment market is outside of
the United States. Although most of the Company's current revenues represent
shipments to domestic telecommunications equipment suppliers, all of these
companies market and distribute the Company's products worldwide. *Premisys
intends to increase and diversify its sales in international markets. To achieve
this goal, Premisys is in the process of ensuring that its IAD products meet
international standards and is pursuing international strategic relationships.
Premisys currently has international sales offices in Singapore, Hong Kong,
China, Mexico and the United Kingdom.
Customers and Applications
Customers
A substantial majority of the Company's sales are to suppliers of
telecommunications equipment with whom the Company has strategic relationships.
These telecommunications equipment suppliers generally resell the Company's
products to public carriers and end users. The Company also sells products to
value-added resellers ("VARs"), distributors and systems integrators, and, to a
much lesser degree, directly to carriers and end users. Certain of the Company's
customers in fiscal 1999 are listed by channel in the table below.
Strategic Relationships
ADC Paradyne
Alcatel U.S.A., Inc. (1) Pulsecom
Ericsson Telecom S.A. de C.V. Tadiran Microwave Networks
Lucent UTStarcom
Motorola XEL Communications
Northern Telecom
(1) - Alcatel U.S.A., Inc. ("Alcatel") is the combination of Alcatel Network
Systems, Inc. and DSC Communications Corp, ("DSC"), with whom the Company has
had a strategic relationship. Alcatel completed the acquisition of DSC in
September 1998.
Value-Added Resellers, Distributors and System Integrators
Datacraft Asia PSI Technologies Corporation
Harris Corporation/Farinon Division Schmidt Telecom
InComA Ltd. SRT Associates
Integrated Telecommunication Telos Engineering Limited
Technology Sdn. Bhd.
Interlink Communication Systems Telsource Corporation
Metro-Link Services Co. Ltd. Trends and Technologies
MSN Communications Walker & Associates
N.E.T. Federal
Direct
AT&T Local Services Nexcom S.A.de C.V.
Cox Communications Ovation
Powertel, Inc. Southwestern Bell Telephone
Company
MediaOne MCI/WorldCom
Motorola Paging
Paradyne was the Company's first strategic partner and was its largest
customer in fiscal 1999. Paradyne markets the Company's products, under its
label, AccuLink Access Controller (AAC), primarily to Lucent and AT&T. In fiscal
1997, 1998 and 1999, Paradyne accounted for 30%, 15% and 29% of the Company's
revenues, respectively. The Company's agreement with Paradyne gives Paradyne
exclusive distribution rights to AT&T entities. See "-Results of Operations -
Revenues" and "Other Factors That May Affect Future Operating Results -
Relationship with Paradyne" within "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in Item 7 of this Form 10-K.
AT&T Local Services was the Company's second largest customer in fiscal
1999. It accounted for less than 5% of the Company's revenues during fiscal 1997
and 1998, but accounted for 13% of the Company's revenues during fiscal 1999.
Motorola accounted for 15%, 11% and 12% of the Company's revenues during fiscal
1997, 1998 and 1999, respectively. *The loss of any one or more of the Company's
major customers would have a material adverse effect on the Company's business
and operating results. *Any of the telecommunications equipment suppliers that
market and sell the Company's products could elect to cease marketing and
selling the Company's products, and there can be no assurance that these
telecommunications equipment suppliers will continue to place orders with the
Company or that the Company will be able to obtain orders from new
telecommunications equipment suppliers or end users. See Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations - Other
Factors That May Affect Future Operating Results - Indirect Channels of
Distribution."
The Premisys Product Lines
Premisys Communications, Inc. offers a full family of integrated access
devices: the IMACS, StreamLine, SlimLine and Q-155 products. The IMACS is the
Company's flagship product and has the broadest range of services among the
Company's IAD product family. The Company began shipping the IMACS in 1992, and
it has represented a substantial majority of the Company's revenues through
fiscal 1999. The StreamLine has a similar modular architecture as the IMACS and
supports all IMACS user cards in a smaller chassis with a single T1/E1 design.
Shipments of the StreamLine began in March 1998. The SlimLine is a single T1
voice and data IAD, offering a very small footprint and low price. It is a
product that is easy to provision and is ideal for the small or remote office
environment. Shipments of the SlimLine began in June 1998. In June 1998 the
Company announced the Q-155 product, which is a multiple T1/E1 product that
manages narrowband access devices, delivers broadband services, and acts as a
gateway to both time division multiplexing ("TDM") and cell-based carrier
networks. Shipments of the Q-155 began in March 1999. The tables below compare
the capabilities and prices of these four product lines.
NARROWBAND PRODUCTS
[picture of SlimLine] [picture of StreamLine][picture of IMACS]
SlimLine StreamLine IMACS
Network 1-8 T1/E1s TDM,
Connections Single T1 Single T1/E1 Frame Relay, DS3
ATM
- --------------------------------------------------------------------------------
User o 12 or 24 voice o User cards: o Server cards:
Connections ports ISDN, FXS, FXO, Frame Relay,
o 2 data ports FRAD, Data, IP PRI, ATM, ADPCM
o User Cards:
ISDN, FXS, FXO,
Frame Relay, IP
- --------------------------------------------------------------------------------
Management o Plug & play, o Remotely via o Remotely via
front panel EMS & Telnet EMS & Telnet
configuration o Full range of
SNMP MIBs
- --------------------------------------------------------------------------------
Other o TR-08 o TR-08 o Server Cards
Functions o Drop & insert for Advanced
o Voice functions
compression o 0/1
o Modular design cross-connect
o Redundancy
o TR-08
o Modular design
- --------------------------------------------------------------------------------
List Price Range $3,500 - $5,000 $7,000 - $12,000 $10,000 - $40,000
<PAGE>
BROADBAND PRODUCTS
[picture of Q-155]
Q-155
Network 72 T1/E1s TDM
Connections DS3/E3, OC3/STM 1
SONET/SDH
- ---------------------------------------------
User o HDSL
Connections o T1/E1 & DS3/E3
o OC3C/STM 1
- ---------------------------------------------
Management o Remotely via
online
o TL1
- ---------------------------------------------
Key o 3/1/0 Cross
Functions Connect
o ATM Switch
o GR-303/V5.2
- ---------------------------------------------
List Price Range $50,000 - $100,000
- ---------------------------------------------
IMACS Products
The IMACS product is a modular, software-based platform that can be
configured for delivering a wide variety of communications services. The product
is designed for mission-critical applications and supports full redundancy for
CPU, wide area network ("WAN") interfaces, power supplies and ringing
generators. The components of the IMACS system architecture are the WAN modules,
user modules, server modules and common equipment modules. The WAN modules
provide the connections to the carrier network. The user modules connect user
voice, data and video systems to the IMACS. The server modules process
information flowing between user and WAN modules, performing tasks such as voice
compression, ATM adaptation and inverse multiplexing. The common equipment
modules contain the central processor and provide power and interface functions.
Two versions of the IMACS with three unique chassis designs are available: the
3.x Host series, which does not have server modules and supports an intelligent
channel bank application and the 5.x Host series, which offers the full
functionality of an IAD. The chassis designs are the IMACS/600 and IMACS/900
which are front-access devices, and the IMACS/800 that can be accessed from the
front and back. This allows the IMACS to work in any carrier environment.
Environmentally hardened units are also available, including units designed for
desert installation.
The Company also offers pre-configured versions of the IMACS to address
specific applications. These pre-configured products include: the BRX, which
offers carriers a cost-effective solution for provisioning ISDN BRI services to
remote customers, and the CellDAX, which is configured to reduce the amount of
equipment at the wireless cell site, decreasing bandwidth requirements and
reducing operating costs.
StreamLine
The StreamLine product, like the IMACS, has a modular design and is
software-based. It supports all of the User cards supported by the IMACS, but
none of the Server cards, and accommodates one T1/E1 connection instead of
IMACS' eight. It is also manageable via the same element management system
("EMS") that supports the IMACS. However, it only has half the footprint of the
IMACS, thus making it ideal for space constrained collocation space and telco
closets, and its fewer modules and lower selling price offers carriers an
inventory control and cost benefit.
As with all Premisys products, StreamLine is standards based including the
Bellcore Standard TR-08 protocol. The single T1/E1 design positions it for the
small and medium business market that carriers are targeting, without losing the
scalability
offered by the IMACS.
<PAGE>
SlimLine
The SlimLine product is designed for small or remote business offices
seeking plug & play provisioning of integrated T1 service. It is offered in two
fixed configurations - one with 12 voice channels and two V.35 data ports, and
the other with 24 voice channels and two V.35 data ports. Either or both data
ports can support a low cost router for Internet and Intranet service. The
chassis is a pizza-box design with configuration done with front panel dip
switches. Installation is very simple.
TR-08 support comes standard with either the 12 or 24 port voice
configurations, supports FXS, loop and ground start, caller ID and an integral
channel servicing unit ("CSU").
*A managed version of the SlimLine was introduced in June 1999 and is
expected to begin shipping in the December quarter of fiscal 2000.
Q-155 Product Line
The Q-155 brings the benefits of IADs to broadband networks. This product
is designed to increase the utilization of higher bandwidth services such as
SONET or SDH fiber optic rings and to accept legacy TDM or advanced packet
traffic and route it to the appropriate central office or data switch, again in
any protocol required (SONET, SDH, ATM, TDM).
The Q-155 enables carriers to deliver a variety of broadband and
narrowband services to their business customers with higher utilization of their
transmission networks and reduced requirements for ports on their central office
cross-connects and switches. The Q-155 has been developed utilizing technologies
licensed from Positron in January 1997, and from technologies licensed from SNT
in March 1998. First shipments of the Q-155 occurred in the quarter ended March
31, 1999.
The Q-155 is designed to complement the IMACS, StreamLine and SlimLine
products as the Q-155 can integrate these devices into a total network solution.
*With the addition of the Q-155 product line, Premisys products are expected to
provide a full access product line, offering multiple price points from a single
T1 to SONET/SDH speeds and are expected to enable Premisys to offer a complete
solution to network access. For a discussion of certain risks related to these
new products, see "Other Factors that May Affect Future Operating Results -
Rapidly Evolving Technology" within Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
Network Management
The IMACS and StreamLine products offer a number of network management
options that are based on open industry standards in order to provide easy
integration with generic network management systems and interfaces, such as the
Simplified Network Management Protocol ("SNMP"). They can be managed locally
through an attached terminal or remotely through an integral modem. Network
management messaging is supported locally through TCP/IP protocol standards,
including support for Serial Line Interface Protocol ("SLIP"), and remotely
through the virtual terminal TELNET protocol. Network management messaging can
be sent across the network via a carrier's standards-based network
infrastructure. The Q-155 can be managed remotely either online or via TL1
(command line interface).
The Company has also developed application software for the IMACS and
StreamLine products called EMS and the new OnLine EMS. EMS' features include
fault management and statistics, remote testing and diagnostics, surveillance
management, performance monitoring, software-download, inventory reporting and
configuration management. These features reduce the carrier's cost of providing
multiple services to its business customers by allowing remote management and
control.
<PAGE>
Marketing, Sales and Distribution
The primary market for the Company's products is public telecommunications
carriers, including major domestic carriers providing long distance and local
service, competitive access providers, competitive local exchange carriers,
wireless service providers, enhanced service providers and international
carriers. The focus of the Company's sales strategy is to form and to support
strategic relationships with telecommunications equipment suppliers, systems
integrators and international distributors (collectively "Partners"). The
Company also has relationships with distributors and sells its products directly
to end users on a limited basis. The Company currently has sales staff in
several locations across the United States and also maintains international
sales offices in Singapore, Hong Kong, China, Mexico and the United Kingdom. The
offices in Singapore, China and Hong Kong serve the Asia/Pacific region, the
office in the United Kingdom serves Europe, the Middle East and Africa and the
office in Mexico serves the Latin American region. The Company's sales staff
supports the sales organizations of the telecommunications equipment suppliers
that distribute and market its products. In addition, the Company's sales staff
provides field system training, develops new strategic relationships and, where
appropriate, sells directly to carriers and end users.
Strategic Relationships
The Company believes that the combination of technologies, services and
support mechanisms needed to reach the world-wide market for the Company's
products can best be provided through strategic relationships with leading
partners. Many of these partners have established relationships with the public
carriers and provide a broad range of services to these carriers through
existing front-line service and support networks. Premisys seeks strategic
relationships that offer (i) an established presence in the Company's primary
markets, (ii) a product line that the IMACS product can complement to provide
value-added networking solutions and (iii) a core technology that enables the
telecommunications equipment suppliers to develop enhanced products with market
differentiation that can be integrated with the IMACS platform.
The Company believes that the joint development of technology demonstrates
the commitment of these partners to the IMACS product line and encourages a
longer-term relationship with the Company. *The Company has completed joint
development projects with Paradyne, Lucent, Northern Telecom, Alcatel and
Motorola, which has led to IMACS products being sold as components of these
companies' specific products.
The Company's agreements with partners generally grant non-exclusive
licenses to distribute and, based on volume, provide for certain discounts on
the purchase prices of the Company's products. *Any partner that markets and
sells the Company's products could elect to cease marketing and selling the
Company's products, and there can be no assurance that these partners will
continue to place orders with the Company or that the Company will be able to
obtain orders from new customers or end users. *The loss of any one or more of
the Company's strategic partners would have a material adverse effect on the
Company's business and operating results. The Company derived approximately 77%,
80% and 81 % of its revenues from its partners in fiscal 1997, 1998 and 1999,
respectively. See Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Results of Operations Revenues" and "-
Other Factors That May Affect Future Operating Results Relationship with
Paradyne."
Distributors
The Company also uses a select number of VARs, system integrators and
distributors to market and sell its products. These customers generally sell the
Company's products to smaller carriers and corporations accessing public
networks as well as to service international markets where the VAR or
distributor is located. The Company derived approximately 19%, 11% and 7% of its
revenues from value added resellers and non-strategic distributors in fiscal
1997, 1998 and 1999, respectively.
Direct Sales
Direct sales by the Company to carriers and end users to date has
represented a minor part of the Company's business. Generally, the Company sells
directly only to carriers that have their own established support and service
infrastructures and to end users within market segments where the Company's
strategic telecommunications equipment suppliers, distributors and VARs cannot
cost-effectively market and sell the Company's products. The Company derived
approximately 4%, 9% and 12% of its revenues from direct sales in fiscal 1997,
1998 and 1999, respectively. *The Company intends to focus on and increase the
proportion of its revenues that are derived directly from CLECs and Alternative
Carriers. *The Company believes that large telecommunications equipment
providers do not aggressively target these new and generally small carriers.
*Moreover, the Company believes that its products are ideally suited to these
new carriers because they offer bundled services, a range of technologies,
protection of legacy investment and low cost implementation. *The Company
intends to augment its technical support, training, collateral development and
marketing to actively develop its direct sales capabilities. *However, there can
be no assurance that such efforts will be successful. See Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations - Other
Factors That May Affect Future Operating Results - Competition."
Customer Support
The partners that sell the Company's products directly to the end user
provide the first level of customer support for the Company's products. The
Company's personnel provide backup support and training. When a partner is not
able to provide solutions to product problems, service personnel contact the
Company's customer support group, which has hardware and software products
configured to simulate networking problems. In some cases, the Company's
customer support representatives dial into the end user network to assist
directly in troubleshooting and problem isolation. Customer support
representatives are available by telephone 24 hours a day, 7 days a week. The
Company also provides on-site service when requested.
The Company's products have been designed to ensure that problems can be
easily diagnosed. All voice and data modules contain integral testing suites
that allow isolation of networking problems. The Company currently warrants its
systems products against workmanship or defects for five years and its network
management software products for 90 days. During the warranty period, Premisys
repairs or replaces any failed system component at no charge.
The Company also provides technical training either at the sites of its
strategic partners or at Company facilities. Training courses include the theory
of operation, equipment diagnostics and the testing and troubleshooting of both
the equipment and the network. Train-the-trainer courses are also offered to
help the telecommunications equipment suppliers educate their support personnel.
Competition
The market for telecommunications products is highly competitive and
subject to rapid technological change, regulatory developments and emerging
industry standards. The Company believes that the principal competitive factors
in the carrier access market are: support for multiple types of carrier
services; conformance to public carrier standards for signaling, transmission,
network management, reliability and safety; the development and rapid
introduction of new product features; price/performance; quality of customer
support; and installed base. The Company believes it has competed favorably to
date with respect to these factors. *However, there can be no assurance that the
Company will compete successfully in the future with respect to these or other
factors.
The Company's principal competition to date for its IMACS products has
been from major telecommunications equipment suppliers, such as Newbridge
Networks Corporation ("Newbridge"), Tellabs, Inc. ("Tellabs") and World Access,
Inc. ("World Access"), all of which offer broad lines of products including
access devices for business applications. *The Company expects substantial
additional competition from existing competitors as they develop products to
compete with the functionality and flexibility of the Company's IMACS products.
Premisys' SlimLine and StreamLine products have faced significant competition
from Carrier Access Corporation ("CAC"), and to a lesser extent from Vina
Technologies ("Vina"), Adtran, Inc. ("Adtran") and existing telecommunications
equipment manufacturers selling channel bank and CSU/DSU (data servicing unit)
products. In addition, the Company faces competition from companies who provide
substitute, as opposed to direct replacement, solutions for the Company's IMACS,
SlimLIne and StreamLine products. The primary competitors supplying substitute
products include Advanced Fibre Communications ("AFC"), Alcatel, Lucent, Nortel
and Reltec Corporation ("Reltec"). The Q-155 product competes with broadband
access products offered or announced by a number of vendors including Fibex,
which was recently acquired by Cisco, Accelerated Networks, Inc., Atmosphere
Networks, Inc., other telecommunications equipment manufacturers selling
multiplexer products and digital loop carriers ("DLCs") with the Bellcore
Standard GR-303 protocol and other competitors, such as Pairgain Technologies,
Inc. ("Pairgain") and Paradyne, that provide bundled voice and data services and
solutions for better utilization of bandwidth. *Certain of the
telecommunications equipment suppliers that market and distribute the Company's
products may in the future develop other products that could be sold for
selected applications for which the Company's products are currently provided.
*Successful, timely development and market acceptance of such products could
reduce the level of demand from these telecommunications equipment suppliers for
the Company's products. *To the extent that current or potential competitors can
expand their current offerings to include access to circuit, packet and cell
switching in an integrated product, the Company's business and operating results
could be materially adversely affected. Many of the Company's competitors have
technical, financial, manufacturing and marketing resources significantly
greater than those of the Company. In addition, many of such competitors have
long-established relationships with public carriers. *There can be no assurance
that the Company will have the financial resources, technical expertise,
manufacturing, marketing, distribution and support capabilities to compete
successfully in the future.
<PAGE>
Manufacturing and Suppliers
The Company's manufacturing operations consist primarily of materials
planning and procurement, module testing and quality control. The Company relies
on contract manufacturers, primarily in the United States. The Company's
reliance on third-party subcontractors reduces the Company's flexibility and
responsiveness to changes. For example, contract manufacturers are not as quick
as internal manufacturing organizations to react to new products or changes in
product designs or product quantities. Use of contract manufacturers can expose
Premisys to supply interruptions due to production, quality or financial
problems of its contractors. *This loss of flexibility or supply interruption
can result in shipment delays, which could have a material adverse effect on the
Company's business and operating results. The Company believes, however, that by
using a limited number of third-party subcontractors, it is in a better position
to reduce product costs, acquire additional capacity and reduce its capital
investment. All testing of the Company's products is performed by the Company at
its Fremont, California facility. Products are rigorously tested using automated
test equipment prior to shipment to customers. All printed circuit board
assemblies are tested individually. To date, the Company has experienced no
significant adverse affects on flexibility or responsiveness to changes due to
the Company's use of third-party subcontractors.
Generally, the Company uses industry standard components for its products.
It uses field programmable gate arrays with erasable programmable memory rather
than custom integrated circuits in order to maximize its ability to customize
products quickly for individual carriers and add product features. Certain
components used in the Company's products, including microprocessors and
communications chips that are manufactured by Motorola, Siemens AG, Xilinx,
Lucent and National Semiconductor, are currently available from only one
supplier. In the past, the Company has experienced shortages of certain of these
and other components because of vendor production or quality problems and the
inability of suppliers to increase delivery rates to meet the Company's
requirements. In the past certain components have been in short supply within
the Company's industry, and in such cases, Premisys must compete for these
components with larger companies that often have longer established
relationships with these vendors. Component shortages and delays have on
occasion resulted in delays in the shipment of the Company's products, and the
component shortages have also on occasion resulted in higher component costs.
Certain components used in the Company's products require an order lead time of
up to one year. *Other components that currently are readily available may
become difficult to obtain in the future. *Failure of the Company to order
sufficient quantities of these components in advance could prevent the Company
from increasing production of products in response to customer orders in excess
of amounts projected by the Company, which could have a material adverse effect
on the Company's business and operating results. *Alternatively, ordering too
much of a component in advance could lead to excess inventory, which could have
a material adverse effect on the Company's business and operating results.
*An extended delay in deliveries of components or of finished printed
circuit board assemblies would have a material adverse effect on the Company's
business and operating results and possibly on its relationships with its
customers. *Although Premisys typically maintains some reserve inventory of
components, this inventory would not cover a significant delay in the delivery
of such components.
Research and Development
During fiscal 1997, 1998 and 1999, total research and development
expenditures were $10.5 million, $16.2 million and $19.8 million, respectively.
All research and development expenditures are expensed as incurred. In addition,
in fiscal 1997 and 1998 the Company incurred charges of $4.0 million and $4.4
million, respectively, for licenses to certain SONET and SDH based technologies
and cell and packet technologies, respectively. See "Results of Operations -
Acquired In-Process Technology" within "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in Item 7 of this Form 10-K.
The telecommunications equipment market is characterized by rapidly
changing technologies and frequent new product introductions, which include
frame relay, ATM and new digital subscriber line technologies ("xDSL").
Standards for new services such as ATM and xDSL are still evolving. *As these
technologies and related standards evolve, the Company may be required to modify
its products or develop and support new versions of its products. *The rapid
development of new technologies increases the risk that current or new
competitors could develop products that would reduce the competitiveness of the
Company's products. *The Company's success will depend to a substantial degree
upon its ability to respond to changes in technology, industry standards and
customer requirements. *This will require the timely selection, development and
marketing of new products and enhancements on a cost-effective basis. *There can
be no assurance that the Company will be successful in developing, introducing
or managing the transition to new or enhanced products or that any such products
will be responsive to technological changes or will gain market acceptance. See
Item 7, "Management's Discussion and Analysis of Financial Condition and Results
of Operations - Other Factors That May Affect Future Operating Results - Rapidly
Evolving Technology."
In fiscal 1997, 1998 and 1999, the Company's research and
development activities focused on the development and release of the SlimLine,
StreamLine and Q-155. The SlimLine and StreamLine were released in the quarters
ended March 31 and June 30, 1998, respectively. The Q-155 was first shipped in
the quarter ended March 31, 1999. Premisys licensed SONET/SDH technology from
Positron in the quarter ended March 31, 1997 and licensed cell and packet
switching technologies from SNT in the quarter ended March 31, 1998. The Company
has integrated the technology licensed from Positron, and is continuing to
integrate the technology licensed from SNT, into the Q-155.
*Products as complex as those offered by the Company may contain
undetected errors or failures when first introduced or as new versions are
released. *Such errors have occurred in the past year, and there can be no
assurance that, despite testing by the Company and by current and potential
customers, errors will not be found in new products after commencement of
commercial shipments. *The occurrence of such errors have in the past resulted
(including during fiscal 1997, 1998 and 1999), and could in the future, result
in the loss or delay in market acceptance of the Company's products, which could
have a material adverse effect on the Company's quarterly operating results and
its market opportunities. *As the functionality and complexity of the Company's
products continue to grow, the Company may experience an increased incidence of
such errors or failures, as well as delays in introducing its products.
As of June 30, 1999, 122 employees were engaged in research and
development programs, including hardware and software development, test and
engineering support personnel. The Company believes that recruiting and
retaining engineering personnel is essential to its success. *To the extent that
the Company is not successful in attracting and retaining its technical staff,
its business and operating results would be adversely affected. See Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Other Factors That May Affect Future Operating Results - Dependence
on Key Personnel."
Government Regulation
*Government regulatory policies are likely to continue to have a major
impact on the pricing of existing as well as new public network services and
therefore are expected to affect demand for such services and the
telecommunications products that support such services. *Regulations and FCC
rulings arising from the Telecommunications Reform Act of 1996 will impact
service offerings and competitiveness in the communications marketplace, and
thus could have an effect on the timing and size of the industry's investment in
access equipment. *Tariff rates, whether determined autonomously by carriers or
in response to regulatory directives, may affect the cost effectiveness of
deploying public network services. *Tariff policies are under continuous review
and are subject to change. *User uncertainty regarding future policies may also
affect demand for telecommunications products, including the Company's products.
Governmental communications regulatory authorities have promulgated
regulations that, among other things, set installation and equipment standards
for private telecommunications systems and require that all newly installed
hardware be registered and meet certain governmental standards. *The failure of
the Company's products to comply with these standards, or any delays in
compliance, could delay introduction of the Company's products, which could have
a material adverse effect on the Company's business and operating results. See
Item 7, "Management's Discussion and Analysis of Financial Condition and Results
of Operations - Other Factors That May Affect Future Operating Results -
Industry Standards and Regulatory Matters."
Intellectual Property
The Company relies upon a combination of patent, trade secret, copyright
and trademark laws and contractual restrictions to establish and protect
proprietary rights in its products. The Company currently holds one U.S. patent.
This patent relates to the manner in which the various modules that are included
within an IMACS communicate with one another and expires December 2012. The
Company has also entered into confidentiality and invention assignment
agreements with its employees, and enters into non-disclosure agreements with
its suppliers, distributors and appropriate customers so as to limit access to
and disclosure of its proprietary information. *There can be no assurance that
these statutory and contractual arrangements will prove sufficient to deter
misappropriation of the Company's technologies or independent third-party
development of similar technologies. *The laws of certain foreign countries in
which the Company's products are or may be developed, manufactured or sold may
not protect the Company's products or intellectual property rights to the same
extent as do the laws of the United States and thus make the possibility of
piracy of the Company's technology and products more likely.
The telecommunications industry is characterized by the existence of a
large number of patents and frequent litigation based on allegations of patent
infringement. *From time to time, third parties may assert exclusive patent,
copyright, trademark and other intellectual property rights to technologies that
are important to the Company. There are no currently pending material claims
that the Company's products, trademarks or other proprietary rights infringe the
proprietary rights of third parties. *However, there can be no assurance that
the Company will not receive communications from third parties in the future
asserting that the Company's products infringe or may infringe the proprietary
rights of third parties. In its distribution agreements, the Company agrees to
indemnify its customers for any expenses or liabilities resulting from claimed
infringements of patents, trademarks or copyrights of third parties. *In the
event of litigation to determine the validity of any third-party claims, such
litigation, whether or not determined in favor of the Company, could result in
significant expense to the Company and divert the efforts of the Company's
technical and management personnel from productive tasks. *In the event of an
adverse ruling in such litigation, the Company might be required to discontinue
the use and sale of infringing products, expend significant resources to develop
non-infringing technology or obtain licenses from third parties. *There can be
no assurance that licenses from third parties would be available on reasonable
commercial terms, if at all. *In the event of a successful claim against the
Company and the failure of the Company to develop or license a substitute
technology, the Company's business and operating results would be materially
adversely affected.
Employees
At June 30, 1999, Premisys employed 332 individuals on a full-time
equivalent basis. Of these, 100 were involved in sales, marketing and customer
support, 122 in research and development, 79 in manufacturing, and the remaining
31 in administration and finance. The Company also uses contractors and
temporary workers. The Company considers its relations with its employees to be
good and has not experienced any interruption of operations as a result of labor
disagreements. *The Company's future success will depend on its ability to
attract, motivate and retain highly skilled employees, the competition for whom
is intense. See Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Other Factors That May Affect Future
Operating Results - Dependence on Key Personnel."
Item 2. Properties
The Company's principal offices are located in two facilities, totaling
118,281 square feet, leased by the Company in Fremont, California. The leases on
these facilities, which are classified as non-cancelable operating leases,
expire on various dates through December 31, 2005. In addition, the Company
leases a facility, totaling 29,840 square feet, in Fremont, California that it
subleases under a three year sublease that commenced in April 1999. The Company
also leases facilities in Florida, Colorado, Texas, Canada, Singapore, Hong
Kong, the United Kingdom and China. The leases on these facilities, which are
classified as non-cancelable operating leases, expire on various dates through
December 31, 2005. Approximately 60% of the space in the Fremont, California
facilities is used or reserved for manufacturing, product development and
testing; the balance of the space is used or reserved for sales, marketing and
other general administrative activities. See Note 9 of Notes to Consolidated
Financial Statements. The Company believes that its present facilities are well
maintained and are in good operating condition.
Item 3. Legal Proceedings
The Company is not involved in any material legal proceeding.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the security holders during the
fourth quarter of fiscal 1999.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Price Range of Common Stock
The Company's Common Stock is quoted on the Nasdaq National Market under
the symbol "PRMS." The Company's Common Stock commenced trading on the Nasdaq
National Market on April 6, 1995. The following table lists the high and low
closing prices during fiscal 1998 and fiscal 1999.
High Low
Fiscal 1998:
First Quarter $ 25 1/4 $ 15
Second Quarter $ 33 1/4 $ 20 3/8
Third Quarter $ 29 3/4 $ 18 13/16
Fourth Quarter $ 32 1/4 $ 22 1/2
Fiscal 1999:
First Quarter $ 25 7/8 $ 8
Second Quarter $ 15 3/8 $ 5 5/8
Third Quarter $ 12 1/8 $ 6 1/4
Fourth Quarter $ 10 1/2 $ 6 31/32
There were approximately 224 holders of record of the Company's Common
Stock as of September 3, 1999.
Dividend Policy
The Company has not paid any cash dividends on its capital stock to date.
*The Company currently anticipates that it will retain all future earnings for
use in its business and does not anticipate paying any cash dividends in the
foreseeable future.
Issuance of Put Warrants
On August 31, 1998, the Company's Board of Directors authorized the
repurchase, at management's discretion, of up to 4.0 million shares of its
Common Stock at market prices not to exceed $14.00 per share and as market and
business conditions warrant. The primary purpose of this repurchase program was
to increase stockholder value.
In connection with this program, on September 17, 1998 the Company sold
2.0 million put warrants to, and purchased 1.5 million call options from an
independent third party. The Company used the proceeds from the sale of the put
warrants to purchase call options in a transaction not requiring any cash outlay
at the time. The put warrants entitled the independent party to sell shares of
the Company's common stock to the Company at specified strike prices and
exercise dates. Each of the warrants was exempt from registration under section
4 (2) of the Securities Act of 1933, as amended. Each transaction was privately
negotiated and each offeree and purchaser was an accredited investor. No public
offering or public solicitation was used by the Company in the placement of
these warrants.
On January 26, 1999, the Company paid $762,000 to dissolve the obligation
for 1.0 million put warrants and 0.75 million call options that were to expire
on January 29, 1999. On September 10, 1999, the Company paid $3.7 million to
dissolve the remaining 1.0 million put warrants and 0.75 million call options
which were to expire on September 15, 1999. The expenses associated with the
dissolution of these put warrants are reflected as a component of cash for the
quarter ended March 31, 1999 and will be reflected in the same manner in the
quarter ended September 30, 1999.
Item 6. Selected Financial Data
Year Ended June 30, (1)
--------------------------------------------------
1995 1996 1997 1998 1999
--------- -------- -------- -------- ---------
(in thousands, except per share data)
Consolidated Statements of Operations Data:
Revenues $30,888 $73,912 $78,358 $102,298 $ 92,423
Income from operations 4,784 24,577 15,213 18,371 7,635
Net income $ 3,967 $16,788 $10,891 $ 13,715 $ 7,621
========= ======== ======== ======== =========
Net income per share - Basic $ 0.60 $ 0.70 $ 0.44 $ 0.54 $ 0.31
========= ======== ======== ========= =========
Net income per share-Diluted $ 0.18 $ 0.64 $ 0.41 $ 0.50 $ 0.30
========= ======== ========= ========= =========
Shares used in computing net income
per share
Basic 6,622 23,876 24,722 25,569 24,600
========= ======== ======== ======== =========
Diluted 22,246 26,389 26,498 27,495 25,384
========= ======== ======== ======== =========
<PAGE>
As of June 30, (1)
--------------------------------------------------
1995 1996 1997 1998 1999
-------- -------- -------- -------- --------
(in thousands)
Consolidated Balance Sheet Data:
Cash, cash equivalents and
short-term investments $42,963 $60,861 $73,224 $105,981 $ 84,434
Working capital 45,520 74,853 90,263 112,079 100,593
Total assets 52,621 87,522 107,101 138,757 126,624
Long-term debt 109 91 9 --- ---
Total stockholder's equity $47,007 $77,580 $96,817 $120,776 $ 99,205
Quarterly Financial Data
The following table sets forth certain unaudited quarterly financial data
for each quarter of fiscal 1998 and 1999. In the opinion of the Company's
management, this unaudited information has been prepared on the same basis as
the audited consolidated financial statements contained herein and includes all
adjustments (consisting only of normal recurring adjustments) necessary to
present fairly the information set forth therein. *The operating results for any
quarter are not necessarily indicative of results for any future period. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Quarterly Fluctuations."
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Quarter Ended
---------------------------------------------------------------------
Fiscal 1998 (1) Fiscal 1999 (1)
--------------------------------- ---------------------------------
Sept 30 Dec 31 Mar 31, June 30, Sept 30 Dec 31, Mar 31, June 30,
1997 1997 1998 1998 1998 1998 1999 1999
------- ------- -------- ------- ------- ------- ------- -------
(in thousands, except per share date)
Revenues $19,285 $24,616 $27,154 $31,243 $25,011 $25,394 $26,734 $15,284
Gross Profit 12,067 16,338 18,045 20,262 16,623 15,156 15,425 8,559
Income (loss) 3,536 5,498 2,000(2) 7,337 5,382 3,106 2,897 (3,750)
from operations
Net income (loss) $ 2,677 $ 4,012 $ 1,841(2)$ 5,185 $ 4,013 $ 2,544 $ 2,375 $(1,311)
======= ======= ======== ======= ======== ======= ======= =======
Net income per $ 0.11 $ 0.16 $ 0.07 $ 0.20 $ 0.15 $ 0.10 $ 0.10 $(0.05)
share-Basic
======= ======= ======== ======= ======= ======= ======= =======
Net income per $ 0.10 $ 0.15 $ 0.07 $ 0.19 $ 0.15 $ 0.10 $ 0.10 $(0.05)
share-Diluted
======= ======= ======== ======= ======= ======= ======= =======
Shares used in
computing net income per share
Basic 25,308 25,462 25,630 25,874 25,910 24,388 24,030 24,072
Diluted 27,287 27,578 27,507 27,608 27,025 25,142 24,628 24,738
======= ======= ======== ======= ======= ======= ======= =======
</TABLE>
- ---------------------------------
(1)The Company uses a fiscal year ending on the Friday closest to June 30.
For ease of presentation, however, annual and quarterly periods during
fiscal 1997, 1998 and 1999 are shown in this Form 10-K as ending on the
last day of the last calendar month in such year and quarter,
respectively.
(2)Includes a $4,431,000 charge for a technology license. See Item 7,
"Management's Discussion and Analysis of Financial Condition and Results
of Operations - Acquired In-Process Technology" of this Form 10-K and Note
3 of Notes to Consolidated Financial Statements.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
As indicated in the first paragraph of Item 1, above, this Form 10-K
contains certain forward looking statements within the meaning of Section 21E of
the Securities Exchange Act of 1934, as amended, and Section 27A of the
Securities Act of 1933, as amended. The Company has identified by asterisks (*)
(or italics in the non-EDGAR version of this Form 10-K) various sentences within
this Form 10-K which contain such forward-looking statements, and words such as
"believes," "anticipates," "expects," "intends," "will" and similar expressions
are also intended to identify forward looking statements, but these are not the
exclusive means of identifying such statements. The forward looking statements
included in this Form 10-K involve numerous risks and uncertainties which are
described throughout this Form 10-K, such as those referenced in the first
paragraph of Item 1, above, and other factors described throughout this Form
10-K, including under "Revenues" and "Other Factors That May Affect Future
Operating Results" within this Item 7. The actual results that the Company
achieves may differ materially from any forward looking statements due to such
risks and uncertainties.
Overview
Premisys was founded in July 1990 and became a publicly owned corporation
in April 1995. The Company develops, manufactures, and markets access products
for use by telecommunications carriers for delivering a wide variety of voice
and data services to its business customers.
The Company's products enable carriers to deliver multiple services with a
single device. The Company's IMACS product supports a wide range of services and
up to eight T1 or E1 connections. The Company's StreamLine product, which was
derived from the IMACS, supports the same voice services and most of the data
services offered by the IMACS, but has a single T1 connection. The Company's
SlimLine product supports a limited number of voice and data services and has
one T1 connection. The Company's Q-155 product is a broadband integrated access
device combining TDM, ATM and SONET/SDH on a single platform which accommodates
a wide range of voice and data services. Although the IMACS accounted for nearly
all of the Company's revenues in fiscal 1997, 1998 and 1999, the Company's new
products provide additional options in order to offer carriers more complete
solutions to provide delivery of services to their business customers.
Most of the Company's products are deployed in new networks, typically
built by new carriers, such as CLECs in the United States and new wireless
service providers.
The Company sells its products worldwide, primarily through large
telecommunications equipment suppliers, systems integrators and distributors.
The Company derived 7%, 5% and 3%, respectively, of its revenues from direct
sales to international customers in fiscal 1997, 1998 and 1999. (International
sales through domestic suppliers and distributors are reflected in the Company's
domestic revenues). *The Company intends to continue to expand its operations
outside the United States and anticipates that direct sales to international
customers will increase in the future, both in absolute dollars and as a
percentage of the Company's revenues. In order to sell its products
internationally, the Company must meet standards established by international
telecommunications committees and telecommunications authorities in various
countries. *Conducting business outside of the United States is subject to
certain risks, including longer payment cycles, unexpected changes in regulatory
requirements and tariffs, currency conversion risks, difficulties in staffing
and managing foreign operations, greater difficulty in accounts receivable
collection and potentially adverse tax consequences. See " - Other Factors That
May Affect Future Operating Results - Indirect Channels of Distribution."
Results of Operations
Revenues
Revenues consist primarily of gross sales of products, less discounts and
sales returns and allowances. Revenues in fiscal 1997, 1998 and 1999 were
$78,358,000, $102,298,000 and $92,423,000, respectively. The majority of the
revenue increase from fiscal 1997 to fiscal 1998 was primarily attributable to
unit growth. The Company's list prices for its products did not change
significantly from fiscal 1997 to fiscal 1998 and the average revenue to the
Company per platform and module was relatively unchanged from fiscal 1997 to
fiscal 1998. In addition, an important contributor to the Company's unit growth
in fiscal 1998 was its success with one domestic CLEC in particular, MCI,
through the Company's strategic relationship with ADC. From fiscal 1998 to
fiscal 1999, revenues decreased by $9,875,000 or 10%. A significant portion of
this decrease from fiscal 1998 to fiscal 1999 was due to a decrease in revenues
from MCI through ADC. Unit volumes decreased slightly from fiscal 1998 to fiscal
1999 as first-time sales of the Company's SlimLine and StreamLine products were
offset by lower sales of the Company's IMACS product line. Average sales prices
of both platforms and modules decreased from fiscal 1998 to fiscal 1999
primarily due to increased pricing competition in the IAD market. Pricing is
becoming more important as Telecommunications carriers compete for local access
to small and medium sized businesses and, as a result, the carriers are
demanding price reductions from access equipment suppliers. Although during the
first three quarters of fiscal 1999 the Company recorded revenues comparable to
or higher than the first three quarters of fiscal 1998, the Company experienced
a large decrease in revenues for the quarter ended June 30, 1999 as compared to
the quarter ended June 30, 1998. The decrease in revenues from $31,243,000 in
the quarter ended June 30, 1998 to $15,284,000 in the quarter ended June 30,
1999 was due primarily to the Company's failure to obtain large orders it had
expected during the quarter from three of its major OEM partners - Paradyne,
Nortel Networks Corporation ("Nortel") and XEL - and the lack of revenues from
MCI through ADC. The lack of anticipated orders from Paradyne and Nortel in the
quarter ended June 30, 1999 was due to delays in the deployment of Premisys'
products by their customers. XEL deferred orders of Premisys product during the
quarter ended June 30,1999 while awaiting the completion of in-process upgrades
implemented by Premisys. *The Company believes that the loss of MCI's business
is due to MCI's merger with WorldCom. See "-Other Factors That May Affect Future
Operating Results - Mergers of the Company's Customers." *The Company expects
that revenues will grow slightly from fiscal 1999 to fiscal 2000. *However, the
Company's expectations regarding future revenue levels are subject to numerous
risks and uncertainties, including limited order backlog, the level of capital
expenditures by CLECs and other carriers and its relationships with its
strategic partners and the introduction of new products. See "-Other Factors
That May Affect Future Operating Results -Indirect Channels of Distribution,"
"-Mergers of the Company's Customers" and "-Rapidly Evolving Technology."
The following table sets forth, for the periods indicated, the revenues
generated by customers which accounted for 10% or more of the Company's revenues
in either fiscal 1997, 1998 or 1999, other domestic customers as a group and
international customers as a group, in absolute dollars and as a percentage of
total revenues.
Source of Revenues
<TABLE>
<S> <C> <C> <C> <C> <C>
Fiscal % Change Fiscal % Change Fiscal 1999
1997 1998
Paradyne $23,355,000 (34%) $15,345,000 72% $26,351,000
ALS (1) --- (a) --- (a) 11,928,000
Motorola 11,996,000 (9%) 10,946,000 8% 11,809,000
ADC 9,576,000 214% 30,024,000 --- (a)
DSC 7,950,000 --- (a) --- (a)
Other Domestic Customers 19,802,000 107% 41,043,000 (4%) 39,472,000
International Customers 5,679,000 (13%) 4,940,000 (42%) 2,863,000
Total Revenues $78,358,000 31% $102,298,000 (10%) $92,423,000
------------------------========== ========== =========== ========= ============
Percentage of Total Revenues
Fiscal Fiscal Fiscal 1999
1997 1998
Paradyne 30% 15% 29%
ALS (1) (a) (a) 13%
Motorola 15% 11% 13%
ADC 12% 29% (a)
DSC 10% (a) (a)
Other Domestic Customers 26% 40% 42%
International Customers 7% 5% 3%
Total Revenues 100% 100% 100%
- ------------------------
</TABLE>
(a) - Amounts not provided as revenues for the period were less than 10% of the
total. (1) - AT&T Local Services ("ALS") was formerly known as Teleport
Communications Group ("Teleport").
As illustrated in the table above, the Company sells a substantial
majority of its products to a limited number of customers, which generally
resell the Company's products to public carriers and end users. *The loss of any
one or more of the Company's major customers would have a material adverse
effect on the Company's business and operating results. *Any of the
telecommunications equipment suppliers that market and sell the Company's
products could elect to cease marketing and selling the Company's products, and
there can be no assurance that these telecommunications equipment suppliers will
continue to place orders with the Company or that the Company will be able to
obtain orders from new telecommunications equipment suppliers or end users. See
"-Other Factors That May Affect Future Operating Results - Indirect Channels of
Distribution."
Gross Profit
Fiscal % Change Fiscal % Change Fiscal
1997 1998 1999
Gross Profit $51,096,000 31% $66,712,000 (16%) $55,763,000
As a percentage
of Revenues 65% 65% 60%
Cost of revenues consists of component costs, compensation costs and
overhead related to the Company's manufacturing operations and warranty
expenses. Gross profit improved from fiscal 1997 to fiscal 1998 primarily as a
result of increased unit volumes. Gross margin was relatively unchanged from
fiscal 1997 to fiscal 1998. Gross profit and gross margin decreased from fiscal
1998 to fiscal 1999 primarily as a result of lower average sales prices for
platforms and modules and first-time sales of the Company's lower-margin
SlimLine and StreamLine products. *The Company expects its gross margins for
fiscal 2000 to decline somewhat from the 60% realized in fiscal 1999 due
primarily to changes in product mix. *However, achievement of the Company's
expectations is subject to a number of uncertainties, including customer mix,
the mix and volume of products sold and the Company's ability to realize
expected revenue levels.
Research and Development Expenses
Fiscal % Change Fiscal % Change Fiscal
1997 1998 1999
Research and
development expenses $10,519,000 54% $16,205,000 22% $19,823,000
As a percentage of 13% 16% 21%
revenues
Research and development expenses consist of personnel costs, contract
development fees, consulting, testing, supplies and depreciation expenses. All
software development costs have been expensed in the period in which they were
incurred. Research and development expenses increased $5,686,000, or 54%, from
fiscal 1997 to fiscal 1998 and $3,618,000, or 22%, from fiscal 1998 to fiscal
1999. The increase from fiscal 1997 to fiscal 1998 was primarily due to
additional personnel for the purpose of expanding the Company's product line
and, to a lesser extent, increased consulting and supply expenses. The increase
from fiscal 1998 to fiscal 1999 was primarily due to additional personnel for
the purpose of expanding the Company's product line and, to a lesser extent,
increased depreciation expenses. In fiscal 1999, the Company's development
activities focused primarily on the development of the Q-155 and SlimLine
products. See "-Other Factors That May Affect Future Operating Results - Rapidly
Evolving Technology." Research and development expenses increased as a
percentage of the Company's revenues from 13% in fiscal 1997 to 16% in fiscal
1998 and to 21% in fiscal 1999. The increase from fiscal 1997 to fiscal 1998 was
the result of the increased research and development activities discussed above.
The increase in expenses as a percentage of revenues from fiscal 1998 to fiscal
1999 was primarily due to the fact that while research and development expenses
grew as planned, the Company's revenues did not. *The Company anticipates that
the amount of these expenses will increase in fiscal 2000, but as a percentage
of revenues, will decrease slightly in fiscal 2000 as compared to fiscal 1999.
*However, the expected decrease in research and development expenses as a
percentage of revenues is subject to, among other things, the Company's ability
to achieve revenue expectations.
Acquired In-Process Technology
In the quarter ended March 31, 1997, the Company executed a technology
license agreement with Positron. The Company licensed certain SONET and SDH
based technologies for use in its future products, including the Q-155, which
was first shipped in the quarter ended March 31, 1999.
The licensed technology includes the right to modify and manufacture
products which are based on Positron's OSIRIS-155Mb/s SONET/SDH products. The
licensed technology also includes the right to use and manufacture Positron
proprietary application-specific integrated circuits (ASICs), and training and
integration assistance on all design materials.
The Company will pay Positron $4 million of license fees over three years.
Positron will also be paid a royalty on the Company's products utilizing the
licensed technology up to a maximum of $4 million. Thus, total payments to
Positron will be between $4 million and $8 million. The Company expensed the $4
million of license fees in the quarter ended March 31, 1997, resulting in a
$0.09 per share earnings reduction. Payments of license fees to Positron in
fiscal 1997, 1998 and 1999 totaled $2.0 million, $1.0 million and $1.0 million,
respectively. *If the Company is unsuccessful in marketing the product or if
customers do not accept the product, this technology has no alternative use. See
"-Other Factors That May Affect Future Operating Results - Rapidly Evolving
Technology."
In the quarter ended March 31, 1998, the Company announced the execution
of a technology license agreement with SNT. SNT's technologies will provide the
Company with a non-blocking switching core expandable to 11.6 Gbs, ATM
interfaces to OC-3 and OC-12, 10/100MB Ethernet/Fast Ethernet interfaces, and
related software. *The Company intends to use these technologies to develop
broadband ATM and IP multiservice platforms. *However, there can be no assurance
that the Company will be able to integrate successfully this technology into its
products. *If the Company is unsuccessful in developing the product, this
technology has no alternative use. See "-Other Factors That May Affect Future
Operating Results - Rapidly Evolving Technology."
The Company paid a total of $4.4 million for licensing SNT technologies
and related software. The Company expensed these fees as a purchase of
in-process research and development in the quarter ended March 31, 1998
resulting in a $0.10 per share earnings reduction. The Company also received
options to license future releases of SNT software for additional fees. To date
the Company has not purchased any additional software releases from SNT.
Selling, General and Administrative Expenses
Fiscal % Change Fiscal % Change Fiscal
1997 1998 1999
Selling, general and
administrative expenses $21,364,000 30% $27,705,000 2% $28,305,000
As a percentage of 27% 27% 31%
revenues
Selling expenses consist principally of compensation costs for sales and
marketing personnel (including sales commissions and bonuses), travel expenses,
customer support expenses, trade show expenses and advertising expenses. General
and administrative expenses consist primarily of compensation expenses for
administration, finance and general management personnel, as well as legal and
accounting fees. Selling, general and administrative expenses increased
$6,341,000, or 30%, from fiscal 1997 to fiscal 1998 and $600,000, or 2%, from
fiscal 1998 to fiscal 1999. The increase from fiscal 1997 to fiscal 1998 was
primarily the result of increased staffing, primarily for sales, and associated
expenses, such as payroll taxes and sales commissions and to a lesser extent
increased occupancy and travel expenses. The increase from fiscal 1998 to fiscal
1999 was primarily the result of increased staffing, primarily for sales, and
associated expenses, such as payroll taxes and sales commissions and to a lesser
extent increased occupancy expenses, partially offset by lower trade show and
travel expenses. Selling, general and administrative expenses as a percentage of
the Company's revenues was unchanged at 27% in fiscal 1997 and 1998. Selling,
general and administrative expenses increased as a percentage of the Company's
revenues to 31% in fiscal 1999. The increase in these expenses as a percentage
of revenues from fiscal 1998 to fiscal 1999 was due to the fact that while
selling, general and administrative expenses grew as planned, the Company's
revenues did not. *The Company anticipates that the amount of these expenses
will decrease somewhat in fiscal 2000, and will decrease as a percentage of
revenues in fiscal 2000 as compared to fiscal 1999. *However, the expected
decrease in selling, general and administrative expenses as a percentage of
revenues is subject to, among other things, the Company's ability to achieve
revenue expectations.
Interest and Other Income, Net
Fiscal % Change Fiscal % Change Fiscal
1997 1998 1999
Interest and other $2,641,000 29% $3,399,000 5% $3,573,000
income, net
As a percentage of 3% 3% 4%
revenues
Interest and other income, net consists of interest income, interest
expense and, to a much lesser extent, foreign currency gains and losses. The
increase in interest and other income, net for all comparison periods was
primarily due to increased interest income from cash balances invested in high
grade, marketable fixed income securities versus lower yielding bank money
market accounts.
Provision for Income Taxes
Fiscal % Change Fiscal % Change Fiscal
1997 1998 1999
Provision for income taxes $6,963,000 16% $8,055,000 (55%) $3,587,000
As a percentage of
income before income taxes 39% 37% 32%
The Company's provision for income taxes represents estimated federal and
state income taxes. The Company's effective income tax rate for fiscal 1997 was
39% which was less than the combined federal and state statutory rate as a
result of tax-exempt interest income from the Company's municipal securities
portfolio and anticipated utilization of research and development tax credits
available in fiscal 1997. The Company's effective income tax rate for fiscal
1998 was reduced to 37% due to increased tax exempt income from the Company's
municipal securities portfolio. The Company's effective income tax rate for
fiscal 1999 was reduced to 32% as a larger portion of the Company's pre-tax
income came from tax exempt income from the Company's municipal securities
portfolio. *The Company anticipates that its effective income tax rate of 32%
will remain unchanged in fiscal 2000.
Net Income per Share
Fiscal % Change Fiscal % Change Fiscal
1997 1998 1999
Net income $10,891,000 $13,715,000 $7,621,000
Net income per share $0.41 22% $0.50 (40%) $0.30
(diluted)
Shares used in
computing diluted net 26,498,000 4% 27,495,000 (8%) 25,384,000
income per share
Net income per share in fiscal 1997 was reduced by $0.09 as a result of
the $4 million of license paid to Positron, as discussed above. The increase in
net income per share from fiscal 1997 to fiscal 1998 was due to an increase in
net income, which was a result of the rate of growth of the Company's revenues
being greater than the rate of growth in the Company's operating expenses. This
increase in net income per share was slightly offset by a greater number of
weighted average common shares and common share equivalents used to calculate
net income per share. Net income for fiscal 1998 was reduced by license fees
paid to SNT, as discussed above. The Company expensed $4.4 million of license
fees for the SNT agreement in fiscal 1998, which reduced reported net income per
share in fiscal 1998 by $0.10. The decrease in net income per share from fiscal
1998 to fiscal 1999 was due to a decrease in net income, resulting from a
decrease in revenues in fiscal 1999, as discussed above, and an increase in
operating expenses in fiscal 1999, also discussed above.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). SFAS 133 establishes accounting and
reporting standards for derivative instruments and for hedging activities and is
effective for all fiscal years beginning after June 15, 2000. The Company does
not expect the adoption of SFAS 133 to have a material impact on its results of
operations.
<PAGE>
Liquidity and Capital Resources
Fiscal % Change Fiscal % Change Fiscal
1997 1998 1999
---------- -------- ----------- --------- -----------
Net cash provided by
operating activities $9,233,000 189% $26,675,000 189% $1,246,000
Year end cash, cash
equivalents and short-term$73,224,000 45% $105,981,000 45% $84,434,000
investments
Year end working capital $90,254,000 24% $112,079,000 24% $100,593,000
In fiscal 1999, net cash of $1.2 million was provided by operating
activities primarily due to net income and a decrease in accounts receivable,
offset by an increase in inventories and a decrease in accounts payable. The
increase in inventories during fiscal 1999 was the result of lower than expected
product sales during the fiscal year, primarily during the quarter ended June
30, 1999, as discussed above.
The Company purchased $4.2 million of property and equipment in fiscal
1999, primarily for computers and peripherals and machinery and equipment.
Financing activities used $18.6 million of cash in fiscal 1999, primarily due to
the repurchase of Common Stock. Cash used in the Common Stock repurchase was
partially offset by cash provided by the issuance of Common Stock in connection
with the Company's employee benefits plan.
At June 30, 1999, the Company's principal sources of liquidity included
$84 million of cash, cash equivalents and short-term investments, and the
Company had working capital of approximately $100.6 million. The Company has no
significant capital spending or purchase commitments other than normal purchase
commitments and commitments under facilities and capital leases. *The Company
believes that available funds and anticipated cash flows from operations will
satisfy the Company's projected working capital and capital expenditure
requirements through at least the next 18 months.
On August 31, 1998, the Company's Board of Directors authorized the
repurchase, at management's discretion, of up to 4.0 million shares of the
Company's Common Stock at market prices not to exceed $14.00 per share and as
market and business conditions warrant. As of June 30, 1999, the Company had
repurchased for cash 2.4 million shares at market prices ranging from $6.69 to
$10.94 per share. As of September 17, 1998, pursuant to the authorized stock
repurchase program, the Company sold 2.0 million put warrants and purchased 1.5
million call options. On January 26, 1999, the Company paid $762,000 to dissolve
the obligation for 1.0 million put warrants and 0.75 million call options that
were to expire on January 29, 1999. On September 10, 1999, the Company paid $3.7
million to dissolve the remaining 1.0 million put warrants and 0.75 million call
options which were to expire on September 15, 1999. The expenses associated with
the dissolution of these put warrants are reflected as a component of cash for
the quarter ended March 31, 1999 and will be reflected in the same manner in the
quarter ended September 30, 1999.
Recent accounting pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). SFAS 133 establishes accounting and
reporting standards for derivative instruments and for hedging activities and is
effective for all fiscal years beginning after June 15, 2000. The Company does
not expect the adoption of SFAS 133 to have a material impact on its results of
operations.
Other Factors That May Affect Future Operating Results
As referenced in the first paragraph of this Item 2, this section consists
primarily of forward looking statements and associated risks but, for improved
readability, does not include asterisks (or italics in the non-EDGAR version of
this Form 10-K).
COMPETITION. The market for telecommunications products is highly
competitive and subject to rapid technological change. The Company's principal
competition for the market segment served by the Company's IMACS products comes
from major telecommunications equipment suppliers, such as Newbridge, Tellabs
and World Access, which offer a broad line of products including access devices
for business applications. The Company's principal competition for the market
segment served by the Company's SlimLine and StreamLine products includes CAC,
Adtran, Vina and existing telecommunications equipment manufacturers selling
channel bank and CSU/DSU products. In addition, the Company faces competition
from companies who provide substitute, as opposed to direct replacement,
solutions for the Company's IMACS, SlimLine and StreamLine products. The primary
competitors for such substitute products include AFC, Alcatel, Lucent, Nortel
and Reltec. The Company has experienced and expects substantial additional
competition from existing competitors as they continue to develop products to
compete with the functionality and flexibility of the Company's products. As
shipments of the Company's SlimLine and StreamLine products increase, it expects
to face additional competition from channel bank and CSU/DSU vendors as well as
from new startups focusing on the access equipment market. The Q-155 product
competes with broadband access products offered or announced by a number of
vendors including Fibex, which was recently acquired by Cisco, Accelerated
Networks, Inc., Atmosphere Networks, Inc., other telecommunications equipment
manufacturers selling multiplexer products and digital loop carriers with the
Bellcore Standard GR-303 protocol and other competitors, such as Pairgain and
Paradyne, that provide bundled voice and data services and solutions for better
utilization of bandwidth. Certain of the telecommunications equipment suppliers
which market the Company's products have recently either acquired or expressed
an interest in acquiring companies which have products or technologies that
either do or may compete with the Company's products. Other telecommunications
equipment suppliers that market and distribute the Company's products may in the
future develop or acquire products that could be sold for selected applications
for which the Company's products are currently provided. Successful development
or acquisition of such products could reduce the level of demand from these
telecommunications equipment suppliers for the Company's products. In addition,
the Company believes that there will be an increase in the intensity of price
competition in the markets served by the Company's products. Thus, while unit
volumes are expected to increase, the Company believes that the rate of increase
of revenues will be lower than the rate of increase in units. While the Company
has recently begun selling is StreamLine and SlimLine products, which are more
price competitive than its IMACS platform, these new products must compete with
an increasing number of low priced integrated access devices. As a result, the
Company may find it more difficult to achieve expected levels of revenues and
profitability.
LIMITED ORDER BACKLOG. The Company typically operates with limited order
backlog, and a majority of its revenues in each quarter result from orders
booked in that quarter. Also, the Company has from time-to-time recognized a
majority of its revenues from sales booked and shipped in the last month of a
quarter, including the quarters ended September 30, 1998, December 31, 1998 and
March 31, 1999. Due to the delivery requirements of its customers, the Company
expects to continue to experience limited order backlog. The Company's
manufacturing procedures are designed to assure rapid response to customer
demand, but may, in some circumstances, create risk of excess or inadequate
inventory, which may have an adverse effect on the Company's business and
operating results. The Company's agreements with its customers typically allow
customers to cancel orders or delay scheduled shipments without penalty until a
relatively short period of time before planned shipment. The Company has
experienced cancellation of orders from time to time, and expects to receive
order cancellations from time to time in the future, which could adversely
affect the Company's revenues for a quarter or series of quarters. Because a
substantial portion of customer orders are filled within the fiscal quarter of
receipt, and because of the ability of customers to revise or cancel orders and
change delivery schedules without significant penalty, the Company believes that
its backlog as of any given date is not necessarily indicative of actual
revenues for any succeeding period.
DEPENDENCE ON KEY PERSONNEL. The Company's success to date has been
significantly dependent on the contributions of its senior officers and other
key employees. The loss of the services of any one of the Company's senior
officers or key employees could have a material adverse effect on the Company's
business and operating results. The Company's success also depends to a
significant extent on its ability to attract and retain additional
highly-skilled technical, managerial and sales and marketing personnel, the
competition for whom is intense.
INDIRECT CHANNELS OF DISTRIBUTION. Substantial portions of the sales of
the Company's products are through indirect channels of distribution. Thus, the
Company's ability to affect and judge the timing and size of individual user
orders is more limited than for manufacturers selling directly to the end users
of their products. Any of thc strategic partners that market and sell the
Company's products could elect to cease marketing and selling the Company's
products, and there can be no assurance that these strategic partners will
continue to place orders with the Company or that the Company will be able to
obtain orders from new strategic partners or end users. See "-Relationship with
Paradyne." Strategic partners could develop products that could be sold for
selected applications for which the Company's products are currently provided,
which could reduce the level of demand from these telecommunications equipment
suppliers for the Company's products. See "- Competition." In addition, the
Company's revenues for a given quarter may depend to a significant degree upon
planned product shipments for a single carrier's equipment deployment project.
For example, in the quarters ended September 30 and December 31, 1997, March 31,
1998 and June 30, 1998, shipments of the Company's products to MCI
Communications Corporation ("MCI"), through ADC, one of the Company's strategic
distribution partners, represented more than 10% of the Company's total revenues
for such quarters. Revenues derived from particular carrier projects have been
and continue to be difficult to forecast due to a relatively long sales cycle
and delays in the timing of such projects. For example, the Company's financial
results for the first quarter of fiscal 1999 were adversely affected when
product shipments for MCI were lower than expected. In addition, the Company's
financial results for the quarter ended June 30, 1999 were also adversely
affected primarily as a result of the Company's failure to obtain large orders
it had expected during the quarter from three of its major OEM partners -
Paradyne, Nortel and XEL. Similar delays may occur in the future and would have
a significant impact if they did occur. Delays can be caused by late deliveries
by other vendors, changes in implementation priorities, slower than anticipated
growth in demand for the services that the equipment supports or in the capital
expenditures of the end user customer, consolidation among carriers and delays
in obtaining regulatory approvals for new tariffs. See "-Mergers of the
Company's Customers." Revenues can also be affected by delays in initial
shipments of new products and new software releases developed by the Company.
See "-Rapidly Evolving Technology." In developing countries, delays and
reductions in the planned deployment of the Company's products can also be
caused by sudden declines in the local economy or capital availability and by
new import controls. Suppliers of the Company's products have in the past and
may in the future build significant inventory in order to facilitate more rapid
deployment of anticipated major projects or for other reasons. Decisions by such
suppliers to sell from their inventory could lead to reductions in purchases
from the Company. These reductions, in turn, could cause fluctuations in the
Company's operating results and have an adverse effect on the Company's business
and operating results in the periods in which the inventory is utilized. In
addition, the Company has in the past experienced delays as a result of the need
to modify its products to comply with unique customer specifications. There can
be no assurance that any future delays would not have an adverse effect.
QUARTERLY FLUCTUATIONS. The Company's operating results may fluctuate on a
quarterly and annual basis due to factors such as the timing of new product
announcements and introductions by the Company, its major customers and its
competitors, delays in equipment deployment, availability and market acceptance
of new or enhanced versions of the Company's products, changes in the product or
customer mix of revenues, changes in the level of operating expenses,
competitive product and pricing pressures, the gain or loss of significant
customers, increased research and development expense associated with new
product introductions, component shortages (see "-Dependence on Certain
Suppliers"), and general economic conditions. The Company's planned product
shipments for a single carrier's equipment deployment project can be a
significant portion of a quarter's revenues, and delays in the timing of such a
project (which have occurred in the past, including the quarters ended March 31,
1997 and June 30, 1999) or reductions in expected shipments to a single carrier
(which occurred in the quarter ended September 30, 1998) could and have had a
material adverse effect on the Company's business and operating results. All of
the above factors are difficult for the Company to forecast, and these or other
factors can materially adversely affect the Company's business and operating
results for one quarter or a series of quarters. The Company's expense levels
are based in part on its expectations regarding future revenues and in the short
term are fixed to a large extent. Therefore, the Company may be unable to adjust
spending in a timely manner to compensate for any unexpected future revenue
shortfall. The Company has on several occasions, including the quarters ended
September 30, 1998, December 31, 1998 and June 30, 1999 experienced such an
unforecasted revenue shortfall and was not able to compensate for it through
expense reductions. Any significant decline in demand relative to the Company's
expectations or any material delay of customer orders would have a material
adverse effect on the Company's business and operating results. The Company's
operating results may also be affected by seasonal trends. Such trends may
include lower revenues in the summer months during the Company's first fiscal
quarter when many businesses experience lower sales, and in the Company's third
fiscal quarter, as compared to its second fiscal quarter, as a result of strong
calendar year end purchasing patterns from certain of the Company's strategic
customers.
MERGERS OF THE COMPANY'S CUSTOMERS. A number of the largest CLECs which use
the Company's products have either merged or announced plans to merge with
larger carriers over the next several quarters. MCI has merged with WorldCom,
Inc. ("WorldCom"), Teleport has merged with AT&T Corporation ("AT&T"), and GTE
Network Services ("GTE") has announced an intention to merge with Bell Atlantic
Corporation ("Bell Atlantic"). The Company believes that part of the impetus for
each of these mergers is to increase the combined carrier's ability to compete
for local access markets. In the long term, the Company believes that this
should cause capital spending on local access, in which the type of products
provided by the Company serve a vital function, to grow. However, as these
mergers are implemented, it is likely that capital expenditures will be
temporarily deferred as the newly combined companies evaluate inventories of
undeployed equipment, potential overlaps in network deployment plans, strategies
for future product deployments, and assignment of responsibilities for
deployments in targeted local markets. This risk of a deferral in expenditures
on local access, including expenditures for the Company's products, has already
materialized in the case of MCI. The Company anticipates that it also may see a
deferral of expenditures for its products by GTE in connection with its
anticipated merger. In addition, the Company anticipates that the slowdown in
expenditures may persist for multiple quarters following the mergers. The
increased buying power wielded by these merged carriers and by merged equipment
suppliers, such as Alcatel and DSC Communications Corp. ("DSC"), is also likely
to place added competitive price pressure on equipment manufacturers such as
Premisys.
RAPIDLY EVOLVING TECHNOLOGY. The telecommunications equipment market is
characterized by rapidly changing technologies and frequent new product
introductions, which include cell and packet technologies and new digital
subscriber line technologies ("xDSL"). The Company's success will depend to a
substantial degree upon its ability to respond to changes in technology and
customer requirements. This will require the timely selection, development and
marketing of new and cost effective products and enhancements. The Company has
licensed certain technology from Positron for inclusion in the Company's Q-155
products, which were announced in June 1997. The Company began field trials for
this product in the quarter ending December 31, 1998 and shipped its first Q-155
product in the quarter ended March 31, 1999. Also, in the quarter ended March
31, 1998, the Company licensed cell and packet technologies from SNT. The
Company intends to ship products based upon the SNT technology in the first
quarter of calendar 2000. However, there can be no assurance that the Company
will be able to successfully develop new products or new enhancements to
existing products on a timely and cost-effective basis. The Company may also
experience delays in connection with its product development efforts, which can
impact expected operating results. For example, the Company's shipment of its
new SlimLine product had been delayed for several quarters due to hardware and
software revisions necessary to make the product more acceptable in the
marketplace. In addition, failure to achieve market acceptance of new products
could have a material adverse effect on the Company's operating results. The
introduction of new and enhanced products also requires that the Company manage
transitions from older products in order to minimize disruptions in customer
orders, avoid excess inventory of old products and ensure that adequate supplies
of new products can be delivered to meet customer orders. In the past, certain
of the Company's newly introduced products have contained undetected errors and
incompatibilities with installed products, which has resulted in losses and
delays in market acceptance of such products. As the functionality and
complexity of the Company's products continue to grow, the Company has
experienced and may in the future experience an increased incidence of such
errors or failures as well as delays in introducing its products.
RELATIONSHIP WITH PARADYNE. The Company has a strategic relationship with
Paradyne, formerly a wholly-owned subsidiary of AT&T, that involves the joint
development, marketing and sale of the Company's IMACS product by Paradyne. The
Company's agreement with Paradyne provides Paradyne exclusive distribution
rights with respect to the products covered by the agreement to AT&T entities,
as defined under the agreement. At the time that the Company entered into its
OEM agreement with Paradyne, Paradyne was a 100%-owned subsidiary of AT&T. In
1996, AT&T separated into three publicly-held stand-alone businesses, one of
which - Lucent would focus on the communications equipment market. In June 1996,
Lucent concluded a stock purchase agreement for the sale of Paradyne to the
Texas Pacific Group. In the quarter ended March 31, 1997, Paradyne announced new
products which are extensions of its existing line of CSU/DSU products. Premisys
believes that the higher capacity models of Paradyne's 916x series offer
features that are similar to those of the Company's IMACS and StreamLine
products. See "-Competition" and "-Rapidly Evolving Technology." In the quarter
ended December 31, 1997, the Company entered into an OEM agreement with Lucent
for the purchase of the SlimLine and StreamLine products directly from Premisys.
Shipments to Paradyne have represented a significant portion of the Company's
revenues, including in fiscal 1999, and continue to represent a significant
portion of the Company's revenues in fiscal 2000. Neither Paradyne nor Lucent is
subject to any minimum purchase requirements, and there can be no assurance that
they will continue to place orders with the Company. Significant reductions in
shipments to Paradyne could have a material adverse effect on the Company's
business and operating results.
LIMITED PROTECTION OF INTELLECTUAL PROPERTY. The Company relies upon a
combination of patent, trade secret, copyright and trademark laws and
contractual restrictions to establish and protect proprietary rights in its
products. There can be no assurance that these statutory and contractual
arrangements will prove sufficient to deter misappropriation of the Company's
technologies or independent third-party development of similar technologies. The
telecommunications industry is characterized by the existence of a large number
of patents and frequent litigation based on allegations of patent infringement.
In the event of litigation to determine the validity of any third-party claims
asserting that the Company's products infringe or may infringe the proprietary
rights of such third parties, such litigation, whether or not determined in
favor of the Company, could result in significant expense to the Company and
divert the efforts of the Company's technical and management personnel from
productive tasks. In the event of an adverse ruling in such litigation, the
Company might be required to discontinue the use and sale of infringing
products, expend significant resources to develop non-infringing technology or
obtain licenses from third parties.
INDUSTRY STANDARDS AND REGULATORY MATTERS. The market for the Company's
products is also characterized by the need to meet a significant number of voice
and data communications regulations and standards, including those defined by
the Federal Communications Commission, Underwriters Laboratories, Bell
Communications Research ("Bellcore") and, internationally, various countries and
international standards committees. Regulations can be changed by new
legislation, as occurred with the enactment of the Telecommunications Reform Act
of 1996; these changes can impact service offerings and competitiveness in the
communications marketplace, and thus could have an effect on the timing and size
of the industry's investment in access equipment. New standards are evolving as
new technologies, such as ATM and xDSL, are deployed. As existing and new
standards evolve, the Company will be required to modify its products or develop
and support new versions of its products. It is also important that the
Company's products be easily integrated with carriers' network management
systems. The failure of the Company's products to comply, or delays in
compliance, with the various existing and evolving industry standards could
delay introduction of the Company's products, which could have a material
adverse effect on the Company's business and operating results. In addition,
government regulatory policies are likely to continue to have a major impact on
the pricing of existing as well as new public network services and therefore are
expected to affect demand for such services and the telecommunications products
that support such services.
DEPENDENCE ON CERTA1N SUPPLIERS. Certain components used in the Company's
products are currently available from only one supplier. In addition, the
Company relies on contract manufacturers to produce its printed circuit board
assemblies. Use of contract manufacturers can expose Premisys to supply
interruptions due to production, quality or financial problems of its
contractors. Shortages or delays in the delivery of the components used in the
Company's products (which have occurred in the past) or extended delays in
deliveries of printed circuit board assemblies could result in delays in the
shipment of the Company's products and/or increase component costs. Failure of
the Company to order sufficient quantities of any required component in advance
could prevent the Company from increasing production of products in response to
customer orders in excess of amounts projected by the Company. Although the
Company typically maintains some reserve inventory of components and printed
circuit board assemblies, this inventory would not cover a significant delay in
the delivery of such items.
YEAR 2000 RISKS. The Company has a formal Year 2000 Conformance Project in
place that focuses on four key readiness areas: (1) internal infrastructure
readiness, addressing internal information systems and non-information
technology systems; (2) supplier readiness, addressing the preparedness of our
supplier base; (3) product readiness, addressing the Company's product
functionality, which includes customer support of the installed base of the
Company's products; and (4) customer readiness, addressing the preparedness of
our customer base. For each readiness area, a task force is systematically
performing a Company-wide risk assessment, conducting testing and remediation,
and communicating with employees, suppliers, customers and other third party
business partners to raise awareness of the Year 2000 problem. Following are
overviews of each readiness area and the Company's progress for becoming ready
for the Year 2000.
Internal infrastructure readiness: An assessment of internal computer
software and hardware has been completed with the assistance of a third party.
The Company has migrated to an upgraded version of its enterprise-wide
accounting and manufacturing system, which is Year 2000 compliant. For other
systems, the Company has identified all non-compliant systems, established a
project for prioritized system compliance, and is in the process of executing
under such compliance project. Other systems are scheduled to be compliant no
later than November 1999. In addition to applications and information technology
hardware, the Company is testing remediation plans for embedded systems,
facilities and other operations.
Supplier readiness: This program is focused on minimizing the risk
associated with suppliers in two areas: (1) a supplier's business capability to
continue providing products and services, and (2) compliance of a supplier's
products with Year 2000. Suppliers have been identified and contacted based on
their criticality to the Company. The Company has received responses from all of
its preferred suppliers. Most of the respondents are in the process of
developing remediation plans. Based on interactions with and assurances from
suppliers, the Company believes that supplier issues that potentially affect the
Company's products have been resolved.
Product readiness: The Company has completed a comprehensive program which
focused on identifying and resolving Year 2000 issues existing in the Company's
products. The program encompassed a number of key efforts including testing,
evaluation, engineering and manufacturing implementation. In addition, the
program focused on customer support of the installed base, including
coordination of retrofit activity and testing existing customer electronic
transaction capability. Based on these efforts, the Company believes that its
products, both past and present, are Year 2000 compliant.
Customer readiness: The Company sells a substantial portion of its product
to large, publicly traded companies who themselves are addressing Year 2000
compliance issues. Premisys has been working directly with these customers, who
are also our strategic distribution partners or major distributors, to resolve
any issues between them and the Company. The Company has also reviewed their
readiness statements as filed in public documents with the Securities and
Exchange Commission. Based on these efforts, the Company believes that Year 2000
issues will not materially affect shipment of products to these customers.
However, there can be no assurances that unforeseen problems or problems with
customers of Premisys' partners or distributors will not occur and have a
material impact on the Company's revenues in the future. In the event that any
of the Company's significant customers do not successfully and timely achieve
Year 2000 compliance of their own products, the Company's business and
operations could be adversely affected. Use of the Company's products in
connection with customer products which are not Year 2000 compliant, including
non-compliant hardware and software, may result in inaccurate exchange of dates,
performance problems or system failure. If the businesses of the Company's
significant customers are materially and adversely affected by Year 2000 issues,
the Company's business will also be materially and adversely affected to the
extent that such customers delay, postpone or cancel orders for the Company's
products as they divert resources to fixing their own Year 2000 compliance
problems. In addition, the Company believes that the businesses of the Company's
strategic partners may be adversely affected to the extent that the Year 2000
compliance concerns of their own end user customers affect the purchasing
patterns of such customers in the short-term. Such end user customers may defer
purchases of telecommunications equipment generally until early in the next
millennium to avoid Year 2000 problems. Any such deferral of purchases could
reduce demand for the Company's products by the Company's strategic partners,
which could have a material adverse effect on the Company's business, operating
results and financial condition.
General Risk Factors: The Company's Year 2000 project is currently in the
remediation phase. The Company believes that, in spite of their assurances, its
greatest potential risks are associated with its suppliers. In many cases, the
Company is relying on assurances from suppliers that new and upgraded
information systems and other products will be Year 2000 compliant. The Company
plans to test such third-party products, but cannot be sure that its tests will
be adequate or that, if problems are identified, they will be addressed by the
supplier in a timely and satisfactory way. The Company is at the remediation
phase for its operations and infrastructure, and, while the Company cannot
foresee any significant problems or issues, it cannot predict whether or not
significant problems or issues will be identified in the future. The Company has
determined the extent of contingency planning that may be required, but it
cannot be sure that additional actions will not be necessary. Based on the
status of the assessments made and remediation plans developed to date, the
Company is not in a position to state the total cost of remediation of all Year
2000 issues; however, the Company believes such costs will not exceed $500,000.
However, the Company has not yet developed remediation for all problems or
completely implemented or tested some of its remediation plans. As the Year 2000
project continues, the Company may discover additional Year 2000 problems, may
not be able to develop, implement, or test remediation plans, or may find that
the costs of these activities exceed current expectations. Because the Company
uses a variety of information systems and has additional systems embedded in its
operations and infrastructure, it cannot be sure that all of its systems will
work together in a Year 2000-compliant fashion. Furthermore, the Company cannot
be sure that it will not suffer business interruptions, either because of its
own Year 2000 problems or those of its customers or suppliers whose Year 2000
problems may make it difficult or impossible for them to fulfill their
commitments to the Company. If the Company fails to satisfactorily resolve Year
2000 issues related to its products in a timely manner, it could be exposed to
liability to third parties.
RISKS FROM CONVERSION TO SINGLE EUROPEAN CURRENCY. On January 1, 1999,
certain member states of the European Economic Community fixed their respective
currencies to a new currency, commonly known as the Euro. During the three years
beginning on January 1, 1999, business in these countries will be conducted both
in the existing national currency, such as the French Franc or the Deutsche
Mark, as well as the Euro. Companies operating in or conducting business in
these countries will need to ensure that their financial and other software
systems are capable of processing transactions and properly handling the
existing currencies and the Euro. Based on the current level of direct
international business being conducted by the Company, the Company does not
expect that introduction and use of the Euro will materially affect the
Company's business. However, if the Company encounters unexpected opportunities
and/or difficulties, the Company's business could be adversely affected,
including the inability to bill customers and to pay suppliers for transactions
denominated in the Euro and the inability to properly record transactions
denominated in the Euro in the Company's financial statements.
STOCK PRICE FLUCTUATIONS. All of the above factors are difficult for the
Company to forecast, and these or other factors, such as changes in earnings
estimates by securities analysts, can materially affect the Company's stock
price for one quarter or a series of quarters. Further, the stock market has
experienced extreme price and volume fluctuations that have particularly
affected the market prices of securities of many high technology companies.
These fluctuations, as well as general economic, political and market
conditions, may materially adversely affect the market price of the Company's
Common Stock. There can be no assurance that the trading price of the Company's
Common Stock will remain at or near its current level.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The Company, in the normal course of business, is subject to the risks
associated with foreign currency exchange rates, fluctuations in the market
value of its fixed income securities available-for-sale, and changes in interest
rates.
To date, the Company's exposure to foreign currency fluctuations has been
minimized through the denomination of its foreign sales, and hence its accounts
receivable, in US dollars as well as the use of letters of credit when
warranted. The Company funds its international operations from US dollar bank
accounts on an as needed basis and, accordingly, does not keep significant
amounts of funds in foreign currencies. Presently, the Company does not hedge
foreign currency exposures for its non-dollar denominated operating expenses in
Europe, Asia, Canada and Latin America as such amounts have not been material in
relation to the Company's domestic operating expenses. Until fiscal 1997, the
Company purchased a substantial amount of its modules from one foreign supplier.
Today, substantially all of these modules are sourced in the United States.
There has been no significant change in the Company's exposure to foreign
currency fluctuations during fiscal 1999, as compared to fiscal 1998.
The Company also maintains a portfolio of marketable, fixed income
securities, available for sale, of various issuers, types and maturities.
Substantially all of the portfolio consists of municipal securities. The Company
limits its exposure to interest and credit risk by establishing and strictly
monitoring clear policies and guidelines for its fixed income portfolio. The
maximum allowable maturity for any one investment is 3 years and the maximum
allowable duration of the portfolio is limited to 1.5 years. The guidelines also
establish credit quality standards and limits on exposure to one issue, issuer
and type of instrument. The fair market value of the Company's fixed income
securities portfolio at June 30, 1999 was $81 million, with the corresponding
unrealized gain included as a component of shareholders' equity. The average
weighted duration of the portfolio increased from 0.99 years at June 30, 1998 to
1.20 years at June 30, 1999.
The following table presents the hypothetical change in the aggregate fair
market value of the Company's fixed income securities portfolio at June 30, 1999
which would result if the Federal Funds Rate changed as shown. Market changes
reflect immediate hypothetical parallel shifts in the yield curve of plus or
minus 50 basis points ("BPS"), 100 BPS and 150 BPS.
Decrease in Federal Funds Increase in Federal Funds
Rate Rate
---------------------------------------------------------
Change in Federal Funds (150 BPS) (100 BPS) (50 BPS) 50 BPS 100 BPS 150 BPS
Rate (BPS)
- --------------------------------------------------------------------------------
Change in Securities $1,479 $976 $474 ($488) ($969) ($1,443)
Valuation ($000's)
The Company also has a potential obligation at June 30, 1999 related to
put warrants. The potential obligation was dissolved on September 10, 1999. See
Note 6, "Put Warrants," of Notes to Condensed Consolidated Financial Statements
in this Form 10-K.
Item 8. Financial Statements and Supplementary Data
Quarterly supplementary data is included as part of Item 6, "Selected
Financial Data." The Company's consolidated financial statements required by
this item are set forth below.
<PAGE>
PREMISYS COMMUNICATIONS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Accountants 33
Consolidated Balance Sheet as of June 30, 1998 and 1999 34
Consolidated Income Statement for the years ended June 30,
1997, 1998 and 1999 35
Consolidated Statement of Stockholders' Equity for the years ended June 30,
1997, 1998 and 1999 36
Consolidated Statement of Cash Flows for the years ended June 30, 1997, 1998
and 1999 37
Notes to Consolidated Financial Statements 38
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Stockholders of Premisys Communications, Inc.
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, of stockholders' equity and of cash flows
present fairly, in all material respects, the financial position of Premisys
Communications, Inc. and its subsidiaries at June 30, 1998 and 1999, and the
results of their operations and their cash flows for each of the three years in
the period ended June 30, 1999, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
PRICEWATERHOUSECOOPERS LLP
San Jose, California
July 22, 1999 except for Note 6, which is as of September 10, 1999.
<PAGE>
PREMISYS COMMUNICATIONS, INC.
CONSOLIDATED BALANCE SHEET
(in thousands, except per share data)
ASSETS
June 30,
---------------------------
1998 1999
------------ ----------
Current assets:
Cash and cash equivalents $31,006 $ 3,982
Short-term investments 74,975 80,452
Accounts receivable, net 12,208 8,459
Inventories 3,859 15,231
Deferred tax assets 7,355 7,895
Prepaid expenses and other assets 657 1,368
------------ ----------
Total current assets 130,060 117,387
Property and equipment, net 8,392 9,053
Other assets 305 184
------------ ----------
$138,757 $126,624
============ ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,969 $ 5,759
Accrued liabilities 10,277 10,020
Income taxes payable 735 1,015
----------- ----------
Total current liabilities 17,981 16,794
----------- ----------
Commitments (Note 9)
Put Warrant obligations --- 10,625
----------- ----------
Stockholders' equity:
Preferred Stock, $0.01 par value, 2,000 shares
authorized; no
shares issued or outstanding --- ---
Common stock, $0.01 par value, 100,000 shares
authorized;
25,974 and 26,478 shares issued and outstanding 260 265
Additional paid-in capital 85,230 78,336
Treasury Stock --- (22,303)
Retained earnings 35,286 42,907
----------- ----------
Total stockholders' equity 120,776 99,205
----------- ----------
$138,757 $126,624
=========== ==========
The accompanying notes are an integral part
of these financial statements.
<PAGE>
PREMISYS COMMUNICATIONS, INC.
CONSOLIDATED INCOME STATEMENT
(in thousands, except per share data)
Year Ended June 30,
-------------------------------
1997 1998 1999
---------- --------- ---------
Revenues $ 78,358 $ 102,298 $ 92,423
Cost of revenues 27,262 35,586 36,660
---------- ----------- ----------
Gross profit 51,096 66,712 55,763
---------- ----------- ----------
Operating expenses:
Research and development 10,519 16,205 19,823
Acquired in-process technology 4,000 4,431 ---
Selling, general and administrative 21,364 27,705 28,305
-------- --------- --------
Total operating expenses 35,883 48,341 48,128
---------- ----------- ----------
Income from operations 15,213 18,371 7,635
Interest and other income, net 2,641 3,399 3,573
----------- ---------- ----------
Income before income taxes 17,854 21,770 11,208
Provision for income taxes 6,963 8,055 3,587
---------- ----------- ----------
Net income $ 10,891 $ 13,715 $ 7,621
========== =========== ==========
Net income per share
Basic $ 0.44 $ 0.54 $ 0.31
========== =========== ==========
Diluted $ 0.41 $ 0.50 $ 0.30
========== =========== ==========
Shares used in computing net income
per share
Basic 24,722 25,569 24,600
========== =========== ==========
Diluted 26,498 27,495 25,384
========== =========== ==========
The accompanying notes are an integral part
of these financial statements.
<PAGE>
PREMISYS COMMUNICATIONS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(in thousands)
<TABLE>
<S> <C> <C> <C> <C> <C>
Additional
Common Stock Paid-In Treasury Retained
Shares Amount Capital Stock Earnings
Balance, June 30, 1996 24,399 $ 244 $ 6,656 --- $ 10,680
Shares issued under Employee
Stock Purchase Plan 46 --- 1,109 --- ---
Exercise of options 746 8 2,776 --- ---
Tax benefit of exercised
stock options --- --- 4,453 --- ---
Net income for fiscal 1997 --- --- --- --- 10,891
---------------------------- --------- --------- ---------- ----------- --------
Balance, June 30, 1997 25,191 252 74,994 --- 21,571
Shares issued under Exployee
Stock Purchase Plan 52 --- 919 --- ---
Exercise of options 731 8 3,213 --- ---
Tax benefit of exercised
stock options --- --- 6,104 --- ---
Net income for fiscal 1998 --- --- --- --- 13,715
---------------------------- --------- --------- ---------- ---------- -----------
Balance, June 30, 1998 25,974 260 85,230 --- 35,286
Shares issued under Employee
Stock Purchase Plan 94 1 1,052 --- ---
Exercise of options 410 4 2,318 --- ---
Tax benefit of exercised
stock options --- --- 1,123 --- ---
Put warrant obligations --- --- (10,625) --- ---
Cost to dissolve part of
put warrant obligations --- --- (762) --- ---
Repurchase of common stock --- --- --- (22,303) ---
Net income for fiscal 1999 --- --- --- --- 7,621
---------------------------- --------- --------- ---------- ---------- -----------
Balance, June 30, 1999 26,478 $ 265 $ 78,336 $(22,303) $ 42,907
========= ========= ========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
PREMISYS COMMUNICATIONS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
<TABLE>
<S> <C> <C> <C>
Year Ended June 30,
1997 1998 1999
- ------------------------------------------------- ------------ ------------- ------------
Cash flows from operating activities:
Net income $ 10,891 $ 13,715 $ 7,621
Adjustments to reconcile net income to net
cash provided by
(used in) operating activities:
Depreciation 1,347 2,194 3,565
Deferred tax assets (4,292) (148) (540)
Changes in assets and liabilities:
Accounts receivable 8,609 (4,550) 3,749
Inventories (4,554) 4,916 (11,372)
Prepaid expenses and other assets (3,235) 2,831 (590)
Accounts payable 1,506 2,213 (1,210)
Accrued liabilities (459) 4,769 (257)
Income taxes payable (580) 735 280
------------ ------------- ------------
Net cash provided by operating activities 9,233 26,675 1,246
------------ ------------- ------------
Cash flows from investing activities:
Purchase of property and equipment (5,091) (4,142) (4,226)
Purchase of short-term investments (5,498) (30,674) (5,477)
------------ ------------- ------------
Net cash used in investing activities (10,589) (34,816) (9,703)
------------ ------------- ------------
Cash flows from financing activities:
Proceeds from issuance of Common Stock, net 3,893 4,140 3,375
Tax benefit of exercised stock options 4,453 6,104 1,123
Cost to dissolve part of Put warrant obligations --- --- (762)
Repurchase of Common Stock --- --- (22,303)
Proceeds (repayment) of long-term debt (125) (20) ---
------------ ------------- ------------
Net cash provided by financing activities 8,221 10,224 (18,567)
------------ ------------- ------------
Net increase in cash 6,865 2,083 (27,024)
Cash and cash equivalents at beginning of year 22,058 28,923 31,006
------------ ------------- ------------
Cash and cash equivalents at end of year $ 28,923 $ 31,006 $ 3,982
============ ============= ============
Supplemental disclosures:
Cash paid for income taxes $ 10,644 $ 63 $ 1,918
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
PREMISYS COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company
Premisys Communications, Inc. and its subsidiaries, (together, the
"Company"), design, manufacture and market integrated digital access products
for telecommunications service providers. The Company's products assist domestic
and international public carriers in building, expanding and managing their
worldwide telecommunications networks for their business customers.
Summary of Significant Accounting Policies
Management estimates and assumptions
The preparation of 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 reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Principles of consolidation
The consolidated financial statements include the accounts of Premisys
Communications, Inc. and its wholly-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated. The U.S. dollar is
the functional currency of Premisys Asia, Premisys Canada and Premisys Europe.
Exchange gains and losses resulting from transactions denominated in currencies
other than U.S. dollars are included in net income. To date, the resulting gains
and losses have not been material.
Cash, cash equivalents and short-term investments
Cash and cash equivalents include cash, money market funds and certain
municipal securities with a maturity of three months or less when purchased. All
of the Company's short-term investments, consisting principally of municipal
securities, have been classified as available-for-sale. Under this
classification the investments are reported at fair value, with unrealized gains
and losses excluded from earnings and reported as a separate component of
stockholders' equity. At June 30, 1998 and 1999, such unrealized gains and
losses were not significant.
Inventories
Inventories are stated at the lower of cost or market, cost being
determined using the first-in, first-out (FIFO) method.
Property and equipment
Property and equipment are stated at cost, and depreciation is computed
using the straight-line method over their estimated useful lives, which range
from two years for computer equipment and purchased software to five years for
machinery and equipment and furniture and fixtures. Leasehold improvements are
amortized using the straight-line method based upon the shorter of the estimated
useful lives (all of which are currently five years) or the remaining lease
term.
Revenue recognition
The Company recognizes revenue upon shipment of product to customers
provided no significant obligations remain and collectibility is probable.
Certain distributors have sales agreements allowing limited rights to return
product without penalties. In such cases the Company recognizes revenue upon
sales of the product by the distributor to its customers.
Software development costs
Software development costs incurred prior to the establishment of
technological feasibility are expensed as incurred. Software development costs
incurred subsequent to the establishment of technological feasibility will be
capitalized, if material. To date, all software development costs incurred
subsequent to the establishment of technological feasibility have been
immaterial, and therefore no software development costs have been capitalized.
Warranty expense
Upon product shipment, the Company provides for the estimated cost that
may be incurred under its various product warranties.
Net income per share
Basic net income per share is computed by dividing net income available to
common stockholders by the weighted average number of common shares outstanding
during the period. Diluted net income per share gives effect to all dilutive
potential common shares outstanding during a period. In computing diluted net
income per share, the average stock price for the period is used in determining
the number of shares assumed to be purchased under the treasury stock method
from exercise of stock options.
Fiscal year
The Company uses a 52/53 week accounting year that ends on the Friday
closest to June 30. For purposes of financial statement presentation, each
fiscal year is considered to have ended on June 30.
Comprehensive income
Comprehensive income is defined as the change in equity of a company
during a period from transactions and other events and circumstances excluding
transactions resulting from investment by owners and distribution to owners. For
the years ended June 30, 1997, 1998 and 1999, the comprehensive income of the
Company did not differ significantly from the net income.
Derivative instruments and hedging activities
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). SFAS 133 establishes accounting and
reporting standards for derivative instruments and for hedging activities and is
effective for all fiscal years beginning after June 15, 2000. The Company does
not expect the adoption of SFAS 133 to have a material impact on its results of
operations.
NOTE 2 - BALANCE SHEET COMPONENTS
June 30,
--------------------
1998 1999
--------- ----------
(in thousands)
Accounts receivable:
Trade accounts receivable $ 12,408 $ 8,621
Less: allowance for doubtful accounts (200) (162)
--------- ----------
$ 12,208 $ 8,459
========= ==========
Inventories:
Raw materials $ 582 $ 1,376
Work-in-process 676 1,476
Finished goods 2,601 12,379
--------- ----------
$ 3,859 $15,231
========= ==========
Property and equipment:
Machinery and equipment $ 4,355 $ 5,691
Computers and purchased software 4,931 7,263
Furniture and fixtures 2,074 2,406
Leasehold improvements 2,402 2,628
--------- ----------
13,762 17,988
Less: accumulated depreciation (5,370) (8,935)
--------- ----------
$8,392 $9,053
========= ==========
Accrued liabilities:
Employee compensation $ 3,960 $ 2,792
Warranty 3,842 4,475
Other 2,475 2,753
--------- ----------
$ 10,277 $ 10,020
========= ==========
NOTE 3 - ACQUIRED RESEARCH AND DEVELOPMENT IN-PROCESS
In the quarter ended March 31, 1997, the Company executed a technology
license agreement with Positron. The Company licensed certain SONET and SDH
based technologies for use in its future products, including the Q-155, which
was announced in June 1997 and began shipping in the quarter ended March 31,
1999. The licensed technology includes the right to modify and manufacture
products which are based on Positron's OSIRIS-155Mb/s SONET/SDH products. The
licensed technology also includes the right to use and manufacture Positron
proprietary application-specific integrated circuits (ASICs), and training and
integration assistance on all design materials.
The Company paid Positron $4 million of license fees over three years.
Also, Positron is to be paid a royalty on the Company's products utilizing the
licensed technology up to a maximum of $4 million. The Company expensed the $4
million of license fees as acquired research and development in process in the
quarter ended March 31, 1997. Payments of license fees to Positron in fiscal
1997, 1998 and 1999 totaled $2.0 million, $1.0 million and $1.0 million,
respectively.
In the quarter ended March 31, 1998, the Company announced the execution
of a technology license agreement with SNT. SNT's technologies will provide the
Company with a non-blocking switching core expandable to 11.6 Gbs, ATM
interfaces to OC-3 and OC-12, 10/100MB Ethernet/Fast Ethernet interfaces, and
related software. The Company intends to use these technologies to develop
broadband ATM and IP multiservice platforms.
The Company paid a total of $4.4 million for licensing SNT technologies and
related software. The Company expensed these fees as acquired research and
development in-process in the March 31, 1998 quarter. The Company also received
options to license future releases of SNT software for additional fees. To date
the Company has not purchased any additional software releases from SNT.
NOTE 4 - INCOME TAXES
The provision for income taxes consists of the following:
Year Ended June 30,
--------------------------------------
1997 1998 1999
----------- ----------- ----------
Current: (in thousands)
Federal $ 9,058 $ 6,230 $ 3,000
State 2,138 1,891 1,043
Foreign 59 82 84
----------- ---------- -----------
11,255 8,203 4,127
----------- ----------- ----------
Deferred:
Federal (3,467) (216) (442)
State (825) 68 (98)
----------- ---------- -----------
(4,292) (148) (540)
----------- ----------- ----------
$ 6,963 $ 8,055 $ 3,587
=========== =========== ==========
Deferred income taxes reflect the tax effects of temporary differences
between carrying amounts of assets and liabilities for financial reporting and
income tax purposes. Significant components of the Company's deferred tax assets
are as follows:
June 30,
------------------------
1998 1999
----------- ---------
(in thousands)
Financial accruals not yet deductible $ 5,265 $ 6,683
Capitalized purchased technology 2,076 1,212
Capitalized research and development expenses 14 0
----------- ---------
$ 7,355 $ 7,895
=========== =========
<PAGE>
A reconciliation of the income tax provisions computed at the United
States federal statutory rate to the effective tax rate is as follows:
Year Ended June 30,
---------------------------------------------
1997 1998 1999
--------------- -------------- -----------
Federal statutory rate 35.0% 35.0% 35.0%
State taxes, net of federal benefit 6.1 6.1 5.8
Tax exempt interest income (4.8) (5.0) (10.3)
Other 2.7 0.9 1.5
--------------- -------------- -----------
Effective tax rate 39.0% 37.0% 32.0%
=============== ============== ===========
NOTE 5 - NET INCOME PER SHARE
Following is a presentation of the Basic and Diluted EPS computations for
the periods presented below:
<TABLE>
<S> <C> <C> <C>
Income Per Share
(in thousands) Shares Amount
Year ended June 30, 1997
Earnings per share of common stock - basic $ 10,891 24,722 $ 0.44
Effect of dilutive securities:
Stock options --- 1,776
------------ ------------
Earnings per share of common stock - diluted $ 10,891 26,498 $ 0.41
------------ ------------ ----------
Year ended June 30, 1998
Earnings per share of common stock - basic $ 13,715 25,569 $ 0.54
Effect of dilutive securities:
Stock options --- 1,926
------------ ------------
Earnings per share of common stock - diluted $ 13,715 27,495 $ 0.50
------------ ------------ ----------
Year ended June 30, 1999
Earnings per share of common stock - basic $ 7,621 24,600 $ 0.31
Effect of dilutive securities:
Stock options --- 784
------------ ------------
Earnings per share of common stock - diluted $ 7,621 25,384 $ 0.30
------------ ------------ ----------
</TABLE>
NOTE 6 - PUT WARRANTS
As of September 17, 1998, pursuant to the authorized stock
repurchase program, the Company sold 2.0 million put warrants and purchased 1.5
million call options. On January 26, 1999, the Company paid $762,000 to dissolve
the obligation for 1.0 million put warrants and 0.75 million call options that
were to expire on January 29, 1999. On September 10, 1999, the Company paid $3.7
million to dissolve the remaining 1.0 million put warrants and 0.75 million call
options which were to expire on September 15, 1999.
NOTE 7 - STOCKHOLDERS EQUITY AND BENEFIT PLANS
Repurchase of stock
On August 31, 1998, the Company's Board of Directors authorized the
repurchase, at management's discretion, of up to 4.0 million shares of the
Company's Common Stock at market prices not to exceed $14.00 per share and as
market and business conditions warrant. As of June 30, 1999, the Company had
repurchased for cash 2.4 million shares at market prices ranging from $6.69 to
$10.94 per share.
Stockholder rights plan
On September 17, 1998, the Company's Board of Directors ("Board") adopted
a Stockholder Rights Plan ("Plan") designated to protect the long-term value of
the Company for its stockholders during any future unsolicited acquisition
attempt. Pursuant to the Plan, the Board declared a dividend of one preferred
share right ("Right") for each share of the Company's Common Stock outstanding
on October 5, 1998. Each Right becomes exercisable to purchase one one-hundredth
(1/100) of a share of Series A Junior Participating Preferred Stock at an
exercise price of $80.00. The Rights will expire on September 18, 2008. The
Company may redeem the Rights at a price of $0.001 per Right.
Stock option plans
In March 1992, the Company adopted a Stock Option Plan (the "1992 Option
Plan"). The 1992 Option Plan provides for the granting of incentive stock
options and nonqualified stock options to employees at prices not less than the
fair market value and not less than 85% of the fair market value of the
Company's Common Stock, respectively, on the date of grant. While previously
issued options remain outstanding under the 1992 Option Plan, the Company can no
longer issue new options out of the 1992 Option Plan.
On November 16, 1994, the Company's Board of Directors approved the 1994
Stock Option Plan (the "1994 Option Plan"). Under the terms of the 1994 Option
Plan, 6,460,000 shares of the Company's Common Stock are reserved for issuance
at exercise prices not less than the fair value of the Company's Common Stock at
the date of grant. The incentive and nonqualified stock options have ten-year
terms, and vest over a period determined by the Board of Directors, but not to
exceed five years. Options granted to date have vesting terms of four years. The
1994 Option Plan will terminate ten years after its adoption unless terminated
earlier by the Board of Directors.
In February 1995, the Company's Board of Directors adopted, and the
Company's stockholders approved, the 1995 Directors Stock Option Plan
("Directors Plan"), which provides for the automatic grant of options to
purchase shares of Common Stock to non-employee directors of the Company
("Eligible Directors"). The maximum number of shares of Common Stock that may be
issued pursuant to options granted under the Directors Plan is 240,000. Pursuant
to the terms of the Directors Plan, each Eligible Director who becomes a member
of the Board and who has not otherwise received options in connection with his
Board service will automatically be granted an option to purchase 24,000 shares
of Common Stock on the date the Eligible Director first joins the board. Each
Eligible Director will automatically be granted an additional option for 6,000
shares of Common Stock annually. Each Grant will vest as to 25% of the shares
per year thereafter, so long as the non-employee director remains a member of
the Board. Options granted under the Directors Plan expire ten years from the
date of grant. The exercise price of options under the Directors Plan must be
equal to the fair market value of the Company's Common Stock on the date of
grant. The Directors Plan will terminate in February 2005, unless sooner
terminated by the Board.
On March 19, 1997 the Compensation Committee of the Board of Directors
approved offering employees the right to amend outstanding stock options granted
under the Company's 1994 Stock Option Plan. The amended stock options have an
exercise price equal to the closing price of the Company's Common Stock on April
23, 1997 and a new vesting schedule beginning on the same date with a duration
equal to that of the original option. Corporate officers were excluded from this
option repricing offer. Employees elected to amend options for approximately
1,051,000 shares; the new exercise price was $8.1875 per share. In the summary
table below, these options are included in shares granted and shares canceled in
fiscal 1997.
<PAGE>
A summary of transactions relating to all of the Company's option plans is as
follows:
<TABLE>
<S> <C> <C> <C>
Options Options Outstanding
--------------------------------
Available Weighted
for Grant Shares Average
Exercise Price
---------------- --------------- ---------------
Balance at June 30, 1996 2,797,761 2,909,458 $10.61
Options granted (3,401,647) 3,401,647 $16.35
Options canceled 1,457,105 (1,457,105) $27.33
Options exercised --- (746,089) $3.80
---------------- --------------- ---------------
Balance at June 30, 1997 853,219 4,107,911 $10.67
Additional shares authorized, 1,200,000 --- ---
December 1997
Options granted (1,761,550) 1,761,550 $24.07
Options canceled 484,970 (484,970) $12.03
Options exercised --- (731,276) $4.41
---------------- --------------- ---------------
Balance at June 30, 1998 776,639 4,653,215 $16.58
Additional shares authorized, 1,260,000 --- ---
December 1998
Options granted (3,011,894) 3,011,894 $10.20
Options canceled 2,065,529 (2,065,529) $20.84
Options exercised --- (409,708) $5.67
---------------- --------------- ---------------
Balance at June 30, 1999 1,090,274 5,189,872 $12.10
================ =============== ===============
</TABLE>
The following table summarizes information concerning outstanding and
exercisable options as of June 30, 1999:
Options Outstanding Options Exercisable
----------------------------------- ----------------------
Weighted Weighted Weighted
Remaining Average Average
Range of Number Contractual Life Exercise Number Exercise
Exercise Prices Outstanding (in years) Price Exerciseable Price
$0.10 - $7.13 1,091,662 7.90 $ 5.46 475,354 $3.40
$7.19 - $8.56 985,692 7.76 $ 8.14 418,368 $8.10
$8.69 - $9.19 1,147,813 9.06 $ 9.00 257,921 $9.00
$9.25 - $17.25 824,688 9.24 $ 12.71 92,391 $12.08
$17.88 - $51.00 1,140,017 8.50 $ 24.55 472,294 $25.29
=========== ============
$0.10 - $51.00 5,189,872 8.48 $ 12.10 1,716,328 $11.88
=========== ============
Stock Purchase Plan
In February 1995, the Company's Board of Directors approved the 1995
Employee Stock Purchase Plan (the "Stock Purchase Plan"). Under the terms of the
Stock Purchase Plan, all employees of the Company may contribute, through
payroll deductions, up to 10% of their annual compensation toward the purchase
of the Company's Common Stock. The Company has reserved 400,000 shares for
issuance under the Stock Purchase Plan. The purchase price per share is 85% of
the lesser of (a) the fair market value of the Common Stock on the first day of
the offering period, as defined, or (b) the fair market value of the Common
Stock on the last day of the offering period, as defined. The Stock Purchase
Plan will terminate ten years after its adoption unless terminated earlier by
the Board of Directors.
<PAGE>
Pro forma net income and earnings per share
Pro forma information regarding net income and earnings per share is
required by SFAS 123. This information is required to be determined as if the
Company had accounted for its employee stock options, including shares issued
under the Stock Purchase Plan (collectively the "options") granted subsequent to
June 30, 1995, under the fair value method of that statement. The fair value of
options granted in fiscal 1997, 1998 and 1999 reported below have been estimated
at the date of grant using a Black-Scholes option pricing model. The
Black-Scholes option valuation model was developed for use in estimating the
fair value of publicly traded options that have no vesting restrictions and are
fully transferable.
Had stock-based compensation cost for the options been determined based on
the fair value at the grant dates using the Black-Scholes model as prescribed by
SFAS 123, the Company's Results of Operations for the years ended June 30, 1997,
1998 and 1999 would have been as follows:
Year Ended June 30,
--------------------------------------------
1997 1998 1999
(in thousands except per share data)
Net income/(loss):
As reported $10,891 $13,715 $7,621
Pro forma $2,371 $3,474 $(107)
Earnings per share -- basic:
As reported $0.44 $0.54 $0.31
Pro forma $0.10 $0.14 $0.00
Earnings per share -- diluted
As reported $0.41 $0.50 $0.30
Pro forma $0.09 $0.13 $0.00
The pro forma effect on net income and earnings per share for fiscal 1997,
1998 and fiscal 1999 is not representative of the pro forma effect on net income
in future years because it does not take into consideration pro forma
compensation expense related to grants made prior to fiscal 1996.
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes model with the following weighted average assumptions:
<PAGE>
Year Ended June 30,
--------------------------------------------
1997 1998 1999
---- ---- ----
Stock option plans:
Expected dividend yield 0.0% 0.0% 0.0%
Expected stock price 65.0% 65.0% 65.0%
volatility
Risk free interest rate 6.4% 5.6% 5.7%
Expected life of 3.09 3.57 3.04
options (years)
Stock purchase plan:
Expected dividend yield 0.0% 0.0% 0.0%
Expected stock price 65.0% 65.0% 65.0%
volatility
Risk free interest rate 5.4% 5.3% 4.9%
Expected life of 0.50 0.50 0.50
options (years)
The weighted average estimated grant date fair value, as defined by SFAS
123, for options granted under stock option plans during fiscal 1997, 1998 and
1999 was $7.51, $11.18 and $10.20 per share, respectively. The weighted average
estimated grant date fair value, as defined by SFAS 123, for purchase rights
granted under the Stock Purchase Plan during fiscal 1997, 1998 and 1999 was
$7.46, $5.75 and $5.29 per share, respectively.
401(k) Plan
The Company adopted a 401(k) plan for its employees whereby currently
eligible employees may contribute up to 15% of their earnings, on a pre-tax
basis, subject to the maximum amount permitted by the Internal Revenue Code.
Under the 401(k) plan, the Company may make contributions at the discretion of
the Board of Directors. During fiscal 1997,1998 and 1999, the Company matched
employee contributions up to $800 per contributor per plan year.
NOTE 7 - SEGMENT INFORMATION AND INTERNATIONAL OPERATIONS
The Company operates in one business segment, providing telecommunications
access equipment.
The following is a summary of the Company's operations:
Year Ended June 30,
1997 1998 1999
------------- -------------- -------------
(in thousands)
Revenues from third party customers:
United States $ 72,679 $ 97,358 $ 89,554
Asia 3,452 2,996 873
Europe 355 954 717
Latin America 1,872 990 1,279
------------- -------------- -------------
$ 78,358 $ 102,298 $ 92,423
============= ============== =============
Income (loss) from operations:
United States $ 15,114 $ 18,060 $ 9,949
Asia 1,025 1,216 (829)
Europe (1,706) (796) (1,586)
Latin America 780 (109) 101
------------- -------------- -------------
$ 15,213 $ 18,371 $ 7,635
============= ============== =============
June 30,
-----------------------------
1998 1999
------------- -------------
(in thousands)
Identifiable assets:
United States $ 137,104 $ 123,950
Asia 307 385
Canada 646 1,533
Europe 683 453
Latin America 17 303
============ =============
$ 138,757 $ 126,624
============ =============
The Company derived 7%, 5% and 3% of its revenues from direct sales to
international customers in fiscal 1997, 1998 and 1999, respectively.
NOTE 8 - CONCENTRATION OF SALES AND CREDIT RISK
The following table summarizes the percentage of revenues accounted for by
the Company's significant customers:
Year Ended June 30,
-----------------------------------------
1997 1998 1999
---- ---- ----
Paradyne 30% 15% 29%
ALS(1) (a) (a) 13%
Motorola 15% 11% 13%
ADC Telecommunications 12% 29% (a)
DSC 10% (a) (a)
(a) - Amounts not provided as revenues for the period were less than 10% of the
total. (1) - AT&T Local Services ("ALS") was formerly known as Teleport
Communications Group ("Teleport").
Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash and cash equivalents,
short-term investments, municipal securities and trade accounts receivable. The
Company's investment policy limits the amount of credit exposure to any one
financial institution or commercial issuer. The Company has not experienced any
material losses on its investments.
The Company generally extends 30-day credit terms to its customers, which
is consistent with industry business practices. The Company performs ongoing
credit evaluations of its customers' financial condition and, generally,
requires no collateral from its customers. The Company maintains an allowance
for doubtful accounts receivable based upon the expected collectibility of all
accounts receivable. The Company has not experienced any material write-offs of
uncollectible accounts receivable.
NOTE 9 - COMMITMENTS
The Company's principal offices are located in two facilities, totaling
118,281 square feet, leased by the Company in Fremont, California. The leases on
these facilities, which are classified as non-cancelable operating leases,
expire on various dates through December 31, 2005. In addition, the Company
leases a facility, totaling 29,840 square feet, in Fremont, California that it
subleases to a third party under a three year sublease that commenced in April
1999. The lease on this facility, which is classified as a non-cancelable
operating lease, expires in December 2005.The Company also leases facilities in
other locations. The leases on these facilities, which are classified as
non-cancelable operating leases, expire on various dates through December 31,
2005.
Future minimum lease payments under all noncancelable operating leases are
as follows:
Year Ending June 30,
(In thousands)
2000 $ 2,192
2001 2,157
2002 2,144
2003 2,167
2004 2,104
Thereafter 1,184
------------
Total minimum payments $ 11,948
============
Rent expense under facility leases totaled $941,000, $1,365,000 and $2,350,000
during fiscal 1997, 1998 and 1999, respectively.
In addition, the Company leases certain equipment under long-term lease
agreements that are classified as capital leases. These capital leases expire at
various dates through 2001. Property and equipment at June 30, 1998 and 1999
include assets acquired under capitalized leases of $351,000 and $172,000, with
related accumulated amortization of $272,000 and $70,000, respectively. Future
minimum payments under capitalized leases are not material.
NOTE 10 - SUBSEQUENT EVENTS
Effective July 2, 1999, Peter Hauser resigned. Mr. Hauser was the Company's
Senior Vice-President of International Sales.
Effective August 16, 1999, Carol H. Sharer was appointed to serve on the
Company's Board of Directors.
Effective July, 1999, Lip-Bu Tan and Marino Polestra resigned from the Company's
Board of Directors.
<PAGE>
PART III
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
Item 10. Directors and Executive Officers of the Registrant.
Information required by this Item is incorporated by reference from the
section titled "Directors/Nominees" under "Proposal No. 1 - Election of
Directors," "Executive Officers" and "Section 16(a) Beneficial Ownership
Reporting and Compliance" from the definitive proxy statement to be filed with
the Securities and Exchange Commission relative to the Company's annual meeting
of stockholders to be held in December 1998 (the "Definitive Proxy Statement").
Item 11. Executive Compensation.
Information required by this Item is incorporated by reference from the
sections titled "Director Compensation" under "Proposal No. 1 - Election of
Directors" and "Executive Compensation" and "Employment Agreements" from the
Definitive Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Information required by this Item is incorporated by reference from
"Security Ownership of Certain Beneficial Owners and Management" from the
Definitive Proxy Statement.
Item 13. Certain Relationships and Related Transactions.
Information required by this Item is incorporated by reference from
"Certain Relationships and Related Transactions" from the Definitive Proxy
Statement.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a)(1) The following financial statements and schedules are filed as
part of this report:
Financial Statements See index included in Part II, Item 8.
(a)(2) and (d) Financial Statement Schedules
All schedules are omitted because they are not applicable, or the required
information is included in the financial statements or notes thereto.
(a)(3) and (c). The following exhibits are filed herewith or
incorporated by reference:
Exhibit
Number Exhibit Title
2.01 Premisys California Acquisition Agreement between Premisys
Communications Holdings, Inc. and Premisys Communications Pte.
Ltd., dated as of March 12, 1992, and exhibits thereto.(1)
2.02 Exchange Agreement by and among Premisys Communications
Holdings, Inc. and the shareholders, warrant holders and
noteholders of Premisys Communications Pte. Ltd., dated as of
March 12, 1992, and material exhibits thereto.***(1)
2.03 Form of Agreement and Plan of Merger by and among the
Registrant, Premisys Communications Holdings, Inc. and Premisys
Communications, Inc.(1)
3.01 Registrant's Amended and Restated Certificate of Incorporation as
filed with the Delaware Secretary of State on April 12, 1995.(2)
3.02 Certificate of Amendment of Amended and Restated Certificate of
Incorporation of Premisys Communications, Inc.(4)
3.03 Certificate of Designations Specifying the Terms of the Series A
Junior Participating Preferred Stock of Premisys Communications,
Inc. (15)
3.04 Registrant's Bylaws, as amended.(1)
4.02 Investors' Rights Agreement, dated as of March 12, 1992, as amended
June 15, 1992, October 22, 1993, December 14, 1993, February 18, 1994
and May 9, 1994 among Registrant and various investors.(1)
4.03 Waiver Relating to and Amendment of Investors' Rights Agreement dated
as of July 24, 1995 among Registrant and various investors.(3)
4.04 Rights Agreement dated September 18, 1998 between Registrant and
ChaseMellon Shareholder Services LLC, as Rights Agent. (15)
+10.01 Registrant's 1992 Stock Option Plan and related documents.(1)
+10.02 Registrant's 1994 Stock Option Plan and related documents.(10)
+10.03 Registrant's 1995 Directors Stock Option Plan and related
documents.(1)
+10.04 Registrant's 1995 Employee Stock Purchase Plan and related
documents.(1)
+10.06 Founders Agreement by and among Registrant, Raymond Lin, Boris
Auerbuch and Marcus Auerbuch, dated as of March 12, 1992.**(1)
10.08 Form of Indemnity Agreement entered into by Registrant with each
of its directors and executive officers.(1)
10.09 Warranty and Indemnification Agreement by and among Raymond Lin,
Boris Auerbuch and Registrant dated as of August 2, 1990.(1)
10.10 Agreement for Purchase and Sale of Assets by and between
Premisys Communications, Inc., a California corporation, and
Premisys Communications Pte. Ltd., dated as of January 1, 1992,
including Bill of Sale.(1)
10.11 Technology Cost and Risk Sharing Agreement by and between
Premisys Communications, Inc., a California corporation, and
Premisys Communications Pte. Ltd., dated as of January 1,
1992.(1)
10.12 Agreement Regarding Payment by and between Premisys
Communications, Inc., a California corporation, and Premisys
Communications Pte. Ltd., dated as of September 30, 1992.(1)
10.13 Technology Cost and Risk Sharing Agreement Amendment by and between
Premisys Communications, Inc., a California corporation, and Premisys
Communications Pte. Ltd., dated as of July 1, 1995.
(6)
10.15 Option Agreement by and between Registrant and AT&T Paradyne
Corporation, dated as of December 4, 1992.(1)
10.16 Series C Preferred Stock Purchase Agreement by and between Registrant
and AT&T Paradyne Corporation, dated as of December 14, 1993 and
material exhibits thereto.***(1)
10.18 Lease Agreement by and between Registrant and Aetna Life Insurance
Company, dated October 4, 1993, as amended to date.(1)
10.19 OEM Agreement by and among Premisys Communications Holdings, Inc.,
Premisys Communications, Inc., a California corporation, and AT&T
Paradyne Corporation, dated as of December 4, 1992, as amended July
8, 1993, March 17, 1994 and May 24, 1994.**(1)
10.20 Extension Agreements by and among Premisys Communications Holdings,
Inc., Premisys Communications, Inc., a California corporation, and
AT&T Paradyne Corporation, dated as of June 30, 1993 and July 12,
1993 and September 30, 1993.**(1)
10.21 Co-Development Agreement between Registrant and AT&T Paradyne
Corporation, dated as of September 30, 1993, as amended November 9,
1993 and May 25, 1994.**(1)
10.22 Private Label Purchase/Resale Agreement by and between Registrant and
DSC Technologies Corporation, effective as of March 31, 1994.**(1)
10.23 Purchase/Resale Agreement by and between Registrant and ADC
Telecommunications, Inc., effective as of January 1, 1994.**(1)
10.24 Manufacturing Agreement by and between Registrant and Eltech
Electronics Technology (M) SDN BHD (Malaysia) as of July 22,
1996.**(6)
10.26 Original Equipment Manufacturer (OEM) Volume Purchase Agreement
between Registrant and Motorola, Inc. dated December 21,
1994.**(1)
+10.27 Employment Agreement by and between Premisys Communications
Holdings, Inc. and Riley R. Willcox dated as of February 10,
1994.(1)
10.28 Amendment No. 4 to OEM Agreement by and among Premisys
Communications Holdings, Inc., Premisys Communications, Inc., a
California corporation, and AT&T Paradyne Corporation dated as
of March 6, 1995.**(1)
+10.29 Registrant's Management Salary and Incentive Plan for the Fiscal
Year Ended June 30, 1996.(3)
10.30 Lease Agreement by and between Premisys and Berg & Berg Enterprises,
Inc., dated October 24, 1995, for the premises located at 48700
Milmont Drive, Fremont, California.(16)***
10.31 Amendments Number 5 and 6 to OEM Agreement by and between Premisys
Communications, Inc., a Delaware Corporation and AT&T Paradyne
Corporation, dated as of April 1, 1995. (5)**
+10.32 Registrant's Management Incentive Plan for the fiscal year ended
June 30, 1997.(6)
10.33 Amendment Number 7 and 8 to OEM Agreement by and between Premisys
Communications, Inc., a Delaware Corporation, and Paradyne
Corporation, dated as of December 2, 1996.**(9)
10.34 First Amendment to Lease Agreement by and between Premisys
Communications, Inc. and Berg & Berg Enterprises, Inc., dated
September 17, 1996, for the premises located at 48800 Milmont Drive,
Fremont, California (formerly 48700 Milmont Drive, Fremont,
California). (8)
10.35 Second Amendment to Lease Agreement by and between Premisys
Communications, Inc. and Aetna Life Insurance Company, dated
August 9, 1996. (7)
<PAGE>
10.36 Manufacturing Agreement by and between Premisys Communications,
Inc. and CMC Mississippi, Inc. as of January 9, 1997. (11)**
10.37 Amendment Number 9 OEM Agreement by and between Premisys
Communications, Inc., a Delaware Corporation and AT&T Paradyne
Corporation, dated as of May 13, 1997. (11)**
10.38 Employment Agreement by and between Premisys Communications Inc.
and Nicholas Williams dated as of March 31, 1997. (11)
+10.39 Registrant's Management Incentive Plan for the fiscal year ended
June 30, 1998. (11)
10.40 License Agreement dated December 27, 1996 between Premisys
Communications, Inc. and Positron Fiber Systems Corporation. **
(11)
+10.41 Employment Status Change Agreement by and between Premisys
Communications, Inc. and William J. Smith dated as of October
31, 1997. (12)
+10.42 Employment Agreement by and between Premisys Communications,
Inc. and Peter Hauser dated as of January 5, 1998. (13)
10.43 Third Amendment to Lease Agreement by and between Premisys
Communications, Inc. and Aetna Life Insurance Company, dated
January 8, 1998. (14)
+10.44 Employment Status Change Agreement by and between Premisys
Communications, Inc. and Riley R. Willcox dated as of July 16,
1998.(16)
+10.45 Employment Agreement by and between Premisys Communications,
Inc. and John J. Hagedorn dated as of June 1, 1998.(16)
+10.46 Amendment to Employment Agreement by and between Premisys
Communications, Inc. and John J. Hagedorn dated as of July 14,
1998.(16)
+10.47 Registrant's Management Incentive Plan for the fiscal year ended
June 30, 1999.(16)
10.48 Lease Agreement by and between Registrant and Aetna Life Insurance
Company, dated June 4, 1998 for the premises located at 48634 Milmont
Drive, Fremont, California.(16)
10.49 First Amendment to Lease Agreement by and between Premisys
Communications, Inc. and Aetna Life Insurance Company dated July
20, 1998 for the premises located at 48634 Milmont Drive,
Fremont, California.(16)
10.50 OTC Issuer Stock Option Master Agreement with amendment dated
September 9, 1998.(17)
+10.51 Registrant's Management Incentive Plan for the fiscal year ended June
30, 2000.
10.52 Master Purchase Agreement between Premisys Communications, Inc.,
a Delaware corporation, and Teleport Communications Group Inc.,
dated as of October 15, 1997.*
21.01 List of Registrant's subsidiaries.
23.01 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
24.01 Power of Attorney (See page 53 of this Form 10-K).
27.01 Financial Data Schedule.
- -----------
(1) Incorporated herein by reference to the exhibit bearing the same number in
the Registrant's Registration Statement on Form 8-A (No. 0-25684) filed
with the Securities and Exchange Commission on September 22, 1998.
(2) Incorporated by reference to Exhibit 3.01 to the Registrant's Form 10-Q
(File No. 0-25684) for the quarter ended March 31, 1995 filed May 22,
1995.
(3) Incorporated by reference to the exhibit bearing the same number in
Registrant's Form S-1 Registration Statement filed August 1, 1995 (File
No.
33-95266).
(4) Incorporated by reference to Exhibit 3.05 in Registrant's Form 10-Q (File
No. 0-25684) for the quarter ended December 29, 1995 filed February 12,
1996.
(5) Incorporated by reference to the exhibit bearing the same number in
Registrant's Form 10-Q (File No. 0-25684) for the quarter ended March 29,
1996 filed May 3, 1996.
(6) Incorporated by reference to the exhibit bearing the same number in
Registrant's Form 10-K (File No. 0-25684) for the fiscal year ended June
28, 1996 initially filed September 26, 1996.
(7) Incorporated by reference to the exhibit bearing the number 10.33 in
Registrant's Form 10-Q (File No. 0-25684) for the quarter ended September
27, 1996 filed November 10, 1996.
(8) Incorporated by reference to the exhibit bearing the same number in
Registrant's Form 10-Q (File No. 0-25684) for the quarter ended September
27, 1996 filed November 10, 1996.
(9) Incorporated by reference to the exhibit bearing the same number in
Registrant's Form 10-Q (File No. 0-25684) for the quarter ended December 27,
1996 filed February 9, 1997.
(10) Incorporated by reference to Exhibit 4.04 in Registrant's Form S-8
Registration Statement filed January 15, 1999 (File No. 333-70739).
(11) Incorporated by reference to the exhibit bearing the same number in
Registrant's Form 10-K (File No. 0-25684) for the fiscal year ended June
27, 1997 initially filed September 25, 1997.
(12) Incorporated by reference to the exhibit bearing the same number in
Registrant's Form 10-Q (File No. 0-25684) for the quarter ended September
26, 1997 filed November 10, 1997.
(13) Incorporated by reference to the exhibit bearing the same number in
Registrant's Form 10-Q (File No. 0-25684) for the quarter ended December
26, 1997 filed February 2, 1998.
(14) Incorporated by reference to the exhibit bearing the same number in
Registrant's Form 10-Q (File No. 0-25684) for the quarter ended March 27,
1998 filed May 1, 1998.
(15) Incorporated by reference to the exhibit bearing the same number in
Registrant's Form 8-A (File No. 0-25684) filed September 22, 1998.
(16) Incorporated by reference to the exhibit bearing the same number in
Registrant's Form 10-K (File No. 0-25684) for the fiscal year ended June
26, 1998 filed September 24, 1998.
(17) Incorporated by reference to the exhibit bearing the same number in
Registrant's Form 10-Q (File No. 0-25684) for the quarter ended September
25, 1998 filed November 25, 1998.
+ Management contract or compensatory plan or arrangement.
* Confidential treatment has been requested with respect to certain portions
of this agreement. Such portions have been omitted from this filing and have
been filed separately with the Securities and Exchange Commission.
** Confidential treatment was received with respect to certain portions of this
agreement. Such portions have been omitted from this filing and have been filed
separately with the Securities and Exchange Commission.
*** Certain exhibits to the exhibit will be furnished supplementally to the
Securities and Exchange Commission upon its request.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended June 30, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Fremont, State of California, on the 24th day of September, 1998.
PREMISYS COMMUNICATIONS, INC.
By: /s/Nicholas J. Williams
------------------------------
Nicholas J. Williams
Chief Executive Officer
Each person whose signature appears below constitutes and appoints
Nicholas J. Williams and John J. Hagedorn, jointly and severally, his true and
lawful attorneys-in-fact, each with the power of substitution, for him in any
and all capacities, to sign amendments to this Report on Form 10-K, and to file
the same, with all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming all
that said attorneys-in-fact, or his substitute or substitutes, may do or cause
to be done by virtue thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed by the following persons in the capacities
and on the dates indicated.
Name Title Date
Principal Executive Officer:
/s/Nicholas J. Williams Chief Executive Officer, September 23, 1999
- ----------------------------- President, Chief Operating
Nicholas J. Williams Officer and a Director
Principal Financial Officer:
/s/John J. Hagedorn Senior Vice President, September 23, 1999
- ----------------------------- Finance and Administration
John J. Hagedorn Chief Financial Officer
and Secretary
Principal Accounting Officer:
/s/Robert W. Dilfer Vice President and Controller September 23, 1999
- -----------------------------
Robert W. Dilfer
Additional Directors:
/s/Raymond C. Lin Chairman of the Board of September 23, 1999
- ----------------------------- Directors
Raymond C. Lin
/s/Boris J. Auerbuch Director September 23, 1999
- ---------------------------------
Boris J. Auerbuch
/s/Carol H. Sharer Director September 23, 1999
- ---------------------------------
Carol H. Sharer
/s/Edward A. Keible Director September 23, 1999
- ---------------------------------
Edward A. Keible
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
EXHIBITS
to
Form 10-K
Under
THE SECURITIES ACT OF 1933
-----------
PREMISYS COMMUNICATIONS, INC.
<PAGE>
Exhibit Index
Exhibit
Number Exhibit Title
2.01 Premisys California Acquisition Agreement between Premisys
Communications Holdings, Inc. and Premisys Communications Pte.
Ltd., dated as of March 12, 1992, and exhibits thereto.(1)
2.02 Exchange Agreement by and among Premisys Communications
Holdings, Inc. and the shareholders, warrant holders and
noteholders of Premisys Communications Pte. Ltd., dated as of
March 12, 1992, and material exhibits thereto.***(1)
2.03 Form of Agreement and Plan of Merger by and among the
Registrant, Premisys Communications Holdings, Inc. and Premisys
Communications, Inc.(1)
3.01 Registrant's Amended and Restated Certificate of Incorporation as
filed with the Delaware Secretary of State on April 12, 1995.(2)
3.02 Certificate of Amendment of Amended and Restated Certificate of
Incorporation of Premisys Communications, Inc.(4)
3.03 Certificate of Designations Specifying the Terms of the Series A
Junior Participating Preferred Stock of Premisys Communications,
Inc. (15)
3.04 Registrant's Bylaws, as amended.(1)
4.02 Investors' Rights Agreement, dated as of March 12, 1992, as amended
June 15, 1992, October 22, 1993, December 14, 1993, February 18, 1994
and May 9, 1994 among Registrant and various investors.(1)
4.03 Waiver Relating to and Amendment of Investors' Rights Agreement dated
as of July 24, 1995 among Registrant and various investors.(3)
4.04 Rights Agreement dated September 18, 1998 between Registrant and
ChaseMellon Shareholder Services LLC, as Rights Agent. (15)
+10.01 Registrant's 1992 Stock Option Plan and related documents.(1)
+10.02 Registrant's 1994 Stock Option Plan and related documents.(10)
+10.03 Registrant's 1995 Directors Stock Option Plan and related
documents.(1)
+10.04 Registrant's 1995 Employee Stock Purchase Plan and related
documents.(1)
+10.06 Founders Agreement by and among Registrant, Raymond Lin, Boris
Auerbuch and Marcus Auerbuch, dated as of March 12, 1992.**(1)
10.08 Form of Indemnity Agreement entered into by Registrant with each
of its directors and executive officers.(1)
10.09 Warranty and Indemnification Agreement by and among Raymond Lin,
Boris Auerbuch and Registrant dated as of August 2, 1990.(1)
10.10 Agreement for Purchase and Sale of Assets by and between
Premisys Communications, Inc., a California corporation, and
Premisys Communications Pte. Ltd., dated as of January 1, 1992,
including Bill of Sale.(1)
10.11 Technology Cost and Risk Sharing Agreement by and between
Premisys Communications, Inc., a California corporation, and
Premisys Communications Pte. Ltd., dated as of January 1,
1992.(1)
10.12 Agreement Regarding Payment by and between Premisys
Communications, Inc., a California corporation, and Premisys
Communications Pte. Ltd., dated as of September 30, 1992.(1)
10.13 Technology Cost and Risk Sharing Agreement Amendment by and between
Premisys Communications, Inc., a California corporation, and Premisys
Communications Pte. Ltd., dated as of July 1, 1995.
(6)
10.15 Option Agreement by and between Registrant and AT&T Paradyne
Corporation, dated as of December 4, 1992.(1)
10.16 Series C Preferred Stock Purchase Agreement by and between Registrant
and AT&T Paradyne Corporation, dated as of December 14, 1993 and
material exhibits thereto.***(1)
10.18 Lease Agreement by and between Registrant and Aetna Life Insurance
Company, dated October 4, 1993, as amended to date.(1)
10.19 OEM Agreement by and among Premisys Communications Holdings, Inc.,
Premisys Communications, Inc., a California corporation, and AT&T
Paradyne Corporation, dated as of December 4, 1992, as amended July
8, 1993, March 17, 1994 and May 24, 1994.**(1)
10.20 Extension Agreements by and among Premisys Communications Holdings,
Inc., Premisys Communications, Inc., a California corporation, and
AT&T Paradyne Corporation, dated as of June 30, 1993 and July 12,
1993 and September 30, 1993.**(1)
10.21 Co-Development Agreement between Registrant and AT&T Paradyne
Corporation, dated as of September 30, 1993, as amended November 9,
1993 and May 25, 1994.**(1)
10.22 Private Label Purchase/Resale Agreement by and between Registrant and
DSC Technologies Corporation, effective as of March 31, 1994.**(1)
10.23 Purchase/Resale Agreement by and between Registrant and ADC
Telecommunications, Inc., effective as of January 1, 1994.**(1)
10.24 Manufacturing Agreement by and between Registrant and Eltech
Electronics Technology (M) SDN BHD (Malaysia) as of July 22,
1996.**(6)
10.26 Original Equipment Manufacturer (OEM) Volume Purchase Agreement
between Registrant and Motorola, Inc. dated December 21,
1994.**(1)
+10.27 Employment Agreement by and between Premisys Communications
Holdings, Inc. and Riley R. Willcox dated as of February 10,
1994.(1)
10.28 Amendment No. 4 to OEM Agreement by and among Premisys
Communications Holdings, Inc., Premisys Communications, Inc., a
California corporation, and AT&T Paradyne Corporation dated as
of March 6, 1995.**(1)
+10.29 Registrant's Management Salary and Incentive Plan for the Fiscal
Year Ended June 30, 1996.(3)
10.30 Lease Agreement by and between Premisys and Berg & Berg Enterprises,
Inc., dated October 24, 1995, for the premises located at 48700
Milmont Drive, Fremont, California.(16)***
10.31 Amendments Number 5 and 6 to OEM Agreement by and between Premisys
Communications, Inc., a Delaware Corporation and AT&T Paradyne
Corporation, dated as of April 1, 1995. (5)**
+10.32 Registrant's Management Incentive Plan for the fiscal year ended
June 30, 1997.(6)
10.33 Amendment Number 7 and 8 to OEM Agreement by and between Premisys
Communications, Inc., a Delaware Corporation, and Paradyne
Corporation, dated as of December 2, 1996.**(9)
10.34 First Amendment to Lease Agreement by and between Premisys
Communications, Inc. and Berg & Berg Enterprises, Inc., dated
September 17, 1996, for the premises located at 48800 Milmont Drive,
Fremont, California (formerly 48700 Milmont Drive, Fremont,
California). (8)
10.35 Second Amendment to Lease Agreement by and between Premisys
Communications, Inc. and Aetna Life Insurance Company, dated
August 9, 1996. (7)
<PAGE>
10.36 Manufacturing Agreement by and between Premisys Communications,
Inc. and CMC Mississippi, Inc. as of January 9, 1997. (11)**
10.37 Amendment Number 9 OEM Agreement by and between Premisys
Communications, Inc., a Delaware Corporation and AT&T Paradyne
Corporation, dated as of May 13, 1997. (11)**
10.38 Employment Agreement by and between Premisys Communications Inc.
and Nicholas Williams dated as of March 31, 1997. (11)
+10.39 Registrant's Management Incentive Plan for the fiscal year ended
June 30, 1998. (11)
10.40 License Agreement dated December 27, 1996 between Premisys
Communications, Inc. and Positron Fiber Systems Corporation. **
(11)
+10.41 Employment Status Change Agreement by and between Premisys
Communications, Inc. and William J. Smith dated as of October
31, 1997. (12)
+10.42 Employment Agreement by and between Premisys Communications,
Inc. and Peter Hauser dated as of January 5, 1998. (13)
10.43 Third Amendment to Lease Agreement by and between Premisys
Communications, Inc. and Aetna Life Insurance Company, dated
January 8, 1998. (14)
+10.44 Employment Status Change Agreement by and between Premisys
Communications, Inc. and Riley R. Willcox dated as of July 16,
1998.(16)
+10.45 Employment Agreement by and between Premisys Communications,
Inc. and John J. Hagedorn dated as of June 1, 1998.(16)
+10.46 Amendment to Employment Agreement by and between Premisys
Communications, Inc. and John J. Hagedorn dated as of July 14,
1998.(16)
+10.47 Registrant's Management Incentive Plan for the fiscal year ended
June 30, 1999.(16)
10.48 Lease Agreement by and between Registrant and Aetna Life Insurance
Company, dated June 4, 1998 for the premises located at 48634 Milmont
Drive, Fremont, California.(16)
10.49 First Amendment to Lease Agreement by and between Premisys
Communications, Inc. and Aetna Life Insurance Company dated July
20, 1998 for the premises located at 48634 Milmont Drive,
Fremont, California.(16)
10.50 OTC Issuer Stock Option Master Agreement with amendment dated
September 9, 1998.(17)
+10.51 Registrant's Management Incentive Plan for the fiscal year ended June
30, 2000.
10.52 Master Purchase Agreement between Premisys Communications, Inc.,
a Delaware corporation, and Teleport Communications Group Inc.,
dated as of October 15, 1997.*
21.01 List of Registrant's subsidiaries.
23.01 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
24.01 Power of Attorney (See page 53 of this Form 10-K).
27.01 Financial Data Schedule.
- -----------
(1) Incorporated herein by reference to the exhibit bearing the same number in
the Registrant's Registration Statement on Form 8-A (No. 0-25684) filed
with the Securities and Exchange Commission on September 22, 1998.
(2) Incorporated by reference to Exhibit 3.01 to the Registrant's Form 10-Q
(File No. 0-25684) for the quarter ended March 31, 1995 filed May 22,
1995.
(3) Incorporated by reference to the exhibit bearing the same number in
Registrant's Form S-1 Registration Statement filed August 1, 1995 (File
No.
33-95266).
(4) Incorporated by reference to Exhibit 3.05 in Registrant's Form 10-Q (File
No. 0-25684) for the quarter ended December 29, 1995 filed February 12,
1996.
(5) Incorporated by reference to the exhibit bearing the same number in
Registrant's Form 10-Q (File No. 0-25684) for the quarter ended March 29,
1996 filed May 3, 1996.
(6) Incorporated by reference to the exhibit bearing the same number in
Registrant's Form 10-K (File No. 0-25684) for the fiscal year ended June
28, 1996 initially filed September 26, 1996.
(7) Incorporated by reference to the exhibit bearing the number 10.33 in
Registrant's Form 10-Q (File No. 0-25684) for the quarter ended September
27, 1996 filed November 10, 1996.
(8) Incorporated by reference to the exhibit bearing the same number in
Registrant's Form 10-Q (File No. 0-25684) for the quarter ended September
27, 1996 filed November 10, 1996.
(9) Incorporated by reference to the exhibit bearing the same number in
Registrant's Form 10-Q (File No. 0-25684) for the quarter ended December 27,
1996 filed February 9, 1997.
(10) Incorporated by reference to Exhibit 4.04 in Registrant's Form S-8
Registration Statement filed January 15, 1999 (File No. 333-70739).
(11) Incorporated by reference to the exhibit bearing the same number in
Registrant's Form 10-K (File No. 0-25684) for the fiscal year ended June
27, 1997 initially filed September 25, 1997.
(12) Incorporated by reference to the exhibit bearing the same number in
Registrant's Form 10-Q (File No. 0-25684) for the quarter ended September
26, 1997 filed November 10, 1997.
(13) Incorporated by reference to the exhibit bearing the same number in
Registrant's Form 10-Q (File No. 0-25684) for the quarter ended December
26, 1997 filed February 2, 1998.
(14) Incorporated by reference to the exhibit bearing the same number in
Registrant's Form 10-Q (File No. 0-25684) for the quarter ended March 27,
1998 filed May 1, 1998.
(15) Incorporated by reference to the exhibit bearing the same number in
Registrant's Form 8-A (File No. 0-25684) filed September 22, 1998.
(16) Incorporated by reference to the exhibit bearing the same number in
Registrant's Form 10-K (File No. 0-25684) for the fiscal year ended June
26, 1998 filed September 24, 1998.
(17) Incorporated by reference to the exhibit bearing the same number in
Registrant's Form 10-Q (File No. 0-25684) for the quarter ended September
25, 1998 filed November 25, 1998.
+ Management contract or compensatory plan or arrangement.
* Confidential treatment has been requested with respect to certain portions
of this agreement. Such portions have been omitted from this filing and have
been filed separately with the Securities and Exchange Commission.
** Confidential treatment was received with respect to certain portions of this
agreement. Such portions have been omitted from this filing and have been filed
separately with the Securities and Exchange Commission.
*** Certain exhibits to the exhibit will be furnished supplementally to the
Securities and Exchange Commission upon its request.
<PAGE>
Exhibit 10.51
Management Incentive Plan for FY2000
Premisys Communications, Inc.
Compensation Committee of Board of Directors
July 22, 1999
I. Participation
A. Participants ("Participants") are executives and managers that have an
impact of the overall success of the Company.
B. Participants must be full-time, regular employees as of the last day of
each bonus period to earn a bonus.
C. Participants of the Management Incentive Plan can not participate in
profit sharing plan.
II. Bonus Formula
A. The target individual bonuses are set as a percentage of annual salaries
and reflect bonuses paid to individuals in comparable positions at other
companies and their responsibilities at Premisys.
B. Operating Profit in all calculations for non-Engineering participants is
the consolidated operating profit before accruals for Management Bonus and
the Profit Sharing Plans ("Pre-bonus Operating Profit").
C. Operating Profit in all calculations for Engineering participants is the
consolidated product line gross profit less Engineering expense and before
accruals for Management Bonus and the Profit Sharing Plans ("Pre-bonus
Operating Profit").
D. The basis of earning bonuses varies with the responsibilities of the manager:
1. CEO and CFO - Company performance; measured as actual Pre-bonus
Operating Profit versus plan
2. Senior VP Sales - product revenue (through his sales commission plan),
individual goal accomplishments and actual Pre-bonus Operating Profit
versus plan
3. All other participants - combination of actual Pre-bonus Operating
Profit versus plan and achievement of individual goals, with specific
portions of their bonuses tied to the accomplishment of each goal.
E. The Company performance bonuses that are tied to actual Pre-bonus
Operating Profit versus plan will be calculated as follows: 1. The earned
bonus is the product of individual bonus percentage of planned
Pre-bonus Operating Profit times the actual Pre-bonus Operating Profit.
2. If actual Pre-bonus Operating Profit versus plan is120% or more of Plan
for the complete fiscal year, the earned bonus is the product of
individual bonus percentage of planned Pre-bonus Operating Profit times
the ratio of the actual/planned Pre-bonus Operating Profit times the
actual Pre-bonus Operating Profit.
3. Individual Bonuses are capped at two times target dollar bonuses.
F. Bonuses based upon the accomplishmentof individualgoals will be determined
by the CEO in conjunction with the individual's direct manager. The target
levels represent bonuses to be paid upon achievement of goals on a timely
basis; to the degree goals are accomplished later or earlier than
expected, and to the degree the goal completion represented lesser or
greater effort than expected, actual bonuses can be from zero to 150% of
the target levels.
G. No bonus payments to executive officers are made if actual Pre-bonus
Operating Profit is less than 75% of Plan.
H. For all non-executive officer participants, no bonus payments based on
Pre-bonus Operating Profit are made if actual Pre-bonus Operating Profit
is less than 75% of Plan, and no bonus payments based on individual goals
are made if actual Pre-bonus Operating Profit is less than 50% of Plan
I. Management bonuses will be calculated for the first half and the second
half of each fiscal year and be paid within 30 days after the end of each
six-month period.
III. Authorization
A. The Plan and participation must be approved at the beginning of each
fiscal year by the Compensation Committee of the Board of Directors.
B. The Compensation Committee of the Board of Directors has the authority to
adjust amounts paid out based upon corporate performance based upon its
assessment of the overall accomplishments of the management team.
<PAGE>
Exhibit 10.52
** Confidential treatment has been requested with
respect to the information contained within the
"[**]" markings. Such marked portions have been
omitted from this filing and have been filed
separately with the Securities and Exchange
Commission.
MASTER PURCHASE AGREEMENT
This Agreement is between Premisys Communications, Inc., a Delaware corporation
(hereinafter called "Vendor"), having its office at 48664 Milmont Drive,
Fremont, California 94536 and Teleport Communications Group Inc. (hereinafter
called "Customer") having a place of business at One Teleport Drive, Suite 301,
Staten Island, New York 10311.
WITNESSETH:
WHEREAS, Teleport Communications Group Inc. (TCG) is currently engaged in
establishing metropolitan area networks ("MANS") to provide local communications
services in various cities throughout the United States, and
WHEREAS, the entities which will establish such MANS (individually, a "MANS
Entity") may either be wholly or partly owned by TCG, and
WHEREAS, Vendor and TCG wish to set forth a standard set of general terms
and conditions which will facilitate the ability to obtain the Products and/or
Services (listed in Exhibit A) which may be purchased from time to time from
Vendor by any MANS Entity, and
WHEREAS, as used herein the term TCG or Customer shall include, where
applicable, Teleport Communications Group, Inc. and such other MANS Entities
which are wholly or partly owned by TCG;
NOW THEREFORE, it is mutually agreed as follows:
1. ORDERS
1.1 All orders are subject to acceptance and acknowledgment at PREMISYS'
California office. PREMISYS will use its best efforts to acknowledge CUSTOMER's
order using PREMISYS' Sales Order Acknowledgment form within twenty-four (24)
hours. This Agreement supersedes the terms of CUSTOMER's Purchase Order and
preprinted terms on Premisys' Order Acknowledgment.
Orders shall:
(a) be in writing on paper with CUSTOMER's form (can be received via
facsimile transmission); electronic transmission of orders are acceptable if
they meet all of the conditions in this Section 1;
(b) include CUSTOMER's purchase order number and/or a signature of
an authorized employee of CUSTOMER (to be provided by CUSTOMER);
(c) adhere to the terms and conditions as in Section 3 of this
Agreement;
(d) have correct equipment and options description (including item
numbers and part numbers if shown for that item in the price list);
(e) have correct purchase price in accordance with Exhibits A and of
this Agreement or any amendments hereto;
(f) provide tax status for each "ship to" location including
exemption certificate number if tax exempt, either on the order or separate
notice prior to shipment;
(g) have firm shipment schedules, with shipment date, extended not
more than ninety (90) days from date of order; and
(h) specify exact "ship to" and "invoice to" place of business.
1.2 All orders shall be sent to:
PREMISYS Communications, Inc.
ATTN: Customer Service
48664 Milmont Drive
Fremont, CA 94538
Phone: (510) 353-7600 Fax: (510) 353-7601
1.3 Delivery - Within two (2) business days after acceptance of order
providing such orders are approximately as forecasted. PREMISYS will endeavor
and use best commercial efforts to ship such orders within twenty-four (24)
hours of acceptance and other short-term orders requested by CUSTOMER for
products and quantities as shown in Exhibits E and F.
1.4 Shipment of Orders
1.4.1 All shipments shall be accompanied by a detailed packing list which
will reference the PREMISYS part number for the Product, the purchase order
number the shipment is against, the customer item number, and the quantity in
each shipment covered by the packing list.
1.4.2 All shipment containers shall be marked and identified with the
necessary shipping information, including name and address of CUSTOMER or other
designated consignee, and consignor.
1.4.3 CUSTOMER may specify carrier and mode of transportation on each
individual purchase order. All shipments shall be made freight collect. If
CUSTOMER fails to indicate the carrier and mode of transportation, CUSTOMER
grants PREMISYS authority to select carrier and mode of transportation required
to meet CUSTOMER's delivery requirements.
1.4.4 Vendor will pack the Products purchased hereunder for transport in
accordance with its commercial standards and will deliver the Products to a
carrier of the mode of transportation selected by Vendor unless otherwise agreed
upon by the parties.
1.4.5 Products will be shipped to Customer's specified delivery point FOB
shipping point, freight prepaid and billed. Such prepaid transportation charges
will be so identified as a separate line item on Vendor's invoice or will be
separately billed to Customer on NET 30 DAY terms if applicable due to special
handling requested by Customer.
2. PRICES
(a) Products
The price of the Products during the term of this Agreement shall be
as listed in Exhibit A.
(b) Services
(1) Prices for Training and Installation shall be those contained
in Exhibit A.
(2) Prices for Services not listed in Exhibit A shall be those
contained in Vendor proposals issued from time to time.
(c) Volume Discounts; forecasts
(1) There shall be no minimum purchase requirement.
(2) Customer will be invoiced only for Products ordered by Customer
via Purchase Orders. Customer has no liability for Product
purchases beyond issued Purchase Orders.
(3) Customer shall submit to Vendor a six month (6) month rolling
forecast of Product purchases which will be updated quarterly and
is non-binding.
PREMISYS shall sell the Products to CUSTOMER without right of return
except as expressly provided in Exhibit "B" attached hereto.
3. PAYMENT
Payment for Products shall be due NET THIRTY (30) DAYS from the date of
invoice by Customer. Such invoice shall be sent to Customer at the time of
shipment of the Products. Payment for Services ordered by the Customer and
performed by Vendor shall be due net thirty 30 days from the Vendor's
invoice date by Customer. Vendor shall give Customer a two percent (2%)
discount on all Products and Services if payment is made by Customer
within ten (10) days from the invoice date. No penalties will be imposed
for orders for which payment has been made within sixty (60) days.
4. TRANSFER OF TITLE AND RISK OF LOSS; SOFTWARE LICENSE
(a) Title to the Products, except for software, shall pass from Vendor to
Customer upon delivery by the Vendor to the carrier. In the event of
loss or damage during shipment, the Vendor will take the action to
resolve such issues with the carrier, including any and all insurance
claims. If lost Products cannot be recovered within twenty-four (24)
hours,Vendor will replacesuchlost products and any damaged productsat
no additionalcost to Customer.Customer willassist Vendor in asserting
any claim against the involved carrier. Any damaged or recovered
Products or paid claims will be returned to Vendor.
(b) Title to software shall remain with Vendor. Unless otherwise
stipulated by Vendor, Vendor grants to Customer a fully paid up,
non-exclusive, nontransferable license to use the software solely in
conjunction with Vendor-provided Products. The software and license
to use such software is considered Vendor proprietary information.
The foregoing license does not include any right of Customer to
sublicense or assign the software without the prior written approval
of Vendor.
Customer may only make copies sufficient for backup operational logistics.
5. LABOR HARMONY; ACCESS TO CUSTOMER PREMISES
Customer shall familiarize Vendor with the labor/management relationships
at Customer working sites, and Vendor shall conduct its activities in such
a manner as to avoid: (i) any interruption of work and services at the
Customer sites; and (ii) any interference with the work or activities of
other parties. Whenever Vendor has knowledge of any actual or potential
labor dispute, it shall immediately give the MANS Entity notice thereof
and all relevant information it has with respect thereto. Vendor assumes
the risk for any disruption of the work due to a labor dispute caused
directly by an act or omission of Vendor, and such labor dispute, or the
settlement thereof, shall not be grounds for any change in the terms of
this Agreement. In the event of an actual or potential labor dispute,
Vendor agrees to cooperate with the Customer to minimize the effect such
disruption may have at such site. Vendor shall be responsible for its
costs in resolving or averting any such labor dispute.
6. TAXES
(a) Prices for Products and, if applicable, software do not include any
state, federal, county or local sales, or use taxes applicable to
the sale, delivery, or use of said Products, and the Customer
expressly agrees to pay to vendor (in addition to the Prices
specified), the amount of any such taxes that may be imposed upon
and therefore payable by Vendor as shall be determined by the
shipping destination specified in the Customers Purchase Order.
All sales and use taxes, will be itemized separately on the invoice
and billed to the Customer by Vendor unless Customer has supplied
valid tax exemption certificates or equivalent legal waiver
documents.
(b) All other taxes of every nature and kind, including without
limitation franchise, net or gross income, license, occupation, or
property taxes on Vendor-owned property shall be the responsibility
of Vendor and Customer shall have no obligation to Vendor therefor.
(c) Customer shall have the right to pay tax under protest for the levy
of any such sales or use taxes and, in-such event, Vendor shall
provide such assistance and information as may be required by any
taxing authority in connection with such protest and appeals.
7. DOCUMENTATION
(a) At no additional charge, Vendor will furnish one manual for each
enclosure ordered. The instruction books shall contain sections on
theory, operation, installation, and maintenance of the equipment.
(b) In the event that Vendor is contracted by Customer to engineer
and/or install equipment, Vendor documentation will include
engineering drawings covering physical installation, wiring, and
connectivity, and, if applicable, as-built drawings.
9. WARRANTIES
(a) Hardware Warranty
1. All Product is warranted to perform, when given normal, proper and
intended usage, substantially in accordance with the published
release specifications for each Product and, except for Licensed
Software, against defects in materials and workmanship.
2. PREMISYS warrants to Customer only that to the extent that any
Product delivered under this Agreement is hardware, such Product
shall be free from defects in workmanship and materials under
normal use and service for a period of five (5) years from date
of PREMISYS shipment of the Product to CUSTOMER. PREMISYS makes
no warranty to anyone other than Customer including no warranty
to any customer of Customer except as set forth in PREMISYS'
limited warranty accompanying delivery of Product, if any.
CUSTOMER may assign its warranty to its customers subject to the
terms of this section.
If during the stated warranty period any defect in material,
workmanship or design is discovered in any Product covered by the
above warranty PREMISYS shall, at PREMISYS' sole option, (1) repair
or replace any such Products which are returned by Customer or (2)
refund (or credit at Customer's option) the purchase price provided
that: (a) PREMISYS is promptly notified in writing upon discovery of
such defect, which notice shall contain a reasonable explanation of
any alleged deficiency and be delivered to PREMISYS prior to the
expiration of the applicable warranty period; (b) such Product is
promptly returned to PREMISYS after issuance of a return material
authorization (RMA) by PREMISYS, freight prepaid to PREMISYS'
Warranty Repair Department; and (c) PREMISYS is satisfied upon
examination that claimed deficiencies actually exist and were not
caused by accident, misuse, neglect, alteration, improper
installation, improper repair, improper testing, lightning, fire,
flood, or earthquake. No troubles found (NTF) will be billed at a
charge of $100 per occurrence. PREMISYS shall have twenty (20)
business days to make repairs to or replace Products found to be
defective. Unauthorized modifications or alterations of Product
shall invalidate this warranty. PREMISYS shall return all Products
repaired or replaced under warranty freight prepaid to Customer.
(3) Limitations of Warranty
CORRECTION OF DEFECTS BYREPAIR, REPLACEMENT,SERVICE OR REFUNDWILL BE
AT VENDOR'S OPTION AND CONSTITUTE FULFILLMENT OF ALL OBLIGATIONS TO
CUSTOMER FOR BREACH OF WARRANTY.
Vendor assumes no warranty liability with respect to defects in the
product caused by:
(i) Other manufacturer's equipment purchased by Vendor and resold
to Customer will be limited to that manufacturer's warranty.
Vendor shall assign the manufacturer's warranty to Customer.
Vendor assumes no warranty liability for other manufacturer's
equipment furnished by Customer.
(ii) No agent, Customer, or representative is authorized to make
any warranties on behalf of Vendor or to assume for Vendor any
other liability in connection with any Vendor Product or
Service.
(b) Software Program License And Warranty
1. License
1.1 Subject to the following terms and conditions PREMISYS grants to
CUSTOMER and CUSTOMER accepts a perpetual, non-exclusive license to
use the object code software provided by PREMISYS (the Licensed
Program) only with PREMISYS equipment with all copyright, patent and
intellectual property rights remaining the sole property of
PREMISYS.
1.2 CUSTOMER shall receive software support and upgrades for the
Licensed Program in accordance with the applicable then current
PREMISYS software support policy in effect and upon payment of any
applicable fees.
2. Protection and Security of Licensed Programs
2.1 CUSTOMER acknowledges and agrees that the Licensed Program contains
proprietary and confidential information of PREMISYS and/or its
third party supplier. CUSTOMER agrees to protect the confidential
and proprietary nature of the Licensed Program in the same manner
that it protects its own confidential information of like value,
provided that CUSTOMER will in all cases use reasonable care to
protect the Licensed Program.
2.2 CUSTOMER shall not use, print, copy, translate, adapt, create
derivative works from, record, transmit, display, disclose, publish,
encumber by way of security interest or otherwise pledge or
transfer, modify, assign, distribute, rent, loan or make available
to any third party the Licensed Program in whole or in part, except
as expressly provided in this Agreement.
2.3 CUSTOMER shall refrain from and shall prevent others from
decompiling or applying any procedure to the Licensed Program,
including reverse engineering or any similar process, in order to
derive and/or appropriate for use, the source code or source
listings for the Licensed Program.
3. Term
3.1 This Agreement shall become effective for each Licensed Program upon
delivery of the Licensed Program to CUSTOMER.
3.2 PREMISYS may terminate said license upon notice to CUSTOMER if
CUSTOMER breaches any provision of this Agreement and fails to cure
such breach within thirty (30) days of notice thereof, or if
CUSTOMER becomes bankrupt, makes an assignment for the benefit of
creditors or a trustee is appointed for CUSTOMER, or if the assets
of CUSTOMER vest in or become subject to the rights of any trustee,
receiver, board, tribunal, commission or any body, corporate or
person, other than CUSTOMER, or if bankruptcy, reorganization or
insolvency proceedings are instituted against CUSTOMER and are not
dismissed within 30 days.
4. Limited Warranties
4.1 PREMISYS warrants that when the Licensed Program is delivered that
it will function substantially in accordance with the functional
description set out in the applicable portion of the version of the
user manual supplied with the License Program when used in
accordance with such user manual. This warranty will be conclusively
deemed to be satisfied unless CUSTOMER gives PREMISYS notice within
90 days of the date PREMISYS ships the original copy of such
Licensed Program that the warranty has not been met, in which case
PREMISYS shall have the opportunity to make repeated efforts within
a reasonable time to satisfy its obligations under this warranty.
If, after repeated efforts, CUSTOMER notifies PREMISYS that this
warranty has not been met, PREMISYS will take back the Licensed
Program and refund to CUSTOMER all amounts paid by CUSTOMER
hereunder with respect to such Licensed Program.
4.2 THE WARRANTY SET OUT IN SECTION 4.1 SHALL CONSTITUTE THE SOLE
LIABILITY OF PREMISYS AND THE SOLE REMEDY OF CUSTOMER FOR ANY
FAILURE OF ANY PROGRAM TO FUNCTION AS WARRANTED.
4.3 EXCEPT AS EXPRESSLY PROVIDED HEREIN THERE ARE NO WARRANTIES,
CONDITIONS OR REPRESENTATIONS EXPRESS OR IMPLIED BY STATUTE, USAGE,
CUSTOM OF THE TRADE OR OTHERWISE WITH RESPECT TO THE LICENSED
PROGRAMS PROVIDED BY PREMISYS HEREUNDER, INCLUDING BUT NOT LIMITED
TO, WARRANTIES OR REPRESENTATIONS OF WORKMANSHIP, MERCHANTABILITY,
SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR DURABILITY,
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, PREMISYS DOES NOT
WARRANT THAT THE LICENSED PROGRAM WILL MEET ALL OF CUSTOMER'S NEEDS
OR THAT OPERATION OF THE LICENSED PROGRAM WILL BE ERROR FREE.
5. LIMITATION OF LIABILITY
5.1 EXCEPT FOR THIRD PARTY CLAIMS IN NO EVENT WHATSOEVER, REGARDLESS OF
THE FORM OR CAUSE OF ACTION WHETHER IN CONTRACT OR TORT (INCLUDING
NEGLIGENCE) OR THE NUMBER OF CLAIMS ASSERTED, SHALL PREMISYS, ITS
EMPLOYEES, DIRECTORS, OFFICERS AND AGENTS TOTAL COLLECTIVE LIABILITY
TO CUSTOMER FOR ALL CLAIMS EXCEED THE AMOUNT PAID UNDER THIS
AGREEMENT FOR THE LICENSED PROGRAM THAT IS THE SUBJECT MATTER OF OR
THAT IS DIRECTLY RELATED TO CAUSE OF ACTION, PROVIDED THAT IN NO
EVENT SHALL THE TOTAL COLLECTIVE LIABILITY OF PREMISYS, ITS
EMPLOYEES, OFFICERS, AGENTS AND DIRECTORS EXCEED THE AMOUNT PAID TO
PREMISYS PURSUANT TO THIS AGREEMENT.
5.2 PREMISYS, ITS EMPLOYEES, AGENTS, OFFICERS AND DIRECTORS SHALL NOT BE
LIABLE IN ANY WAY WHATSOEVER, WHETHER AS A RESULT OF A CLAIM OR
ACTION IN CONTRACT OR TORT, INCLUDING NEGLIGENCE OR OTHERWISE FOR
ANY INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT
LIMITED TO, LOST PROFITS OR LOST BUSINESS REVENUE, LOST BUSINESS,
FAILURE TO REALIZE EXPECTED SAVINGS, OR OTHER COMMERCIAL OR ECONOMIC
LOSS OF ANY KIND WHATSOEVER, OR FOR ANY DAMAGES, DIRECT OR INDIRECT,
SPECIAL OR CONSEQUENTIAL ARISING OUT OF ANY CLAIM AGAINST CUSTOMER
BY ANY PERSON WHETHER OR NOT SUCH DAMAGES ARE FORESEEABLE AND
WHETHER OR NOT PREMISYS, ITS EMPLOYEES, AGENTS, OFFICERS OR
DIRECTORS HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES WHICH
ARE IN ANY WAY RELATED TO THIS AGREEMENT OR THE LICENSED PROGRAM.
6. Patent, Copyright, Trade Name and Trade Secret Infringement
6.1 PREMISYS shall defend any suit alleging the infringement of any
patent, copyright or trade secret which is brought against CUSTOMER
on account of its use of the Licensed Program and shall pay all
reasonable legal costs and expenses incurred by CUSTOMER in
conjunction therewith and satisfy all monetary judgments and decrees
against CUSTOMER, provided that CUSTOMER notifies PREMISYS within
ten (10) business days of the date any such claim becomes known to
CUSTOMER, that PREMISYS shall have sole control of the defense or
settlement of such actions, and that CUSTOMER provides such
assistance and cooperation to PREMISYS as is reasonably requested.
6.2 In the event CUSTOMER is enjoined from its use of PREMISYS' Licensed
Program due to proceeding based upon any infringement of any patent,
copyright or trade secret, PREMISYS shall either:
i) promptly renderthe Licensed Program non-infringing and capable of
providing services as intended, or
ii) procure for CUSTOMER the right to continue using the Licensed
Program, or
iii) replace the Licensed Program with a non-infringing version, or
iv)remove the Licensed Program and refund the purchase price, less
a monthly usage fee equal to one sixtieth of the license for each
month that CUSTOMER has had use of the Licensed Program.
6.3 The foregoing constitutes the entire liability of PREMISYS to
CUSTOMER with respect to infringement of patents, copyrights,
and trade secrets for Products purchased pursuant to this
Agreement and PREMISYS hereby disclaims any implied warranty
of non-infringement.
7. Miscellaneous
7.1 Notwithstanding anything else in this Exhibit, PREMISYS shall
not, in any way whatsoever, be held liable or responsible for
any failure by it to meet its obligations or responsibilities
under this Exhibit where such failure results from causes
beyond PREMISYS' reasonable control.
7.2 This Exhibit constitutes the entire understanding between
PREMISYS and CUSTOMER with respect to the licensing of the
Licensed Programs to CUSTOMER by PREMISYS and supersedes all
prior oral and written communications with respect to the
Licensed Programs licensed under this Exhibit. This Exhibit
may be amended or modified only by means of a written
Agreement signed by both PREMISYS and CUSTOMER.
7.3 If any provision of this Exhibit shall be held to be invalid,
illegal or unenforceable, such provision shall be severed
therefrom and the validity, legality or enforceability of the
remaining provisions shall not in any way be affected or
impaired thereby.
7.4 CUSTOMER shall comply with all export regulations pertaining
to the Licensed Program in effect from time to time. In
particular, without limiting the generality of the foregoing,
CUSTOMER hereby warrants that it will not directly or
indirectly export, re-export or transship the Licensed Program
or such other information, media or products in violation of
or otherwise in contravention of the export laws, rules and
regulations.
(c) Disclaimer of Warranty and Limitation of Remedies
1. Customer understands and agrees as follows:
THE ABOVE WARRANTIES REPLACES ALL OTHER WARRANTIES, EXPRESSED OR
IMPLIED, AND ALL OTHER OBLIGATIONS OR LIABILITIES OF VENDOR,
INCLUDING ANY WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE. ALL OTHER WARRANTIES ARE DISCLAIMED AND EXCLUDED
BY VENDOR.
THE FOREGOING WILL BE THE SOLE AND EXCLUSIVE REMEDY FOR BREACH OF
WARRANTY IN CONTRACT, OR OTHERWISE. THIS LIMITATION APPLIES TO ALL
SERVICES AND PRODUCTS DURING AND AFTER THE WARRANTY PERIOD. IN NO
EVENT WILL VENDOR BE LIABLE FOR ANY SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES OR COMMERCIAL LOSSES EVEN IF VENDOR HAS BEEN
ADVISED THEREOF.
10. SUPPORT SERVICES
Vendor shall provide the following services:
** Confidential treatment has been requested with
respect to the information contained within the
"[**]" markings. Such marked portions have been
omitted from this filing and have been filed
separately with the Securities and Exchange
Commission.
10.1 NO CHARGE SERVICES
(a) Vendor's Service Engineers to resolve, via telephone,
technical questions/issues on a [ ** ] basis, and to ship
emergency parts within [ ** ] of request.
(b) Distribution of service bulletins that describe Products
changes. Distribution shall take place to Customer within two
(2) workdays of bulletin preparation.
(c) Order Administration for parts and warranty issues.
(d) Training for up to eight (8) qualified technicians at Vendor's
Facilities in the operational theory, technical parameters,
installation and/or maintenance,and testmethods foreachtype of
Product acquired by Customer and by Related Companies. Such
training shall be provided,mutually agreed,forthe firstof such
acquisitions by Customer,and shallbe providedto Customer's and
the Related Company's employeesor their contractors'employees.
If training class is canceledor rescheduled within one(1) week
of the commencement date, Customer will pay Seller's
non-recoverable costs incurred in connection therewith. In
addition, Seller will offer to provide at Seller's training
facility such training for three(3) employees of Customer,each
Related Company, or their contractors for each type of Product
acquired by Customer as to such training, Customer or Related
Company, as applicable, shall pay such employees, travel and
living expenses.
10.2 BILLABLE SERVICES
(a) Except as provided above, training courses at vendor's
facility or Customer's facility shall be provided in Vendor's
Price List (section 4.03) for such services. The cost to
Customer for training at Customer's facility shall not exceed
the reasonable expenses associated with the trainer's travel,
lodging and meals.
(b) Repair of customer-returned units at the then current vendor
price list in effect for such services when the products are
returned out of warranty.
(c) Provision of loaner modules for restoring service during
outages.
(d) Emergency on-site engineering support, with Customer's costs
limited to Vendor's standard rates and the reasonable expenses
associated with travel, lodging and meals.
(e) Cost of emergency parts and shipping as described in Exhibit B.
11. SPARES
** Confidential treatment has been requested with
respect to the information contained within the
"[**]" markings. Such marked portions have been
omitted from this filing and have been filed
separately with the Securities and Exchange
Commission.
(a) Vendor agrees to offer for sale and provide to Customer, at
reasonable rates and deliveries then in effect, replacement and
spare parts for a [ ** ] period commencing on the delivery date for
the last item of Products under this Agreement.
In the event that Vendor is unable to commit within thirty (30) days
to supply to Customer a specified spare part or equivalent
replacement within 180 days from the date a Customer's order is
received, Customer may require Vendor to supply all plans, drawings,
technical specifications, parts list, and other documents as
Customer may require in order to obtain or manufacture a substitute
or equivalent part. Vendor shall use best efforts to meet a shorter
delivery date for spares.
12. INVENTORY
Vendor shall maintain an inventory of sets of Products at its facility as
described in Exhibit E. Customer shall have access to this inventory for
emergency service purposes on a [ ** ] basis, and Vendor shall deliver to
a shipping carrier inventory for such purposes within [ ** ] of Customer's
written authorized request. Vendor will invoice Customer upon shipment
under the terms of this agreement.
13. FUTURE ENHANCEMENTS
Any future enhancements developed for the Product(s) purchased under this
Agreement will be available and offered for sale to Customer at the
then-current catalog price, less any applicable discounts.
<PAGE>
14. EXCUSABLE DELAY
Vendor will not be liable for delays in performance or a failure to
perform hereunder due to unforeseen circumstances or causes beyond its
control including, but not limited to, inability to obtain material, labor
or manufacturing facilities, acts of God, acts of any government, wars,
riots, fires, floods, accidents, strikes, embargoes, or delays on the part
of Vendor's suppliers for said reasons. In the event of such delays the
Purchase Order schedules shall be extended for such additional period of
time as is determined to be equitable by the parties.
If such a delay in performance or failure to perform forces an
interruption of more than fifteen (15) days, Customer may elect to cancel
the Purchase Order(s) without penalty to Customer and without any
financial obligation other than to pay for Products actually delivered.
15. CONFIDENTIALITY OF INFORMATION
(a) Should private information ofeither theCustomer orVendor be required
by the other in performanceof this Agreement,the party receiving such
private information (Recipient hereafter) agrees to maintain same in
confidence andto take precautions reasonably necessaryto protect same
from third parties and any purpose inconsistent with the Agreement.
Precautions taken shallbe deemed reasonable if at least equivalent to
Recipient's precautions with respect to its own private information.
Private information shallmean technical orbusiness informationor data
conveyed in written, graphic, or other permanent tangible form.
The foregoing confidentiality restrictions, however, shall not extend
to any part of the private information which:
(1) was already known to the recipient at the time of disclosure
hereunder and as can be confirmed by written documentation;
(2) was knownor was generally available tothe public atthe time of
disclosure hereunder;
(3) becomes known or generally available to the public (other than
by act of Recipient subsequent to its disclosure hereunder);
(4) is disclosed or made available in writing to Recipient by a
third party having a bona fide right to do so;
(5) is independently developed by Recipient without the use of the
private information as can be established by written
documentation; or,
(6) is required by law to be released.
(b) The provisions of this Section 16 shall survive beyond the
termination of this Agreement.
16. ASSIGNMENT
(a) Vendor shall not assign this Agreement or any of its rights or
obligations hereunder without the prior written consent of Customer,
which consent shall not be unreasonably withheld. However, Vendor
may make such assignment without Customer's approval in case of
merger or acquisition.
(b) Customer may assign this Agreement or any of its rights or
obligations except for obligations of payments due to a parent
company, affiliate or subsidiary.
(c) The terms and conditions of this Agreement shall pass to the benefit
of and be binding upon the successors and assigns of the parties.
17. PATENT INDEMNITY
Vendor agrees that it will defend, at its own expense, all claims and
suits against Customer for infringement (or alleged infringement) of any
United States patent, or patents covering, or alleged to cover,
Vendor-supplied Product(s). Vendor agrees that it will pay all sums which,
by settlement, final judgment or decree in any such claims or suits, may
be assessed against Customer on account of such infringement, provided
that Vendor shall be given (i) immediate written notice of any claims of
any such infringement and of any suits brought or threatened against
Customer and (ii) authority to assume the sole defense thereof through its
own counsel (and at its expense) and to compromise or settle any suits so
far as this may be without prejudice to the right of the Customer to
continue the use, as contemplated, of the Product(s) furnished or to be
furnished. If in any such suit so defended the Product(s) is held to
constitute an infringement and its use is enjoined, or if in the light of
any claim of infringement Vendor deems it advisable to do so, Vendor may
procure the right to continue the use of the same for the Customer, or
replace the same with a non-infringing Product(s) , modify same so as to
be non-infringing, or accept the return of Product(s) and refund the price
therefor to Customer.
18. COPYRIGHT INDEMNITY
Vendor agrees that it will defend, at its own expense, all claims and
suits against Customer for infringement (or alleged infringement) of any
United States Copyrights covering or alleged to cover, Vendor-supplied
Product(s). Vendor agrees that it will pay all sums which, by settlement,
final judgment or decree in any such claims or suits, may be assessed
against Customer on account of such infringement, provided that Vendor
shall be given (i) immediate written notice of any claims of any such
infringement and of any suits brought or threatened against Customer and
(ii) authority to assume the sole defense thereof through its own counsel
(and at its expense) and to compromise or settle any suits so far as this
may be without prejudice to the right of the Customer to continue the use,
as contemplated, of the Product(s) furnished or to be furnished. If in any
such suit so defended the Product(s) is held to constitute an infringement
and its use is enjoined, or if in the light of any claim of infringement
Vendor deems it advisable to do so, Vendor may procure the right to
continue the use of the same for the Customer, or replace the same with a
non-infringing Product(s), modify same so as to be non-infringing, or
accept the return of Product(s) and refund the price therefor to Customer,
and refund the purchase price, less a charge for equal to one sixtieth
(1/60) of the purchase price of the Product for each month that Customer
enjoyed beneficial use, and accept the return of such equipment.
19. NOTICES
(a) All notices or communications of any kind made or required to be
given pursuant to this Agreement shall be in writing and delivered
by personal service to an officer of the other party or sent by
telegraph or by certified mail, returned acknowledgement required
postage prepaid. Notices shall be addressed as follows unless either
party gives notice to the other party of a change of address:
To PREMISYS: To CUSTOMER:
PREMISYS Communications, Inc. Teleport Communications Group, Inc.
48664 Milmont Drive One Teleport Drive , Suite 301
Fremont, CA 94538 Staten Island, NY 10311
ATTN: CONTROLLER ATTENTION: GENERAL COUNSEL
(b) Either party may change such address or change the designation or
title of the individuals by written notice issued and delivered as
above.
20. INSURANCE
(a) Vendor, at its sole cost and expense, shall secure and keep in
force, at all times while this Agreement is in place the following
insurance coverage and their respective minimum limits:
(1) Workmen's Compensation Employer's Liability Insurance
(a) Worker's Compensation - Statutory Limits, unless Seller
maintains a qualified self-insured status and so
certifies to Customer.
(b) Employer's Liability - $100,000 per occurrence.
(2) Comprehensive General Liability Insurance
(a) Combined Bodily Injury Liability and Property Damage
Liability - Limits of not less than $1,000,000 per
occurrence.
(b) This policy must include coverage extensions for (i)
Contractual Liability (to cover the indemnification provision
at Section 21 of this Agreement), (ii) Products Liability
(which shall be maintained for not less than one year
following completion of the services pursuant to this
contract), (iii) Independent Contractor's Liability, and (iv)
Broad Form Property Damage Liability.
(3) Automobile Liability Insurance
(a) Bodily Injury Liability and Property Damage Liability
limits of $1,000,000 per occurrence.
(b) This policy shall cover all owned, non-owned and hired
vehicles that are or may be used by Vendor and its
employees in the performance of this Agreement.
** Confidential treatment has been requested with
respect to the information contained within the
"[**]" markings. Such marked portions have been
omitted from this filing and have been filed
separately with the Securities and Exchange
Commission.
(4) Excess Liability Insurance
Excess or umbrella liability policy(ies) with limits of at
least $1,000,000 per occurrence should be maintained, covering
losses in excess of the above listed coverage (other than
Workers' Compensation) and limits.
The above limits of liability may be provided by a combination
of primary and excess policies, at vendor's election.
(b) [ ** ]
(1) [ ** ]
(2) [ ** ]
(c) All insurance required by this clause shall be issued only by
insurance companies licensed in the state or states where the work
or services covered by this Agreement is to be performed.
(d) Vendor shall provide Customer with certificates of insurance prior
to commencement of the work covered by this contract and for each
policy renewal during the course of this contract.
(e) The insolvency, bankruptcy, or failure of any insurance company
carrying insurance for Vendor or failure of any such insurance
company to pay claims due shall not relieve Vendor of any of it
obligations in respect of the provision of insurance or
indemnification.
21. INDEMNIFICATION
Vendor shall take all necessary and reasonable precautions to prevent the
occurrence of any injury (including death) to any person, or damage to any
property, arising out of any negligent acts or omissions of Vendor or
Vendor's employees, agents, representatives, or subcontractors in
connection with the furnishing of the Products or any Services purchased
by Customer hereunder and to the extent that any injury or damage is due
to such acts or omissions, Vendor shall indemnify and hold harmless
Customer against any loss, claim, damage, liability, expense (including
reasonable attorneys, fees), or cause of action arising out of any such
act or omission.
22. TERM
This Agreement will be in effect for a period of two (2) years commencing
on the effective date of the Agreement unless terminated sooner by either
party. This Agreement may be extended beyond the initial term of the
Agreement by written agreement of the parties. This Agreement shall apply
to all Products and Service for which orders have been placed and
acknowledged for delivery prior to the expiration of the term of this
Agreement whether or not delivered as of that date.
23. TERMINATION
(a) Termination by Customer - Customer shall have the right to terminate
this Agreement, upon 30 days written notice to Vendor, for any
reason. Upon termination under this section, Customer shall be
obligated to pay for Products already ordered and/or Services
already performed. Customer shall have no other obligations under
this section.
(b) Termination by Vendor - Vendor shall have the right to terminate,
upon written notice to Customer, the unperformed portion of this
Agreement in the event of one or more of the following conditions:
(1) Customer is in default under any material provision of this
Agreement and such default continues unremedied for thirty
(30) days after written notice of the existence of such
default shall have been received by Customer for Vendor, or
(2) A decree or order for relief of Customer is entered by a court
of competent jurisdiction in any involuntary case involving
Customer under any bankruptcy, insolvency, or similar law now
or hereafter in effect, or a receiver, liquidator, assignee,
custodian, trustee, sequestrator, or other similar agent is
appointed for Customer or for any substantial part of
Customer's affairs is ordered, or a petition is filed with
respect to Customer in any involuntary case, which petition is
not dismissed for a period of sixty (60) days or is dismissed
or suspended pursuant to Section 305 of the Federal Bankruptcy
Code (or any corresponding provision of any future United
States Bankruptcy law), or
(3) Customer commences a voluntary case under any bankruptcy,
insolvency or other similar law now or hereafter in effect, or
Customer consents to the entry of an order for relief in any
involuntary case under any such law or to the appointment of
or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar agent for
Customer or for any substantial part of Customer's assets or
property, or Customer makes any general assignment for the
benefit of creditors, or Customer takes any action preparatory
to or otherwise in furtherance of any of the foregoing, or
Customer fails generally to pay Customer's debts as such debts
become due.
24. SOURCE CODES
In the event that Vendor is placed in or files for bankruptcy or ceases to
carry on business on a regular basis and such event is not cured in sixty
(60) days, Vendor agrees, where applicable, (1) to furnish to Customer all
source programs and associated documentation ("Software Source Materials")
required for maintenance, modification or correction of Customer's
installed base of the most current version of the Software provided to
Customer, (2) to grant Customer a non-exclusive, royalty-free, perpetual
license to use such Software Source Materials solely with Products
furnished hereunder; and (3) should Customer's use of the Software Source
Materials involve the practice of any invention covered by a United States
patent of Vendor, Vendor agrees not to assert such patent against Customer
in connection with the maintenance, modification or correction of the
Software. Customer will not resell or otherwise transfer the Software
Source Materials to another party.
25. COMPLIANCE WITH LAWS
(a) The Vendor shall giveall requisite notices tothe proper authorities,
obtain all permits and licenses made necessary by the Products and
Services supplied underthis Agreementand shall comply with all laws,
rules and regulations pertaining to such Products and Services,
including without limitationthe FederalOccupational Safetyand Health
Act and all rules and regulations issued pursuant to such act. If
requested the Vendorshall provide Customer withany required approval
certificates.
(b) Without limiting the foregoing,Vendor warrants thatthe Products sold
under the terms of this Agreement are safe in normal use or
transportation,are non-toxic,and present no hazard to persons or the
environment,and may be disposed of without special precaution.Vendor
agrees to provide notification of any new Product that isor contains
toxicor hazardous substances or present's ahazard in transportation,
and further shall provide Customer with product data sheets setting
forth procedures for use, transportation, and disposal of such
Product(s). All hazardous materials containers shall be properly
labeled.Vendor agreesto indemnify and hold Customer harmless for any
expense incurredor judgment obtained against Customerby reason ofthe
use,transportation,or disposal ofthe products furnishedby Vendor and
further agreesto indemnifyand hold Customer harmless fromany claims,
demands,judgments,costs and expenses which Customershall incur under
theComprehensive Environment Response,Compensation and Liability Act
of 1980;The Consumer Product Safety Act of 1972; the Toxic Substance
Control Act;the Occupational Health and Safety Act and the Radiation
Control Act;andany amendments theretoby reason ofCustomer's purchase
and resale of the Product(s) furnished by Vendor pursuant to this
Agreement.
(c) When Product(s) furnished under this Agreement are subject to Part 68 of
the Federal Communications Commission's Rules and Regulations, as may be
amended from time to time, Vendor warrants that such material is registered
under and complies with Part 68 of the Federal Communications Commission's
Rules and Regulations, including, but not limited to, all labeling and
customer instruction requirements. Vendor agrees to indemnify and hold
Customer harmless from any liability, claims, or demands (including the
costs, expenses and reasonable attorney's fees on account thereof) that may
be made because of Vendor's noncompliance with Part 68 of the Federal
Communications Commission's Rules and Regulations.
(d) Product(s) shall comply, to the extent applicable, with the requirements of
Subpart J of Part 15 of the FCC Rules and Regulations, as may from time to
time be amended, including, but not limited to, those sections concerning
the labeling of such Product(s) and the suppression of radio frequency and
electromagnetic radiation to specified levels. Should the Product(s),
despite meeting standards set forth in the FCC Rules and Regulations,
generate harmful interference to radio communications, Vendor shall provide
to Customer information relating to methods of suppressing such
interference. In the event such interference cannot reasonably be
suppressed, Vendor shall, at the option of Customer, accept return of the
Product(s) and refund to Customer the price paid for such Product(s).
Nothing in this section shall be deemed to diminish or otherwise limit
Vendor's obligations under the section entitled "Warranties".
(e) Product(s) shall comply to the extent applicable with the requirements of
the National Electrical Code which requires listing under UL 1459 and the
associated regulations which may be amended from time to time. Vendor
warrants that Product(s) provided hereunder shall comply, and in the event
of noncompliance, Customer shall have the option to return products and
Vendor shall refund Customer the prices paid without penalty or restock
charge and shall indemnify from any damages which may be incurred or
assessed due to the Product(s) not complying with these requirements.
26. COURSE OF DEALING
Except as otherwise provided herein, no trade usage, prior course of
dealing or course of performance shall be part of or shall be used in the
interpretation or construction of this Agreement.
27. NO SPECIAL DAMAGES
Neither Customer nor Vendor will be liable to the other for special,
indirect and/or consequential damages (including lost revenues or profits)
as a result of its performance or failure to perform under this Agreement.
28. TITLES
The clause titles used herein are for convenience only and shall not be
construed as part of this Agreement or used in interpreting or construing
this Agreement.
<PAGE>
29. COUNTERPARTS
This document may be executed in one or more counterparts, each of which
shall be deemed to be an original.
30. MOST FAVORED CUSTOMER
If Vendor, during the term of this agreement, provides products to another
party under more favorable pricing, Vendor agrees to make such favorable
pricing available to Customer, under like terms, commitments, and
conditions for similar quantities of product type.
31. ENTIRETY OF AGREEMENT
This Agreement consists only of this document including Exhibits A, B, C,
D, E and F upon which the parties have affixed their signatures and those
documents specifically incorporated herein by reference. This Agreement as
so constituted is the entire Agreement between the parties with respect to
the subject matter hereof and supersedes all other previous statement,
communications or agreements, whether oral or written, including press
releases, advertising and sales literature. No modification, alteration or
waiver of any provision hereof shall be binding upon the parties unless
evidenced in writing and signed by both parties.
32. WAIVER
Failure of Customer to seek redress for breach of or to insist upon the
strict performance of any provision of this Agreement on one or more
occasions shall not prevent a subsequent act, which would have originally
constituted a breach, from having all the force and effect of a breach.
The receipt and acceptance of payment by Customer shall not be deemed a
waiver of such breach. Failure of Customer to enforce any provision of
this Agreement shall not be deemed a waiver of any such provision. No
provision of this Agreement shall be deemed to have been waived by
Customer unless such waiver is in writing signed by a duly authorized
Representative of Customer.
33. SURVIVAL OF OBLIGATIONS
The terms and provisions contained in this Agreement that by their sense
and context are intended to survive the performance thereof by the parties
hereto shall survive the completion of performance and termination of this
Agreement, including, but not limited to, patent infringement and
indemnity.
34. SEVERABILITY
A determination by a court of competent jurisdiction that any provision of
this Agreement or any part hereof is illegal or unenforceable shall not
cancel or invalidate the remainder of such provision or other provisions
of this Agreement which shall remain in full force and effect.
<PAGE>
35. GOVERNING LAW
The terms and conditions hereof, in their formation, construction and
interpretation, shall be governed by the laws of the State of Delaware. In
the event any of these provisions hereof become subject to revision or
nullification by ruling of an appropriate Court of jurisdiction, the
remaining terms and conditions contained herein shall continue in full
force and effect.
36. NEUTRAL DRAFTING
No rules of construction requiring interpretation against the drafter
shall apply in the interpretation of this Agreement.
Premisys Communications, Inc. Teleport Communications Group Inc.
By \s\ R. Alan Fyffe By \s\ John Hunt
Title VP North American Sales Title VP - Engineering
------------------------------------ -----------------------------------
Date 10-15-97 Date 10-9-97
APPROVED BY TCG
CORPORATE PURCHASING
DATE 10/8/97 BY \s\ GF
APPROVED AS TO FORM
LEGAL DEPARTMENT
DATE 10/9/97 BY \s\ MLG
<PAGE>
** Confidential treatment has been requested with
respect to the information contained within the
"[**]" markings. Such marked portions have been
omitted from this filing and have been filed
separately with the Securities and Exchange
Commission.
EXHIBIT A
UNIT PRICE LIST AND DISCOUNT TERMS
1. CUSTOMER agrees to provide PREMISYS with a monthly rolling six (6) month
forecast within twenty-one (21) calendar days after the start of each new
calendar month.
2. Discount shall be [ ** ] from PREMISYS' unit list price as attached.
Such discounts are not applicable to any Cable Products, Accessories, Services
or Special Pricing Packages as indicated in the price list.
3. PREMISYS reserves the right to renegotiate the discounts at the end of
each term for any renewals or extensions of this Agreement.
** Confidential treatment has been requested with respect to the information
contained within the "[**]" markings. Such marked portions have been omitted
from this filing and have been filed separately with the Securities and Exchange
Commission.
Company Confidential Page 1
September `99
Teleport Transfer Price List
<TABLE>
<S> <C> <C> <C>
US Xfr. Disc.
List
- ----------------------------------------------------------------------------------------------
Section 1: IMACS
01 - Common Equipment
8901 AC Power Supply, 120/240VAC, CE Marked $700 [**] [**] Main power supply
for AC-powered IMACS units. 120/240VAC, 50 - 60Hz input provides +5V
and +12V. Can be used with 8903 Power Converter to provide -48VDC from
120VAC only. Can be used with 8905 Universal Power Converter to provide
-48VDC from either 120VA GA
8902 DC Power Supply, -48VDC, CE Marked $1,000 [**] [**]
Main power supply for use with external -48VDC sources.
Provides +5V and +12V.
A second 8902 may be installed for load sharing redundancy. CE Marked.
GA
890220 DC Power Supply, -48VDC, CE Marked $1,000 [**] [**]
Main power supply for use with external -48VDC sources.
Provides +5V and +12V.
A second 8902 may be installed for load sharing redundancy. CE Marked.
GA
8903 Power Converter, 120VAC to -48VDC $500 [**] [**]
Used with 8901 for 120VAC, 50 - 60Hz input to supply -48VDC
voltage.
Optional redundancy of the 8903 is supported in the IMACS
800 and 900 chassis only.
Cannot be used with 240VAC input voltage.
GA
8905 Power Converter, 120/240VAC to -48VDC, 100W, CE Marked $700 [**] [**]
Used with 8901 with either 120VAC/240VAC, 50 - 60Hz input
to supply -48VDC system voltage. Optional redundancy of the
8905 is supported in the IMACS 800 and 900 chassis only.
CE Marked.
Used only in 6-digit chassis. Consult Technical Support if using with
negative ground.
GA
8906 Ring Generator, -48VDC $400 [**] [**]
Used to supply ringing current for all FXS cards and for FXO cards in
Manual Ring Down applications.
Multiple 8906s are supported in the IMACS 800 and 900 chassis only. One
must be set to master and the others to slave.
Requires -48DC power (8901 & 8903, or 8901 & 8905, or 8902, or external).
GA
8907 Power Supply, +24VDC, CE Marked $1,000 [**] [**]
DC main power supply for use with external +24VDC sources.
Provides +5V and +12V.
A second 8907 may be installed for load sharing redundancy.
CE Marked.
Consult Technical Support if using with negative ground.
Use of any plastic cards or 4-digit chassis in a 24VDC
environment is not supported.
GA
8908 Power Converter, 120/240VAC to -48DC, 350W $1,200 [**] [**]
Used only in the power-enhanced 891930 IMACS 900 chassis. Used
with 8901 with either 120VAC/240VAC, 50 - 60Hz
Input to supply -48VDC system voltage.
Optional redundancy of the 8908 is also supported.
NPI - Contact Product Marketing for availability
8916 IMACS 600 Chassis with Installation Kit, Aluminum Chassis, $1,100 [**] [**]
Front Loading, Plastic Card Guides, CE Marked
Aluminum chassis, front loading, plastic card guides; with
installation kit. Provides 2 CPU slots, 8 universal slots
and 1 Interface slot. Universal slots can support up to 3
Server cards and up to 4 WAN cards. All universal slots
that are not allocated to Servers or WANs can be used for
User Cards. Accommodates 1 main power and 1 redundant main
OR 1 main CE Marked.
GA
891620 IMACS 600 Chassis with Installation Kit, Steel Chassis, $1,100 [**] [**]
Front Loading, Steel Card Guides, CE Marked
Steel chassis, front loading, steel card guides; with
installation kit. Provides 2 CPU slots, 8 universal slots
and 1 Interface slot. Universal slots can be support up to
3 Server cards and up to 4 WAN cards. All universal slots
that are not allocated to AC/DC converter and 1 ringing
generator. AC and dual DC inputs.
CE Marked and NEBS compliant (see Marketing Note MN002_02).
GA
891822 IMACS 800 Chassis with Installation Kit, Steel Chassis, $1,500 [**] [**]
Front & Rear Loading, Steel Card Guides, CE Marked
Steel Chassis, front and read loading, steel card guides;
with installation kit. Provides 2 CPU slots, 3 Server
slots, 4 WAN slots, 1 Interface slot, 8 User slots. AC and
dual DC inputs. Two slots for main power supplies, 5
separate slots for -48V converters or ringing generators.
CPU, WAN, Server cards and power supplies load from front.
User, Interface cards, ringing gerneratros and voltage
converters load from rear.
CE Marked and NEBS compliant (see Marketing Note MN002_02).
GA
<PAGE>
891823 IMACS 800 Chassis with Installation Kit, Steel Chassis, $1,500 [**] [**]
Front & Rear Loading, Plastic Card Guides, CE Marked
Steel Chassis, front and read loading, steel card guides;
with installation kit. Provides 2 CPU slots, 3 Server
slots, 4 WAN slots, 1 Interface slot, 8 User slots. AC and
dual DC inputs. Two slots for main power supplies, 5
separate slots for -48V converters or ringing generators.
CPU, WAN, Server cards and power supplies load from front.
User, Interface cards, ringing gerneratros and voltage
converters load from rear.
CE Marked
GA
891920 IMACS 900 Chassis with Installation Kit, Steel Chassis, Top $2,000 [**] [**]
& Bottom Loading, Steel Card Guides, Steel Faceplate
Steel chassis, top & bottom front loading, steel card
guides, steel faceplate with ejectro; with installation
kit. Provides 2 CPU slots, 3 Server slots, 4 WAN slots, 1
Interface slot, 8 User slots. Two slots on top for main
power supplies, 5 separate slots on bottom for -48V
GA
891630 IMACS 600 Chassis with Installation Kit, Steel Chassis, Front [**] [**]
Loading, Steel Card Guides, Steel Card Guides, CE Marked $1,100
Steel chassis, front loading, new steel card guides; with
installation kit. Provides 2 CPU slots, 8 universal slots
and 1 Interface slot. Universal slots can be support up to
3 Server cards and up to 4 WAN cards. All universal slots
that are not allocated.
GA
891830 IMACS 800 Chassis with Installation Kit, Steel Chassis, $1,500 [**] [**]
Front & Rear Loading, Steel Card Guides, CE Marked
Steel chassis, front and rear loading, new steel card
guides; with installation kit . Provides 2 CPU slots, 3
Server slots, 4 WAN slots, 1 Interface slot, 8 User slots.
AC and dual DC inputs. Two slots for main power supplies,
5 separate slots for -
GA
891930 IMACS 900 Chassis with Installation Kit, Power-Enhanced, Steel [**] [**]
Chassis, Top & Bottom Front Loading, Steel Card Guides $2,000
Steel chassis, top & bottom front loading, new steel card
guides; with installation kit. Provides 2 CPU slots, 3
Server slots, 4 WAN slots, 1 Interface slot, 8 User slots.
Two slots on top for main power supplies, 2 slots on bottom
for -48V converte
GA
8920 Interface Card, 8 T1/E1 Ports, No Modem, 32K NVRAM, Aluminum [**] [**]
Faceplate $1,600
Physical interfaces for up to 8 T1/E1 lines on single 50
pin AMP connector, integral V.22bis modem and port (RJ11),
VT100 control port (RJ45), DB9 computer port for connectin
to network management system and nodal port (RJ48) provides
1 alarm output to external reporting device.
Stainless steel faceplate with ejectro.
Can be used with all system releases up to and including
3.x.y.
GA
Part Number Change
892060 Interface Card, 8 T1/E1 Ports, 2400bps Modem, 32K NVRAM, $1,800 [**] [**]
Stainless Steel Faceplate
Physical interfaces for up to 8 T1/E1 lines on single 50
pin AMP connector, integral V.22bis modem and port (RJ11),
VT100 control port (RJ45), DB9 computer port for connection
to network management system and nodal port (RJ48) provides
1 alarm output to e
GA
8921 Interface Card, 8 T1/E1 Ports, No Modem, 32K NVRAM, Stainless [**] [**]
Steel Faceplate, CE Marked $1,600
Physical Interfaces for up to 8 T1/E1 lines on a single 50
pin AMP connector, VT100 control port (RJ45), DB9 computer
port for connection to network management system and nodal
port (RJ48) provides 1 alarm output to external reporting
device.
Can be used with all systm release up to an dincluding
3.x.y.
GA
Part Number Change
892160 Interface Card, 8 T1/E1 Ports, No Modem, 32K NVRAM, $1,600 [**] [**]
Stainless Steel Faceplate, CE Marked
Physical Interfaces for up to 8 T1/E1 lines on a single 50
pin AMP connector, VT100 control port (RJ45), DB9 computer
port for connection to network management system and nodal
port (RJ48) provides 1 alarm output to external reporting
device.
Stainless steel.
GA
892221 Interface Card, 8 T1/E1 Ports, No Modem, External Sync [**] [**]
(unframed E1), 128K NVRAM, Steel Faceplate, CE Marked $3,000
Physical Interfaces for up to 8 T1/E1 lines on a single 50
pin AMP connector, VT100 control por t(RJ45), DB9 computer
port (COM 1) for connection to network management system
and FJ48 computer port (COM 2), RJ45 for external sync
connection and nodal port (RJ48) provides 1 alarm output to
exteranl reporting device.
Supports external sync for unframed E1 clock source (may
use external sync panel - part number 150000).
CE Marked.
Requires 880222 or 880221 CPU and Host V4.0.2 or higher CPU
firmware.
GA
Availability Change
892260 Interface Card, 8 T1/E1 Ports, No Modem, External Sync (framed [**] [**]
T1), 128K NVRAM, Stainless Steel Faceplate, CE Marked $3,000
Physical Interfaces for up to 8 T1/E1 lines on a single 50
pin AMP connector, VT100 control port (RJ45), DB9 computer
port (COM 1) for connection to network management system
and RJ48 computer port (COM 2), RJ45 for external sync
connection and nodal port
GA
892261 Interface Card, 8 T1/E1 Ports, No Modem, External Sync $3,000 [**] [**]
(unframed E1), 128K NVRAM, Steel Faceplate, CE Marked
Physical Interfaces for up to 8 T1/E1 lines on a single 50
pin AMP connector, VT100 control port (RJ45), DB9 computer
port (COM 1) for connection to network management system
and RJ48 computer port (COM 2), RJ45 for external sync
connection and nodal port
GA
<PAGE>
8923 Interface Card, 8 T1/E1 ports, 2400 bps Modem, 128K NVRAM, [**] [**]
Aluminum Faceplate $2,200
Physical Interfaces for up to 8 T1/E1 lines on a single 50
pin AMP connector, V.22bis modem and port (RJ11), VT100
control port (RJ45), DB9 computer port for connection to
network management system and nodal port (RJ48) provides 1
alarm output to external reporting device.
Requires 880221 or 880222 CPU and v4.x.y CPU firmware.
GA
892360 Interface Card, 8 T1/E1 ports, 2400bps Modem, 128K NVRAM, $2,200 [**] [**]
Stainless Steel Faceplate
Physical Interfaces for up to 8 T1/E1 lines on a single 50
pin AMP connector, V.22bis modem and port (RJ11), VT100
control port (RJ45), DB9 computer port for connection to
network management system and nodal port (RJ48) provides 1
alarm output to external
GA
892460 Interface Card, 8 T1/E1 ports, No Modem, 128K NVRAM, $2,000 [**] [**]
Stainless Steel Faceplate
Physical Interfaces for up to 8 T1/E1 lines on a single 50
pin AMP connector, no modem, VT100 control port (RJ45), DB9
computer port for connection to network management system
and nodal port (RJ48) provides 1 alarm output to external
reporting device.
Stainless Steel
GA
8925 Interface Card, 2 T1/E1 Ports, No Modem, 32K NVRAM, Aluminum [**] [**]
Faceplate $1,200
Two FJ48 and Bantam Jack connectors for T1 or balanced
120-Ohm E1 lines. VT100 control port (RJ45). No DB9
computer port.
Can be used with system releases up to and including 3.x.y.
GA
892560 Interface Card, 2 T1 Ports, No Modem, 32K NVRAM, Stainless $1,200 [**] [**]
Steel Faceplate
Two RJ48 and Bantam Jack connectors for T1 or balanced
120-Ohm E1 lines. VT100 control port (RJ45). No DB9
computer port.
Stainless steel faceplate with ejector.
GA
8926 Interface Card, 2 T1/E1 Ports, 2400bps Modem, 32K NVRAM, [**] [**]
Aluminum Faceplate $1,400
Two RJ48 and Bantam Jack connectors for T1 or balanced
120-Ohm E1 lines. VT100 control port (RJ45), V.22bis modem
(RJ11), DB9 computer port for network management
connections and nodal port (RJ48) provides 1 alarm output
to external reporting device.
Can be used with system releases up to and including 3.x.y.
GA
892660 Interface Card, 2 T1 Ports, 2400bps Modem, 32K NVRAM, $1,400 [**] [**]
Stainless Steel Faceplate
Two RJ48 and Bantam Jack connectors for T1 or balanced
120-Ohm E1 lines. VT100 control port (RJ45), V.22bis modem
(RJ11) , DB9 computer port for network management
connections and nodal port (RJ48) provides 1 alarm output
to external reporting device.
St
GA
8927 Interface Card, 2 E1 Ports, No Modem, 32K NVRAM, Aluminum [**] [**]
Faceplate $1,400
Two pair BNC connectors for 75-Ohm unbalanced E1 lines.
VT100 control port (RJ45), DB9 computer port for network
management connections and nodal port (RJ48) provides 1
alarm output to external reporting device.
Can be used with system releases up to and including 3.x.y.
GA
892760 Interface Card, 2 E1 Ports, No Modem, 32K NVRAM, Stainless $1,400 [**] [**]
Steel Faceplate
Two pair BNC connectors for 75-Ohm unbalanced E1 lines.
VT100 control port (RJ45), DB9 computer port for network
management connections and nodal port (RJ48) provides 1
alarm output to external reporting device.
Stainless steel faceplate with ejector.
02 - CPU Cards
8800 CPU Card, BCON Bus-Connect, Host 3.x.y, Non-Redundant, 2 T1/E1, [**] [**]
Plastic Faceplate $1,500
The 8800 is the base model CPU card. Supports 1 WAN card
for a total of up to 2 E1 or T1 WAN ports (on separate WAN
card). Does not support cross connect module or redundant
CPU operation. WAN card must be installed in slot W1. Can
operate in termination or drop and insert mode. Consult
IMACS manual for more details on drop and insert WAN
timeslot connection options.
CPU card also houses voice signaling firmware (included)
and optional TCP/IP management firmware (must be ordered
separately).
CPU Host firmware must be ordered separately.
Can be used with system release up to and including 3.x.y.
GA
880060 CPU Card, BCON Bus-Connect, Host 3.x.y, Non-Redundant, 2 $1,500 [**] [**]
T1/E1, Stainless Steel Faceplate, CE Marked
The 880060 is the base model CPU card, with stainless steel
faceplate with ejector. Supports 1 WAN card for a total of
up to 2 E1 or T1 WAN ports (on separate WAN card). Does
not support cross connect module or redundant CPU
operation. WAN card must be
<PAGE>
8801 CPU Card, XCON Cross-Connect, Host 3.x.y, Redundant [**] [**]
Capability, Up to 8 T1/E1, Plastic Faceplate $4,000
The 8801 supports complex applications requiring more than
2 WAN ports and the ability to cross-connect DCOs between
WAN. Supports up to 4 WAN cards for a total of 8 T1 or E1
WAN ports and has a built-in cross connect module. Two
model 8801xx CPUs can be installed for CPU redundancy. 1:N
WAN redundancy is also supported (with relevant WAN card
options).
CPU card also houses voice signaling firmware (included)
and optional TCP/IP management firmware (must be ordered
separately).
CPU Host firmware must be ordered separately.
Can be used with system releases up to and including 3.x.y.
GA
880160 CPU Card, XCON Cross-Connect, Host 3.x.y, Redundant Capability, [**] [**]
Up to 8 T1/E1, Stainless Steel Faceplate, CE Marked $4,000
The 880160, with stainless steel faceplate with ejector,
supports complex applications requiring more than 2 WAN
ports and the ability to cross-connect DS0s between WANs.
Supports up to 4 WAN cards for a total of 8 T1 or E1 WAN
ports and has a built-in cross-connect module. Two model
8801xx CPUs can be installed for CPU redundancy. 1:N WAN
redundancy is also supported (with relevant WAN card
options).
CPU card also houses voice signaling firmware (included)
and optional TCP/IP management firmware (must be ordered
separately).
CE Marked.
CPU Host firmware must be ordered separately.
Can be used with system releases up to and including 3.x.y.
GA
Part Number Change
880222 CPU Card, XCON Cross-Connect, Host 4.x.y, Redundant Capability, [**] [**]
Up to 8 T1/E1, Plastic Faceplate, CE Marked $4,300
The 880160, with stainless steel faceplate with ejector,
supports complex applications requiring more than 2 WAN
ports and the ability to cross-connect DS0s between WANs.
Supports up to 4 WAN cards for a total of 8 T1 or E1 WAN
ports and has a built-in cross-connect module. Two model
8801xx CPUs can be installed for CPU redundancy. 1:N WAN
redundancy is also supported (with relevant WAN card
options).
CPU card also houses voice signaling firmware (included)
and optional TCP/IP management firmware (must be ordered
separately).
CE Marked.
CPU Host firmware must be ordered separately.
Can be used with system releases up to and including 3.x.y.
GA
Part Number Change
880260 CPU Card, XCON Cross-Connect, Host 4.x.y, Redundant Capability, [**] [**]
Up to 8 T1/E1, Stainless Steel Faceplate, CE Marked $4,300
The 880260, with stainless steel faceplate with ejector,
supports complex applications requiring more than 2 WAN
ports and the ability to cross-connect DS0s between WANs.
Supports up to 4 WAN cards for a total of 8 T1 or E1 WAN
ports and has a built-in cross-connect module. Two model
8802xx CPUs can be installed for CPU redundancy. 1:N WAN
redundancy is also supported (with relevant WAN card
options)
CPU card also houses voice signaling firmware (included)
and option TCP/IP management firmware (must be ordered
seperately).
CE Marked.
Required v4.x or higher CPU firmware (must e ordered
separately).
Rrequires Interface Card with 128K NVRAM: 892220, 892221,
8923 or 892320 Interface Card.
GA
Part Number Change
880360 CPU Card, XCON Cross-Connect, Host 5.x.y, Redundant $4,300 [**] [**]
Capability, Up to 8 T1/E1, Stainless Steel Faceplate
The 880360, with stainless steel faceplate, supports
complex applications requiring more than 2 WAN ports and
the ability to cross-connect DS0s between WANs. Supports
up to 4 WAN cards for a total of 8 T1 or E1 WAN ports and
has a built-in cross-connect module. Two model 8803xx CPUs
can be installed for CPU redundancy. 1:N WAN redundancy is
also supported (with relevant WAN card options).
CPU card also houses voice signaling and TCP/IP management
firmware (included) and optiona TR-08 firmware (must be
ordered separately).
Requires v5.x.y or higher CPU firmware (must be ordered
separately).
Requires Interface Card with 128K NVRAM: 892220, 892221,
8923, 892320 or 892420.
NPI - Contact Product Marketing for availability.
New
8804 CPU Card, RCON Bus-Connect, Host 3.x.y, Redundant $2,200 [**] [**]
Capability, Up to 4 T1/E1, Plastic Faceplate
The 8804, CPU support 2 T1 or E1 WAN links in clot W1 with
a redundant card (similarly configured) in slot W2, WAN
ports in slot W1 may operate in drop an dinsert or
terminate mode. The 8804 supports another 2 T1 or E1 WAN
links in slot W3 with a redundant card (similarly
configured) in slot W4. WAN ports in slot W3 can only
operate in `terminate' mode and can only be used to support
8202xx, 8213xx, 8215xx HSU ports and 8247xx OCU-DP ports.
CPU Host firmware must be ordered separately.
Can be used with system releases up to an dincluding 3.x.y.
GA
880460 CPU Card, RCON Bus-Connect, Host 3.x.y, Redundant $2,200 [**] [**]
Capability, Up to 4 T1/E1, Stainless Steel Faceplate
The 880460 CPU, with stainless steel faceplate, supports 2
T1 or E1 WAN links in slot W1 with a redundant card
(similarly configured) in slot W2. WAN ports in slot W1
may operate in drop and insert or terminate mode. The
880420 supports another 2 T1 or
03 - CPU Firmware
60101 CPU Firmware, TCP/IP/SNMP $400 [**] [**]
This host code option must be ordered, in addition to CPU
host version firmware, if SNMP and Telnet support is
required for the management of local and remote IMACS units.
GA
<PAGE>
60102 CPU Firmware, TR-08 $900 [**] [**]
This host code option must be ordered, in addition to CPU
host version firmware, if required to provide SLC96 TR-08
based signaling for Centrex or similar services.
GA
60344 CPU Firmware, Host Version 3.4.4 $500 [**] [**]
Release of 3.4.4 host firmware.
GA
60345 CPU Firmware, Host Version 3.4.5 $500 [**] [**]
Release of 3.4.5 host firmware.
GA
60346 CPU Firmware, Host Version 3.4.6 $500 [**] [**]
Release of 3.4.6 host firmware.
GA
60360 CPU Firmware, Host Version 3.6.0 $750 [**] [**]
Release of 3.6 host firmware. Supports NVRAM Backup and
Restore, HDSL, BRI NTU diagrram, inaddition to basic
functionality. Also supports 8231 FRAD. Does not support
any Server except 887120 ADPCM. See Product Relese Bulletiv
for more details.
GA
60361 CPU Firmware, Host Version 3.6.1 $500 [**] [**]
Release of 3.6.1 host firmware. Supports NVRAM Backup and
Restore, HDSL, BRI NTU, in addition to basic
functionality. Also supports 8231 FRAD. Does not support
any Server except 887120 ADPCM. See Product Release
Bulletin for more details.
GA
60412 CPU Firmware, Host Version 4.1.2 $750 [**] [**]
Latest release of generic 4.x CPU host firmware.
Introduces frame relay, coin card support and Euro ISDN
support. Provides base platform for subsequent 4.x
releases. See Product Release Abstract for features and
limitations.
GA
60420 CPU Firmware, Host Version 4.2.0 $750 [**] [**]
Release 4.2.0 host firmware that introduces HDSL and NTU
management support. May not include all previous 4.x
features - see Product Release Abstract for features and
limitations.
GA
60431 CPU Firmware, Host Version 4.3.1 $750 [**] [**]
Release 4.3.1 host firmware that introduces ATM support.
May not include all previous 4.x features - see Product Release
Abstract for features and limitations.
GA
60440 CPU Firmware, Host Version 4.4.0 $750 [**] [**]
Release 4.4.0 host firmware that introduces BRI/PRI
support. May not include all previous 4.x features - see
Product Release Abstract for features and limitations.
GA
60450 CPU Firmware, Host Version 4.5.0 $750 [**] [**]
Release 4.3.1 host firmware that introduces A-CELP voice
compression support. May not include all previous 4.x
features - see Product Release Abstract for features and
limitations.
GA
60421 CPU Firmware, Host Version 4.2.1 $750 [**] [**]
Release 4.5.0 host firmware that introduces HDSL and NTU
management support. May not include all previous 4.x
features - see Product Release Abstract for features and
limitations.
GA
60500 CPU Firmware, Host Version 5.0.0 $750 [**] [**]
Release of 5.x CPU host version firmware. Integrates all
advanced features of releases 4.x. Provides support for
ATM, FRS, LBRV with FAX forwarding, PRI, BRI/PRI
interworking, IMUX, and HDSL WAN. Includes TCP/IP/SNMP at
no extra charge.
GA
04 - WAN Cards
8000 WAN Card, Single T1/E1, Plastic Faceplate $1,000 [**] [**]
Provides a single T1 or E1 line interface. Connects to
both user peripherals and network aggregates. Single port
for DSX/CEPT or CSU oeopration (characterized by separate
Line Interface Module). May operate in CAS or CCS mode.
T1 interfaces equipped with CSU or DSX modules may act as
the "near en" termination point for Subscriber Loop
Carrier (SLC96) facilities as outlines in Bellcore
TR-TSY-000008, Issue 2, August 1987.
GA
800060 WAN Card, Single T1/E1, Stainless Steel Faceplate, CE Marked $1,000 [**] [**]
Stainless steel faceplate with ejector. Provides a single
T1 or E1 line interface. Connects to both user peripherals
and network aggregates. Single port for DSX/CEPT or CSU
operation (characterized by separate Line Interface
Module). May operate in CA
<PAGE>
8010 WAN Card, Dual T1/E1, Plastic Faceplate $1,700 [**] [**]
Supports up to 2 T1 or E1 line interfaces. Can
simultaneously suport 1 T1 and 1 E1. Will work with only 1
Line Interface Module as long as other WAN port remains in
standby state. May operate in CAS or CCS mode. T1
interfaces equipped with CSO or DSX modules may act as the
"near end" termination point for Subscriber Loop Carrier
(SLC96) facilities as outlined in Bellcore TR0TSY-000008,
Issue 2, August 1987.
GA
801060 WAN Card, Dual T1/E1, Stainless Steel Faceplate, CE Marked $1,700 [**] [**]
Stainless steel faceplate with ejector. Supports up to 2
T1 or E1 line interfaces. Can simultaneously support 1 T1
and 1 E1. Will work with only 1 Line Interface Module as
long as other WAN port remains in standby state. May
operate in CAS or CCS mode. T1 interfaces equipped with
Csu or DSX modules may act as the "near end" termination
point for Subscriber Loop Carrier (SLC96) facilities as
outined in Bellcore TR0TSY-000008, Issue 2, August 1987.
GA
801160 WAN Card, Dual HDSL E1, Stainless Steel Faceplate, CE Marked $2,000 [**] [**]
The 801160 HDSL Dual WAN card is designed to support HDSL
applications in both LTU and NTU mode. It accepts two
82030 plug-in HDSL WAN Modules for 2 x E1 lines driving
across 2 twisted pairs each. (Note that it does not
support 811xx or 812xx plug-in modules).
Stainless steel faceplate with ejectors.
GA
8014 WAN Card, Dual T1/E1 WAN Card with Relays, Plastic Faceplate $1,950 [**] [**]
Use with 8801xx or 8802 Cross-Connect cPUs only. Provide
1:N (N) redundancy for dual WAN cards when plugged into
-
slot W4; acts as redundant mate for Dual WAN cards, 8010xx
located in slots W1, W2 or W3. Plug in modules on t
GA
801460 WAN Card, Dual T1/E1 WAN Card with Relays, Stainless Steel $1,950 [**] [**]
Faceplate, CE Marked
Stainless steel faceplate with ejector. Used with 8801xx,
8802xx, or 8803xx Cross-Connect CPUs only. Provides 1:N
(N) redundancy for dual WAN cards when plugged into slot
W4; acts as redundant mate for Dual WAN cards, 8010xx,
located in slots W1, W2 o
GA
811 WAN Module, Line Interface Module for DSX/CEPT Termination, $500 [**] [**]
CE Marked
Used with 8000, 8010 and 8814 WAN cards to provide DSX or
E1 line interface.
One 811 is required for each DSX (external CSU required) or
E1 port. Maximum 2 modules per dual WAN card. For E1
operation, module is manually jumpered to select either 75
Ohm
GA
81120 WAN Module, Line Interface Module for DSX/CEPT Termination, $500 [**] [**]
CE Marked
Used with 8000xx, 8010xx WAN cards to provide DSX or E1
line interface.
One 811xx is requried for each DSX (external CSU required)
or E1 port. Maximum 2 modules per WAN card. For E1
operation, mo
GA
81130 WAN Module, Line Interface Module for DSX/CEPT Termination, $500 [**] [**]
GR-1089
Used with 8000xx, 8010xx and 8814xx WAN cards to provide
DSX or E1 line interface.
One 811xx is required for each DSX (external CSU required) or E1 port.
Maximum 2 modules per WAN card. For E1 operation, module is manually
jumpered to select either 75 GA
812 WAN Module, Line Interface Module for CSU Termination $1,000 [**] [**]
Used with 8000, 8010 and 8814 WAN cards to provide CSU line
interface. Provides complete CSU functionality for T1
lines.
One 812 is required for each CSU port (maximum 2 per dual
WAN card).
GA
81220 WAN Module, Line Interface Module for CSU Termination $1,000 [**] [**]
Used with 8000, 8010 and 8814 WAN cards to provide CSU line
interface. Provides complete CSU functionality for T1
lines.
One 812xx is required for each CSU port (maximum 2 per dual
WAN card).
GA
81230 WAN Module, Line Interface Module for CSU Termination, $1,000 [**] [**]
GR-1089
Used with 8000xx, 8010xx and 8814xx WAN cards to provide
CSU line interface. Provides complete CSU functionality
for T1 lines.
One 812xx is required for each CSU port (maximum 2 per WAN card). NEBS
compliant (see Marketing Note MN002_02) and GR-1089 comp
GA
82030 WAN Module, 2 x 1168Kbps HDSL $1,300 [**] [**]
The 82030 WAN plug-in module is used with the 801160 WAN
card to provide 2 x E1 HDSL line interfaces (= 1 E1 at
2.048 Mb/s). One 82030 is required for each E1 HDSL port
(maximum 2 ports per WAN card). This module is based on
the Adtran 2B1Q interface mo
05 - Voice Cards
8108 E&M/TO Card, 8-Port, 2-Wire, Aluminum Faceplate $1,200 [**] [**]
Supports E&M types, I, II, IV and V. Normal E&M,
Transmission Only and E&MR2 modes are supported. May be
used with 8871xx ADPCM and 8300xx LBRV compression cards.
GA
810860 E&M/TO Card, 8-Port, 2-Wire, Stainless Steel Faceplate $1,200 [**] [**]
Stainless steel faceplate with ejector. Supports E&M types
I, II, IV and V. Normal E&M, Transmission Only and E&MR2
modes are supported. May be used with 8871xx ADPCM and
8300xx LBRV compression cards.
GA
8119 E&M/TO Card, 8-Port, 4-Wire, Extended Range, Aluminum $1,500 [**] [**]
Faceplate, CE Marked
Supports E&M types I, II, IV and V. Normal E&M,
Transmission Only and E&MR2 modes are supported. May be
used with8871xx ADPCM and 8300xx LBRV compression cards.
Extrended TX TLP range is added to support dedicated 4-wire
modem applications - especially important for data
transmission speeds of 19.2Kb/s or higher.
CE Marked for TO mode only.
GA
811960 E&M/TO Card, 8-Port, 4-Wire, Extended Range, Stainless Steel $1,500 [**] [**]
Faceplate, CE Marked
Stainless steel faceplate with ejector. Supports E&M types
I, II, IV and V. Normal E&M, Transmission Only and E&MR2
modes are supported. May be used with 8871xx ADPCM and
8300xx LBRV compression cards.
Extended TX TLP range is added to support dedicat
GA
8125 FXS Card, 4-Port, 2-Wire, 600 Ohm, Aluminum Faceplate $845 [**] [**]
Two wire interface, supporting signaling modes Foreign
Exchange Station (connects to 2-way PBX trunk or key
system), Foreign Exchange Software Defined Network
(emulates E & M for connectio to class 4 switches), PLAR
(point-to-point unswitched), DPO (1-way
GA
8129 FXS Card, 8-Port, 2-Wire, 600 Ohm, Aluminum Faceplate $1,300 [**] [**]
Two wire interface, supporting signaling modes Foreign
Exchange Station (connects to 2-way PBX trunk or key
system), Foreign Exchange Software Defined Network (new
access services, with wink option), PLAR (point-to-point
unswitched), DPO (1-way trunks fro
GA
812960 FXS Card, 8-Port, 2-Wire, 600 Ohm, Stainless Steel Faceplate $1,300 [**] [**]
Two wire interface, supporting signaling modes Foreign
Exchange Station (connects to 2-way PBX trunk or key
system), Foreign Exchange Software Defined Network
(emulates E & M for connection to class 4 switches), PLAR
(point-to-point unswitched), DPO (1-wa
NPI - Contact Product Marketing for availability
New
8139 FXO Card, 8-Port, 2-Wire, 600 Ohm, Aluminum Faceplate $1,600 [**] [**]
Two wire interface, supporting signaling modes Foreign
Exchange Station (connects to 2-way PBX trunk or key
system), Foreign Exchange Software Defined Network (new
access services, with wink option), DPT (1-Way incoming
trunks from PBS, Key system or telephone) and MRD
(point-to-point unswitched). Signal settings include
variety of loop start and ground start options plus R2.
Use with 600-Ohm termination facilities.
GA
813960 FXO Card, 8-Port, 2-Wire, 600 Ohm, Stainless Steel Faceplate $1,600 [**] [**]
Two wire interface, supporting signaling modes Foreign
Exchange Office (connects to 2-way PBX trunk or key
system), Foreign Exchange Software Defined Network
(emulates E & M connection to class 4 switches), DPT (1-way
incoming trunks from PBX, Key system
GA
814960 FXS Card, 6-Port, 2-Wire, 600 Ohm, Stainless Steel Faceplate $2,205 [**] [**]
This CBIS (Coin Box Interface Station) card is a 6-port,
2-wire card with 600Ohm impedance. A-Law or U-Law codec
operation is soft selectable. Metering pulse types of
reverse battery or HF Sine Wave are soft selectable. The
sine wave frequency can be set to 12 or 16 KHx. Supports
signaling modes Foreign Exchange Station (connects to 2-way
PBX trunk or key system)
GA
815960 FXO Card, 8-Port, 2-Wire, 600 Ohm, Stainless Steel Faceplate $3,120 [**] [**]
This CBIS (Coin Box Interface Station) card is a 6-port,
2-wire card with 600Ohm impedance. A-Law or U-Law codec
operation is soft selectable. Metering pulse types of
reverse battery or HF Sine Wave are soft selectable. The
sine wave frequency can be set to 12 or 16 KHx. Supports
signaling modes Foreign Exchange Station (connects to 2-way
PBX trunk or key system)
GA
06 - Data Cards
8202 HSU Card, 2-Port, RS-530/V.35 Interface, Aluminum Faceplate $1,450 [**] [**]
Two port High Speed Unit (HSU) for 56K, 64K and Nx56/64K
data applications. Supports 2 RS530/RS449 or V.35 data
ports. Can also support V.325 and RS232 data through the
use of the appropriate personality modules. DB25
connectors.
GA
820260 HSU Card, 2-Port, RS-530/V.35 Interface, Stainless Steel $1,450 [**] [**]
Faceplate, CE Marked
Two port High Speed Unit (HSU) for 56K, 64K and Nx56/64K
data applications. Supports 2 RS530/RS449 or V.35 data
ports. Can also support RS232 data through the use of the
appropriate personality modules. DB25F connectors.
Stainless steel faceplate with
GA
820360 HSU Card, 2-Port, V.11 Interface, Stainless Steel Faceplate $2,500 [**] [**]
Can be used to provide IMACS external main clock from a
Nx56/64K port. V.11/RS530 interfaces on DB25F connectors.
Also supports Nx56/64K extreme clock to IMACS. Stainless steel
faceplate with ejector.
GA
<PAGE>
8212 HSU Card, 2-Port, V.35 Interface, Aluminum Faceplate $1,450 [**] [**]
Two port High Speed Unit (HSU) for 56K, 64K and Nx56/64K
data applications. True V.35 interface on DB25F connectors.
GA
821260 HSU Card, 2-Port, V.35 Interface, Stainless Steel Faceplate $1,450 [**] [**]
Two port High Speed Unit (HSU) for 56K, 64K and Nx56/64K
data applications. True V.35 interface on DB25F connectors.
Stainless steel faceplate with ejector.
GA
821360 HSU Card, 2-Port with RS-530/V.35, 2 Dial Ports with $1,950 [**] [**]
RS-366/V.25bis, Stainless Steel Faceplate
High Speed Unit (HSU) for 56K, 64K and Nx56/64K data
applications. Supports 2 RS530 or V.35 data ports;
selection is made on a port-by-port basis using on-board
switches. Supports V.25bis and/or RS-366 dialing for
switched data applications when used wi
821460 HSU Card, 2-Port, V.35 Interface, Stainless Steel Faceplate, $2,500
[**] [**] CE Marked Provides true V.35 interfaces on DB26F connectors.
Ports may be configured for either trunk or user peripheral connection.
Also supports Nx56/64K extreme clock to IMACS. Stainless steel
faceplate with ejector. CE Marked.
821560 HSU Card, 4-Port, RS-530/V.35 Interface, Stainless Steel $2,500 [**]
[**] Faceplate, CE Marked High Speed Unit (HSU) for 56K, 64K, and
Nx56/64K data applications. The selection of RS530 or V.35 is made on a
port-by-port basis using on-board switches. Can also support RS232 data
at 56Kb/s through the use of the 1253xx Personality Module and 1240
822060 SRU Card, 10-Port, RS-232C/V.24 Sync/Async Operation, $2,400 [**] [**]
Stainless Steel Faceplate, CE Marked Supports synchronous and/or
asynchronous data ports from 300 bps to 38.4Kbps. Supports DS0-A,
DS0-B, V.14 and X.50 Division 3 subrate multiplexing formats. See Data
Section in manual for aggregate input speed restrictions. SRU card
ports can also be mu
8228 BnR Concentrator Card, SLIP-Based Management Concentration, $3,600 [**]
[**] Aluminum Faceplate Provides concentration for time slots
containing diagnostics from remote IMACS units. Multiplexes up to 8
Bit-7-Redundant (B7R) or B4R formatted data channels from up to 8
different DS0s onto a single, asynchronous channel at up to 38.4Kbps.
Data on the a
823160 FRAD Card, 10-Port, RS-232 Interface, HDLC and Async, $3,200 [**] [**]
Stainless Steel Faceplate, CE Marked Frame Relay Assembler/Disassembler
provides encapsulation for HDLC/SDLC or Async ports up to 38.4Kbps.
Transparent/Sync up to 38.4Kbps. This card concentrates up to 8
non-frame inputs into 2 frame data streams at 56 or 64Kbps. Total of 10
ports may be
824160 OCU-DP Card, 5-Port, Stainless Steel Faceplate $3,500 [**] [**] Allows
provisioning of DDS services or consolidation of DSU traffic as DS0-A
or DS0-B. Interfaces directly to DSU at speeds up to and including
64Kbps. Does not support BCH error correction, performance monitoring
or operation in CSU mode (used only for b
824660 OCU-DP Card, 10-Port, Stainless Steel Faceplate $6,500 [**] [**] Allows
provisioning of DDS services or consolidation of DSU traffic as DS0-A
or DS0-B. Interfaces directly to DSU at speeds up to and including
64Kbps. Does not support BCH error correction, performance monitoring
or operation in CSU mode (used only for b
8249 OCU-DP Card, 2-Port, with Error Correction, Aluminum $1,850 [**] [**]
Faceplate Provides interface for provisioning of DDS services or
consolidation of DSU traffic. Supports DS0-A or DS0-B sub-rate, 56K,
64K and Switched 56K DDS. Support BCH error correction, performance
monitoring or operation in CSU mode. Secondary channel opera
825460 DSO-DP Card, 4-Port Co/Contra-Directional Selectable, $2,450 [**] [**]
Stainless Steel Faceplate Provides 4 ports of DSO-DP or G.703 64K. For
G.703, clock can be selected to be co- or contra-directional. Stainless
steel faceplate with ejector.
826060 BRI OUO Card, 8-Port, 2-Wire, Stainless Steel Faceplate, CE $4,500 [**]
[**] Marked Provides 8 ports of 2-wire 2B1Q interface via a single
RJ27X(F) (50 pin amp) connector. Adheres to 2B+D format. Supports
external timing (in Host Release 3.6). Can be used to support NTUs for
dedicated operation or for connection to BRI OUO interface d
826070 BRI OUO Card, 8-Port, 2-Wire, Stainless Steel Faceplate, CE $4,500 [**]
[**] Marked Provides 8 ports of 2-wire 2B1Q interface via a single
RJ27X(F) (50 pin amp) connector. Adheres to 2B+D format. Supports
external timing (in Host Release 3.6). Can be used to support NTUs for
dedicated operation or for connection to BRI OUO interface d
826160 BRI OUO Card, 8-Port, 2-Wire, with Sealing Current, $4,850 [**] [**]
Stainless Steel Faceplate, CE Marked Provides 8 ports of 2-wire 2B1Q
interface via a single RJ27X(F) (50 pin amp) connector. Adheres to 2B+D
format. Supports external timing. Can be used to support NTUs for
dedicated operation or for connection to BRI OUO interface devices.
Commonly used
826170 BRI OUO Card, 8-Port, 2-Wire, with Sealing Current, $4,850 [**] [**]
Stainless Steel Faceplate, CE Marked Provides 8 ports of 2-wire 2B1Q
interface via a single RJ27X(F) (50 pin amp) connector. Adheres to 2B+D
format. Supports external timing. Can be used to support NTUs for
dedicated operation or for connection to BRI OUO interface devices.
Commonly used
826260 BRI OS/TO Card, 8-Port, 4-Wire, Stainless Steel Faceplate, $4,500 [**]
[**] CE Marked Provides 8 ports with 4-wire ISDN BRI S/T interface via
a single RJ27X(F) (50 pin amp) connector. Adheres to 2B+D format.
Provides TE, NT1 and NT2 emulation. Commonly used to provide remote
extension of four-wire BRI CPE devices from an ISDN PBX. Requ
<PAGE>
826270 BRI S/T Card, 8-Port, 4-Wire, External Timing Support, $4,500 [**] [**]
Stainless Steel Faceplate, CE Marked Provides 8 ports with 4-wire ISDN
BRI S/T interface via a single RJ27X(F) (50 pin amp) connector.
Supports external timing. Adheres to 2B+D format. Provides TE, NT1 and
NT2 emulation. Commonly used to provide remote extension of four-wire
BRI CPE dev
07 - Communications Server Cards
830060 DSP Server Card, 8-Port, Stainless Steel Faceplate $6,000 [**] [**]
Consists of 68360 central processor. First application for the DSP card
is A-CELP (G.729) voice compression. The DSP Card occupies a User card
slot and takes voice traffic from either the WAN or User Bus. DSP card
output = 3 composite HDLC links at 64,
8840A ISDN PRI Server Card, 1 PRI Channel, Plastic Faceplate, CE $2,500 [**]
[**] Marked ISDN PRI Server Card for use with HSU cards, providing
switched data applications across a network facing WAN interface.
Supports 1 PRI D channel only. Signaling may be selected from Fujitsu
Fetex, ATT 4ESS, ATT 5ESS, DMS-100, DMS-250, National ISDN II,
8840B ISDN PRI Server Card, 2 PRI Channels, Plastic Faceplate, CE $4,500 [**]
[**] Marked ISDN PRI Server Card for use with both HSU and E1/T1 (WAN )
User interfaces, providing switched data applications across a network
facing WAN interface. Simultaneously supports 2 PRI D channels - may be
configured for User or Network facing. Signaling m
8840C ISDN PRI Server Card, 8 PRI Channels, Plastic Faceplate, CE $6,500 [**]
[**] Marked ISDN PRI Server Card for use with both HSU and E1/T1 (WAN )
User interfaces, providing switched data applications across a network
facing WAN interface. Simultaneously supports 8 PRI D channels - may be
configured for User or Network facing. Signaling m
887160 ADPCM Server Card, Supports 40, 32 or 24Kb/s ADPCM, $6,300 [**] [**]
Stainless Steel Faceplate, CE Marked The 887120 has 32 pairs of voice
compression engines that will accept input directly from voice, SRU,
BRI or WAN cards. The sum of compression rates for each engine must
equal 64Kb/s. Selectable compression rates include 40, 32 or 24Kb/s
with the latter
8880 Inverse Mux Server Card, 4 Channels, Plastic Faceplate, with $4,500
[**] [**] BONDING modes 0 and 1 Works in conjunction with 1 of the ISDN
PRI Server cards (8840 A, B or C) to provide Nx56K, Nx64K or Nx384K
(H0) Inverse Multiplexed calls. Supports BONDING modes 0 or 1. Up to 4
simultaneous IMUX connections per card are supported.
08 - ACS Cards
881160 ACS Card, Base, Advanced Communication Server, 68 Ports, $4,500 [**]
[**] Stainless Steel Faceplate, CE Marked Base platform for advanced
server applications. ACS variants are availabe with or without child
module options. The base platform supports 4 high speed ports (each
port max speed = 2Mb/s, max aggregate bandwidth = 4Mb/s) & 64 low speed
ports (each port
881360 ACS Card, Advanced Communication Server, 132 Ports, $5,000 [**] [**]
Stainless Steel Faceplate, CE Marked
The 881360 is comprised of the 881160 with additional expansion child card (not
available separately).
Card is characterized through addition of 63xxx Server Firmware (must be ordered
separately).
Stainless steel faceplate with ejector.
882060 ACS Card, DS3, Advanced Communication Server, Stainless $5,000 [**]
[**] Steel Faceplate The 882060 ACS Card is comprised of the base
881160 ACS platform with additional ATM child module (not available
separately). The ATM child card includes ATM Segmentation and
Reassembly (SAR) processor and a DS3 interface (BNC connectors). In
addition a
09 - Server Firmware
62160 FR Firmware, Frame Relay Server Firmware for ACS Card $2,000 [**] [**]
Provides encapsulation FRAD function for SDLC/HDLC data and
concentration of frame relay circuits, with improved congestion
management. All inputs to Frame Relay Server must be at 56, 64 or
Nx56/64K data rates. Input ports may be V.35, EIA-530, DDS 56/6
63100 MCC Firmware, Management Communications Concentrator $4,000 [**] [**]
Firmware for ACS Card Allows up to 128 IP management channels to be
concentrated onto a single ethernet link, providing the means to manage
a large network of IMACS products from a single location using IP
techniques. Provides IP connectivity to up to 131 remote IMACS units.
63110 MCC Firmware, Management Communications Concentrator $4,000 [**] [**]
Firmware for ACS Card Allows up to 128 IP management channels to be
concentrated onto a single ethernet link, providing the means to manage
a large network of IMACS products from a single location using IP
techniques. Provides IP connectivity to up to 131 remote IMACS units.
64110 ATM Firmware, Asynchronous Transfer Mode Concentrator $3,500 [**] [**]
Firmware for ACS Card The ATM Concentrator is an application running on
the Advanced Communication Server, providing a DS3 or OC-3/STM-1 ATM
port. It supports both constant bit rate and variable bit rate
applications and offers connectivity from WAN, HSU, analog voice, FRAD
an
65100 BRI/PRI Firmware, ISDN BRI to PRI Server Firmware for ACS $5,000 [**]
[**] Card Provides inter-working between NET3 based BRI and and NET5
based PRI. Fixed timeslot mapping only in this release. Uses standard
8260xx or 8261xx based BRI card for BRI interface. PRI software is
provided by 65100; an 8840xx based PRI Server Card is no
66600 A-CELP Firmware, LBRV Voice Compression Firmware for DSP Card $500 [**]
[**] Required for each DSP card used as LBRV compression card. Each DSP
card with 66600 firmware will perform voice compression to 8 Kb/s
(G.729) for up to 8 channels of PCM voice originating on WAN card time
slots or analog voice cards. Supports fax recognit
67100 IP Firmware, Internet Protocol Firmware for ACS Card $2,000 [**] [**]
Provides routing of ethernet IP traffic using Frame Relay encapsulation
(RFC 1490) over a maximum of 128 Frame Relay PVCs (3 physical ports).
ARP, RIP, and Inverse ARP are used as routing protocols. Frame Relay
output may be V.35, EIA-530, fractional T1
10 - Other Hardware
840160 External Alarms Card, 4-Port, 4 Inputs & 4 Outputs, $500 [**] [**]
Stainless Steel Faceplate, CE Marked Supports four outbound switches
and four inbound sensors. The outbound switches are used to report
internal alarms to external devices by triggering form-C contact
closures (on Major or Minor alarms). Triggering may be on opening or
closure of the conta
840260 External Alarms Card, 3-Port, Power Fail Alarm, Stainless $500 [**]
[**] Steel Faceplate, CE Marked Supports 3 outbound and 3 inbound
sensors. Card performance is identical to the 8401 External Alarm Card,
except that the fourth alarm port on the 840220 can only be used as an
outbound alarm to show if the system power fails. Stainless steel
faceplate w
840360 External Alarms Card, 28-Port, 28 Inputs & 14 Outputs, $1,850 [**] [**]
Stainless Steel Faceplate, CE Marked Supports 28 external alarm inputs
and 14 external alarm outputs. Inputs are individually selectable for
active or passive mode. Input sensors may sense open or close of
contact. Sensed alarms may be handled internally as Major or Minor.
Input alarms m
Section 2: StreamLine
01 - Packages
Each StreamLine series package contains the basic common equipment to
connect 1 T1 to the network. It consists of an 8 1/4" wide, 7-slot
steel chassis designed to take a special CPU card, WAN card, and
combination power supply card to connect 1 T1 to the network, with
drop-and-insert DSX capability. StreamLine accepts any of the IMACS
User cards with metal faceplate in 4 user slots to fill the 24 channels
available. The combination power supply card has 120/240VAC, 50-60Hz
input that provides +-5V, +-12V, -48VDC and ringing voltage to operate
the system. Redundancy is not provided. Optional voice or data cards
may be added to a StreamLine system (must be ordered separately.)
Available as complete packages only.
400 Streamline, Basic Component Package, T1, AC Power Supply $3,095 [**] [**]
Includes:
1- 491530 (Chassis with installation kit)
1-480060 (CPU control card)
1-401060 (WAN card)
1-490100 (Power Supply, AC)
NPI - Contact Product Marketing for availability
401 StreamLine, DV Package, T1, AC Power Suply $3,495 [**] [**]
Includes:
1- 491530 (Chassis with installation kit)
1-480060 (CPU control card)
1-401060 (WAN card)
1-490100 (Power Supply, AC)
1-820260 (HSU card, 2-port w/ RS-530/V.35 interface,
stainless steel faceplate)
Optional Voice Card(s) must be ordered separately. See Section 1, IMACS
Voice Cards for product description NPI - Contact Product Marketing for
availability
402 StreamLine, BRI Package, T1, AC Power Suply $5,995 [**] [**]
Includes:
1- 491530 (Chassis with installation kit)
1-480060 (CPU control card)
1-401060 (WAN card)
1-490100 (Power Supply, AC)
1-826060 (BRI "U" card, 8-port, 2-wire, stainless steel faceplate)
Optional Voice Card(s) must be ordered separately. See Section 1, IMACS
Voice Cards for product description NPI - Contact Product Marketing for
availability
02 - Common Equipment
401060 StreamLine WAN Card, T1, Stainless Steel Faceplate $2,200 [**] [**]
StreamLine WAN has built-in interface to support 1 T1 for network
connection and a DS1 for local connection. Has RJ48 T1 port (CSU) and
RJ48 DSX port for local drop and insert. Can connect to both
simultaneously for up to 24 channels. WAN redundancy is
480060 StreamLine CPU Card, 1 T1, Stainless Steel Faceplate $1,900 [**] [**]
StreamLine CPU supports 2 T1 line interfaces. Has node/alarm port,
VT100 termination port, and computer port (PPP/SLIP/Printer). Operates
in termination and/or drop-and-insert mode. Has built-in TCP/IP/SNMP
feature. Redundant CPU operation is not supported.
490160 StreamLine Combination AC Power Supply, Converter and Ring $1,000 [**]
[**] Generator, 120/240VAC Combination Power Supply Card for StreamLine
uses 120V/240VAC, 50-60Hz input to provide +5V, +12V, 45W output to
operate all system card; -48V, 50W for the talk battery of voice cards,
and a ringing voltage. Redundancy is not supported.
491530 StreamLine Chassis with Installation Kit, Steel Chassis, $700 [**] [**]
Front Loading, Steel Card Guides Steel chassis, front loading, 8 1/4"
wide, new "V" steel card guides; with installation kit. Can sit on
desktop, or mount on wall or in rack. Provides one slot each for
special CPU, WAN, and Power Supply Cards, plus 4 User slots for voice
and data applications
<PAGE>
Section 3: EMS
01 - EMS Software
70100-1 EMS, v4.1.1, User License Package $5,000 [**] [**]
Package of 5 user licenses required for 5 simultaneous users
of EMS v4.1.1.
70105-04 EMS Complete, v4.1.1, for SUN Solaris 2.x for x86 and SPARC [**] [**]
$20,000
Package of EMS Complete software with 5 user licenses.
Section 4: Miscellaneous Products and Services
01 - Cables and Accessories
1106 Adapter, RJ48(F) to 2 BNC(F) $171 [**] [**] The 1106 adapter is
typically used to connect a balanced E1 circuit to an Interface Card.
Limited to 1 pair of BNC connectors, it may be better to order the 1183
or 1184 Interface Panel for higher density connectivity.
1114CX Cable, 5-ft RJ48(M) to DB25(F) Cross-Over $57 [**] [**] This cable is
used to connect an external clocking source to the 8220xx SRU Card.
1114F Cable, 5-ft RJ48(M) to DB25(F) Straight-Thru $49 [**] [**] This cable
is used to connect RS232 DTE to the 8220xx SRU Card.
1114M Cable, 5-ft RJ48(M) to DB25(M) Straight-Thru $49 [**] [**] This cable
is used to connect RS232 DTE to the 8220xx SRU Card.
1114X Cable, 5-ft RJ48(M) to DB25(M) Cross-Over $49 [**] [**] This cable is
used to connect RS232 DCE to the 8220xx SRU Card.
1118 Cable, 25-ft RJ48(M) to RJ48(M) Silver-Satin $97 [**] [**]
This cable is used to connect DDS DSU/CSU to 8247xx, 8249xx
OCU-DP cards.
1121 Connector Block, 50-Pin Amphenol (F) to 2 x RJ48 (F) Adapter $171 [**]
[**] (with Test Jacks) The 1121 adapter is used to connect T1/E1 links
to the 8920xx, 8921xx, 8922xx, 8923xx Interface Card. For higher
density connectivity, select the 1181. Consult the Premisys Cable and
Equipment Guide for more details.
1181 Connector Block, T1 Distribution Panel, 50-Pin Amphenol (F) $257 [**]
[**] to 8 x RJ48 (F) Adapter (with Test Jacks) The 1181 is used to
connect up to 8 T1s to the 8920xx, 8921xx, 8922xx, 8923xx Interface
Card. Consult the Premisys Cable and Equipment Guide for more details.
1183 Connector Block (With Premisys Logo), E1 Distribution $750 [**] [**]
Panel, 50-Pin Amphenol (F) to 16 x BNC (F) Adapter (with Test Jacks),
CE Marked Contains Premisys logo. Provides 8 pairs of BNC(F) connectors
for connecting up to 8 E1 trunks to an 8920xx, 8921xx, 8922xx, 8923xx
Interface Card. Includes 50-pin (M) to (M) Amp cable and is suitable
for 8916 IMACS 600 chassis only. Mounts in place of
118301 Connector Block (Without Premisys Logo), E1 Distribution $750 [**] [**]
Panel, 50-Pin Amphenol (F) to 16 x BNC (F) Adapter (with Test Jacks),
CE Marked Does not contain Premisys logo. Provides 8 pairs of BNC(F)
connectors for connecting up to 8 E1 trunks to an 8920xx, 8921xx,
8922xx, 8923xx Interface Card. Includes 50-pin (M) to (M) Amp cable and
is suitable for 8916 IMACS 600 chassis only. Mounts in
118320 Connector Block (Without Premisys Logo), E1 Distribution $750 [**] [**]
Panel, 50-Pin Amphenol (F) to 16 x BNC (F) Adapter (with Test Jacks),
CE Marked Does not contain Premisys logo. Provides 8 pairs of BNC(F)
connectors for connecting up to 8 E1 trunks to an 8920xx, 8921xx,
8922xx, 8923xx Interface Card. Includes 50-pin (M) to (M) Amp cable and
is suitable for 891620 IMACS 600 chassis only. Mounts i
1184 Connector Block, E1 Distribution Panel, 50-Pin Amphenol (F) $750 [**]
[**] to 16 x BNC (F) Adapter (with Test Jacks), CE Marked Does not
contains Premisys logo. Provides 8 pairs of BNC(F) connectors for
connecting up to 8 E1 trunks to an 8920xx, 8921xx, 8922xx, 8923xx
Interface Card. Includes 50-pin (M) to (M) Amp cable and is suitable
for 8918xx IMACS 800 chassis only. Mounts
1201F Cable, 15-ft DB9(M) to DB25(F) Straight-Thru $51 [**] [**] For use with
IF cards prior to REV C0. The 1201F cable is used to connect the DB9F
DCE computer port on the Interface Card to a DB25F DTE port on Premisys
EMS or other external system.
1201M Cable, 15-ft DB9(M) to DB25(M) Straight-Thru $51 [**] [**] For use with
IF cards prior to REV C0. The 1201M cable connects the DB9F DCE
computer port on the Interface card to a DB25F DTE port on Premisys EMS
or other external system.
1202F Cable, 15-ft DB9(F) to DB25(F) Cross-Over $51 [**] [**] For use with IF
cards at REV C0 or higher. The 1202F cable connects DB9M DTE computer
port on the Interface Card to the DB25M DTE port on Premisys EMS or
other external system.
1202M Cable, 15-ft DB9(F) to DB25(M) Cross-Over $51 [**] [**] For use with IF
cards at REV C0 or higher. The 1202F cable connects DB9M DTE computer
port on the Interface Card to the DB25F DTE port on Premisys EMS or
other external system.
1203F Cable, 5-ft DB25(M) to M34(F) Straight-Thru V.35 $100 [**] [**] The
1203F cable is used to connect V.35 DTE to HSU cards.
1203X Cable, 5-ft DB25(M) to M34(M) Cross-Over V.35 $100 [**] [**] The 1203X
cable is used to connect V.35 DCE to HSU cards.
1204F Cable, 5-ft DB25(M) to DB25(F) RS530 Straight-Thru $63 [**] [**] The
1204F cable is used to connect RS530 (or RS232 using 1252 module) DTE
to the 8202xx (2 port) HSU card.
1204M Cable, 5-ft DB25(M) to DB25(M) RS530 Straight-Thru $63 [**] [**] The
1204M cable is used to connect RS530 (or RS232 using 1252 module) DTE
to the 8202xx (2 port) HSU card.
1204X Cable, 5-ft DB25(M) to DB25(M) RS530 Cross-Over $63 [**] [**] The 1204X
cable is used to connect RS530 (or RS232 using 1252 module) DCE to the
8202xx (2 port) HSU card.
1206F Cable, 5-ft DB15(M) to DB25(F) RS366 Straight-Thru $71 [**] [**] The
1206F cable is used to connect RS366 Automatic Calling Equipment to HSU
ports.
1207 Cable, 6-ft 3 Amphenol (M) to 4 Amphenol (M) $200 [**] [**]
The 1207 cable is used to connect 3 E&M cards to 2 or 4 M66 blocks
or other terminal wiring.
1208 Cable, 6-ft 3 Amphenol(M) to 1 Amphenol(M) $126 [**] [**]
The 1208 cable is used to connect 3 FXS or FXO cards to one M66
block or other terminal wiring.
1209 Cable, 6-ft 3 Amphenol(M) to 2 Amphenol(M) $200 [**] [**]
The 1209 cable is used to connect 3 E&M cards in TO mode only to M66 block
or other terminal wiring.
1210 Cable, 5-ft 1 Amphenol (M) to 1 Amphenol (M) Extension $86 [**] [**]
The 1210 cable is used to connect user cards with amphenol connectors
to M66 blocks or other terminal wiring.
1212F Cable, 5-ft DB25(M) to DB37(F) Straight-Thru RS449 $86 [**] [**] The
1212F cable is used to connect RS449 DTE to the 8202xx (2 port) HSU
card.
1212X Cable, 5-ft DB25(M) to DB37(M) Cross-Over RS449 $97 [**] [**]
The 1212X cable is used to connect RS449 DCE to the 8202 (2
port) HSU Card.
1213 Cable, 5-ft 50-Pin(M) Amphenol to 2 x RJ-48(F) $100 [**] [**] Used to
connect 2 incoming T1 links from OSmart JacksO to the 8920xx, 8921xx,
8922xx, 8923xx 8T1/E1 (Amphenol connector based) Interface Card.
1215F Cable, 5-ft RJ48(M) to DB15(F) Straight-Thru $49 [**] [**]
The 1215F cable is used to connect CSU equipment to the
Inteface Card.
1215X Cable, 5-ft RJ48(M) to DB15(F) Cross-Over $49 [**] [**]
The 1215X cable is used to connect PBX equipment to the
Inteface Card.
1216F Cable, 15-ft RJ48(M) to DB25(F) Straight-Thru $51 [**] [**] The 1216F
cable is used to connect a VT-100 terminal to the Interface Card.
1216M Cable, 15-ft RJ48(M) to DB25(M) Straight-Thru $51 [**] [**] The 1216M
cable is used to connect a VT-100 terminal to the Interface Card.
1217 Cable, 25-ft RJ11(M) to RJ11(M) $9 [**] [**]
The 1217 cable is used to connect the modem port on the Interface
Card to an RJ11 telephone jack.
1219F Cable, 5-ft RJ48(M) to DB9(F) Straight-Thru $49 [**] [**] The 1219F
cable is used to connect a VT-100 terminal to the Interface Card.
1220 Cable, 25-ft 1 Amphenol (M) to 1 Amphenol (F) Cable $137 [**] [**] The
1220 cable is used as an extension of the 1210 cable when terminal
wiring is located further than five feet from the IMACS chassis.
1221 Cable, 25-ft DB25(M) to DB25(F) RS232 Extension $71 [**] [**] The 1221
cable is used as an extension of the 1114(F, M or X) cable when
RS232DTE is located further than five feet from the 8220xx SRU card.
1222 Cable, 25-ft DB25(M) to DB25(F) RS530 Extension $117 [**] [**] The 1222
cable is used as an extension of other cables when DTE is located
further than five feet from the 8202xx HSU card.
1224 Cable, 25-ft DB25(M) to DB25(F) V.35 Extension $97 [**] [**] The 1224
cable is used as an extension of the 1203 (F, M or X) cables when
V.35DTE is located further than five feet from the HSU card.
1230 Cable, 1-ft RJ48(M) to RJ48(M) Shielded $26 [**] [**]
The 1230 cable is used to connect terminal interface devices
to the Interface Card.
1231 Cable, 25-ft RJ48(M) to RJ48(M) Shielded $57 [**] [**]
The 1231 cable is used to connect terminal interface devices
to the Interface Card.
1232 Cable, 50-ft RJ48(M) to RJ48(M) Shielded $100 [**] [**]
The 1232 cable is used to connect terminal interface devices
to the Interface Card.
1233 Cable, 100-ft RJ48(M) to RJ48(M) Shielded $157 [**] [**]
The 1233 cable is used to connect terminal interface devices
to the Interface Card.
1239 Cable, RJ48(M) to 2 x RJ48(M), Y Adapter with two 1230 $57 [**] [**]
cables attached Used to support WAN card redundancy. RJ48(M) to 2 x
RJ48(M). Y Adapter with two 1230 cables attached.
1240 Cable, 5-inch DB26(M) to DB25(F) RS530 $63 [**] [**]
Connects RS530 or RS232 DTE to the 8215 based HSU Card.
1251 Converter, RS-530 to V.35 Personality Module $74 [**] [**]
Used to allow V.35 signals to be transmitted through HSU ports
designed for RS530 signals.
1253 Converter, RS-530 to RS-232 Personality Module $80 [**] [**]
Used to allow RS232 signals to be transmitted through HSU ports
designed for RS530 signals.
1255 Gender Changer, RS-232/RS-530 DB25(F) to DB25(F) $43 [**] [**] The 1255
gender changer is used to change the gender of RS232 or RS530 cables
from male to female.
1257 Gender Changer, V.35 M34(F) to M34(F) $120 [**] [**] The 1257 gender
changer is used to change the gender of V.35 cables from male to
female.
1258 Gender Changer, RS449 DB37(F) to DB37(F) $57 [**] [**] The 1258 gender
changer is used to change the gender of RS449 cables from male to
female.
1260F Cable, 5-ft DB25(M) to M34(F) Straight-Thru V.35 $100 [**] [**] The
1260F cable is used to connect 821420 HSU DTE to V.35 trunk interfaces.
1261F Cable, 5-ft DB25(M) to M34(F) Straight-Thru V.35 $100 [**] [**]
The 1261F cable is used to connect V.35 DTE to the 8202 HSU card
when operating in V.35 mode.
1263F Cable, 5-ft DB26(M) to M34(F) Straight-Thru $114 [**] [**]
Used to connect V.35 DTE to the 8215 based HSU Card.
1263M Cable, 5-ft DB26(M) to M34(M) Straight-Thru $114 [**] [**]
Used to connect V.35 DTE to the 8215 based HSU Card.
1263X Cable, 5-ft DB26(M) to M34(M) Cross-Over $114 [**] [**]
Used to connect V.35 DCE to the 8215 based HSU Card.
1264F Cable, 5-ft DB26(M) to DB25(F) Straight-Thru RS530 $77 [**] [**]
Used to connect RS530 or RS232 DTE to the 8215 HSU Card.
1264X Cable, 5-ft DB26(M) to DB25(M) Cross-Over RS530 $77 [**] [**] Used to
connect RS530 DCE to the 8215 HSU Card. Cannot be used to transmit
RS232 signals.
1265F Cable, 5-ft DB26(M) to DB37(F) Straight-Thru RS449 $114 [**] [**]
Used to connect RS449 DTE to the 8215 based HSU Card.
1265X Cable, 5-ft DB26(M) to DB37(M) Cross-Over RS449 $114 [**] [**] Used to
connect RS449 DCE to the 8215 based HSU Card. Consult the Premisys
Cable and Equipment Guide for more details.
1266F Cable, 5-ft DB15(M) to DB25(F) Straight-Thru $114 [**] [**]
This 1266F cable is used to connect X.21 DCE to the 8203xx
HSU Card.
1268 Cable, 25-ft DB26(M) to DB26(F) V.35 Extension $114 [**] [**]
Used to extend the range of 1263 cables. Consult the Premisys Cable and
Equipment Guide for more details.
1269 Cable, 25-ft DB26(M) to DB26(F) RS530/RS449 Extension $129 [**] [**]
Used to extend the range of 1264 or 1265 cables.
<PAGE>
150000 Panel, External Sync $850 [**] [**] Steel panel, replaces ringer bay
cover on 8918xx chassis, providing wire-wrap termination for external
clock sources (used for 8922xx base Interface Card external sync
sources). Provides both primary and secondary external clock source
terminations. RJ4
1504 M66 Terminal Block, 2 Female 50-Pin Amp/Champ Connectors $83 [**] [**]
Allows the user to connect facilities with amphenol
connectors.
200100 Panel, Plastic Blank Card Filler Plate $30 [**] [**]
Fills single open card slot in the front of 8918xx IMACS
chassis. Plastic faceplate.
200103 Panel, Stainless Steel Blank Card Filler Plate $30 [**] [**] Fills
single open card slot in the front of 8916xx, 8918xx or 8919xx IMACS
chassis. Stainless steel faceplate.
02 - Reference Manuals
* Preface all Manual Part Numbers with 000- when ordering.
1903 Manual, Cable and Equipment Guide $50 [**] [**]
Provides detailed pin connections for all Premisys Cables
and Connectors.
1904 Manual, TCP/IP Reference Guide $30 [**] [**]
Detailed guide to IP addressing and management traffic
connectivity within the IMACS.
1918 Manual, IMACS Reference Guide, Version 3.4 $100 [**] [**] Manual
provides system and card configuration guidelines for IMACS Host
Release 3.4.x.
1924 Manual, IMACS Reference Guide, Version 4.1.2 $100 [**] [**] Manual
provides system and card configuration guidelines for IMACS Host
Release 4.1.2.
1930 Manual, IMACS Reference Guide, Version 4.2 $100 [**] [**] Manual
provides system and card configuration guidelines for IMACS Host
Release 4.2.0 or 4.2.1.
1931 Manual, IMACS Product Guide $25 [**] [**] Provides information
regarding the IMACS productOs specification, technology, application
and marketing. Consists primarily of hardcopy of documents that are
also available on the Partners Conference folder in FirstClass.
1949 Manual, IMACS Reference Guide, Version 3.6 $100 [**] [**] Manual
provides system and card configuration guidelines for IMACS Host
Release 3.6.x.
03 - Training
Price is per student. Class size:- maximum 12, minimum 6. Cancellations less
than 2 weeks (10 work days) before scheduled course will be billed for a minimum
of 3 students plus any non-refundable instructor travel expenses. TRN001
Training, IMACS Installation and Maintenance $900 [**] [**]
Length: 3 Days
Contents: Product Overview, Installation & Cabling, Test Features,
Troubleshooting
TRN002 Training, IMACS Product Overview $300 [**] [**]
Length: 1 Day
Contents: Premisys Product Line, System Features, Applications,
Components
TRN003 Training, EMS $600 [**] [**]
Length: 2 Days
Contents: Hardware & Software Requirements, System Configuraation, System
Operation
</TABLE>
<PAGE>
EXHIBIT B
ADVANCE REPLACEMENT SERVICE OPTION
1.0 If during the warranty period, any defect is discovered in any product
covered by the warranty, PREMISYS shall, at the request of the CUSTOMER,
immediately ship an advance replacement of such products providing that:
1.1. CUSTOMER has submitted Premisys Advance Replacement Authorization
Agreement Form (Exhibit B-1) purchase order for this service.
1.2. CUSTOMER requests advance replacement service (via fax or e-mail) in
memo that provides: name of requester, name of CUSTOMER, shipping
address, description of apparent defect, model number and quantity
of products to be replaced and returned, serial numbers of products
to be returned, and blanket purchase order number.
1.3. PREMISYS responds to request (via fax or e-mail) providing RMA
number, shipping instructions for products to be returned, and a
sales order acknowledgment for the advance replacements.
1.4. Such product is returned to PREMISYS no more than thirty (30) days
after issuance of a return material authorization (RMA) by PREMISYS.
If the product with the defect is not returned within thirty (30)
days, PREMISYS will invoice the CUSTOMER for the purchase price of
product and the CUSTOMER will pay the invoice according to the
contractual payment terms.
1.5. PREMISYS is satisfied upon examination that claimed deficiencies actually
exist and were not caused by accident, misuse, neglect, alteration,
improper installation, improper repair, improper testing, lightning, power
surges, fire, flood, or earthquake. (Unauthorized modification or
unauthorized or improper alteration of products shall invalidate the
warranty.) If this examination reveals that the claimed deficiencies were
not covered by the warranty, PREMISYS will invoice the CUSTOMER for the
purchase price of product and the CUSTOMER will pay the invoice according
to the contractual payment terms.
1.6. CUSTOMER pays a fee of $275 per advance replacement product. This
fee will not be charged if the product being replaced was shipped to
the CUSTOMER within sixty (60) days of the reported discovery.
1.7. CUSTOMER pays the freight expense on the returned product; PREMISYS
pays the freight expense for the advance replacement.
<PAGE>
EXHIBIT B-1
[Premisys Logo]
ADVANCE REPLACEMENT AUTHORIZATION FORM
This Agreement is made this day of 19 , between Premisys
----- ------------- ---------
Communications, Inc. (Premisys) and ,
----------------------------------------------
(CUSTOMER).
VENDOR CUSTOMER
TO: Premisys Communications, Inc.FROM:
48664 Milmont Drive
Fremont, CA 94538
Telephone 510/353-7600 Telephone
FAX 510/353-7601 FAX
CUSTOMER requests an advance replacement, under the conditions of Premisys'
hardware warranty, for:
- --------------------------------------------------------------------------------
Product Serial Number Reason for Return Price
- -------------- --------------------- --------------------------- -----------
- -------------- --------------------- --------------------------- -----------
- -------------- --------------------- --------------------------- -----------
- -------------- --------------------- --------------------------- -----------
- -------------- --------------------- --------------------------- -----------
- -------------- --------------------- --------------------------- -----------
- -------------- --------------------- --------------------------- -----------
- -------------- --------------------- --------------------------- -----------
- -------------- --------------------- --------------------------- -----------
- -------------- --------------------- --------------------------- -----------
- -------------- --------------------- --------------------------- -----------
- -------------- --------------------- --------------------------- -----------
- -------------- --------------------- --------------------------- -----------
- -------------- --------------------- --------------------------- -----------
- -------------- --------------------- --------------------------- -----------
- -------------- --------------------- --------------------------- -----------
- -------------- --------------------- --------------------------- -----------
- -------------- --------------------- --------------------------- -----------
- --------------------------------------------------------------------------------
CUSTOMER agrees to either return the products listed above within 30 days or pay
for the products shipped to him under this Agreement in accordance with Premisys
standard sales terms and conditions which are FOB Fremont, CA and net 30 days
from invoice date.
Unless the failed product was shipped to CUSTOMER by Premisys within sixty (60)
days of the date of this Agreement, there is a $275.00 charge per unit for this
advance replacement service. CUSTOMER agrees to pay this charge in addition to
any charges that CUSTOMER may be obligated to pay per this Agreement.
Customer Purchase Order Number:
Customer authorized signature:
Print Name Signature
Title
EXHIBIT C
EQUIPMENT UPGRADE POLICY
1. This policy describes the responsibilities of PREMISYS and the Customer
with respect to hardware and software upgrades that are required to
resolve demonstrated problems with the equipment. These are known as
"problem fix upgrades". Hardware and software upgrades whose purpose is to
enhance the functionality of the equipment ("feature upgrades") are quoted
by PREMISYS on a case-by-case basis and are not covered by this policy.
2. For software problems that are reported by the Customer, verified and/or
recreated by PREMISYS and which are fixed on a subsequent revision of
software, PREMISYS shall provide to the Customer two (2) master copies of
the software revision that incorporates the fix. The software will be
accompanied by a completed "Engineering Change Request (Software)" form
which, among other information, states the severity of the problem ("Class
of Change") and a non-binding recommendation to the Customer on the
handling of the change in the field ("Field Effectivity Status"). The
decision on the deployment, if any, of the software fix to one or more
end-users in the field is the responsibility of the Customer and all costs
associated with that deployment will be borne entirely by the Customer.
This paragraph describes the totality of PREMISYS' responsibilities which
are limited to the provision of the two master sets of software and of the
accompanying Engineering Change Request (ECR) notification.
3. For hardware problems that are reported by the Customer, verified and/or
recreated by PREMISYS and which are fixed by a hardware modification to
the card, module or subsystem, PREMISYS shall provide to the Customer a
completed "Engineering Change Request (Hardware)" form which, among other
information, states the severity of the problem ("Class of Change"). The
Class of Change defines PREMISYS' responsibilities with regard to the
performance of the hardware upgrade to units that are already installed in
the field.
a. If the assigned Class of Change is "A", then PREMISYS will
perform the required hardware upgrade to affected units at no
charge.
b. If the assigned Class of Change is "AC" or "AR", then PREMISYS
will perform the required hardware upgrade to effected units at
no charge if the Customer so requests in writing within thirty
(30) days of receipt of the associated ECR.
c. If the assigned Class of Change is "B" or "D", then PREMISYS
will not upgrade any installed units at no charge. At the
Customer's request, PREMISYS will quote such upgrades on a
case-by-case basis.
In all instances where the Class of Change obligates PREMISYS to perform
no-charge hardware upgrades, the Customer shall request and receive a
Return Authorization and shall promptly return all parts requiring the
upgrade, freight prepaid to PREMISYS' Warranty Repair Department. PREMISYS
shall have twenty (20) business days to perform the upgrade and return the
part, freight prepaid, to the Customer.
4. For enhancements or new feature upgrades, the Customer may send the
Product to be upgraded freight prepaid to PREMISYS' Warranty Repair
Department. The Customer must issue a purchase order for the upgrade cost
as specified in PREMISYS' then current upgrade price list. A Return
Authorization must be included with the Product sent to PREMISYS. The
upgraded Product will be returned to the Customer within twenty (20)
business days.
5. Advance Replacement Service. If necessary, the Customer may request an
advance replacement exchange for the unit to be upgraded for those cases
in which the Customer can not wait the standard return period. The
Customer may arrange for this service as follows:
o Secure a Return Authorization for the Product to be exchanged.
o Issue a purchase order for the Product required at PREMISYS'
then current list price plus the cost of the upgrade and a $275
exchange service fee.
o Upon receipt of the proper purchase order, PREMISYS will ship
to the Customer an upgraded Product for exchange. Upon receipt
of the Product the Customer should immediately return the
exchanged Product in the same container.
o Upon receipt of the returned Product PREMISYS will issue a
credit against the Customers purchase order for the list price
of the returned Product.
If the exchanged Product is not returned within thirty (30) days the Customer
will be invoiced for the Product shipped at the list price and Customer agrees
to pay said invoice due upon receipt.
<PAGE>
CLASS CHANGE DEFINITIONS
Class A Changes
A. Changes which are (1) needed to correct (a) conditions which result in safety
hazards, or (b) conditions which result in noncompliance with federal
registration or radiation requirements or other federal, state or local safety
regulations or UL requirements; and (2) judged by Customer severe enough to have
to be made to all hardware in process, in stock or installed.
Class AC Changes
Changes which are (1) needed to correct (a) inoperative electrical or
mechanical conditions, or unsatisfactory maintenance or operating
conditions, or (b) conditions which result in safety hazards, where the
conditions in (a) or (b) are caused by circuit combinations or options
which exist only on certain hardware; (2) needed to compensate for marginal
(worse circuit) cases where the inoperative or unsatisfactory conditions
exist on certain hardware and cannot be associated with specific circuit
combinations or options. Such changes shall be made on Products in process
and if requested by Customer on Products in stock or returned to an
authorized repair center.
Class AR Changes
Changes which are needed to correct unsatisfactory electrical, mechanical
or operating conditions, which may be allowed to exist on a temporary
basis. Such changes shall be made to Products in process, except that in
some cases, if Customer gives written consent, Products may be shipped for
a period of time specified by Customer without incorporating the change at
that time to Products in process. If Customer requests that such changes be
made to Products in stock or already installed, supplier shall make such
changes.
Class B - Enhancements
B. Changes which are sufficiently important to require their application to
Products being manufactured (as soon as reasonably possible) and/or which may
also be recommended for application to existing stock and installations in the
field. Examples of this class of changes may include, but are not limited to:
a) Providing new features that directly affect Product operability.
b) Providing design improvements which result in better service
capabilities, longer life or improved operability margins.
c) Providing changes in design which result in important cost savings to
Customer.
Class BU Changes
For conditions of a mandatory nature, for example, the fulfillment of
future federal registration or future compatibility requirement or for
conditions of sufficient importance to be intended for universal
application. Such changes would only be required of Products in process.
Class D Changes - Non-Customer Affecting
D. Other changes not sufficiently important to justify application to Products
being manufactured within any specified time frame and not sufficiently
important to recommend for application to existing stock and installations in
the field.
<PAGE>
EXHIBIT D
DIAGNOSTIC SUPPORT SERVICES
I. PREMISYS' RESPONSIBILITIES
PREMISYS will provide at no charge the following support services only to
CUSTOMER during the term of this Agreement.
A. Dial-in Diagnostics:
PREMISYS shall provide, during its principal period of service (PPS),
a dial-in diagnostic service which will allow PREMISYS technical
support engineers remote dial-in access to an End User node in order
to perform on-line diagnostics and problem determination. Problem
determination and resolution will be performed with CUSTOMER not the
End User. PREMISYS will make every reasonable effort to respond to
service requests within 30 minutes.
B. Network Emergency Assistance:
1. A "Network Emergency" shall be defined as the failure of a
previously operating PREMISYS Product which renders the Network
inoperable.
2. PREMISYS will provide access to PREMISYS technical support
engineers via a telephone "Hot Line" to assist CUSTOMER with
Network Emergencies twenty-four (24) hours a day, seven (7) days a
week.
3. PREMISYS reserves the right to invoice CUSTOMER at the time and
material rates then in effect, for support services requested by
CUSTOMER outside the PPS which is determined not to be a Network
Emergency.
C. "Principal Period of Support" ("PPS") means the period of 8 a.m. to 10
p.m. Eastern Standard Time, Monday through Friday, excluding PREMISYS
observed holidays.
D. Problem Resolution
For each network emergency, PREMISYS will assign a systems engineer
to follow through and report status to CUSTOMER until such time as
the problem is resolved.
II. RESPONSIBILITIES OF CUSTOMER
A. CUSTOMER Support Staff:
1. CUSTOMER shall maintain a technically competent staff sufficiently
trained to provide direct support of PREMISYS Products to the End
User. At least one CUSTOMER technical support representative must
attend PREMISYS' training program prior to the date of any support
services request.
2. CUSTOMER shall designate in writing (by name, title, address and
phone number) to PREMISYS a primary technical support
representative.
(i) the CUSTOMER support representative shall be the primary
contact with PREMISYS for all support services provided
hereunder.
(ii)CUSTOMER may designate in writing to PREMISYS up to two (2)
alternate technical support representatives who will be
authorized to place support calls with PREMISYS.
(iii) CUSTOMER agrees that only the primary or alternate technical
support representatives will request support services provided
hereunder and that such representatives will be knowledgeable
in the support of the Products.
(iv)CUSTOMER may change primary and alternate technical support
representative(s) by issuing written notice to PREMISYS.
B. When use of the PREMISYS dial-in diagnostics capability is requested
by CUSTOMER and/or determined by PREMISYS to be necessary:
1. CUSTOMER shall insure that a telephone line is available to be
attached to the integral modem on the End User node.
2. CUSTOMER shall obtain from the End User and be responsible for all
necessary authorizations for remote access by PREMISYS to the End
User node.
3. CUSTOMER agrees that during any such remote access PREMISYS shall
at all times be acting as an agent for CUSTOMER.
C. CUSTOMER shall use system support provided hereunder only in support
of its End Users and any internal Products used by CUSTOMER.
III. GENERAL PROVISIONS
All PREMISYS test and diagnostic software and documentation, whether on
CUSTOMER's site, accessible by remote inquiry or incorporated into the
Products, shall be and remain the confidential and proprietary property of
PREMISYS.
<PAGE>
EXHIBIT E
EMERGENCY INVENTORY
I. TCG ITEM# 15453 Redundant AC System (AC/RG and CPU)
Quantity - 5 Kits
- --------------------------------------------------------------
Qty. Part # Description
- --------------------------------------------------------------
- --------------------------------------------------------------
1 891823 Universal 18-slot Enclosure (Imacs800)
- --------------------------------------------------------------
- --------------------------------------------------------------
2 8901 AC Power Supply
- --------------------------------------------------------------
- --------------------------------------------------------------
2 8903 -48V DC Converter
- --------------------------------------------------------------
- --------------------------------------------------------------
2 8906 -48v Ring Generator
- --------------------------------------------------------------
- --------------------------------------------------------------
1 8926 Dual T1 Interface card w/modem
- --------------------------------------------------------------
- --------------------------------------------------------------
2 8804 IMACS CPU 4T1/E1 (RCON bus-connect)
- --------------------------------------------------------------
- --------------------------------------------------------------
60343 CPU firmware, Host version 3.4.3
- --------------------------------------------------------------
- --------------------------------------------------------------
60101 TCP/IP, SNMP Software Option
- --------------------------------------------------------------
- --------------------------------------------------------------
60102 TR08 Software Option
- --------------------------------------------------------------
- --------------------------------------------------------------
1 8010 Dual WAN T1/E1 Card
- --------------------------------------------------------------
- --------------------------------------------------------------
2 812 Single WAN T1/E1 CSU
- --------------------------------------------------------------
II. TCG ITEM# 15454 Redundant DC System (DC/RG and CPU)
Quantity - 15 Kits
- --------------------------------------------------------------
Qty. Part # Description
- --------------------------------------------------------------
- --------------------------------------------------------------
1 891823 Universal 18-slot Enclosure (Imacs800)
- --------------------------------------------------------------
- --------------------------------------------------------------
2 8902A DC Power Supply
- --------------------------------------------------------------
- --------------------------------------------------------------
2 8906 -48v Ring Generator
- --------------------------------------------------------------
- --------------------------------------------------------------
1 8926 Dual T1 Interface card w/modem
- --------------------------------------------------------------
- --------------------------------------------------------------
2 8804 IMACS CPU 4T1/E1 (RCON bus-connect)
- --------------------------------------------------------------
- --------------------------------------------------------------
60343 CPU firmware, Host version 3.4.3
- --------------------------------------------------------------
- --------------------------------------------------------------
60101 TCP/IP, SNMP Software Option
- --------------------------------------------------------------
- --------------------------------------------------------------
60102 TR08 Software Option
- --------------------------------------------------------------
- --------------------------------------------------------------
1 8010 Dual WAN T1/E1 Card
- --------------------------------------------------------------
- --------------------------------------------------------------
2 812 Single WAN T1/E1 CSU
- --------------------------------------------------------------
<PAGE>
EXHIBIT F
QUICK DELIVERY INVENTORY
Quantity of 15 units each is to be maintained as quick delivery inventory for
unforecasted orders.
Premisys
Part Number Description
8108 8 port, 2 wire E&M/TO card
8119 8 port, 4 wire extended range E&M/TO card
8128 8 port, 2 wire, 900 Ohm FXS card
8129 8 port, 2 wire, 600 Ohm FXS card
8139 8 port, 2 wire, 600 Ohm FXO card
8000 Single T1/E1 WAN card
8010 Dual T1/E1 WAN card
8014 Dual T1/E1 WAN card (1x3 Redundancy)
811 DSX plug in module
812 CSU plug in module (T1)
8215 4 port, RS530/V.35 HSU card
8202 2 port, RS530/V.35 HSU card
8212 2 port, V.35 HSU card
8220 10 port, RS232C/V.24 subrate card/(supports async/sync & DS0a/DS0b
configurations)
8228 BnR Concentrator card/(supports both B7r & B4r formats) 8228 BnR
Concentrator 8231 10 port, RS232, HDLC Sync/Async FRAD card 8247 5 port,
OCU-DP card/(Expandable to 10 ports with 845 module)
845 OCU-DP 5 port expansion module
8249 2 port, OCU-DP card with error correction
8254 4 port, OCU-DP/G.703 card
8260 8 port, 2 wire ISDN BRI "U" interface card
8800 2 T1/E1, BCON Bus-connect Non-Redundant CPU card
8801 8 T1/E1, XCON Cross-connect Redundant CPU card
8804 4 T1/E1, RCON Bus-connect Redundant CPU card
8920 8 T1/E1, Interface card w/2400bps modem
8925 2 T1/E1, Interface card w/o modem
8926 2 T1/E1, Interface card w/2400bps modem
8901 AC Power Supply, 120/240vac
8902A DC Power Supply
8903 Power Converter, 120vac to -48vdc
8906 Ring Generator, -48vdc
8916 Imacs 600 Enclosure w/install kit/(Front loading chassis, wall
mountable)
891823 Imacs 800 Enclosure w/install kit/(Front and rear loading chassis,
rack mount unit)
8871 ADPCM Server card
<PAGE>
EXHIBIT 21.01
LIST OF REGISTRANT'S SUBSIDIARIES
Country of
Name Organization Percentage Owned by
Registrant
- ------------------------------------- ----------------- ----------------------
Premisys Communications Pte Ltd Singapore 100%
Premisys Communications Limited United Kingdom 100%
Premisys Communications (Canada) Canada 100%
Inc.
<PAGE>
EXHIBIT 23.01
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (File No. 333-90938, File No. 333-4060, File No.
333-49991 and File No. 333-70739) of Premisys Communications, Inc. of our report
dated July 22, 1999, except for Note 6 which is as of September 10, 1999
appearing on page 33 of this Annual Report on Form 10-K.
PRICEWATERHOUSECOOPERS LLP
San Jose, California
September 21, 1999
<PAGE>
EXHIBIT 27.01
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet, consolidated statement of operations and
consolidated statement of cash flows included in the Company's Form 10-K for the
period ended June 25, 1999, and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER>
1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-25-1999
<PERIOD-START> JUN-27-1998
<PERIOD-END> JUN-25-1999
<CASH> 3,982
<SECURITIES> 80,452
<RECEIVABLES> 8,459
<ALLOWANCES> 0
<INVENTORY> 15,231
<CURRENT-ASSETS> 117,387
<PP&E> 17,988
<DEPRECIATION> 8,935
<TOTAL-ASSETS> 126,624
<CURRENT-LIABILITIES> 16,794
<BONDS> 0
0
0
<COMMON> 265
<OTHER-SE> 98,940
<TOTAL-LIABILITY-AND-EQUITY> 126,624
<SALES> 92,423
<TOTAL-REVENUES> 92,423
<CGS> 36,660
<TOTAL-COSTS> 84,788
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 11,208
<INCOME-TAX> 3,587
<INCOME-CONTINUING> 7,621
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,621
<EPS-BASIC> 0.31
<EPS-DILUTED> 0.30
</TABLE>
