| Excel Switching Corporation | |||
| Ticker: | XLSW | 255 Independence Drive | |
| Exchange: | NASDAQ-National Market | Hyannis, MA 02601 | |
| Industry: | Manufacturing (SIC Code 3661) | (508) 862-3000 | |
| # of Employees: | 252 | ||
| Type of Shares: | Common Shares | Filing Date: | 9/17/97 | |
| U.S. Shares: | 4,500,000 | Offer Date: | 11/4/97 | |
| Non-U.S. Shares: | 0 | Filing Price: | $15.00 | |
| Primary Shares: | 4,500,000 | Offer Price: | $21.00 | |
| Secondary Shares: | 0 | Gross Spread: | $1.47 | |
| Offering Amount: | $67,500,000 | Selling: | $0.88 | |
| Expenses: | $800,000 | Reallowance: | $0.10 | |
| Shares Out After: | 32,589,600 |
| Manager | Tier | Phone |
| Morgan Stanley Dean Witter Discover & Co. | Lead Manager | (212) 761-5900 |
| Hambrecht & Quist Incorporated | Co-manager | (415) 439-3626 |
| Montgomery Securities | Co-manager | (415) 627-2100 |
| Issuer's Law Firm: | Testa, Hurwitz & Thibeault |
| Bank's Law Firm: | Hale and Dorr |
| Auditor: | Arthur Andersen |
| Registrar/Transfer Agent: | BankBoston |
Dollar amounts in U.S. millions except for per share data | |||||
| 6 Month Ending Financials | |||||
| Full Year Audited Income | Latest Unaudited Income | Prior Unaudited Income | Balance Sheet | ||
| 12/28/97 | 6/28/97 | 6/30/96 | 6/28/97 | ||
| Revenue: | $62.05 | $39.06 | $27.89 | Assets: | $44.45 |
| Net Income: | $7.90 | $7.42 | $3.69 | Curr Assets: | $35.24 |
| EPS: | $0.23 | $0.22 | $0.11 | Liabilities: | $16.90 |
| Prior EPS: | $0.16 | $9.65 | $0.21 | Curr Liabilities: | $13.32 |
| Cash Flow/Oper: | $7.30 | -$0.24 | $2.32 | Equity: | $27.54 |
| Cash Flow/Fin: | $0.05 | -$1.25 | -$2.54 | Cash: | $9.22 |
| Cash Flow/Inv: | -$4.05 | -$1.25 | Working Cap: | $21.91 | |
| Business Description |
| The company is a leading provider of open switching platforms for telecommunications networks worldwide. The company develops, manufactures, markets and supports a family of open, programmable, carrier-class switches. The company's products offer network providers the flexibility to address multiple market applications and the scalability to deploy a variety of system capacities. The Company's programmable switching platforms enable network providers to deliver improved networking functionality at a lower cost than purchasing, upgrading or reprogramming traditional, closed, central office switches. The Company's products are currently deployed in telecommunications networks in approximately 50 countries throughout the world. The company offers a family of programmable switching platforms that are designed with distributed architecture and open software to maximize performance and provide multiple levels of programmability and redundancy. |
| Competition |
| The markets in which the Company competes are characterized by intense competition, with a large number of suppliers providing different types of products to different segments of the markets. The Company currently competes principally on the basis of: (i) the breadth of its products' features and benefits; (ii) the flexibility, scalability, quality, ease of use, reliability and cost effectiveness of its products; and (iii) the Company's reputation and the depth of its expertise, customer service and support. While the Company believes that itcurrently competes favorably overall with respect to these factors, there can be no assurance that the Company will be able to continue to do so. The Company competes or may compete directly or indirectly with the following categories of companies: (i) other manufacturers of programmable switches such as Summa Four, Inc., Redcom Laboratories, Inc. and Harris Corporation; (ii) large, well-established switch and telecommunications equipment manufacturers such as Alcatel Alsthom Compagnie Generale d'Electricite SA, DSC Communications Corporation, Lucent Technologies Inc., Northern Telecom Limited, Siemens AG and Telefonaktiebolaget LM Ericsson; and (iii) to a lesser degree, systems integrators and application developers whose switches are based on PC card-level products manufactured by companies such as Aculab Inc., Dialogic Corporation and Natural MicroSystems Corporation. In addition, several smaller companies have begun recently to manufacture programmable switching platforms. Due to the rapidly evolving markets in which the Company competes, additional competitors with significant market presence and financial resources, including large telecommunications equipment manufacturers and computer hardware and software companies, may enter those markets, thereby further intensifying competition. Additionally, there can be no assurance that one or more of the Company's application developers will not begin to develop or market products in competition with the Company. Many of the Company's current and potential competitors have significantly greater financial, selling and marketing, technical, manufacturing and other resources than the Company. As a result, these competitors may be able to devote greater resources to the development, promotion, sale and support of their products than the Company. Some of the Company's competitors currently offer financing alternatives to their customers, a service that the Company does not provide at this time. Moreover, these companies may introduce additional products that are competitive with those of the Company or enter into strategic relationships to offer complete solutions which the Company does not currently offer. There can be no assurance that the Company's products would compete effectively with such products. Although the Company believes that it has certain technological and other advantages over its competitors, maintaining such advantages will require continued investment by the Company in research and development, selling and marketing and customer service and support. In addition, as the Company enters new markets, distribution channels, technical requirements and levels and bases of competition may be different than those in the Company's current markets. There can be no assurance that the Company will be able to compete successfully against either current or potential competitors in the future. |
| Business Plan |
| Excel's objective is to be a leader in open, programmable switching platforms for telecommunications networks worldwide. The key elements of the Company's strategy are to: (I) Focus on Open Telecommunications Technology, (ii) Maintain and Strengthen Relationships with Application Developers, OEMs and Systems Integrators, (iii) Provide Superior Customer Service and Support, (iv) Expand Existing Markets and Enter Emerging Markets and (v) Establish Open, Programmable Switching as an Industry Standard. |
| Use of Proceeds |
| The proceeds from the proposed offering will be used for general corporate purposes including working capital, product development, capital expenditures and potential acquisitions. |
| Name of Shareholder | % Owned Before | % Owned After |
| Robert P. Madonna | 99.50% | 85.80% |
| Officer Name | Title | Age |
| Gadi Tamari | Chief Operating Officer | 52 |
| Russell M. Levesque | Director of Product Management | 37 |
| Robert P. Madonna | President, Chief Executive Officer and Chairman of the Board | 37 |
| Robert J. Buttel | Vice President, Advanced Technology Development | 49 |
| James W. Carroll | Vice President, Engineering | 37 |
| Stephen S. Galliker | Vice President, Finance and Administration, and Chief Financial Officer | 50 |
| Christopher Stavros | Vice President, General Counsel, Director and Clerk | 44 |
| Robert C. Panoff | Vice President, Marketing | 50 |
| David C. Brajczewski | Vice President, Research and Development | 38 |
| Robert W. Ross | Vice President, Sales | 48 |