1
Filed by Cisco Systems, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934
Subject Company: Cisco Systems, Inc.
Commission File No.: 000-18225
ACQUISITION OF ACTIVE VOICE CORPORATION Q&A
GENERAL Q&A
WHAT IS CISCO SYSTEMS, INC. ACQUIRING?
Cisco is acquiring Active Voice, Corp., a leading provider of IP-based Unified
Messaging solutions for the enterprise and small/medium business customer.
WHAT IS IP-BASED UNIFIED MESSAGING?
Unified Messaging consolidates voicemail, e-mail, and fax messages on a single
IP network, accessible independent of location, time or device. Unified
Messaging (UM), a key component of Unified Communications (UC), is an important
initiative for Cisco that paints a very compelling picture for the future of
communications applications and supports our direction with the Architecture for
Voice, Video, and Integrated Data (AVVID) for the corporate enterprise. Cisco
also delivers UC solutions for the service provider market through its uOne
software platform/technology.
WHY IS CISCO PURCHASING A UNIFIED MESSAGING COMPANY?
Cisco has a strong focus and commitment to delivering an end-to-end enterprise
architecture for the convergence of voice, video and data through its AVVID
initiative. As part of this effort, Cisco believes that applications will help
drive the adoption of IP telephony, and unified messaging / unified
communications play a key role in this adoption for enterprise customers. With
the acquisition of Active Voice and its integration with Cisco CallManager,
Cisco is setting the foundation for delivering true unified communications in
the enterprise.
CISCO PURCHASED AMTEVA TECHNOLGIES OVER A YEAR AGO FOR UNIFIED MESSAGING
PRODUCTS. WHY IS CISCO ACQUIRING A SECOND UNIFIED MESSAGING COMPANY?
2
Cisco believes the unified messaging/unified communications market is a
substantial opportunity and as the market for this technology matures, the
requirements for various segments of the market will drive multiple solutions.
With the purchase of Amteva, now known as the Unified Communications Software
Business Unit, Cisco has built a strong focus and software platform for
delivering unified communications for the service provider market. The Active
Voice acquisition in conjunction with Cisco CallManager will give us a robust
solution for enterprise customers.
WHAT IS UNIFIED COMMUNICATIONS AND HOW DOES IT DIFFER FROM UNIFIED MESSAGING?
Unified Messaging(UM) is a very important component of Unified Communications.
Users of UM benefit from increased productivity by combining the ever increasing
barrage of email, voice and fax messages into a single, common mailbox
accessible by any devices (land-line or mobile phone, PC email client or Web
browser) regardless of location, time or media type. Unified communications goes
beyond unified messaging to offer real time notification and calling services,
providing personalized inbound call screening so that users can determine when,
how and by whom they chose to be reached sending others to their unified
"in-box". Further, unified communications allows users to respond to an email,
voice or fax message by calling the sender, communicating in real time so that
the message can be placed into context of a live conversation with the message
sender and immediately return to the target message and take action. The user
can add voice on top of email or fax, email on top of voice or fax and send the
response to an individual or list of recipients.
WHY HASN'T THE UNIFIED MESSAGING/UNIFIED COMMUNICATIONS MARKET TAKEN OFF?
One of the biggest obstacles to adoption has been interoperability with legacy
PBX and voice mail systems and the transition to IP based communications. With
the acquisition of Active Voice and its strength in integrating with traditional
and IP based systems combined with Cisco's focus and expertise in IP, we believe
that we are well positioned to help accelerate the UM/UC market. In addition,
with different solutions designed to meet the specific needs of various market
segments (uOne for service provider and Active Voice for enterprise), Cisco will
deliver solutions to meet the needs of its various customers as the market
continues to evolve.
WHAT HAPPENS TO UONE, THE PRODUCT ORIGINATING FROM THE AMTEVA ACQUISITION?
The Cisco uOne software platform is targeted towards the service provider market
and will continue to deliver unified communications capabilities to that market.
Cisco continues to view the service provider market as a growth opportunity and
are continuing to focus in this area through UCSBU.
3
WHAT HAPPENS TO CISCO'S UONE 5.0 E SOLUTION ANNOUNCED IN SEPTEMBER 2000 AND
TARGETED AT THE ENTERPRISE MARKET?
Cisco will offer customers a choice of either purchasing the uOne 5.0E product
as a limited release with future migration options to the Active Voice
enterprise version, or to purchase the Active Voice product with similar pricing
and capabilities. Product comparison documents will be provided to these
customers to help them make the choice.
WASN'T ACTIVE VOICE ONE OF CISCO'S AVVID ECOSYSTEM PARTNERS FOR DELIVERING
UNIFIED MESSAGING CAPABILITIES TO THE ENTERPRISE MARKET?
Yes. Active Voice was one of Cisco's partners for the AVVID initiative that in
conjunction with our CallManager software delivered unified messaging
functionality to the enterprise. The Active Voice product has been very
successful with Cisco enterprise customers, in particular those that have
adopted AVVID.
HOW DOES THIS ACQUISITION AFFECT CISCO'S OTHER AVVID PARTNERS (INCLUDING THE
UNIFIED MESSAGING PARTNERS)?
Cisco believes that the UM/UC market is large, and requires multiple, segment
specific solutions. Our strategy is to deliver on customer needs both with our
own solutions for those customers who want a single vendor offering and with
partnered solutions that offer vertical market differentiation. Cisco will
continue to support open industry application interface standards such as TAPI
and JTAPI and will openly share these interfaces with external messaging
partners.
IS SOFTWARE.COM, RECENTLY MERGED WITH PHONE.COM, A CISCO ECOSYSTEM PARTNER FOR
UC?
Yes. Software.com is an ecosystem partner for UCSBU related to the uOne software
platform, focused on delivering UC to the service provider market.
WILL THE TWO COMPANIES CONTINUE TO WORK TOGETHER ON UC?
Yes, our acquisition of Active Voice is targeted at the enterprise market and
Cisco's strategy for delivering UM/UC solutions to enterprise customers.
IS CISCO BECOMING AN APPLICATIONS PROVIDER?
4
No, Cisco believes that the unified messaging market will evolve and become a
part of a broader unified communications market. Cisco believes that voice mail
and unified messaging need to be core components of an IP telephony and unified
communications platform. The aggregation of these technologies into an
underlying platform that interoperates with legacy equipment provide our
customers with a clear migration path from legacy systems to a new-world IP
infrastructure and will help accelerate the deployment of applications such as
scheduling, directory services, VXML, etc., by providing 3rd party vendors with
value-added integration capabilities. As such, Cisco's strategy continues to be
to enable Internet-based applications and adding value to core IP networking
technology. Cisco will continue to partner with application providers in order
to provide robust, end-to-end solutions to its customers.
WHY DID CISCO CHOOSE ACTIVE VOICE?
Cisco believes that Active Voice was the best choice amongst IP-based Unified
Messaging providers. Active Voice has best-in-class technology with proven
reliability and scalability, an impressive customer base, strong engineering
team, and close ties to Cisco's AVVID group. Customer demand has already driven
sales of the Active Voice product through Cisco's enterprise and small/medium
business units and the technology is unique in its level of integration to Cisco
CallManager. In addition, Cisco and Active Voice have a strong-shared vision for
fostering growth and innovation in IP telephony through protocol and standards
driven telephony infrastructure. With its technology expertise, Active Voice
will help accelerate the time to market for value added applications sitting on
top of Cisco infrastructure and software platforms.
Culture. Both organizations share an entrepreneurial, customer-focused culture.
Successful joint development and marketing efforts to date are clear indicators
of culture fit between the two companies.
Shared vision. Cisco and Active Voice share the vision of enabling a spectrum of
IP-based, standards-driven Unified Messaging products allowing access to
voicemail, email, and fax over a single IP network independent of location, time
or device.
Short term win.
o Successful product and architecture today that meets the requirements for
our enterprise customers
o Instant time-to-market with a complete AVVID Cisco product solution for
Unified Messaging.
Long term win.
o Addition of engineering talent with strong unified messaging background
o Roadmap for an interoperable, end-to-end unified communications
architecture for both enterprise and service provider customers
5
Leadership. Active Voice is a leader in Unified Messaging solutions. Active
Voice has best-in-class technology with proven reliability and scalability, an
impressive customer base, and strong engineering team.
Cisco evaluates all its acquisitions using five key factors, namely, culture,
shared vision, short term win, long term win and leadership. The Active Voice
acquisition fits these criteria well.
WILL THE ACQUISITION BE IMPACTED BY THE LACK OF GEOGRAPHIC PROXIMITY?
We believe that one key to making acquisitions successful is to effectively
integrate acquired organizations on a cultural level, i.e. to make sure they
understand the Cisco culture and the way it operates. Although this cultural
integration is facilitated by geographic proximity, it is possible to achieve
this through other creative means. Active Voice has a proven track record of
partnering with Cisco business units and has very strong culture and vision fit
with Cisco that was apparent from day one. We believe that we will be able to
effectively integrate Active Voice into Cisco on a cultural level. Seattle, WA,
is also an area characterized by strong technology companies and a presence in
WA will benefit Cisco.
WHY DID CISCO HAVE TO ACQUIRE ACTIVE VOICE?
Cisco has a strong focus in delivering an end-to-end architecture for the
convergence of voice, video and data. And we believe that applications will help
drive the adoption of IP telephony. Also, our customers and partners desire a
seamless network infrastructure to provide value- added services to their
customers. By acquiring Active Voice, Cisco can focus on a technology direction
that allows our enterprise customers to quickly enable those services. In
addition, Unified Messaging evolving to unified communications is a required
functionality for enterprise IP telephony, and Active Voice will significantly
enhance Cisco's time-to-market in this area. With Active Voice, Cisco provides a
standards-based interface for our enterprise customers and partners. The
acquisition of Active Voice in conjunction with Cisco CallManager, brings Cisco
a step closer to delivering unified communications to enterprise customers.
Cisco already has a strong unified communications offering for the service
provider market through its uOne platform and now is enhancing and expanding its
technology solution for the enterprise market with the acquisition of Active
Voice.
WHY DIDN'T CISCO ACQUIRE SOME OTHER UNIFIED MESSAGING COMPANY?
Cisco evaluated a number of companies. Based on this evaluation, we believe that
the other products in the market were either not as good a fit with the Cisco
strategy or were not as reliable and scalable as the Active Voice solution.
6
Active Voice has the strongest suite of products that cater to the enterprise
and small/medium business market segments. In joint development partnerships
with Cisco business units, Active Voice executed smoothly and proved to be a
well-run company with great engineering talent. In addition, the chemistry
between Cisco and Active Voice management and the shared vision of the teams
makes this a particularly compelling combination.
ARE CISCO AND ACTIVE VOICE GOING TO INTEROPERATE WITH LEGACY VOICE EQUIPMENT?
Cisco strives to meet the needs of our customers as data and voice networks and
applications converge. We anticipate that as part of our Unified
Messaging/unified communications strategy we will continue to work with our
partners to provide our customers with interoperability with traditional PBX
systems and a migration path from legacy equipment to New World infrastructure.
Active Voice solutions support both traditional telephony and IP telephony
systems, providing a seamless migration path to IP networks.
WHAT PRODUCTS DOES ACTIVE VOICE OFFER?
Active Voice offers two product suites called Unity Enterprise and Unity
Connections. The Unity line is a set of IP-based messaging services that
currently enables the following integrated unified messaging capabilities: voice
messaging over IP, fax messaging over IP, and e-mail messaging. These products
work with legacy systems and interface with any fax machine, wireline or
wireless phone, and communicate over the IP network to standards-based
directories. Unity is highly flexible with extensive options for web-based
management as well web-based personal administration by subscribers. Unity and
its comprehensive offerings bridge legacy telephony and New World IP
infrastructures. The same functionality available on a personal computer is
available with a telephone whether wireless, fixed, or IP. Cisco will integrate
Unity functionality with the Cisco CallManager and enable a turnkey solution
that integrates with existing enterprise email systems.
Active Voice also offers a suite of legacy voicemail applications. These legacy
applications do not fit into Cisco's AVVID New World infrastructure strategy,
and therefore the legacy business will be spun-off into a self-operating entity.
HOW DOES ACTIVE VOICE FIT INTO THE CISCO AVVID ARCHITECTURE?
Active Voice fits directly into the Cisco AVVID family of solutions as the
Unified Messaging product offering. The Unity product offerings will provide
IP-based Unified Messaging and IP-based Voice Messaging for the Cisco
CallManager and associated hardware for both the enterprise and small/medium
business segments.
7
WHO WILL OWN THE INTELLECTUAL PROPERTY RIGHTS CREATED TO DATE BY ACTIVE VOICE?
Cisco will own all the intellectual property rights of Active Voice following
the acquisition, but will license non-Unity related intellectual property to the
legacy spin-off.
HOW DOES ACTIVE VOICE RELATE TO THE OTHER ACQUISITIONS THAT CISCO HAS MADE IN
THE VOICE AREA, FOR EXAMPLE AMTEVA, GEOTEL, AND SELSIUS?
Active Voice is an enterprise-targeted acquisition that provides IP-based
unified messaging technology to enable easy access to voicemail, email, and fax
messages independent of location, time, or device. The combination of the
products from the Active Voice, Amteva, Geotel, and Selsius acquisitions will
significantly enhance Cisco's time to market in delivering a turnkey solution to
provide voice services and advanced telephony functionality to all customers.
Amteva is now part of Cisco's Internet Communications Software Group (ICSG) and
its uOne software platform delivers IP-based unified communications solutions
for the service provider market.
The GeoTel acquisition is also part of Cisco ICSG and provides call routing
technology based on dynamically changing routing criteria appropriate for call
centers.
Selsius, now part of Cisco's Enterprise line of business is directed towards the
campus and branch office voice markets for telephony. It provides IP technology
for call processing and control for voice calls that are carried over the packet
switched IP data networks.
WILL CISCO SELL THE ACTIVE VOICE PRODUCTS AS THEY EXIST NOW?
Yes. Cisco will continue to sell Active Voice Unity products as they exist
today.
WHAT ARE THE BENEFITS TO CUSTOMERS FROM CISCO'S ACQUISITION OF ACTIVE VOICE?
With the acquisition of Active Voice, Cisco is furthering its commitment to
delivering best-in-class software solutions to market that will help accelerate
the adoption and transition to IP telephony utilizing interoperability with
legacy equipment. In addition, we will deliver various solutions to market to
address the different needs of our enterprise and service provider customers.
8
WHO ARE THE KEY ACTIVE VOICE COMPETITORS AND HOW DO THEY COMPARE WITH ACTIVE
VOICE?
Other Unified Messaging technology providers include Lucent/Avaya, Nortel and
KeyVoice.
All of these companies are focused primarily on legacy telephony/TDM networks.
Active Voice/Unity is the only product designed with New World IP infrastructure
in mind from product conception. Unity helps migrate customers from a
legacy-based environment to IP.
HOW IS CISCO/ACTIVE VOICE UNIFIED MESSAGING FUNCTIONALITY COMPETITIVE WITH
EXISTING SOLUTIONS FROM VENDORS SUCH AS LUCENT (OCTEL) AND NORTEL?
Both Nortel and Lucent are focused primarily on legacy telephony/TDM networks.
Cisco/Active Voice Unity is the only product designed with the New world IP
infrastructure in mind from product conception. In addition, Unity helps
customers migrate from a legacy environment to IP.
WHO ARE SOME OF ACTIVE VOICE' KEY CUSTOMERS?
Active Voice has a strong international customer base of over 100,000 voice
messaging, computer telephony and unified systems in over 60 countries. Some key
customers include Aether Systems, CF Bean, C&S Machine Products, Holy Cross
College, PHT Clinical Networks, and TECO-Westinghouse Motor Company.
SINCE ACTIVE VOICE WAS A CISCO AVVID PARTNER ARE THERE ANY JOINT CUSTOMERS?
Active Voice and Cisco AVVID have participated in several enterprise deployments
this year, i.e. a large Federal armed services division, a healthcare provider
group, and an Internet services company.
WILL CISCO BE MAKING MORE ACQUISITIONS TO FILL OUT ITS PRODUCT PORTFOLIO IN THE
UNIFIED COMMUNICATIONS AREA?
We will evaluate acquisitions opportunities on a case-by-case basis as they
arise. As always, if we find it makes more sense to fill a critical need by
acquiring instead of building the technology ourselves, we will not hesitate to
make more acquisitions in this or any other area.
9
Q&AS RELATING TO FUTURE INTEGRATION PLANS
WHAT WERE THE TERMS OF THE DEAL?
Cisco will pay approximately $266M in stock for Active Voice's Unity operations.
Cisco will also pay approximately $30 million in stock for Active Voice's legacy
voicemail solutions which will be sold after the closing to a newly formed
entity comprised of former Active Voice employees for $30 million. The purchase
price will be shared by all Active Voice securityholders. As of November 9,
2000, there were approximately 14.8 million shares of Active Voice outstanding
on a fully diluted basis.
WHO ARE THE CURRENT OWNERS OF ACTIVE VOICE?
There are no major corporate owners of Active Voice, only insiders and other
significant individual owners.
WHEN WILL THE DEAL CLOSE?
We expect the deal to close in Cisco Q2 FY01.
WHAT IS THE FINANCIAL IMPACT TO CISCO?
Based on initial projections, the deal will be neutral to slightly accretive.
WHAT IS ACTIVE VOICE' CURRENT REVENUE RUN-RATE?
Active Voice is a public company and as such information can be obtained through
their public filings.
WHAT IS THE BREAKDOWN OF REVENUES FOR THE UNITY PRODUCT?
Cisco does not comment on the revenue breakdown by product lines for companies
we acquire.
WHAT APPROVALS ARE REQUIRED?
An S-4 filing, proxy statement, and an HSR filing are required.
WHY WASN'T POOLING ACCOUNTING USED FOR THIS DEAL?
This transaction did not satisfy all the requirements for pool accounting.
10
WAS CISCO IN A BIDDING SITUATION?
No.
WAS CISCO OR ACTIVE VOICE REPRESENTED BY BANKERS?
Active Voice was represented by William Blair &Company. Cisco was represented by
Thomas Weisel Partners.
IS ACTIVE VOICE CURRENTLY INVOLVED IN ANY LEGAL OR PATENT DISPUTES?
Active Voice is not involved in any patent disputes. Active Voice has a few
pending Y2K lawsuits.
Q&AS RELATING TO FUTURE INTEGRATION PLANS
WILL THERE BE ANY LAYOFFS AT ACTIVE VOICE?
We are acquiring both technology and skilled employees related to the Unity
product line. As discussed earlier, employees related to the Legacy business
will be transferred to a self-operating entity.
WILL CISCO MOVE ACTIVE VOICE OUT OF SEATTLE, WA?
Active Voice will remain in Seattle, WA.
WHERE WILL ACTIVE VOICE FIT INTO THE CISCO ORGANIZATION?
The Active Voice organization will form a new business unit reporting into David
Kirk, Sr. Vice President ICSG, as part of Cisco's Internet Communications
Software Group (ICSG).
WILL FRANK COSTA CONTINUE TO LEAD HIS TEAM AND HEAD UP THE NEW BU AT CISCO?
No. Frank Costa will run the independent spin-off company. Kevin Chestnut will
run the Active Voice team within Cisco.
11
SINCE ACTIVE VOICE IS A CISCO AVVID PARTNER WHY ISN'T THIS ACQUISITION UNDER
CISCO'S ENTERPRISE LINE OF BUSINESS?
With Cisco's announcement of its new Internet Communications Software Group
(ICSG) in May 2000, it is beginning to consolidate its software platform
initiatives under one group.
Q&AS RELATING TO EXISTING ACTIVE VOICE CUSTOMERS /PARTNERS/MARKETS
WHO WILL SUPPORT ACTIVE VOICE' EXISTING UNITY CUSTOMER BASE?
Cisco will support the existing Active Voice customer base, using the Active
Voice support organization initially and gradually integrating this work into
the Cisco support organization.
WILL CISCO CONTINUE TO SUPPORT ACTIVE VOICE EXISTING UNITY CHANNELS?
Yes.
WILL CISCO CONTINUE TO WORK WITH ACTIVE VOICE PARTNERS/OEMS SUCH AS ALCATEL AND
OTHERS?
Cisco will continue to meet the contractual obligations of the retained
Unity-related business's customers and partners.
* * * *
This report may contain projections or other forward-looking statements
regarding future events or the future financial performance of Cisco that
involve risks and uncertainties. Readers are cautioned that these
forward-looking statements are only predictions and may differ materially from
actual future events or results. Readers are referred to the documents filed by
Cisco with the SEC, specifically the most recent reports on Form 10-K, 8-K, and
10-Q, each as it may be amended from time to time, which identify important risk
factors that could cause actual results to differ from those contained in the
forward-looking statements, including risks associated with acquisition
strategy, dependence on new product offerings, competition, patents,
intellectual property and licensing, future growth, rapid technological and
market change, manufacturing and sourcing risks, Internet infrastructure and
regulation, international operations, volatility of stock price, financial risk
management, and potential volatility in operating results, among others.
Cisco, Cisco Systems, and the Cisco Systems logo are registered trademarks of
Cisco Systems, Inc. or its affiliates in the U.S. and certain other countries.
All other trademarks mentioned in this document are the property of their
respective owners. Copyright(C)2000 Cisco Systems, Inc. All rights reserved.
12
* * * *
Cisco plans to file a Registration Statement on SEC Form S-4 in connection with
the merger and Active Voice Corporation ("Active Voice") expects to mail a Proxy
Statement/Prospectus to its stockholders containing information about the
merger. Investors and security holders are urged to read the Registration
Statement and the Proxy Statement/Prospectus carefully when they are available.
The Registration Statement and the Proxy Statement/Prospectus will contain
important information about Cisco, Active Voice, the merger and related matters.
Investors and security holders will be able to obtain free copies of these
documents through the web site maintained by the U.S. Securities and Exchange
Commission at http//www.sec.gov.
In addition to the Registration Statement and the Proxy Statement/Prospectus,
Cisco and Active Voice file annual, quarterly and special reports, proxy
statements and other information with the Securities and Exchange Commission.
You may read and copy any reports, statements and other information filed by
Cisco and Active Voice at the SEC public reference rooms at 450 Fifth Street,
N.W., Washington, D.C. 20549 or at the Commission's other public reference rooms
in New York, New York and Chicago, Illinois. Please call the Commission at
1-800-SEC-0330 for further information on public reference rooms. Cisco's and
Active Voice's filings with the Commission also are available to the public from
commercial document-retrieval services and at the web site maintained by the
Commission at http//www.sec.gov.
INFORMATION CONCERNING PARTICIPANTS
Active Voice, its directors, executive officers and certain members of
management and employees may be soliciting proxies from Active Voice's
stockholders in favor of the adoption of the merger agreement. Information
concerning Active Voice's participants in the solicitation is set forth in its
Proxy Statement for its 2000 Annual Meeting of Stockholders. In addition, Cisco
and certain employees of Cisco, including Ammar Hanafi, Art Rangel and Eugene
Lee, may be deemed to have participated in the solicitation of proxies from
Active Voice's stockholders in favor of the adoption of the merger agreement.
Information concerning Cisco's directors and executive officers is set forth in
Cisco's Proxy Statement for its 2000 Annual Meeting of Shareholders. Messrs.
Hanafi, Rangel and Lee are Vice Presidents of Cisco.
BENEFITS OF MERGER TO ACTIVE VOICE OFFICERS AND DIRECTORS
Officers and directors of Active Voice will receive accelerated vesting of their
stock options in connection with the merger. A description of these benefits is
contained in the Active Voice Proxy Statement for its 2000 Annual Meeting of
Stockholders. In addition, certain officers of Active Voice, as a condition to
the closing of the merger, will enter into employment and non-competition
agreements with Cisco that will become effective upon completion of the merger.
Certain officers of Active Voice will receive bonuses as a result of the merger.
A description of the employment agreements and bonuses will be contained in the
Registration Statement and the Proxy Statement/Prospectus under the caption
"Interests of Active Voice Directors, Officers and Affiliates in the Merger." In
addition certain officers and directors of Active Voice will purchase certain
assets from Active Voice and receive certain payments relating thereto following
the closing of the Merger. A description of this transaction will also be set
forth in the Proxy Statement/Prospectus.