SAN JOSE, Calif., February 20, 2004 - Cisco Systems, Inc., today announced it has completed the acquisition of privately held Andiamo Systems, Inc. of San Jose, California. On August 20, 2002, Cisco announced the definitive agreement to acquire Andiamo, a leading developer of intelligent storage switching products for the Storage Area Networking (SAN) market. Andiamo's team and products have established Cisco as a key innovator in the SAN switch space by delivering the industry's first family of intelligent SAN switches and driving new standards in storage networking.
"Andiamo is an excellent example of how Cisco creates value for customers and shareholders through innovation," said John Chambers, president and CEO of Cisco Systems. "We are proud of the success Andiamo's products have had in the market. The integration of this successful partnership marks our continued commitment to delivering leading SAN and data networking technologies and intelligent network services, combined with storage services from Cisco and our storage partners."
In 2001, Cisco entered into agreements with Andiamo under which Cisco was granted the right to acquire Andiamo, as previously disclosed in Cisco's previous 10-Q filings with the SEC. As of today, shares of Cisco common stock have been exchanged for all outstanding shares and options of Andiamo not already owned by Cisco.
The purchase price paid to Andiamo was approximately $750 million net of Cisco's ownership and certain adjustments. Cisco previously owned 44 percent of Andiamo. Specifics will be detailed in Cisco's 10Q filing for the period ending May 1, 2004.
The Andiamo transaction has been accounted for by Cisco under the Financial Accounting Standards Board Interpretation No. 46 (R) "Consolidation of Variable Interest Entities". Consequently, Cisco has already expensed the majority of the Andiamo purchase price as stock compensation as discussed in Cisco's Q2 FY2004 earnings announcement on February 3, 2004. As of the close of this transaction, Cisco has recorded a stock compensation charge of approximately $58 million as operating expense and will also record on its balance sheet deferred stock compensation of approximately $95 million.
Cisco and Andiamo have shared a similar vision of delivering innovative, market leading solutions that meet customers' evolving business needs. Since its formation, Andiamo has focused on delivering solutions that extend Cisco's capabilities into the SAN switching market while also complementing Cisco's existing businesses, such as LAN switching, routing, security, content, and optical networking solutions for the data center. Andiamo has utilized Cisco technology and data networking concepts to introduce the same innovations to storage networking as Cisco has delivered in data networking.
Andiamo was founded in January 2001 and has 317 employees. The employees of Andiamo will join Cisco's Internet Switching Business Unit led by Luca Cafiero. Buck Gee, former CEO of Andiamo, will drive integration efforts and head on-going operations. Cisco will maintain its focused efforts in the dynamic, high growth storage networking market space while continuing to share complementary innovations across technology groups.