Verilink Acquires DACS and Edge Concentrator Product Lines From

Verilink Acquires DACS and Edge Concentrator Product Lines From Zhone 
Acquisition of ArcaDACS 100/Sechtor 300 Expands Verilink's Reach to
the Network Edge; Provides Continuity With Verilink's Largest
Customer and Improves Gross Margin 
CENTENNIAL, CO -- (MARKET WIRE) -- 10/03/05 --  Verilink Corporation
(NASDAQ: VRLK), a leading provider of broadband access solutions,
today announced the acquisition of the ArcaDACS(TM) 100  Digital
Access Cross-Connect System (DACS) and the Sechtor(R) 300
Multiservice Edge Concentrator product lines from Zhone Technologies,
Inc. (NASDAQ: ZHNE). 
The all-stock transaction, which closed on September 30, 2005,
follows a successful three-year OEM relationship with Zhone under
which Verilink has marketed, sold and supported the ArcaDACS 100. The
ArcaDACS 100 is being deployed by Verilink's largest customer, the
largest domestic ILEC, as part of a fully managed voice and data
bundled T1 service intended for small- to mid-sized businesses in the
U.S. Through this asset acquisition, Verilink gains all rights and
interests in the ArcaDACS 100 and Sechtor 300 products, including
rights to the product designs and all associated intellectual
property, saleable inventory, existing customer contracts, as well as
future manufacturing rights.  No employees were included in this
acquisition. 
"This acquisition is strategic to Verilink as the ArcaDACS is an
integral part of the solution we provide to our largest customer, and
we look forward to enhancing our value to all customers including
those gained through this agreement," said Leigh S. Belden, President
and CEO of Verilink.  "This acquisition also complements the margin
improvement initiatives that we launched in recent quarters.
Structured as an all-stock transaction, the terms were attractive
from an ROI and balance sheet perspective when combined with the
saleable inventory we gained through this transaction." 
Mory Ejabat, Chairman and CEO of Zhone, said, "We are pleased that
Verilink has chosen to include the ArcaDACS and Sechtor 300 products
in its family of telecommunications product portfolio. With this
transaction, our customers benefit from continued sales of these
products as well as from Verilink's experience in servicing these
products at its largest customers." 
The ArcaDACS 100 is a new generation 3/1/0 DACS product designed to
consolidate and groom circuits to increase trunk efficiency. The
Sechtor 300, a combines the DACS functionality of the ArcaDACS 100
with GR-303 voice concentration and to further increase trunk
efficiencies and enable voice over-subscription services between the
edge access network and the serving office equipment. 
The ArcaDACS 100 and Sechtor 300 products are ideally suited for
grooming fractional T1s at the network access facility, allowing
carriers to choose switching granularity from DS3 down to DS0, all in
one efficient, effective, and economical platform. The ArcaDACS 100
and Sechtor 300 are OSMINE-certified and Network Equipment Building
Standard (NEBS) Level-3 compliant. Both are carrier-class products
designed to deliver reliable 99.999% service with no
single-point-of-failure. The products also comply with all physical,
power, and software requirements needed for installation in a central
office, remote node, or customer site. 
As an important component of this deployment, both the ArcaDACS 100
and Sechtor 300 have completed the OSMINE Services certification
process for Telcordia(TM) Network Configuration Manager (NCON) and
Telcordia(TM) Loop Facilities Assignment and Control System (LFACS)
support. This certification helps to ensure operations systems
automation to deliver services in a timely fashion and on a volume
basis. Customers also will benefit from improved billing, ordering,
repair and account management services. 
The OSMINE services process is an important aspect of a carrier's
service offering. The completion of the OSMINE services process allows
carriers to pre-qualify the ordering, circuit engineering and
provisioning of the service. This flow-through integration reduces
provisioning intervals and associated costs. The result for the
subscriber is quicker turn-up of service. 
"Building on our strong IAD and CPE portfolio, with the addition of
the ArcaDACS 100 and Sechtor 300 product lines, we have expanded our
market position to encompass both the customer premise and the network
edge and improved our competitive position with all carriers," Belden
added. 
Notice Under Nasdaq Rule 4350(b) 
Verilink filed its Annual Report on Form 10-K for the fiscal year
ended July 1, 2005 with the Securities and Exchange Commission on
September 27, 2005.  As required under Nasdaq Rule 4350(b), Verilink
is providing notice that the report of Ehrhardt Keefe Steiner &
Hottman PC , Verilink's registered independent public accounting
firm, on Verilink's financial statements as of July 1, 2005 contains
an explanatory paragraph, which refers to our working capital
deficiency, operating loss, and negative cash flow and notes that
these matters raise substantial doubt about Verilink's ability to
continue as a going concern. 
Verilink has initiated several actions that are intended to address
the issues cited in the auditors opinion. Although no such assurance
can be given, Management believes that our cash and cash equivalents,
anticipated cash flow from operations and anticipated proceeds from
the sale of the facility located at 950 Explorer Boulevard,
Huntsville, Alabama will be sufficient to fund our operations through
the next twelve months. 
For additional information, see Verilink's Annual Report on Form
10-K, which is available from the SEC's website at http://www.sec.gov
or the "News" or "Investor" section of Verilink's website at
http://www.verilink.com.  The information in this release and our
Annual Report on Form 10-K on file with the Securities and Exchange
Commission supersedes the information in our July 28, 2004 press
release. 
About Verilink Corporation 
Verilink Corporation (NASDAQ: VRLK) is a leading provider of
next-generation broadband access solutions for today's and tomorrow's
networks. The company develops, manufactures and markets a broad
suite of products that enable carriers (ILECs, CLECs, IXCs, and IOCs)
and enterprises to build converged access networks to cost-effectively
deliver next-generation communications services to their end
customers. The company's products include a complete line of VoIP,
VoATM, VoDSL and TDM-based integrated access devices (IADs), optical
access products, wire-speed routers, and bandwidth aggregation
solutions including CSU/DSUs, multiplexers and DACS. The company also
provides turnkey professional services to help carriers plan, manage
and accelerate the deployment of new services. Verilink is
headquartered in Centennial, CO (metro Denver area), with operations
in Madison, AL, and Newark, CA, and sales offices in the U.S., Europe
and Asia. To learn more about Verilink, visit the company's website
at http://www.verilink.com. 
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995 
Except for the historical information contained herein, the matters
set forth in this press release, including the statements as to value
enhancement to customers as a result of the acquisition and
sufficient cash flow to fund operations through the next twelve
months, are forward-looking statements within the meaning of the
"safe harbor" provisions of the Private Securities Litigation Reform
Act of 1995.  These forward-looking statements are subject to risks
and uncertainties that may cause actual results to differ materially,
including, but not limited to, the ability of Verilink to implement
cost reductions and adjust spending levels, and to sell Verilink's
Explorer Boulevard facility, risks associated with Verilink's working
capital deficiency, operating loss, and negative cash flow and "going
concern" explanatory paragraph in the auditor's report and the
ability to successfully integrate acquisitions and achieve expected
synergies. 
A detailed discussion of these and other risks and uncertainties that
could cause actual results and events to differ materially from such
forward-looking statements are included in Verilink's most recent
Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. These
forward-looking statements speak only as of the date hereof. Verilink
disclaims any intention or obligation to update or revise any
forward-looking statements. 
Verilink and the Verilink logo are registered trademarks of Verilink
Corporation.  All other trademarks or registered trademarks are the
property of the respective owners. 
Contact:
Gary W. Gray
Verilink Corporation
510.771.3354
Contact via http://www.marketwire.com/mw/emailprcntct?id=8AD619F3845927F1 
Provider ID: 05096827
 
 
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