Terayon to Acquire Mainsail Networks

Acquisition Adds Access Platform that Interconnects Copper and Fiber Optic Networks

SANTA CLARA, Calif., Aug. 1 /PRNewswire/ -- Terayon Communication Systems, Inc. (Nasdaq: TERN), a leading supplier of broadband network systems, today announced a definitive agreement to acquire Mainsail Networks, Inc. for 3.2 million shares of Terayon common stock. Based in Fremont, California, Mainsail Networks is a privately held company that designs, develops and markets integrated access solutions for next-generation broadband networks.

"The acquisition of Mainsail is a strategic addition to our broadband portfolio, representing Terayon's expansion in the access infrastructure and optical transport markets,'' said Zaki Rakib, Chief Executive Officer of Terayon. "In order to keep pace with the increased consumer demand for broadband capability, carriers are demanding systems that support advanced voice and data transmission between copper networks and fiber optic networks. Mainsail's cost-efficient, integrated platform provides versatility for the next generation of voice, data and video services.''

Mainsail's products enable telecommunications carriers to deliver multiple services over a single network infrastructure, significantly reducing operational complexity and cost of ownership of broadband networks. Complementing Terayon's current array of broadband access solutions, Mainsail's products address the needs of CLECs (competitive local exchange carriers), ILECs (incumbent local exchange carriers), and IXCs (inter-exchange carriers).

The acquisition will be accounted for as a purchase and is expected to close in early fourth quarter of Terayon's fiscal year 2000. This acquisition has been approved by Terayon's board of directors and is subject to various closing conditions.

About Mainsail Networks

Founded in 1997, Mainsail Networks is a privately held California-based company that designs, develops and markets integrated multiservice access solutions for next-generation optical networks. Mainsail Networks pioneered the concept of Multi-Service Optical Network, enabling carriers to provision data and voice TDM, ATM and IP services over optical networks. Mainsail's next-generation access platform incorporates the functions of multiple networking devices into a single integrated system. Mainsail may be found on the web at www.mainsailnet.com.

About Terayon

Terayon Communication Systems provides innovative broadband access systems for delivering advanced voice, data and video services over cable, DSL and satellite networks. The company's broadband systems are deployed by the world's leading cable and telecommunications carriers. Terayon, headquartered in Santa Clara, California, has sales and support offices worldwide, and is traded on the NASDAQ under the symbol TERN. Terayon can be found on the web at www.terayon.com.