Oak Technology To Acquire Pixel Magic; Pixel Magic's strengths in image processing technology will allow Oak to penetrate emerging digital office equipment market

Business Wire, Oct 30, 1995

SUNNYVALE, Calif.--(BUSINESS WIRE)--October 30, 1995--Oak Technology (NASDAQ: OAKT), a leading supplier of multimedia silicon and software today announced that it has entered into a definitive agreement to acquire Pixel Magic, a leader in image processing technology.

The privately-held company based in Andover, Massachusetts, is to be purchased by Oak, subject to certain closing conditions, for $10.5M cash, of which $5M is contingent upon the achievement of certain performance criteria over a three year period. Oak management expects the transaction to close during November. In connection with this acquisition, the Company anticipates that it will incur a one-time write-off of in-process research and development of between $4.5M to $5M in the quarter ended December 31, 1995.

Pixel Magic's strengths in compression and image enhancement technology are expected to play a key role in the new generation of digital office equipment. There is a great deal of commonality between the underlying imaging technologies found in digital office equipment and those found in the traditional multimedia applications Oak has been focusing on to date. The acquisition will enable Oak to leverage its existing imaging, MPEG and video/graphics technologies into the digital office market.

"Pixel Magic's products and technology are an excellent complement to Oak's existing imaging products. This acquisition will allow Oak to accelerate its penetration of the emerging digital office equipment market and significantly broaden the set of solutions we can offer to office equipment vendors targeting the business environment," stated David Tsang, President and Chief Executive Officer of Oak. "Our goal is to become the dominant supplier of silicon and software solutions for the digital office equipment market as we now are in the CD-ROM controller market," Tsang added.

"Oak's excellent sales channels, especially in Japan, strong manufacturing infrastructure, complementary product technology, and financial strength will allow Pixel Magic to bring its products to market faster and at a lower cost than we could have done on our own. We are delighted to join the Oak team," said Peter Besen, President of Pixel Magic.

Pixel Magic

Pixel Magic's PM-2 Jaguar is the first multi-standard image processor to implement the CCITT standard JBIG (Joint Bi-level Imaging Experts Group) compression algorithm. Using JBIG, OEMs can design office equipment products which are 40% to 200% more efficient than systems based on more traditional technology. These efficiencies directly translate into reduced image storage and transmission costs as well as lower network bandwidth requirements. In addition, JBIG allows internal memory requirements to be substantially reduced, dramatically reducing system cost. Future products include programmable high-performance image processors and JPEG (Joint Photographic Experts Group) processors.

Applications for these products include scanners, printers, digital copiers, fax machines, optical storage systems, video capture/editing systems, and digital cameras as well as the fast growing market for multi-function peripherals (MFP).

Founded in 1991, Pixel Magic sells integrated circuits, image processing boards, and supporting software to OEMs worldwide. Its customers include Cornerstone, Fujitsu, Minolta, Ricoh, Xerox, and Xionics.

Oak Technology

Oak Technology supplies high-performance multimedia semiconductors and related software to the personal computer, PC peripheral and consumer electronics industries. The company is currently the world's largest merchant supplier of CD-ROM controllers.

CONTACT: Miller/Shandwick Technologies

Staci Sheppard/Jeff Lettes, 415/962-9550

ssheppard@millerwest.com

jlettes@millerwest.com

or

Oak Technology

Scott Alberts, 408/523-6539

scotta@oaktech.com

or

Pixel Magic

Don Shulsinger, 508/688-4410

shulsinger@pixelmagic.com