ADVISORY/Additional Information Regarding Earlier News Release, Echelon to Acquire BeAtHome.

News/Business Editors & High-Tech Writers

CES 2002

ADVISORY...

SAN JOSE, Calif.--(BUSINESS WIRE)--Jan. 8, 2002

Echelon Corporation (Nasdaq:ELON) is supplying the following additional information in the form of a Question & Answer to supplement information provided previously in a press release titled, "Echelon to Acquire BeAtHome."

Q1. What is the primary advantage in combining the technologies of Echelon and BeAtHome?

A1. Echelon's core strength is in networking and managing everyday devices in commercial building, industrial, transportation, or home environments. Once intelligently connected, these smart devices can reduce installation, operation, and life-cycle costs and deliver enhanced security, safety, energy efficiency, reliability, and other valuable services.

We believe that BeAtHome could add important complementary skills, technologies, and products to this offering. BeAtHome offers an award-winning, easy-to-use services infrastructure that provides the flexibility, scalability and power needed by service operators such as utilities, energy services companies, and manufacturers to manage, control, and gather information from remote devices, buildings, homes, and plants. When combined with the industry-leading networking products that Echelon already offers, we believe that the BeAtHome platform could provide a powerful tool that could, in time, speed the deployment of remote LonWorks(R) based monitoring and control solutions to utilities, homes, and businesses worldwide and could create new on-going revenue opportunities for the combined company.

Q2. What are examples of service applications that the new Echelon/BeAtHome platform will deliver?

A2. At this time, we are not announcing any specific plans. However, both companies are highly focused on energy management, remote device and system monitoring and management, and remote facility/factory management applications.

An example might be an end-to-end energy management service that optimizes energy supply to a building by supplying energy at the lowest available cost in real-time and which also minimizes energy consumption by controlling high energy use devices such as boilers and chillers.

Another example might be applications that allow companies with many customers using LonWorks networks to drive down operating costs and increase customer satisfaction by accessing those networks from central service centers and analyzing usage data, failure rates, energy consumption, up-time, and the like.

Q3. Will this acquisition have any impact on the shipment of the award-winning BeAtHome Energy Management Solution?

A3. At this time, we are not announcing any specific plans. What is clear, however, is that both Echelon and BeAtHome are highly focused on utility-driven energy management solutions. Check the Echelon web site for information as it becomes available.

Q4. What does the acquisition mean to the current BeAtHome Channel Partners?

A4. At this time, we are not in a position to definitively answer that question.

Q5. Is BeAtHome adding new Sales Partners?

A5. At this time, BeAtHome will not be adding any additional Sales Partners.

Q6. Will the BeAtHome System continue to be sold as a BeAtHome-branded solution?

A6. We are still developing our plans. Any new product announcements will be posted to our web site.

Q7. What will happen to the BeAtHome customer base after the acquisition by Echelon?

A7. We will continue serving the BeAtHome customers with the high level of service they have always been offered. In fact, these customers can rest easy knowing that BeAtHome products are backed by a world-class company focused on bringing new technology to homes and businesses.

Q8. BeAtHome currently supports multiple protocols such as X10 and ITI's Radio Frequency products. Will it continue to support these?

A8. We are still developing our plans. Any new product announcements will be posted to our web site.

Echelon and the OEM suppliers of LonWorks enabled products represent a broad range of world-class products. BeAtHome is already working to incorporate some of these devices into its software platform in order to offer solutions that represent functionality, reliability and capabilities unparallel in the industry today.

We have recently seen the introduction of some exciting new LonWorks based lighting and HVAC products from companies like HalenSmart and RCS into the U.S. retrofit market. These devices offer the enhanced reliability of LonWorks networks over power line, while maintaining a low price point.

Q9. When will the BeAtHome System begin supporting LonWorks devices?

A9. We are not announcing any product plans at this time. However, this week at the 2002 Consumer Electronics Show, BeAtHome is showing a LonWorks enabled prototype of the BeAtHome appliance that communicates over the power lines with low-cost LonWorks powered lighting control modules from HalenSmart.

Q10. In what ways does the BeAtHome System manage energy?

A10. Today, the BeAtHome System saves residential energy consumption through managing lights, heating, cooling and home appliances. Primarily, it saves energy through demand curtailment. Through their utility pilots, this curtailment is being taken to new levels, for example, permission-based macros run by the utility in a consumer's home allows utilities to reduce energy usage spikes and lower energy prices.

Q11. What is the impact on Echelon's earnings?

A11. This acquisition will be accounted for as a purchase. Taking into account the amortization of non-goodwill related intangibles as well as all other acquisition related costs required to be expensed under GAAP, the Company expects the acquisition to reduce Echelon's first quarter earnings by 2 to 3 cents per share and to reduce full year earnings by 8 to 10 cents per share.

Q12. Why do this/What does it bring/What's new?

A12. We believe that BeAtHome could add important complementary skills, technologies, and products to Echelon's product and technology portfolio. BeAtHome offers an award-winning, easy-to-use services infrastructure that provides the flexibility, scalability and power that service operators, such as utilities, energy services companies, or manufacturers, need to manage, control, and gather information from devices in a number of homes, buildings, or other remote sites.

When combined with the industry-leading networking products that Echelon already offers, we believe that the BeAtHome platform could provide a powerful tool that could speed the deployment of remote LonWorks based monitoring and control solutions to utilities, homes, and business worldwide and could create new on-going revenue opportunities for the combined company.

Q13. Why BeAtHome?

A13. We believe that BeAtHome's technology, much like our own, achieves a rare combination of flexibility, power, scalability, and ease of use. The many awards that BeAtHome has won are testament to its accomplishments and set it apart from its competition.

When combined with the industry-leading networking products that Echelon already offers, we believe that the BeAtHome platform could provide a powerful tool that could speed the deployment of remote LonWorks based monitoring and control solutions to utilities, homes, and business worldwide and could create new on-going revenue opportunities for the combined company.

Q14. When will it affect Echelon's business?

A14. We believe that the addition of BeAtHome's technology to Echelon's product portfolio represents a new and large, longer-term revenue opportunity. The exact timing and rate of any effect is a function of when we can bring integrated products to market, which we will not know until the acquisition has closed and our development and marketing teams have completed their detailed integration plans. Additionally, since we anticipate that BeAtHome's products will blend into Echelon's existing core product offerings, we do not expect to offer separate guidance for BeAtHome's products. That is, in the future we expect that any impact from the BeAtHome acquisition would be included in our guidance for our core business.

Q15. How will it affect Echelon's business?

A15. We believe that the addition of BeAtHome's technology to Echelon's product portfolio could contribute to our business in two ways.

First, we believe that the integration of BeAtHome's technology with ours will speed the deployment of remote LonWorks based monitoring and control solutions to utilities, homes, and business worldwide. While our customers can build a system like BeAtHome's on top of the tools that Echelon provides today, to do so takes time and money -- and for some customers requires skills that they do not have in house. With the integration of BeAtHome's platform into our product line, we expect to greatly reduce -- and perhaps even eliminate -- much of the development task needed to deploy systems that manage, control, and gather information from devices in a number of homes, buildings, or other remote sites. This should enable our customers to deploy such systems more quickly and at lower cost.

Additionally, we expect this software platform to create, in time, new on-going longer-term revenue opportunities for the combined company.

Q16. Is there a demand for this from your customer base?

A16. We believe that there is a large -- and growing -- demand from businesses to integrate the information from control devices into their businesses to lower costs, increase revenue, and offer increased comfort and conveniences, etc. Certainly we see our customers beginning to offer such services today. With the BeAtHome system integrated into LonWorks technology, we believe that this trend could accelerate.

Q17. How will BeAtHome be integrated into Echelon?

A17. The BeAtHome organization will report to our president.

Q18. Are any layoffs anticipated as a result of this announcement?

A18. While there are some administrative redundancies, given that the two companies are in different but complementary businesses, we expect there to be very little overlap between the two work forces.

This document may contain statements relating to future plans, events or performance. Such statements may involve risks and uncertainties, including risks associated with uncertainties pertaining to obtaining approvals for and satisfying conditions to the consummation of the acquisition of BeAtHome, the successful integration of Echelon and BeAtHome's technology, products and services, the timing and level of customer orders, demand for products and services, development of markets for Echelon's products and services, and other risks identified in Echelon's SEC filings. Actual results, effect on earnings, events and performance may differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Echelon undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.