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ZITEL CORP. AND CHI SYSTEMS ANNOUNCE INTENT TO MERGE

 ZITEL CORP. AND CHI SYSTEMS ANNOUNCE INTENT TO MERGE
 MILPITAS, Calif., Sept. 18 /PRNewswire/ -- Zitel Corp. (NASDAQ: ZITL) and CHI Systems Inc. announced today that they have reached an agreement in principle for Zitel's acquisition of CHI Systems in a pooling of interest transaction. CHI Systems Inc., a privately held corporation located in Pleasanton, is a leader in the ANSI X3T9.3 HIPPI technology, providing intelligent interfaces and support software for high-speed data acquisition, communication and storage applications. Revenues for CHI Systems fiscal year ending Feb. 29, 1992, were approximately $2.5 million.
 Craig A. Humphreys, president of CHI Systems said, "CHI Systems has a wealth of high-speed connectivity and network protocol technologies. Zitel has substantial financial, manufacturing and distribution resources, along with critical storage technologies. Combined we can become a leading producer of gigabit-performance connectivity and intelligent network storage products for both the computing and communications markets. These emerging technologies are being driven today by gigabit testbeds run by regional telephone operating companies."
 Jack H. King, president and chief executive officer of Zitel Corp. commented, "CHI Systems is making a significant contribution to Zitel's efforts in the government consortium on advanced storage technology at Lawrence Livermore National Laboratory where members of the computer industry have organized a collaborative research project to accelerate the development of technology for storage systems. Personnel at CHI Systems display unique skills and are highly regarded by their customers. CHI Systems' leading edge capabilities in the design of high performance HIPPI interfaces and high capacity, fast packet data transmission systems are a natural fit to Zitel's high performance storage systems."
 The transaction, which is subject to completion of documentation and corporate and regulatory approvals, is expected to be completed in late October. Financial terms of the agreement were not disclosed.
 Zitel Corp. designs, manufactures, and markets high-speed storage subsystems for various applications for Original Equipment Manufacturers (OEMs) and business end-users of standard mini-computers and mainframe computers. The company is headquartered at 630 Alder Dr., Milpitas, CA 95035.
 NOTE: Zitel is a registered trademark.
 -0- 9/18/92
 /CONTACT: Henry C. Harris, vice president of finance at Zitel Corp., 408-321-9600, ext. 205, or 800-622-5020, ext. 205 (outside of Calif.)/
 (ZITL) CO: Zitel Corp.; CHI Systems ST: California IN: CPR SU: TNM


GT -- SJ001 -- 0952 09/18/92 08:02 EDT
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Publication:PR Newswire
Date:Sep 18, 1992
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