Features - Financial Plays Of The Week:

QUANTUM SPINS OFF NAS ASSETS TO FORM SNAP APPLIANCE INC

Quantum Corp, a leading provider of data protection systems, has announced that it has signed a definitive agreement to spin off certain assets related to its Network Attached Storage (NAS) business to help form a new company, Snap Appliance Inc. This strategic move enables Snap Appliance Inc to leverage Quantum's existing leadership in NAS through Quantum's Snap Server and GuardianT product families while allowing Quantum's Storage Solutions Group to focus exclusively on data protection.

Under the terms of the agreement, Snap Appliance Inc will purchase Quantum's NAS assets for an aggregate purchase price of $11.3 million, including a minority equity interest, and will offer employment to a substantial number of Quantum NAS employees. In addition, Quantum has the option to receive up to $1.9 million in additional consideration in connection with future financings. The new company will combine these assets and key talent with next generation software technology from privately held Broadband Storage and will be led by key storage industry executives. Other investors in the new company include Moore Capital Management and Mellon Ventures Inc, an affiliate of Mellon Financial Corporation. The transaction is expected to close by the end of the month.

"The formation of Snap Appliance Inc is an important step for the Storage Solutions Group as it will enable us to devote all of our resources to our data protection strategy, while at the same time positioning Snap Appliance Inc to be a clear leader in the NAS market," said Larry Orecklin, president of Quantum's Storage Solutions Group. "Quantum will also partner with Snap Appliance Inc to integrate product offerings and work together on future market opportunities. Our customers will benefit from better NAS and data protection solutions, and our partnership will allow us to work hand-in-hand with a focused development team on complementary and simplified storage solutions."

"Snap Appliance Inc will stand as a powerful combination of essential ingredients from key industry partners," said Eric Kelly, president and CEO of Snap Appliance Inc. "Snap Appliance Inc will leverage the Snap brand and leadership position as the foundation for delivering simplified storage solutions. Equally important, Snap Appliance Inc and Quantum will work together strategically to drive ongoing value creation across the two businesses."

Distribution, Service and Support

Snap Server and Guardian server families will continue to be available through targeted distributor and reseller channels in North America. To ensure that existing channel partners can continue to sell these products without interruption, Quantum will work with them and Snap Appliance Inc to provide for a seamless transition.

Snap Appliance Inc and Quantum will continue to provide warranty and technical services for all current Quantum NAS customers worldwide.

Part of Quantum's Broader Restructuring Actions

This announcement is a major component of the second phase of Quantum's two-phased restructuring plan, which was announced on September 9 and is intended to reduce costs and drive profitability. Further information about this second phase and the Snap Appliance Inc transaction will be provided when Quantum announces its fiscal second quarter earnings later this month.

About Quantum

Quantum Corp, founded in 1980, is a global leader in data protection systems, meeting the needs of business customers with enterprise-wide storage solutions and services. Quantum isone of the world's largest suppliers of tape drives, and its DLTtapeT technology is the standard for backup, archiving, and recovery of mission-critical data. Quantum is a leader in the design, manufacture and service of automated tape libraries used to manage, store and transfer data. This year, the company expanded into the area of disk-based backup, with a solution that emulates a tape library and is optimized for data protection. Quantum sales for the fiscal year ending March 31, 2002, were approximately $1.1 billion. Quantum Corp, 501 Sycamore Dr., Milpitas, CA 95035, 408-944-4000, www.quantum.com/.