Quantegy Discontinues Magnetic Tape Products

Opelika, AL (January 23, 2007)--Yesterday, Quantegy Recording Solutions officially announced the discontinuation of its various magnetic tape product lines. These tape lines include Quantegy's well-known audio formulations GP9, 499, 467, 456/457, 406/407/408, 600 Series, ADAT and DAT. Though the discontinuation process will begin immediately, orders will be accepted through February 28, 2007. Production of the lines to be discontinued will cease upon fulfillment of final orders. Looking to the future, Quantegy will center its focus on research and development of new technology, such as its FHD and Black Diamond family of hard drive solutions, to better serve its primary markets.
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Opelika, AL (January 23, 2007)--Yesterday, Quantegy Recording Solutions officially announced the discontinuation of its various magnetic tape product lines. These tape lines include Quantegy's well-known audio formulations GP9, 499, 467, 456/457, 406/407/408, 600 Series, ADAT and DAT. Though the discontinuation process will begin immediately, orders will be accepted through February 28, 2007. Production of the lines to be discontinued will cease upon fulfillment of final orders. Looking to the future, Quantegy will center its focus on research and development of new technology, such as its FHD and Black Diamond family of hard drive solutions, to better serve its primary markets.

According to Josh Herron, marketing/communications for Quantegy Recording Solutions: "Eventually, we will discontinue production on all audio tape formulations. We are currently ramping down the production based on the demand for each product, and are scheduling new production based on the orders we receive by Feb. 28."

A letter from Frank Foster, Quantegy's Chief Operating Officer, further explains, "Today, the same technological forces that brought us magnetic tape have in turn brought us new technologies that have supplanted many of the markets Quantegy Recording Solutions once served. The net result of this technology shift is the decline in the demand for magnetic tape in these professional markets. Quantegy Recording Solutions' tape manufacturing facility is a large, complex operation that requires certain minimum volumes of production to cover the day-to-day operating costs. As industry-wide demand has fallen, Quantegy and its supplier base have had to adapt to provide the level of service and quality that Quantegy's customers have come to expect. These volume requirements are necessary to maintain raw material viability and pricing. As volumes decline, it becomes economically more difficult to produce products at a price and quality level that is acceptable to our customers.

"It is our desire to provide Quantegy's customers with an opportunity to make final purchases of these items thereby covering both current and future demands. But to do so, Quantegy must ensure the cost of production is adequately covered during this period, thus requiring immediate modification to our pricing and freight terms as noted on the attached price list. We will accept orders for these items through February 28, 2007 with the intention of fulfilling those orders by the end of April 2007. All customers are encouraged to place final orders as soon as possible to secure allocation of limited production time for this make-to-order period."

Foster continued, "Obviously, as a company, we have very mixed emotions concerning this decision. On one hand, the company has played a defining role in the development and growth of this industry, which has such a loyal following, and we have made many great friends along the way. On the other hand, we have to face the current role that tape plays in the industry. We believe the best way to honor Quantegy's tradition and history is to produce the highest quality magnetic tape products today while bringing you new solutions for tomorrow. On this note, the company has begun to leverage its knowledge of the markets it serves to bring its customers new products to build a platform for the future."

As far as what will become of the extensive manufacturing equipment in Quantegy's large Opelika, AL facility, Herron added, "We are and will evaluate future coated media opportunities, but some equipment will be decommissioned and available for sale based on timing of discontinued production. Any interested parties can contact Quantegy or myself directly for more information on purchasing any assets that may become available."

He also noted that, "Currently, no staffing changes are planned. We are evaluating resources and requirements for future product production, and currently all resources and staff are being utilized for production based on demand of discontinued/current items and timing of orders placed. Currently, no management changes are planned." That being said, Peter Hutt, Quantegy's former president and still a shareholder, has not been involved with the company's daily operation since just after the AES Convention in October.

Again, to ensure timely delivery, Quantegy customers should place orders as soon as possible. For more information, please contact Quantegy Recording Solutions via the contact information above, or toll free: 800-752-0732. Future updates and more details can be found at the Quantegy web site: www.quantegy.com.