Adaptec Responds to Steel Partners' Public Statements

Urges Stockholders to Reject Minority Stockholder’s Proposals by Signing the GOLD Consent Revocation Card

• Press Release
• Source: Adaptec, Inc.
• On 3:00 pm EDT, Friday October 30, 2009

MILPITAS, Calif.--(BUSINESS WIRE)--Adaptec, Inc. (NASDAQ:ADPT - News), the global leader in I/O innovation, today responded to a news release issued Oct. 29 by Steel Partners II LP.

Related Quotes

Symbol	Price	Change
ADPT	3.15	-0.02

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“In claiming the Board’s independent financial advisor has called for ‘selling the business operations,’ Steel has once again attempted to shade the truth. The advisor made no such recommendation, and in fact has yet to present an analysis of the best ways to create value for stockholders,” said Joseph S. Kennedy, Adaptec’s Board Chairman. “This misrepresentation typifies Steel’s campaign, which has offered up creative distortions in press releases at the expense of presenting a clear vision of prudent strategies to create value for stockholders.

“Steel’s distortion relates to the Board’s strategic review process. The Board asked its advisor to evaluate a number of alternatives, a subset of which were alternatives for separating the Company’s assets, ranging from a spin-off to a split of the corporation into multiple entities. The advisor found that, within that subset of alternatives, a sale was the best – but the advisor did not compare the separation of assets against other alternatives, nor did the advisor determine that a sale of the business was the best way to create value for stockholders. The advisor is also considering other scenarios outside of that subset,” added Mr. Kennedy.

“While the Board majority is open to all options to maximize value, and has tried on several occasions over the years to find buyers for the business, the Board recognizes that the success of such strategic actions depends on timing to get the best value,” he noted. “In the meantime, the Board majority is committed to a significant cash dividend to stockholders after taking into account Adaptec’s needs for working capital and for other strategic opportunities. A cash dividend is an alternative Steel has consistently resisted.

“Steel’s vague plan suggests value-destroying approaches similar to those followed by CoSine Communications, of which Steel has been an investor at least since 2005. The Company ceased its technology customer service operations in 2006 and has been pursing an ‘opportunistic, value-focused investment strategy and is not targeting any specific industries.’ To date, CoSine has made no acquisition nor has it returned cash to stockholders, as would be the case in a properly structured SPAC (Special Purpose Acquisition Company). CoSine now trades on the Pink Sheets at a current market value that is slightly less than the value of its cash and cash equivalents,” he added.

In response to Steel’s comments on Adaptec’s quarterly results, Mary Dotz, Chief Financial Officer, said:

“Our results, excluding one-time costs relating to Steel’s consent solicitation, were in line with the operating plan that was approved by the Board – including by Steel’s representatives. The results we believe underscore our strong financial foundation and demonstrate the rising acceptance of Adaptec’s new products, which have now grown to account for 48% of our revenues and are close to outrunning the decline of our legacy revenues.

“While Steel confuses the issue by citing projections of our cash burn that are based on GAAP numbers, which include non-cash and one-time charges, we generated close to $5 million in cash from our operations last quarter. Our plan projects a positive cash flow from operations this year and a modest operating cash burn in the next fiscal year, excluding the impact of the Board’s decision to declare a cash dividend,” she added.

About Adaptec

Adaptec provides innovative data center I/O solutions that protect, accelerate, optimize, and condition data in today's most demanding data center environments. Adaptec products are used in IT environments ranging from traditional enterprise environments to fast-growing, on-demand cloud computing data centers. The company's products enable data center managers, channel partners and OEMs to deploy best-in-class storage solutions to meet their customers' evolving IT and business requirements. Around the world, leading corporations, government organizations, and medium and small businesses trust Adaptec technology. More information is available at www.adaptec.com, on its blog, storageadvisors.adaptec.com, and at adaptec.com/facebook and twitter.com/Adaptec_Inc.

Cautionary Statement

This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, are statements that could be deemed to be forward-looking statements, including but not limited to statements related to: Adaptec's new products may outrun the decline of the company’s legacy product revenues; and the company’s cash flow projections. Adaptec cautions that a variety of factors, including but not limited to the following, could cause results to differ materially from those expressed or implied in the forward-looking statements: continued or increased economic weakness and declines in customer spending; the potential failure of anticipated long-term benefits from new products to materialize; the potential impact of adverse changes in the global credit markets; the impact of industry technology transitions; fluctuating operating results; and other risks detailed from time to time in filings Adaptec makes with the SEC, including in the section entitled “Risk Factors” in its latest Annual Report on Form 10-K and Quarterly Report on Form 10-Q.

Important Notice Regarding Availability of Consent Revocation Materials

The Consent Revocation Statement and the Additional Solicitation Materials are available free of charge at www.adaptec.com/investor/proxy.

Stockholders may also contact Georgeson Inc. with questions or requests for additional copies of the consent revocation materials by calling toll free at (800) 223-2064.

The Abernathy MacGregor Group (Media)
Tom Johnson, 212-371-5999
Ian Campbell and Jim Lucas, 213-630-6550
or
Georgeson (Investors)
800-223-2064
adaptecinfo@georgeson.com