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Quantum Corporation Reports Strong Fiscal 2010 Year-End Financial Results, With Improved Fourth Quarter Performance

Major New Disk, Tape and Software Product Introductions Provide Foundation for Growth in Fiscal Year 2011

SAN JOSE, CA, May 13, 2010 (MARKETWIRE via COMTEX) --Quantum Corp. (NYSE: QTM), the leading global specialist in backup, recovery and archive, today announced that revenue for its fiscal year 2010 (FY10), ended March 31, 2010, was $681 million, with $164 million in fiscal fourth quarter (FQ4'10) revenue. The company's FY10 GAAP gross margin rate of 41.1 percent was the highest in nine years, and the FQ4'10 GAAP gross margin rate of 40.8 percent was above 40 percent for the third consecutive quarter. Quantum generated GAAP net income of $17 million for the full year, or eight cents per basic share, with the $17 million profit representing the company's best fiscal year performance in eight years. Although Quantum reported a GAAP net loss of $4 million, or two cents per share, for the March quarter, this was a significant improvement over the comparable quarter in fiscal year 2009 (FY09).

The strength of Quantum's financial performance in FY10 is further demonstrated by the fact that the $17 million in GAAP net income included $36 million in amortization of intangibles costs, $10 million in stock-based compensation charges and $5 million in restructuring expenses, offset by only a $13 million net gain related to the retirement of convertible debt. The net impact of these four items reduced FY10 basic earnings per share by 18 cents to the company's reported 8-cent earnings per basic share. Similarly, the $4 million GAAP net loss in the March quarter included $9 million in amortization of intangibles costs and $3 million in stock-based compensation charges, reducing basic earnings per share by six cents to the reported 2-cent loss per share for the quarter.

Quantum generated $100 million in cash for the full fiscal year, with $19 million in cash from operations for FQ4'10. This strong cash generation enabled the company to pay down $62 million of its senior debt in FY10 and end the year with $117 million in total cash and cash equivalents, the highest year-end level since March 2006.

Quantum's financial results reflect a successful multi-year strategy of moving away from a more device-centric orientation to becoming a storage systems company. A key element of this strategy has been a shift from reliance on low-margin OEM revenue to driving a greater percentage of higher-margin branded business. For FY10, the company's branded business represented 74 percent of total non-royalty revenue, up from 67 percent in FY09, with an FQ4'10 branded share of 78 percent compared to 70 percent in the same period the previous year. This mix shift was one of the major factors behind the strong financial results Quantum reported today and also is the basis for the respective 16 percent and 2 percent year-over-year revenue declines for FY10 and FQ4'10, as these declines were largely due to lower OEM revenue.

"Fiscal year 2010 was a critical year in Quantum's transformation to becoming a storage systems company and providing a strong foundation for growth in the new fiscal year," said Rick Belluzzo, chairman and CEO of Quantum. "We overcame some very difficult challenges and succeeded in delivering our best financial performance in many years, introducing major new products across our portfolio, and shifting our go-to-market focus. As a result, Quantum is well-positioned to capitalize on the improved storage spending environment, on our central role in key market segments such as deduplication and high performance data management, and on channel and other partner opportunities created by changes in the competitive landscape. All of this will enable us to drive revenue growth moving forward, our top priority for fiscal year 2011."

In addition to Quantum's success in executing on its financial model, the company also continued to make progress in driving disk systems and software momentum. Inclusive of related service revenue, revenue in this product category was $95 million for FY10, and $23 million for FQ4'10. This included record branded disk systems and software revenue for the full fiscal year, with a 19 percent increase over FY09. For the March quarter, branded revenue in this product category grew 29 percent over the same period in FY09, driven by a significant increase in branded DXi(TM) sales. New DXi6500 midrange customers in FQ4'10 included a leading U.S. medical technology supplier, a global oil company's European division and a major American hydroelectric power provider. Notable DXi7500 enterprise account wins during the quarter included new business with one of the world's largest greeting card companies, a major automobile manufacturer in Asia and a top telecommunications supplier in Europe and Latin America, as well as repeat orders from leading U.S. insurance and wireless providers.

In the March quarter, Quantum also continued building on StorNext(R)'s leadership in the Media and Entertainment industry with major deals at several broadcasting companies around the world. Quantum also strengthened StorNext's foothold in other key vertical markets such as Government and Life Sciences, where some of the largest revenue contributions came from existing customers, including a national intelligence organization, a governmental geosciences agency, and a genome sequencing center.

Quantum stated that it expects its DXi and StorNext products to be a significant growth driver in fiscal year 2011. Since last October, the company has introduced two new DXi backup, deduplication and replication platforms -- the DXi6500 for midrange, NAS environments and the DXi4500 for small- and medium-size businesses and remote offices, both of which are optimized for sales through channel partners -- as well as version 4.0 of its StorNext data management software.

Complementing its disk systems and software products, Quantum also said it intends to build on its position as the worldwide leader in open systems tape automation, again leveraging products launched since last fall. These include the Scalar(R) i40 and i80 entry-level libraries and the Scalar i6000 enterprise library, as well as new LTO-5 tape drives that the company is adding to its tape automation systems.

Both the DXi4500 and Scalar i6000 were just introduced in the last six weeks, and many of the other new products only started shipping in the last three months. Although these new products have been well-received by end users and channel partners, their contribution to Quantum's revenue base is therefore still limited. As they begin to ramp in the coming months, the company expects these products to generate increasing revenue momentum and play a key role in meeting its growth objectives for fiscal year 2011.

Conference Call and Audio Webcast Notification

Quantum will hold a conference call today, May 13, 2010, at 2:00 p.m. PDT, to discuss its fiscal fourth quarter and year-end results. Press and industry analysts are invited to attend in listen-only mode. Dial-in number: (480) 629-9771 (U.S. & International). Quantum will provide a live audio webcast of the conference call beginning today, May 13, 2010, at 2:00 p.m. PDT. Site for the webcast and related information:

About Quantum

Quantum Corp. (NYSE: QTM) is the leading global storage company specializing in backup, recovery and archive. Combining focused expertise, customer-driven innovation, and platform independence, Quantum provides a comprehensive, integrated range of disk, tape, and software solutions supported by a world-class sales and service organization. This includes the DXi(tm)-Series, the first disk backup solutions to extend the power of data deduplication and replication across the distributed enterprise. As a long-standing and trusted partner, the company works closely with a broad network of resellers, OEMs and other suppliers to meet customers' evolving data protection needs. Quantum Corp., 1650 Technology Drive, Suite 800, San Jose, CA 95110, (408) 944-4000,

Quantum, the Quantum logo, StorNext and Scalar are registered trademarks of Quantum Corporation and its affiliates. DXi is a trademark of Quantum Corporation. All other trademarks are the property of their respective owners.

"Safe Harbor" Statement under the U.S. Private Securities Litigation Reform Act of 1995: This press release contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. Specifically, without limitation, statements relating to major new disk, tape and software product introductions providing a foundation for growth in fiscal year 2011, Quantum being well-positioned to capitalize on its opportunities and drive revenue growth, that Quantum expects its DXi and StorNext products to be a significant growth driver in fiscal year 2011, that Quantum intends to build on its position as the worldwide leader in open systems tape automation and that the company expects recent product introductions to generate increasing revenue momentum and play a key role in meeting its growth objectives for fiscal year 2011. More detailed information about these risk factors, and additional risk factors, are set forth in Quantum's periodic filings with the Securities and Exchange Commission, including, but not limited to, those risks and uncertainties listed in the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations - Risk Factors," in Quantum's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on February 5, 2010 and in Quantum's Annual Report on Form 10-K filed with the Securities and Exchange Commission on June 30, 2009. Quantum expressly disclaims any obligation to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

                            QUANTUM CORPORATION
                 (In thousands, except per-share amounts)
                                 Three Months Ended   Twelve Months Ended
                                --------------------  --------------------
                                March 31,  March 31,  March 31,  March 31,
                                  2010       2009       2010       2009
                                ---------  ---------  ---------  ---------
  Product                       $ 107,970  $ 111,826  $ 456,101  $ 556,484
  Service                          38,827     40,071    156,477    164,664
  Royalty                          17,654     16,226     68,849     87,824
                                ---------  ---------  ---------  ---------
    Total revenue                 164,451    168,123    681,427    808,972
Cost of Revenue:
  Product                          72,896     76,012    300,568    379,595
  Service                          24,506     31,297    100,822    125,063
                                ---------  ---------  ---------  ---------
    Total cost of revenue          97,402    107,309    401,390    504,658
                                ---------  ---------  ---------  ---------
      Gross margin                 67,049     60,814    280,037    304,314
  Operating expenses:
    Research and development       18,355     16,728     69,949     70,537
    Sales and marketing            30,410     30,244    114,612    141,250
    General and administrative     15,360     17,785     61,372     76,645
    Restructuring charges              11      2,338      4,795      6,807
    Goodwill impairment                --         --         --    339,000
                                ---------  ---------  ---------  ---------
                                   64,136     67,095    250,728    634,239
                                ---------  ---------  ---------  ---------
      Income (loss) from
       operations                   2,913     (6,281)    29,309   (329,925)
  Interest income and other, net     (540)      (462)     1,255         41
  Interest expense                 (6,116)    (5,700)   (25,515)   (29,261)
  Gain on debt extinguishment,
   net of costs                        --         --     12,859         --
                                ---------  ---------  ---------  ---------
      Income (loss) before
       income taxes                (3,743)   (12,443)    17,908   (359,145)
  Income tax provision (benefit)      622       (557)     1,274       (881)
                                ---------  ---------  ---------  ---------
        Net income (loss)       $  (4,365) $ (11,886) $  16,634  $(358,264)
                                =========  =========  =========  =========
  Net income (loss) per share:
    Basic                       $   (0.02) $   (0.05) $    0.08  $   (1.71)
    Diluted                         (0.02)     (0.05)      0.02      (1.71)
  Income (loss) for purposes of
   computing net income
   (loss) per share:
    Basic                       $  (4,365) $ (11,886) $  16,634  $(358,264)
    Diluted                        (4,365)   (11,886)     5,024   (358,264)
  Weighted average common and
   common equivalent shares:
    Basic                         214,442    210,189    212,672    209,041
    Diluted                       214,442    210,189    223,761    209,041
                                ---------  ---------  ---------  ---------
  Included in the above
   Statements of Operations:
  Amortization of intangibles:
    Cost of revenue                 5,547      5,510     22,069     24,668
    Research and development          100        100        400        400
    Sales and marketing             3,394      3,393     13,575     15,035
    General and administrative         25         25        100        100
                                ---------  ---------  ---------  ---------
                                    9,066      9,028     36,144     40,203
  Share-based compensation:
    Cost of revenue                   414        320      1,366      1,419
    Research and development          640        549      2,373      2,722
    Sales and marketing               744        706      2,581      2,695
    General and administrative        836        925      3,469      3,756
                                ---------  ---------  ---------  ---------
                                    2,634      2,500      9,789     10,592
                            QUANTUM CORPORATION
                              (In thousands)
                                                     March 31,   March 31,
                                                       2010        2009*
                                                    ----------  ----------
  Current assets:
    Cash and cash equivalents                       $  114,947  $   85,532
    Restricted cash                                      1,896       1,773
    Accounts receivable, net                           103,397     107,851
    Manufacturing inventories, net                      54,080      61,237
    Service parts inventories, net                      53,217      63,029
    Deferred income taxes                                7,907       9,935
    Other current assets                                14,500      24,745
                                                    ----------  ----------
      Total current assets                             349,944     354,102
  Long-term assets:
    Property and equipment, less accumulated
     depreciation                                       24,528      28,553
    Intangible assets, less accumulated
     amortization                                       73,092     109,236
    Goodwill                                            46,770      46,770
    Other long-term assets                               9,809      10,708
                                                    ----------  ----------
      Total long-term assets                           154,199     195,267
                                                    ----------  ----------
                                                    $  504,143  $  549,369
                                                    ==========  ==========
Liabilities and Stockholders' Deficit
  Current liabilities:
    Accounts payable                                $   56,688  $   45,182
    Accrued warranty                                     5,884      11,152
    Deferred revenue, current                           94,921      84,079
    Current portion of long-term debt                    1,884       4,000
    Current portion of convertible subordinated
     debt                                               22,099          --
    Accrued restructuring charges                        3,795       4,681
    Accrued compensation                                31,237      27,334
    Income taxes payable                                 2,594       4,752
    Other accrued liabilities                           23,555      34,550
                                                    ----------  ----------
      Total current liabilities                        242,657     215,730
  Long-term liabilities:
    Deferred revenue, long-term                         30,724      32,082
    Deferred income taxes                                8,676      11,190
    Long-term debt                                     305,899     244,000
    Convertible subordinated debt                           --     160,000
    Other long-term liabilities                          7,444       6,326
                                                    ----------  ----------
      Total long-term liabilities                      352,743     453,598
    Stockholders' deficit                              (91,257)   (119,959)
                                                    ----------  ----------
                                                    $  504,143  $  549,369
                                                    ==========  ==========
* Derived from the March 31, 2009 audited Consolidated Financial
                            QUANTUM CORPORATION
                              (In thousands)
                                                  Twelve Months Ended
                                            March 31, 2010  March 31, 2009
                                            --------------  --------------
Cash flows from operating activities:
  Net income (loss)                         $       16,634  $     (358,264)
  Adjustments to reconcile net income
   (loss) to net cash provided by
   operating activities:
    Depreciation                                    12,098          15,452
    Amortization                                    38,461          42,291
    Service parts lower of cost or market
     adjustment                                     11,424          20,691
    Gain on debt extinguishment                    (15,613)             --
    Goodwill impairment                                 --         339,000
    Deferred income taxes                             (466)           (352)
    Share-based compensation                         9,789          10,592
    Changes in assets and liabilities:
     Accounts receivable                             4,454          75,132
     Manufacturing inventories, net                  2,328           6,591
     Service parts inventories, net                  3,217           1,658
     Accounts payable                               11,495         (52,692)
     Accrued warranty                               (5,268)         (8,710)
     Deferred revenue                                9,484          11,515
     Accrued restructuring charges                    (917)            968
     Accrued compensation                            3,824          (4,335)
     Income taxes payable                           (2,239)          1,794
     Other assets and liabilities                    1,459         (12,231)
                                            --------------  --------------
Net cash provided by operating activities          100,164          89,100
Cash flows from investing activities:
  Purchases of property and equipment               (8,595)         (5,423)
  Increase in restricted cash                         (112)           (295)
  Return of principal from other investments           166           1,038
                                            --------------  --------------
Net cash used in investing activities               (8,541)         (4,680)
Cash flows from financing activities:
  Borrowings of long-term debt, net                120,042              --
  Repayments of long-term debt                     (61,934)        (92,000)
  Repayments of convertible subordinated
   debt                                           (122,288)             --
  Payment of taxes due upon vesting of
   restricted stock                                 (1,069)           (779)
  Proceeds from issuance of common stock             2,851           2,738
                                            --------------  --------------
Net cash used in financing activities              (62,398)        (90,041)
Effect of exchange rate changes on cash and
 cash equivalents                                      190            (997)
Net increase (decrease) in cash and cash
 equivalents                                        29,415          (6,618)
Cash and cash equivalents at beginning of
 period                                             85,532          92,150
                                            --------------  --------------
Cash and cash equivalents at end of period  $      114,947  $       85,532
                                            ==============  ==============

Brad Cohen
Public Relations
Quantum Corp.
(408) 944-4044

Christi Lee
Investor Relations
Quantum Corp.
(408) 944-4450

SOURCE: Quantum Corporation