As filed with the Securities and Exchange Commission on May 8, 1996
Registration No. 333-________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
QUANTUM CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 94-2665054
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
500 McCarthy Boulevard
Milpitas, California 95035
(408) 894-4000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
Michael A. Brown
President and CEO
500 McCarthy Boulevard
Milpitas, California 95035
(408) 894-4000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
Copies to:
Steven E. Bochner, Esq. Andrew Kryder, Esq.
Wilson Sonsini Goodrich & Rosati Vice President, Finance
Professional Corporation and Corporate General Counsel
650 Page Mill Road 500 McCarthy Boulevard
Palo Alto, California 94304-1050 Milpitas, California 95035
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC UNDER THIS
REGISTRATION STATEMENT: as soon as practicable after this registration
statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. / /
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------------------
Common Stock, $0.01 par value 10,813,172 $22.32 $241,350,000 $83,224.14
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(1) The 10,813,172 shares to be registered are issuable upon conversion of
the Company's outstanding 5% Convertible Subordinated Notes due 2003
(the "Notes"). The Company is also registering such indeterminate
number of additional shares of Common Stock as may become issuable
pursuant to the anti-dilution adjustments of the Notes.
(2) Computed in accordance with Rule 457 under the Securities Act of 1933
solely for purposes of calculating the registration fee.
----------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any State.
SUBJECT TO COMPLETION, DATED MAY 8, 1996
PROSPECTUS
QUANTUM CORPORATION
10,813,172 shares Common Stock
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The shares of Common Stock, $0.01 par value ("Common Stock"), of Quantum
Corporation, a Delaware corporation ("Quantum" or the "Company"), offered hereby
(the "Shares") may be sold by or for the account of certain prospective
stockholders of the Company described herein (the "Selling Stockholders") from
time to time in transactions in the over-the-counter market or otherwise at the
prevailing market prices at the time of sale. The Shares are issuable upon
conversion of the Company's outstanding 5% Convertible Subordinated Notes due
2003 (the "Notes"). The Company sold Notes with an aggregate principal amount of
$241,350,000 to the Selling Stockholders under the terms of an Indenture, dated
February 15, 1996, between the Company and LaSalle National Bank (the
"Indenture") in a private transaction (the "Note Offering") exempt from the
registration requirements of the Securities Act of 1933, as amended, (the
"Securities Act").
The Company will receive no part of the proceeds from the sales made
hereunder. All expenses of registration incurred in connection with this
offering shall be borne by the Company but all selling expenses incurred by the
Selling Stockholders shall be borne by such Selling Stockholders. The Company
and the Selling Stockholders have agreed to indemnify each other against certain
liabilities arising under the Securities Act. See "Selling Stockholders and
Plan of Distribution."
The Common Stock of the Company is traded on the Nasdaq National Market
under the symbol QNTM.
SEE "RISK FACTORS" ON PAGE 3 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
The Selling Stockholders and any brokers participating in such sales
may be deemed underwriters within the meaning of the Securities Act.
Commissions received by any such broker may be deemed to be underwriting
commissions under the Securities Act. See "Selling Stockholders and Plan of
Distribution."
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
---------------------------------------
The date of this Prospectus is May 8, 1996
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION
WITH THE OFFERING DESCRIBED HEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY SELLING STOCKHOLDER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THE
SHARES BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON
TO MAKE SUCH OFFER, SOLICITATION OR SALE. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the offices of
the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, as well as at the following regional offices of the
Commission: Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661; and Seven World Trade Center, Suite 1300, New York, New York
10048. Copies of such material can be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. Such reports, proxy statements and other information
concerning the Company may be inspected at the office of the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006. The Common Stock of the Company is quoted on the Nasdaq National Market.
The Company has filed with the Commission a Registration Statement (which
term shall include all amendments, exhibits and schedules thereto) on Form S-3
under the Securities Act with respect to the Shares offered hereby. This
Prospectus does not contain all the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission, and to which reference is hereby made. Statements
made in this Prospectus as to the contents of any document referred to are not
necessarily complete. With respect to each such document filed as an exhibit to
the Registration Statement, reference is made to the exhibit for a more complete
description of the matter involved, and each such statement shall be deemed
qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission and are
incorporated herein by reference:
(a) The Company's Proxy Statement for its 1995 Annual Meeting of
Stockholders;
(b) The Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1995;
(c) The Company's Quarterly Reports on Form 10-Q for the three months
ended July 2, 1995, October 1, 1995, and December 31, 1995;
(d) The Company's Current Report on Form 8-K filed February 8, 1996;
(e) The Company's Current Report on Form 8-K filed March 22, 1996;
(f) The Company's Current Report on Form 8-K filed May 8, 1996;
(g) The Company's Registration Statement on Form 8-A filed on August
1, 1983, as may be amended from time to time, relating to the
description of the Company's Common Stock; and
(h) The Company's Registration Statement on Form 8-A filed on August
15, 1988 relating to the Company's Preferred Share purchase rights.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus shall be deemed to
be incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement incorporated herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement and any statement contained herein shall
be deemed to be modified or superseded for all purposes to the extent that a
statement contained in any subsequently filed document which is deemed to be
incorporated by reference modifies or supersedes such statement.
The Company will provide without charge to such person to whom this
Prospectus is delivered, upon the request of such person, a copy of any or all
of the foregoing documents incorporated herein by reference, other than exhibits
to such documents (unless such exhibits are specifically incorporated by
reference into such documents). Requests for such documents should be directed
to Investor Relations, Quantum Corporation, at the Company's executive offices
located at 500 McCarthy Boulevard, Milpitas, California 95035, telephone (408)
894-4000.
THE COMPANY
Quantum Corporation ("Quantum" or the "Company") is a leader in designing,
developing and marketing mass storage products, including high-performance, high
quality hard disk drives, solid state disk drives, recording heads and tape
drives. The Company combines its engineering and design expertise with the high
volume hard disk drive manufacturing capabilities of its exclusive manufacturing
partner, Matsushita Kotobuki Electronics Industries, Ltd. ("MKE") of Japan, to
produce high quality hard disk drives designed to meet the storage requirements
of workstations, servers, disk arrays, entry-level to high-end desktop personal
computers ("PCs") and minicomputers. The Company relies on MKE's
state-of-the-art, highly automated manufacturing process which emphasizes
consistency and repeatability. The Company believes that its manufacturing
strategy gives it a competitive advantage in product quality, time to volume
production and lower capital requirements. The Company's customers include
leading original equipment manufacturers ("OEMs") such as Acer, Apple, Compaq,
Dell, Digital, Hewlett-Packard, IBM, NEC, Silicon Graphics and Sun Microsystems.
The Company was incorporated in February 1980 and reincorporated as a
Delaware corporation in 1987. The Company's executive offices are located at 500
McCarthy Boulevard, Milpitas, California 95035.
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RISK FACTORS
This Prospectus contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. Actual results could differ materially from those projected in the
forward-looking statements as a result of certain of the risk factors set forth
below and elsewhere in this Prospectus. In addition to the other information
contained and incorporated by reference in this Prospectus the following risk
factors should be considered carefully in evaluating the Company and its
business before purchasing the Shares offered hereby:
Fluctuation in Results of Operations. The Company's results of operations
are subject to fluctuations from period to period. In this regard, the demand
for the Company's hard disk drive products depends on the demand for the
computer systems manufactured by its customers, which is affected by computer
system product cycles and by prevailing economic conditions. Growth in demand
for computer systems, especially in the PC market segment, where the Company
derives a significant amount of its disk drive sales, has historically been
subject to significant fluctuations. Such fluctuations in end user demand have
in the past, and may in the future, result in the deferral or cancellation of
orders for the Company's products. A slowdown in demand for PCs would have a
material adverse effect on the Company's results of operations. During 1995,
there was significant growth in the demand for PCs, a portion of which
represented sales of PCs for use in the home. Although many analysts forecast
continued strong growth in personal computer sales during 1996, such growth is
expected to be at a slower rate than the rate experienced during 1995. Based on
the foregoing, the Company could experience a decrease in demand for its
products in the near future. Any such slowdown in demand would have a material
adverse effect on the Company. The hard disk drive industry has also been
subject, from time to time, to seasonal fluctuations in demand, with relatively
flat demand in the quarter ending September 30 as compared to the quarter ending
June 30 and increasing demand throughout the quarters ending December 31 and
March 31. The Company's shipments tend to be highest in the third month of each
quarter and failure by the Company to complete shipments in the final month
could adversely affect the Company's operating results for the quarter.
The market for hard disk drives is characterized by intense competition
and short product life cycles, and such factors typically result in a need to
lower prices and introduce new, more cost-effective products in a timely manner.
In this regard, the Company intends to introduce important new products during
1996, and there can be no assurance that it will be successful in this regard.
If this does not occur, the Company would be materially and adversely affected.
The hard disk drive industry also tends to experience periods of excess product
inventory and intense price competition. If price competition intensifies, the
Company may be forced to lower prices further than expected, which could
adversely affect its sales and gross margin.
Transition of High-Capacity Manufacturing Operations to MKE. Since the
Company's acquisition of Digital's high-capacity disk drive operations in late
1994, the Company has experienced significant difficulties integrating these
operations into its high-capacity business. These difficulties have included
problems involving both the development and manufacturing of its high-capacity
products and have resulted in, among other things, significant delays in
meeting the qualification standards imposed by certain major customers of the
Company's high-capacity disk drive products. In January 1996, the Company
decided to transition its high-capacity disk drive product manufacturing to
MKE, and, as a result, incurred a related non-recurring charge of $209 million
in the Company's fiscal quarter ended March 31, 1996. Actual results, however,
with regards to the restructuring charge could vary in the event demand for the
Company's current high-capacity products declines faster than expected,
resulting in excess inventory, or in the event the Company experiences
unanticipated problems or incurs greater than expected costs in connection with
the closure of its high-capacity manufacturing operations.
The Company's transition of its high-capacity manufacturing operations to
MKE entails several risks, and there can be no assurance that the Company's
efforts in this regard will be successful. This transition will require close
and continuous collaboration between the Company and MKE in all phases of
design, engineering and production of its high-capacity products. Although the
Company has had a continuous manufacturing relationship
-3-
with MKE since 1984, the Company's high-capacity products are more complex to
manufacture than its desktop products. MKE has not previously manufactured any
significant amount of the Company's high-capacity products and there can be no
assurance that the Company's previous difficulties with its high-capacity
products will be resolved or that new problems will not arise as a result of the
transition of this manufacturing to MKE. Any failure of the Company to
successfully manage this transition would have a material adverse effect on the
Company's business, financial condition and results of operations.
In addition, the Company's high-capacity manufacturing transition requires
the successful introduction of two new products during 1996. These products are
still in development and have not been released to customers for evaluation. The
Company's product development efforts entail a number of risks, and there can be
no assurance that the Company will be successful in these efforts.
Dependence on MKE Relationship. The Company is dependent upon MKE for
the manufacture of its disk drive products. During fiscal 1995 and fiscal 1996,
approximately 80% and 75%, respectively, of the Company's sales were derived
from products manufactured by MKE. In January 1996, the Company announced that
it will transition the manufacturing of its high-capacity hard disk drive
products to MKE. The Company and MKE have agreed that, following this
transition, MKE will have the exclusive right to manufacture all of the
Company's hard disk drive products.
The Company's relationship with MKE is critical to the Company's business
and financial performance. The Company's dependence on MKE entails, among
others, the following principal risks:
Quality and Delivery. The Company relies on MKE's ability to bring
new products rapidly to volume production at low cost, to meet the
Company's stringent quality requirements and to respond quickly to
changing order dates from the Company. This requires, among other things,
close and continuous collaboration between the Company and MKE in all
phases of design, engineering and production. In this respect, the
Company's high-capacity product development teams have had limited or no
prior experience working with MKE. The Company's business and financial
results would be adversely affected if products manufactured by MKE fail
to satisfy the Company's quality requirements or if MKE is unable to meet
the Company's delivery commitments. In the event MKE is unable to satisfy
Quantum's production requirements, the Company would not have an
alternative high volume manufacturing source to meet such demand without
substantial delay and disruption to the Company's operations. As a result,
the Company would be materially adversely affected.
Extension of relationship. The Company's relationship with MKE,
which has been continuous since 1984, is currently governed by a master
agreement that, unless extended, will expire in December 1997. This
agreement was recently amended to include the manufacture of the Company's
high-capacity hard disk drive products by MKE. The failure of the parties
to extend their relationship, or the extension of the relationship on
terms unfavorable to the Company, could have a material adverse effect on
the Company.
Volume and Pricing. MKE's production schedule is based on the
Company's forecasts of its product purchase requirements, and the Company
has only limited rights to modify short-term purchase orders issued to
MKE. The failure of the Company to accurately forecast its requirements
could lead to inventory shortages or surpluses which could adversely
affect results of operations. In addition, the Company renegotiates
pricing arrangements with MKE on a periodic basis. Failure to reach
agreements reasonable to the Company with regard to pricing would
materially affect the Company.
-4-
Manufacturing Capacity and Capital Commitment. The Company
believes that MKE's current and committed manufacturing capacity should be
adequate to meet the Company's requirements at least through the end of
calendar 1996. The Company's future growth will require, however, that MKE
continue to devote substantial financial resources to property, plant and
equipment and working capital to support manufacture of the Company's
products, as to which there can be no assurance. In the event that MKE is
unable or unwilling to meet the Company's manufacturing requirements,
there can be no assurance that the Company would be able to obtain an
alternate source of supply in a timely manner or at all, and any such
failure would have a material adverse effect on the Company.
Foreign Manufacturing. Pursuant to its MKE relationship, all of
the Company's hard disk drive products will be manufactured by MKE in
Japan, Singapore and Ireland. As a result, the Company is subject to
certain risks associated with contracting with foreign manufacturers,
including obtaining requisite governmental permits and approvals, currency
exchange fluctuations, currency restrictions, political instability, labor
problems, trade restrictions and changes in tariff and freight rates.
Dependence on Suppliers of Components and Sub-Assemblies; Component
Shortages. The Company and its manufacturing partner, MKE, are dependent upon
suppliers for components and sub-assemblies, including recording heads, media
and integrated circuits, which are essential to the manufacture of the Company's
products. In connection with certain products, the Company qualifies only a
single source for certain components and sub-assemblies, which can magnify the
risk of shortages. Component shortages have in the past constrained the
Company's sales growth. If such shortages occur, or if the Company experiences
quality problems with component suppliers, shipments of products could be
significantly delayed or costs significantly increased, which would have a
material adverse effect on the Company's results of operations. The Company
believes that the industry will periodically experience component shortages, and
there can be no assurance that these issues will not adversely affect the
Company's operating results.
New Product Development. Quantum operates in an industry characterized by
increasingly rapid technological changes and short product life cycles. For
these and other reasons, including competitive pressures, gross margins on
specific products can decrease rapidly and any delay in introduction of more
advanced and more cost-effective products can result in significantly lower
sales and gross margins. The Company's future is therefore dependent on its
ability to develop new products, to successfully introduce these products to the
market on a timely basis and to commence volume production to meet customer
demands. In this regard, the Company expects that sales of new products will
account for a significant portion of fiscal 1997 sales and that sales of older
products will decline. For example, the Company expects sales from its current
high-capacity products, presently manufactured by the Company in Milpitas,
California and Penang, Malaysia, to decline substantially in the first half of
fiscal 1997, as the Company transitions customers to new high-capacity products
to be manufactured by MKE. The Company's new high-capacity products, currently
under development, are expected to achieve volume production and contribute to
sales in the latter half of fiscal 1997. The Company's inability to successfully
manage this transition could have a material adverse effect on the Company.
The Company is also currently engaged in a substantial effort to advance
the development of its MR recording heads. MR head technology, which provides
higher capacity per disk than conventional thin film heads, is widely expected
in the industry to replace thin film heads as the leading recording head
technology. Although MR recording heads comprised a relatively small portion of
the recording head market demand for the entire industry in 1995, the Company
expects them to comprise approximately one-half of the market demand by 1998.
The Company believes that by establishing its own supply of MR heads it can
lower the risk of supply shortages of MR heads that may occur in the future and
can create cost advantages for its overall business. However, MR technology is
relatively complex, and as is typical of new head technology, manufacturing
yields begin at relatively
-5-
low levels and increase throughout the product life of the recording head. While
the Company has increased production yields in its MR recording heads in the
past, several of the Company's important new disk drive products which are
scheduled to commence volume production during fiscal 1997 are dependent on new
MR recording heads currently under development. Increases in the current levels
of production yields for those new MR heads will be required for the Company to
meet its manufacturing objectives for these new disk drive products. In the
event that yields do not improve, there are limited alternative sources of
supply for MR recording heads, and there can be no assurance that the Company
will be able to locate and obtain adequate supply from such alternative sources.
In such event, the Company will be materially adversely affected.
There can be no assurance that the Company will be successful in the
development and marketing of these and other new products and components that
respond to technological change or evolving industry standards, that the Company
will not experience difficulties that could delay or prevent the successful
development, introduction and marketing of these products and components, or
that the Company's new products and components will adequately meet the
requirements of the marketplace and achieve market acceptance. In addition,
technological advances in magnetic, optical or other technologies, or the
development of new technologies, could result in the introduction of competitive
products with superior performance to and substantially lower prices than the
Company's products. Further, the Company's new products and components are
subject to significant technical risks. If the Company experiences delays in the
commencement of commercial shipments of new products or components, the Company
could experience delays or loss of product sales. If the Company is unable, for
technological or other reasons, to develop and introduce new products in a
timely manner in response to changing market conditions or customer
requirements, the Company's business, operating results and financial condition
would be materially adversely affected.
Customer Concentration. As is typical in the disk drive industry, the
Company's customer base is concentrated with a small number of systems
manufacturers. The Company's sales to its customers are generally governed by
written agreements. Except with respect to the Company's agreement with Digital,
none of these agreements obligates a customer to purchase any minimum volume of
the Company's products, and these agreements are generally terminable at will by
the customer.
Sales of the Company's desktop products, which comprise a significant
majority of its overall sales, were concentrated in several key customers
during the fiscal year ended March 31, 1996 as sales to the top five customers
of the Company represented 44% of total sales, of which 11% represented sales
to Apple and 12% represented sales to Compaq. Apple recently announced a
significant layoff of personnel and restructuring of its business. As a result,
it could become increasingly difficult for the Company to forecast accurately
the demand for its products by Apple. In addition, the Company is unable to
predict whether or not there will be any significant change in demand for
Apple's or any of its other customers' products in the future. In the event
that any such changes result in decreased demand for the Company's products,
whether by loss or delays in orders, the Company would be materially adversely
affected.
Intensely Competitive Industry. The mass storage products industry in
general, and the disk drive industry in particular, is characterized by intense
competition which results in rapid price erosion, short product life cycles,
and continuous introduction of new products offering increased levels of
capacity and performance. Quantum faces direct competition from a number of
companies, including Seagate, Western Digital, IBM and Maxtor. In February
1996, Seagate merged with Connor creating a company which is the world's
largest disk drive manufacturer. There can be no assurance that the Company can
compete effectively with these or any other companies, and the Company is
unable to predict the effect, if any, that the Seagate/Conner merger may have
on the Company's business. In the event the Company is unable to compete
effectively with these or any other companies, the Company's business,
financial condition or results of operations could be materially adversely
affected.
-6-
In the market for desktop products, Quantum competes primarily with
Seagate, Western Digital and Maxtor. Quantum and its competitors have developed
and are developing a number of products targeted at particular segments of this
market, such as home PC buyers, and factors such as time to market can have a
significant effect on the success of any particular product. The desktop market
is characterized by more competitors and shorter product life cycles than the
hard disk drive market in general.
The Company faces competition in the high-capacity disk drive market
primarily from Seagate and IBM. Seagate has the largest share of the market for
high-capacity disk drives. Although the same competitive factors generally
applicable to the overall disk drive industry apply to high-capacity disk
drives, the Company believes that the performance and quality of its products
are more important in this segment than in the desktop market. In connection
with the Company's recently announced transition of its manufacturing activities
to MKE, the Company has been able to focus its product development efforts more
closely on certain key products. The Company's success in the high-capacity
market during the foreseeable future is dependent on the successful development,
timely introduction and market acceptance of these key products, as to which
there can be no assurance.
In the market for tape drives, the Company competes with a large number
of companies, including Exabyte Corporation. During 1995, the Company
experienced increasing market acceptance of its tape drive products. However, a
number of competitors have announced or already introduced tape drive product
offerings and the market could become significantly more competitive during
1996. As a result, the Company could experience increased price competition. If
price competition occurs, the Company may be forced to lower prices and there
can be no assurance as to the amount or extent of such reductions or its effect
on the Company.
Finally, the Company's customers could commence the manufacture of disk
and tape drives for their own use or for sale to others. Any such loss of
customers could have a material adverse effect on the Company.
Intellectual Property Matters. The hard disk drive industry has been
characterized by significant litigation relating to patent and other
intellectual property rights. The Company is from time to time approached by
companies and individuals alleging Quantum's need for a license under patented
technology that Quantum assertedly uses. There can be no assurance that licenses
to any such technology, if required, could be obtained on commercially
reasonable terms or at all. Adverse resolution of any intellectual property
litigation could subject the Company to substantial liabilities and require it
to refrain from manufacturing certain products. In addition, the costs of
engaging in such litigation may be substantial, regardless of the outcome.
Future Capital Needs. The mass storage business is capital-intensive and
competitive. Although the Company is in the process of transitioning the
manufacturing of all of its hard disk drive products to MKE, the Company
believes that in order to remain competitive in the mass storage business, it
will need significant additional financial resources over the next several years
for capital expenditures, working capital and research and development. The
Company believes that it will be able to fund these capital requirements from a
combination of the proceeds of the Note Offering, existing cash balances, cash
flow from operations and funds available under its credit facilities. However,
in the event the Company decides to increase its capital expenditures further or
sooner than presently contemplated, or if results of operations do not meet the
Company's expectations, the Company will require additional debt or equity
financing. There can be no assurance that such additional funds will be
available to the Company or, if available, will be available on favorable terms.
In addition, the Company may require additional capital for other purposes not
presently contemplated by the Company. If the Company is unable to obtain
sufficient capital, it could be required to curtail its capital equipment and
research and development expenditures, which could adversely affect the
Company's future operations and competitive position.
-7-
Possible Volatility of Stock Price. The market price of the Company's
Common Stock has been, and may continue to be, extremely volatile. Factors such
as new product announcements by the Company or its competitors, quarterly
fluctuations in the operating results of the Company, its competitors and other
technology companies and general conditions in the computer market may have a
significant impact on the market price of the Common Stock. In particular, if
the Company were to report operating results that did not meet the expectations
of research analysts, the market price of the Common Stock could be materially
adversely affected. In addition, the stock market has recently experienced
substantial price and volume fluctuations, which have particularly affected the
market prices of the stock of many high technology companies.
-8-
SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION
The Selling Stockholders are those individuals and entities who will from
time to time hold the Shares. The Notes are convertible at any time after June
16, 1996 through the close of business on March 1, 2003, subject to prior
redemption, into shares of Common Stock at a price of $22.32 per share, subject
to adjustment under certain circumstances specified in the Indenture.
Accordingly, the number of Shares of Common Stock issuable upon conversion may
change. As of the date of this Prospectus, the aggregate principal amount of
Notes outstanding is $241,350,000, which may be converted into 10,813,172 shares
of Common Stock.
Pursuant to a Registration Rights Agreement dated February 15, 1996
(the "Registration Rights Agreement") between the Company and the initial
purchasers named therein entered into in connection with the Note Offering, the
Company has filed with the Commission under the Securities Act a Registration
Statement on Form S-3, of which this Prospectus forms a part, with respect to
the resale of the Shares from time to time and has agreed to use its reasonable
efforts to keep such Registration Statement effective until the earlier of (i)
March 18, 1999 or (ii) such date as all of the Shares have been either resold
pursuant to the Registration Statement, resold to the public pursuant to Rule
144 of the Securities Act or eligible for resale pursuant to Rule 144(k) of the
Securities Act. Pursuant to the Registration Rights Agreement, the Company has
the right to suspend the use of this Prospectus for the sale of Shares under
certain circumstances for up to a period not to exceed thirty (30) days in any
three month period or two periods not to exceed an aggregate of 60 days in any
12 month period under certain circumstances relating to pending corporate
developments, public filings with the Commission and similar events.
As of the date of this Prospectus, none of the Notes have been
converted, and as a result, the Company is not aware of any proposed Selling
Stockholder. Such Selling Stockholders will be qualified institutional buyers
within the meaning of Rule 144A of the Securities Act, institutional accredited
investors within the meaning of Rule 501 of the Securities Act or non-U.S.
persons within the meaning of Regulation S under the Securities Act. Prior to
any use of this Prospectus for resale of the Shares registered herein, this
Prospectus will be amended or supplemented to set forth the name of the Selling
Stockholder, the number of Shares beneficially owned by such Selling
Stockholder, and the number of Shares to be offered for resale by such Selling
Stockholder. The supplemented or amended Prospectus will also disclose whether
any Selling Stockholder selling in connection with such supplemented or amended
Prospectus has held any position or office with, been employed by or otherwise
had a material relationship with, the Company or any of its affiliates during
the three years prior to the date of the supplemented or amended Prospectus.
Each of the Selling Stockholders will act independently of the Company in
making decisions with respect to the timing, manner and size of each sale. Such
sales may be made in the over-the-counter market or otherwise, at market prices
prevailing at the time of the sale, at prices related to the then prevailing
market prices or in negotiated transactions, including pursuant to an
underwritten offering or pursuant to one or more of the following methods: (a)
block trades in which the broker or dealer so engaged will attempt to sell the
Shares as agent but may position and resell a portion of the block as principal
to facilitate the transaction, (b) purchases by a broker or dealer as principal
and resale by such broker or dealer for its account pursuant to this Prospectus,
and (c) ordinary brokerage transactions and transactions in which the broker
solicits purchasers.
In connection with the sale of Shares, Selling Stockholders may engage
broker-dealers who in turn may arrange for other broker-dealers to participate.
Broker-dealers may receive commissions or discounts from the Selling
Stockholders in amounts to be negotiated immediately prior to the sale. In
addition, underwriters or agents may receive compensation from the Selling
Stockholders or from purchasers of the Shares for whom they may act as agents,
in the form of discounts, concessions or commissions. Underwriters may sell
Shares to or through dealers, such dealers may receive compensation in the form
of discounts, concessions or commissions from the
-9-
underwriters or commissions from the purchasers for whom they act as agents.
Underwriters, dealers and agents that participate in the distribution of Shares
may be deemed to be underwriters and any discounts or commissions received by
them from the Selling Stockholders and any profit on the resale of Shares by
them may be deemed to be underwriting discounts and commissions under the
Securities Act. Any such underwriter or agent will be identified, and any such
compensation received from the Selling Stockholders will be described, in the
applicable Prospectus supplement.
The Company and the Selling Stockholders have agreed to indemnify each
other against certain liabilities arising under the Securities Act. The Company
has agreed to pay all expenses incident to the offer and sale of the Shares by
the Selling Stockholders to the public, other than selling expenses incurred by
the Selling Stockholder and registration expenses to the extent that the Company
is prohibited from paying for such expenses on behalf of the Selling
Stockholders by applicable Blue Sky laws.
LEGAL MATTERS
The validity of the Common Stock being offered hereby will be passed upon
for the Company by Wilson Sonsini Goodrich & Rosati, Professional Corporation,
Palo Alto, California.
EXPERTS
The consolidated financial statements of Quantum Corporation, included in
Quantum Corporation's Annual Report (Form 10-K) for the year ended March 31,
1995, have been audited by Ernst & Young LLP, independent auditors, as set forth
in their report thereon included therein and incorporated herein by reference.
Such consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
-10-
QUANTUM CORPORATION
REGISTRATION STATEMENT ON FORM S-3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item Number
ITEM 14 OTHER EXPENSES OF REGISTRATION AND DISTRIBUTION.
The following table sets forth the estimated expenses of the Registrant in
connection with the offering described in this Registration Statement.
Securities and Exchange Commission registration fee.. $ 83,225
Accountants' fees.................................... $ 8,000
Legal fees........................................... $ 15,000
Miscellaneous........................................ $ 4,775
---------
Total .............................................. $111,000
ITEM 15 INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law authorizes a
corporation to grant indemnity to directors and officers in terms sufficiently
broad to permit such indemnification under certain circumstances for liabilities
(including reimbursement for expenses incurred) arising under the Securities Act
of 1933, as amended (the "Securities Act"). Section 11 of the Registrant's
Restated Certificate of Incorporation provides for indemnification of its
directors against the Registrant or its Stockholders to the maximum extent
permitted by the Delaware General Corporation Law for monetary damages for
breach of fiduciary duty as a director. Article VI of the Company's Bylaws, as
amended, permits the Company to indemnify directors, officers, employees and
agents to the maximum extent permitted by the Delaware General Corporation Law.
In addition, the Registrant has entered into Indemnification Agreements with its
officers and directors.
ITEM 16 EXHIBITS.
EXHIBIT
NUMBER
- -------
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation, as to legality of securities being registered..
23.1 Consent of Ernst & Young LLP, independent auditors.
23.2 Consent of Counsel (contained in Exhibit 5.1 hereto).
24.1 Power of Attorney (contained on Page II-3).
ITEM 17 UNDERTAKINGS.
1. The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of this
Registration Statement (or the most recent
post-effective amendment hereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth in
this Registration Statement;
(iii) to include any material information with respect to
the plan of distribution not previously disclosed
in this Registration Statement or any material
change to such information in this Registration
Statement;
provided, however, that the undertakings set forth in paragraph (i) and
(ii) above shall not apply if the information required to be included
in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") that
are incorporated by reference in this Registration Statement.
(b) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
2. The undersigned hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in this Registration Statement shall be deemed to be
a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
3. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Jose, State of California, on this 8th day of
May, 1996.
QUANTUM CORPORATION
/s/ Michael A. Brown
_____________________________________________
Michael A. Brown
President and Chief Executive Officer
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each such person whose signature
appears below constitutes and appoints, jointly and severally, Michael A. Brown
and Andrew Kryder his attorneys-in-fact, each with the power of substitution,
for him in any and all capacities, to sign any amendments to this Registration
Statement on Form S-3 (including post-effective amendments), and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming all
that each of said attorneys-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
- ------------------------- -------------------------------------- -----------
/s/ Michael A. Brown President, Chief Executive Officer and May 8, 1996
- ------------------------- Director (Principal Executive Officer)
Michael A. Brown
/s/ Joseph T. Rodgers Executive Vice President, Finance and May 8, 1996
- ------------------------- Chief Financial Officer
Joseph T. Rodgers (Principal Financial Officer and
Principal Accounting Officer)
/s/ Edward M. Esber Director May 8, 1996
- -------------------------
Edward M. Esber
/s/ David A. Brown Director May 8, 1996
- -------------------------
David A. Brown
/s/ Stephen M. Berkley Director May 8, 1996
- -------------------------
Stephen M. Berkley
/s/ Robert J. Casale Director May 8, 1996
- -------------------------
Robert J. Casale
/s/ Steven C. Wheelwright Director May 8, 1996
- -------------------------
Steven C. Wheelwright
II-3
QUANTUM CORPORATION
REGISTRATION STATEMENT ON FORM S-3
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Description Page
- ------- ---------------------------------------------------------------------- -------------
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation,
as to legality of securities being registered........................
23.1 Consent of Counsel (contained in Exhibit 5.1 above)...................
23.2 Consent of Ernst & Young LLP, independent auditors....................
24.1 Power of Attorney (see page II-3).....................................
II-4