Exhibit 99.1
| Contact: | For Release: | |
| Brad Cohen |
Jan. 28, 2010 | |
| Public Relations |
1:05 p.m. PST | |
| Quantum Corp. |
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| (408) 944-6500 |
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| brad.cohen@quantum.com |
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| Marilyn Keys |
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| Investor Relations |
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| Quantum Corp. |
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| (408) 944-4450 |
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| ir@quantum.com |
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QUANTUM CORPORATION REPORTS FISCAL THIRD QUARTER RESULTS
Highlights:
| • | Total revenue of $182 million – second consecutive quarter of sequential growth |
| • | GAAP gross margin rate of 41 percent – second consecutive quarter above 40 percent |
| • | GAAP net income of $5 million – third consecutive quarter of GAAP profit |
| • | Disk systems and software revenue of $25 million – branded sales up 29 percent year-over-year to record level |
SAN JOSE, Calif., Jan. 28, 2010 – Quantum Corp. (NYSE:QTM), the leading global specialist in backup, recovery and archive, today announced that revenue for its fiscal third quarter (FQ3’10), ended Dec. 31, 2009, was $182 million. This represented an 11 percent decline from the same period last year (FQ3’09), primarily due to expected reductions in OEM revenue, including DXi™ software, tape, and devices and media sales. Despite the year-over-year decline, revenue increased 4 percent from the prior quarter (FQ2’10) – the second consecutive quarter of sequential growth – and branded revenue was up from both FQ2’10 and the same period last year. As it did in the prior quarter, the company reported a GAAP gross margin rate above 40 percent, although the 41.1 percent rate in the December quarter was down from 42.1 percent in FQ3’09, largely due to the decline in OEM DXi software revenue.
Quantum also delivered its third consecutive quarter of GAAP profit, with $5 million in net income, or diluted earnings per share of two cents. This compared to a GAAP net loss of $329 million in FQ3’09. The $5 million profit included $9 million in amortization of intangibles and $2 million in stock-based compensation charges, which together reduced diluted earnings per share by five cents.
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Quantum generated $17 million in cash from operations for FQ3’10 and ended the quarter with over $100 million in cash and cash equivalents.
“The December quarter further demonstrated the strength of our business model, with results in several areas being among the best we’ve achieved over the past 10 years,” said Rick Belluzzo, chairman and CEO of Quantum. “With a strong contribution from our branded business and gross margin above 40 percent, we again delivered solid GAAP profits and sequential revenue growth. Our record level of branded disk systems and software revenue also speaks to the opportunity we have in key growth segments of the storage market, particularly given the recent additions we’ve made to our product portfolio with the DXi6500 family of NAS-based deduplication appliances and the latest release of our StorNext® data management software.”
Quantum’s product revenue, which includes sales of the company’s hardware and software products, totaled $125 million in FQ3’10. This represented a decrease of $19 million from FQ3’09, primarily reflecting the expected declines in OEM revenue.
Disk systems and software revenue, inclusive of related software maintenance and service revenue, was $25 million in the December quarter. This was down approximately $6 million from the same quarter last year, primarily due to reduced OEM DXi software revenue. However, on a branded basis, Quantum generated its highest level of disk systems and software revenue to date. A sampling of major DXi7500 account wins during the quarter included new business with one of the world’s largest technology consulting companies, a leading global supplier of industrial gasses and a national lottery operator in Asia. In addition, Quantum had several repeat DXi7500 orders, including those from two top U.S. and Asian insurance companies, one of the world’s biggest telecommunications providers and a major university medical center in the U.S.
Also contributing to the record disk systems and software revenue in FQ3’10 were significant StorNext® wins, most notably a deal for more than a million dollars in which StorNext will play a central role in a multi-site, private cloud implementation for a Fortune Global 10 company. Other key wins included new business with a major television studio in Asia and follow-on orders from a multinational technology company and a large weather services provider in North America.
Conference Call and Audio Webcast Notification
Quantum will hold a conference call today, Jan. 28, 2010, at 2:00 p.m. PST, to discuss its fiscal third quarter results. Press and industry analysts are invited to attend in listen-only mode. Dial-in number: (480) 629-9643 (U.S. & International). Quantum will provide a live audio webcast of the conference call beginning today, Jan. 28, 2010, at 2:00 p.m. PST. Site for the webcast and related information: http://www.quantum.com/investors.
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™-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, www.quantum.com.
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Quantum, the Quantum logo and StorNext 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: This press release contains “forward-looking” statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Specifically, but without limitation, the statement that our record level of branded disk systems and software revenue speaks to the opportunity we have in key growth segments of the storage market could be deemed a forward-looking statement within the meaning of the Safe Harbor. All forward-looking statements in this press release are based on information available to Quantum on the date hereof. These statements involve known and unknown risks, uncertainties and other factors that may cause Quantum’s actual results to differ materially from those implied by the forward-looking statements. These risks include operational difficulties, unforeseen technical limitations, unexpected material deviation in product operation, the ability of competitors to introduce new solutions that compete more successfully with our solutions, unexpected changes in market conditions and unanticipated changes in customers’ needs or requirements, as well as the risks 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 “Risk Factors,” in Quantum’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 6, 2009 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
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| December 31, 2009 |
December 31, 2008 |
December 31, 2009 |
December 31, 2008 |
|||||||||||||
| Revenue: |
||||||||||||||||
| Product |
$ | 124,580 | $ | 143,882 | $ | 348,131 | $ | 444,658 | ||||||||
| Service |
38,991 | 40,757 | 117,650 | 124,593 | ||||||||||||
| Royalty |
18,139 | 19,029 | 51,195 | 71,598 | ||||||||||||
| Total revenue |
181,710 | 203,668 | 516,976 | 640,849 | ||||||||||||
| Cost of revenue: |
||||||||||||||||
| Product |
82,509 | 88,949 | 227,672 | 303,583 | ||||||||||||
| Service |
24,485 | 28,933 | 76,316 | 93,766 | ||||||||||||
| Total cost of revenue |
106,994 | 117,882 | 303,988 | 397,349 | ||||||||||||
| Gross margin |
74,716 | 85,786 | 212,988 | 243,500 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Research and development |
18,155 | 16,053 | 51,594 | 53,809 | ||||||||||||
| Sales and marketing |
29,029 | 32,821 | 84,202 | 111,006 | ||||||||||||
| General and administrative |
16,289 | 17,015 | 46,012 | 58,860 | ||||||||||||
| Restructuring charges (benefits) |
(22 | ) | 4,062 | 4,784 | 4,469 | |||||||||||
| Goodwill impairment |
— | 339,000 | — | 339,000 | ||||||||||||
| 63,451 | 408,951 | 186,592 | 567,144 | |||||||||||||
| Income (loss) from operations |
11,265 | (323,165 | ) | 26,396 | (323,644 | ) | ||||||||||
| Interest income and other, net |
526 | (594 | ) | 1,795 | 503 | |||||||||||
| Interest expense |
(6,813 | ) | (7,276 | ) | (19,399 | ) | (23,561 | ) | ||||||||
| Gain on debt extinguishment, net of costs |
— | — | 12,859 | — | ||||||||||||
| Income (loss) before income taxes |
4,978 | (331,035 | ) | 21,651 | (346,702 | ) | ||||||||||
| Income tax provision (benefit) |
342 | (2,259 | ) | 652 | (324 | ) | ||||||||||
| Net income (loss) |
$ | 4,636 | $ | (328,776 | ) | $ | 20,999 | $ | (346,378 | ) | ||||||
| Net income (loss) per share: |
||||||||||||||||
| Basic |
$ | 0.02 | $ | (1.58 | ) | $ | 0.10 | $ | (1.66 | ) | ||||||
| Diluted |
0.02 | (1.58 | ) | 0.04 | (1.66 | ) | ||||||||||
| Income (loss) for purposes of computing net income (loss) per share: |
||||||||||||||||
| Basic |
$ | 4,636 | $ | (328,776 | ) | $ | 20,999 | $ | (346,378 | ) | ||||||
| Diluted |
4,636 | (328,776 | ) | 9,389 | (346,378 | ) | ||||||||||
| Weighted average common and common equivalent shares: |
||||||||||||||||
| Basic |
213,525 | 210,086 | 212,092 | 208,665 | ||||||||||||
| Diluted |
220,710 | 210,086 | 223,143 | 208,665 | ||||||||||||
| Included in the above Statements of Operations: |
||||||||||||||||
| Amortization of intangibles: |
||||||||||||||||
| Cost of revenue |
5,548 | 5,510 | 16,522 | 19,158 | ||||||||||||
| Research and development |
100 | 100 | 300 | 300 | ||||||||||||
| Sales and marketing |
3,393 | 3,394 | 10,181 | 11,642 | ||||||||||||
| General and administrative |
25 | 25 | 75 | 75 | ||||||||||||
| 9,066 | 9,029 | 27,078 | 31,175 | |||||||||||||
| Share-based compensation: |
||||||||||||||||
| Cost of revenue |
333 | 141 | 952 | 1,099 | ||||||||||||
| Research and development |
513 | 601 | 1,733 | 2,173 | ||||||||||||
| Sales and marketing |
619 | 276 | 1,837 | 1,989 | ||||||||||||
| General and administrative |
877 | 1,314 | 2,633 | 2,831 | ||||||||||||
| 2,342 | 2,332 | 7,155 | 8,092 | |||||||||||||
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QUANTUM CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
| December 31, 2009 |
March 31, 2009* |
|||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 100,700 | $ | 87,305 | ||||
| Accounts receivable, net |
116,553 | 107,851 | ||||||
| Manufacturing inventories, net |
49,829 | 61,237 | ||||||
| Service parts inventories, net |
54,688 | 63,029 | ||||||
| Deferred income taxes |
9,970 | 9,935 | ||||||
| Other current assets |
17,292 | 24,745 | ||||||
| Total current assets |
349,032 | 354,102 | ||||||
| Long-term assets: |
||||||||
| Property and equipment, less accumulated depreciation |
25,128 | 28,553 | ||||||
| Purchased technology, less accumulated amortization |
32,326 | 49,148 | ||||||
| Other intangible assets, less accumulated amortization |
49,832 | 60,088 | ||||||
| Goodwill |
46,770 | 46,770 | ||||||
| Other long-term assets |
10,518 | 10,708 | ||||||
| Total long-term assets |
164,574 | 195,267 | ||||||
| $ | 513,606 | $ | 549,369 | |||||
| Liabilities and Stockholders’ Deficit |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 56,571 | $ | 45,182 | ||||
| Accrued warranty |
6,428 | 11,152 | ||||||
| Deferred revenue, current |
100,580 | 84,079 | ||||||
| Current portion of long-term debt |
1,884 | 4,000 | ||||||
| Current portion of convertible subordinated debt |
22,099 | — | ||||||
| Accrued restructuring charges |
4,522 | 4,681 | ||||||
| Accrued compensation |
28,925 | 27,334 | ||||||
| Income taxes payable |
2,674 | 4,752 | ||||||
| Other accrued liabilities |
26,209 | 34,550 | ||||||
| Total current liabilities |
249,892 | 215,730 | ||||||
| Long-term liabilities: |
||||||||
| Deferred revenue, long-term |
29,445 | 32,082 | ||||||
| Deferred income taxes |
10,815 | 11,190 | ||||||
| Long-term debt |
306,370 | 244,000 | ||||||
| Convertible subordinated debt |
— | 160,000 | ||||||
| Other long-term liabilities |
7,026 | 6,326 | ||||||
| Total long-term liabilities |
353,656 | 453,598 | ||||||
| Stockholders’ deficit |
(89,942 | ) | (119,959 | ) | ||||
| $ | 513,606 | $ | 549,369 | |||||
| * | Derived from the March 31, 2009 audited Consolidated Financial Statements. |
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QUANTUM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Nine Months Ended | ||||||||
| December 31, 2009 |
December 31, 2008 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income (loss) |
$ | 20,999 | $ | (346,378 | ) | |||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||||||
| Depreciation |
9,111 | 12,054 | ||||||
| Amortization |
28,987 | 32,804 | ||||||
| Service parts lower of cost or market adjustment |
8,092 | 13,832 | ||||||
| Gain on debt extinguishment |
(15,613 | ) | — | |||||
| Goodwill impairment |
— | 339,000 | ||||||
| Deferred income taxes |
(410 | ) | 141 | |||||
| Share-based compensation |
7,155 | 8,092 | ||||||
| Changes in assets and liabilities: |
||||||||
| Accounts receivable |
(8,702 | ) | 37,790 | |||||
| Manufacturing inventories, net |
8,387 | 2,265 | ||||||
| Service parts inventories, net |
3,270 | 223 | ||||||
| Accounts payable |
11,389 | (38,949 | ) | |||||
| Accrued warranty |
(4,724 | ) | (7,261 | ) | ||||
| Deferred revenue |
13,864 | 11,012 | ||||||
| Accrued restructuring charges |
(159 | ) | 2,248 | |||||
| Accrued compensation |
1,591 | (5,385 | ) | |||||
| Income taxes payable |
(2,078 | ) | 93 | |||||
| Other assets and liabilities |
706 | (11,704 | ) | |||||
| Net cash provided by operating activities |
81,865 | 49,877 | ||||||
| Cash flows from investing activities: |
||||||||
| Purchases of property and equipment |
(5,728 | ) | (4,289 | ) | ||||
| Return of principal from other investments |
166 | 1,038 | ||||||
| Net cash used in investing activities |
(5,562 | ) | (3,251 | ) | ||||
| Cash flows from financing activities: |
||||||||
| Borrowings of long-term debt, net |
120,042 | — | ||||||
| Repayments of long-term debt |
(61,463 | ) | (91,000 | ) | ||||
| Repayments of convertible subordinated debt |
(122,288 | ) | — | |||||
| Payment of taxes due upon vesting of restricted stock |
(960 | ) | (768 | ) | ||||
| Proceeds from issuance of common stock |
1,761 | 2,738 | ||||||
| Net cash used in financing activities |
(62,908 | ) | (89,030 | ) | ||||
| Net increase (decrease) in cash and cash equivalents |
13,395 | (42,404 | ) | |||||
| Cash and cash equivalents at beginning of period |
87,305 | 93,643 | ||||||
| Cash and cash equivalents at end of period |
$ | 100,700 | $ | 51,239 | ||||
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