Exhibit 99.1
 
 
 News Release

Contact: For Release:
Brad Cohen Oct. 27, 2011
Public Relations 1:05 p.m. PDT
Quantum Corp.  
(408) 944-4044  
brad.cohen@quantum.com  

Christi Lee
Investor Relations
Quantum Corp.
(408) 944-4450
ir@quantum.com
 
QUANTUM CORPORATION REPORTS FISCAL SECOND QUARTER RESULTS
 
Highlights:
SAN JOSE, Calif., Oct. 27, 2011 – Quantum Corp. (NYSE:QTM), a proven global expert in data protection and big data management, today reported results for the second quarter of fiscal 2012 (FQ2’12), ended Sept. 30, 2011. Revenue for the quarter totaled $165 million, down 2 percent from the second quarter of fiscal 2011 (FQ2’11) primarily due to expected reductions in media royalties and OEM revenue. However, total revenue was up $12 million sequentially, with record revenue of $36 million from disk system and software sales, including related maintenance, which increased 17 percent from FQ2’11 and 30 percent over the prior quarter. In addition, Quantum branded revenue, which represented 82 percent of total non-royalty revenue for the quarter, grew 4 percent year-over-year and 11 percent sequentially.
 
For FQ2’12, GAAP net income was $4 million, or 1 cent per diluted share, compared to GAAP net income of $3 million, or 1 cent per diluted share, in FQ2’11. Non-GAAP net income for the quarter was $14 million, or 6 cents per diluted share, up from $13 million, or 6 cents per diluted share, in the comparable quarter last year.
 
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“This was our eighth consecutive quarter of year-over-year branded revenue growth and one in which we generated our highest level of disk and software revenue to date,” said Jon Gacek, president and CEO of Quantum. “We had strong customer traction with our new DXi® and StorNext® appliance introductions, as particularly reflected by the revenue generated from our launch of the DXi6701/02 disk backup and deduplication products, which was the most successful branded systems product launch in Quantum’s history.
 
“We also grew branded tape automation revenue 5 percent on a year-over-year basis, partly driven by adding 135 new enterprise and midrange customers. In addition, during the quarter we launched the vmPRO 4000, the first virtual data protection offering resulting from our June acquisition of Pancetera Software. All of this speaks to the momentum and opportunity we see as we continue to leverage our proven expertise in data protection and big data management to aggressively introduce new intelligent solutions with unmatched value for meeting customers’ storage challenges.”
 
Beyond driving revenue growth across a number of key areas in FQ2’12, Quantum also paid down $30 million of its senior debt. The company ended the quarter with $69 million of senior debt, $135 million of convertible debt and $49 million in cash and cash equivalents. Reflecting the continued improvements in Quantum’s balance sheet, Standard & Poor’s Rating Services upgraded its outlook on the company from stable to positive during the quarter.
 
Outlook
For the third quarter of fiscal 2012, the company expects:
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Business Highlights
Key business highlights for the September quarter include the following:
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Conference Call and Audio Webcast Notification
Quantum will hold a conference call today, Oct. 27, 2011, at 2:00 p.m. PDT, to discuss its fiscal second quarter results. Press and industry analysts are invited to attend in listen-only mode. Dial-in number: (480) 629-9867 (U.S. & International). Quantum will provide a live audio webcast of the conference call beginning today, Oct. 27, 2011, at 2:00 p.m. PDT. Site for the webcast and related information: http://www.quantum.com/investors.
 
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About Quantum
Quantum Corp. (NYSE:QTM) is a proven global expert in data protection and big data management. From small businesses to multinational enterprises, more than 50,000 customers trust Quantum to solve their data protection, retention and management challenges. Quantum’s best-of-breed, open systems solutions provide significant storage efficiencies and cost savings while minimizing risk and protecting prior investments. They include: DXi®-Series disk-based deduplication and replication systems for fast backup and restore, Scalar® tape automation products for disaster recovery and long-term data retention, StorNext® data management software and appliances for high-performance file sharing and archiving and vmPRO™ solutions for protecting virtual machine data. Quantum Corp., 1650 Technology Drive, Suite 800, San Jose, CA 95110, (408) 944-4000, www.quantum.com.
 
###
 
Quantum, the Quantum logo, DXi, Scalar, StorNext and vmPRO are either registered trademarks or trademarks of Quantum Corporation and its affiliates in the United States and/or other countries. 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, the statements regarding the momentum and opportunity we see, as well as all of our statements under the “Outlook” section are forward-looking statements 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 statement. 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 “Item 1A. Risk Factors,” in Quantum’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on June 14, 2011 and Quantum’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 9, 2011. Quantum expressly disclaims any obligation to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.
 
Use of Non-GAAP Financial Measures
 
Quantum believes that the non-GAAP financial measures disclosed above provide useful and supplemental information to investors regarding its quarterly financial performance. Quantum management uses these non-GAAP financial measures internally to understand, manage, and evaluate the company’s business results and make operating decisions. For instance, Quantum management often makes decisions regarding staffing, future management priorities and how the company will direct future operating expenses on the basis of non-GAAP financial measures. In addition, compensation of our employees is based in part on the performance of our business based on non-GAAP operating income.
 
The non-GAAP financial measures used in this press release exclude the impact of amortization of intangibles, share-based compensation expense, restructuring charges and acquisition expenses for the following reasons:
 
Amortization of Intangible Assets
This includes acquired intangibles such as purchased technology and customer relationships in connection with prior acquisitions. These expenses are not factored into management’s evaluation of potential acquisitions or Quantum’s performance after completion of the acquisitions because they are not related to Quantum’s core operating performance. In addition, the frequency and amount of such charges can vary significantly based on the size and timing of acquisitions and the maturities of the businesses being acquired. Excluding acquisition-related charges from non-GAAP measures provides investors with a basis to compare Quantum against the performance of other companies without the variability caused by purchase accounting.
 
Share-Based Compensation Expense
Share-based compensation expense relates primarily to equity awards such as stock options and restricted stock units. Share-based compensation is a non-cash expense that varies in amount from period to period and is dependent on market forces that are often beyond Quantum’s control. As a result, management excludes this item from Quantum’s internal operating forecasts and models. Management believes that non-GAAP measures adjusted for share-based compensation provide investors with a basis to measure Quantum’s core performance against the performance of other companies without the variability created by share-based compensation as a result of the variety of equity awards used by other companies and the varying methodologies and assumptions used. 
 
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Restructuring Charges
Restructuring charges primarily relate to expenses associated with changes to Quantum’s operating structure. Restructuring charges are excluded from non-GAAP financial measures because they are not considered core operating activities. Although Quantum has engaged in various restructuring activities in the past, each has been a discrete event based on a unique set of business objectives. Management believes that it is appropriate to exclude restructuring charges from Quantum’s non-GAAP financial measures, as it enhances the ability of investors to compare Quantum’s period-over-period operating results from continuing operations.
 
Acquisition Expenses
The acquisition expenses are those expenses incurred to acquire Pancetera and are not part of Quantum’s future core operations.
 
Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. They are limited in value because they exclude charges that have a material impact on the company’s reported financial results and, therefore, should not be relied upon as the sole financial measures to evaluate the company. The non-GAAP financial measures are meant to supplement, and be viewed in conjunction with, GAAP financial measures. Investors are encouraged to review the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measures as provided in the tables accompanying this press release.
 
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QUANTUM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
 
    Three Months Ended   Six Months Ended
        September 30, 2011       September 30, 2010       September 30, 2011       September 30, 2010
Revenue:                                
       Product   $ 115,126     $ 112,329     $ 217,394     $ 220,783  
       Service     35,898       37,728       72,594       76,365  
       Royalty     14,015       17,665       28,586       33,799  
              Total revenue     165,039       167,722       318,574       330,947  
Cost of revenue:                                
       Product     72,299       73,067       140,806       143,702  
       Service     21,129       23,259       43,195       48,395  
       Restructuring benefit related to cost of revenue     —       —       (300 )     —  
              Total cost of revenue     93,428       96,326       183,701       192,097  
                     Gross margin     71,611       71,396       134,873       138,850  
Operating expenses:                                
       Research and development     19,003       18,128       37,583       36,250  
       Sales and marketing     31,115       29,119       61,640       59,197  
       General and administrative     15,230       14,941       31,232       30,424  
       Restructuring charges     863       94       699       11  
              Total operating expenses     66,211       62,282       131,154       125,882  
Gain on sale of patents     1,500       —       1,500       —  
       Income from operations     6,900       9,114       5,219       12,968  
Interest income and other, net     (182 )     306       (280 )     274  
Interest expense                      (2,852 )                     (6,001 )                       (5,661 )                   (12,116 )
       Income (loss) before income taxes     3,866       3,419       (722 )     1,126  
Income tax provision     305       394       943       797  
       Net income (loss)   $ 3,561     $ 3,025     $ (1,665 )   $ 329  
 
Basic and diluted net income (loss) per share:   $ 0.01     $ 0.01     $ (0.01 )   $ 0.00  
 
Weighted average common and common equivalent shares:                          
              Basic     232,712       218,856       230,579       217,167  
              Diluted     238,459       221,999       230,579       224,267  
Included in the above Statements of Operations:                                
       Amortization of intangibles:                                
              Cost of revenue   $ 2,101     $ 3,966     $ 4,676     $ 9,513  
              Research and development     —       100       —       200  
              Sales and marketing     3,285       3,362       6,616       6,756  
              General and administrative     7       25       32       50  
      5,393       7,453       11,324       16,519  
       Share-based compensation:                                
              Cost of revenue     568       444       1,023       904  
              Research and development     1,031       581       1,671       1,330  
              Sales and marketing     1,213       720       1,932       1,605  
              General and administrative     993       729       2,196       1,677  
      3,805       2,474       6,822       5,516  
       Acquisition expenses     93       —       325       —  

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QUANTUM CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 
    September 30, 2011   March 31, 2011*
Assets                        
Current assets:                
       Cash and cash equivalents   $ 46,460     $ 76,010  
       Restricted cash     2,996       1,863  
       Accounts receivable, net     108,645       114,969  
       Manufacturing inventories     50,438       48,131  
       Service parts inventories     42,705       45,036  
       Deferred income taxes     6,362       6,271  
       Other current assets     10,915       11,274  
              Total current assets     268,521       303,554  
Long-term assets:                
       Property and equipment, net     25,030       24,980  
       Intangible assets and goodwill     91,144       91,481  
       Other long-term assets     9,496       10,950  
              Total long-term assets     125,670       127,411  
    $ 394,191     $ 430,965  
Liabilities and Stockholders’ Deficit                
Current liabilities:                
       Accounts payable   $ 53,394     $ 52,203  
       Accrued warranty     7,113       7,034  
       Deferred revenue, current     81,858       87,488  
       Current portion of long-term debt     708       1,067  
       Accrued restructuring charges     1,276       4,028  
       Accrued compensation     26,703       31,249  
       Income taxes payable     1,386       1,172  
       Other accrued liabilities     19,960       21,418  
              Total current liabilities     192,398       205,659  
Long-term liabilities:                
       Deferred revenue, long-term     34,361       34,281  
       Deferred income taxes     6,174       6,820  
       Long-term debt     68,106       103,267  
       Convertible subordinated debt     135,000       135,000  
       Other long-term liabilities     7,281       7,049  
              Total long-term liabilities     250,922       286,417  
Stockholders’ deficit                         (49,129 )                    (61,111 )
    $ 394,191     $ 430,965  
____________________                

*        Derived from the March 31, 2011 audited Consolidated Financial Statements.
 
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QUANTUM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
  Six Months Ended
  September 30, 2011        September 30, 2010
Cash flows from operating activities:              
       Net income (loss) $     (1,665 )   $     329  
       Adjustments to reconcile net income (loss) to net cash provided by operating activities:              
              Depreciation   5,928       5,878  
              Amortization   12,521       17,327  
              Service parts lower of cost or market adjustment   3,851       7,053  
              Deferred income taxes   (713 )     (171 )
              Share-based compensation   6,822       5,516  
              Changes in assets and liabilities, net of effect of acquisition:              
                     Accounts receivable   6,330       2,559  
                     Manufacturing inventories   (5,992 )     (974 )
                     Service parts inventories   2,166       1,033  
                     Accounts payable   1,189       (3,595 )
                     Accrued warranty   79       329  
                     Deferred revenue   (5,578 )     (18,142 )
                     Accrued restructuring charges   (2,761 )     (2,737 )
                     Accrued compensation   (4,506 )     (3,154 )
                     Income taxes payable   248       (907 )
                     Other assets and liabilities   (913 )     145  
Net cash provided by operating activities   17,006       10,489  
 
Cash flows from investing activities:              
       Purchases of property and equipment   (6,036 )     (7,677 )
       (Increase) decrease in restricted cash   (1,245 )     69  
       Return of principal from other investments   —       95  
       Payment for business acquisition, net of cash acquired   (8,152 )     —  
Net cash used in investing activities   (15,433 )     (7,513 )
 
Cash flows from financing activities:              
       Repayments of long-term debt   (35,521 )     (942 )
       Repayments of convertible subordinated debt   —       (22,099 )
       Payment of taxes due upon vesting of restricted stock   (2,544 )     (2,076 )
       Proceeds from issuance of common stock   6,975       3,366  
Net cash used in financing activities   (31,090 )     (21,751 )
 
Effect of exchange rate changes on cash and cash equivalents   (33 )     40  
 
Net decrease in cash and cash equivalents              (29,550 )                (18,735 )
Cash and cash equivalents at beginning of period   76,010       114,947  
Cash and cash equivalents at end of period $ 46,460     $ 96,212  
               
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QUANTUM CORPORATION
GAAP TO NON-GAAP RECONCILIATION
(In thousands, except per share amounts)
(Unaudited)
 
  Three Months Ended September 30, 2011
  Gross
Margin		   Gross
Margin
Rate		   Net Income   Per Share
Net Income,
Basic		   Per Share
Net Income,
Diluted
GAAP $     71,611      43.4 %      $     3,561      $     0.01      $     0.01
Non-GAAP Reconciling Items:                            
       Amortization of intangibles   2,101           5,393            
       Share-based compensation   568           3,805            
       Restructuring charges   —           863            
       Acquisition expenses   —           93            
Non-GAAP $ 74,280   45.0 %   $ 13,715   $ 0.06   $ 0.06
 
                     Computation of basic and diluted net income per share:           GAAP   Non-GAAP
                            Net income                   $ 3,561   $ 13,715
                                   Interest on dilutive convertible notes             —     1,191
                            Income for purposes of computing income per diluted share   $ 3,561   $ 14,906
 
                     Weighted average shares:                            
                            Basic                     232,712     232,712
                                   Dilutive shares from stock plans                 5,747     5,747
                                   Dilutive shares from convertible notes             —     31,158
                            Diluted                     238,459     269,617
                             
  Three Months Ended September 30, 2010
  Gross
Margin		   Gross
Margin
Rate		   Net Income   Per Share
Net Income,
Basic		   Per Share
Net Income,
Diluted
GAAP $     71,396      42.6 %      $     3,025      $     0.01      $     0.01
Non-GAAP Reconciling Items:                            
       Amortization of intangibles   3,966           7,453            
       Share-based compensation   444           2,474            
       Restructuring charges   —           94            
Non-GAAP $ 75,806   45.2 %   $ 13,046   $ 0.06   $ 0.06
                              
                     Computation of basic and diluted net income per share:           GAAP   Non-GAAP
                            Net income                   $ 3,025   $ 13,046
                                   Interest on dilutive convertible notes             —     —
                            Income for purposes of computing income per diluted share   $ 3,025   $ 13,046
              
                     Weighted average shares:                            
                            Basic                   218,856     218,856
                                   Dilutive shares from stock plans                 3,143     3,143
                                   Dilutive shares from convertible notes             —     —
                            Diluted                   221,999     221,999
                           
The non-GAAP information set forth in this table is not prepared in accordance with generally accepted accounting principles and may be different from non-GAAP financial information used by other companies.
 
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QUANTUM CORPORATION
FORECAST THIRD QUARTER FISCAL 2012
GAAP TO NON-GAAP RECONCILIATION
(Dollars in millions)
 
  Dollars
Forecast operating expense on a GAAP basis $     67.2
Forecast amortization of intangibles   3.3
Forecast share-based compensation   2.9
Forecast operating expense on a non-GAAP basis $ 61.0
     
Estimates based on current (October 27, 2011) projections.
 
The projected GAAP and non-GAAP financial information set forth in this table represent forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For risk factors that could impact these projections, see our Annual Report on Form 10-K as filed with the SEC on June 14, 2011. We disclaim any obligation to update information in any forward-looking statement.
 
The non-GAAP financial information set forth in this table is not prepared in accordance with generally accepted accounting principles and may be different from non-GAAP financial information used by other companies.
 
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