Exhibit 99.1


 
Contact: For Release:
Brad Cohen Oct. 23, 2013
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

Generates Record Revenue from Big Data Management and Archive Solutions, Including Several Key Lattus Object Storage Deals

SAN JOSE, Calif., Oct. 23, 2013 – Quantum Corp. (NYSE:QTM), a proven global expert in data protection and big data management, today reported results for the second quarter of fiscal 2014, ended Sept. 30, 2013. Revenue for the quarter was $131.4 million, down 11 percent from the second quarter of fiscal 2013, primarily as a result of softness in Asia and lower-than-expected revenue from the U.S. federal government and Europe. Quantum achieved record revenue from sales of its big data management and archive solutions and also reported a higher gross margin rate and improved operating income and net income over the same quarter last year.

The GAAP gross margin for the quarter was 42.9 percent, up from 40.2 percent a year earlier, while the non-GAAP gross margin increased to 43.6 percent, from 41.4 percent in the same quarter a year ago. Combined with an 11 percent year-over-year reduction in GAAP and non-GAAP operating expenses, the higher gross margin resulted in improved operating and net income results.

-more-


On a GAAP basis, Quantum reported an operating loss of $5.0 million for the quarter, compared to a $10.0 million loss in the same quarter last year, and had a net loss of $8.0 million, or $0.03 per diluted share, compared to a net loss of $12.3 million in the prior year. On a non-GAAP basis, the company generated $1.0 million of operating income, an improvement from a $2.6 million operating loss a year ago. Quantum reported a non-GAAP net loss of $1.9 million, or $0.01 per diluted share, representing a $3.0 million improvement from a year earlier.

“Record quarterly revenue from big data management and archive sales – including several key Lattus™ storage object deals – helped support a year-over-year improvement in gross margin, operating income and net income,” said Jon Gacek, president and CEO of Quantum. “Our better-than-expected operating results also reflected the strength of our business model and focus on driving profit and cash flow. However, the concerns we expressed as we entered the quarter regarding U.S. federal government spending were validated and were a major contributor to our total revenue falling short of expectations.

“In the second half of the fiscal year, we intend to build on our big data leadership in end-to-end content workflow with our newly announced StorNext 5 platform and Lattus, driving deeper into current vertical markets and expanding into others. We will also leverage our market share leadership in tape automation and our comprehensive data protection portfolio to support share gains in the data center, including deploying Lattus to address converged backup and archive needs. Finally, we are looking to extend our market reach through both existing and new channel and strategic partnerships. Throughout these efforts, we will continue to maintain our balanced approach to driving increased profit and cash flow while pursuing revenue growth.”

Outlook

For the third quarter of fiscal 2014, Quantum expects:

-more-


Business Highlights

Key business highlights for the September quarter include the following:

-more-


Conference Call and Audio Webcast Notification

Quantum will hold a conference call today, Oct. 23, 2013, 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) 629-9866 (U.S. & International). Quantum will provide a live audio webcast of the conference call beginning today, Oct. 23, 2013, at 2:00 p.m. PDT. Site for the webcast and related information: www.quantum.com/investors.

About Quantum

Quantum is a proven global expert in data protection and big data management, providing specialized storage solutions for physical, virtual and cloud environments. From small businesses to major enterprises, more than 100,000 customers have trusted Quantum to help maximize the value of their data by protecting and preserving it over its entire lifecycle. With Quantum, customers can Be Certain™ they’re able to adapt in a changing world – keeping more data longer, bridging from today to tomorrow, and reducing costs. See how at www.quantum.com.

###

Quantum, the Quantum logo, Be Certain, DXi, Lattus and StorNext 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, our statements regarding our priorities and focuses for the second half of our fiscal year, that we will maintain our balanced approach to driving increased profit and cash flow while pursuing revenue growth and 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 “Risk Factors” in Quantum’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on June 7, 2013 and in Quantum’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 9, 2013. Quantum expressly disclaims any obligation to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

-more-


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, restructuring charges and share-based compensation expense 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.

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.

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.

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.

Note 1

In the first quarter of fiscal year 2014, Quantum identified an error related to the accounting for certain allowances for estimated future price adjustments to customers which impacted prior reporting periods. As a result, the company’s financial statements for the second quarter and first six months of fiscal 2013 have been revised. For additional information, refer to our Form 10-Q filed with the Securities and Exchange Commission on August 9, 2013.

-more-


QUANTUM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)

Three Months Ended Six Months Ended
September 30, 2013        September 30, 2012        September 30, 2013        September 30, 2012
(Revised) Note 1 (Revised) Note 1
Revenue:
        Product $                   84,707   $        100,041   $                   170,676   $        193,826  
        Service 36,194 35,711 72,686 71,798
        Royalty 10,529 11,562 36,037 22,543
                Total revenue 131,430 147,314 279,399 288,167
Cost of revenue:
        Product 57,882 67,884 116,665 132,634
        Service 17,116 20,232 36,347 40,536
        Restructuring charges related to cost of revenue 89 - 89 -
                Total cost of revenue 75,087 88,116 153,101 173,170
                        Gross margin 56,343 59,198 126,298 114,997
Operating expenses:
        Research and development 16,359 19,475 33,053 38,024
        Sales and marketing 29,995 34,441 60,153 68,885
        General and administrative 14,813 15,279 29,510 32,059
        Restructuring charges 208 - 2,767 -
Total operating expenses 61,375 69,195 125,483 138,968
                Income (loss) from operations (5,032 ) (9,997 ) 815 (23,971 )
Other income and expense 46 (110 ) 421 (448 )
Interest expense (2,440 ) (1,817 ) (4,879 ) (3,666 )
                Loss before income taxes (7,426 ) (11,924 ) (3,643 ) (28,085 )
Income tax provision 534 370 924 869
                Net loss $ (7,960 ) $ (12,294 ) $ (4,567 ) $ (28,954 )
 
Basic and diluted net loss per share: $ (0.03 ) $ (0.05 ) $ (0.02 ) $ (0.12 )
 
Weighted average basic and diluted shares: 247,074 239,856 246,569 238,251
 
Included in the above Statements of Operations:
Amortization of intangibles:
        Cost of revenue $ 368 $ 1,134 $ 736 $ 2,496
        Sales and marketing 1,857 2,556 3,713 5,812
  2,225 3,690 4,449 8,308
Share-based compensation:
        Cost of revenue 523 642 1,051 1,213
        Research and development 908 947 1,776 1,847
        Sales and marketing 1,080 1,246 2,154 2,330
        General and administrative 980 891 1,866 2,623
3,491 3,726 6,847 8,013

Note 1 is presented above, before the Condensed Consolidated Statements of Operations.

-more-


QUANTUM CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

September 30, 2013 March 31, 2013*
(Revised) Note 1
Assets  
Current assets:
       Cash and cash equivalents $       73,829          $             68,976
       Restricted cash 3,255 3,023
       Accounts receivable 87,097 97,546
       Manufacturing inventories 49,847 53,075
       Service parts inventories 30,064 35,368
       Other current assets 10,748 12,192
              Total current assets 254,840 270,180
 
Long-term assets:
       Property and equipment 19,437 21,456
       Intangible assets 8,364 12,813
       Goodwill 55,613 55,613
       Other long-term assets 9,541 9,531
              Total long-term assets 92,955 99,413
 
$ 347,795 $ 369,593
Liabilities and Stockholders' Deficit
Current liabilities:
       Accounts payable $ 33,417 $ 47,634
       Accrued warranty 6,489 7,520
       Deferred revenue, current 84,273 91,108
       Accrued restructuring charges, current 3,529 3,021
       Accrued compensation 25,902 30,964
       Other accrued liabilities 21,766 20,188
              Total current liabilities 175,376 200,435
 
Long-term liabilities:
       Deferred revenue, long-term 38,778 38,393
       Convertible subordinated debt 205,000 205,000
       Other long-term liabilities 9,433 9,547
              Total long-term liabilities 253,211 252,940
 
       Stockholders' deficit (80,792 ) (83,782 )
 
$ 347,795 $ 369,593

* Derived from the March 31, 2013 audited Consolidated Financial Statements.

Note 1 is presented above, before the Condensed Consolidated Statements of Operations.

-more-


QUANTUM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

Six Months Ended
September 30, 2013       September 30, 2012
(Revised) Note 1
Cash flows from operating activities:
       Net loss $ (4,567 ) $ (28,954 )
       Adjustments to reconcile net loss to net cash provided by (used in) operating
       activities:
              Depreciation 5,671 6,151
              Amortization 5,265 8,895
              Service parts lower of cost or market adjustment 6,659 4,700
              Deferred income taxes 59 274
              Share-based compensation 6,847 8,013
              Changes in assets and liabilities:
                     Accounts receivable 10,449 11,328
                     Manufacturing inventories 185 1,499
                     Service parts inventories 1,688 2,019
                     Accounts payable (14,245 ) (13,347 )
                     Accrued warranty (1,031 ) 318
                     Deferred revenue (6,449 ) (11,058 )
                     Accrued restructuring charges 359 (828 )
                     Accrued compensation (5,195 ) (4,546 )
                     Other assets and liabilities 2,533 1,014
Net cash provided by (used in) operating activities 8,228 (14,522 )
               
Cash flows from investing activities:
       Purchases of property and equipment (3,226 ) (6,691 )
       (Increase) decrease in restricted cash (117 ) 169
       Purchases of other investments (534 ) (2,169 )
       Return of principal from other investments - 208
Net cash used in investing activities (3,877 ) (8,483 )
 
Cash flows from financing activities:
       Payment of taxes due upon vesting of restricted stock (1,770 ) (1,882 )
       Proceeds from issuance of common stock 2,247 2,599
Net cash used in financing activities 477 717
Effect of exchange rate changes on cash and cash equivalents 25 (1 )
Net increase (decrease) in cash and cash equivalents 4,853 (22,289 )
Cash and cash equivalents at beginning of period 68,976 51,261
Cash and cash equivalents at end of period $                   73,829 $                  28,972

Note 1 is presented above, before the Condensed Consolidated Statements of Operations.

-more-


QUANTUM CORPORATION
GAAP TO NON-GAAP RECONCILIATION
(In thousands, except per share amounts)
(Unaudited)

Three Months Ended September 30, 2013
Gross
Margin		 Gross
Margin
Rate		 Operating
Expenses		 Income (Loss)
From
Operations		 Net Loss Per Share
Net Loss,
Basic		 Per Share
Net Loss,
Diluted
GAAP $ 56,343      42.9%      $ 61,375      $ (5,032 )      $ (7,960 )      $ (0.03 )      $ (0.03 )
Non-GAAP Reconciling Items:
       Amortization of intangibles 368 (1,857 ) 2,225 2,225
       Share-based compensation 523 (2,968 ) 3,491 3,491
       Restructuring charges 89 (208 ) 297 297
Non-GAAP $ 57,323 43.6% $      56,342 $           981 $      (1,947 ) $      (0.01 ) $ (0.01 ) ‡
 
                     Computation of basic and diluted net loss per share: GAAP Non-GAAP
                            Net loss $   (7,960 ) $    (1,947 )
 
                     Weighted average shares:
                            Basic and diluted 247,074 247,074
 
 
Six Months Ended September 30, 2013
Gross
Margin		 Gross
Margin
Rate		 Operating
Expenses		 Income From
Operations		 Net
Income
(Loss)		 Per Share
Net
Income
(Loss),
Basic		 Per Share
Net
Income
(Loss),
Diluted
GAAP $ 126,298 45.2% 125,483 815   $ (4,567 ) $ (0.02 ) $ (0.02 )
Non-GAAP Reconciling Items:
       Amortization of intangibles 736   (3,713 ) 4,449 4,449
       Share-based compensation 1,051 (5,796 ) 6,847 6,847
       Restructuring charges 89 (2,767 ) 2,856 2,856
Non-GAAP $ 128,174 45.9%   $ 113,207 $ 14,967 $ 9,585 $ 0.04 $ 0.04 ‡
 
                     Computation of basic and diluted net income (loss) per share: GAAP Non-GAAP
                            Net income (loss) $ (4,567 ) $ 9,585
                                   Interest on dilutive convertible notes - 1,575
                            Income (loss) for purposes of computing income (loss) per diluted share $ (4,567 ) $ 11,160
 
                     Weighted average shares:
                            Basic 246,569 246,569
                                   Dilutive shares from stock plans - 2,851
                                   Dilutive shares from convertible notes - 42,502
                            Diluted 246,569 291,922

‡ Non-GAAP per share net income (loss): Each fiscal period is calculated independently, thus the sum of each of the quarter's non-GAAP per share net income (loss) does not necessarily equal the year-to-date non-GAAP per share net income (loss). For example, certain convertible subordinated notes were anti-dilutive in the second quarter of fiscal 2014 but were dilutive for the year-to-date period.

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.

-more-


QUANTUM CORPORATION
GAAP TO NON-GAAP RECONCILIATION
(In thousands, except per share amounts)
(Unaudited)

Three Months Ended September 30, 2012
(Revised) Note 1
Gross
Margin		 Gross
Margin
Rate		 Operating
Expenses		  Loss From
Operations		 Net Loss Per Share
Net Loss,
Basic		 Per Share
Net Loss,
Diluted
GAAP $ 59,198      40.2%      $ 69,195        $     (9,997 )      $ (12,294 )      $ (0.05 )      $     (0.05 )
Non-GAAP Reconciling Items:
       Amortization of intangibles 1,134 (2,556 ) 3,690 3,690
       Share-based compensation 642 (3,084 ) 3,726 3,726
Non-GAAP $ 60,974 41.4% $    63,555 $ (2,581 ) $ (4,878 ) $ (0.02 ) $ (0.02 )
 
                     Computation of basic and diluted net loss per share: GAAP Non-GAAP
                            Net loss $ (12,294 ) $ (4,878 )
 
                     Weighted average shares:
                            Basic and diluted 239,856 239,856
 
Six Months Ended September 30, 2012
(Revised) Note 1
Gross
Margin		 Gross
Margin
Rate		 Operating
Expenses		  Loss From
Operations		 Net Loss Per Share
Net Loss,
Basic		 Per Share
Net Loss,
Diluted
GAAP $ 114,997 39.9% $ 138,968 $ (23,971 ) $ (28,954 ) $ (0.12 ) $ (0.12 )
Non-GAAP Reconciling Items:
       Amortization of intangibles 2,496 (5,812 ) 8,308 8,308
       Share-based compensation 1,213 (6,800 ) 8,013 8,013
Non-GAAP $ 118,706 41.2% $ 126,356 $   (7,650 ) $ (12,633 ) $   (0.05 ) $  (0.05 )
 
                     Computation of basic and diluted net loss per share: GAAP Non-GAAP
                            Net loss $ (28,954 ) $ (12,633 )
                     Weighted average shares:
                            Basic and diluted 238,251 238,251

Note 1 is presented above, before the Condensed Consolidated Statements of Operations.

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.

-more-


QUANTUM CORPORATION
FORECAST THIRD QUARTER FISCAL 2014
GAAP TO NON-GAAP RECONCILIATION
(Dollars in millions)

Percentage Range
Forecast third quarter gross margin rate on a GAAP basis 41.3 % - 42.3 %
Forecast amortization of intangibles       0.3%      
Forecast share-based compensation 0.4%
Forecast third quarter gross margin rate on a non-GAAP basis 42.0 % - 43.0 %
 
Dollar Range
Forecast third quarter operating expense on a GAAP basis $ 59.9 - $ 61.9
Forecast amortization of intangibles 1.9
Forecast share-based compensation 3.0
Forecast third quarter operating expense on a non-GAAP basis $ 55.0 - $ 57.0

Estimates based on current (October 23, 2013) 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 7, 2013. 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.

-end-