Exhibit 99.1


Contact: For Release:
Brad Cohen May 7, 2014
Public Relations 1:05 p.m. PDT
Quantum Corp.
(408) 944-4044
brad.cohen@quantum.com
 
Brinlea Johnson or Allise Furlani
Investor Relations
The Blueshirt Group
(212) 331-8424 or (212) 331-8433
ir@quantum.com

QUANTUM CORPORATION REPORTS FISCAL FOURTH QUARTER AND FULL YEAR 2014 RESULTS

Fourth Quarter Highlights:

SAN JOSE, Calif., May 7, 2014 – Quantum Corp. (NYSE:QTM) today reported results for the fiscal fourth quarter and full year 2014 ended March 31, 2014.

Fiscal Fourth Quarter 2014 Results
(All comparisons are relative to the fiscal fourth quarter 2013)

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Fiscal Year 2014 Results
(All comparisons are relative to the fiscal year 2013)

“We’re very pleased with our progress over the past year – financially, operationally and strategically,” said Jon Gacek, president and CEO at Quantum. “We reduced our cost structure and achieved our goal of significantly improving bottom line results and increasing cash flow. We also took a number of actions that successfully drove greater operational and sales effectiveness, including aligning our engineering and product groups to better leverage cross-company strengths and refining our sales model to create greater focus in both key verticals and the broader storage market. Lastly, we enhanced our strategic position and value to customers, introducing a range of new offerings, including: our StorNext 5 platform and related appliances for high-performance, scale-out content storage and collaboration; DXi deduplication and vmPRO backup software products for virtual environments; and a Lattus object storage solution data center customers can deploy as a highly scalable, self-healing and self-protecting nearline disk tier – onsite or as the foundation for a private cloud. 

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“In this new fiscal year, we will build on our progress through several strategic initiatives that leverage our technology, product and install base strengths and capitalize on the market trends in data protection and scale-out storage – with the goal of delivering profitable growth in our core business and increased shareholder value.”

Fiscal Year 2015 Outlook
For the fiscal first quarter, Quantum expects:
For the full fiscal year, Quantum expects:
Fiscal Fourth Quarter 2014 Business Highlights

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Conference Call and Audio Webcast Notification
Quantum will hold a conference call today, May 7, 2014, at 2:00 p.m. PDT, to discuss its fiscal fourth quarter and full year results. Press and industry analysts are invited to attend in listen-only mode. Dial-in number: (480) 629-9835 (U.S. & International). Quantum will provide a live audio webcast of the conference call beginning today, May 7, 2014, at 2:00 p.m. PDT. Site for the webcast and related information: www.quantum.com/investors.

About Quantum
Quantum is a leading expert in scale-out storage, archive and data protection, providing solutions for capturing, sharing, transforming and preserving digital assets over the entire data lifecycle. From small businesses to major enterprises, more than 100,000 customers have trusted Quantum to address their most demanding data workflow challenges. With Quantum, customers can Be Certain™ they have the end-to-end storage foundation to maximize the value of their data by making it accessible whenever and wherever needed, retaining it indefinitely and reducing total cost and complexity. See how at www.quantum.com/customerstories.

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Quantum, the Quantum logo, Be Certain, DXi, StorNext, Lattus, vmPRO and Scalar 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: 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, our statement that we will build on our progress through several strategic initiatives that leverage our technology, product and install base strengths and capitalize on the market trends in data protection and scale-out storage – with the goal of delivering profitable growth in our core business and increased shareholder value, and all of the statements under the Fiscal Year 2015 Outlook heading 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 statements. These risks include operational difficulties, unforeseen technical limitations, 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 February 7, 2014 and in Quantum’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on June 7, 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.

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, restructuring charges and outsourcing transition costs 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 valuation 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.

Outsourcing Transition Costs
Outsourcing transition costs are expenses attributable to transitioning our manufacturing to an outsourced model. These costs are excluded from non-GAAP financial measures because they are not considered core operating activities and management believes that it is appropriate to exclude these costs in order to provide investors the ability to compare Quantum’s period-over-period operating results from continuing 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.

Note 1

During fiscal year 2014, Quantum identified errors related to the accounting for rent expense and certain allowances for estimated future price adjustments to customers which impacted prior reporting periods. In addition, the company had previously identified errors related to the accrual for sales commissions that also impacted prior reporting periods. While these errors were not material to any previously issued annual or quarterly consolidated financial statements, management concluded that correcting the errors in fiscal 2014 would be material to the year’s consolidated financial statements. Quantum will revise its prior period annual and quarterly consolidated financial statements to correct the errors when next presented in future SEC filings.

In this earnings release, the company has revised the March 31, 2013 Condensed Consolidated Balance Sheet and the Condensed Consolidated Statements of Operations and Cash Flows for the quarter and fiscal year ended March 31, 2013 to record reduced rent expense, additional accounts receivable allowance for future price adjustments and revised sales commission expense. The net impact of the revision was to (a) increase the previously reported net loss for the quarter ended March 31, 2013 by $600,000, (b) reduce the previously reported net loss for the fiscal year ended March 31, 2013 by $200,000 and (c) increase the previously reported accumulated deficit and stockholders’ deficit at March 31, 2013 by $800,000.

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

   Three Months Ended Twelve Months Ended   
     March 31, 2014      March 31, 2013      March 31, 2014      March 31, 2013
(Revised) Note 1 (Revised) Note 1
Revenue:
       Product $           79,426 $           92,615 $           348,318 $           398,910
       Service 37,587 36,899 147,199 144,037
       Royalty 10,955 10,411 57,648 44,492
              Total revenue 127,968 139,925 553,165 587,439
Cost of revenue:
       Product 55,909 62,633 237,076 267,274
       Service 19,877 19,708 75,930 79,604
       Restructuring charges 162 - 539 -
              Total cost of revenue 75,948 82,341 313,545 346,878
                     Gross margin 52,020 57,584 239,620 240,561
       Operating expenses:
              Research and development 15,312 17,321 64,375 73,960
              Sales and marketing 29,194 34,400 118,771 136,873
              General and administrative 14,120 15,230 57,865 62,017
              Restructuring charges 6,150 3,569 10,675 10,171
       Total operating expenses 64,776 70,520 251,686 283,021
       Gain on sale of assets 267 - 267 -
                            Loss from operations (12,489 ) (12,936 ) (11,799 ) (42,460 )
         Other income and expense 505 172 1,296 (216 )
       Interest expense (2,435 ) (2,446 ) (9,754 ) (8,342 )
                            Loss before income taxes (14,419 ) (15,210 ) (20,257 ) (51,018 )
       Income tax provision (15 ) (56 ) 1,217 1,161
                            Net loss $ (14,404 ) $ (15,154 ) $ (21,474 ) $ (52,179 )
 
       Basic and diluted net loss per share: $ (0.06 ) $ (0.06 ) $ (0.09 ) $ (0.22 )
       Weighted average basic and diluted shares: 249,593 242,165 247,024 239,855
 
 
Included in the above Statements of Operations:
Amortization of intangibles:
                     Cost of revenue $ 372 $ 368 $ 1,476 $ 3,775
                     Sales and marketing 1,857 1,856 7,426 9,524
2,229 2,224 8,902 13,299
Share-based compensation:
                     Cost of revenue 403 550 1,963 2,389
                     Research and development 792 893 3,430 3,665
                     Sales and marketing 949 1,096 4,097 4,699
                     General and administrative 1,047 871 3,969 4,386
3,191 3,410 13,459 15,139
Outsourcing Transition Costs:
                     Cost of revenue 598 - 1,550 -
598 - 1,550 -
 

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

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

      March 31, 2014       March 31, 2013*
(Revised) Note 1
Assets
Current assets:
       Cash and cash equivalents $           99,125 $              68,976
       Restricted cash 2,760 3,023
       Accounts receivable 101,605 96,835
       Manufacturing inventories 34,815 53,075
       Service parts inventories 25,629 35,368
       Other current assets 10,624 11,831
              Total current assets 274,558 269,108
 
Long-term assets:
       Property and equipment 17,574 21,456
       Intangible assets 3,911 12,813
       Goodwill 55,613 55,613
       Other long-term assets 10,605 9,892
              Total long-term assets 87,703 99,774
 
$ 362,261 $ 368,882
 
Liabilities and Stockholders' Deficit
Current liabilities:
       Accounts payable $ 42,255 $ 47,634
       Accrued warranty 6,116 7,520
       Deferred revenue, current 98,098 91,108
       Accrued restructuring charges, current 4,345 3,021
       Accrued compensation 25,036 30,964
       Other accrued liabilities 15,168 14,569
              Total current liabilities 191,018 194,816
 
Long-term liabilities:
       Deferred revenue, long-term 40,054 38,393
       Accrued restructuring charges, long-term 4,023 1,735
       Convertible subordinated debt 203,735 205,000
       Other long-term liabilities 10,831 11,301
              Total long-term liabilities 258,643 256,429
 
       Stockholders' deficit (87,400 ) (82,363 )
 
$ 362,261 $ 368,882

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

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

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

Twelve Months Ended
      March 31, 2014       March 31, 2013
(Revised) Note 1
Cash flows from operating activities:
       Net loss $            (21,474 ) $             (52,179 )
       Adjustments to reconcile net loss to net cash provided by operating activities:
              Depreciation 10,713 12,413
              Amortization 10,536 14,646
              Service parts lower of cost or market adjustment 11,307 10,081
              Deferred income taxes 36 (142 )
              Share-based compensation 13,459 15,139
              Other non-cash gain 983 -
              Changes in assets and liabilities:
                     Accounts receivable (4,770 ) 11,880
                     Manufacturing inventories 13,352 (2,098 )
                     Service parts inventories 2,675 3,735
                     Accounts payable (5,418 ) (8,630 )
                     Accrued warranty (1,404 ) (66 )
                     Deferred revenue 8,651 (370 )
                     Accrued restructuring charges 3,619 3,009
                     Accrued compensation (6,140 ) (1,663 )
                     Other assets and liabilities (651 ) 1,980
Net cash provided by operating activities 35,474 7,735
 
Cash flows from investing activities:
       Purchases of property and equipment (5,957 ) (10,099 )
       Decrease in restricted cash 426 1,113
       Purchases of other investments (1,118 ) (2,169 )
       Return of principal from other investments - 247
Net cash used in investing activities (6,649 ) (10,908 )
 
Cash flows from financing activities:
       Repayments of long-term debt - (49,495 )
       Borrowings of convertible subordinated debt, net - 67,701
       Repayments of convertible subordinated debt (1,265 ) -
       Payment of taxes due upon vesting of restricted stock (1,880 ) (2,036 )
       Proceeds from issuance of common stock 4,430 4,805
Net cash provided by financing activities 1,285 20,975
 
Effect of exchange rate changes on cash and cash equivalents 39 (87 )
 
Net increase in cash and cash equivalents 30,149 17,715
Cash and cash equivalents at beginning of period 68,976 51,261
Cash and cash equivalents at end of period $ 99,125 $ 68,976

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

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

Three Months Ended March 31, 2014
     Gross Margin      Gross
Margin
Rate
     Loss From
Operations
     Operating
Margin
     Net Loss      Per Share Net
  Loss, Basic
     Per Share Net
Loss, Diluted
GAAP $ 52,020   40.7 % $     (12,489 )       (9.8 )% $      (14,404 ) $         (0.06 ) $       (0.06 )
Non-GAAP Reconciling Items:
       Amortization of intangibles 372   2,229 2,229  
       Share-based compensation 403 3,191 3,191
       Restructuring charges 162 6,312 6,312
       Outsourcing transition costs 598 598 598
Non-GAAP $ 53,555 41.9 % $ (159 ) (0.1 )% $ (2,074 ) $ (0.01 ) $ (0.01 ) *
 
                     Computation of basic and diluted net loss per share: GAAP Non-GAAP
                            Net loss $        (14,404 ) $ (2,074 )
 
                     Weighted average shares:  
                            Basic and diluted 249,593 249,593

Twelve Months Ended March 31, 2014
     Gross Margin      Gross
Margin
Rate
     Income (Loss)
From
Operations
     Operating
Margin
     Net Income
(Loss)
     Per Share Net
Income (Loss),
Basic
     Per Share Net
Income (Loss),
Diluted
GAAP $ 239,620    43.3 % $          (11,799 )       (2.1 )% $      (21,474 ) $                  (0.09 ) $         (0.09 )
Non-GAAP Reconciling Items:
       Amortization of intangibles 1,476 8,902 8,902
       Share-based compensation 1,963 13,459 13,459
       Restructuring charges 539 11,214 11,214
       Outsourcing transition costs 1,550 1,550 1,550
Non-GAAP $ 245,148 44.3 % $ 23,326 4.2 % $ 13,651 $ 0.06 $ 0.05  *

                     Computation of basic and diluted net income (loss) per share: GAAP      Non-GAAP
                            Net income (loss) $            (21,474 )   $         13,651
                                   Interest on dilutive convertible notes   - -
                            Income (loss) for purposes of computing income (loss) per diluted share $ (21,474 ) $ 13,651
 
                     Weighted average shares:
                            Basic 247,024 247,024
                                   Dilutive shares from stock plans - 3,004
                                   Dilutive shares from convertible notes - -
                            Diluted 247,024 250,028

* 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 dilutive in the first quarter of fiscal 2014 but were anti-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.

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

Three Months Ended March 31, 2013
(Revised)Note 1
      Gross Margin      Gross
Margin
Rate
      Loss From
Operations
     Operating
Margin
     Net Loss       Per Share Net
  Loss, Basic
       Per Share Net
Loss, Diluted
GAAP $ 57,584       41.2 % $     (12,936 )        (9.2 )%   $     (15,154 ) $         (0.06 ) $     (0.06 )
Non-GAAP Reconciling Items:            
       Amortization of intangibles   368     2,224     2,224    
       Share-based compensation   550   3,410     3,410      
       Restructuring charges -       3,569   3,569      
Non-GAAP $ 58,502 41.8 % $ (3,733 ) (2.7 )% $ (5,951 ) $ (0.03 ) $ (0.03 ) *
 
                     Computation of basic and diluted net loss per share: GAAP Non-GAAP
                            Net loss $ (15,154 ) $       (5,951 )
 
                     Weighted average shares:
                            Basic and diluted 242,165 242,165

Twelve Months Ended March 31, 2013
(Revised)Note 1
      Gross Margin      Gross
Margin
Rate
      Loss From
Operations
     Operating
Margin
     Net Loss       Per Share Net
  Loss, Basic
       Per Share Net
Loss, Diluted
GAAP $ 240,561 41.0 % $     (42,460 )      (7.2 )% $     (52,179 ) $         (0.22 ) $       (0.22 )
Non-GAAP Reconciling Items:
       Amortization of intangibles 3,775 13,299 13,299
       Share-based compensation 2,389 15,139 15,139
       Restructuring charges - 10,171 10,171
Non-GAAP $ 246,725 42.0 % $ (3,851 ) (0.7 )% $ (13,570 )  $ (0.06 ) $ (0.06 ) *
 
                     Computation of basic and diluted net loss per share: GAAP Non-GAAP
                            Net loss $ (52,179 ) $ (13,570 )
 
                     Weighted average shares:
                            Basic and diluted 239,855 239,855

* 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 dilutive in the third quarter of fiscal 2013 but were anti-dilutive for the year-to-date period.

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.

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QUANTUM CORPORATION
FORECAST FIRST QUARTER AND FISCAL 2015
GAAP TO NON-GAAP RECONCILIATION
(Dollars in millions)

FORECAST FIRST QUARTER FISCAL 2015

Percentage Range
Forecast first quarter gross margin rate on a GAAP basis       43.3 %       -       44.3 %
Forecast amortization of intangibles     0.3%  
Forecast share-based compensation   0.4%  
Forecast first quarter gross margin rate on a non-GAAP basis 44.0 % - 45.0 %
 
Dollars
Forecast first quarter operating expense on a GAAP basis* $58.6
Forecast amortization of intangibles 1.9
Forecast share-based compensation 2.7
Forecast first quarter operating expense on a non-GAAP basis $54.0

FORECAST FULL YEAR FISCAL 2015

Percentage Range
Forecast fiscal 2015 gross margin rate on a GAAP basis       44.6%       -       45.6%
Forecast amortization of intangibles 0.2%
Forecast share-based compensation 0.2%
Forecast fiscal 2015 gross margin rate on a non-GAAP basis 45.0% - 46.0%
 
Dollar Range
Forecast fiscal 2015 operating expense on a GAAP basis* $ 227.4 - $ 232.4
Forecast amortization of intangibles 2.8
Forecast share-based compensation 9.6
Forecast fiscal 2015 operating expense on a non-GAAP basis $ 215.0 - $ 220.0

* Forecast first quarter and fiscal year 2015 GAAP operating expense does not reflect facility restructuring charges. These charges will be recognized when we vacate the various locations, which may occur in the first quarter of fiscal 2015 or a later period in fiscal 2015.

Estimates based on current (May 7, 2014) 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.

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