SAN JOSE, CA, Jan 25, 2012 (MARKETWIRE via COMTEX) –Quantum Corp. /quotes/zigman/209763/quotes/nls/qtm QTM +2.67%
— Total revenue of $173 million, with ninth consecutive quarter of year-over-year growth in Quantum branded sales — Record disk systems and software revenue of $36 million, up 18% year-over-year — Strong traction from new midrange and SMB DXi deduplication appliances, vmPRO virtual data protection solutions and StorNext big data management appliances
Quantum Corp. /quotes/zigman/209763/quotes/nls/qtm QTM +2.67% , a proven global expert in data protectionand big data management, today reported results for the third quarterof fiscal 2012 (FQ3’12), ended Dec. 31, 2011. Revenue for the quartertotaled $173 million, down 2 percent from the third quarter of fiscal2011 (FQ3’11) primarily due to expected reductions in OEM and royaltyrevenue. On a sequential basis, third quarter revenue was up $8million. In addition, FQ3’12 was the ninth consecutive quarter ofyear-over-year growth in branded revenue, which increased 3 percentand represented 81 percent of total non-royalty revenue. Quantum alsogenerated record revenue of $36 million from disk system and softwaresales (including related maintenance), which increased 18 percentfrom the same quarter last year.
GAAP net income for FQ3’12 was $4 million, or 2 cents per dilutedshare, compared to GAAP net income of $6 million, or 3 cents perdiluted share, in FQ3’11. Non-GAAP net income for the quarter was $12million, or 5 cents per diluted share, down from $16 million, or 7cents per diluted share, in the comparable quarter last year. Theyear-over-year decline in GAAP and non-GAAP net income was primarilydue to lower tape-related service and media royalty revenue.
“We are pleased with the continued momentum we saw across key areasin the December quarter,” said Jon Gacek, president and CEO ofQuantum. “Quantum branded revenue, which now makes up more than 80percent of total product and service revenue, grew year-over-year forthe ninth consecutive quarter. We also achieved a new high for diskand software revenue, with a strong contribution from new productsales, and generated our highest level of branded tape automationrevenue in eight quarters.
“Sales of our DXi6701/02 and DXi4601 disk backup and deduplicationproducts were particularly strong, and customers also responded verypositively to our new vmPRO(TM) virtual data protection solutions,all of which speaks to the unique value we offer customers inprotecting both physical and virtual machine data. We also sawsignificant traction with our new StorNext(R) appliances, as morecustomers are turning to Quantum for big data management solutionsthat enable them to maximize revenue and accelerate time-to-market byfully leveraging their digital assets.”
The company generated $16 million in cash from operating activitiesand ended the quarter with $69 million of senior debt, $135million of convertible debt and $63 million in cash and cashequivalents.
Outlook For the fourth quarter of fiscal 2012, Quantumexpects:
— Revenue of $160 million to $170 million. — GAAP gross margin and non-GAAP gross margin rates slightly below those in FQ3’12. — GAAP operating expenses of $68 million to $70 million and non-GAAP operating expenses of $62 million to $64 million. — Interest expense of approximately $3 million and taxes of $1 million.
Business Highlights Key business highlights for the December quarterinclude the following:
— Further enhancing its portfolio of DXi(R) backup and deduplication appliances, Quantum began shipping the DXi4601for small data center or remote office environments and the DXi8500 with DXi 2.1 software for enterprise customers. The DXi4601 provides the industry’s first capacity-on-demand capability in a deduplication appliance and achieves twice the performance of competitors in its class at half the price. The new DXi8500 offers 60 percent greater capacity, nearly a 40 percent increase in performance, industry-leading price-performance and unique hybrid deduplication. — Quantum introduced two new vmPRO virtual data protection offerings. The vmPRO 4601 appliance is a turnkey virtual machine (VM) backup solution for small and medium-sized businesses and remote offices that includes capacity-on-demand scalability. Quantum’s vmPRO software incorporates advanced utilities designed to dramatically improve and simplify VM data protection in midrange and larger data centers. In conjunction with the company’s DXi deduplication appliances, it delivers the most effective deduplication rates and the fastest VM recovery in the industry. Demonstrating Quantum’s growing leadership in VM data protection, its vmPRO 4000 was named “Storage Virtualization Product of the Year” at the 2011 Storage, Virtualization and Cloud Computing (SVC) Awards. — The company announced it had sold more than 60,000 StorNext licenses to date, a significant milestone and testament to its leadership in helping customers manage big data and extract the full value from their digital assets. Quantum also began shipping new StorNext disk and archive offerings as part of its expanded StorNext appliance family. These appliances leverage high-performance StorNext software and market-leading hardware in purpose-built configurations that are highly scalable, cost-effective and easy to deploy. — Quantum began shipping its Scalar i6000 enterprise tape libraries with dual robotics for high availability. The enhanced libraries also feature Active Vault, which expands managed capacity within the library while reducing application licensing costs. Further reinforcing Quantum’s position as the worldwide leader in open systems tape automation, Storage magazine announced that the company had captured the top spot overall and in all five rating categories for both enterprise and midrange libraries in its annual tape library quality awards. — The company announced two new low-cost data deduplication and disaster recovery solutions for small businesses. The NDX-8 NAS appliance includes built-in backup software and deduplication technology, enabling customers to reduce storage requirements and network traffic by up to 90 percent. The RDX 8000 removable disk library combines the advantages of disk with the removability of tape and is available with Quantum Datastor Shield deduplication software, which can cut cartridge use by nearly two-thirds.
Conference Call and Audio Webcast Notification Quantum will hold aconference call today, Jan. 25, 2012, at 2:00 p.m. PST, to discussits fiscal third quarter results. Press and industry analysts areinvited to attend in listen-only mode. Dial-in number: (480) 629-9645(U.S. & International). Quantum will provide a live audio webcast ofthe conference call beginning today, Jan. 25, 2012, at 2:00 p.m. PST.Site for the webcast and related information: quantum.com/investors .
About Quantum Quantum Corp. /quotes/zigman/209763/quotes/nls/qtm QTM +2.67% is a proven global expert indata protection and big data management that provides a uniquecombination of intelligent storage solutions and unmatched value fortraditional, virtual and cloud environments. From small businesses tomultinational enterprises, more than 50,000 customers trust Quantumto help cost effectively manage data growth and extract the fullvalue from their digital assets. Quantum’s offerings include:DXi(R)-Series disk-based deduplication and replication systems forfast backup and restore, vmPRO(TM) solutions for protecting virtualmachine data, Scalar(R) tape automation products for disasterrecovery and long-term data retention, and StorNext(R) big datamanagement software and appliances for high-performance file sharingand archiving. Quantum Corp., 1650 Technology Drive, Suite 800, SanJose, CA 95110, (408) 944-4000, quantum.com .
Quantum, the Quantum logo, DXi, Scalar, StorNext and vmPRO are eitherregistered trademarks or trademarks of Quantum Corporation and itsaffiliates in the United States and/or other countries. All othertrademarks are the property of their respective owners.
“Safe Harbor” Statement under the U.S. Private Securities LitigationReform Act of 1995: This press release contains “forward-looking”statements within the meaning of the Private Securities LitigationReform Act of 1995. Specifically, without limitation, all of ourstatements under the “Outlook” section are forward-looking statementswithin the meaning of the Safe Harbor. All forward-looking statementsin this press release are based on information available to Quantumon the date hereof. These statements involve known and unknown risks,uncertainties and other factors that may cause Quantum’s actualresults to differ materially from those implied by theforward-looking statement. More detailed information about these riskfactors, and additional risk factors, are set forth in Quantum’speriodic filings with the Securities and Exchange Commission,including, but not limited to, those risks and uncertainties listedin the section entitled “Item 1A. Risk Factors,” in Quantum’s AnnualReport on Form 10-K filed with the Securities and Exchange Commissionon June 14, 2011 and Quantum’s Quarterly Report on Form 10-Q filedwith the Securities and Exchange Commission on November 9, 2011.Quantum expressly disclaims any obligation to update or alter itsforward-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 aboveprovide useful and supplemental information to investors regardingits quarterly financial performance. Quantum management uses thesenon-GAAP financial measures internally to understand, manage, andevaluate the company’s business results and make operating decisions.For instance, Quantum management often makes decisions regardingstaffing, future management priorities and how the company willdirect future operating expenses on the basis of non-GAAP financialmeasures. In addition, compensation of our employees is based in parton the performance of our business based on non-GAAP operatingincome.
The non-GAAP financial measures used in this press release excludethe impact of amortization of intangibles, share-based compensationexpense, senior debt amendment fees and loss on debt extinguishmentfor the following reasons:
Amortization of Intangible Assets This includes acquired intangiblessuch as purchased technology and customer relationships in connectionwith prior acquisitions. These expenses are not factored intomanagement’s evaluation of potential acquisitions or Quantum’sperformance after completion of the acquisitions because they are notrelated to Quantum’s core operating performance. In addition, thefrequency and amount of such charges can vary significantly based onthe size and timing of acquisitions and the maturities of thebusinesses being acquired. Excluding acquisition-related charges fromnon-GAAP measures provides investors with a basis to compare Quantumagainst the performance of other companies without the variabilitycaused by purchase accounting.
Share-Based Compensation Expense Share-based compensation expenserelates primarily to equity awards such as stock options andrestricted stock units. Share-based compensation is a non-cashexpense that varies in amount from period to period and is dependenton market forces that are often beyond Quantum’s control. As aresult, management excludes this item from Quantum’s internaloperating forecasts and models. Management believes that non-GAAPmeasures adjusted for share-based compensation provide investors witha basis to measure Quantum’s core performance against the performanceof other companies without the variability created by share-basedcompensation as a result of the variety of equity awards used byother companies and the varying methodologies and assumptions used.
Senior Debt Amendment Fees The senior debt amendment fees relate toa specific amendment fee and are not part of Quantum’s future coreoperations.
Loss on Debt Extinguishment The loss on extinguishment of debtrelates to a specific debt refinancing action and is not part ofQuantum’s future core operations.
Non-GAAP financial measures should not be considered as a substitutefor, or superior to, measures of financial performance prepared inaccordance with GAAP. They are limited in value because they excludecharges that have a material impact on the company’s reportedfinancial results and, therefore, should not be relied upon as thesole financial measures to evaluate the company. The non-GAAPfinancial measures are meant to supplement, and be viewed inconjunction with, GAAP financial measures. Investors are encouragedto review the reconciliation of the non-GAAP financial measures totheir most directly comparable GAAP financial measures as provided inthe tables accompanying this press release.
QUANTUM CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) Three Months Ended Nine Months Ended ———————- ———————- December December December December 31, 2011 31, 2010 31, 2011 31, 2010 ———- ———- ———- ———- Revenue: Product $ 124,081 $ 123,218 $ 341,475 $ 344,001 Service 35,362 37,365 107,956 113,730 Royalty 14,049 15,643 42,635 49,442 ———- ———- ———- ———- Total revenue 173,492 176,226 492,066 507,173 Cost of revenue: Product 77,238 77,456 218,044 221,158 Service 22,537 23,200 65,732 71,595 Restructuring benefit related to cost of revenue — – (300) — ———- ———- ———- ———- Total cost of revenue 99,775 100,656 283,476 292,753 ———- ———- ———- ———- Gross margin 73,717 75,570 208,590 214,420 Operating expenses: Research and development 17,629 18,240 55,212 54,490 Sales and marketing 33,350 31,776 94,990 90,973 General and administrative 15,759 14,176 46,991 44,600 Restructuring charges — – 699 11 ———- ———- ———- ———- Total operating expenses 66,738 64,192 197,892 190,074 Gain on sale of patents — – 1,500 — ———- ———- ———- ———- Income from operations 6,979 11,378 12,198 24,346 Interest income and other, net (142) (250) (422) 24 Interest expense (2,450) (4,761) (8,111) (16,877) Loss on debt extinguishment — (1,186) — (1,186) ———- ———- ———- ———- Income before income taxes 4,387 5,181 3,665 6,307 Income tax provision (benefit) 473 (683) 1,416 114 ———- ———- ———- ———- Net income $ 3,914 $ 5,864 $ 2,249 $ 6,193 ========== ========== ========== ========== Basic and diluted net income per share: $ 0.02 $ 0.03 $ 0.01 $ 0.03 Weighted average common and common equivalent shares: Basic 233,812 222,801 231,661 219,052 Diluted 239,912 235,099 239,261 228,154 —————————————————————————- Included in the above Statements of Operations: Amortization of intangibles: Cost of revenue $ 1,472 $ 2,574 $ 6,148 $ 12,087 Research and development — – — 200 Sales and marketing 3,256 3,332 9,872 10,088 General and administrative — 25 32 75 ———- ———- ———- ———- 4,728 5,931 16,052 22,450 Share-based compensation: Cost of revenue 495 459 1,518 1,363 Research and development 795 603 2,466 1,933 Sales and marketing 1,127 786 3,059 2,391 General and administrative 1,007 686 3,203 2,363 ———- ———- ———- ———- 3,424 2,534 10,246 8,050 Acquisition expenses — – 325 — —————————————————————————- QUANTUM CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) December 31, March 31, 2011 2011* ———— ———— Assets Current assets: Cash and cash equivalents $ 59,250 $ 76,010 Restricted cash 3,987 1,863 Accounts receivable, net 115,106 114,969 Manufacturing inventories 58,879 48,131 Service parts inventories 41,036 45,036 Deferred income taxes 6,384 6,271 Other current assets 10,358 11,274 ———— ———— Total current assets 295,000 303,554 Long-term assets: Property and equipment, net 24,818 24,980 Intangible assets and goodwill 86,416 91,481 Other long-term assets 8,962 10,950 ———— ———— Total long-term assets 120,196 127,411 ———— ———— $ 415,196 $ 430,965 ============ ============ Liabilities and Stockholders’ Deficit Current liabilities: Accounts payable $ 59,238 $ 52,203 Accrued warranty 7,080 7,034 Deferred revenue, current 84,537 87,488 Current portion of long-term debt 708 1,067 Accrued restructuring charges 689 4,028 Accrued compensation 33,072 31,249 Income taxes payable 1,542 1,172 Other accrued liabilities 19,277 21,418 ———— ———— Total current liabilities 206,143 205,659 Long-term liabilities: Deferred revenue, long-term 34,533 34,281 Deferred income taxes 6,129 6,820 Long-term debt 67,929 103,267 Convertible subordinated debt 135,000 135,000 Other long-term liabilities 7,199 7,049 ———— ———— Total long-term liabilities 250,790 286,417 Stockholders’ deficit (41,737) (61,111) ———— ———— $ 415,196 $ 430,965 ============ ============ * Derived from the March 31, 2011 audited Consolidated Financial Statements. QUANTUM CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Nine Months Ended ————————– December 31, December 31, 2011 2010 ———— ———— Cash flows from operating activities: Net income $ 2,249 $ 6,193 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 8,776 8,780 Amortization 17,785 23,728 Service parts lower of cost or market adjustment 7,564 10,957 Loss on debt extinguishment — 1,186 Deferred income taxes (785) (417) Share-based compensation 10,246 8,050 Changes in assets and liabilities, net of effect of acquisition: Accounts receivable (131) (15,350) Manufacturing inventories (17,463) (5,861) Service parts inventories 3,150 1,524 Accounts payable 7,052 2,000 Accrued warranty 46 626 Deferred revenue (2,727) (9,312) Accrued restructuring charges (3,347) (2,856) Accrued compensation 1,975 (1,068) Income taxes payable 438 (1,159) Other assets and liabilities (1,735) 1,900 ———— ———— Net cash provided by operating activities 33,093 28,921 Cash flows from investing activities: Purchases of property and equipment (8,538) (9,348) (Increase) decrease in restricted cash (2,317) 222 Return of principal from other investments 97 95 Payment for business acquisition, net of cash acquired (8,152) — ———— ———— Net cash used in investing activities (18,910) (9,031) Cash flows from financing activities: Repayments of long-term debt (35,698) (163,079) Borrowings of convertible subordinated debt, net — 130,022 Repayments of convertible subordinated debt — (22,099) Payment of taxes due upon vesting of restricted stock (2,638) (2,165) Proceeds from issuance of common stock 7,506 13,635 ———— ———— Net cash used in financing activities (30,830) (43,686) Effect of exchange rate changes on cash and cash equivalents (113) 47 Net decrease in cash and cash equivalents (16,760) (23,749) Cash and cash equivalents at beginning of period 76,010 114,947 ———— ———— Cash and cash equivalents at end of period $ 59,250 $ 91,198 ============ ============ QUANTUM CORPORATION GAAP TO NON-GAAP RECONCILIATION (In thousands, except per share amounts) (Unaudited) Three Months Ended December 31, 2011 ——————————————— Per Per Share Share Gross Net Net Gross Margin Net Income, Income, Margin Rate Income Basic Diluted ——– —— ——- ——– ——– GAAP $ 73,717 42.5% $ 3,914 $ 0.02 $ 0.02 Non-GAAP Reconciling Items: Amortization of intangibles 1,472 4,728 Share-based compensation 495 3,424 ——– ——- Non-GAAP $ 75,684 43.6% $12,066 $ 0.05 $ 0.05 Computation of basic and diluted net income per share: GAAP Non-GAAP ——– ——– Net income $ 3,914 $ 12,066 Interest on dilutive convertible notes — 1,191 ——– ——– Income for purposes of computing income per diluted share $ 3,914 $ 13,257 ======== ======== Weighted average shares: Basic 233,812 233,812 Dilutive shares from stock plans 6,100 6,100 Dilutive shares from convertible notes — 31,158 ——– ——– Diluted 239,912 271,070 ======== ======== Three Months Ended December 31, 2010 ——————————————— Per Per Share Share Gross Net Net Gross Margin Net Income, Income, Margin Rate Income Basic Diluted ——– —— ——- ——– ——– GAAP $ 75,570 42.9% $ 5,864 $ 0.03 $ 0.03 Non-GAAP Reconciling Items: Amortization of intangibles 2,574 5,931 Share-based compensation 459 2,534 Loss on debt extinguishment 1,186 Senior debt amendment fees 861 ——– ——- Non-GAAP $ 78,603 44.6% $16,376 $ 0.08 $ 0.07 Computation of basic and diluted net income per share: GAAP Non-GAAP ——– ——– Net income $ 5,864 $ 16,376 Interest on dilutive convertible notes — 595 ——– ——– Income for purposes of computing income per diluted share $ 5,864 $ 16,971 ======== ======== Weighted average shares: Basic 222,801 222,801 Dilutive shares from stock plans 12,298 12,298 Dilutive shares from convertible notes — 15,579 ——– ——– Diluted 235,099 250,678 ======== ======== 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. QUANTUM CORPORATION FORECAST FOURTH QUARTER FISCAL 2012 GAAP TO NON-GAAP RECONCILIATION (Dollars in millions) ————- Dollars ————- Forecast operating expense on a GAAP basis $68.4 – $70.4 Forecast amortization of intangibles 3.3 Forecast share-based compensation 3.1 ————- Forecast operating expense on a non-GAAP basis $62.0 – $64.0 ============= Estimates based on current (January 25, 2012) 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. Contact: Brad Cohen Public Relations Quantum Corp. (408) 944-4044 Email Contact Christi Lee Investor Relations Quantum Corp. (408) 944-4450 Email Contact
SOURCE: Quantum Corporation
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