SOURCE: Quantum Corporation

Quantum Corporation

May 17, 2011 16:05 ET

Quantum Corporation Delivers Branded Revenue Growth for Fiscal 2011 and Fourth Quarter

SAN JOSE, CA--(Marketwire - May 17, 2011) - Quantum Corp. (NYSE: QTM)

Earnings Highlights:

-- Total fiscal year revenue of $672 million and total quarterly revenue of
   $165 million, with branded growth of 5% and 9% over respective prior
   year periods
-- Record fiscal year branded disk systems and software revenue of $113
   million -- up 38% from fiscal 2010, with 31% year-over-year growth in
   fourth quarter
-- Fiscal year GAAP gross margin rate of 42.1% and non-GAAP gross margin
   rate of 44.6% -- highest in 10 years
-- Second consecutive year of GAAP net profit and seventh straight year of
   non-GAAP net profit

Quantum Corp. (NYSE: QTM), the leading global specialist in backup, recovery and archive, today reported results for fiscal 2011 (FY11) and the fourth quarter (FQ4'11), ended March 31, 2011. Revenue for the year totaled $672 million, down about one percent from fiscal 2010 (FY10), primarily due to expected reductions in OEM revenue. For FQ4'11, Quantum reported $165 million in revenue, slightly higher than the same period last year (FQ4'10). Branded revenue, which represented 79 percent of total non-royalty revenue for the year, grew 5 percent for the year and 9 percent for FQ4'11 over the comparable FY10 periods. Branded disk systems and software sales, including related service revenue, were a key contributor to this year-over-year growth, increasing 38 percent for FY11 and 31 percent for the fourth quarter.

For the fiscal year, Quantum's GAAP and non-GAAP gross margin rates were 42.1 percent and 44.6 percent, respectively. These rates were the highest in 10 years, up from 41.1 percent in FY10 on a GAAP basis and from 44.5 percent on a non-GAAP basis. The company's GAAP gross margin rate for FQ4'11 was 41.5 percent, up from 40.8 percent a year earlier, while the non-GAAP gross margin rate decreased to 43.7 percent from 44.4 percent.

GAAP net income for FY11 was $5 million, or 2 cents per basic share, compared to net income of $17 million, or 8 cents per share, in the prior year. Non-GAAP net income for the year was $49 million, or 22 cents per basic share, down from $55 million, or 26 cents per share, in FY10. For FQ4'11, Quantum reported a GAAP net loss of $2 million, or one cent per basic share, an improvement over the net loss of $4 million, or 2 cents per share, in FQ4'10. Non-GAAP net income for the quarter was $10 million, or 4 cents per basic share, compared to $7 million, or 4 cents per share, in the same quarter of FY10.

"In fiscal 2011, we delivered growth in a number of key areas," said Jon Gacek, CEO of Quantum. "Branded sales increased 5 percent over the prior year, and we had record revenue for both branded disk systems and branded software, which were up 43 percent and 28 percent, respectively. In addition, midrange DXi® product revenue nearly tripled over the prior year. We also added approximately 550 new midrange and enterprise tape automation customers and grew our entry-level tape automation revenue 30 percent year-over-year.

"We plan to build on this momentum in fiscal 2012, with new products and enhanced features across our portfolio, as well as deeper engagement with channel partners," Gacek added. "We have also realigned our sales resources so that we can more comprehensively meet the evolving needs of our installed customer base while growing this base through new partnerships and solutions that enable us to broaden our market reach."

Quantum ended FQ4'11 with $78 million in total cash and cash equivalents and $239 million in total debt. For the full year, the company generated $52 million in cash from operations, reduced total debt by $91 million and refinanced its subordinated term debt with subordinated convertible debt at a significantly lower interest rate. The refinancing saved Quantum nearly $4 million in interest expense for FY11 and is expected to save approximately $10 million annually going forward. Reflecting the continued improvement in the company's business model and balance sheet, both Moody's Investor Service and Standard and Poor's upgraded Quantum's credit rating during the March quarter.

Outlook

For the full 2012 fiscal year, Quantum expects:

-- Increased revenue driven by growth in the company's branded business,
   including branded disk systems and software sales.
-- Improved GAAP and non-GAAP gross margin rates.
-- A modest increase in GAAP and non-GAAP operating expenses driven by
   higher R&D investment.
-- Interest expense similar to the exit rate for FQ4'11.

For the first quarter of fiscal 2012, the company expects:

-- Revenue of approximately $160 million.
-- GAAP gross margin rate of 41-42 percent and non-GAAP gross margin rate
   of 43-44 percent.
-- GAAP operating expenses of $64 million to $66 million and non-GAAP
   operating expenses of $58 million to $60 million.
-- Interest expense of $3 million and taxes of $1 million.

Business Highlights

Key business highlights for the March quarter include the following:

-- Quantum announced DXi 2.0, the fourth generation software platform for
   its DXi-Series disk backup and deduplication solutions, and began
   shipping the software on its entry-level DXi4500 and midrange
   DXi6500 models. Offered at the same price as DXi products with previous
   generation software, appliances running DXi 2.0 software deliver both
   higher performance and better price-performance than any other products
   in their class, with as much as a 5X advantage over the nearest
   competitive offerings. As a result, DXi customers are able to protect
   more data on smaller systems at no additional cost. Approximately 100
   customers have deployed DXi 2.0 software since it began shipping in
   mid-March.
-- Reflecting Quantum's growing strength in midrange disk backup and
   deduplication, Storage magazine/SearchStorage.com named the DXi6500 as
   one of the 2010 Products of the Year in the backup hardware category.
-- Quantum's leadership in deduplication technology was reinforced by the
   U.S. Patent and Trademark Office confirming the validity of the
   company's 5,990,810 patent (the "'810 patent"), the foundational patent
   in the area of variable-length deduplication.
-- As the first example of an initiative to expand StorNext® partnerships
   and investments related to server environments that include Apple
   products, Quantum began selling a new local area network client for
   StorNext that was co-developed with Group Logic. It provides greater
   flexibility for Mac users to leverage StorNext's heterogeneous file
   system and StorNext Storage Manager™ tiered-archiving capabilities,
   as well as effectively utilize Windows-based storage and print servers.
-- Quantum worked with NetApp to finalize a StorNext reseller agreement
   announced shortly after the quarter ended. The combination of StorNext
   software and NetApp's disk-based products gives customers a powerful
   unified storage solution for simultaneous sharing, managing, on-demand
   distribution and archiving of rich media files.
-- Quantum announced high availability and security enhancements to its
   enterprise Scalar i6000 and midrange Scalar i500 tape libraries. These
   enhancements include the addition of dual robotics to the Scalar i6000
   and key manager interoperability protocol support for encryption to both
   the Scalar i6000 and Scalar i500, all of which will be available in the
   second half of this year. Both data path failover and FIPS validation --
   already in the Scalar i6000 -- were also incorporated into the Scalar
   i500, thereby expanding the enterprise-level features Quantum provides
   to midrange customers.

Conference Call and Audio Webcast Notification

Quantum will hold a conference call today, May 17, 2011, 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) 629-9692 (U.S. & International). Quantum will provide a live audio webcast of the conference call beginning today, May 17, 2011, at 2:00 p.m. PDT. Site for the webcast and related information: http://www.quantum.com/investors.

About Quantum

Quantum Corp. (NYSE: QTM) is the leading global specialist in backup, recovery, and archive. 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 three market-leading, highly scalable platforms: 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, and StorNext® data management software for high-performance file sharing and archiving. 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 StorNext Storage Manager 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 "We plan to build on this momentum in fiscal 2012, with new products and enhanced features across our portfolio, as well as deeper engagement with channel partners" and that we "realigned our sales resources so that we can more comprehensively meet the evolving needs of our installed customer base while growing this base through new partnerships and solutions that enable us to broaden our market reach," 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 "Management's Discussion and Analysis of Financial Condition and Results of Operations - Risk Factors," in Quantum's Annual Report on Form 10-K filed with the Securities and Exchange Commission on June 11, 2010 and in Quantum's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on February 8, 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, senior debt amendment fees and gain (loss) on extinguishment of debt, net, 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.

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.

Senior Debt Amendment Fees

The senior debt amendment fees relate to a specific amendment fee and are not part of Quantum's future core operations.

Gain (Loss) on Extinguishment of Debt, Net

The gain (loss) on extinguishment of debt, net relates to specific debt refinancing actions and is 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.


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


                               Three Months Ended     Twelve Months Ended
                              --------------------    --------------------
                              March 31,  March 31,    March 31,  March 31,
                                2011       2010         2011       2010
                              ---------  ---------    ---------  ---------

Revenue:
  Product                     $ 112,902  $ 107,970    $ 456,903  $ 456,101
  Service                        37,365     38,827      151,095    156,477
  Royalty                        14,830     17,654       64,272     68,849
                              ---------  ---------    ---------  ---------
    Total revenue               165,097    164,451      672,270    681,427
Cost of revenue:
  Product                        73,217     72,896      294,375    300,568
  Service                        22,716     24,506       94,311    100,822
  Restructuring charges
   related to cost of revenue       602         --          602         --
                              ---------  ---------    ---------  ---------
    Total cost of revenue        96,535     97,402      389,288    401,390
                              ---------  ---------    ---------  ---------
      Gross margin               68,562     67,049      282,982    280,037

  Operating expenses:
    Research and development     18,518     18,355       73,008     69,949
    Sales and marketing          31,795     30,410      122,768    114,612
    General and administrative   14,860     15,360       59,460     61,372
    Restructuring charges         3,031         11        3,042      4,795
                              ---------  ---------    ---------  ---------
                                 68,204     64,136      258,278    250,728
                              ---------  ---------    ---------  ---------
      Income from operations        358      2,913       24,704     29,309
  Interest income and other,
   net                            1,175       (540)       1,199      1,255
  Interest expense               (3,286)    (6,116)     (20,163)   (25,515)
  Gain (loss) on debt
   extinguishment, net of
   costs                             --         --       (1,186)    12,859
                              ---------  ---------    ---------  ---------
    Income (loss) before
     income taxes                (1,753)    (3,743)       4,554     17,908
  Income tax provision
   (benefit)                       (101)       622           13      1,274
                              ---------  ---------    ---------  ---------
      Net income (loss)       $  (1,652) $  (4,365)   $   4,541  $  16,634
                              =========  =========    =========  =========


  Net income (loss) per share:
      Basic                   $   (0.01) $   (0.02)   $    0.02  $    0.08
      Diluted                     (0.01)     (0.02)        0.02       0.02

  Income (loss) for purposes
   of computing income (loss)
   per share:
      Basic                   $  (1,652) $  (4,365)   $   4,541  $  16,634
      Diluted                    (1,652)    (4,365)       4,541      5,024

  Weighted average shares:
      Basic                     226,496    214,442      220,888    212,672
      Diluted                   226,496    214,442      229,738    223,761


  Included in the above
   Statements of Operations:

  Amortization of intangibles:
    Cost of revenue           $   2,575  $   5,547    $  14,662  $  22,069
    Research and development         --        100          200        400
    Sales and marketing           3,331      3,394       13,419     13,575
    General and administrative       25         25          100        100
                              ---------  ---------    ---------  ---------
                                  5,931      9,066       28,381     36,144
  Share-based compensation:
    Cost of revenue                 405        414        1,768      1,366
    Research and development        553        640        2,486      2,373
    Sales and marketing             730        744        3,121      2,581
    General and administrative      683        836        3,046      3,469
                              ---------  ---------    ---------  ---------
                                  2,371      2,634       10,421      9,789

  Senior debt amendment fees         --         --          861         --



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


                                                March 31,      March 31,
                                                  2011           2010*
                                              -------------  -------------

Assets
  Current assets:
    Cash and cash equivalents                 $      76,010  $     114,947
    Restricted cash                                   1,863          1,896
    Accounts receivable, net                        114,969        103,397
    Manufacturing inventories, net                   48,131         54,080
    Service parts inventories, net                   45,036         53,217
    Deferred income taxes                             6,271          7,907
    Other current assets                             11,274         14,500
                                              -------------  -------------
      Total current assets                          303,554        349,944

  Long-term assets:
    Property and equipment, net                      24,980         24,528
    Intangible assets, net                           44,711         73,092
    Goodwill                                         46,770         46,770
    Other long-term assets                           10,950          9,809
                                              -------------  -------------
      Total long-term assets                        127,411        154,199

                                              -------------  -------------
                                              $     430,965  $     504,143
                                              =============  =============

Liabilities and Stockholders' Deficit
  Current liabilities:
    Accounts payable                          $      52,203  $      56,688
    Accrued warranty                                  7,034          5,884
    Deferred revenue, current                        87,488         94,921
    Current portion of long-term debt                 1,067          1,884
    Current portion of convertible
     subordinated debt                                   --         22,099
    Accrued restructuring charges                     4,028          3,795
    Accrued compensation                             31,249         31,237
    Income taxes payable                              1,172          2,594
    Other accrued liabilities                        21,418         23,555
                                              -------------  -------------
      Total current liabilities                     205,659        242,657

  Long-term liabilities:
    Deferred revenue, long-term                      34,281         30,724
    Deferred income taxes                             6,820          8,676
    Long-term debt                                  103,267        305,899
    Convertible subordinated debt                   135,000             --
    Other long-term liabilities                       7,049          7,444
                                              -------------  -------------
      Total long-term liabilities                   286,417        352,743

    Stockholders' deficit                           (61,111)       (91,257)

                                              -------------  -------------
                                              $     430,965  $     504,143
                                              =============  =============

*Derived from the March 31, 2010 audited Consolidated Financial Statements.




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


                                                  Twelve Months Ended
                                              ----------------------------
                                                March 31,      March 31,
                                                  2011           2010
                                              -------------  -------------
Cash flows from operating activities:
  Net income                                  $       4,541  $      16,634
  Adjustments to reconcile net income to net
   cash provided by operating activities:
    Depreciation                                     11,657         12,098
    Amortization                                     30,304         38,461
    Service parts lower of cost or market
     adjustment                                      13,796         11,424
    (Gain) loss on debt extinguishment                1,186        (15,613)
    Deferred income taxes                              (184)          (466)
    Share-based compensation                         10,421          9,789
    Other non-cash writeoffs                            302             --
    Changes in assets and liabilities:
      Accounts receivable                           (14,935)         4,454
      Manufacturing inventories                      (1,460)         2,328
      Service parts inventories                       1,955          3,217
      Accounts payable                               (1,466)        11,495
      Accrued warranty                                1,150         (5,268)
      Deferred revenue                               (3,876)         9,484
      Accrued restructuring charges                     227           (917)
      Accrued compensation                             (302)         3,824
      Income taxes payable                           (1,454)        (2,239)
      Other assets and liabilities                      465          1,459
                                              -------------  -------------
Net cash provided by operating activities            52,327        100,164

Cash flows from investing activities:
  Purchases of property and equipment               (12,339)        (8,595)
  (Increase) decrease in restricted cash                 32           (112)
  Return of principal from other investments          2,204            166
                                              -------------  -------------

Net cash used in investing activities               (10,103)        (8,541)

Cash flows from financing activities:
  Borrowings of long-term debt, net                      --        120,042
  Repayments of long-term debt                     (203,449)       (61,934)
  Borrowings of convertible subordinated debt,
   net                                              130,022             --
  Repayments of convertible subordinated debt       (22,099)      (122,288)
  Payment of taxes due upon vesting of
   restricted stock                                  (2,307)        (1,069)
  Proceeds from issuance of common stock             16,547          2,851
                                              -------------  -------------
Net cash used in financing activities               (81,286)       (62,398)

Effect of exchange rate changes on cash and
 cash equivalents                                       125            190

Net increase (decrease) in cash and cash
 equivalents                                        (38,937)        29,415
Cash and cash equivalents at beginning of
 period                                             114,947         85,532
                                              -------------  -------------
Cash and cash equivalents at end of period    $      76,010  $     114,947
                                              =============  =============




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


                                  Three Months Ended March 31, 2011
                          -------------------------------------------------
                                                         Per       Per
                                                         Share     Share
                                                          Net       Net
                                      Gross      Net     Income    Income
                            Gross     Margin     Income  (Loss),   (Loss),
                            Margin    Rate       (Loss)   Basic    Diluted
                          --------- --------  --------  --------  --------
GAAP                      $  68,562     41.5% $ (1,652) $  (0.01) $  (0.01)
Non-GAAP Reconciling
 Items:
  Amortization of
   Intangibles                2,575              5,931
  Share-based
   Compensation                 405              2,371
  Restructuring Charges         602              3,633
                          ---------           --------
Non-GAAP                  $  72,144     43.7% $ 10,283  $   0.04  $   0.04

       Computation of
        basic and diluted
        net income (loss)
        per share:                                        GAAP    Non-GAAP
                                                        --------  --------
         Net income
          (loss)                                        $ (1,652) $ 10,283
           Interest on
            dilutive
            convertible
            notes                                             --     1,166
                                                        --------  --------
         Income (loss)
          for purposes of
          computing
          income (loss)
          per diluted
          share                                         $ (1,652) $ 11,449
                                                        ========  ========

       Weighted average
        shares:
         Basic                                           226,496   226,496
           Dilutive
            shares from
            stock plans                                       --     9,469
           Dilutive
            shares from
            convertible
            notes                                             --    31,158
                                                        --------  --------
         Diluted                                         226,496   267,123
                                                        ========  ========


                                 Twelve Months Ended March 31, 2011
                          -------------------------------------------------
                                                         Per       Per
                                                         Share     Share
                                      Gross              Net       Net
                            Gross     Margin    Net      Income,   Income,
                            Margin    Rate     Income    Basic     Diluted
                          --------- --------  --------  --------  --------
GAAP                      $ 282,982     42.1% $  4,541  $   0.02  $   0.02
Non-GAAP Reconciling
 Items:
  Amortization of
   Intangibles               14,662             28,381
  Share-based
   Compensation               1,768             10,421
  Restructuring Charges         602              3,644
  Loss on Debt
   Extinguishment                                1,186
  Senior Debt Amendment
   Fees                                            861
                          ---------           --------
Non-GAAP                  $ 300,014     44.6% $ 49,034  $   0.22  $   0.21

       Computation of
        basic and diluted
        net income per
        share:                                            GAAP    Non-GAAP
                                                        --------  --------
         Net income                                     $  4,541  $ 49,034
           Interest on
            dilutive
            convertible
            notes                                             --     1,761
                                                        --------  --------
         Income for
          purposes of
          computing
          income per
          diluted share                                 $  4,541  $ 50,795
                                                        ========  ========

       Weighted average
        shares:
         Basic                                           220,888   220,888
           Dilutive
            shares from
            stock plans                                    8,850     8,850
           Dilutive
            shares from
            convertible
            notes                                             --    11,610
                                                        --------  --------
         Diluted                                         229,738   241,348
                                                        ========  ========

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


                                  Three Months Ended March 31, 2010
                          -------------------------------------------------
                                                         Per       Per
                                                         Share     Share
                                                          Net       Net
                                      Gross      Net     Income    Income
                            Gross     Margin     Income  (Loss),   (Loss),
                            Margin    Rate       (Loss)   Basic    Diluted
                          --------- --------  --------  --------  --------
GAAP                      $  67,049     40.8% $ (4,365) $  (0.02) $  (0.02)
Non-GAAP Reconciling
 Items:
  Amortization of
   Intangibles                5,547              9,066
  Share-based
   Compensation                 414              2,634
  Restructuring Charges                             11
                          ---------           --------
Non-GAAP                  $  73,010     44.4% $  7,346  $   0.04  $   0.03

       Computation of
        basic and diluted
        net income (loss)
        per share:                                        GAAP    Non-GAAP
                                                        --------  --------
         Net income
          (loss)                                        $ (4,365) $  7,346
           Interest on
            dilutive
            convertible
            notes                                             --        --
                                                        --------  --------
         Income (loss)
          for purposes of
          computing
          income (loss)
          per diluted
          share                                         $ (4,365) $  7,346
                                                        ========  ========

       Weighted average
        shares:
         Basic                                           214,442   214,442
           Dilutive
            shares from
            stock plans                                       --    10,956
           Dilutive
            shares from
            convertible
            notes                                             --        --
                                                        --------  --------
         Diluted                                         214,442   225,398
                                                        ========  ========


                                 Twelve Months Ended March 31, 2010
                          -------------------------------------------------
                                                         Per       Per
                                                         Share     Share
                                      Gross              Net       Net
                            Gross     Margin    Net      Income,   Income,
                            Margin    Rate     Income    Basic     Diluted
                          --------- --------  --------  --------  --------
GAAP                      $ 280,037     41.1% $ 16,634  $   0.08  $   0.02
Non-GAAP Reconciling
 Items:
  Amortization of
   Intangibles               22,069             36,144
  Share-based
   Compensation               1,366              9,789
  Restructuring Charges                          4,795
  Gain on Debt
   Extinguishment, Net of
   Costs                                       (12,859)
                          ---------           --------
Non-GAAP                  $ 303,472     44.5% $ 54,503  $   0.26  $   0.25

       Computation of
        basic and diluted
        net income per
        share:                                            GAAP    Non-GAAP
                                                        --------  --------
         Net income                                     $ 16,634  $ 54,503
           Interest on
            dilutive
            convertible
            notes                                          1,249        --
           Gain on debt
            extinguishme-
            nt, net of
            costs                                        (12,859)       --
                                                        --------  --------
         Income for
          purposes of
          computing
          income per
          diluted share                                 $  5,024  $ 54,503
                                                        ========  ========

       Weighted average
        shares:
         Basic                                           212,672   212,672
           Dilutive
            shares from
            stock plans                                    4,527     4,527
           Dilutive
            shares from
            convertible
            notes                                          6,562        --
                                                        --------  --------
         Diluted                                         223,761   217,199
                                                        ========  ========

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 FIRST QUARTER FISCAL 2012
                      GAAP TO NON-GAAP RECONCILIATION
                              (In millions)


                                              ----------------------------
                                                    Percentage range
                                              ----------------------------

Forecast gross margin rates on a GAAP basis        41.1%   --     42.1%

Forecast amortization of intangibles                       1.6%
Forecast share-based compensation                          0.3%

                                              ----------------------------
Forecast gross margin rates on a non-GAAP
 basis                                             43.0%   --     44.0%
                                              ============================


                                              ----------------------------
                                                      Dollar range
                                              ----------------------------

Forecast operating expense on a GAAP basis    $       63.7 -- $       65.7

Forecast amortization of intangibles                       3.3
Forecast share-based compensation                          2.4

                                              ----------------------------
Forecast operating expense on a non-GAAP
 basis                                        $       58.0 -- $       60.0
                                              ============================

Estimates based on current (May 17, 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 11, 2010. 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 Information

  • Contact:
    Brad Cohen
    Public Relations
    Quantum Corp.
    (408) 944-4044
    Email Contact

    Christi Lee
    Investor Relations
    Quantum Corp.
    (408) 944-4450
    Email Contact