Science & Technology
Science and Technology
Science and Technology
Fri, May 14, 2010
Thu, May 13, 2010 Quantum Corporation Reports Strong Fiscal 2010 Year-End Financial Results, With Improved Fourth Quarter Performance
SAN JOSE, CA--(Marketwire - May 13, 2010) - Quantum Corp. (
The strength of Quantum's financial performance in FY10 is further demonstrated by the fact that the $17 million in GAAP net income included $36 million in amortization of intangibles costs, $10 million in stock-based compensation charges and $5 million in restructuring expenses, offset by only a $13 million net gain related to the retirement of convertible debt. The net impact of these four items reduced FY10 basic earnings per share by 18 cents to the company's reported 8-cent earnings per basic share. Similarly, the $4 million GAAP net loss in the March quarter included $9 million in amortization of intangibles costs and $3 million in stock-based compensation charges, reducing basic earnings per share by six cents to the reported 2-cent loss per share for the quarter.
Quantum generated $100 million in cash for the full fiscal year, with $19 million in cash from operations for FQ4'10. This strong cash generation enabled the company to pay down $62 million of its senior debt in FY10 and end the year with $117 million in total cash and cash equivalents, the highest year-end level since March 2006.
Quantum's financial results reflect a successful multi-year strategy of moving away from a more device-centric orientation to becoming a storage systems company. A key element of this strategy has been a shift from reliance on low-margin OEM revenue to driving a greater percentage of higher-margin branded business. For FY10, the company's branded business represented 74 percent of total non-royalty revenue, up from 67 percent in FY09, with an FQ4'10 branded share of 78 percent compared to 70 percent in the same period the previous year. This mix shift was one of the major factors behind the strong financial results Quantum reported today and also is the basis for the respective 16 percent and 2 percent year-over-year revenue declines for FY10 and FQ4'10, as these declines were largely due to lower OEM revenue.
"Fiscal year 2010 was a critical year in Quantum's transformation to becoming a storage systems company and providing a strong foundation for growth in the new fiscal year," said Rick Belluzzo, chairman and CEO of Quantum. "We overcame some very difficult challenges and succeeded in delivering our best financial performance in many years, introducing major new products across our portfolio, and shifting our go-to-market focus. As a result, Quantum is well-positioned to capitalize on the improved storage spending environment, on our central role in key market segments such as deduplication and high performance data management, and on channel and other partner opportunities created by changes in the competitive landscape. All of this will enable us to drive revenue growth moving forward, our top priority for fiscal year 2011."
In addition to Quantum's success in executing on its financial model, the company also continued to make progress in driving disk systems and software momentum. Inclusive of related service revenue, revenue in this product category was $95 million for FY10, and $23 million for FQ4'10. This included record branded disk systems and software revenue for the full fiscal year, with a 19 percent increase over FY09. For the March quarter, branded revenue in this product category grew 29 percent over the same period in FY09, driven by a significant increase in branded DXi™ sales. New DXi6500 midrange customers in FQ4'10 included a leading U.S. medical technology supplier, a global oil company's European division and a major American hydroelectric power provider. Notable DXi7500 enterprise account wins during the quarter included new business with one of the world's largest greeting card companies, a major automobile manufacturer in Asia and a top telecommunications supplier in Europe and Latin America, as well as repeat orders from leading U.S. insurance and wireless providers.
In the March quarter, Quantum also continued building on StorNext®'s leadership in the Media and Entertainment industry with major deals at several broadcasting companies around the world. Quantum also strengthened StorNext's foothold in other key vertical markets such as Government and Life Sciences, where some of the largest revenue contributions came from existing customers, including a national intelligence organization, a governmental geosciences agency, and a genome sequencing center.
Quantum stated that it expects its DXi and StorNext products to be a significant growth driver in fiscal year 2011. Since last October, the company has introduced two new DXi backup, deduplication and replication platforms -- the DXi6500 for midrange, NAS environments and the DXi4500 for small- and medium-size businesses and remote offices, both of which are optimized for sales through channel partners -- as well as version 4.0 of its StorNext data management software.
Complementing its disk systems and software products, Quantum also said it intends to build on its position as the worldwide leader in open systems tape automation, again leveraging products launched since last fall. These include the Scalar® i40 and i80 entry-level libraries and the Scalar i6000 enterprise library, as well as new LTO-5 tape drives that the company is adding to its tape automation systems.
Both the DXi4500 and Scalar i6000 were just introduced in the last six weeks, and many of the other new products only started shipping in the last three months. Although these new products have been well-received by end users and channel partners, their contribution to Quantum's revenue base is therefore still limited. As they begin to ramp in the coming months, the company expects these products to generate increasing revenue momentum and play a key role in meeting its growth objectives for fiscal year 2011.
Conference Call and Audio Webcast Notification
Quantum will hold a conference call today, May 13, 2010, at 2:00 p.m. PDT, to discuss its fiscal fourth quarter and year-end results. Press and industry analysts are invited to attend in listen-only mode. Dial-in number: (480) 629-9771 (U.S. & International). Quantum will provide a live audio webcast of the conference call beginning today, May 13, 2010, at 2:00 p.m. PDT. Site for the webcast and related information: [ http://www.quantum.com/investors ].
About Quantum
Quantum Corp. (
Quantum, the Quantum logo, StorNext and Scalar are registered trademarks of Quantum Corporation and its affiliates. DXi is a trademark of Quantum Corporation. 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, statements relating to major new disk, tape and software product introductions providing a foundation for growth in fiscal year 2011, Quantum being well-positioned to capitalize on its opportunities and drive revenue growth, that Quantum expects its DXi and StorNext products to be a significant growth driver in fiscal year 2011, that Quantum intends to build on its position as the worldwide leader in open systems tape automation and that the company expects recent product introductions to generate increasing revenue momentum and play a key role in meeting its growth objectives for fiscal year 2011. 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 Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on February 5, 2010 and in Quantum's Annual Report on Form 10-K filed with the Securities and Exchange Commission on June 30, 2009. Quantum expressly disclaims any obligation to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.
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, 2010 2009 2010 2009 --------- --------- --------- --------- Revenue: Product $ 107,970 $ 111,826 $ 456,101 $ 556,484 Service 38,827 40,071 156,477 164,664 Royalty 17,654 16,226 68,849 87,824 --------- --------- --------- --------- Total revenue 164,451 168,123 681,427 808,972 Cost of Revenue: Product 72,896 76,012 300,568 379,595 Service 24,506 31,297 100,822 125,063 --------- --------- --------- --------- Total cost of revenue 97,402 107,309 401,390 504,658 --------- --------- --------- --------- Gross margin 67,049 60,814 280,037 304,314 Operating expenses: Research and development 18,355 16,728 69,949 70,537 Sales and marketing 30,410 30,244 114,612 141,250 General and administrative 15,360 17,785 61,372 76,645 Restructuring charges 11 2,338 4,795 6,807 Goodwill impairment -- -- -- 339,000 --------- --------- --------- --------- 64,136 67,095 250,728 634,239 --------- --------- --------- --------- Income (loss) from operations 2,913 (6,281) 29,309 (329,925) Interest income and other, net (540) (462) 1,255 41 Interest expense (6,116) (5,700) (25,515) (29,261) Gain on debt extinguishment, net of costs -- -- 12,859 -- --------- --------- --------- --------- Income (loss) before income taxes (3,743) (12,443) 17,908 (359,145) Income tax provision (benefit) 622 (557) 1,274 (881) --------- --------- --------- --------- Net income (loss) $ (4,365) $ (11,886) $ 16,634 $(358,264) ========= ========= ========= ========= Net income (loss) per share: Basic $ (0.02) $ (0.05) $ 0.08 $ (1.71) Diluted (0.02) (0.05) 0.02 (1.71) Income (loss) for purposes of computing net income (loss) per share: Basic $ (4,365) $ (11,886) $ 16,634 $(358,264) Diluted (4,365) (11,886) 5,024 (358,264) Weighted average common and common equivalent shares: Basic 214,442 210,189 212,672 209,041 Diluted 214,442 210,189 223,761 209,041 --------- --------- --------- --------- Included in the above Statements of Operations: Amortization of intangibles: Cost of revenue 5,547 5,510 22,069 24,668 Research and development 100 100 400 400 Sales and marketing 3,394 3,393 13,575 15,035 General and administrative 25 25 100 100 --------- --------- --------- --------- 9,066 9,028 36,144 40,203 Share-based compensation: Cost of revenue 414 320 1,366 1,419 Research and development 640 549 2,373 2,722 Sales and marketing 744 706 2,581 2,695 General and administrative 836 925 3,469 3,756 --------- --------- --------- --------- 2,634 2,500 9,789 10,592 QUANTUM CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) March 31, March 31, 2010 2009* ---------- ---------- Assets Current assets: Cash and cash equivalents $ 114,947 $ 85,532 Restricted cash 1,896 1,773 Accounts receivable, net 103,397 107,851 Manufacturing inventories, net 54,080 61,237 Service parts inventories, net 53,217 63,029 Deferred income taxes 7,907 9,935 Other current assets 14,500 24,745 ---------- ---------- Total current assets 349,944 354,102 Long-term assets: Property and equipment, less accumulated depreciation 24,528 28,553 Intangible assets, less accumulated amortization 73,092 109,236 Goodwill 46,770 46,770 Other long-term assets 9,809 10,708 ---------- ---------- Total long-term assets 154,199 195,267 ---------- ---------- $ 504,143 $ 549,369 ========== ========== Liabilities and Stockholders' Deficit Current liabilities: Accounts payable $ 56,688 $ 45,182 Accrued warranty 5,884 11,152 Deferred revenue, current 94,921 84,079 Current portion of long-term debt 1,884 4,000 Current portion of convertible subordinated debt 22,099 -- Accrued restructuring charges 3,795 4,681 Accrued compensation 31,237 27,334 Income taxes payable 2,594 4,752 Other accrued liabilities 23,555 34,550 ---------- ---------- Total current liabilities 242,657 215,730 Long-term liabilities: Deferred revenue, long-term 30,724 32,082 Deferred income taxes 8,676 11,190 Long-term debt 305,899 244,000 Convertible subordinated debt -- 160,000 Other long-term liabilities 7,444 6,326 ---------- ---------- Total long-term liabilities 352,743 453,598 Stockholders' deficit (91,257) (119,959) ---------- ---------- $ 504,143 $ 549,369 ========== ========== * Derived from the March 31, 2009 audited Consolidated Financial Statements. QUANTUM CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Twelve Months Ended ------------------------------ March 31, 2010 March 31, 2009 -------------- -------------- Cash flows from operating activities: Net income (loss) $ 16,634 $ (358,264) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 12,098 15,452 Amortization 38,461 42,291 Service parts lower of cost or market adjustment 11,424 20,691 Gain on debt extinguishment (15,613) -- Goodwill impairment -- 339,000 Deferred income taxes (466) (352) Share-based compensation 9,789 10,592 Changes in assets and liabilities: Accounts receivable 4,454 75,132 Manufacturing inventories, net 2,328 6,591 Service parts inventories, net 3,217 1,658 Accounts payable 11,495 (52,692) Accrued warranty (5,268) (8,710) Deferred revenue 9,484 11,515 Accrued restructuring charges (917) 968 Accrued compensation 3,824 (4,335) Income taxes payable (2,239) 1,794 Other assets and liabilities 1,459 (12,231) -------------- -------------- Net cash provided by operating activities 100,164 89,100 Cash flows from investing activities: Purchases of property and equipment (8,595) (5,423) Increase in restricted cash (112) (295) Return of principal from other investments 166 1,038 -------------- -------------- Net cash used in investing activities (8,541) (4,680) Cash flows from financing activities: Borrowings of long-term debt, net 120,042 -- Repayments of long-term debt (61,934) (92,000) Repayments of convertible subordinated debt (122,288) -- Payment of taxes due upon vesting of restricted stock (1,069) (779) Proceeds from issuance of common stock 2,851 2,738 -------------- -------------- Net cash used in financing activities (62,398) (90,041) Effect of exchange rate changes on cash and cash equivalents 190 (997) Net increase (decrease) in cash and cash equivalents 29,415 (6,618) Cash and cash equivalents at beginning of period 85,532 92,150 -------------- -------------- Cash and cash equivalents at end of period $ 114,947 $ 85,532 ============== ==============
