SOURCE:
Quantum Corporation
2008-07-29 15:05:00
Quantum Corporation Reports Fiscal First Quarter Results
Quantum Corporation Reports Fiscal First Quarter Results
Grows Disk Systems and Software Revenue 100 Percent Year-Over-Year With Significant Contribution From New DXi7500 Enterprise De-Duplication and Replication System
SAN JOSE, CA–(EMWNews – July 29, 2008) – Quantum Corp. (
specialist in backup, recovery and archive, today announced that revenue
for its fiscal first quarter (FQ1’09), ended June 30, 2008, was $222
million. Although this represented a 10 percent decline from the same
period last year (FQ1’08), the company’s non-royalty branded revenue grew
by 3 percent. The greater mix of branded sales also helped increase the
overall GAAP gross margin rate from 32 to 34 percent, year-over-year. In
addition, Quantum’s GAAP operating expenses of $81 million were down $11
million, $9 million of which was related to restructuring charges incurred
in FQ1’08.
Quantum reported a GAAP net loss of $14 million for FQ1’09, or 7 cents per
share, a 4-cent improvement over FQ1’08. This $14 million net loss included
$11 million in amortization of intangibles and $3 million in stock-based
compensation charges, and the net impact of these items reduced earnings
per share on a diluted basis by approximately 7 cents.
One of the major highlights of the quarter was the growth in Quantum’s disk
systems and software sales. Product and service revenue in this category
totaled $20 million, an increase of 100 percent over FQ1’08 and 60 percent
over the prior quarter. Quantum’s newly released DXi7500 enterprise
de-duplication and replication system was a significant contributor to this
growth, and the company also received revenue from its software license
agreement with EMC.
Quantum generated $26 million in cash from operations for the quarter and
paid down
$50 million of debt. The company’s cash balance as of June 30, 2008 was $67
million.
“Although the June quarter was a transitional one in many ways, we
demonstrated significant progress in several key areas,” said Rick
Belluzzo, chairman and CEO of Quantum. “We achieved record disk systems and
software revenue with just a month’s contribution from our branded DXi7500
shipments and expanded relationship with EMC. We also had record service
revenue and increased both our branded revenue and gross margin rate. And
our cash generation enabled us to pay down an even larger amount of debt
than we have in recent quarters. While we have more work to do, all of this
reflects our continuing focus on further improving our operating model and
delivering a stable and more profitable revenue stream by growing our
branded business.”
Quantum’s product revenue, which includes sales of the company’s hardware
and software products, totaled $158 million in the June quarter. This
represented a net decrease of
$24 million from FQ1’08, primarily due to an expected decline in overall
OEM revenue. Sales of branded devices and tape automation were also lower
on a year-over-year basis, while revenue from branded disk systems,
software and non-royalty media grew.
Disk systems and software product revenue was $18 million in FQ1’09, double
the $9 million generated in the same period last year. Quantum now has more
than 300 DXi-Series customers, with a number of significant DXi7500 wins
secured, both in the U.S. and abroad, during the June quarter. These wins
include multiple unit purchases by a top U.S. cable company, a leading
supplier of broadband service in Europe and a major electrical utility
supplier in Australia, as well as deals with one of America’s most
respected newspaper publishers, a large operator of luxury resorts and
casinos in Las Vegas, and various governmental agencies. A majority of
DXi7500 customers bought a replication license and nearly half purchased
the path-to-tape option, reinforcing the unique value Quantum provides by
offering a single family of disk-based de-duplication and replication
solutions for remote sites, midrange offices and primary data centers and
by delivering integrated tape creation for enterprise customers.
Tape automation product revenue totaled $86 million in the June quarter, a
decrease of
$22 million from the comparable period last year, with two-thirds of the
decline related to OEM products and the other third mainly due to lower
branded sales in North America.
Product revenue from devices and non-royalty media sales totaled $54
million in FQ1’09, down
$10 million year-over-year. This was largely the result of an anticipated
decline in OEM device revenue offset by a slight increase in branded
non-royalty media sales.
Service revenue, which includes hardware service contracts as well as
repair, installation and professional services, was $42 million in FQ1’09.
This was an increase of $2 million over FQ1’08 and a new record for
Quantum.
The company had $22 million in royalty revenue for the June quarter, down
$2 million from the comparable quarter in Fiscal Year 2008.
Quantum increased its branded share of non-royalty revenue to 66 percent in
FQ1’09, from
58 percent in FQ1’08.
Conference Call and Audio Webcast Notification
Quantum will hold a conference call today, July 29, 2008, at 2:00 p.m. PDT,
to discuss its fiscal first quarter results. Press and industry analysts
are invited to attend in listen-only mode. Dial-in number: (303) 262-2130
(U.S. & International). Quantum will provide a live audio webcast of the
conference call beginning today, July 29, 2008, at 2:00 p.m. PDT. Site for
the webcast and related information: http://www.quantum.com/investors.
About Quantum
Quantum Corp. (
specializing in backup, recovery and archive. Combining focused expertise,
customer-driven innovation, and platform independence, Quantum provides a
comprehensive, integrated range of disk, tape, and software solutions
supported by a world-class sales and service organization. This includes
the
DXi-Series, the first disk backup solutions to extend the power of data
de-duplication and replication across the distributed enterprise. As a
long-standing and trusted partner, the company works closely with a broad
network of resellers, OEMs and other suppliers to meet customers’ evolving
data protection needs. Quantum Corp., 1650 Technology Drive, Suite 800, San
Jose, CA 95110, (408) 944-4000, www.quantum.com.
Quantum and the Quantum logo are trademarks of Quantum Corporation
registered in the United States and other countries.
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 may contain “forward-looking” statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
These statements are based on management’s current expectations and are
subject to certain risks and uncertainties. As a result, actual results may
differ materially from the forward-looking statements contained herein.
Factors that could cause actual results to differ materially from those
described herein include, but are not limited to: (a) the failure to
compete successfully in the highly competitive and rapidly changing
marketplace for backup, recovery, archive and other storage products and
services; (b) our ability to successfully execute to our product roadmaps
and timely ship our products; (c) the risk that lower volumes and
continuing price and cost pressures could lead to lower gross margin rate;
(d) media royalties from media manufacturers coming in at lower levels than
expected; (e) operational risks associated with the changes being made to
our manufacturing infrastructure; (f) acceptance of, or demand for, our
products being lower than anticipated; and (g) difficulties in retaining
key employees. More detailed information about these risk factors, and
additional risk factors, are set forth in Quantum’s periodic filings with
the Securities and Exchange Commission, including, but not limited to,
those risks and uncertainties listed in the section entitled “Risk
Factors,” on pages 12 to 22 of Quantum’s Annual Report on Form 10-K for
fiscal year 2008, filed with the Securities and Exchange Commission on June
13, 2008. 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 )
Three Months Ended
------------------------
June 30, June 30,
2008 2007
----------- -----------
(Unaudited) (Unaudited)
Revenue:
Product $ 157,584 $ 181,631
Service 42,257 40,104
Royalty 21,950 24,033
----------- -----------
Total revenue 221,791 245,768
Cost of Revenue:
Product 115,003 137,143
Service 31,949 30,331
Restructuring charges related to cost of
revenue -- 237
----------- -----------
Total cost of revenue 146,952 167,711
----------- -----------
Gross margin 74,839 78,057
Operating expenses:
Research and development 18,990 26,358
Sales and marketing 40,037 35,356
General and administrative 22,025 21,517
Restructuring charges (benefit) (50) 9,114
----------- -----------
81,002 92,345
----------- -----------
Loss from operations (6,163) (14,288)
Interest income and other, net 1,482 4,357
Interest expense (8,775) (13,634)
----------- -----------
Loss before income taxes (13,456) (23,565)
Income tax provision (benefit) 882 (980)
----------- -----------
Net loss $ (14,338) $ (22,585)
=========== ===========
Basic and diluted net loss per share $ (0.07) $ (0.11)
Basic and diluted weighted average common and
common equivalent shares 206,915 198,289
Included in the above Statements of Operations:
Accelerated depreciation on legacy IT system $ -- $ 2,179
Retention expense:
Cost of revenue -- 166
Research and development -- --
Sales and marketing -- --
General and administrative -- --
----------- -----------
-- 166
Amortization of intangibles:
Cost of revenue 6,918 8,509
Research and development 100 205
Sales and marketing 4,131 4,223
General and administrative 25 25
----------- -----------
11,174 12,962
Share-based compensation:
Cost of revenue 355 366
Research and development 765 859
Sales and marketing 741 583
General and administrative 833 1,042
----------- -----------
2,694 2,850
QUANTUM CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
( In thousands )
June 30, March 31,
2008 2008
----------- -----------
(Unaudited) *
Assets
Current assets:
Cash and cash equivalents $ 67,486 $ 93,643
Accounts receivable, net 149,464 182,998
Inventories 78,525 75,995
Deferred income taxes 12,327 12,060
Other current assets 31,345 30,601
----------- -----------
Total current assets 339,147 395,297
Long-term assets:
Property and equipment, less accumulated
depreciation 36,352 39,271
Service parts for maintenance, less
accumulated amortization 75,753 77,211
Purchased technology, less accumulated
amortization 67,649 74,667
Other intangible assets, less accumulated
amortization 71,067 75,223
Goodwill 390,776 390,776
Other long-term assets 12,812 13,280
----------- -----------
Total long-term assets 654,409 670,428
----------- -----------
$ 993,556 $ 1,065,725
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 87,676 $ 97,965
Accrued warranty 18,519 19,862
Deferred revenue, current 71,665 73,525
Current portion of long-term debt 4,000 4,000
Accrued restructuring charges 3,341 3,834
Other accrued liabilities 86,142 82,997
----------- -----------
Total current liabilities 271,343 282,183
Long-term liabilities:
Deferred revenue, long-term 31,757 31,152
Deferred income taxes 13,887 13,640
Long-term debt 286,000 336,000
Convertible subordinated debt 160,000 160,000
Other long-term liabilities 14,024 14,746
----------- -----------
Total long-term liabilities 505,668 555,538
Stockholders' equity 216,545 228,004
----------- -----------
$ 993,556 $ 1,065,725
=========== ===========
* Derived from the March 31, 2008 audited Consolidated Financial Statements
QUANTUM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended
------------------------
June 30, June 30,
2008 2007
----------- -----------
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net loss $ (14,338) $ (22,585)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation 4,508 9,667
Amortization 16,251 17,575
Realized gain on sale of investment -- (2,122)
Deferred income taxes (20) 17
Share-based compensation 2,694 2,850
Fixed assets written off in restructuring -- 360
Changes in assets and liabilities, net of
effects of assets held for sale:
Accounts receivable 33,534 (25,869)
Inventories (4,973) 6,730
Service parts for maintenance (484) 131
Accounts payable (10,289) (6,839)
Accrued warranty (1,343) (3,862)
Deferred revenue (1,255) (459)
Accrued restructuring charges (493) 1,976
Other assets and liabilities 1,722 1,165
----------- -----------
Net cash provided by (used in) operating
activities 25,514 (21,265)
Cash flows from investing activities:
Purchases of marketable securities -- (65,000)
Proceeds from sale of marketable securities -- 90,000
Purchases of property and equipment (1,704) (4,746)
----------- -----------
Net cash provided by (used in) investing
activities (1,704) 20,254
Cash flows from financing activities:
Borrowings of long-term debt -- 50,000
Repayments of long-term debt (50,000) (26,250)
Proceeds from issuance of common stock, net 33 2,678
----------- -----------
Net cash provided by (used in) financing
activities (49,967) 26,428
Net increase (decrease) in cash and cash
equivalents (26,157) 25,417
Cash and cash equivalents at beginning of period 93,643 59,926
----------- -----------
Cash and cash equivalents at end of period $ 67,486 $ 85,343
=========== ===========
| Contact: Brad Cohen Public Relations Quantum Corp. (408) 944-4044 Marilyn Keys |
|
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