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Quantum Corporation Reports Fiscal Fourth Quarter and Full Year 2014 Results


May 7, 2014 - SAN JOSE, CA

Quantum Corporation (NYSE: QTM)

Fourth Quarter Highlights:

  • Delivered Revenue and Operating Income Performance within Guidance Range
  • Increased StorNext/Lattus Revenue 9% Year-over-Year, Driven by Near-50% Growth in North America and Closing Record Fiscal Year for StorNext Revenue
  • Generated $20 Million in Cash from Operations
  • Ended Quarter with More than $100 Million in Cash, the Highest Level in 4 Years

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

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

  • Revenue was $128.0 million, within the January guidance range but down 9 percent, primarily due to lower tape automation and DXi® sales.
  • Scale-out storage (StorNext® and Lattus™) revenue grew 9 percent, driven by a nearly 50 percent increase in North America sales.
  • GAAP operating loss was $12.5 million, a slight improvement from a $12.9 million operating loss.
  • GAAP net loss was $14.4 million, or $0.06 per diluted share, compared to a net loss of $15.2 million, or $0.06 per diluted share.
  • Non-GAAP operating loss was $159,000 -- reduced from an operating loss of $3.7 million.
  • Non-GAAP net loss was $2.1 million, an improvement of 65 percent compared to a net loss of $6.0 million.
  • Cash generated from operations was $20 million.

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

  • Revenue was $553.2 million, down 6 percent, due primarily to lower tape automation and DXi sales.
  • Scale-out storage revenue reached a record level, growing 12 percent overall and approximately 50 percent in North America.
  • GAAP net loss was $21.5 million, an improvement of approximately 60 percent from a net loss of $52.2 million.
  • Non-GAAP net income was $13.7 million, up $27.2 million.
  • Cash generated from operations was $35.5 million, compared to $7.7 million.
  • Quantum ended the fiscal year with $101.9 million in total cash and cash equivalents, the highest level in four years.

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

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

Fiscal Year 2015 Outlook
For the fiscal first quarter, Quantum expects:

  • Revenue of approximately $125 million to $130 million.
  • GAAP gross margin of 43.3 to 44.3 percent and non-GAAP gross margin of 44 to 45 percent.
  • GAAP operating expenses of approximately $59 million and non-GAAP operating expenses of approximately $54 million.
  • Interest expense of $2.5 million and taxes of $500,000.

For the full fiscal year, Quantum expects:

  • Revenue of approximately $540 million to $550 million.
  • GAAP gross margin of 44.6 to 45.6 percent and non-GAAP gross margin of 45 to 46 percent.
  • GAAP operating expenses of $227 million to $232 million and non-GAAP operating expenses of $215 million to $220 million.
  • Interest expense of $10 million and taxes of $2 million.

Fiscal Fourth Quarter 2014 Business Highlights

  • Quantum announced several new products based on its StorNext 5 platform. These include StorNext Pro Solutions which are specifically designed and optimized to meet today's toughest workflow challenges, thereby enabling greater levels of efficiency for broadcasters and post-production facilities. The initial three Pro Solutions offerings provide high-performance storage for refreshing or enhancing older Apple Xsan environments, meeting new 4K workflow demands and supporting end-to-end content production and library management.
  • Extending its technology leadership in disk-based backup and deduplication, the company launched the DXi4700 appliance. It provides best-in-class scalability (5-135 TB of usable capacity), density and cost per terabyte under a "pay-as-you-grow" model, along with security, performance and value features that make it a particularly good fit in the data center, hosted environments and remote sites.
  • Quantum continued to see increasing market traction in selling StorNext to its data center customers for video storage streamlining. The company turned several small tape library opportunities into $200,000 plus deals incorporating StorNext -- including at one of the largest athletic shoe companies in the world, which needed a better storage solution for all its marketing videos.
  • Capping off a year of numerous industry awards and accolades, Quantum had four products named as finalists in Storage magazine/SearchStorage.com's 2013 Product of the Year Awards, more than any other storage provider. The products -- DXi6800 physical backup and deduplication systems, DXi V4000 virtual backup and deduplication appliances, Scalar i6000 HD tape libraries and Lattus Object Storage solutions -- span a cross section of the company's data protection and scale-out storage portfolios and were recognized for innovation and value.

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

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

Quantum, the Quantum logo, Be Certain, DXi, StorNext, Lattus, vmPRO and Scalar are either registered trademarks or trademarks of Quantum Corporation and its affiliates in the United States and/or other countries. All other trademarks are the property of their respective owners.

"Safe Harbor" Statement: This press release contains "forward-looking" statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Specifically, but without limitation, our statement that we will build on our progress through several strategic initiatives that leverage our technology, product and install base strengths and capitalize on the market trends in data protection and scale-out storage -- with the goal of delivering profitable growth in our core business and increased shareholder value, and all of the statements under the Fiscal Year 2015 Outlook heading are forward-looking statements within the meaning of the Safe Harbor. All forward-looking statements in this press release are based on information available to Quantum on the date hereof. These statements involve known and unknown risks, uncertainties and other factors that may cause Quantum's actual results to differ materially from those implied by the forward-looking statements. These risks include operational difficulties, unforeseen technical limitations, unexpected changes in market conditions and unanticipated changes in customers' needs or requirements, as well as the risks set forth in Quantum's periodic filings with the Securities and Exchange Commission, including, but not limited to, those risks and uncertainties listed in the section entitled "Risk Factors," in Quantum's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on February 7, 2014 and in Quantum's Annual Report on Form 10-K filed with the Securities and Exchange Commission on June 7, 2013. Quantum expressly disclaims any obligation to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

Use of Non-GAAP Financial Measures

Quantum believes that the non-GAAP financial measures disclosed above provide useful and supplemental information to investors regarding its quarterly financial performance. Quantum management uses these non-GAAP financial measures internally to understand, manage and evaluate the company's business results and make operating decisions. For instance, Quantum management often makes decisions regarding staffing, future management priorities and how the company will direct future operating expenses on the basis of non-GAAP financial measures. In addition, compensation of our employees is based in part on the performance of our business based on non-GAAP operating income.

The non-GAAP financial measures used in this press release exclude the impact of amortization of intangibles, share-based compensation, restructuring charges and outsourcing transition costs for the following reasons:

Amortization of Intangible Assets
This includes acquired intangibles such as purchased technology and customer relationships in connection with prior acquisitions. These expenses are not factored into management's evaluation of potential acquisitions or Quantum's performance after completion of the acquisitions because they are not related to Quantum's core operating performance. In addition, the frequency and amount of such charges can vary significantly based on the size and timing of acquisitions and the maturities of the businesses being acquired. Excluding acquisition-related charges from non-GAAP measures provides investors with a basis to compare Quantum against the performance of other companies without the variability caused by purchase accounting.

Share-Based Compensation Expense
Share-based compensation expense relates primarily to equity awards such as stock options and restricted stock units. Share-based compensation is a non-cash expense that varies in amount from period to period and is dependent on market forces that are often beyond Quantum's control. As a result, management excludes this item from Quantum's internal operating forecasts and models. Management believes that non-GAAP measures adjusted for share-based compensation provide investors with a basis to measure Quantum's core performance against the performance of other companies without the variability created by share-based compensation as a result of the variety of equity awards used by other companies and the varying valuation methodologies and assumptions used.

Restructuring Charges
Restructuring charges primarily relate to expenses associated with changes to Quantum's operating structure. Restructuring charges are excluded from non-GAAP financial measures because they are not considered core operating activities. Although Quantum has engaged in various restructuring activities in the past, each has been a discrete event based on a unique set of business objectives. Management believes that it is appropriate to exclude restructuring charges from Quantum's non-GAAP financial measures, as it enhances the ability of investors to compare Quantum's period-over-period operating results from continuing operations.

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

Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. They are limited in value because they exclude charges that have a material impact on the company's reported financial results and, therefore, should not be relied upon as the sole financial measures to evaluate the company. The non-GAAP financial measures are meant to supplement, and be viewed in conjunction with, GAAP financial measures. Investors are encouraged to review the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measures as provided in the tables accompanying this press release.

Note 1

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

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




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,
2014 2013 2014 2013
--------- --------- --------- ---------
(Revised) (Revised)
Note 1 Note 1
Revenue:
Product $ 79,426 $ 92,615 $ 348,318 $ 398,910
Service 37,587 36,899 147,199 144,037
Royalty 10,955 10,411 57,648 44,492
--------- --------- --------- ---------
Total revenue 127,968 139,925 553,165 587,439
Cost of revenue:
Product 55,909 62,633 237,076 267,274
Service 19,877 19,708 75,930 79,604
Restructuring charges 162 -- 539 --
--------- --------- --------- ---------
Total cost of revenue 75,948 82,341 313,545 346,878
--------- --------- --------- ---------
Gross margin 52,020 57,584 239,620 240,561

Operating expenses:
Research and development 15,312 17,321 64,375 73,960
Sales and marketing 29,194 34,400 118,771 136,873
General and administrative 14,120 15,230 57,865 62,017
Restructuring charges 6,150 3,569 10,675 10,171
--------- --------- --------- ---------
Total operating expenses 64,776 70,520 251,686 283,021
Gain on sale of assets 267 -- 267 --
--------- --------- --------- ---------
Loss from operations (12,489) (12,936) (11,799) (42,460)

Other income and expense 505 172 1,296 (216)
Interest expense (2,435) (2,446) (9,754) (8,342)
--------- --------- --------- ---------
Loss before income taxes (14,419) (15,210) (20,257) (51,018)
Income tax provision (15) (56) 1,217 1,161
--------- --------- --------- ---------
Net loss $ (14,404) $ (15,154) $ (21,474) $ (52,179)
========= ========= ========= =========


Basic and diluted net loss per
share $ (0.06) $ (0.06) $ (0.09) $ (0.22)

Weighted average basic and
diluted shares 249,593 242,165 247,024 239,855

---------------------------------------------------------------------------

Included in the above
Statements of Operations:

Amortization of intangibles:
Cost of revenue $ 372 $ 368 $ 1,476 $ 3,775
Sales and marketing 1,857 1,856 7,426 9,524
--------- --------- --------- ---------
2,229 2,224 8,902 13,299
Share-based compensation:
Cost of revenue 403 550 1,963 2,389
Research and development 792 893 3,430 3,665
Sales and marketing 949 1,096 4,097 4,699
General and administrative 1,047 871 3,969 4,386
--------- --------- --------- ---------
3,191 3,410 13,459 15,139
Outsourcing Transition Costs:
Cost of revenue 598 -- 1,550 --
--------- --------- --------- ---------
598 -- 1,550 --

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




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

March 31, 2014 March 31, 2013*
---------------- ----------------
(Revised) Note 1
Assets
Current assets:
Cash and cash equivalents $ 99,125 $ 68,976
Restricted cash 2,760 3,023
Accounts receivable 101,605 96,835
Manufacturing inventories 34,815 53,075
Service parts inventories 25,629 35,368
Other current assets 10,624 11,831
---------------- ----------------
Total current assets 274,558 269,108

Long-term assets:
Property and equipment 17,574 21,456
Intangible assets 3,911 12,813
Goodwill 55,613 55,613
Other long-term assets 10,605 9,892
---------------- ----------------
Total long-term assets 87,703 99,774

---------------- ----------------
$ 362,261 $ 368,882
================ ================

Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable $ 42,255 $ 47,634
Accrued warranty 6,116 7,520
Deferred revenue, current 98,098 91,108
Accrued restructuring charges, current 4,345 3,021
Accrued compensation 25,036 30,964
Other accrued liabilities 15,168 14,569
---------------- ----------------
Total current liabilities 191,018 194,816

Long-term liabilities:
Deferred revenue, long-term 40,054 38,393
Accrued restructuring charges, long-
term 4,023 1,735
Convertible subordinated debt 203,735 205,000
Other long-term liabilities 10,831 11,301
---------------- ----------------
Total long-term liabilities 258,643 256,429

Stockholders' deficit (87,400) (82,363)

---------------- ----------------
$ 362,261 $ 368,882
================ ================

* Derived from the March 31, 2013 audited Consolidated Financial Statements.
Note 1 is presented above, before the Condensed Consolidated Statements of
Operations.




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

Twelve Months Ended
----------------------------------
March 31, 2014 March 31, 2013
--------------- -----------------
(Revised) Note 1
Cash flows from operating activities:
Net loss $ (21,474) $ (52,179)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Depreciation 10,713 12,413
Amortization 10,536 14,646
Service parts lower of cost or
market adjustment 11,307 10,081
Deferred income taxes 36 (142)
Share-based compensation 13,459 15,139
Other non-cash gain 983 --
Changes in assets and liabilities:
Accounts receivable (4,770) 11,880
Manufacturing inventories 13,352 (2,098)
Service parts inventories 2,675 3,735
Accounts payable (5,418) (8,630)
Accrued warranty (1,404) (66)
Deferred revenue 8,651 (370)
Accrued restructuring charges 3,619 3,009
Accrued compensation (6,140) (1,663)
Other assets and liabilities (651) 1,980
--------------- -----------------
Net cash provided by operating
activities 35,474 7,735

Cash flows from investing activities:
Purchases of property and equipment (5,957) (10,099)
Decrease in restricted cash 426 1,113
Purchases of other investments (1,118) (2,169)
Return of principal from other
investments -- 247
--------------- -----------------
Net cash used in investing activities (6,649) (10,908)

Cash flows from financing activities:
Repayments of long-term debt -- (49,495)
Borrowings of convertible subordinated
debt, net -- 67,701
Repayments of convertible subordinated
debt (1,265) --
Payment of taxes due upon vesting of
restricted stock (1,880) (2,036)
Proceeds from issuance of common stock 4,430 4,805
--------------- -----------------
Net cash provided by financing
activities 1,285 20,975

Effect of exchange rate changes on cash
and cash equivalents 39 (87)

Net increase in cash and cash
equivalents 30,149 17,715
Cash and cash equivalents at beginning
of period 68,976 51,261
--------------- -----------------
Cash and cash equivalents at end of
period $ 99,125 $ 68,976
=============== =================

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




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


Three Months Ended March 31, 2014
-----------------------------------------
Gross
Gross Margin Loss From Operating
Margin Rate Operations Margin
---------- ------- ---------- ---------
GAAP $ 52,020 40.7% $ (12,489) (9.8)%
Non-GAAP Reconciling Items:
Amortization of intangibles 372 2,229
Share-based compensation 403 3,191
Restructuring charges 162 6,312
Outsourcing transition costs 598 598
---------- ----------
Non-GAAP $ 53,555 41.9% $ (159) (0.1)%



Three Months Ended March 31, 2014
------------------------------------
Per Share Per Share
Net Loss, Net Loss,
Net Loss Basic Diluted
---------- ---------- ----------
GAAP $ (14,404) $ (0.06) $ (0.06)
Non-GAAP Reconciling Items:
Amortization of intangibles 2,229
Share-based compensation 3,191
Restructuring charges 6,312
Outsourcing transition costs 598
----------
Non-GAAP $ (2,074) $ (0.01) $ (0.01)*

Computation of basic and diluted net loss
per share: GAAP Non-GAAP
--------- ---------
Net loss $ (14,404) $ (2,074)

Weighted average shares:
Basic and diluted 249,593 249,593


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


Twelve Months Ended March 31, 2014
------------------------------------
Per Share Per Share
Net Income Net Income
Net Income (Loss), (Loss),
(Loss) Basic Diluted
---------- ---------- ----------
GAAP $ (21,474) $ (0.09) $ (0.09)
Non-GAAP Reconciling Items:
Amortization of intangibles 8,902
Share-based compensation 13,459
Restructuring charges 11,214
Outsourcing transition costs 1,550
----------
Non-GAAP $ 13,651 $ 0.06 $ 0.05 *

Computation of basic and diluted net income
(loss) per share: GAAP Non-GAAP
--------- ---------
Net income (loss) $ (21,474) $ 13,651
Interest on dilutive convertible notes -- --
--------- ---------
Income (loss) for purposes of computing
income (loss) per diluted share $ (21,474) $ 13,651
========= =========

Weighted average shares:
Basic 247,024 247,024
Dilutive shares from stock plans -- 3,004
Dilutive shares from convertible notes -- --
--------- ---------
Diluted 247,024 250,028
========= =========

 * Non-GAAP per share net income (loss): Each fiscal period is calculatedindependently, thus the sum of each of the quarter's non-GAAP per share netincome (loss) does not necessarily equal the year-to-date non-GAAP per sharenet income (loss). For example, certain convertible subordinated notes weredilutive in the first quarter of fiscal 2014 but were anti-dilutive for theyear-to-date period. The non-GAAP financial information set forth in this table is not preparedin accordance with generally accepted accounting principles and may bedifferent 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, 2013 ---------------------------------------- (Revised) Note 1 Gross Gross Margin Loss From Operating Margin Rate Operations Margin ---------- ------- ---------- ---------GAAP $ 57,584 41.2% $ (12,936) (9.2)%Non-GAAP Reconciling Items: Amortization of intangibles 368 2,224 Share-based compensation 550 3,410 Restructuring charges -- 3,569 ---------- ----------Non-GAAP $ 58,502 41.8% $ (3,733) (2.7)% Three Months Ended March 31, 2013 ----------------------------------- (Revised) Note 1 Per Share Per Share Net Loss, Net Loss, Net Loss Basic Diluted ---------- ---------- ----------GAAP $ (15,154) $ (0.06) $ (0.06)Non-GAAP Reconciling Items: Amortization of intangibles 2,224 Share-based compensation 3,410 Restructuring charges 3,569 ----------Non-GAAP $ (5,951) $ (0.03) $ (0.03)* Computation of basic and diluted net loss per share: GAAP Non-GAAP --------- --------- Net loss $ (15,154) $ (5,951) Weighted average shares: Basic and diluted 242,165 242,165 Twelve Months Ended March 31, 2013 ---------------------------------------- (Revised) Note 1 Gross Gross Margin Loss From Operating Margin Rate Operations Margin ---------- ------- ---------- ---------GAAP $ 240,561 41.0% $ (42,460) (7.2)%Non-GAAP Reconciling Items: Amortization of intangibles 3,775 13,299 Share-based compensation 2,389 15,139 Restructuring charges -- 10,171 ---------- ----------Non-GAAP $ 246,725 42.0% $ (3,851) (0.7)% Twelve Months Ended March 31, 2013 ------------------------------------- (Revised) Note 1 Per Share Per Share Net Loss, Net Loss, Net Loss Basic Diluted ---------- ---------- ----------GAAP $ (52,179) $ (0.22) $ (0.22)Non-GAAP Reconciling Items: Amortization of intangibles 13,299 Share-based compensation 15,139 Restructuring charges 10,171 ----------Non-GAAP $ (13,570) $ (0.06) $ (0.06)* Computation of basic and diluted net loss per share: GAAP Non-GAAP --------- --------- Net loss $ (52,179) $ (13,570) Weighted average shares: Basic and diluted 239,855 239,855 * Non-GAAP per share net income (loss): Each fiscal period is calculatedindependently, thus the sum of each of the quarter's non-GAAP per share netincome (loss) does not necessarily equal the year-to-date non-GAAP per sharenet income (loss). For example, certain convertible subordinated notes weredilutive in the third quarter of fiscal 2013 but were anti-dilutive for theyear-to-date period. Note 1 is presented above, before the Condensed Consolidated Statements ofOperations. The non-GAAP financial information set forth in this table is not preparedin accordance with generally accepted accounting principles and may bedifferent from non-GAAP financial information used by other companies. QUANTUM CORPORATION FORECAST FIRST QUARTER AND FISCAL 2015 GAAP TO NON-GAAP RECONCILIATION (Dollars in millions) FORECAST FIRST QUARTER FISCAL 2015 ----------------- Percentage Range -----------------Forecast first quarter gross margin rate on a GAAP basis 43.3% - 44.3%Forecast amortization of intangibles 0.3%Forecast share-based compensation 0.4% -----------------Forecast first quarter gross margin rate on a non-GAAP basis 44.0% - 45.0% ================= ----------------- Dollars -----------------Forecast first quarter operating expense on a GAAP basis* $58.6Forecast amortization of intangibles 1.9Forecast share-based compensation 2.7 -----------------Forecast first quarter operating expense on a non-GAAP basis $54.0 ================= FORECAST FULL YEAR FISCAL 2015 ----------------- Percentage Range -----------------Forecast fiscal 2015 gross margin rate on a GAAP basis 44.6% - 45.6%Forecast amortization of intangibles 0.2%Forecast share-based compensation 0.2% -----------------Forecast fiscal 2015 gross margin rate on a non-GAAP basis 45.0% - 46.0% ================= ----------------- Dollar Range -----------------Forecast fiscal 2015 operating expense on a GAAP basis* $227.4 - $232.4Forecast amortization of intangibles 2.8Forecast share-based compensation 9.6 -----------------Forecast fiscal 2015 operating expense on a non-GAAP basis $215.0 - $220.0 ================= * Forecast first quarter and fiscal year 2015 GAAP operating expense doesnot reflect facility restructuring charges. These charges will be recognizedwhen we vacate the various locations, which may occur in the first quarterof fiscal 2015 or a later period in fiscal 2015. Estimates based on current (May 7, 2014) projections. The projected GAAP and non-GAAP financial information set forth in thistable represent forward-looking statements within the meaning of the PrivateSecurities Litigation Reform Act of 1995. For risk factors that could impactthese projections, see our Annual Report on Form 10-K as filed with the SECon June 7, 2013. We disclaim any obligation to update information in anyforward-looking statement. The non-GAAP financial information set forth in this table is not preparedin accordance with generally accepted accounting principles and may bedifferent from non-GAAP financial information used by other companies. 

Contact:
Brad Cohen
Public Relations
Quantum Corp.
(408) 944-4044
brad.cohen@quantum.com

Brinlea Johnson or Allise Furlani
Investor Relations
The Blueshirt Group
(212) 331-8424 or (212) 331-8433
ir@quantum.com

MarketWire

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