Quantum's report: DLT up 14%, revenues to 292 million, media revenues up sharply as well, installed base approaching 1 million drives, combined media and drive revenue to $370 million (with partners revenue).
Thursday October 15, 5:14 pm Eastern Time
Company Press Release
Quantum Corporation Reports Earnings for
Second Fiscal 1999 Quarter
MILPITAS, Calif.--(BUSINESS WIRE)--Oct. 15, 1998--Quantum Corporation (Nasdaq/NMS:QNTM - news)
today announced revenue of $1.2 billion for its second fiscal quarter ended September 27, 1998. Net income for
the quarter was $17.3 million, or $.11 per share, diluted. This compares to net income of $3.0 million, or $.02
per share, diluted, on revenues of $1.1 billion for the quarter ended June 28, 1998.
Quantum's overall results improved from the previous quarter due to the strong growth in revenue and
operating income from the DLTtape(TM) business, which offset the loss from the company's hard disk drive
business. ''With DLTtape revenue representing a record 25 percent of total revenue, we believe this quarter's
results confirm the advantages of Quantum's diversified business model,'' said Michael Brown, Quantum's
Chairman and Chief Executive Officer.
Revenues from the DLTtape business grew 14 percent sequentially to $292 million, driven by continued strong
end-user demand and the increasing significance of media royalty revenue from licensed media partners,
which grew to $29.8 million in fiscal Q2.
''As the installed base of DLT drives approaches 1 million units, demand for media continued to grow during
the quarter, and presents an increasing opportunity to both Quantum and its media partners,'' said Brown.
''Combined DLTtape drive and media sales for both Quantum and our licensed media partners reached a
record level in the September quarter of approximately $370 million, compared to the previous record of
approximately $345 million achieved in the same quarter a year ago.''
Commenting on the company's hard disk drive business, Brown said that the market dynamics remain
difficult for the HDD industry, however for the first time in a year, the company saw growth in its desktop
HDD business. ''Although we continue to incur losses in both our total HDD business and our recording heads
joint venture, our desktop unit shipments, at 5.8 million units, increased by about 10 percent from the June
quarter and, despite continued aggressive pricing, desktop hard drive revenue grew 5 percent sequentially,''
said Brown. ''In addition, we continued to see a reduction in the losses we have been incurring in our high
end HDD business, based upon the continued strong market acceptance of our Atlas III and Viking II
products.''
Commenting on the balance sheet, Brown said that the company generated over $100 million in cash from
operations during the quarter. ''This was the eighth consecutive quarter of positive cash flow from operations.
In addition, we reduced our inventory levels from the previous quarter by $22 million and maintained our
HDD channel inventory levels within our targeted range,'' said Brown.
About Quantum
Founded in 1980, Quantum Corporation (www.quantum.com) is a diversified mass storage company with
leadership positions in both fixed and removable storage markets. Quantum is the highest volume global
supplier of hard disk drives for personal computers, a leading supplier of high capacity hard drives and the
worldwide revenue leader among all classes of tape drives. The company sells a broad range of storage
products to OEM and distribution customers worldwide. Quantum's sales for the fiscal year ending March 1998
were $5.8 billion.
Quantum and the Quantum logo are trademarks of Quantum Corporation, registered in the United States and
other countries.
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QUANTUM CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts)
Three Months Ended Six Months Ended
Sept. 27, Sept. 28, Sept. 27, Sept. 28,
1998 1997 1998 1997
Sales $1,164,711 $1,553,491 $2,267,734 $2,999,635
Cost of sales 972,822 1,255,407 1,909,473 2,425,618
Gross profit 191,889 298,084 358,261 574,017
Expenses:
Research and development 82,640 74,493 166,938 148,522
Sales and marketing 45,386 41,971 83,723 83,704
General and
administrative 21,494 24,268 38,895 51,739
Total operating
expenses 149,520 140,732 289,556 283,965
Income from operations 42,369 157,352 68,705 290,052
Interest and other
expense, net 592 1,482 (1,609) (183)
Equity in loss of investee 17,114 15,629 41,350 19,571
Income before income taxes 24,663 140,241 28,964 270,664
Income tax provision 7,399 36,463 8,689 70,372
Net income $ 17,264 $ 103,778 $ 20,275 200,292
Net income per share:
Basic $ 0.11 $ 0.77 $ 0.13 $ 1.51
Diluted $ 0.11 $ 0.63 $ 0.13 $ 1.23
Weighted average common and
common equivalent shares:
Basic 151,527 134,256 155,121 132,583
Diluted 156,489 171,250 161,223 166,714
QUANTUM CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
Sept. 27, March 31,
1998 1998
Assets
Current Assets:
Cash and investments $ 578,686 $ 713,723
Accounts receivable, net of
allowance for doubtful accounts
of $10,985 and $12,928 663,014 737,928
Inventories 295,799 315,035
Deferred income taxes 133,993 133,981
Other current assets 92,061 124,670
Total current assets 1,763,553 2,025,337
Property and equipment, net 286,248 285,159
Purchased intangibles, net 18,040 24,490
Other assets 60,963 103,425
---------- ----------
$2,128,804 $2,438,411
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $ 397,348 $ 446,243
Accrued warranty 72,296 74,017
Other accrued liabilities 136,956 179,041
Current portion of long-term debt 978 935
Total current liabilities 607,578 700,236
Deferred income taxes 39,683 38,668
Convertible subordinated debt 287,500 287,500
Long-term debt 39,484 39,985
Shareholders' equity 1,154,559 1,372,022
---------- ----------
$2,128,804 $2,438,411 |
