Quantum Corporation Reports Record Earnings for Second Fiscal 1998 Quarter
Third Consecutive Quarter of Record Earnings
MILPITAS, Calif.--(BUSINESS WIRE)--Oct. 21, 1997--Quantum Corporation (NMS:QNTM) today announced record net income of $104 million or 62 cents per share fully diluted on sales of $1.55 billion for its second fiscal 1998 quarter ended September 28, 1997.
This compares to net income of $4.6 million or 4 cents per share on sales of $1.12 billion in the second quarter of fiscal 1997. Net income for the first six months of fiscal 1998 was $200 million or $1.23 per share fully diluted on sales of $3 billion compared to net income of $8.4 million or 7 cents per share on sales of $2.28 billion for the first six months of fiscal 1997.
''We are pleased with our overall results and with the strong performance of our DLT brand tape drive and desktop hard disk drive business in what is often a seasonally weak quarter,'' said Michael Brown. ''The continued intense pricing pressure and turmoil in the high-end portion of the hard disk drive marketplace had a negative impact on our profitability. In spite of that, we achieved our fifth consecutive quarter of increased profitability as a company, achieved record unit hard disk drive shipments, and increased our total sales 38% over the second quarter a year ago.''
Sales of Quantum's DLT brand tape products more than doubled from a year ago to $339 million in the quarter. ''Our DLT tape products represented 22% of our sales this quarter and continued to contribute a much higher percentage of our overall operating profits,'' said Brown. ''Our leadership in the mid-range tape market and the profitability of our DLT tape business are important differentiators for Quantum as we continue to evolve from a hard drive company to a diversified storage provider.''
Quantum's desktop hard disk drive shipments increased to 6.3 million units in the quarter, an increase of 23% from a year ago and up roughly 600,000 units sequentially from the June quarter. ''We are very pleased with our ability to grow our desktop business during the typically slow summer months,'' said Brown. ''Although we saw strong demand across our desktop product line from both distribution and OEM customers, most of the increase in shipments from the June quarter was due to increased demand from the top 10 PC OEMs for our Fireball ST 1.6 GB/platter drives and Bigfoot CY 5.25-inch products,'' said Brown.
With respect to the high-end portion of its business, the company stated that it is in the process of considering plans to address the current operating losses in that business. The actions being contemplated revolve around transition planning for the company's next generation of high-end products in light of the changing competitive dynamics in the high-end marketplace. Some actions being considered could, if required, result in non-recurring charges in the current quarter. Such potential non-recurring charges, if required, could range to a maximum of $35 million after tax.
About Quantum
Founded in 1980, Quantum Corporation is the only storage company that has developed leadership positions in both fixed and removable storage products. One of the highest volume global suppliers of hard disk drives, and the leader in the mid-range tape market, Quantum is widely recognized as the industry's quality leader.
The company sells a broad range of storage products to OEM and distribution customers worldwide. Quantum's sales for the fiscal year ending March 1997 were $5.3 billion. The company's world wide web home address is quantum.com .
The foregoing statements regarding the company's transition planning for the high-end business are forward-looking statements and actual results could vary. Factors that could affect actual results include the extent and timing of any non-recurring charges in the high-end business and the impact of pricing and other factors affecting the high end market.
QUANTUM CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts)
THREE MONTHS ENDED SIX MONTHS ENDED
Sept. 28, Sept. 29, Sept. 28, Sept. 29,
1997 1996 1997 1996
Sales $1,553,491 $1,124,144 $2,999,635 $2,277,646
Cost of sales 1,255,407 988,666 2,425,618 2,000,889
Gross profit 298,084 135,478 574,017 276,757
Expenses:
Research and
development 74,493 69,549 148,522 136,214
Sales and
marketing 41,971 29,812 83,704 66,007
General and
administrative 24,268 16,988 51,739 38,475
Total operating
expenses 140,732 116,349 283,965 240,696
Income from
operations 157,352 19,129 290,052 36,061
Interest and
other expense, net 17,111 12,949 19,388 24,688
Income before
income taxes 140,241 6,180 270,664 11,373
Income tax provision 36,463 1,607 70,372 2,957
Net income $ 103,778 $ 4,573 $ 200,292 $ 8,416
Net income
per share:
Primary $ 0.71 $ 0.04 $ 1.40 $ 0.07
Fully diluted $ 0.62 $ 0.04 $ 1.23 $ 0.07
Weighted average
common and common
equivalent shares:
Primary 145,791 117,264 143,337 116,478
Fully diluted 172,501 117,264 167,506 116,478
QUANTUM CORPORATION
CONSOLIDATED BALANCE SHEETS
( In thousands)
Sept. 28, March 31,
1997 1997
Assets
Current Assets:
Cash and investments $ 637,744 $ 345,125
Accounts receivable, net of
allowance for doubtful accounts
of $10,194 and $10,610 1,029,829 887,477
Inventories 386,525 252,802
Deferred income taxes 122,899 122,899
Other current assets 42,713 80,116
Total current assets 2,219,710 1,688,419
Property and equipment, net 258,859 407,206
Purchased intangibles, net 15,017 42,131
Other assets 158,112 20,507
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$2,651,698 $2,158,263
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 626,938 $ 502,069
Accrued warranty 84,446 94,989
Other accrued liabilities 193,128 174,291
Current portion of long-term debt 893 44,229
Total current liabilities 905,405 815,578
Deferred income taxes 33,709 33,587
Convertible subordinated debt 528,850 241,350
Long-term debt 40,463 177,668
Redeemable preferred stock 3,888 3,888
Shareholders' equity 1,139,383 886,192
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$2,651,698 $2,158,263 |
