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To Our Stockholders: Fiscal Year 2009 was a year marked by both challenge and progress. The global economic crisis that began last fall caused customers to pull back on their spending, particularly in the March quarter. We also saw continued pressure in the tape market, most notably in the low- end segments of the market as the role of tape in backup, recovery and archive continued to evolve. Despite these challenges, however, Quantum made significant progress in refining and executing on our strategy, delivering on our business model and positioning the company to capitalize on growth opportunities in the coming year, including those resulting from our leadership in data deduplication technology. In FY09, we solidified our strategy of providing a comprehensive range of solutions for protecting and managing data from the edge of the network to the core data center, solutions that integrate disk, tape, software and services within a common management and security framework. One of the key components of this strategy is the ability to leverage our leadership in deduplication, which continues to be one of the hottest segments in storage. On that front, we announced general availability of our DXi7500 Enterprise disk backup and remote replication solution in May of last year, with industry-first features such as policy- based deduplication and direct tape creation. In addition, last fall we introduced a midrange version of the DXi7500 (DXi7500 Express), and in February we made a number of major enhancements to the DXi7500 product line, including increasing capacity and expanding replication and path-to-tape options. Since the end of the fiscal year, we’ve introduced the DXi2500-D – a high-performance, low-cost backup and deduplication appliance for remote and branch offices optimized for replication back to a central data center – as well as a new version of our Quantum Vision™ backup management and reporting software that works across sites and our disk and tape systems. During FY09, EMC also began shipping products incorporating our deduplication and replication technology under a software licensing agreement, and we saw continued momentum for our StorNext® software in core markets such as Media and Entertainment and some large wins in new areas such as Life Sciences and Genomics. Combined with the expansion of our DXi™-Series family, all of this helped us increase our disk systems and software revenue by 79 percent year-over-year. Our disk systems and software business represented nearly 11 percent of our total revenue for FY09, up from 5 percent in the previous year, and was a key contributor to Quantum’s improved business model results in FY09. These improved results were reflected in the following: • Continuing our strategy of shifting Quantum’s revenue mix toward higher margin business, our non-GAAP gross margin rate for FY09 increased to 41 percent, the highest it’s been in eight years. • We reduced non-GAAP operating expenses throughout the year, from $74 million in the first fiscal quarter to $59 million in the final quarter – a 21 percent reduction. • We increased non-GAAP operating income to 8.2 percent of revenue, up from 6.9 percent in the prior year, and also the highest level in eight years. It’s also worth noting that in the December quarter, Quantum’s non-GAAP operating income was 15.3 percent of revenue. • We generated $88 million in cash from operations in FY09, enabling us to reduce our debt and improve our liquidity. A quantitative reconciliation of any GAAP and non-GAAP financial measures included in this letter can be accessed on our website at www.quantum.com by clicking “Investors” and then “Quarterly Earnings.” During FY09, we also took a number of actions to enable Quantum to capitalize on opportunities in Fiscal 2010. In addition to investing more R&D in disk systems and software, we focused our tape investments more narrowly in the midrange and open systems enterprise markets where we are well-positioned and can still generate good margins with our Scalar® tape library platform. We also changed our go-to-market model to gain greater leverage through our partners and do a better job of expanding our opportunities at lower cost. Finally, toward the end of FY09, we secured a loan commitment from EMC that subsequently enabled us to refinance a majority of our convertible debt while also reducing our senior debt, thereby improving our capital structure. For FY10, we have four key objectives: • Better articulating and communicating our edge-to-core strategy for protecting and managing data across sites, storage tiers and time; • Executing on our product roadmaps and building out our edge-to-core offerings with new solutions and product enhancements; • Leveraging the changes we’ve made in our go-to-market model, with particular focus on strengthening our channel relationships, generating increased leads and more aggressively driving our overall market messages; and • Continuing to improve our capital structure through further reductions in our debt. Industry developments in the first quarter of FY10 have only reinforced that deduplication is a very dynamic space with significant opportunity, and we are confident that Quantum will continue to be a major player in this area regardless of how these developments play out. We hold the foundational patent in the most effective form of deduplication (variable-length deduplication) and a strong technology position. With our DXi-Series, we offer customers a deduplication and replication platform that scales from less than 1 TB to 220 TB of usable capacity within a single software architecture, provides tight integration with tape systems for long-term archive and compliance and can be centrally managed with other Quantum products. We also have the ability to leverage our expertise in deduplication beyond just backup through our StorNext file system. In summary, despite challenges on a number of fronts in FY09, we made significant progress in our transition to becoming a higher value, storage systems company. As we work to complete this transition in the coming year, we know it will not be easy given the macro-economic environment. However, we have purposely established a narrow set of objectives for FY10 to make clear to everyone across the company where we must focus and execute. It is this focused execution that will enable us to demonstrate further progress in delivering on our business model. As always, we appreciate your continued support and confidence in Quantum. Rick Belluzzo Quantum, the Quantum logo, Scalar and StorNext are registered trademarks of Quantum Corporation and its affiliates. DXi and Quantum Vision are trademarks of Quantum Corporation. All other trademarks are the property of their respective owners. "Safe Harbor" Statement: This letter 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, statements relating to 1) Quantum’s objectives for FY 2010, 2) Quantum’s future market and technology positions and future role in the deduplication market, 3) the expected benefits to our customers for using Quantum’s products and 4) Quantum’s future revenue from its products and solutions, are forward- looking statements within the meaning of the Safe Harbor. 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 material deviation in product operation, the ability of competitors to introduce new solutions that compete more successfully with our solutions, Quantum’s ability to refinance a significant portion of its remaining convertible promissory notes, 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 Annual Report on Form 10-K included with this letter. 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 __________________________________ NOTICE OF ANNUAL MEETING OF STOCKHOLDERS __________________________________ TO BE HELD ON August 19, 2009 TO THE STOCKHOLDERS: NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Quantum Corporation (the “Company” or “Quantum”), a Delaware corporation, will be held on Wednesday, August 19, 2009 at 8:00 a.m., Pacific Daylight Time, at Quantum’s corporate headquarters at 1650 Technology Drive, San Jose, CA 95110, for the following purposes: 1. To elect nine directors recommended by the Board to serve until the next Annual Meeting of Stockholders or until their successors are elected and duly qualified; 2. To ratify the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm of the Company for the fiscal year ending March 31, 2010; 3. Provided that the Company has not effected a reverse stock split before August 19, 2009, to reauthorize the Company’s Board of Directors to select and file one of several possible amendments to the Company’s amended and restated certificate of incorporation which would effect a reverse stock split, pursuant to which any whole number of outstanding shares of the Company’s common stock between and including three and twelve would be combined into one share of such stock; and 4. To transact such other business as may properly come before the meeting or any adjournment or postponement thereof. The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice. Pursuant to rules promulgated by the Securities and Exchange Commission (“SEC”), we have elected to provide access to our proxy materials by notifying you of the availability of our proxy materials on the Internet.