8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 23, 2008

Quantum Corporation

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation)

1-13449	94-2665054
(Commission File No.)	(IRS Employer Identification No.)

1650 Technology Drive, Suite 800

San Jose, CA 95110

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (408) 944-4000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Financial Operations and Financial Condition

On January 23, 2008, Quantum Corporation issued a press release announcing earnings for its third quarter and first nine months of fiscal 2008, a copy of which is attached as Exhibit 99.1 hereto and incorporated by reference.

This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits

99.1 Press Release, dated January 23, 2008

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

QUANTUM CORPORATION
By:	/s/ Shawn D. Hall
	Shawn D. Hall
	Vice President, General Counsel and Secretary

Dated: January 23, 2008

EXHIBIT INDEX

Exhibit	Description
99.1	Press Release, dated January 23, 2008.

EX-99.1

Exhibit 99.1

Press release, dated January 23, 2008.

News Release

Contact:

Brad Cohen

Public Relations

Quantum Corp.

(408) 944-4044

brad.cohen@quantum.com

Marilyn Keys

Investor Relations

Quantum Corp.

(408) 944-4450

ir@quantum.com

QUANTUM CORPORATION REPORTS FISCAL THIRD QUARTER RESULTS

Generates Highest GAAP Operating Income in Three Years

SAN JOSE, Calif., Jan. 23, 2008 – Quantum Corp. (NYSE:QTM), the leading global specialist in backup, recovery and archive, today announced that revenue for its fiscal third quarter (FQ3’08), ended Dec. 31, 2007, was $253 million. Although this was down from $302 million in the same quarter last year (FQ3’07), the company more than doubled its GAAP operating income to $9 million. This was the highest level in three years and reflected Quantum’s focus on pursuing higher margin sales over low-margin revenue opportunities.

The company reported a GAAP net loss of $2 million for FQ3’08, or 1 cent per share, compared to a $10 million net loss (5 cents per share) in FQ3’07. The $2 million net loss in the recent December quarter included two major expense items totaling $16 million: $12 million in amortization of intangibles and $4 million in stock-based compensation charges. The net impact of these items reduced earnings per share on a diluted basis by approximately 8 cents.

Quantum increased its GAAP gross margin rate to 35 percent in FQ3’08, up from 29 percent in the comparable quarter last year. This was the highest GAAP gross margin rate for the company in more than five years. In addition to delivering strong gross margin

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performance, the company reduced its GAAP operating expenses to $78 million, from $85 million in the same period last year. During FQ3’08, Quantum also paid down $20 million of its debt related to the August 2006 acquisition of ADIC. At quarter end, the Company had reduced this debt by 27 percent since the acquisition and had a balance of $360 million. Interest expense for the period was $11 million, down $4 million from the comparable quarter last year.

“We are pleased with the continued progress we made in executing on our financial model last quarter,” said Rick Belluzzo, chairman and CEO of Quantum. “Our strategy of focusing on the higher margin segments of our business and reducing our expense structure has enabled us to deliver solid operating income, generate cash and pay down our debt. At the same time, however, we recognize the need to grow branded revenue and have undertaken a number of actions across the company which we believe will help drive such growth over the coming quarters. This includes building a stronger disk and software business, with an increasing contribution from our DXi-Series family of disk-based data de-duplication and replication solutions.”

Quantum’s product revenue, which includes sales of the company’s hardware and software products, totaled $185 million in FQ3’08. This represented a net decrease of approximately $50 million from the same quarter last year. The components of product revenue were as follows:

• Disk systems and software revenue was $14 million, up $2 million from FQ3’07, as a strong contribution from Quantum’s DXi3500 and DXi5500 de-duplication and replication appliances offset the revenue decline in sales of the company’s legacy disk products.

• Tape automation systems revenue totaled $113 million in FQ3’08, a decline of $30 million from the comparable period last year, with lower sales in almost all product categories.

• Revenue from devices and non-royalty media sales totaled $58 million in the December quarter, down $22 million from the same quarter last year, as non-royalty media revenue grew but device sales declined.

Service revenue, which includes hardware service contracts as well as repair, installation and professional services, was $41 million in FQ3’08. This was up $3 million over FQ3’07.

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Quantum had $27 million in royalty revenue for FQ3’08, down approximately $2 million from the same quarter last year.

The company increased its branded share of non-royalty revenue to 62 percent in FQ3’08, from 54 percent in FQ3’07.

Continued Validation for Quantum’s DXi^™ Solutions

During the December quarter, Quantum continued to see solid validation for its DXi-Series solutions. The company increased its combined DXi3500 and DXi5500 revenues by 31 percent sequentially and now has an installed base of approximately 200 customers across a range of industries and geographies. One-third of Quantum’s DXi-Series revenues in the quarter came from repeat purchases, and about 50 percent of customers bought a replication license, which indicates the continued growth opportunity for the company in this market. In addition, the DXi-Series portfolio is gaining increased recognition within the storage industry, most recently by the editors of Storage magazine and SearchStorage.com, who named the DXi-Series appliances as a finalist in the backup hardware category for their 2007 Storage Products of the Year (winners to be announced next month).

One of the key factors underlying the DXi-Series’ growing momentum has been Quantum’s focus on building an integrated, scalable family of data de-duplication and replication solutions for addressing customers’ needs from remote sites to primary data centers. This includes providing policy-based de-duplication and direct tape creation in the company’s new DXi7500 enterprise solution, which it plans to begin shipping later this quarter. Quantum has already received more than 200 requests for DXi7500 quotes from customers excited about the product and the benefits it offers.

Conference Call and Audio Webcast Notification

Quantum will hold a conference call today, Jan. 23, 2008, at 2:00 p.m. PST, to discuss its fiscal third quarter results. Press and industry analysts are invited to attend in listen-only mode. Dial-in number: (303) 262-2137 (U.S. & International). Quantum will provide a live audio webcast of the conference call beginning today, Jan. 23, 2008, at 2:00 p.m. PST. Site for the webcast and related information: http://www.quantum.com/investors.

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About Quantum

Quantum Corp. (NYSE:QTM) is the leading global storage company 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. 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.

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Quantum and the Quantum logo are trademarks of Quantum Corporation registered in the United States and other countries. DXi and StorNext are trademarks 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 contains “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. Specifically, without limitation, statements relating to: (1) our belief that actions undertaken across the company will help drive branded revenue growth over the coming quarters; (2) the scheduled shipping of the DXi7500 later this quarter, along with the product’s expected benefits; and (3) the expectation that momentum in the data de-duplication and replication markets will increase, are forward-looking statements within the meaning of the Safe Harbor. 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 21 of Quantum’s Annual Report on Form 10-K for fiscal year 2007, filed with the Securities and Exchange Commission on June 13, 2007 and on pages 32 to 42 of Quantum’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2007, filed with the Securities and Exchange Commission on November 8, 2007. In particular, you should review the risk factors on pages 12 through 14 of our Form 10-K under the headings “A large percentage of our sales come from a few customers, and these customers have no minimum or long-term purchase commitments. The loss of, or a significant reduction in demand from, one or more key customers could materially and adversely affect our business, financial condition, and operating results”, “From time to time we make acquisitions, such as the recent acquisition of ADIC. The failure to successfully integrate recent or future acquisitions could harm our business, financial condition, and operating results”, “We derive almost all of our revenue from products incorporating tape technology. If competition from alternative storage technologies continues or increases, our business, financial condition, and operating results would be materially and adversely harmed” and “Competition has increased, and may increasingly intensify, in the tape drive and tape automation markets as a result of competitors introducing products based on new technology standards, which could materially and adversely affect our business, financial condition, and results of operations.” 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 Dec 31,						Nine Months Ended Dec 31,
	2007			2006			2007			2006
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenue
Product	$	185,130		$	234,949		$	551,734		$	570,993
Service		40,628			37,923			119,740			83,460
Royalty		26,753			29,027			75,312			84,411
Total revenue		252,511			301,899			746,786			738,864
Cost of revenue
Product		133,885			184,932			412,623			464,275
Service		31,453			27,951			90,421			62,935
Restructuring charges related to cost of revenue		—			—			237			—
Total cost of revenue		165,338			212,883			503,281			527,210
Gross margin		87,173			89,016			243,505			211,654
Operating expenses
Research and development		20,127			30,245			68,985			78,407
Sales and marketing		39,371			36,524			108,980			86,243
General and administrative		18,787			18,048			58,290			46,399
Restructuring charges		98			545			9,429			7,288
In-process research and development		—			—			—			14,700
		78,383			85,362			245,684			233,037
Income (loss) from operations		8,790			3,654			(2,179	)		(21,383	)
Interest income and other, net		331			2,243			6,200			6,273
Interest expense		(10,952	)		(15,266	)		(48,785	)		(25,974	)
Loss before income taxes		(1,831	)		(9,369	)		(44,764	)		(41,084	)
Income tax provision		559			155			678			2,692
Net loss	$	(2,390	)	$	(9,524	)	$	(45,442	)	$	(43,776	)
Basic and diluted net loss per share	$	(0.01	)	$	(0.05	)	$	(0.22	)	$	(0.23	)
Basic and diluted weighted average common and common equivalent shares		204,243			194,087			201,211			190,814

Included in the above Statements of Operations:

	Three Months Ended Dec 31,				Nine Months Ended Dec 31,
	2007		2006		2007		2006
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Expense related to retiring prior debt facility	$	—	$	—	$	12,602	$	—
Accelerated depreciation on legacy IT system		—		—		2,179		—
Accelerated depreciation related to facility closures		66		—		132		—
Inventory valuation adjustment to fair value		—		—		—		1,960
Retention expense
Cost of revenue		33		538		252		747
Research and development		—		353		—		490
Sales and marketing		—		790		—		1,097
General and administrative		41		91		114		126
		74		1,772		366		2,460
Amortization of intangibles
Cost of revenue		7,351		8,347		23,907		18,064
Research and development		521		326		932		865
Sales and marketing		4,177		5,313		12,623		10,003
General and administrative		25		25		75		189
		12,074		14,011		37,537		29,121
Share-based compensation
Cost of revenue		584		333		1,522		854
Research and development		984		717		2,901		1,757
Sales and marketing		861		563		2,444		1,404
General and administrative		1,476		927		3,557		2,532
		3,905		2,540		10,424		6,547

QUANTUM CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	December 31, 2007		March 31, 2007
	(Unaudited)		*
Assets
Current assets:
Cash and cash equivalents	$	83,420	$	60,581
Marketable securities		—		35,000
Accounts receivable, net		209,803		149,435
Inventories		73,657		91,153
Deferred income taxes		14,713		17,137
Other current assets		30,597		33,155
Total current assets		412,190		386,461
Long-term assets:
Property and equipment, less accumulated depreciation		40,447		50,241
Service parts for maintenance, less accumulated amortization		78,147		82,361
Purchased technology, less accumulated amortizatin		81,685		106,524
Other intangible assets, less accumulated amortization		79,379		92,077
Goodwill		388,670		390,032
Other long-term assets		13,270		18,133
Total long-term assets		681,598		739,368
	$	1,093,788	$	1,125,829
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	98,201	$	92,292
Accrued warranty		22,063		30,669
Deferred revenue, current		69,543		57,617
Current portion of long-term debt		4,000		25,000
Accrued restructuring charges		4,473		13,289
Other accrued liabilities		87,027		110,583
Total current liabilities		285,307		329,450
Long-term liabilities:
Deferred revenue, long-term		28,988		27,634
Deferred income taxes		14,310		16,751
Long-term debt		356,000		337,500
Convertible subordinated debt		160,000		160,000
Other long-term liabilities		13,941		53
Total long-term liabilities		573,239		541,938
Stockholders’ equity		235,242		254,441
	$	1,093,788	$	1,125,829

* Derived from the March 31, 2007 audited Consolidated Financial Statements.

QUANTUM CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Nine Months Ended December 31,
	2007			2006
	(Unaudited)			(Unaudited)
Cash flows from operating activities:
Net loss	$	(45,442	)	$	(43,776	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation		20,411			20,057
Amortization **		58,497			38,254
Realized gain on sale of securities		(2,122	)		—
In-process research and development		—			14,700
Gain on Ireland facility closure		—			(476	)
Deferred income taxes		(18	)		(29	)
Share-based compensation		10,424			6,547
Fixed assets written off in restructuring		568			382
Change in assets and liabilities:
Accounts receivable		(60,368	)		(5,204	)
Inventories		10,464			18,574
Service parts for maintenance		(7,426	)		(13,924	)
Accounts payable		14,214			(23,108	)
Income taxes payable		33			978
Accrued warranty		(8,606	)		(5,822	)
Deferred revenue		13,280			8,051
Accrued restructuring charges		(8,314	)		(12,962	)
Other assets and liabilities		(1,491	)		(10,624	)
Net cash used in operating activities		(5,896	)		(8,382	)
Cash flows from investing activities:
Purchases of marketable securities		(65,000	)		(564,758	)
Proceeds from sale of marketable securities		100,000			624,757
Purchases of property and equipment		(17,356	)		(11,255	)
Proceeds from sale of investment		5,441			—
Proceeds from sale of Ireland facility		—			6,000
Proceeds from sale of subsidiary, net of cash sold		2,176			—
Payments made in connection with business acquisitions, net of cash		—			(545,385	)
Net cash provided by (used in) investing activities		25,261			(490,641	)
Cash flows from financing activities:
Borrowings of long-term debt, net		441,953			486,683
Repayments of long-term debt		(452,500	)		(7,750	)
Proceeds from issuance of common stock, net		14,021			6,460
Net cash provided by financing activities		3,474			485,393
Net increase (decrease) in cash and cash equivalents		22,839			(13,630	)
Cash and cash equivalents at beginning of period		60,581			123,298
Cash and cash equivalents at end of period	$	83,420		$	109,668

** Amortization for the nine months ended December 31, 2007 includes $8.1 million of our prior debt facility’s capitalized debt costs.