SAN JOSE, Calif., Sept. 14, 2018 /PRNewswire/ -- Quantum Corp.
(NYSE: QTM) today announced that the Special Committee of its Board
of Directors has substantially completed its internal
investigation. The Committee conducted the investigation with
the assistance of independent advisors.
In connection with the investigation, the Board of Directors has
concluded that there were misstatements in the Company's previously
issued consolidated financial statements and other financial
information relating to the recognition of revenue for certain
transactions prior to satisfying the criteria for revenue
recognition required under U.S. GAAP. The misstatements
generally concerned the timing of the recognition of revenue.
Revenue previously recognized prematurely will be recognized in
different historical periods or, where the criteria for recognition
of revenue under GAAP have not yet been satisfied, may be recorded
in future periods upon satisfaction of the criteria required by
GAAP. Based on its preliminary analysis, which is subject to
change, the Company estimates that: (i) as of September 30, 2017, the end of the last fiscal
quarter to be publicly reported by the Company, there was between
approximately $25 million to
$35 million of prematurely recognized
revenue in the historical periods that may be recognized in periods
subsequent to that date upon satisfaction of the criteria required
by GAAP; and (ii) as of June 30,
2018, the end of its most recently completed fiscal quarter,
there was between approximately $15
million and $25 million of
prematurely recognized revenue in the historical periods that may
be recognized in future periods upon satisfaction of the criteria
required by GAAP. These misstatements will not impact the
Company's historical or current cash and cash equivalents
balances.
The Company's Board of Directors continues to have the utmost
confidence in the Company's recently appointed CEO and CFO, each of
whom were not with the Company during the time covered by the
investigation and were not involved in any of the transactions
identified in connection with the investigation.
The Company is also evaluating the impact of these misstatements
on the Company's internal control over financial reporting and
disclosure controls and procedures, and expects to report one or
more material weaknesses in internal control over financial
reporting related to these matters and to report that its internal
control over financial reporting and disclosure controls and
procedures were not effective during the periods containing these
misstatements, as well as in subsequent periods until such material
weakness or weaknesses are remediated. The Company has begun
to implement, will continue to implement and will continue to
evaluate additional remedial measures based on the findings from
the investigation.
As a result of the misstatements identified by the Company, the
Board of Directors, in consultation with the Audit Committee of the
Board and the Company's management, has concluded that the
Company's previously issued consolidated financial statements and
other financial data for the fiscal years ended March 31, 2015, 2016 and 2017 contained in its
Annual Reports on Form 10-K, and its condensed consolidated
financial statements for the quarters and year-to-date periods
ended June 30, 2015, September 30, 2015, December 31, 2015, June
30, 2016, September 30, 2016,
December 31, 2016, June 30, 2017 and September 30, 2017 contained in its Quarterly
Reports on Form 10-Q should no longer be relied upon and should be
restated. As part of the restatement process, the Company is
continuing to assess the accounting matters related to the
investigation, including the determination and quantification of
misstatements, and will assess any other potential items for
correction as needed. This assessment is ongoing, and
although sufficient information is available to support the
determination to restate the financial statements referred to
above, the Company has not yet made any findings on the specific
amounts to be set forth in the restated results.
The Company is proceeding as expeditiously as possible to
complete its quantification and evaluation of the impact of the
identified misstatements on its previously issued financial
statements. Due to the procedures required before such
process can be completed, the Company is not able to predict at
this time the exact dates for such filings. The Company will
provide additional information regarding these misstatements and
the consequent adjustments to its financial statements and expects
to file the restated financial statements as soon as
practicable.
About Quantum
Quantum is a leading expert in scale-out tiered storage, archive
and data protection, providing solutions for capturing, sharing,
managing 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. Quantum's end-to-end, tiered
storage foundation enables customers 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 and the Quantum logo 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.
Forward-Looking Statements: This press release contains
"forward-looking" statements (including within the meaning of
Section 21E of the United States Securities Exchange Act of 1934,
as amended, and Section 27A of the United States Securities Act of
1933, as amended). All statements other than statements of
historical fact are statements that could be deemed forward-looking
statements. Quantum advises caution in reliance on
forward-looking statements. Forward-looking statements in
this press release include, without limitation, Quantum's estimates
that: (i) as of September 30, 2017,
there was between approximately $25
million to $35 million of
prematurely recognized revenue in the historical periods that may
be recognized in periods subsequent to that date upon satisfaction
of the criteria required by GAAP; and (ii) as of June 30, 2018, there was between approximately
$15 million and $25 million of prematurely recognized revenue in
the historical periods that may be recognized in future periods
upon satisfaction of the criteria required by GAAP; Quantum's
expectations that it will identify one or more material weaknesses
in its internal control over financial reporting; the current
intent, beliefs and expectations regarding the consequences and
effects of the Special Committee investigation, including on
previously announced financial results and the anticipated
adjustments thereto, and the timing of the announcement of
Quantum's restated financial results. All forward-looking
statements 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 actual results to
differ materially from those implied by the forward-looking
statement, including the outcome of the Company's completion of the
quantification and evaluation of the specific impact of the
misstatements in the Company's revenue recognition practices on the
Company's financial results and previously issued financial
statements, including the possibility of material adjustments
thereto, the discovery of additional and unanticipated information
during the procedures required to be completed before the Company
is able to file its required reports, the application of accounting
or tax principles in an unanticipated manner, and any unanticipated
delay in the preparation and filing of the Company's required
reports with the SEC. More detailed information about 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," in Quantum's Quarterly Report on Form 10-Q
filed with the Securities and Exchange
Commission on November 9, 2017, which you may obtain for
free at the SEC's website at http://www.sec.gov. Quantum
expressly disclaims any obligation to update or alter its
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by applicable
law.
Investor Relations:
Molly Presley
Quantum Corp.
+1 (720) 940-5736
ir@quantum.com
Public Relations Contact:
Bob
Wientzen
Quantum Corp.
+1 (720) 201-8125
bob.wientzen@quantum.com
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SOURCE Quantum Corp.