Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Jun. 30, 2015 | Jul. 31, 2015 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | QUANTUM CORP /DE/ | |
Entity Central Index Key | 709,283 | |
Current Fiscal Year End Date | --03-31 | |
Entity Filer Category | Accelerated Filer | |
Trading Symbol | QTM | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2015 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 261,833,550 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2015 | Mar. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 53,685 | $ 67,948 |
Restricted cash | 2,713 | 2,621 |
Accounts receivable, net of allowance for doubtful accounts of $45 and $27, respectively | 97,329 | 124,159 |
Manufacturing inventories | 49,149 | 50,274 |
Service parts inventories | 24,713 | 24,640 |
Other current assets | 12,178 | 11,942 |
Total current assets | 239,767 | 281,584 |
Long-term assets: | ||
Property and equipment, less accumulated depreciation | 14,401 | 14,653 |
Intangible assets, less accumulated amortization | 594 | 731 |
Goodwill | 55,613 | 55,613 |
Other long-term assets | 4,246 | 4,577 |
Total long-term assets | 74,854 | 75,574 |
Total Assets | 314,621 | 357,158 |
Current liabilities: | ||
Accounts payable | 35,855 | 54,367 |
Accrued warranty | 3,600 | 4,219 |
Deferred revenue, current | 89,390 | 95,899 |
Accrued restructuring charges, current | 2,674 | 3,855 |
Convertible subordinated debt, current, net of unamortized debt issuance costs of $234 and $390, respectively | 83,501 | 83,345 |
Accrued compensation | 34,450 | 35,414 |
Other accrued liabilities | 15,734 | 20,740 |
Total current liabilities | 265,204 | 297,839 |
Long-term liabilities: | ||
Deferred revenue, long-term | 37,359 | 39,532 |
Accrued restructuring charges, long-term | 881 | 991 |
Convertible subordinated debt, long-term, net of unamortized debt issuance costs of $1,092 and $1,207, respectively | 68,908 | 68,793 |
Other long-term liabilities | 10,262 | 10,441 |
Total long-term liabilities | 117,410 | 119,757 |
Stockholders' deficit: | ||
Common stock, $0.01 par value; 1,000,000 shares authorized; 258,704 and 258,208 shares issued and outstanding at June 30, 2015 and March 31, 2015, respectively | 2,587 | 2,582 |
Capital in excess of par | 459,251 | 456,411 |
Accumulated deficit | (534,066) | (523,311) |
Accumulated other comprehensive income | 4,235 | 3,880 |
Total stockholders’ deficit | (67,993) | (60,438) |
Total liabilities and stockholders' deficit | $ 314,621 | $ 357,158 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2015 | Mar. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 45 | $ 27 |
Unamortized debt issuance costs, current | 234 | 390 |
Unamortized debt issuance costs, long-term | $ 1,092 | $ 1,207 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 258,704,000 | 258,208,000 |
Common stock, shares outstanding | 258,704,000 | 258,208,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Income Statement [Abstract] | ||
Product revenue | $ 62,719 | $ 80,194 |
Service revenue | 37,939 | 38,500 |
Royalty revenue | 10,198 | 9,434 |
Total revenue | 110,856 | 128,128 |
Cost of product revenue | 46,964 | 54,908 |
Cost of service revenue | 16,927 | 17,694 |
Total cost of revenue | 63,891 | 72,602 |
Gross margin | 46,965 | 55,526 |
Operating expenses: | ||
Research and development | 13,323 | 14,554 |
Sales and marketing | 27,605 | 27,705 |
General and administrative | 13,986 | 14,371 |
Restructuring charges | 258 | 865 |
Total operating expenses | 55,172 | 57,495 |
Gain on sale of assets | 0 | 462 |
Loss from operations | (8,207) | (1,507) |
Other income and expense | (286) | (125) |
Interest expense | (1,923) | (2,444) |
Loss before income taxes | (10,416) | (4,076) |
Income tax provision | 339 | 248 |
Net loss | $ (10,755) | $ (4,324) |
Basic and diluted net loss per share (usd per share) | $ (0.04) | $ (0.02) |
Weighted average basic and diluted shares (in shares) | 258,448 | 250,666 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (10,755) | $ (4,324) |
Other comprehensive income, net of taxes: | ||
Foreign currency translation adjustments | 441 | 9 |
Net unrealized gain (loss) on revaluation of long-term intercompany balances | (86) | 58 |
Total other comprehensive income | 355 | 67 |
Total comprehensive loss | $ (10,400) | $ (4,257) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Cash flows from operating activities: | ||
Net loss | $ (10,755) | $ (4,324) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation | 1,718 | 2,198 |
Amortization of intangible assets | 137 | 2,234 |
Amortization of debt issuance costs | 324 | 411 |
Service parts lower of cost or market adjustment | 1,146 | 1,154 |
Gain on sale of assets | 0 | (462) |
Deferred income taxes | 38 | (77) |
Share-based compensation | 2,653 | 3,068 |
Changes in assets and liabilities: | ||
Accounts receivable | 26,830 | 11,140 |
Manufacturing inventories | (63) | 597 |
Service parts inventories | (472) | (63) |
Accounts payable | (18,702) | (3,010) |
Accrued warranty | (619) | (218) |
Deferred revenue | (8,682) | (6,446) |
Accrued restructuring charges | (1,291) | (927) |
Accrued compensation | (1,062) | 1,549 |
Other assets and liabilities | (4,759) | (550) |
Net cash provided by (used in) operating activities | (13,559) | 6,274 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (840) | (1,371) |
Proceeds from sale of assets | 0 | 462 |
Change in restricted cash | (59) | (20) |
Net cash used in investing activities | (899) | (929) |
Cash flows from financing activities: | ||
Payment of taxes due upon vesting of restricted stock | (74) | (119) |
Proceeds from issuance of common stock | 266 | 114 |
Net cash provided by (used in) financing activities | 192 | (5) |
Effect of exchange rate changes on cash and cash equivalents | 3 | (1) |
Net increase (decrease) in cash and cash equivalents | (14,263) | 5,339 |
Cash and cash equivalents at beginning of period | 67,948 | 99,125 |
Cash and cash equivalents at end of period | 53,685 | 104,464 |
Supplemental disclosure of cash flow information: | ||
Purchases of property and equipment included in accounts payable | $ 606 | $ 302 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 3 Months Ended |
Jun. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION Quantum Corporation (“Quantum”, the “Company”, “us” or “we”) is a leading expert in scale-out storage, archive and data protection, providing solutions for capturing, sharing, transforming and preserving digital assets over the entire data lifecycle. Our customers, ranging from small businesses to large/multi-national enterprises, trust us to address their most demanding content workflow challenges. We provide solutions for storing and protecting information in physical, virtual and cloud environments that are designed to help customers Be Certain ™ that they have an end-to-end storage foundation to maximize the value of their data by making it accessible whenever and wherever needed, retaining it indefinitely and reducing total cost and complexity. We work closely with a broad network of distributors, value-added resellers (“VARs”), direct marketing resellers (“DMRs”), original equipment manufacturers (“OEMs”) and other suppliers to meet customers’ evolving needs. Our stock is traded on the New York Stock Exchange under the symbol QTM. The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of Quantum and our wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated. In the Condensed Consolidated Balance Sheets, prior period convertible subordinated debt, current and long-term, have been presented net of debt issuance costs to conform to current period presentation. The interim financial statements reflect all adjustments, consisting of normal recurring adjustments that, in the opinion of management, are necessary for a fair statement of the results for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for the full fiscal year. The Condensed Consolidated Balance Sheet as of March 31, 2015 has been derived from the audited financial statements at that date, but it does not include all disclosures required by accounting principles generally accepted in the United States for complete financial statements. The accompanying financial statements should be read in conjunction with the audited Consolidated Financial Statements for the fiscal year ended March 31, 2015 included in our Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on June 12, 2015. Recently Adopted Accounting Pronouncements In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Topic 835-30): Simplifying the Presentation of Debt Issuance Costs ("ASU 2015-03"). ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs is not affected by ASU 2015-03. ASU 2015-03 is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted. We adopted ASU 2015-03 in the first quarter of fiscal 2016 and reclassified debt issuance costs from other current and long-term assets to convertible subordinated debt on the Condensed Consolidated Balance Sheets. Adoption did not otherwise impact our statements of financial position or results of operations. Recent Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 requires entities to recognize revenue through the application of a five-step model, which includes identification of the contract, identification of the performance obligations, determination of the transaction price, allocation of the transaction price to the performance obligations and recognition of revenue as the entity satisfies the performance obligations. ASU 2014-09 will become effective for us beginning April 1, 2018, or fiscal 2019. We are currently evaluating the guidance to determine the potential impact on our financial condition, results of operations, cash flows and financial statement disclosures. In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern (Topic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 requires that management assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and for annual periods and interim periods thereafter. We plan to adopt ASU 2014-15 as of the end of our fiscal year ending March 31, 2017 and do not anticipate adoption will impact our statements of financial position or results of operations. |
FAIR VALUE
FAIR VALUE | 3 Months Ended |
Jun. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE | FAIR VALUE Our assets measured and recorded at fair value on a recurring basis consist of money market funds, which are included in cash and cash equivalents in our Condensed Consolidated Balance Sheets, and are valued using quoted market prices (level 1 fair value measurements) at the respective balance sheet dates (in thousands): As of June 30, 2015 March 31, 2015 Money market funds $ 9,699 $ 34,278 We did not record impairments to any non-financial assets in the first quarter of fiscal 2016 or 2015 . We do not have any non-financial liabilities measured and recorded at fair value on a non-recurring basis. Our financial liabilities were comprised primarily of convertible subordinated debt at June 30, 2015 and March 31, 2015 . The carrying value and fair value based on quoted market prices in less active markets (level 2 fair value measurement) were as follows (in thousands): As of June 30, 2015 March 31, 2015 Carrying Value Fair Value Carrying Value Fair Value Convertible subordinated debt $ 152,409 $ 167,968 $ 152,138 $ 166,551 |
INVENTORIES
INVENTORIES | 3 Months Ended |
Jun. 30, 2015 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIES Manufacturing inventories and service parts inventories consisted of the following (in thousands): As of June 30, 2015 March 31, 2015 Manufacturing inventories: Finished goods $ 24,542 $ 28,022 Work in process 74 58 Materials and purchased parts 24,533 22,194 $ 49,149 $ 50,274 As of June 30, 2015 March 31, 2015 Service parts inventories: Finished goods $ 19,336 $ 18,143 Component parts 5,377 6,497 $ 24,713 $ 24,640 |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL | 3 Months Ended |
Jun. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS AND GOODWILL | INTANGIBLE ASSETS AND GOODWILL We evaluate our amortizable and indefinite-lived intangible assets (“long-lived assets”) for impairment whenever indicators of impairment exist. We concluded the carrying amount of our long-lived assets was recoverable and there was no impairment in the first quarter of fiscal 2016 or 2015 . The following provides a summary of the carrying value of intangible assets (in thousands): As of June 30, 2015 March 31, 2015 Gross Amount Accumulated Amortization Net Amount Gross Amount Accumulated Amortization Net Amount Purchased technology $ 179,992 $ (179,398 ) $ 594 $ 179,992 $ (179,261 ) $ 731 Trademarks 3,900 (3,900 ) — 3,900 (3,900 ) — Customer lists 66,219 (66,219 ) — 66,219 (66,219 ) — $ 250,111 $ (249,517 ) $ 594 $ 250,111 $ (249,380 ) $ 731 We evaluate goodwill for impairment annually during the fourth quarter of our fiscal year, or more frequently when indicators of impairment are present. There were no changes to goodwill balances during the first quarter of fiscal 2016 . The following table provides a summary of the goodwill balance at both June 30, 2015 and March 31, 2015 (in thousands): Goodwill Accumulated Impairment Losses Net Amount Balance $ 394,613 $ (339,000 ) $ 55,613 |
ACCRUED WARRANTY
ACCRUED WARRANTY | 3 Months Ended |
Jun. 30, 2015 | |
Product Warranties Disclosures [Abstract] | |
ACCRUED WARRANTY | ACCRUED WARRANTY The quarterly changes in the accrued warranty balance were (in thousands): Three Months Ended June 30, 2015 June 30, 2014 Beginning balance $ 4,219 $ 6,116 Additional warranties issued 1,607 1,728 Adjustments for warranties issued in prior fiscal years (367 ) 383 Settlements (1,859 ) (2,329 ) Ending balance $ 3,600 $ 5,898 We warrant our products against certain defects for one to three years. A provision for estimated future costs and estimated returns for repair or replacement relating to warranty is recorded when products are shipped and revenue recognized. Our estimate of future costs to satisfy warranty obligations is primarily based on historical trends and, if believed to be significantly different from historical trends, estimates of future failure rates and future costs of repair. Future costs of repair include materials consumed in the repair, labor and overhead amounts necessary to perform the repair. If we determine in a future period that either actual failure rates or actual costs of repair were to differ from our estimates, we record the impact of those differences in that future period. |
DEBT
DEBT | 3 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT On April 24, 2014, our credit agreement with Wells Fargo (as amended, the “WF credit agreement”) was amended to allow us to use proceeds from the credit agreement to repay our convertible subordinated notes so long as we have a fixed charge coverage ratio of 1.5 and liquidity of $25 million . The amendment also impacted the available line, maturity date and certain covenants and compliance obligations, which are reflected below. Under the WF credit agreement, we have the ability to borrow the lesser of $75 million or the amount of the monthly borrowing base under a senior secured revolving credit facility. The WF credit agreement matures March 29, 2017 so long as an amount sufficient to repay the $83.7 million of 3.50% convertible subordinated notes due November 15, 2015 (" 3.50% notes") is available for borrowing under the WF credit agreement or is deposited in a WF controlled account prior to August 16, 2015. Otherwise, the WF credit agreement matures on August 16, 2015. We have letters of credit totaling $1.0 million , reducing the maximum amount available to borrow by this amount at June 30, 2015 . As of June 30, 2015 , and during the first quarter of fiscal 2016, we were in compliance with all covenants and had no outstanding balance on the line of credit. Quarterly , we are required to pay a 0.375% commitment fee on undrawn amounts under the revolving credit facility. The 3.50% notes are included in convertible subordinated debt, current as they are due November 15, 2015. The WF credit agreement contains customary covenants, including cross-default provisions, as well as financial covenants. Average liquidity must exceed $15 million each month. The fixed charge coverage ratio is required to be greater than 1.2 for the 12 month period ending on the last day of any month in which the covenant is applicable. This covenant is applicable only in months in which borrowings exceed $5 million at any time during the month. To avoid triggering mandatory field audits and Wells Fargo controlling our cash receipts, we must maintain liquidity of at least $20 million at all times. The fixed charge coverage ratio, average liquidity and liquidity are defined in the WF credit agreement and/or amendments. Certain schedules in the compliance certificate must be filed monthly if borrowings exceed $5 million ; otherwise they are to be filed quarterly. |
RESTRUCTURING CHARGES
RESTRUCTURING CHARGES | 3 Months Ended |
Jun. 30, 2015 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING CHARGES | RESTRUCTURING CHARGES The types of restructuring expense for the three months ended June 30, 2015 and June 30, 2014 were (in thousands): Three Months Ended June 30, 2015 June 30, 2014 Severance and benefits $ 72 $ 125 Facilities 186 727 Other — 13 Total $ 258 $ 865 For the first quarter of fiscal 2016, restructuring charges were primarily due to facilities costs incurred as a result of further consolidating our facilities in the U.S. For the first quarter of fiscal 2015, restructuring charges were primarily the result of further consolidating a facility previously used by our manufacturing and service operations. Accrued Restructuring The following tables show the activity and the estimated timing of future payouts for accrued restructuring (in thousands): Three Months Ended June 30, 2015 Severance and Benefits Facilities Total Balance as of March 31, 2015 $ 189 $ 4,657 $ 4,846 Restructuring costs 103 299 402 Restructuring charge reversal (31 ) (113 ) (144 ) Cash payments (159 ) (1,433 ) (1,592 ) Other non-cash — 43 43 Balance as of June 30, 2015 $ 102 $ 3,453 $ 3,555 As of June 30, 2015 Severance and Benefits Facilities Total Estimated timing of future payouts: Next twelve months $ 2 $ 2,672 $ 2,674 July 2016 through December 2021 100 781 881 $ 102 $ 3,453 $ 3,555 Facility restructuring accruals will be paid in accordance with the respective facility lease terms and amounts above are net of estimated sublease amounts. |
STOCK INCENTIVE PLANS AND SHARE
STOCK INCENTIVE PLANS AND SHARE-BASED COMPENSATION | 3 Months Ended |
Jun. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK INCENTIVE PLANS AND SHARE-BASED COMPENSATION | STOCK INCENTIVE PLANS AND SHARE-BASED COMPENSATION Share-Based Compensation The following table summarizes share-based compensation (in thousands): Three Months Ended June 30, 2015 June 30, 2014 Share-based compensation: Cost of revenue $ 362 $ 414 Research and development 549 780 Sales and marketing 870 910 General and administrative 872 964 $ 2,653 $ 3,068 Share-based compensation by type of award: Stock options $ 2 $ 157 Restricted stock 2,430 2,698 Stock purchase plan 221 213 $ 2,653 $ 3,068 Stock Incentive Plans - Grants and Fair Value Stock Options No stock options were granted during the first quarter of fiscal 2016 or 2015 . The Black-Scholes option pricing model is used to estimate the fair value of stock options. Restricted Stock The fair value of restricted stock units (“RSUs”) granted is the intrinsic value as of the respective grant date since the RSUs are granted at no cost to the employee. The weighted-average grant date fair values of RSUs granted during the first quarter of fiscal 2016 and 2015 were $1.97 and $1.21 per share, respectively. Stock Purchase Plan Under the Stock Purchase Plan, rights to purchase shares are typically granted during the second and fourth quarter of each fiscal year. No rights to purchase shares were granted in the first quarter of fiscal 2016 and fiscal 2015 . Stock Incentive Plans - Activity Stock Options A summary of activity relating to our stock options follows (options and aggregate intrinsic value in thousands): Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding as of March 31, 2015 4,944 $ 1.47 Exercised (252 ) 1.05 Expired (26 ) 1.99 Outstanding as of June 30, 2015 4,666 $ 1.49 1.50 $ 2,144 Vested and expected to vest at June 30, 2015 4,666 $ 1.49 1.50 $ 2,144 Exercisable as of June 30, 2015 4,666 $ 1.49 1.50 $ 2,144 Restricted Stock A summary of activity relating to our restricted stock follows (shares in thousands): Shares Weighted-Average Grant Date Fair Value Per Share Nonvested at March 31, 2015 13,791 $ 1.34 Granted 230 1.97 Vested (289 ) 1.41 Forfeited (138 ) 1.30 Nonvested at June 30, 2015 13,594 $ 1.35 |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Income tax provisions for the first quarter of fiscal 2016 and 2015 were $0.3 million and $0.2 million , respectively. Income tax provisions for each of these periods reflect expenses for foreign income taxes and state taxes. We have provided a full valuation allowance against our U.S. net deferred tax assets due to our history of net losses, difficulty in predicting future results and our conclusion that we cannot rely on projections of future taxable income to realize the deferred tax assets. Significant management judgment is required in determining our deferred tax assets and liabilities and valuation allowances for purposes of assessing our ability to realize any future benefit from our net deferred tax assets. We intend to maintain this valuation allowance until sufficient positive evidence exists to support a reversal or decrease in this allowance. Future income tax expense will be reduced to the extent that we have sufficient positive evidence to support a reversal of, or decrease in, our valuation allowance. |
NET LOSS PER SHARE
NET LOSS PER SHARE | 3 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share [Abstract] | |
NET LOSS PER SHARE | NET LOSS PER SHARE The following is the computation of basic and diluted loss per share (in thousands, except per share data): Three Months Ended June 30, 2015 June 30, 2014 Numerator: Net loss $ (10,755 ) $ (4,324 ) Denominator: Weighted average basic and diluted shares 258,448 250,666 Basic and diluted net loss per share $ (0.04 ) $ (0.02 ) Potentially dilutive common shares from the Stock Incentive Plans are determined by applying the treasury stock method to the assumed exercise of outstanding options and the assumed vesting of outstanding restricted stock units. The dilutive impact related to our convertible subordinated notes is determined by applying the if-converted method, which includes adding the related weighted average shares to the denominator and the related interest expense to net income. The computations of diluted net loss per share for the periods presented exclude the following because the effect would have been anti-dilutive: • For the first quarter of fiscal 2016 and 2015, 42.5 million weighted average shares related to our 4.50% convertible subordinated notes and $0.9 million of related interest expense were excluded. • For the first quarter of 2016, 19.3 million weighted average shares related to our 3.50% convertible subordinated notes and $0.9 million of related interest expense were excluded. For the first quarter of fiscal 2015, 30.9 million weighted average shares and $1.4 million of related interest expense were excluded. • For the first quarter of fiscal 2016 and 2015, options to purchase 4.8 million and 7.8 million , respectively, weighted average shares were excluded. • For the first quarter of fiscal 2016 and 2015, unvested RSUs of 13.1 million and 11.2 million , respectively, weighted average shares were excluded. |
LEGAL PROCEEDINGS
LEGAL PROCEEDINGS | 3 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
LEGAL PROCEEDINGS | LEGAL PROCEEDINGS On February 18, 2014, Crossroads Systems, Inc. (“Crossroads”) filed a patent infringement lawsuit against Quantum in the U.S. District Court for the Western District of Texas, alleging infringement of U.S. Patents 6,425,035 and 7,934,041. An amended complaint filed on April 15, 2014 also alleged infringement of U.S. patent 7,051,147. Crossroads asserts that we have incorporated Crossroads' patented technology into our StorNext QX and Q-Series lines of disk array products, and into our Scalar libraries. Crossroads seeks unspecified monetary damages and injunctive relief. Crossroads has already dismissed all claims of infringement with respect to the StorNext QX and Q-Series products. In July and September of 2014, we filed for Inter Partes Review of all three asserted Crossroads patents before the Patent Trial and Appeal Board and a review has been initiated for all claims. On June 16, 2015, the U.S. District Court, Western District of Texas stayed the Crossroads trial proceedings pending resolution of the Inter Partes Review proceedings. We believe the probability that we will pay material damages related to this lawsuit is remote. On September 23, 2014, we filed a lawsuit against Crossroads in the U.S. District Court for the Northern District of California alleging patent infringement of our patent 6,766,412 by Crossroads' StrongBox VSeries Library Solution product. We are seeking injunctive relief and the recovery of monetary damages. On December 4, 2014, we amended our complaint alleging infringement of a second patent, 5,940,849, related to Crossroads' SPHiNX product line. On December 16, 2014, we withdrew the amended complaint alleging infringement of the second patent, 5,940,849. |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 3 Months Ended |
Jun. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Schedule of assets measured and recorded at fair value on a recurring basis | Our assets measured and recorded at fair value on a recurring basis consist of money market funds, which are included in cash and cash equivalents in our Condensed Consolidated Balance Sheets, and are valued using quoted market prices (level 1 fair value measurements) at the respective balance sheet dates (in thousands): As of June 30, 2015 March 31, 2015 Money market funds $ 9,699 $ 34,278 |
Schedule of carrying value and fair value of financial liabilities | Our financial liabilities were comprised primarily of convertible subordinated debt at June 30, 2015 and March 31, 2015 . The carrying value and fair value based on quoted market prices in less active markets (level 2 fair value measurement) were as follows (in thousands): As of June 30, 2015 March 31, 2015 Carrying Value Fair Value Carrying Value Fair Value Convertible subordinated debt $ 152,409 $ 167,968 $ 152,138 $ 166,551 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 3 Months Ended |
Jun. 30, 2015 | |
Inventory Disclosure [Abstract] | |
Schedule of manufacturing inventories | Manufacturing inventories and service parts inventories consisted of the following (in thousands): As of June 30, 2015 March 31, 2015 Manufacturing inventories: Finished goods $ 24,542 $ 28,022 Work in process 74 58 Materials and purchased parts 24,533 22,194 $ 49,149 $ 50,274 |
Schedule of service parts inventories | As of June 30, 2015 March 31, 2015 Service parts inventories: Finished goods $ 19,336 $ 18,143 Component parts 5,377 6,497 $ 24,713 $ 24,640 |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL (Tables) | 3 Months Ended |
Jun. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of carrying value of intangible assets | The following provides a summary of the carrying value of intangible assets (in thousands): As of June 30, 2015 March 31, 2015 Gross Amount Accumulated Amortization Net Amount Gross Amount Accumulated Amortization Net Amount Purchased technology $ 179,992 $ (179,398 ) $ 594 $ 179,992 $ (179,261 ) $ 731 Trademarks 3,900 (3,900 ) — 3,900 (3,900 ) — Customer lists 66,219 (66,219 ) — 66,219 (66,219 ) — $ 250,111 $ (249,517 ) $ 594 $ 250,111 $ (249,380 ) $ 731 |
Summary of goodwill balance | The following table provides a summary of the goodwill balance at both June 30, 2015 and March 31, 2015 (in thousands): Goodwill Accumulated Impairment Losses Net Amount Balance $ 394,613 $ (339,000 ) $ 55,613 |
ACCRUED WARRANTY (Tables)
ACCRUED WARRANTY (Tables) | 3 Months Ended |
Jun. 30, 2015 | |
Product Warranties Disclosures [Abstract] | |
Schedule of changes in the accrued warranty balance | The quarterly changes in the accrued warranty balance were (in thousands): Three Months Ended June 30, 2015 June 30, 2014 Beginning balance $ 4,219 $ 6,116 Additional warranties issued 1,607 1,728 Adjustments for warranties issued in prior fiscal years (367 ) 383 Settlements (1,859 ) (2,329 ) Ending balance $ 3,600 $ 5,898 |
RESTRUCTURING CHARGES (Tables)
RESTRUCTURING CHARGES (Tables) | 3 Months Ended |
Jun. 30, 2015 | |
Restructuring and Related Activities [Abstract] | |
Types of restructuring expense | The types of restructuring expense for the three months ended June 30, 2015 and June 30, 2014 were (in thousands): Three Months Ended June 30, 2015 June 30, 2014 Severance and benefits $ 72 $ 125 Facilities 186 727 Other — 13 Total $ 258 $ 865 |
Activity for accrued restructuring | The following tables show the activity and the estimated timing of future payouts for accrued restructuring (in thousands): Three Months Ended June 30, 2015 Severance and Benefits Facilities Total Balance as of March 31, 2015 $ 189 $ 4,657 $ 4,846 Restructuring costs 103 299 402 Restructuring charge reversal (31 ) (113 ) (144 ) Cash payments (159 ) (1,433 ) (1,592 ) Other non-cash — 43 43 Balance as of June 30, 2015 $ 102 $ 3,453 $ 3,555 |
Estimated timing of future payouts for accrued restructuring | As of June 30, 2015 Severance and Benefits Facilities Total Estimated timing of future payouts: Next twelve months $ 2 $ 2,672 $ 2,674 July 2016 through December 2021 100 781 881 $ 102 $ 3,453 $ 3,555 |
STOCK INCENTIVE PLANS AND SHA23
STOCK INCENTIVE PLANS AND SHARE-BASED COMPENSATION (Tables) | 3 Months Ended |
Jun. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of share-based compensation | The following table summarizes share-based compensation (in thousands): Three Months Ended June 30, 2015 June 30, 2014 Share-based compensation: Cost of revenue $ 362 $ 414 Research and development 549 780 Sales and marketing 870 910 General and administrative 872 964 $ 2,653 $ 3,068 Share-based compensation by type of award: Stock options $ 2 $ 157 Restricted stock 2,430 2,698 Stock purchase plan 221 213 $ 2,653 $ 3,068 |
Summary of activity relating to stock options | A summary of activity relating to our stock options follows (options and aggregate intrinsic value in thousands): Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding as of March 31, 2015 4,944 $ 1.47 Exercised (252 ) 1.05 Expired (26 ) 1.99 Outstanding as of June 30, 2015 4,666 $ 1.49 1.50 $ 2,144 Vested and expected to vest at June 30, 2015 4,666 $ 1.49 1.50 $ 2,144 Exercisable as of June 30, 2015 4,666 $ 1.49 1.50 $ 2,144 |
Summary of activity relating to restricted stock | A summary of activity relating to our restricted stock follows (shares in thousands): Shares Weighted-Average Grant Date Fair Value Per Share Nonvested at March 31, 2015 13,791 $ 1.34 Granted 230 1.97 Vested (289 ) 1.41 Forfeited (138 ) 1.30 Nonvested at June 30, 2015 13,594 $ 1.35 |
NET LOSS PER SHARE (Tables)
NET LOSS PER SHARE (Tables) | 3 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share [Abstract] | |
Computation of basic and diluted loss per share | The following is the computation of basic and diluted loss per share (in thousands, except per share data): Three Months Ended June 30, 2015 June 30, 2014 Numerator: Net loss $ (10,755 ) $ (4,324 ) Denominator: Weighted average basic and diluted shares 258,448 250,666 Basic and diluted net loss per share $ (0.04 ) $ (0.02 ) |
FAIR VALUE - Schedule of Fair V
FAIR VALUE - Schedule of Fair Value of Money Market Funds (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Mar. 31, 2015 |
Level 1 fair value measurements | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market funds | $ 9,699 | $ 34,278 |
FAIR VALUE - Schedule of Carryi
FAIR VALUE - Schedule of Carrying Value and Fair Value of Financial Liabilities (Details) - Convertible subordinated debt - USD ($) $ in Thousands | Jun. 30, 2015 | Mar. 31, 2015 |
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | ||
Carrying Value | $ 152,409 | $ 152,138 |
Level 2 fair value measurements | ||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | ||
Fair Value | $ 167,968 | $ 166,551 |
INVENTORIES - Schedule of Manuf
INVENTORIES - Schedule of Manufacturing Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Mar. 31, 2015 |
Manufacturing inventories: | ||
Finished goods | $ 24,542 | $ 28,022 |
Work in process | 74 | 58 |
Materials and purchased parts | 24,533 | 22,194 |
Total manufacturing inventories | $ 49,149 | $ 50,274 |
INVENTORIES - Schedule of Servi
INVENTORIES - Schedule of Service Parts Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Mar. 31, 2015 |
Service parts inventories: | ||
Finished goods | $ 19,336 | $ 18,143 |
Component parts | 5,377 | 6,497 |
Total service parts inventories | $ 24,713 | $ 24,640 |
INTANGIBLE ASSETS AND GOODWIL29
INTANGIBLE ASSETS AND GOODWILL - Summary of Carrying Value of Intangible Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Mar. 31, 2015 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | $ 250,111 | $ 250,111 |
Accumulated Amortization | (249,517) | (249,380) |
Net Amount | 594 | 731 |
Purchased technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 179,992 | 179,992 |
Accumulated Amortization | (179,398) | (179,261) |
Net Amount | 594 | 731 |
Trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 3,900 | 3,900 |
Accumulated Amortization | (3,900) | (3,900) |
Net Amount | 0 | 0 |
Customer lists | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 66,219 | 66,219 |
Accumulated Amortization | (66,219) | (66,219) |
Net Amount | $ 0 | $ 0 |
INTANGIBLE ASSETS AND GOODWIL30
INTANGIBLE ASSETS AND GOODWILL - Summary of Goodwill Balance (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Mar. 31, 2015 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill | $ 394,613 | $ 394,613 |
Accumulated Impairment Losses | (339,000) | (339,000) |
Net Amount | $ 55,613 | $ 55,613 |
ACCRUED WARRANTY (Details)
ACCRUED WARRANTY (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Beginning balance | $ 4,219 | $ 6,116 |
Additional warranties issued | 1,607 | 1,728 |
Adjustments for warranties issued in prior fiscal years | (367) | 383 |
Settlements | (1,859) | (2,329) |
Ending balance | $ 3,600 | $ 5,898 |
Minimum | ||
Product Warranty Term [Line Items] | ||
Product warranty term (in years) | 1 year | |
Maximum | ||
Product Warranty Term [Line Items] | ||
Product warranty term (in years) | 3 years |
DEBT (Details)
DEBT (Details) | 3 Months Ended | |
Jun. 30, 2015USD ($) | Apr. 24, 2014USD ($) | |
Wells Fargo Credit Agreement | ||
Debt Instrument [Line Items] | ||
Fixed charge coverage ratio | 1.5 | |
Amount of liquidity to be below for covenant to be applicable | $ 25,000,000 | |
Line of credit facility, maximum borrowing amount | $ 75,000,000 | |
Line of credit facility, expiration date | Mar. 29, 2017 | |
Line of credit facility, frequency of commitment fee payment | Quarterly | |
Line of credit facility, percent commitment fee on undrawn amounts | 0.375% | |
Line of credit facility, average liquidity when covenant is applied | 15,000,000 | |
Line of credit facility, fixed charge coverage ratio | 1.2 | |
Line of credit facility, fixed charge coverage ratio, period when covenant is applied | 12 months | |
Amount of borrowings, if exceeded, increase the filing of compliance certificates to monthly rather than quarterly | $ 5,000,000 | |
Line of credit facility, amount of liquidity required to avoid audits | 20,000,000 | |
Wells Fargo Credit Agreement | Letter of Credit | ||
Debt Instrument [Line Items] | ||
Line of credit facility, letters of credit outstanding | $ 1,000,000 | |
3.50% convertible subordinated notes | ||
Debt Instrument [Line Items] | ||
Principal amount outstanding | $ 83,700,000 | |
Stated interest rate | 3.50% | 3.50% |
Debt due date | Nov. 15, 2015 |
RESTRUCTURING CHARGES - Types o
RESTRUCTURING CHARGES - Types of Restructuring Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Restructuring and Related Activities [Abstract] | ||
Severance and benefits | $ 72 | $ 125 |
Facilities | 186 | 727 |
Other | 0 | 13 |
Total | $ 258 | $ 865 |
RESTRUCTURING CHARGES - Activit
RESTRUCTURING CHARGES - Activity for Accrued Restructuring (Details) $ in Thousands | 3 Months Ended |
Jun. 30, 2015USD ($) | |
Restructuring Reserve [Roll Forward] | |
Balance as of beginning of period | $ 4,846 |
Restructuring costs | 402 |
Restructuring charge reversal | (144) |
Cash payments | (1,592) |
Other non-cash | 43 |
Balance as of end of period | 3,555 |
Severance and Benefits | |
Restructuring Reserve [Roll Forward] | |
Balance as of beginning of period | 189 |
Restructuring costs | 103 |
Restructuring charge reversal | (31) |
Cash payments | (159) |
Other non-cash | 0 |
Balance as of end of period | 102 |
Facilities | |
Restructuring Reserve [Roll Forward] | |
Balance as of beginning of period | 4,657 |
Restructuring costs | 299 |
Restructuring charge reversal | (113) |
Cash payments | (1,433) |
Other non-cash | 43 |
Balance as of end of period | $ 3,453 |
RESTRUCTURING CHARGES - Estimat
RESTRUCTURING CHARGES - Estimated Timing of Future Payouts (Details) $ in Thousands | 3 Months Ended |
Jun. 30, 2015USD ($) | |
Restructuring Cost and Reserve [Line Items] | |
Estimated timing of future payouts | $ 3,555 |
Next twelve months | |
Restructuring Cost and Reserve [Line Items] | |
Estimated timing of future payouts | 2,674 |
July 2016 through December 2021 | |
Restructuring Cost and Reserve [Line Items] | |
Estimated timing of future payouts | 881 |
Severance and Benefits | |
Restructuring Cost and Reserve [Line Items] | |
Estimated timing of future payouts | 102 |
Severance and Benefits | Next twelve months | |
Restructuring Cost and Reserve [Line Items] | |
Estimated timing of future payouts | 2 |
Severance and Benefits | July 2016 through December 2021 | |
Restructuring Cost and Reserve [Line Items] | |
Estimated timing of future payouts | 100 |
Facilities | |
Restructuring Cost and Reserve [Line Items] | |
Estimated timing of future payouts | 3,453 |
Facilities | Next twelve months | |
Restructuring Cost and Reserve [Line Items] | |
Estimated timing of future payouts | 2,672 |
Facilities | July 2016 through December 2021 | |
Restructuring Cost and Reserve [Line Items] | |
Estimated timing of future payouts | $ 781 |
STOCK INCENTIVE PLANS AND SHA36
STOCK INCENTIVE PLANS AND SHARE-BASED COMPENSATION - Summary of Share-based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation | $ 2,653 | $ 3,068 |
Stock options | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation | 2 | 157 |
Restricted stock | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation | 2,430 | 2,698 |
Stock purchase plan | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation | 221 | 213 |
Cost of revenue | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation | 362 | 414 |
Research and development | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation | 549 | 780 |
Sales and marketing | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation | 870 | 910 |
General and administrative | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation | $ 872 | $ 964 |
STOCK INCENTIVE PLANS AND SHA37
STOCK INCENTIVE PLANS AND SHARE-BASED COMPENSATION - Summary of Activity Relating to Stock Options (Details) - Jun. 30, 2015 - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | Total |
Options | |
Outstanding, beginning balance (in shares) | 4,944 |
Exercised (in shares) | (252) |
Expired (in shares) | (26) |
Outstanding, ending balance (in shares) | 4,666 |
Vested and expected to vest (in shares) | 4,666 |
Exercisable (in shares) | 4,666 |
Weighted- Average Exercise Price | |
Outstanding, beginning balance (usd per share) | $ 1.47 |
Exercised (usd per share) | 1.05 |
Expired (usd per share) | 1.99 |
Outstanding, ending balance (usd per share) | 1.49 |
Vested and expected to vest at end of period (usd per share) | 1.49 |
Exercisable at end of period (usd per share) | $ 1.49 |
Weighted- Average Remaining Contractual Term | |
Outstanding | 1 year 6 months |
Vested and expected to vest | 1 year 6 months |
Exercisable | 1 year 6 months |
Aggregate Intrinsic Value | |
Outstanding | $ 2,144 |
Vested and expected to vest | 2,144 |
Exercisable | $ 2,144 |
STOCK INCENTIVE PLANS AND SHA38
STOCK INCENTIVE PLANS AND SHARE-BASED COMPENSATION - Summary of Activity Relating to Restricted Stock (Details) - Restricted Stock - $ / shares shares in Thousands | 3 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Shares | ||
Nonvested, beginning balance (in shares) | 13,791 | |
Granted (in shares) | 230 | |
Vested (in shares) | (289) | |
Forfeited (in shares) | (138) | |
Nonvested, ending balance (in shares) | 13,594 | |
Weighted-Average Grant Date Fair Value Per Share | ||
Nonvested, beginning balance (usd per share) | $ 1.34 | |
Granted (usd per share) | 1.97 | $ 1.21 |
Vested (usd per share) | 1.41 | |
Forfeited (usd per share) | 1.30 | |
Nonvested, ending balance (usd per share) | $ 1.35 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Income Tax Disclosure [Abstract] | ||
Income tax provision | $ 339 | $ 248 |
NET LOSS PER SHARE - Computatio
NET LOSS PER SHARE - Computation of Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Numerator: | ||
Net loss | $ (10,755) | $ (4,324) |
Denominator: | ||
Weighted average basic and diluted shares (in shares) | 258,448 | 250,666 |
Basic and diluted net loss per share (usd per share) | $ (0.04) | $ (0.02) |
NET LOSS PER SHARE - Narrative
NET LOSS PER SHARE - Narrative (Details) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Apr. 24, 2014 | |
Stock options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share | 4.8 | 7.8 | |
Restricted stock | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share | 13.1 | 11.2 | |
4.50% convertible subordinated notes | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share | 42.5 | 42.5 | |
Interest rate, per annum on the principal amount | 4.50% | ||
Antidilutive income excluded from computation of earnings per share | $ 0.9 | $ 0.9 | |
3.50% convertible subordinated notes | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share | 19.3 | 30.9 | |
Interest rate, per annum on the principal amount | 3.50% | 3.50% | |
Antidilutive income excluded from computation of earnings per share | $ 0.9 | $ 1.4 |