Room 4561
January 12, 2006
Mr. Paul Holt
Chief Financial Officer
Quality Systems, Inc.
18191 Von Karman Avenue
Irvine, CA 92612
Re: Quality Systems, Inc.
Form 10-K for Fiscal Year Ended March 31, 2005
Filed June 14, 2005
File No. 001-12537
Dear Mr. Holt:
We have reviewed the above referenced filing and have the
following comments. Please note that we have limited our review
to
the matters addressed in the comments below. We may ask you to
provide us with supplemental information so we may better
understand
your disclosure. Please be as detailed as necessary in your
explanation. After reviewing this information, we may raise
additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Form 10-K for the Fiscal Year Ended March 31, 2005
Item 7. Management`s Discussion and Analysis of Financial
Condition
and Results of Operation
Liquidity and Capital Resources, page 39
1. You disclose that cash provided by operations is your principal
source of cash yet your discussion of operating cash flow is
limited.
When preparing the discussion and analysis of operating cash
flows,
you should address material changes in the underlying drivers that
affect these cash flows. These disclosures should also include a
discussion of the underlying reasons for changes in working
capital
items that affect operating cash flows. For example, how have you
considered expanding your disclosure to address the underlying
factors that resulted in the $13.9 million decrease in cash flows
related to accounts receivable. As part of your response, please
tell us how you considered the guidance in Section IV.B.1 of SEC
Release 33-8350.
2. We note that your DSO appears to have increased to 119 days as
of
March 31, 2005 from 99 days as of March 31, 2004. Please describe
for us, in reasonable detail, the reasons for this apparent
increase.
Describe any changes in the payment terms you offer or your
collection policies and practices. Tell us how you have
considered
providing disclosure about DSO in your MD&A.
Item 9A. Controls and Procedures, page 41
3. We note that you have evaluated the effectiveness of your
disclosure controls and procedures within 90 days of the filing
date
of your report. Rule 13a-15(b) of the Exchange Act and Item 307
of
Regulation S-K require that management evaluate the effectiveness
of
the disclosure controls and procedures, as of the end of the
period
covered by the report. Please tell us management`s conclusion as
to
the effectiveness of the disclosure controls and procedures as of
the
end of the period covered by this Form 10-K and confirm that you
will
conform your disclosure to the requirements of Item 307 in future
filings. Please provide similar representations for the
subsequent
Form 10-Q`s you have filed.
4. We note your disclosure that your "disclosure controls and
procedures result in the effective recordation, processing,
summarization and reporting of information." Exchange Act Rule
13a-
15(e) requires that you conclude whether your disclosure controls
and
procedures are effective to ensure that the information required
to
be disclosed "is recorded, processed, summarized and reported,
within
the time periods specified in the Commission`s rules and forms"
and
are also designed to ensure that the "information required to be
disclosed in the reports that you file or submit under the
Exchange
Act is accumulated and communicated to your management, including
your chief executive officer and chief financial officer, to allow
timely decisions regarding required disclosure." Please confirm,
if
true, that your disclosure controls and procedures met all of the
requirements of the rule as of March 31, 2005 and subsequent
interim
periods and confirm that you will conform your disclosure in
future
filings.
As appropriate, please amend your filing and respond to these
comments within 10 business days or tell us when you will provide
us
with a response. Please submit all correspondence and
supplemental
materials on EDGAR as required by Rule 101 of Regulation S-T. You
may wish to provide us with marked copies of any amendment to
expedite our review. Please furnish a cover letter with any
amendment that keys your responses to our comments and provides
any
requested information. Detailed cover letters greatly facilitate
our
review. Please understand that we may have additional comments
after
reviewing any amendment and your responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Christine Davis, Staff Accountant or me at
(202)
551-3489 if you have questions regarding these comments.
Sincerely,
Brad Skinner
Accounting Branch Chief
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Mr. Paul Holt
Quality Systems, Inc.
January 12, 2006
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