• Filing Date: 2017-08-09
  • Form Type: 10-Q
  • Description: Quarterly report
v3.7.0.1
Document and Entity Information - shares
3 Months Ended
Jun. 30, 2017
Aug. 04, 2017
Document and Entity Information [Abstract]    
Entity Registrant Name QUANTUM CORP /DE/  
Entity Central Index Key 0000709283  
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, 2017  
Document Fiscal Year Focus 2017  
Document Fiscal Period Focus Q1  
Amendment Flag false  
Entity Common Stock, Shares Outstanding   34,472,160
v3.7.0.1
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Jun. 30, 2017
Mar. 31, 2017
Current assets:    
Cash and cash equivalents $ 8,661 $ 12,958
Restricted cash 1,891 1,832
Accounts receivable, net of allowance for doubtful accounts of $29 and $16, respectively 109,418 116,056
Manufacturing inventories 27,821 27,661
Service parts inventories 19,788 19,849
Other current assets 10,005 9,969
Total current assets 177,584 188,325
Long-term assets:    
Property and equipment, net of accumulated depreciation 10,455 11,186
Restricted cash 20,000 20,000
Other long-term assets 4,993 5,516
Total long-term assets 35,448 36,702
Total Assets 213,032 225,027
Current liabilities:    
Accounts payable 45,007 41,611
Accrued warranty 3,161 3,263
Deferred revenue 79,996 84,683
Accrued restructuring charges 2,249 869
Convertible subordinated debt 62,926 62,827
Accrued compensation 22,186 24,104
Other accrued liabilities 13,309 12,998
Total current liabilities 228,834 230,355
Long-term liabilities:    
Deferred revenue 36,697 37,642
Accrued restructuring charges 544 481
Long-term debt 60,219 65,028
Other long-term liabilities 4,736 7,520
Total long-term liabilities 102,196 110,671
Stockholders' deficit:    
Common stock, $0.01 par value; 1,000,000 shares authorized; 34,101 and 34,063 shares issued and outstanding at June 30, 2017 and March 31, 2017, respectively 341 341
Capital in excess of par 475,357 473,850
Accumulated deficit (596,969) (593,295)
Accumulated other comprehensive income 3,273 3,105
Total stockholders’ deficit (117,998) (115,999)
Total liabilities and stockholders' deficit $ 213,032 $ 225,027
v3.7.0.1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)
shares in Thousands, $ in Thousands
Jun. 30, 2017
Mar. 31, 2017
Statement of Financial Position [Abstract]    
Allowance for doubtful accounts $ 29 $ 16
Common stock, par value (usd per share) $ 0.01 $ 0.01
Common stock, shares authorized 1,000,000 1,000,000
Common stock, shares issued 34,101 34,063
Common stock, shares outstanding 34,101 34,063
v3.7.0.1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Income Statement [Abstract]    
Product revenue $ 71,618 $ 71,826
Service revenue 35,246 35,818
Royalty revenue 9,994 8,640
Total revenue 116,858 116,284
Cost of product revenue 50,949 50,132
Cost of service revenue 15,090 15,506
Total cost of revenue 66,039 65,638
Gross margin 50,819 50,646
Operating expenses:    
Research and development 10,605 11,058
Sales and marketing 27,824 26,367
General and administrative 12,509 12,960
Restructuring charges 2,335 2,052
Total operating expenses 53,273 52,437
Loss from operations (2,454) (1,791)
Other income (expense) 98 155
Interest expense (2,558) (1,507)
Net loss before income tax provision (benefit) (4,914) (3,143)
Income tax provision (benefit) (1,240) 377
Net loss $ (3,674) $ (3,520)
Basic and diluted net loss per share (usd per share) $ (0.11) $ (0.11)
Weighted average shares:    
Basic (shares) 34,084 33,292
Diluted (shares) 34,084 33,292
v3.7.0.1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($)
$ in Thousands
3 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Statement of Comprehensive Income [Abstract]    
Net loss $ (3,674) $ (3,520)
Other comprehensive income (loss), net of taxes:    
Foreign currency translation adjustments 155 (339)
Net unrealized gain (loss) on revaluation of long-term intercompany balances 13 42
Total other comprehensive income (loss) 168 (297)
Total comprehensive loss $ (3,506) $ (3,817)
v3.7.0.1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
3 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Cash flows from operating activities:    
Net loss $ (3,674) $ (3,520)
Adjustments to reconcile net loss to net cash provided by operating activities:    
Depreciation 1,268 1,383
Amortization and write off of debt issuance costs 427 168
Service parts lower of cost or market adjustment 1,257 1,337
Tax benefit from settlement (1,656) 0
Non-cash interest expense 277 0
Deferred income taxes 120 75
Share-based compensation 1,613 1,998
Changes in assets and liabilities:    
Accounts receivable, net 6,638 15,426
Manufacturing inventories (709) 3,686
Service parts inventories (1,034) (124)
Accounts payable 3,318 (8,364)
Accrued warranty (102) 14
Deferred revenue (5,633) (4,426)
Accrued restructuring charges 1,444 726
Accrued compensation (2,047) 580
Other assets and liabilities (489) (3,798)
Net cash provided by operating activities 1,018 5,161
Cash flows from investing activities:    
Purchases of property and equipment (123) (529)
Return of capital from investments 278 0
Restricted cash (2) (15)
Net cash provided by (used in) investing activities 153 (544)
Cash flows from financing activities:    
Borrowings of long-term debt 71,800 3,000
Repayments of long-term debt (77,175) (6,959)
Payment of taxes due upon vesting of restricted stock (111) (27)
Proceeds from issuance of common stock 5 0
Net cash used in financing activities (5,481) (3,986)
Effect of exchange rate changes on cash and cash equivalents 13 (5)
Net (decrease) increase in cash and cash equivalents (4,297) 626
Cash and cash equivalents at beginning of period 12,958 33,870
Cash and cash equivalents at end of period 8,661 34,496
Supplemental disclosure of cash flow information:    
Purchases of property and equipment included in accounts payable $ 78 $ 191
v3.7.0.1
BASIS OF PRESENTATION
3 Months Ended
Jun. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
BASIS OF PRESENTATION
BASIS OF PRESENTATION
Quantum Corporation (“Quantum”, the “Company”, “us” or “we”), founded in 1980 and reincorporated in Delaware in 1987, is a leading expert in scale-out storage, archive and data protection, providing solutions for capturing, sharing, managing 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 data workflow challenges. Our end-to-end tiered storage solutions enable users 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. The interim financial statements reflect all adjustments, consisting of normal recurring adjustments that, in the opinion of management, are necessary for a fair presentation 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, 2017 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, 2017 included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on May 31, 2017.
On April 18, 2017, we effected a 1-for-8 reverse stock split of our issued and outstanding common stock (the "Reverse Stock Split"). Our stock began to trade on a post-split basis on April 19, 2017. All share and per share data for comparative periods included within our Condensed Consolidated Financial Statements and related footnotes have been adjusted to account for the effect of the Reverse Stock Split.
Recently Adopted Accounting Pronouncements
In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. We adopted ASU 2016-09 in the first quarter of fiscal 2018 using multiple transition approaches in-line with the requirements. Our tax windfall benefits are reported in the statement of operations instead of equity to the extent we do not have an offsetting valuation allowance and such benefits are recorded within our deferred taxes.  There were no other changes based upon the new guidance. The adoption of ASU 2016-09 did not impact our statements of financial condition, results of operations, cash flows or financial statement disclosures.  

In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330) (“ASU 2015-11”). ASU 2015-11 requires that an entity measure all inventory at the lower of cost and net realizable value, except for inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. We adopted ASU 2015-11 prospectively in the first quarter of fiscal 2018 and adoption did not impact our statements of financial condition, results of operations, cash flows or financial statement disclosures.

Recent Accounting Pronouncements

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Topic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). ASU 2016-01 addresses certain aspects of recognition, measurement, presentation and disclosures of financial instruments. ASU 2016-01 will become effective for us beginning April 1, 2018, or fiscal 2019. We must apply the provisions using a cumulative-effect adjustment to the balance sheet at the beginning of the year of adoption, or April 1, 2018. We are currently assessing what financial instruments are being impacted and the extent of the potential impact on our statements of financial condition, results of operations, cash flows and financial statement disclosures.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 provides a new comprehensive model for lease accounting. Under ASU 2016-02, lessees and lessors should apply a “right-of-use” model in accounting for all leases and eliminate the concept of operating leases and off-balance sheet leases. ASU 2016-02 will become effective for us beginning April 1, 2019, or fiscal 2020. ASU 2016-02 requires a modified retrospective transition approach with certain practical expedients available. We have identified all of our current leases subject to ASU 2016-02. We are in the process of evaluating these agreements to determine the impact on our statements of financial condition, results of operations, cash flows and financial statement disclosures.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 provides guidance on the following eight specific cash flow issues: 1) debt prepayment or debt extinguishment costs, 2) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, 3) contingent consideration payments made after a business combination, 4) proceeds from the settlement of insurance claims, 5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, 6) distributions received from equity method investees, 7) beneficial interests in securitization transactions and 8) separately identifiable cash flows and application of the predominance principle. ASU 2016-15 transition requires the use of the retrospective method for all periods presented and will become effective for us beginning April 1, 2018, or fiscal 2019. We have evaluated the types of transactions impacted by ASU 2016-15 and at this time, and anticipate the only impact is related to the our debt extinguishment costs. As such, we do not anticipate the adoption of ASU 2016-15 will have a material impact on our statements of cash flows.

In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory (“ASU 2016-16”). ASU 2016-16 requires that an entity recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. ASU 2016-16 will become effective for us beginning April 1, 2018, or fiscal 2019. ASU 2016-16 requires the modified retrospective transition approach with a cumulative-effect adjustment to retained earnings at the beginning of the period of adoption. We currently do not have any material intra-entity transfers of assets and therefore we do not anticipate that adoption will have a material impact on our statements of financial condition, results of operations, cash flows or financial statement disclosures.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”). ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. ASU 2016-18 will become effective for us beginning April 1, 2018, or fiscal 2019. ASU 2016-18 is required to be applied retrospectively. Upon the adoption, amounts described as restricted cash will be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the statements of cash flows.

In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. The ASU provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU 2017-09 will become effective for us beginning April 1, 2018, or fiscal 2019 and interim and interim periods within those years and is to be applied prospectively to an award modified on or after the adoption date. As we currently do not have a practice of modifying our stock based awards and have no plans to do so in the future, we do not anticipate adoption will have a material impact on our statements of financial condition, results of operations, cash flows or financial statement disclosures.

The FASB issued the following accounting standard updates related to its revenue convergence project:

ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”) in May 2014. 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 No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (“ASU 2016-08”) in March 2016. ASU 2016-08 does not change the core principle of revenue recognition in Topic 606 but clarifies the implementation guidance on principal versus agent considerations.
ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (“ASU 2016-10”) in April 2016. ASU 2016-10 does not change the core principle of revenue recognition in Topic 606 but clarifies the implementation guidance on identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. ASU No. 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting (SEC Update) (“ASU 2016-11”) in May 2016. ASU 2016-11 rescinds SEC paragraphs pursuant to two SEC Staff Announcements at the March 3, 2016 EITF meeting. The SEC Staff is rescinding SEC Staff Observer comments that are codified in Topic 605 and Topic 932, effective upon adoption of Topic 606.
ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients in May 2016. ASU 2016-12 does not change the core principle of revenue recognition in Topic 606 but clarifies the implementation guidance on a few narrow areas and adds some practical expedients to the guidance.

These ASUs will become effective for us beginning April 1, 2018, or fiscal 2019. ASU 2014-09 and the related ASUs allow for
either a retrospective or a modified retrospective transition approach. The Company has elected to use a modified retrospective method. We have completed our initial assessment of the changes in our revenue recognition accounting policies for the new revenue standards. Our accounting for commission costs related to our service agreements will change from recognition in the period incurred to the deferral and recognition over the services are provided. Other costs such as warranty costs and our accounting for our rebate programs ("variable consideration") will not materially change. We have identified our performance obligations and have established the related standalone selling prices for the distinct goods and services underlying the obligations. We are currently configuring our system to meet our business requirements and upon completion, we will process the Company’s historical revenue transactions which will enable us to assess the overall impact of the adoption of Topic 606 on our financial condition, results of operations, cash flows and financial statement disclosures.
v3.7.0.1
FAIR VALUE
3 Months Ended
Jun. 30, 2017
Fair Value Disclosures [Abstract]  
FAIR VALUE
FAIR VALUE
Our assets measured and recorded at fair value on a recurring basis may 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. At June 30, 2017 and March 31, 2017, we had no cash in money market funds.
We did not record impairments to any non-financial assets in the first quarter of fiscal 2018 or fiscal 2017. 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 and long-term debt at June 30, 2017 and March 31, 2017. The carrying value and fair value of our convertible subordinated debt and long-term debt were as follows (in thousands):
 
As of
 
June 30, 2017
 
March 31, 2017
 
Carrying Value
 
Fair Value
 
Carrying Value
 
Fair Value
Convertible subordinated debt (1)
$
62,926

 
$
61,513

 
$
62,827

 
$
60,667

 
 
 
 
 
 
 
 
Long-term debt: (2)
 
 
 
 
 
 
 
Revolving credit agreement
11,888

 
13,372

 
16,852

 
18,490

Term loan agreement
48,331

 
49,930

 
48,176

 
50,026

Total long-term debt
$
60,219

 
$
63,302

 
$
65,028

 
$
68,516

 
 
 
 
 
 
(1) Fair value based on quoted market prices in less active markets (level 2).
 
(2) Fair value based on outstanding borrowings and market interest rates (level 2).
v3.7.0.1
INVENTORIES
3 Months Ended
Jun. 30, 2017
Inventory Disclosure [Abstract]  
INVENTORIES
INVENTORIES
Manufacturing inventories and service parts inventories consisted of the following (in thousands):
 
As of
 
June 30, 2017

March 31, 2017
Manufacturing inventories:
 
 
 
Finished goods
$
14,924

 
$
15,070

Work in process
869

 
606

Materials and purchased parts
12,028

 
11,985

 
$
27,821

 
$
27,661


 
As of
 
June 30, 2017
 
March 31, 2017
Service parts inventories:
 
 
 
Finished goods
$
14,628

 
$
14,851

Component parts
5,160

 
4,998

 
$
19,788

 
$
19,849

v3.7.0.1
ACCRUED WARRANTY
3 Months Ended
Jun. 30, 2017
Product Warranties Disclosures [Abstract]  
ACCRUED WARRANTY
ACCRUED WARRANTY
The changes in the accrued warranty balance were (in thousands):
 
Three Months Ended
 
June 30, 2017
 
June 30, 2016
Beginning balance
$
3,263

 
$
3,430

Additional warranties issued
1,412

 
1,998

Adjustments for warranties issued in prior fiscal years
(4
)
 
140

Settlements
(1,510
)
 
(2,124
)
Ending balance
$
3,161

 
$
3,444


We warrant our products against certain defects typically for a term of 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 is 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.
v3.7.0.1
DEBT
3 Months Ended
Jun. 30, 2017
Debt Disclosure [Abstract]  
DEBT
DEBT
Our debt consisted of the following (in thousands):
 
As of
 
June 30, 2017
 
March 31, 2017
Convertible subordinated debt:
 
 
 
4.50% convertible subordinated notes
$
63,090

 
$
63,090

Unamortized debt issuance costs
(164
)
 
(263
)
Convertible subordinated debt, net of unamortized debt issuance costs
$
62,926

 
$
62,827

 
As of
 
June 30, 2017
 
March 31, 2017
Long-term debt:
 
 
 
Revolving credit agreement
$
13,403

 
$
18,500

Term loan agreement
50,000

 
50,000

Unamortized discount and debt issuance costs
(3,184
)
 
(3,472
)
Long-term debt, net of unamortized discount and debt issuance costs
$
60,219

 
$
65,028


Convertible Subordinated Debt

In the third quarter of fiscal 2013, we issued $70 million aggregate principal amount of 4.50% convertible subordinated notes (4.5% Notes) due November 15, 2017. These notes are convertible into shares of our common stock until November 14, 2017 at the option of the holders at a conversion rate of 75.896 shares per $1,000 principal amount, a conversion price of approximately $13.20 per share. The 4.50% notes require semi-annual interest payments paid on May 15 and November 15 of each year and have no early call provisions.
Long-term Debt
Our credit facility includes a revolving credit and security agreement entered into with PNC Bank, National Association (“revolving credit agreement”) and a term loan credit and security agreement entered into with TCW Asset Management Company LLC (“term loan agreement”).
Revolving credit agreement

Under the revolving credit agreement, we have the ability to borrow the lesser of $80 million or the amount of the monthly borrowing base, which is reduced by $1.0 million of the outstanding letters of credit. Our borrowing base is established monthly based on certain working capital asset balances. The revolving credit agreement also includes an uncommitted accordion in an amount up to $20 million. The revolving credit agreement matures on October 21, 2021. As of June 30, 2017, our excess availability under the revolving credit agreement was $39.6 million.
Borrowings under the revolving credit agreement bear interest at a rate per annum equal to, at our option, either (a) the greatest of (i) the base rate, (ii) the Federal funds rate plus 0.50% and (iii) the LIBOR rate based upon an interest period of 1 month plus 1.0%, plus an applicable margin of 1.50%, or (b) the LIBOR rate plus an applicable margin of 2.50%. The base rate is defined in the revolving credit agreement. Additionally, we are required to pay a 0.375% commitment fee on undrawn amounts under the revolving credit agreement on a quarterly basis, which is recorded as interest expense in the period incurred. As of June 30, 2017, we had a $13.4 million outstanding balance on the revolving credit agreement at an interest rate of 5.75%.
Term loan agreement

The term loan agreement provides for $50 million of a senior secured term loan which was at the time we entered into the credit facility and $20 million of a senior secured delay draw term loan (“DDTL”). Borrowings under the DDTL are restricted to be used only to redeem our 4.50% convertible subordinated notes due November 15, 2017. The term loan agreement matures on October 21, 2021. The amount outstanding under the term loan is to be repaid on a quarterly basis in an amount equal to 1.25% of the original principal amount beginning on March 31, 2018, with any remaining principal balance due on the maturity of the term loan.
Borrowings under the term loan agreement bear interest at a rate per annum equal to, at our option, either (a) the greatest of (i) 3.00%, (ii) the Federal funds rate plus 0.50%, (iii) the LIBOR rate based upon an interest period of 1 month plus 1.0% and (iv) the “prime rate” last quoted by the Wall Street Journal, plus a margin ranging from 6.00% to 7.25% based on the applicable senior net leverage ratio, or (b) the LIBOR rate plus 7.00% to 8.25% based on the applicable senior net leverage ratio. The senior net leverage ratio is defined in the term loan agreement. As of June 30, 2017, our interest rate on the term loan was 8.66%.
The revolving credit agreement and the term loan agreement are collateralized by a pledge of substantially all of our assets and
contain certain financial covenants and customary events of default for such securities. Financial covenants include a fixed
charge coverage ratio, senior net leverage ratio and total leverage ratio. Additionally, the revolving credit agreement includes
minimum liquidity requirements. There is a blanket lien on all of our assets under the revolving credit agreement and term loan
agreement. As of June 30, 2017, and during fiscal 2018, we were in compliance with all covenants.
Debt Maturities
A summary of the scheduled maturities of principal for our outstanding debt as of June 30, 2017 follows (in thousands):
 
Debt Maturity Due by Period
 
Less than 1 Year
 
1 Year
 
2 Years
 
3 Years
 
4 Years
 
More than 5 Years
 
Total
4.50% convertible subordinated notes
$
63,090

 
$

 
$

 
$

 
$

 
$

 
$
63,090

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt:
 
 
 
 
 
 
 
 
 
 
 
 
 
Revolving credit agreement

 

 

 

 
13,403

 

 
13,403

Term loan agreement
1,250

 
2,500

 
2,500

 
2,500

 
41,250

 

 
50,000

Total long-term debt
$
1,250

 
$
2,500

 
$
2,500

 
$
2,500

 
$
54,653

 
$

 
$
63,403

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total debt
$
64,340

 
$
2,500

 
$
2,500

 
$
2,500

 
$
54,653

 
$

 
$
126,493

v3.7.0.1
RESTRUCTURING CHARGES
3 Months Ended
Jun. 30, 2017
Restructuring and Related Activities [Abstract]  
RESTRUCTURING CHARGES
RESTRUCTURING CHARGES
Fiscal 2018 Restructuring Plan
During the first quarter of fiscal 2018, we approved a plan (“Fiscal 2018 Restructuring Plan”) to eliminate 49 positions in the U.S. and internationally to align our workforce within various functions of our business in order to meet the Company’s strategic plans. The costs associated with these actions consist of restructuring charges related to severance and benefits. We incurred $1.6 million of restructuring charges under this plan during the quarter, and as of June 30, 2017, we paid $0.5 million under this plan with the remaining amounts to be paid during the remainder of fiscal 2018.
Fiscal 2017 April Restructuring Plan
In April 2016, we approved a plan (“Fiscal 2017 April Restructuring Plan”) to eliminate 29 positions in the U.S. and internationally to reduce investments in various functions of our business to improve operational efficiencies. The costs associated with these actions consist of restructuring charges related to severance and benefits. These actions were completed by the second quarter of fiscal 2017. We incurred and paid $1.5 million of restructuring charges under this plan.

Fiscal 2016 Restructuring Plan

In November 2015, we approved a plan (“Fiscal 2016 Restructuring Plan”) to eliminate approximately 65 positions in the U.S. and internationally, primarily in research and development and sales and marketing functions, in order to improve our cost structure and align spending with continuing operations plans. These actions were completed by the first quarter of fiscal 2017, with the majority having occurred by December 31, 2015. The costs associated with these actions consist of restructuring charges related to severance and benefits. We incurred and paid $2.0 million of restructuring charges under this plan.

Summary of Restructuring Expense
The following summarizes the type of restructuring costs, included in operating expense, for the three months ended June 30, 2017 and June 30, 2016 (in thousands):
 
Three Months Ended
 
June 30, 2017
 
June 30, 2016
Severance and benefits
$
1,570

 
$
1,489

Facilities
756

 
563

Other
9

 

 
$
2,335

 
$
2,052



Restructuring charges for the first three months of fiscal 2018 included $1.6 million of severance and benefits costs incurred as a result of the Fiscal 2018 Restructuring Plan. Additionally, we incurred $0.8 million of facilities restructuring charges in the first three months of fiscal 2018 due to a change in estimate of sublease timing and related expenses for our facilities previously used in manufacturing.

Restructuring charges for the first three months of fiscal 2017 were largely due to $1.5 million of severance and benefits costs incurred as a result of the Fiscal 2017 Restructuring Plan. Additionally, we incurred $0.6 million of restructuring charges related to facilities costs primarily due to a change in estimate of sublease timing for our facilities previously used in manufacturing.

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, 2017
 
Severance
and Benefits
 
Facilities
 
Total
Balance as of March 31, 2017
$
130

 
$
1,220

 
$
1,350

Restructuring costs
1,570

 

 
1,570

Adjustment of prior estimates

 
756

 
756

Cash payments
(472
)
 
(411
)
 
(883
)
Balance as of June 30, 2017
$
1,228

 
$
1,565

 
$
2,793


 
 
 
 
 
 
 
Three Months Ended June 30, 2017
 
Severance
and Benefits
 
Facilities
 
Total
Balance as of March 31, 2016
$
354

 
$
2,383

 
$
2,737

Restructuring costs
1,489

 
426

 
1,915

Adjustment of prior estimates

 
179

 
179

Cash payments
(1,029
)
 
(339
)
 
(1,368
)
Balance as of June 30, 2016
$
814

 
$
2,649

 
$
3,463



 
As of June 30, 2017
 
Severance and
Benefits
 
Facilities
 
Total
Estimated timing of future payouts:
 
 
 
 
 
Next twelve months
$
1,228

 
$
1,022

 
$
2,250

July 2018 through June 2022

 
543

 
543

 
$
1,228

 
$
1,565

 
$
2,793



Facility restructuring accruals will be paid in accordance with the respective facility lease terms and the above amounts are net of estimated sublease amounts.
v3.7.0.1
EQUITY
3 Months Ended
Jun. 30, 2017
Equity [Abstract]  
EQUITY
EQUITY
On April 18, 2017, we effected a 1-for-8 reverse stock split of our issued and outstanding common stock (the "Reverse Stock Split"). Our stock began to trade on a post-split basis on April 19, 2017. Par value of the Company's common stock was unchanged as a result of the Reverse Stock Split, remaining at $0.01 per share, which resulted in reclassification of capital from par value to capital in excess of par value. All share and per share data for comparative periods included within our Condensed Consolidated Financial Statements and related footnotes have been adjusted to account for the effect of the Reverse Stock
Split.
v3.7.0.1
STOCK INCENTIVE PLANS AND SHARE-BASED COMPENSATION
3 Months Ended
Jun. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
STOCK INCENTIVE PLANS AND SHARE-BASED COMPENSATION
STOCK INCENTIVE PLANS AND SHARE-BASED COMPENSATION
During the first quarter of fiscal 2018, all restricted stock awards, restricted stock units and options to purchase our common stock outstanding under the Company's Stock Incentive Plans were adjusted to reflect the impact of the Reverse Stock Split. The Reverse Stock Split also reduced the number of shares of common stock issuable under the Company's 2012 Long Term Incentive Plan and Employee Stock Purchase Plan, as amended. The per share exercise price of all outstanding awards was increased and the number of shares of common stock issuable upon the exercise or settlement of all outstanding awards was reduced proportionately to the reverse split ratio.
Share-Based Compensation
The following table summarizes share-based compensation (in thousands):
 
Three Months Ended
 
June 30, 2017
 
June 30, 2016
Share-based compensation:
 
 
 
Cost of revenue
$
217

 
$
280

Research and development
286

 
403

Sales and marketing
520

 
612

General and administrative
590

 
703

 
$
1,613

 
$
1,998

Share-based compensation by type of award:
 
 
 
Stock options
$

 
$

Restricted stock units
1,461

 
1,836

Stock purchase plan
152

 
162

 
$
1,613

 
$
1,998


Restricted Stock Units
The fair value of restricted stock units (“RSUs”) granted is the intrinsic value as of the respective grant date. The weighted-average grant date fair values of RSUs granted during the first quarter of fiscal 2018 and fiscal 2017 were $7.82 and $3.84, respectively.
A summary of activity relating to our restricted stock units follows (shares in thousands):
 
Shares
 
Weighted-Average
Grant Date
Fair Value Per Share
Nonvested at March 31, 2017
1,765

 
$
6.75

Granted
83

 
7.82

Vested
(52
)
 
5.66

Forfeited
(27
)
 
7.48

Nonvested at June 30, 2017
1,769

 
$
6.82



Employee Stock Purchase Plan
Under the Employee 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 2018 or fiscal 2017.
v3.7.0.1
INCOME TAXES
3 Months Ended
Jun. 30, 2017
Income Tax Disclosure [Abstract]  
INCOME TAXES
INCOME TAXES
Income tax benefit for the first quarter of fiscal 2018 was $1.2 million as compared to an income tax provision of $0.4 million for the first quarter of fiscal 2017. The tax benefit for the first quarter of fiscal 2018 included the release of $1.7 million of an uncertain tax position liability upon the effective settlement with the German taxing authorities for tax audits of our German subsidiary.
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.
v3.7.0.1
NET INCOME (LOSS) PER SHARE
3 Months Ended
Jun. 30, 2017
Earnings Per Share [Abstract]  
NET INCOME (LOSS) PER SHARE
NET INCOME (LOSS) PER SHARE
The following is the computation of basic and diluted net income (loss) per share (in thousands, except per share data):
 
Three Months Ended
 
June 30, 2017
 
June 30, 2016
Numerator:
 
 
 
Net loss
$
(3,674
)
 
$
(3,520
)
 
 
 
 
Denominator:
 
 
 
Weighted average shares:
 
 
 
Basic
34,084

 
33,292

Dilutive shares from stock plans

 

Dilutive shares from convertible subordinated notes

 

Diluted
34,084

 
33,292

 
 
 
 
Basic and diluted net loss per share
$
(0.11
)
 
$
(0.11
)


Dilutive and 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 income (loss) per share for the periods presented exclude the following because the effect would have been anti-dilutive (in millions):
 
Three Months Ended
 
June 30, 2017
 
June 30, 2016
Weighted average shares excluded:
 
 
 
4.50% convertible subordinated notes
4.8

 
5.3

Stock options
0.2

 
0.5

Unvested restricted stock units
1.5

 
1.4

 
 
 
 
Interest expense excluded:
 
 
 
4.50% convertible subordinated notes
$
0.8

 
$
0.9

v3.7.0.1
COMMITMENTS AND CONTINGENCIES
3 Months Ended
Jun. 30, 2017
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES
Commitments to Purchase Inventory

We use contract manufacturers for our manufacturing operations. Under these arrangements, the contract manufacturer procures inventory to manufacture products based upon our forecast of customer demand. We have similar arrangements with certain other suppliers. We are responsible for the financial impact on the supplier or contract manufacturer of any reduction or product mix shift in the forecast relative to materials that the third party had already purchased under a prior forecast. Such a variance in forecasted demand could require a cash payment for inventory in excess of current customer demand or for costs of excess or obsolete inventory. As of June 30, 2017, we had issued non-cancelable commitments for $42.0 million to purchase inventory from our contract manufacturers and suppliers.

Legal Proceedings

Crossroads

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. On January 29, 2016, the Patent Trial and Appeal Board issued decisions on the inter partes reviews for U.S. patents 6,425,035 and 7,051,147, ordering all claims of both patents to be unpatentable. On March 17, 2016, the Patent Trial and Appeal Board issued a decision on the inter partes review for U.S. patent 7,934,041, ordering all claims to be unpatentable. On March 31, 2016, Crossroads filed Notices of Appeal in each of the inter partes review decisions. On June 6, 2017, the U.S. Court of Appeals for the Federal Circuit affirmed the PTAB decision finding all claims of all patents to be unpatentable.  On July 6, 2017, Crossroads filed a petition for a rehearing en banc before the Federal Circuit. On August 8, 2017, the Federal Circuit denied Crossroads' petition. We believe the probability that this lawsuit will have a material adverse effect on our business, operating results or financial condition is remote.

Realtime Data

On July, 22 2016, Realtime Data LLC d/b/a IXO(“Realtime Data”) filed a patent infringement lawsuit against Quantum in the U.S. District Court for the Eastern District of Texas, alleging infringement of U.S. Patents Nos. 7,161,506, 7,378,992, 7,415,530, 8,643,513, 9,054,728, and 9,116,908. The lawsuit has been transferred to the U.S. District Court for the Northern District of California for further proceedings. Realtime Data asserts that we have incorporated Realtime Data’s patented technology into our compression products and services. Realtime Data seeks unspecified monetary damages and other relief that the Court deems appropriate. On July 31, 3017, the District Court stayed proceedings in this litigation pending decision in Inter Partes Review proceedings currently before the Patent Trial and Appeal Board and relating to the Realtime patents. We believe the probability that this lawsuit will have a material adverse effect on our business, operating results or financial condition is remote.
v3.7.0.1
BASIS OF PRESENTATION (Policies)
3 Months Ended
Jun. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Recently Adopted Accounting Pronouncements and Recent Accounting Pronouncements
Recently Adopted Accounting Pronouncements
In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. We adopted ASU 2016-09 in the first quarter of fiscal 2018 using multiple transition approaches in-line with the requirements. Our tax windfall benefits are reported in the statement of operations instead of equity to the extent we do not have an offsetting valuation allowance and such benefits are recorded within our deferred taxes.  There were no other changes based upon the new guidance. The adoption of ASU 2016-09 did not impact our statements of financial condition, results of operations, cash flows or financial statement disclosures.  

In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330) (“ASU 2015-11”). ASU 2015-11 requires that an entity measure all inventory at the lower of cost and net realizable value, except for inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. We adopted ASU 2015-11 prospectively in the first quarter of fiscal 2018 and adoption did not impact our statements of financial condition, results of operations, cash flows or financial statement disclosures.

Recent Accounting Pronouncements

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Topic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). ASU 2016-01 addresses certain aspects of recognition, measurement, presentation and disclosures of financial instruments. ASU 2016-01 will become effective for us beginning April 1, 2018, or fiscal 2019. We must apply the provisions using a cumulative-effect adjustment to the balance sheet at the beginning of the year of adoption, or April 1, 2018. We are currently assessing what financial instruments are being impacted and the extent of the potential impact on our statements of financial condition, results of operations, cash flows and financial statement disclosures.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 provides a new comprehensive model for lease accounting. Under ASU 2016-02, lessees and lessors should apply a “right-of-use” model in accounting for all leases and eliminate the concept of operating leases and off-balance sheet leases. ASU 2016-02 will become effective for us beginning April 1, 2019, or fiscal 2020. ASU 2016-02 requires a modified retrospective transition approach with certain practical expedients available. We have identified all of our current leases subject to ASU 2016-02. We are in the process of evaluating these agreements to determine the impact on our statements of financial condition, results of operations, cash flows and financial statement disclosures.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 provides guidance on the following eight specific cash flow issues: 1) debt prepayment or debt extinguishment costs, 2) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, 3) contingent consideration payments made after a business combination, 4) proceeds from the settlement of insurance claims, 5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, 6) distributions received from equity method investees, 7) beneficial interests in securitization transactions and 8) separately identifiable cash flows and application of the predominance principle. ASU 2016-15 transition requires the use of the retrospective method for all periods presented and will become effective for us beginning April 1, 2018, or fiscal 2019. We have evaluated the types of transactions impacted by ASU 2016-15 and at this time, and anticipate the only impact is related to the our debt extinguishment costs. As such, we do not anticipate the adoption of ASU 2016-15 will have a material impact on our statements of cash flows.

In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory (“ASU 2016-16”). ASU 2016-16 requires that an entity recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. ASU 2016-16 will become effective for us beginning April 1, 2018, or fiscal 2019. ASU 2016-16 requires the modified retrospective transition approach with a cumulative-effect adjustment to retained earnings at the beginning of the period of adoption. We currently do not have any material intra-entity transfers of assets and therefore we do not anticipate that adoption will have a material impact on our statements of financial condition, results of operations, cash flows or financial statement disclosures.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”). ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. ASU 2016-18 will become effective for us beginning April 1, 2018, or fiscal 2019. ASU 2016-18 is required to be applied retrospectively. Upon the adoption, amounts described as restricted cash will be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the statements of cash flows.

In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. The ASU provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU 2017-09 will become effective for us beginning April 1, 2018, or fiscal 2019 and interim and interim periods within those years and is to be applied prospectively to an award modified on or after the adoption date. As we currently do not have a practice of modifying our stock based awards and have no plans to do so in the future, we do not anticipate adoption will have a material impact on our statements of financial condition, results of operations, cash flows or financial statement disclosures.

The FASB issued the following accounting standard updates related to its revenue convergence project:

ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”) in May 2014. 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 No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (“ASU 2016-08”) in March 2016. ASU 2016-08 does not change the core principle of revenue recognition in Topic 606 but clarifies the implementation guidance on principal versus agent considerations.
ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (“ASU 2016-10”) in April 2016. ASU 2016-10 does not change the core principle of revenue recognition in Topic 606 but clarifies the implementation guidance on identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. ASU No. 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting (SEC Update) (“ASU 2016-11”) in May 2016. ASU 2016-11 rescinds SEC paragraphs pursuant to two SEC Staff Announcements at the March 3, 2016 EITF meeting. The SEC Staff is rescinding SEC Staff Observer comments that are codified in Topic 605 and Topic 932, effective upon adoption of Topic 606.
ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients in May 2016. ASU 2016-12 does not change the core principle of revenue recognition in Topic 606 but clarifies the implementation guidance on a few narrow areas and adds some practical expedients to the guidance.

These ASUs will become effective for us beginning April 1, 2018, or fiscal 2019. ASU 2014-09 and the related ASUs allow for
either a retrospective or a modified retrospective transition approach. The Company has elected to use a modified retrospective method. We have completed our initial assessment of the changes in our revenue recognition accounting policies for the new revenue standards. Our accounting for commission costs related to our service agreements will change from recognition in the period incurred to the deferral and recognition over the services are provided. Other costs such as warranty costs and our accounting for our rebate programs ("variable consideration") will not materially change. We have identified our performance obligations and have established the related standalone selling prices for the distinct goods and services underlying the obligations. We are currently configuring our system to meet our business requirements and upon completion, we will process the Company’s historical revenue transactions which will enable us to assess the overall impact of the adoption of Topic 606 on our financial condition, results of operations, cash flows and financial statement disclosures.
v3.7.0.1
FAIR VALUE (Tables)
3 Months Ended
Jun. 30, 2017
Fair Value Disclosures [Abstract]  
Schedule of carrying value and fair value of financial liabilities
The carrying value and fair value of our convertible subordinated debt and long-term debt were as follows (in thousands):
 
As of
 
June 30, 2017
 
March 31, 2017
 
Carrying Value
 
Fair Value
 
Carrying Value
 
Fair Value
Convertible subordinated debt (1)
$
62,926

 
$
61,513

 
$
62,827

 
$
60,667

 
 
 
 
 
 
 
 
Long-term debt: (2)
 
 
 
 
 
 
 
Revolving credit agreement
11,888

 
13,372

 
16,852

 
18,490

Term loan agreement
48,331

 
49,930

 
48,176

 
50,026

Total long-term debt
$
60,219

 
$
63,302

 
$
65,028

 
$
68,516

 
 
 
 
 
 
(1) Fair value based on quoted market prices in less active markets (level 2).
 
(2) Fair value based on outstanding borrowings and market interest rates (level 2).
v3.7.0.1
INVENTORIES (Tables)
3 Months Ended
Jun. 30, 2017
Inventory Disclosure [Abstract]  
Schedule of manufacturing inventories and service parts inventories
Manufacturing inventories and service parts inventories consisted of the following (in thousands):
 
As of
 
June 30, 2017

March 31, 2017
Manufacturing inventories:
 
 
 
Finished goods
$
14,924

 
$
15,070

Work in process
869

 
606

Materials and purchased parts
12,028

 
11,985

 
$
27,821

 
$
27,661


 
As of
 
June 30, 2017
 
March 31, 2017
Service parts inventories:
 
 
 
Finished goods
$
14,628

 
$
14,851

Component parts
5,160

 
4,998

 
$
19,788

 
$
19,849

v3.7.0.1
ACCRUED WARRANTY (Tables)
3 Months Ended
Jun. 30, 2017
Product Warranties Disclosures [Abstract]  
Schedule of changes in the accrued warranty balance
The changes in the accrued warranty balance were (in thousands):
 
Three Months Ended
 
June 30, 2017
 
June 30, 2016
Beginning balance
$
3,263

 
$
3,430

Additional warranties issued
1,412

 
1,998

Adjustments for warranties issued in prior fiscal years
(4
)
 
140

Settlements
(1,510
)
 
(2,124
)
Ending balance
$
3,161

 
$
3,444

v3.7.0.1
DEBT (Tables)
3 Months Ended
Jun. 30, 2017
Debt Disclosure [Abstract]  
Schedule of Debt
Our debt consisted of the following (in thousands):
 
As of
 
June 30, 2017
 
March 31, 2017
Convertible subordinated debt:
 
 
 
4.50% convertible subordinated notes
$
63,090

 
$
63,090

Unamortized debt issuance costs
(164
)
 
(263
)
Convertible subordinated debt, net of unamortized debt issuance costs
$
62,926

 
$
62,827

 
As of
 
June 30, 2017
 
March 31, 2017
Long-term debt:
 
 
 
Revolving credit agreement
$
13,403

 
$
18,500

Term loan agreement
50,000

 
50,000

Unamortized discount and debt issuance costs
(3,184
)
 
(3,472
)
Long-term debt, net of unamortized discount and debt issuance costs
$
60,219

 
$
65,028

Schedule of Maturities of Debt
A summary of the scheduled maturities of principal for our outstanding debt as of June 30, 2017 follows (in thousands):
 
Debt Maturity Due by Period
 
Less than 1 Year
 
1 Year
 
2 Years
 
3 Years
 
4 Years
 
More than 5 Years
 
Total
4.50% convertible subordinated notes
$
63,090

 
$

 
$

 
$

 
$

 
$

 
$
63,090

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt:
 
 
 
 
 
 
 
 
 
 
 
 
 
Revolving credit agreement

 

 

 

 
13,403

 

 
13,403

Term loan agreement
1,250

 
2,500

 
2,500

 
2,500

 
41,250

 

 
50,000

Total long-term debt
$
1,250

 
$
2,500

 
$
2,500

 
$
2,500

 
$
54,653

 
$

 
$
63,403

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total debt
$
64,340

 
$
2,500

 
$
2,500

 
$
2,500

 
$
54,653

 
$

 
$
126,493

v3.7.0.1
RESTRUCTURING CHARGES (Tables)
3 Months Ended
Jun. 30, 2017
Restructuring and Related Activities [Abstract]  
Types of restructuring expense
The following summarizes the type of restructuring costs, included in operating expense, for the three months ended June 30, 2017 and June 30, 2016 (in thousands):
 
Three Months Ended
 
June 30, 2017
 
June 30, 2016
Severance and benefits
$
1,570

 
$
1,489

Facilities
756

 
563

Other
9

 

 
$
2,335

 
$
2,052

Activity for accrued restructuring charges
The following tables show the activity and the estimated timing of future payouts for accrued restructuring (in thousands):
 
 
 
 
 
 
 
Three Months Ended June 30, 2017
 
Severance
and Benefits
 
Facilities
 
Total
Balance as of March 31, 2017
$
130

 
$
1,220

 
$
1,350

Restructuring costs
1,570

 

 
1,570

Adjustment of prior estimates

 
756

 
756

Cash payments
(472
)
 
(411
)
 
(883
)
Balance as of June 30, 2017
$
1,228

 
$
1,565

 
$
2,793


 
 
 
 
 
 
 
Three Months Ended June 30, 2017
 
Severance
and Benefits
 
Facilities
 
Total
Balance as of March 31, 2016
$
354

 
$
2,383

 
$
2,737

Restructuring costs
1,489

 
426

 
1,915

Adjustment of prior estimates

 
179

 
179

Cash payments
(1,029
)
 
(339
)
 
(1,368
)
Balance as of June 30, 2016
$
814

 
$
2,649

 
$
3,463



Estimated timing of future payouts for accrued restructuring charges
 
As of June 30, 2017
 
Severance and
Benefits
 
Facilities
 
Total
Estimated timing of future payouts:
 
 
 
 
 
Next twelve months
$
1,228

 
$
1,022

 
$
2,250

July 2018 through June 2022

 
543

 
543

 
$
1,228

 
$
1,565

 
$
2,793

v3.7.0.1
STOCK INCENTIVE PLANS AND SHARE-BASED COMPENSATION (Tables)
3 Months Ended
Jun. 30, 2017
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, 2017
 
June 30, 2016
Share-based compensation:
 
 
 
Cost of revenue
$
217

 
$
280

Research and development
286

 
403

Sales and marketing
520

 
612

General and administrative
590

 
703

 
$
1,613

 
$
1,998

Share-based compensation by type of award:
 
 
 
Stock options
$

 
$

Restricted stock units
1,461

 
1,836

Stock purchase plan
152

 
162

 
$
1,613

 
$
1,998

Summary of activity relating to restricted stock units
A summary of activity relating to our restricted stock units follows (shares in thousands):
 
Shares
 
Weighted-Average
Grant Date
Fair Value Per Share
Nonvested at March 31, 2017
1,765

 
$
6.75

Granted
83

 
7.82

Vested
(52
)
 
5.66

Forfeited
(27
)
 
7.48

Nonvested at June 30, 2017
1,769

 
$
6.82

v3.7.0.1
NET INCOME (LOSS) PER SHARE (Tables)
3 Months Ended
Jun. 30, 2017
Earnings Per Share [Abstract]  
Computation of basic and diluted net income (loss) per share
The following is the computation of basic and diluted net income (loss) per share (in thousands, except per share data):
 
Three Months Ended
 
June 30, 2017
 
June 30, 2016
Numerator:
 
 
 
Net loss
$
(3,674
)
 
$
(3,520
)
 
 
 
 
Denominator:
 
 
 
Weighted average shares:
 
 
 
Basic
34,084

 
33,292

Dilutive shares from stock plans

 

Dilutive shares from convertible subordinated notes

 

Diluted
34,084

 
33,292

 
 
 
 
Basic and diluted net loss per share
$
(0.11
)
 
$
(0.11
)
Schedule of antidilutive securities excluded from computation of diluted net income (loss) per share
The computations of diluted net income (loss) per share for the periods presented exclude the following because the effect would have been anti-dilutive (in millions):
 
Three Months Ended
 
June 30, 2017
 
June 30, 2016
Weighted average shares excluded:
 
 
 
4.50% convertible subordinated notes
4.8

 
5.3

Stock options
0.2

 
0.5

Unvested restricted stock units
1.5

 
1.4

 
 
 
 
Interest expense excluded:
 
 
 
4.50% convertible subordinated notes
$
0.8

 
$
0.9

v3.7.0.1
BASIS OF PRESENTATION (Details)
Apr. 18, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Reverse stock split, ratio 0.125000
v3.7.0.1
FAIR VALUE - Schedule of Carrying Value and Fair Value of Financial Liabilities (Details) - USD ($)
$ in Thousands
Jun. 30, 2017
Mar. 31, 2017
Carrying Value    
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]    
Total long-term debt $ 60,219 $ 65,028
Level 2 fair value measurements | Fair Value    
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]    
Total long-term debt 63,302 68,516
Convertible subordinated debt | Carrying Value    
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]    
Total long-term debt 62,926 62,827
Convertible subordinated debt | Level 2 fair value measurements | Fair Value    
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]    
Total long-term debt 61,513 60,667
Credit agreement | Carrying Value | Revolving credit agreement | Revolving credit agreement    
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]    
Total long-term debt 11,888 16,852
Credit agreement | Level 2 fair value measurements | Fair Value | Revolving credit agreement | Revolving credit agreement    
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]    
Total long-term debt 13,372 18,490
Term loan agreement | Carrying Value    
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]    
Total long-term debt 48,331 48,176
Term loan agreement | Level 2 fair value measurements | Fair Value    
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]    
Total long-term debt $ 49,930 $ 50,026
v3.7.0.1
INVENTORIES - Schedule of Manufacturing Inventories (Details) - USD ($)
$ in Thousands
Jun. 30, 2017
Mar. 31, 2017
Manufacturing inventories:    
Finished goods $ 14,924 $ 15,070
Work in process 869 606
Materials and purchased parts 12,028 11,985
Total manufacturing inventories $ 27,821 $ 27,661
v3.7.0.1
INVENTORIES - Schedule of Service Parts Inventories (Details) - USD ($)
$ in Thousands
Jun. 30, 2017
Mar. 31, 2017
Service parts inventories:    
Finished goods $ 14,628 $ 14,851
Component parts 5,160 4,998
Total service parts inventories $ 19,788 $ 19,849
v3.7.0.1
ACCRUED WARRANTY (Details) - USD ($)
$ in Thousands
3 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Movement in Standard Product Warranty Accrual [Roll Forward]    
Beginning balance $ 3,263 $ 3,430
Additional warranties issued 1,412 1,998
Adjustments for warranties issued in prior fiscal years (4) 140
Settlements (1,510) (2,124)
Ending balance $ 3,161 $ 3,444
Minimum    
Product Warranty Liability [Line Items]    
Product warranty term (in years) 1 year  
Maximum    
Product Warranty Liability [Line Items]    
Product warranty term (in years) 3 years  
v3.7.0.1
DEBT - Schedule of Debt (Details) - USD ($)
$ in Thousands
Jun. 30, 2017
Mar. 31, 2017
Debt Instrument [Line Items]    
Unamortized discount and debt issuance costs $ (3,184) $ (3,472)
Long-term debt 126,493  
Long-term debt, net of unamortized discount and debt issuance costs 60,219 65,028
Revolving credit agreement    
Debt Instrument [Line Items]    
Long-term debt 13,403  
Convertible subordinated debt    
Debt Instrument [Line Items]    
4.50% convertible subordinated notes 63,090 63,090
Unamortized discount and debt issuance costs (164) (263)
Convertible subordinated debt, net of unamortized debt issuance costs 62,926 62,827
Credit agreement | Revolving credit agreement | Revolving credit agreement    
Debt Instrument [Line Items]    
Long-term debt 13,403 18,500
Term loan agreement    
Debt Instrument [Line Items]    
Long-term debt $ 50,000 $ 50,000