SEC Comment Letter for QUANTUM (QMCO) — Jun 26, 2006
QUANTUM CORP /DE/ (QMCO) (CIK 0000709283)
Date: June 26, 2006 · CIK: 0000709283 · Accession: 0000000000-06-029705
AI Filing Summary & Sentiment
Reasoning
Referenced dates: October 21, 2005
Letter
Room 4561 January 25, 2006 Mr. Richard E. Belluzo Chief Executive Officer Quantum Corporation 1650 Technology Drive Suite 800 San Jose, California 95110
Re: Quantum Corporation Form 10-K for the Fiscal Year Ended March 31, 2005 Filed June 8, 2005 Form 8-K Filed October 27, 2005 File No. 1-13449
Dear Mr. Belluzo,
We have reviewed your response letter dated October 21, 2005, as well as the filings referenced above, and have the follo wing comments. Where indicated, we think you should revise your document in response to these comments. If you disagree, we will consider your explanation as to why our comments are inapplicable or a revision is unnecessary. Please be as detaile d as necessary in your explan ation. After reviewing this information, we may raise additional comments.
Please understand that the purpose of our re view 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 comment or on any other aspect of our review. Feel free to call us at the telephone numbers listed at the end of this letter.
Richard E. Belluzo Quantum Corporation January 25, 2006 Page 2 Form 10-K for the Fiscal Year Ended March 31, 2005
Item 7. MD&A of Financial Condi tion and Results of Operations
Critical Accounting Policies, page 17 1. We have read your response to our prior comment number 1 and believe that disclosures regarding how accurate your estimates related to warranties and contingent tax accruals have been in the past, how much these estimates have changed, and whether these estimates are reasonably likely to change in the future should be provided within the critical acc ounting policies section. We believe this will allow readers to gain an understanding of the relevant accounting policies and related estimates and evaluate those policies and estimates within the context provided by the required quantitative info rmation. Please revise your disclosures to ensure your critical accounting policies section is complete.
Revenue recognition, page 50 2. Please revise your revenue recognition di sclosures to explain your process for recognizing royalty revenues. Explain that you substantiate delivery through obtaining periodic, timely unit reports from licensees that include quantity of units sold to end users that are subject to royalties. In addition, clarify how you determine the amount of revenue to r ecord using the royalty agreements.
GAAP to Non-GAAP Reconciliation of Consolid ated Statements of Operations, pages 79 through 82 3. Please explain to us why you believe labeli ng restructuring items as “special” is sufficiently different than labeling items as “non-recu rring,” “infrequent,” or “unusual” as contemplated by Item 10(e)(1)(ii)(B). 4. We have read your response to prior comment number 6 and note that you have not proposed any additional disclosures related to your non-GAAP information. Question 9 of the FAQ indicates that presenting a non-GAAP financial measure that eliminates recurring charges will depend on all the facts and circumstances. If there is a past pattern of the charges, no articulate d demonstration that such charges will not continue, and no other unusua l reason that you can substantiate to identify the special nature of the charge , it would be difficult for you to meet the burden of disclosing why the non-GAAP financ ial measure is useful to investors. Similarly, Question 8 of the FAQ indicates that, while there is no per se prohibition against removi ng a recurring item, you must meet the burden of demonstrating the usefulness of any m easure that exclude s recurring items, especially if the non-GAAP measure is us ed to evaluate performance. Such measures more likely would be permi ssible if you reasonably believe that the
Richard E. Belluzo Quantum Corporation January 25, 2006 Page 3 financial impact of the item will disappear or become immaterial within a near- term finite period. In addition, we believe more robust disclosures are required in both your filed and furnished documents that contain non-GAAP information, including:
Why the adjustments are necessary in evaluating your overall financial and operating performance and why the excluded items should not be considered. For example, it remain s unclear to us why recurring restructuring activities that appear to be critical to the ongoing performance of your business should be ignored in assessing your performance; The material limitations associat ed with the use of the non-GAAP financial measures; and The manner in which management compensates for the limitations when using the non-GAAP measures. Please note that we believe your disclosu res should provide detailed information regarding each non-GAAP measure a nd each exclusion from the GAAP information. In addition, you should specifi cally define any references to items such as “overall financial performa nce,” “operating performance” and “core operating performance” as companies and investors may differ as to what these terms represent and how each should be determined. We may have further comment.
As appropriate, please amend your filing and respond to these comments within 10 business days or tell us when you will provid e 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 cove r 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.
You may contact Stathis Kouninis, Staff Accountan t, at (202) 551-3476, Mark Kronforst, Senior Staff Acc ountant at (202) 551-3451 or me at (202) 551-3489 if you have any questions regard ing these comments.
S i n c e r e l y ,
B r a d S k i n n e r Accounting Branch Chief
Show Raw Text
Room 4561
January 25, 2006
Mr. Richard E. Belluzo
Chief Executive Officer
Quantum Corporation
1650 Technology Drive
Suite 800
San Jose, California 95110
Re: Quantum Corporation
Form 10-K for the Fiscal Year Ended March 31, 2005
Filed June 8, 2005
Form 8-K
Filed October 27, 2005
File No. 1-13449
Dear Mr. Belluzo,
We have reviewed your response letter dated October 21, 2005, as well as the
filings referenced above, and have the follo wing comments. Where indicated, we think
you should revise your document in response to these comments. If you disagree, we
will consider your explanation as to why our comments are inapplicable or a revision is
unnecessary. Please be as detaile d as necessary in your explan ation. After reviewing this
information, we may raise additional comments.
Please understand that the purpose of our re view 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 comment or on any other aspect of our review. Feel free to call us at the telephone numbers listed at the end of this letter.
Richard E. Belluzo
Quantum Corporation
January 25, 2006 Page 2
Form 10-K for the Fiscal Year Ended March 31, 2005
Item 7. MD&A of Financial Condi tion and Results of Operations
Critical Accounting Policies, page 17
1. We have read your response to our prior comment number 1 and believe that disclosures regarding how accurate your estimates related to warranties and
contingent tax accruals have been in the past, how much these estimates have changed, and whether these estimates are reasonably likely to change in the future should be provided within the critical acc ounting policies section. We believe this
will allow readers to gain an understanding of the relevant accounting policies and
related estimates and evaluate those policies and estimates within the context provided by the required quantitative info rmation. Please revise your disclosures
to ensure your critical accounting policies section is complete.
Revenue recognition, page 50
2. Please revise your revenue recognition di sclosures to explain your process for
recognizing royalty revenues. Explain that you substantiate delivery through obtaining periodic, timely unit reports from licensees that include quantity of units
sold to end users that are subject to royalties. In addition, clarify how you
determine the amount of revenue to r ecord using the royalty agreements.
GAAP to Non-GAAP Reconciliation of Consolid ated Statements of Operations, pages 79
through 82
3. Please explain to us why you believe labeli ng restructuring items as “special” is
sufficiently different than labeling items as “non-recu rring,” “infrequent,” or
“unusual” as contemplated by Item 10(e)(1)(ii)(B).
4. We have read your response to prior comment number 6 and note that you have
not proposed any additional disclosures related to your non-GAAP information.
Question 9 of the FAQ indicates that presenting a non-GAAP financial measure
that eliminates recurring charges will depend on all the facts and circumstances.
If there is a past pattern of the charges, no articulate d demonstration that such
charges will not continue, and no other unusua l reason that you can substantiate to
identify the special nature of the charge , it would be difficult for you to meet the
burden of disclosing why the non-GAAP financ ial measure is useful to investors.
Similarly, Question 8 of the FAQ indicates that, while there is no per se prohibition against removi ng a recurring item, you must meet the burden of
demonstrating the usefulness of any m easure that exclude s recurring items,
especially if the non-GAAP measure is us ed to evaluate performance. Such
measures more likely would be permi ssible if you reasonably believe that the
Richard E. Belluzo
Quantum Corporation
January 25, 2006 Page 3
financial impact of the item will disappear or become immaterial within a near-
term finite period. In addition, we believe more robust disclosures are required in
both your filed and furnished documents that contain non-GAAP information,
including:
Why the adjustments are necessary in evaluating your overall financial and operating performance and why the excluded items should not be
considered. For example, it remain s unclear to us why recurring
restructuring activities that appear to be critical to the ongoing
performance of your business should be ignored in assessing your performance;
The material limitations associat ed with the use of the non-GAAP
financial measures; and
The manner in which management compensates for the limitations when using the non-GAAP measures.
Please note that we believe your disclosu res should provide detailed information
regarding each non-GAAP measure a nd each exclusion from the GAAP
information. In addition, you should specifi cally define any references to items
such as “overall financial performa nce,” “operating performance” and “core
operating performance” as companies and investors may differ as to what these terms represent and how each should be determined. We may have further
comment.
As appropriate, please amend your filing and respond to these comments within
10 business days or tell us when you will provid e 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 cove r 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.
You may contact Stathis Kouninis, Staff Accountan t, at (202) 551-3476, Mark
Kronforst, Senior Staff Acc ountant at (202) 551-3451 or me at (202) 551-3489 if you
have any questions regard ing these comments.
S i n c e r e l y ,
B r a d S k i n n e r
Accounting Branch Chief