SEC Comment Letter for QUANTUM (QMCO) — Feb 27, 2013
QUANTUM CORP /DE/ (QMCO) (CIK 0000709283)
Date: Feb. 27, 2013 · CIK: 0000709283 · Accession: 0000000000-13-010930
AI Filing Summary & Sentiment
Reasoning
Letter
February 27, 2013 Via E -mail Ms. Linda M. Breard Chief Financial Officer Quantum Corporation 1650 Technology Drive, Suite 800 San Jose, CA 95110
Re: Quantum Corporation Form 10-K for the Fiscal Year Ended March 31, 2012 Filed June 14, 2012 Form 10 -Q for the Quarterly Period Ended December 31, 2012 Filed February 8, 2013 File No. 001 -13449
Dear Ms. Breard :
We have reviewed your filing s and have the following comments. In some of our comments , we may ask you to provide us with information so we may better understand your disclosure.
Please respond to this letter within ten business days by amending your filing, by providing the requested information, or by advising us when you will provide the requested response. If you do not believe our comments apply to your facts and circumstances or do not believe an amendment is appropriate, please tell us why in your response.
After reviewing any amendment to your filing and the information you provide in response to these comment s, we may have additional comments.
Form 10 -K for the Fiscal Year Ended March 31, 2012
Item 8. Financial Statements and Supplementary Data
Report of Independent Registered Public Accounti ng Firm, page 44
1. We no te that you have included separate Statements of Comprehensive Income (Loss) on page 47 and that the first paragraph of the audit report does not reference th ese statement s. Please amend your Form 10 -K to include an opinion that ref erences all of the audited financial statements. Refer to AU Section 508.08.
Ms. Linda M. Breard Quantum Corporation February 27, 2013 Page 2
Note 13 – Commitments and Contingencies
Legal Proceedings, page 74
2. We note that your statement regarding the Compression Technology Solutions LLC (CTS) patent infringement lawsuit indicates that “[d]ue to inherent uncertainty of litigation , [you] cannot identify probable or estimable damages.” We note similar disclosure included in your Form 10 -Q for the quarterly period ended December 31, 2012 with respect to the CTS laws uit and a patent infringement lawsuit with Overland Storage, Inc. I f there is at least a reasonable possibility that a loss exceeding amounts already recognized may have been incurred, in your next periodic filing, either disclose an estimate (or, if true , state that the estimate is immaterial in lieu of providing quantified amounts) of the additional loss or range of loss, or state that such an estimate cannot be made. Refer to ASC 450 -20-50.
Form 10 -Q for the Quarterly Period Ended December 31, 2012
Item 1. Financial Statements
Note 1 – Basis of Presentation, page 5
3. We note your disclosure on page 13 of your Form 10 -Q for the quarterly period ended September 30, 2012 that during the second quarter of fiscal 2013 you introduced a new product, Q -Clou d, that provides backup and disaster recovery on a subscription basis. Please provide us with the details and terms of these arrangements, including whether any implementation or set -up fees were earned, and your accounting policy for these cloud subscrip tion services.
Note 4 – Intangible Assets and Goodwill, page 6
4. We note that you evaluate goodwill for impairment during the fourth quarter of the fiscal year or more frequently if indicators of impairment are present. We further note that your stock price has declined from $2.62 on March 30, 2012 to as low as $1.05 on October 31, 2012. You have also included disclosure on page 34 regarding your decreasing stock price and the risk of NYSE delisting. In light of these factors , as well as your declinin g revenues, please tell us how you concluded that there were no indicators of goodwill impairment.
Ms. Linda M. Breard Quantum Corporation February 27, 2013 Page 3
Item 4. Controls and Procedures
(a) Evaluation of disclosure controls and procedures, page 24
5. Please confirm whether your Chief Executive Officer an d your Chief Financial Officer evaluated the effectiveness of your disclosure controls and procedures as defined in Rules 13a-15(e) and 15d -15(e) under the Exchange Act. Please also consider including the full definition of disclosure controls and procedu res in future filings similar to the disclosure on page 76 of your Form 10 -K for the fiscal year ended March 31, 2012 or alternatively, provide a reference to the definition of the rules (i.e. Rules 13a -15(e) and 15d -15(e) under the Exchange Act ).
We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing to be certain that the filing includes the information the Securities Exchange Act of 1934 and all applicable Exchange Act rules require. Since the compa ny 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 responding to our comments, please provide a written statement from the co mpany 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.
You may contact Jaime John, Staff Accountant , at (202) 551 -3446 if you have questions regarding comments on the financial statements and re lated matters . If you require further assistance, do not hesitate to contact me at (202) 551 -3406.
Sincerely,
/s/ Patrick Gilmore
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February 27, 2013 Via E -mail Ms. Linda M. Breard Chief Financial Officer Quantum Corporation 1650 Technology Drive, Suite 800 San Jose, CA 95110 Re: Quantum Corporation Form 10-K for the Fiscal Year Ended March 31, 2012 Filed June 14, 2012 Form 10 -Q for the Quarterly Period Ended December 31, 2012 Filed February 8, 2013 File No. 001 -13449 Dear Ms. Breard : We have reviewed your filing s and have the following comments. In some of our comments , we may ask you to provide us with information so we may better understand your disclosure. Please respond to this letter within ten business days by amending your filing, by providing the requested information, or by advising us when you will provide the requested response. If you do not believe our comments apply to your facts and circumstances or do not believe an amendment is appropriate, please tell us why in your response. After reviewing any amendment to your filing and the information you provide in response to these comment s, we may have additional comments. Form 10 -K for the Fiscal Year Ended March 31, 2012 Item 8. Financial Statements and Supplementary Data Report of Independent Registered Public Accounti ng Firm, page 44 1. We no te that you have included separate Statements of Comprehensive Income (Loss) on page 47 and that the first paragraph of the audit report does not reference th ese statement s. Please amend your Form 10 -K to include an opinion that ref erences all of the audited financial statements. Refer to AU Section 508.08. Ms. Linda M. Breard Quantum Corporation February 27, 2013 Page 2 Note 13 – Commitments and Contingencies Legal Proceedings, page 74 2. We note that your statement regarding the Compression Technology Solutions LLC (CTS) patent infringement lawsuit indicates that “[d]ue to inherent uncertainty of litigation , [you] cannot identify probable or estimable damages.” We note similar disclosure included in your Form 10 -Q for the quarterly period ended December 31, 2012 with respect to the CTS laws uit and a patent infringement lawsuit with Overland Storage, Inc. I f there is at least a reasonable possibility that a loss exceeding amounts already recognized may have been incurred, in your next periodic filing, either disclose an estimate (or, if true , state that the estimate is immaterial in lieu of providing quantified amounts) of the additional loss or range of loss, or state that such an estimate cannot be made. Refer to ASC 450 -20-50. Form 10 -Q for the Quarterly Period Ended December 31, 2012 Item 1. Financial Statements Note 1 – Basis of Presentation, page 5 3. We note your disclosure on page 13 of your Form 10 -Q for the quarterly period ended September 30, 2012 that during the second quarter of fiscal 2013 you introduced a new product, Q -Clou d, that provides backup and disaster recovery on a subscription basis. Please provide us with the details and terms of these arrangements, including whether any implementation or set -up fees were earned, and your accounting policy for these cloud subscrip tion services. Note 4 – Intangible Assets and Goodwill, page 6 4. We note that you evaluate goodwill for impairment during the fourth quarter of the fiscal year or more frequently if indicators of impairment are present. We further note that your stock price has declined from $2.62 on March 30, 2012 to as low as $1.05 on October 31, 2012. You have also included disclosure on page 34 regarding your decreasing stock price and the risk of NYSE delisting. In light of these factors , as well as your declinin g revenues, please tell us how you concluded that there were no indicators of goodwill impairment. Ms. Linda M. Breard Quantum Corporation February 27, 2013 Page 3 Item 4. Controls and Procedures (a) Evaluation of disclosure controls and procedures, page 24 5. Please confirm whether your Chief Executive Officer an d your Chief Financial Officer evaluated the effectiveness of your disclosure controls and procedures as defined in Rules 13a-15(e) and 15d -15(e) under the Exchange Act. Please also consider including the full definition of disclosure controls and procedu res in future filings similar to the disclosure on page 76 of your Form 10 -K for the fiscal year ended March 31, 2012 or alternatively, provide a reference to the definition of the rules (i.e. Rules 13a -15(e) and 15d -15(e) under the Exchange Act ). We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing to be certain that the filing includes the information the Securities Exchange Act of 1934 and all applicable Exchange Act rules require. Since the compa ny 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 responding to our comments, please provide a written statement from the co mpany 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. You may contact Jaime John, Staff Accountant , at (202) 551 -3446 if you have questions regarding comments on the financial statements and re lated matters . If you require further assistance, do not hesitate to contact me at (202) 551 -3406. Sincerely, /s/ Patrick Gilmore Patrick Gilmore Accounting Branch Chief