Quantum Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

RESTRUCTURING CHARGES

RESTRUCTURING CHARGES

12 Months Ended

Mar. 31, 2016

Restructuring and Related Activities [Abstract]

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. The costs associated with these actions consist of restructuring charges related to severance and benefits. We incurred aggregate restructuring charges of approximately $2.0 million under this plan, of which $1.7 million was paid. The ending balance for accrued restructuring charges for the Fiscal 2016 Restructuring Plan is $0.3 million as of March 31, 2016, which is expected to be paid by the second quarter of fiscal 2017.

The following summarizes the type of restructuring expense for fiscal 2016, 2015 and 2014 (in thousands):



	For the year ended March 31,
	2016		2015		2014
Restructuring expense related to cost of revenue	$	—	$	—	$	539
Restructuring expense in operating expense	4,006		1,666		10,675
	$	4,006	$	1,666	$	11,214



	For the year ended March 31,
	2016		2015		2014
Severance and benefits	$	2,293	$	406	$	6,139
Facilities	1,713		1,250		4,303
Other	—		10		772
	$	4,006	$	1,666	$	11,214

Fiscal 2016

Restructuring charges in fiscal 2016 were largely due to $2.3 million of severance and benefits costs primarily from the Fiscal 2016 Restructuring Plan. Additionally, we incurred $1.7 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.

Fiscal 2015

Restructuring charges in fiscal 2015 were primarily due to facilities costs of $1.3 million as a result of further consolidating our facilities in the U.S.

Fiscal 2014

Restructuring charges in fiscal 2014 were primarily due to strategic management decisions to outsource our manufacturing operations and further consolidate repair and service activities, inclusive of exiting manufacturing facilities. In addition, we had additional consolidation in research and development, sales and marketing and administrative activities and teams to align our workforce with our continuing operations plans. Severance and benefits charges of $6.1 million in fiscal 2014 were attributable to positions eliminated worldwide, with the majority of positions eliminated in the U.S. Facility restructuring charges of $4.3 million in fiscal 2014 were primarily due to accruing the remaining lease obligation for the vacated portion of our manufacturing facility in the U.S, reduced by estimated future sublease amounts. Other restructuring charges of $0.8 million were primarily due to charges related to cost of sales as a result of our manufacturing outsource decision.

The following tables show the activity and the estimated timing of future payouts for accrued restructuring (in thousands):



	Severance and benefits			Facilities			Other			Total
Balance as of March 31, 2013	$	2,711		$	2,045		$	—		$	4,756
Restructuring costs	7,522			4,392			772			12,686
Adjustments of prior estimates	(1,383		)	(89		)	—			(1,472		)
Cash payments	(7,276		)	(607		)	(702		)	(8,585		)
Other non-cash	—			983			—			983
Balance as of March 31, 2014	1,574			6,724			70			8,368
Restructuring costs	749			1,680			13			2,442
Adjustments of prior estimates	(343		)	(430		)	(3		)	(776		)
Cash payments	(1,791		)	(3,617		)	(80		)	(5,488		)
Other non-cash	—			300			—			300
Balance as of March 31, 2015	189			4,657			—			4,846
Restructuring costs	2,266			656			—			2,922
Adjustments of prior estimates	27			1,057			—			1,084
Cash payments	(2,128		)	(4,087		)	—			(6,215		)
Other non-cash	—			100			—			100
Balance as of March 31, 2016	$	354		$	2,383		$	—		$	2,737



Estimated timing of future payouts:	Severance and benefits		Facilities		Total
Fiscal 2017	$	220	$	1,401	$	1,621
Fiscal 2018 to 2022	134		982		1,116
	$	354	$	2,383	$	2,737

Facility restructuring accruals will be paid in accordance with the respective facility lease terms and amounts above are net of estimated sublease amounts.