Quantum Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

RESTRUCTURING CHARGES

RESTRUCTURING CHARGES

9 Months Ended

Dec. 31, 2016

Restructuring and Related Activities [Abstract]

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 types of restructuring expense for the three and nine months ended December 31, 2016 and December 31, 2015 were (in thousands):



	Three Months Ended					Nine Months Ended
	December 31, 2016			December 31, 2015		December 31, 2016		December 31, 2015
Severance and benefits	$	(13	)	$	1,685	$	1,437	$	1,912
Facilities	(92		)	210		525		628
Total	$	(105	)	$	1,895	$	1,962	$	2,540

For the third quarter of fiscal 2017, restructuring benefits were primarily due to a change in estimate of sublease in one of our facilities in the U.S. For the first nine months of fiscal 2017, restructuring charges were primarily due to $1.5 million of severance and benefits costs incurred as a result of the Fiscal 2017 April Restructuring Plan. Additionally, we approved a plan to vacate certain leased space in the U.S. primarily used for administration and research and development in the first quarter of fiscal 2017 and recorded $0.2 million of restructuring charges related to facilities costs in the first nine months of fiscal 2017.

For the third quarter and first nine months of fiscal 2016, restructuring charges were largely due to $1.7 million of severance and benefits costs incurred as a result of the Fiscal 2016 Restructuring Plan. Additionally, for the first nine months of fiscal 2016, we incurred restructuring charges related to facilities costs as a result of further consolidating our facilities in the U.S.

Accrued Restructuring

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




	Three Months Ended December 31, 2015									Three Months Ended December 31, 2016
	Severance and Benefits			Facilities			Total			Severance and Benefits			Facilities			Total
Beginning balance	$	257		$	2,572		$	2,829		$	140		$	2,378		$	2,518
Restructuring costs	1,690			210			1,900			—			(92		)	(92		)
Adjustment of prior estimates	(5		)	—			(5		)	(13		)	—			(13		)
Cash payments	(1,171		)	(1,022		)	(2,193		)	(1		)	(619		)	(620		)
Other non-cash	—			57			57			—			82			82
Ending balance	$	771		$	1,817		$	2,588		$	126		$	1,749		$	1,875



	Nine Months Ended December 31, 2015									Nine Months Ended December 31, 2016
	Severance and Benefits			Facilities			Total			Severance and Benefits			Facilities			Total
Beginning balance	$	189		$	4,657		$	4,846		$	354		$	2,383		$	2,737
Restructuring costs	1,913			604			2,517			1,489			388			1,877
Adjustment of prior estimates	(1		)	24			23			(52		)	137			85
Cash payments	(1,330		)	(3,568		)	(4,898		)	(1,665		)	(1,283		)	(2,948		)
Other non-cash	—			100			100			—			124			124
Ending balance	$	771		$	1,817		$	2,588		$	126		$	1,749		$	1,875



	As of December 31, 2016
	Severance and Benefits		Facilities		Total
Estimated timing of future payouts:
Next twelve months	$	126	$	1,179	$	1,305
January 2018 through December 2021	—		570		570
	$	126	$	1,749	$	1,875

Facility restructuring accruals will be paid in accordance with the respective facility lease terms, partially offset by the estimated sublease amounts to be received over the course of the facility lease terms.