Quarterly Revenues Outpace Sequential Growth of Large Networking
Peers and Increase 31 Percent Year-Over-Year
SAN JOSE, Calif.--(BUSINESS WIRE)--Nov. 23, 2009--
Brocade® (NASDAQ:BRCD) today reported
financial results for its fourth fiscal quarter and full fiscal year
ended October 31, 2009. Brocade’s quarterly revenues increased 31
percent year-over-year to $521.8 million and annual revenues increased
33 percent year-over-year to over $1.95 billion.
“Fiscal 2009 was a transformational year as Brocade became one of only
two end-to-end networking solutions providers in the industry,” said
Michael Klayko, CEO of Brocade. “Brocade also delivered exceptionally
strong year-over-year revenue growth and increased its account
penetration in the Ethernet networking market while growing share in the
storage networking market.”
Klayko continued, “In addition, Q4 saw tremendous momentum as we
exceeded the Street’s consensus non-GAAP EPS estimates for the
seventeenth consecutive quarter, delivered the fastest sequential
revenue growth of any large networking vendor, and generated strong cash
flows. Looking at 2010, we expect to continue our momentum as we execute
our strategy of delivering the highest levels of performance, quality,
innovation and choice to the IT market.”
Brocade management has posted prepared comments and slides on its Fiscal
Q4 and 2009 results and Fiscal 2010 outlook at www.BRCD.com
in addition to this press release. Brocade will host a live webcast
conference call to answer questions from investors and analysts at 5:00
a.m. Pacific time on November 24. Questions may be also submitted in
advance to ir@brocade.com.
Other Q4 product, customer, and partner announcements are available at http://newsroom.brocade.com/.
Financial Highlights and Additional
Financial Information
-
Fiscal year 2009 revenue was $1,952.9 million, increasing 33% over
fiscal year 2008.
-
Q4 revenue was $521.8 million, increasing 31% year-over-year and 6%
sequentially.
-
Q4 total Storage Area Networking (SAN) port shipments were
approximately 1.0 million.
-
Q4 SAN Average Selling Price (ASP) declines were in the low single
digits.
-
Q4 effective GAAP tax rate was (24.9)%; non-GAAP effective tax-rate
was 25.3%.
-
Q4 Adjusted EBITDA was $130.6 million, increasing from $119.3 million
in Q3.
-
Q4 non-GAAP operating margin was 22.7%, increasing from 20.3% in Q3.
|
|
|
|
|
|
|
|
|
|
|
Q4 2009
|
|
Q3 2009
|
|
Q4 2008
|
|
Revenue
|
|
$521.8 M
|
|
$493.3 M
|
|
$398.5 M
|
|
GAAP net income (loss)
|
|
$33.6 M
|
|
$(21.0) M
|
|
$35.6 M
|
|
Non-GAAP net income
|
|
$73.4 M
|
|
$55.4 M
|
|
$75.8 M
|
|
GAAP EPS – diluted
|
|
$0.07
|
|
($0.05)
|
|
$0.09
|
|
Non-GAAP EPS – diluted
|
|
$0.15
|
|
$0.12
|
|
$0.20
|
|
Non-GAAP gross margin
|
|
59.5%
|
|
58.2%
|
|
64.1%
|
|
Non-GAAP operating margin
|
|
22.7%
|
|
20.3%
|
|
26.2%
|
|
Adjusted EBITDA (4)
|
|
$130.6 M
|
|
$119.3 M
|
|
$142.1 M
|
|
Cash provided by operations
|
|
$155.3 M
|
|
$16.6 M
|
|
$168.6 M
|
|
|
|
|
|
|
|
|
|
Non-GAAP financial measures should be considered in addition to
results prepared in accordance with GAAP, but should not be
considered a substitute for, or superior to, GAAP results. A
detailed reconciliation between GAAP and non-GAAP information is
contained in the tables included herein.
|
|
|
|
As a % of total revenues
|
|
Q4 2009 (3)
|
|
Q3 2009
|
|
Q4 2008
|
|
OEM revenues
|
|
65%
|
|
63%
|
|
88%
|
|
Channel/Direct revenues
|
|
35%
|
|
37%
|
|
12%
|
|
10% or greater customer revenues
|
|
46%
|
|
46%
|
|
65%
|
|
Domestic revenues (1)
|
|
63%
|
|
64%
|
|
64%
|
|
International revenues (1)
|
|
37%
|
|
36%
|
|
36%
|
|
Data Storage Revenue
|
|
58%
|
|
58%
|
|
84%
|
|
Ethernet Products Revenue
|
|
25%
|
|
24%
|
|
0%
|
|
Stackable % of Ethernet Revenues (2)
|
|
30%
|
|
26%
|
|
28%
|
|
Chassis % of Ethernet Revenues (2)
|
|
70%
|
|
74%
|
|
72%
|
|
Enterprise % of Ethernet Revenues (2)
|
|
86%
|
|
83%
|
|
73%
|
|
Service Providers % of Ethernet Revenues (2)
|
|
14%
|
|
17%
|
|
27%
|
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Global Services Revenue
|
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17%
|
|
18%
|
|
16%
|
|
|
|
|
|
|
|
|
|
|
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Q4 2009
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Q3 2009
|
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Q4 2008
|
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Cash, cash equivalents and investments
|
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$338.9 M
|
|
$249.9 M
|
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$820.1 M
|
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Deferred revenues
|
|
$235.4 M
|
|
$230.1 M
|
|
$141.2 M
|
|
Capital expenditures – non-campus related
|
|
$ 16.7 M
|
|
$ 20.0 M
|
|
$ 13.9 M
|
|
Capital expenditures – campus related
|
|
$ 27.8 M
|
|
$ 24.8 M
|
|
$ 4.7 M
|
|
Total debt, net of discount
|
|
$1,085 M
|
|
$1,139 M
|
|
$1,225 M
|
|
Days sales outstanding
|
|
52 days
|
|
56 days
|
|
36 days
|
|
Employees at end of period
|
|
4,070
|
|
3,866
|
|
2,834
|
|
|
|
|
|
|
|
|
|
1) Based on Brocade estimates of adjustment for partners taking
delivery of internationally bound shipments in the United States,
end-user demand was 53% domestic and 47% international.
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2) On an “As If” combined Brocade basis with respect to Q4 2008.
|
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3) Q4 2009 is the third full quarter of combined operations post
acquisition of Foundry.
|
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4) EBITDA adjusted for non cash expenses and legal fees and
recoveries related to indemnification obligations.
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Non-GAAP Financial Measures
This press release contains non-GAAP financial measures. In evaluating
Brocade’s performance, management uses certain non-GAAP financial
measures to supplement consolidated financial statements prepared under
GAAP.
Management believes that non-GAAP net income and other non-GAAP
financial measures used in this press release allow management to gain a
better understanding of Brocade’s comparative operating performance from
period to period and to its competitors' operating results. Management
also believes these non-GAAP financial measures help indicate Brocade’s
baseline performance before gains, losses or charges that are considered
by management to be outside ongoing operating results. Accordingly,
management uses these non-GAAP financial measures for planning and
forecasting of future periods and in making decisions regarding
operations performance and the allocation of resources. Management
believes these non-GAAP financial measures, when read in conjunction
with Brocade’s GAAP financials, provide useful information to investors
by offering:
-
the ability to make more meaningful period-to-period comparisons of
Brocade’s ongoing operating results;
-
the ability to better identify trends in Brocade’s underlying business
and perform related trend analysis;
-
a better understanding of how management plans and measures Brocade’s
underlying business; and
-
an easier way to compare Brocade’s most recent results of operations
against investor and analyst financial models.
Management excludes certain gains or losses and benefits or costs in
determining non-GAAP net income that are the result of infrequent events
or arise outside the ordinary course of our continuing operations.
Management believes that it is appropriate to evaluate Brocade’s
operating performance by excluding those items that are not indicative
of ongoing operating results or limit comparability. Such items include:
(i) legal fees and recoveries associated with indemnification
obligations to former directors and officers and other related costs,
net, (ii) provision for class action lawsuit, (iii) acquisition and
integration costs (in connection with the Foundry acquisition), (iv)
in-process research and development charges (in connection with the
Foundry acquisition), (v) loss on sale of investments, and (vi) loss on
impairment of portfolio investments.
Management also excludes the following non-cash charges in determining
non-GAAP net income: (i) stock-based compensation expense, (ii)
amortization of purchased intangible assets, (iii) costs/benefits
associated with restructuring costs and facilities lease losses, and
(iv) goodwill and acquisition-related intangible assets impairment.
Because of varying available valuation methodologies, subjective
assumptions and the variety of award types, management believes that the
exclusion of stock-based compensation allows for more accurate
comparisons of our operating results to our peer companies. Management
believes that the expense associated with the amortization of
acquisition-related intangible assets is appropriate to be excluded
because a significant portion of the purchase price for acquisitions may
be allocated to intangible assets that have short lives and exclusion of
the amortization expense allows comparisons of operating results that
are consistent over time for Brocade’s newly acquired and long-held
businesses. Management also believes that the expense associated with
the goodwill and acquisition-related intangible assets impairment is
appropriate to be excluded because we do not believe that this charge is
indicative of future operating results and we believe that investors
benefit from an understanding of our operating results without giving
effect to it.
Finally, management believes that it is appropriate to exclude the tax
effects of the items noted above in order to present a more meaningful
measure of non-GAAP net income.
Limitations. These non-GAAP financial measures have limitations,
however, because they do not include all items of income and expense
that impact the Company. Management compensates for these limitations by
also considering Brocade’s GAAP results. The non-GAAP financial measures
that Brocade uses are not prepared in accordance with, and should not be
considered an alternative to measurements required by GAAP, such as
operating income, net income (loss) and net income (loss) per share, and
should not be considered measurements of Brocade’s liquidity. The
presentation of this additional information is not meant to be
considered in isolation or as a substitute for the most directly
comparable GAAP measures. In addition, these non-GAAP financial measures
may not be comparable to similar measurements reported by other
companies.
Cautionary Statement
This press release contains statements that are forward-looking in
nature, including statements regarding Brocade’s market positioning and
opportunities, including potential benefits of new or expanded partner
relationships, and the integration of the Foundry acquisition. These
statements are based on current expectations on the date of this press
release and involve a number of risks and uncertainties which may cause
actual results to differ significantly from such estimates. The risks
include, but are not limited to, the effect of changes in IT spending
levels, market competition and changes in the industry, Brocade’s
ability to successfully introduce new products and services on a timely
basis, and Brocade’s ability to manage its business effectively in a
rapidly evolving market. Certain of these and other risks are set forth
in more detail in "Item 1A. Risk Factors" in Brocade's Quarterly Report
on Form 10-Q for the fiscal quarter ended August 1, 2009. Brocade does
not assume any obligation to update or revise any such forward-looking
statements, whether as the result of new developments or otherwise.
About Brocade
Brocade® (NASDAQ:BRCD) develops extraordinary networking
solutions that enable today’s complex, data-intensive businesses to
optimize information connectivity and maximize the business value of
their data. For more information, visit www.brocade.com.
Brocade, the B-wing symbol, BigIron, DCX, Fabric OS, FastIron,
IronPoint, IronShield, IronView, IronWare, JetCore, NetIron, SecureIron,
ServerIron, StorageX and TurboIron are registered trademarks, and DCFM,
Extraordinary Networks and SAN Health are trademarks of Brocade
Communications Systems, Inc., in the United States and/or in other
countries. All other brands, products or service names are or may be
trademarks or service marks of, and are used to identify, products or
services of their respective owners.
© 2009 Brocade Communications Systems, Inc. All Rights Reserved.
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BROCADE COMMUNICATIONS SYSTEMS, INC.
|
|
GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(in thousands, except per share amounts)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
|
October 31,
|
|
October 25,
|
|
October 31,
|
|
October 25,
|
|
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
|
|
|
|
|
|
|
|
Product
|
|
$
|
432,394
|
|
|
$
|
335,403
|
|
|
$
|
1,615,511
|
|
|
$
|
1,230,737
|
|
|
Services
|
|
|
89,361
|
|
|
|
63,095
|
|
|
|
337,415
|
|
|
|
236,200
|
|
|
Total net revenues
|
|
|
521,755
|
|
|
|
398,498
|
|
|
|
1,952,926
|
|
|
|
1,466,937
|
|
|
Cost of revenues
|
|
|
|
|
|
|
|
|
|
Product
|
|
|
203,442
|
|
|
|
114,374
|
|
|
|
739,354
|
|
|
|
459,850
|
|
|
Services
|
|
|
47,466
|
|
|
|
38,987
|
|
|
|
180,072
|
|
|
|
146,715
|
|
|
Total cost of revenues
|
|
|
250,908
|
|
|
|
153,361
|
|
|
|
919,426
|
|
|
|
606,565
|
|
|
Gross margin
|
|
|
270,847
|
|
|
|
245,137
|
|
|
|
1,033,500
|
|
|
|
860,372
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
95,346
|
|
|
|
70,867
|
|
|
|
354,809
|
|
|
|
255,571
|
|
|
Sales and marketing
|
|
|
103,451
|
|
|
|
71,112
|
|
|
|
385,155
|
|
|
|
274,311
|
|
|
General and administrative
|
|
|
22,209
|
|
|
|
14,912
|
|
|
|
84,962
|
|
|
|
58,172
|
|
|
Legal fees and recoveries associated with indemnification
obligations and other related costs, net
|
|
|
(14,612
|
)
|
|
|
26,274
|
|
|
|
23,941
|
|
|
|
48,673
|
|
|
Provision for class action lawsuit
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
160,000
|
|
|
Amortization of intangible assets
|
|
|
17,052
|
|
|
|
7,820
|
|
|
|
68,718
|
|
|
|
31,484
|
|
|
Acquisition and integration costs
|
|
|
333
|
|
|
|
682
|
|
|
|
5,127
|
|
|
|
682
|
|
|
Restructuring costs and facilities lease loss, net
|
|
|
—
|
|
|
|
3,208
|
|
|
|
2,329
|
|
|
|
2,731
|
|
|
In-process research and development
|
|
|
—
|
|
|
|
—
|
|
|
|
26,900
|
|
|
|
—
|
|
|
Goodwill and acquisition-related intangible assets impairment
|
|
|
—
|
|
|
|
—
|
|
|
|
53,306
|
|
|
|
—
|
|
|
Total operating expenses
|
|
|
223,779
|
|
|
|
194,875
|
|
|
|
1,005,247
|
|
|
|
831,624
|
|
|
Income from operations
|
|
|
47,068
|
|
|
|
50,262
|
|
|
|
28,253
|
|
|
|
28,748
|
|
|
Interest and other income/(expense), net
|
|
|
530
|
|
|
|
(796
|
)
|
|
|
(2,382
|
)
|
|
|
26,867
|
|
|
Interest expense
|
|
|
(20,681
|
)
|
|
|
(5,684
|
)
|
|
|
(91,281
|
)
|
|
|
(10,068
|
)
|
|
(Gain)/loss on sale of investments, net
|
|
|
(27
|
)
|
|
|
111
|
|
|
|
(602
|
)
|
|
|
(6,874
|
)
|
|
Loss on impairment of portfolio investments
|
|
|
—
|
|
|
|
(8,751
|
)
|
|
|
—
|
|
|
|
(8,751
|
)
|
|
Income/(loss) before provision/(benefit) for income taxes
|
|
|
26,890
|
|
|
|
35,142
|
|
|
|
(66,012
|
)
|
|
|
29,922
|
|
|
Income tax provision/(benefit)
|
|
|
(6,707
|
)
|
|
|
(439
|
)
|
|
|
10,573
|
|
|
|
(137,148
|
)
|
|
Net income/(loss)
|
|
$
|
33,597
|
|
|
$
|
35,581
|
|
|
$
|
(76,585
|
)
|
|
$
|
167,070
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss) per share – Basic
|
|
$
|
0.08
|
|
|
$
|
0.10
|
|
|
$
|
(0.19
|
)
|
|
$
|
0.45
|
|
|
Net income/(loss) per share – Diluted
|
|
$
|
0.07
|
|
|
$
|
0.09
|
|
|
$
|
(0.19
|
)
|
|
$
|
0.43
|
|
|
Shares used in per share calculation – Basic
|
|
|
425,530
|
|
|
|
371,845
|
|
|
|
398,948
|
|
|
|
375,303
|
|
|
Shares used in per share calculation – Diluted
|
|
|
492,174
|
|
|
|
389,477
|
|
|
|
398,948
|
|
|
|
394,703
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BROCADE COMMUNICATIONS SYSTEMS, INC.
|
|
|
|
|
|
GAAP CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
(in thousands) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 31,
|
|
October 25,
|
|
|
|
2009
|
|
2008
|
|
Assets
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
334,193
|
|
|
$
|
453,884
|
|
|
Short-term investments
|
|
|
4,678
|
|
|
|
152,741
|
|
|
Restricted cash
|
|
|
12,502
|
|
|
|
—
|
|
|
Total cash, cash equivalents, short-term investments and restricted
cash
|
|
|
351,373
|
|
|
|
606,625
|
|
|
Accounts receivable, net
|
|
|
297,819
|
|
|
|
158,935
|
|
|
Inventories
|
|
|
72,152
|
|
|
|
21,362
|
|
|
Deferred tax assets
|
|
|
84,629
|
|
|
|
104,705
|
|
|
Prepaid expenses and other current assets
|
|
|
79,302
|
|
|
|
49,931
|
|
|
Total current assets
|
|
|
885,275
|
|
|
|
941,558
|
|
|
|
|
|
|
|
|
Long-term marketable equity securities
|
|
|
—
|
|
|
|
177,380
|
|
|
Long-term investments
|
|
|
—
|
|
|
|
36,120
|
|
|
Restricted cash
|
|
|
—
|
|
|
|
1,075,079
|
|
|
Property and equipment, net
|
|
|
442,408
|
|
|
|
313,379
|
|
|
Goodwill
|
|
|
1,648,217
|
|
|
|
268,977
|
|
|
Intangible assets, net
|
|
|
470,872
|
|
|
|
220,567
|
|
|
Non-current deferred tax assets
|
|
|
185,713
|
|
|
|
227,795
|
|
|
Other assets
|
|
|
28,218
|
|
|
|
37,793
|
|
|
Total assets
|
|
$
|
3,660,703
|
|
|
$
|
3,298,648
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
|
$
|
181,249
|
|
|
$
|
167,660
|
|
|
Accrued employee compensation
|
|
|
160,832
|
|
|
|
107,994
|
|
|
Deferred revenue
|
|
|
174,870
|
|
|
|
103,372
|
|
|
Current liabilities associated with facilities lease losses
|
|
|
10,769
|
|
|
|
13,422
|
|
|
Liability associated with class action lawsuit
|
|
|
—
|
|
|
|
160,000
|
|
|
Revolving credit facility
|
|
|
14,050
|
|
|
|
—
|
|
|
Current portion of long-term debt
|
|
|
38,822
|
|
|
|
43,606
|
|
|
Convertible subordinated debt
|
|
|
171,822
|
|
|
|
—
|
|
|
Purchase commitments
|
|
|
17,011
|
|
|
|
17,332
|
|
|
Other accrued liabilities
|
|
|
88,252
|
|
|
|
88,472
|
|
|
Total current liabilities
|
|
|
857,677
|
|
|
|
701,858
|
|
|
|
|
|
|
|
|
Long-term debt, net of current portion
|
|
|
860,114
|
|
|
|
1,011,399
|
|
|
Non-current convertible subordinated debt
|
|
|
—
|
|
|
|
169,660
|
|
|
Non-current liabilities associated with facilities lease losses
|
|
|
10,150
|
|
|
|
15,007
|
|
|
Non-current deferred revenue
|
|
|
60,575
|
|
|
|
37,869
|
|
|
Non-current income tax liability
|
|
|
92,276
|
|
|
|
67,497
|
|
|
Other non-current liabilities
|
|
|
15,114
|
|
|
|
13,118
|
|
|
|
|
|
|
|
|
Stockholders’ equity
|
|
|
|
|
|
Common stock
|
|
|
1,872,482
|
|
|
|
1,393,299
|
|
|
Accumulated other comprehensive loss
|
|
|
(5,920
|
)
|
|
|
(85,877
|
)
|
|
Accumulated deficit
|
|
|
(101,765
|
)
|
|
|
(25,182
|
)
|
|
Total stockholders’ equity
|
|
|
1,764,797
|
|
|
|
1,282,240
|
|
|
Total liabilities and stockholders’ equity
|
|
$
|
3,660,703
|
|
|
$
|
3,298,648
|
|
|
|
|
BROCADE COMMUNICATIONS SYSTEMS, INC.
|
|
GAAP CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
For the Three Months Ended October 31, 2009 and October 25, 2008
|
|
(in thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
October 31,
|
|
October 25,
|
|
|
|
2009
|
|
2008
|
|
Cash flows from operating activities:
|
|
|
|
|
|
Net income
|
|
$
|
33,597
|
|
|
$
|
35,581
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
Excess tax benefit from employee stock plans
|
|
|
(192
|
)
|
|
|
(13,641
|
)
|
|
Depreciation and amortization
|
|
|
51,486
|
|
|
|
30,533
|
|
|
Loss on disposal of property and equipment
|
|
|
110
|
|
|
|
1,853
|
|
|
Amortization of debt issuance costs
|
|
|
4,182
|
|
|
|
319
|
|
|
Net losses on investments and marketable equity securities
|
|
|
27
|
|
|
|
8,839
|
|
|
Provision for doubtful accounts receivable and sales allowances
|
|
|
3,148
|
|
|
|
1,700
|
|
|
Non-cash compensation expense
|
|
|
35,714
|
|
|
|
7,515
|
|
|
Capitalization of interest cost
|
|
|
(2,737
|
)
|
|
|
(970
|
)
|
|
Non-cash facilities lease loss benefit
|
|
|
—
|
|
|
|
(105
|
)
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
Restricted cash
|
|
|
(12,502
|
)
|
|
|
—
|
|
|
Accounts receivable
|
|
|
821
|
|
|
|
13,386
|
|
|
Inventories
|
|
|
(18,560
|
)
|
|
|
(6,993
|
)
|
|
Prepaid expenses and other assets
|
|
|
(2,716
|
)
|
|
|
44,232
|
|
|
Deferred tax assets
|
|
|
2,440
|
|
|
|
(48,296
|
)
|
|
Accounts payable
|
|
|
30,815
|
|
|
|
39,353
|
|
|
Accrued employee compensation
|
|
|
27,425
|
|
|
|
33,768
|
|
|
Deferred revenue
|
|
|
5,376
|
|
|
|
(7,486
|
)
|
|
Other accrued liabilities
|
|
|
(118
|
)
|
|
|
31,308
|
|
|
Liabilities associated with facilities lease losses
|
|
|
(3,004
|
)
|
|
|
(2,325
|
)
|
|
Net cash provided by operating activities
|
|
|
155,312
|
|
|
|
168,571
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(44,491
|
)
|
|
|
(18,603
|
)
|
|
Purchases of short-term investments
|
|
|
(22
|
)
|
|
|
(2,053
|
)
|
|
Purchases of marketable equity securities
|
|
|
—
|
|
|
|
(248,431
|
)
|
|
Proceeds from maturities and sale of short-term investments
|
|
|
1,056
|
|
|
|
107,547
|
|
|
Purchases of non-marketable minority equity investments
|
|
|
—
|
|
|
|
(1,436
|
)
|
|
(Increase) decrease in restricted cash
|
|
|
—
|
|
|
|
(1,075,079
|
)
|
|
Cash paid in connection with pending acquisition of Foundry
Networks, Inc.
|
|
|
—
|
|
|
|
(1,000
|
)
|
|
Net cash used in investing activities
|
|
|
(43,457
|
)
|
|
|
(1,239,055
|
)
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
Payment of principal related to the term loan
|
|
|
(57,881
|
)
|
|
|
—
|
|
|
Common stock repurchases
|
|
|
—
|
|
|
|
—
|
|
|
Excess tax benefit from employee stock plans
|
|
|
192
|
|
|
|
13,641
|
|
|
Proceeds from issuance of common stock, net
|
|
|
35,375
|
|
|
|
615
|
|
|
Proceeds from term loan
|
|
|
—
|
|
|
|
1,054,425
|
|
|
Net cash provided by (used in) financing activities
|
|
|
(22,314
|
)
|
|
|
1,068,681
|
|
|
|
|
|
|
|
|
Effect of exchange rate fluctuations on cash and cash equivalents
|
|
|
473
|
|
|
|
(3,712
|
)
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
90,014
|
|
|
|
(5,515
|
)
|
|
Cash and cash equivalents, beginning of period
|
|
|
244,179
|
|
|
|
459,399
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
334,193
|
|
|
$
|
453,884
|
|
|
|
|
|
|
|
|
|
|
|
|
BROCADE COMMUNICATIONS SYSTEMS, INC.
|
|
GAAP CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
For the Twelve Months Ended October 31, 2009 and October 25,
2008
|
|
(in thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
Twelve Months Ended
|
|
|
|
October 31,
|
|
October 25,
|
|
|
|
2009
|
|
2008
|
|
Cash flows from operating activities:
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(76,585
|
)
|
|
$
|
167,070
|
|
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
|
|
|
|
|
|
Release of valuation allowance
|
|
|
—
|
|
|
|
(185,176
|
)
|
|
Excess tax benefit from employee stock plans
|
|
|
794
|
|
|
|
(16,146
|
)
|
|
Depreciation and amortization
|
|
|
196,573
|
|
|
|
120,178
|
|
|
Loss on disposal of property and equipment
|
|
|
1,478
|
|
|
|
3,181
|
|
|
Amortization of debt issuance costs
|
|
|
16,038
|
|
|
|
319
|
|
|
Net losses on investments and marketable equity securities
|
|
|
597
|
|
|
|
15,327
|
|
|
Provision for doubtful accounts receivable and sales allowances
|
|
|
12,681
|
|
|
|
6,614
|
|
|
Non-cash compensation expense
|
|
|
137,219
|
|
|
|
39,036
|
|
|
Capitalization of interest cost
|
|
|
(9,093
|
)
|
|
|
(970
|
)
|
|
In-process research and development
|
|
|
26,900
|
|
|
|
—
|
|
|
Non-cash facilities lease loss benefit
|
|
|
(339
|
)
|
|
|
(582
|
)
|
|
Asset impairment charge
|
|
|
53,306
|
|
|
|
—
|
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
Restricted cash
|
|
|
(12,502
|
)
|
|
|
—
|
|
|
Accounts receivable
|
|
|
(74,965
|
)
|
|
|
17,143
|
|
|
Inventories
|
|
|
25,338
|
|
|
|
(3,345
|
)
|
|
Prepaid expenses and other assets
|
|
|
4,213
|
|
|
|
25,200
|
|
|
Deferred tax assets
|
|
|
3,091
|
|
|
|
(58,104
|
)
|
|
Accounts payable
|
|
|
(11,052
|
)
|
|
|
40,550
|
|
|
Accrued employee compensation
|
|
|
(28,685
|
)
|
|
|
30,242
|
|
|
Deferred revenue
|
|
|
26,454
|
|
|
|
10,185
|
|
|
Other accrued liabilities
|
|
|
(5,543
|
)
|
|
|
77,311
|
|
|
Liabilities associated with facilities lease losses
|
|
|
(10,394
|
)
|
|
|
(9,538
|
)
|
|
Liability associated with class action lawsuit
|
|
|
(160,000
|
)
|
|
|
160,000
|
|
|
Net cash provided by operating activities
|
|
|
115,524
|
|
|
|
438,495
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(162,770
|
)
|
|
|
(144,071
|
)
|
|
Purchases of short-term investments
|
|
|
(138
|
)
|
|
|
(169,016
|
)
|
|
Purchases of marketable equity securities
|
|
|
—
|
|
|
|
(248,431
|
)
|
|
Proceeds from sale of marketable equity securities and equity
investments
|
|
|
—
|
|
|
|
9,926
|
|
|
Proceeds from maturities and sale of short-term investments
|
|
|
155,986
|
|
|
|
448,385
|
|
|
Purchases of non-marketable minority equity investments
|
|
|
—
|
|
|
|
(1,436
|
)
|
|
Purchases of long-term investments
|
|
|
—
|
|
|
|
(37,731
|
)
|
|
Proceeds from maturities and sale of long-term investments
|
|
|
30,173
|
|
|
|
22,483
|
|
|
(Increase) decrease in restricted cash
|
|
|
1,075,079
|
|
|
|
(1,075,079
|
)
|
|
Cash paid in connection with pending acquisition of Foundry
Networks, Inc.
|
|
|
—
|
|
|
|
(1,000
|
)
|
|
Net cash paid in connection with acquisitions
|
|
|
(1,297,482
|
)
|
|
|
(43,554
|
)
|
|
Net cash used in investing activities
|
|
|
(199,152
|
)
|
|
|
(1,239,524
|
)
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
Payment of senior underwriting fees related to the term loan
|
|
|
(30,525
|
)
|
|
|
—
|
|
|
Payment of principal related to the term loan
|
|
|
(166,022
|
)
|
|
|
—
|
|
|
Common stock repurchases
|
|
|
—
|
|
|
|
(168,293
|
)
|
|
Excess tax benefit from employee stock plans
|
|
|
(794
|
)
|
|
|
16,146
|
|
|
Proceeds from issuance of common stock, net
|
|
|
145,655
|
|
|
|
42,418
|
|
|
Proceeds from term loan
|
|
|
—
|
|
|
|
1,054,425
|
|
|
Proceeds from revolving credit facility
|
|
|
14,050
|
|
|
|
—
|
|
|
Net cash provided by (used in) financing activities
|
|
|
(37,636
|
)
|
|
|
944,696
|
|
|
|
|
|
|
|
|
Effect of exchange rate fluctuations on cash and cash equivalents
|
|
|
1,573
|
|
|
|
(5,538
|
)
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
(119,691
|
)
|
|
|
138,129
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
453,884
|
|
|
|
315,755
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
334,193
|
|
|
$
|
453,884
|
|
|
|
|
BROCADE COMMUNICATIONS SYSTEMS, INC.
|
|
RECONCILIATION BETWEEN GAAP AND NON-GAAP NET INCOME
|
|
(in thousands, except per share amounts)
|
|
(unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
October 31,
|
|
October 25,
|
|
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
Net income on a GAAP basis
|
|
$
|
33,597
|
|
|
$
|
35,581
|
|
|
Adjustments:
|
|
|
|
|
|
Stock-based compensation expense included in cost of revenues
|
|
|
7,062
|
|
|
|
1,616
|
|
|
Amortization of intangible assets expense included in cost of
revenues
|
|
|
17,898
|
|
|
|
8,780
|
|
|
Provision for certain pre-acquisition litigation
|
|
|
14,335
|
|
|
|
—
|
|
|
Legal fees associated with certain pre-acquisition litigation
|
|
|
546
|
|
|
|
20
|
|
|
Total gross margin adjustments
|
|
|
39,841
|
|
|
|
10,416
|
|
|
Legal fees and recoveries associated with indemnification
obligations and other related costs, net
|
|
|
(14,612
|
)
|
|
|
26,274
|
|
|
Stock-based compensation expense included in research and development
|
|
|
10,251
|
|
|
|
2,385
|
|
|
Stock-based compensation expense included in sales and marketing
|
|
|
12,934
|
|
|
|
2,325
|
|
|
Stock-based compensation expense included in general and
administrative
|
|
|
5,468
|
|
|
|
1,189
|
|
|
Amortization of intangible assets expense included in operating
expenses
|
|
|
17,052
|
|
|
|
7,820
|
|
|
Acquisition and integration costs
|
|
|
333
|
|
|
|
682
|
|
|
Restructuring costs and facilities lease loss benefit, net
|
|
|
—
|
|
|
|
3,208
|
|
|
Total operating expense adjustments
|
|
|
31,426
|
|
|
|
43,883
|
|
|
Total operating income adjustments
|
|
|
71,267
|
|
|
|
54,299
|
|
|
Loss on impairment of portfolio investments
|
|
|
—
|
|
|
|
8,751
|
|
|
Acquisition-related financing charges
|
|
|
—
|
|
|
|
4,736
|
|
|
Income tax effect of adjustments
|
|
|
(31,502
|
)
|
|
|
(27,602
|
)
|
|
Non-GAAP net income
|
|
$
|
73,362
|
|
|
$
|
75,765
|
|
|
Non-GAAP net income per share – basic
|
|
$
|
0.17
|
|
|
$
|
0.20
|
|
|
Non-GAAP net income per share – diluted
|
|
$
|
0.15
|
|
|
$
|
0.20
|
|
|
Shares used in non-GAAP per share calculation – basic
|
|
|
425,530
|
|
|
|
371,845
|
|
|
Shares used in non-GAAP per share calculation – diluted
|
|
|
492,174
|
|
|
|
389,477
|
|
|
|
|
|
|
|
|
|
|
|
|
See explanation of non-GAAP information included herein.
|
|
|
|
|
|
|
|
|
|
|
|
BROCADE COMMUNICATIONS SYSTEMS, INC.
|
|
RECONCILIATION BETWEEN GAAP AND NON-GAAP NET INCOME (LOSS)
|
|
(in thousands, except per share amounts)
|
|
(unaudited)
|
|
|
|
|
|
|
|
Twelve Months Ended
|
|
|
|
October 31,
|
|
October 25,
|
|
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
Net income (loss) on a GAAP basis
|
|
$
|
(76,585
|
)
|
|
$
|
167,070
|
|
|
Adjustments:
|
|
|
|
|
|
Stock-based compensation expense included in cost of revenues
|
|
|
25,654
|
|
|
|
9,117
|
|
|
Amortization of intangible assets expense included in cost of
revenues
|
|
|
65,803
|
|
|
|
37,400
|
|
|
Provision for certain pre-acquisition litigation
|
|
|
14,335
|
|
|
|
—
|
|
|
Legal fees associated with certain pre-acquisition litigation
|
|
|
546
|
|
|
|
2,339
|
|
|
Total gross margin adjustments
|
|
|
106,338
|
|
|
|
48,856
|
|
|
Legal fees and recoveries associated with indemnification
obligations and other related costs, net
|
|
|
23,941
|
|
|
|
48,673
|
|
|
Provision for class action lawsuit
|
|
|
—
|
|
|
|
160,000
|
|
|
Stock-based compensation expense included in research and development
|
|
|
40,365
|
|
|
|
10,324
|
|
|
Stock-based compensation expense included in sales and marketing
|
|
|
48,820
|
|
|
|
10,652
|
|
|
Stock-based compensation expense included in general and
administrative
|
|
|
22,380
|
|
|
|
8,944
|
|
|
Amortization of intangible assets expense included in operating
expenses
|
|
|
68,718
|
|
|
|
31,484
|
|
|
Acquisition and integration costs
|
|
|
5,127
|
|
|
|
682
|
|
|
Restructuring costs and facilities lease losses (benefits), net
|
|
|
2,329
|
|
|
|
2,731
|
|
|
In-process research and development
|
|
|
26,900
|
|
|
|
—
|
|
|
Goodwill and acquisition-related intangible assets impairment
|
|
|
53,306
|
|
|
|
—
|
|
|
Total operating expense adjustments
|
|
|
291,886
|
|
|
|
273,490
|
|
|
Total operating income adjustments
|
|
|
398,224
|
|
|
|
322,346
|
|
|
Loss on sale of investments, net
|
|
|
—
|
|
|
|
6,004
|
|
|
Loss on impairment of portfolio investments
|
|
|
—
|
|
|
|
8,751
|
|
|
Acquisition-related financing charges
|
|
|
4,366
|
|
|
|
4,736
|
|
|
Income tax effect of adjustments
|
|
|
(86,586
|
)
|
|
|
(248,001
|
)
|
|
Non-GAAP net income
|
|
$
|
239,419
|
|
|
$
|
260,906
|
|
|
|
|
|
|
|
|
Non-GAAP net income per share – basic
|
|
$
|
0.60
|
|
|
$
|
0.70
|
|
|
Non-GAAP net income per share – diluted
|
|
$
|
0.53
|
|
|
$
|
0.67
|
|
|
Shares used in non-GAAP per share calculation – basic
|
|
|
398,948
|
|
|
|
375,303
|
|
|
Shares used in non-GAAP per share calculation – diluted
|
|
|
454,293
|
|
|
|
394,703
|
|
|
|
|
|
|
|
|
|
|
|
|
See explanation of non-GAAP information included herein.
|
Source: Brocade Communications Systems, Inc.
Brocade
Public Relations
John Noh, 408-333-5108
jnoh@brocade.com
Investor
Relations
Peter Ausnit, 408-333-4000
pausnit@brocade.com
|
