20.08.2009 20:05:00
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Brocade Reports Q3 FY 2009 Results
Brocade® (NASDAQ:BRCD) today reported financial results for its third fiscal quarter, which ended August 1, 2009. Brocade reported Q3 revenues of $493.3 million, reflecting 35 percent year-over-year growth.
Commenting on Brocade's third quarter financial results, Michael Klayko, Brocade CEO, said:
"We are very pleased with our financial performance which delivered a 35 percent year-over-year revenue growth and a healthy sequential increase in gross margins during a seasonally and economically challenging quarter. The traction Brocade has made in both new and existing partnerships, the opportunities we see in our core markets, combined with our continued product and technology innovation all demonstrate that we are executing on our well-defined strategy and make us optimistic for both the near- and long-term future.”
Recent Business Highlights
Partnership Announcements
- Brocade announced that it has expanded its strategic business alliance with Net One Systems, the largest independent network integrator in Japan, to help enable the two companies to better address high-growth, emerging opportunities in the data center and service provider networking segments in Japan, particularly in the areas of virtualization and cloud computing.
- Brocade announced that the Brocade 4 and 8 Gbps Fibre Channel (FC) host bus adapters (HBAs) have been successfully tested on the HP ProLiant server platform, and the HP StorageWorks Modular Storage Array (MSA) and Enterprise Virtual Array (EVA) disk storage platforms. The new Brocade 8000 Fibre Channel over Ethernet (FCoE) switch, which enables the consolidation of storage and IP networking ports at the server edge, will also be offered by HP to its customers.
- Brocade announced it had completed testing and interoperability qualification of its server connectivity solutions, or HBAs, by all leading storage manufacturers, including HP, EMC, IBM, Hitachi Data Systems, LSI Corporation and Xiotech.
- Brocade announced a global Alliance Partner Network channel program designed to attract storage and IP networking channel resellers with a more selective, profitable alternative to existing channel programs.
- Brocade announced two strategic North American distribution partners, Avnet Technology Solutions and Tech Data Corporation, to help expand its existing data center distribution network to enterprise IP networking products via channel reseller partners.
- Brocade announced a Server Connectivity Certification Program for Assured Compatibility of Brocade HBAs in Multi-Vendor, Heterogeneous Environments.
Product Introductions
-
Brocade introduced a number of new products and features at Interop
that span all layers of the network, reinforcing Brocade’s commitment
to continuous IP networking innovation. Specifically, Brocade
announced the:
- Brocade TurboIron® 24X 10 Gigabit Ethernet (GbE) top-of-rack switch
- Brocade ServerIron® ADX Series Application Delivery Controllers (ADCs)
- Brocade FastIron® CX Series of Power over Ethernet Plus (PoE+)-ready switches
- http://newsroom.brocade.com/article_display.cfm?article_id=876
Executive Leadership
- Brocade appointed Amanda Giddins as its new EMEA Channel Sales Director, further signifying Brocade’s commitment to drive business opportunities across the geography and bolster the channel.
Customer Wins
-
Brocade showcased several data center and enterprise IP networking
customer wins, including the San Diego Super Computer Center (SDSC),
Mizuno, a number of Independent Operating Companies (IOCs), Insight
Investment, Denit Hosting Solutions and Purewire.
- SDSC - http://newsroom.brocade.com/article_display.cfm?article_id=888
- Mizuno - http://newsroom.brocade.com/article_display.cfm?article_id=922
- IOCs - http://newsroom.brocade.com/article_display.cfm?article_id=932
- Insight Investment - http://newsroom.brocade.com/article_display.cfm?article_id=943
- Denit Hosting Solutions - http://newsroom.brocade.com/article_display.cfm?article_id=944
- Purewire - http://newsroom.brocade.com/article_display.cfm?article_id=950
Third Fiscal Quarter 2009 Financial Highlights and Additional Financial Information
- Revenue of $493.3 million, reflecting 35% year-over-year growth and a 3% sequential decline.
- GAAP net loss of $21.0 million or $(0.05) per share diluted, and net income of $55.4 million or $0.12 per share diluted on a non-GAAP basis.
- Total quarterly SAN ports shipped was approximately 0.9 million.
- SAN Average Selling Price (ASP) declines were in the mid single digits.
- Net stock-based compensation expense was $43.3 million.
- Effective GAAP tax rate was (1,977)%; non-GAAP effective tax-rate was 29.2%.
Q3 2009 |
Q2 2009 |
Q3 2008 |
|||||||
Revenue | $493.3 M | $506.3 M | $365.7 M | ||||||
GAAP net income (loss) | $(21.0) M | $(63.1) M | $20.3 M | ||||||
Non-GAAP net income | $55.4 M | $47.1 M | $61.2 M | ||||||
GAAP EPS – diluted | ($0.05) | $(0.16) | $0.05 | ||||||
Non-GAAP EPS – diluted | $0.12 | $0.11 | $0.16 | ||||||
Non-GAAP gross margin | 58.2% | 56.2% | 61.9% | ||||||
Non-GAAP operating margin | 20.3% | 18.8% | 22.6% | ||||||
Cash provided by operations | $16.6 M | $107.3 M | $71.7 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 |
Q3 2009 |
Q2 2009 |
Q3 2008 |
||||||
OEM revenues | 63% | 62% | 86% | ||||||
Channel/Direct revenues | 37% | 38% | 14% | ||||||
10% or greater customer revenues | 46% | 43% | 62% | ||||||
Domestic revenues (1) | 64% | 69% | 65% | ||||||
International revenues (1) | 36% | 31% | 35% | ||||||
Data Storage Revenue | 58% | 58% | 82% | ||||||
IP Products Revenue | 24% | 25% | 1% | ||||||
Stackable % of IP Revenues (2) | 26% | 26% | 28% | ||||||
Chassis % of IP Revenues (2) | 74% | 74% | 72% | ||||||
Enterprise % of IP Revenues (2) | 83% | 78% | 82% | ||||||
Service Providers % of IP Revenues (2) | 17% | 22% | 18% | ||||||
Global Services Revenue | 18% | 17% | 17% | ||||||
Q3 2009 |
Q2 2009 |
Q3 2008 |
|||||||
Cash, cash equivalents and investments | $249.9 M | $236.9 M | $764.2 M | ||||||
Deferred revenues | $230.1 M | $244.4 M | $148.5 M | ||||||
Capital expenditures – non-campus related | $ 20.0 M | $ 15.7 M | $ 14.0 M | ||||||
Capital expenditures – campus related | $ 24.8 M | $ 21.9 M | $ 80.2 M | ||||||
Total debt, net of discount | $1,139 M | $1,169 M | $169.1 M | ||||||
Days sales outstanding | 56 days | 49 days | 43 days | ||||||
Employees at end of period | 3,866 | 3,845 | 2,842 | ||||||
1) Based on Brocade estimates of adjustment for OEMs taking delivery of
internationally bound shipments in the United States, end-user demand
was 52% domestic and 48% international.
2) On an "As If” combined
Brocade basis with respect to Q3 2008.
3) Q3 2009 is the second
full quarter of combined operations post acquisition of Foundry.
Non-GAAP Financial Measures
This press release and the related conference call contain 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 associated with indemnification obligations to former directors and officers and other related costs, (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) acquisition-related financing charges (in connection with the Foundry acquisition).
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 measures 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 measures reported by other companies.
Third Fiscal Quarter 2009 Conference Call and Webcast Information
Brocade management will host a conference call to discuss third quarter 2009 results on Thursday, August 20, 2009, at 2:00 p.m. Pacific Time. To access the live webcast, please visit Brocade's website at http://www.brcd.com at least 20 minutes prior to the call to download any necessary audio or plug-in software. A telephone replay will be available approximately two hours after the conference ends and will be available until 5:00 p.m. Pacific Time on August 27, 2009. A replay of the conference call will be available via webcast at http://www.brcd.com for approximately twelve months.
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 impact of the economic slowdown across geographies and the effect of changes in IT spending levels, Brocade’s ability to realize the anticipated benefits from new and expanded partnership relationships, and the acquisition of Foundry, Brocade’s ability to successfully introduce new products and services on a timely basis, market competition, 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 May 2, 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.
BROCADE COMMUNICATIONS SYSTEMS, INC. | ||||||||||||||||
GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||
(unaudited) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
August 1, | July 26, | August 1, | July 26, | |||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Net revenues | ||||||||||||||||
Product | $ | 402,483 | $ | 301,804 | $ | 1,183,117 | $ | 895,333 | ||||||||
Services | 90,797 | 63,892 | 248,054 | 173,107 | ||||||||||||
Total net revenues | 493,280 | 365,696 | 1,431,171 | 1,068,440 | ||||||||||||
Cost of revenues | ||||||||||||||||
Product | 185,347 | 111,072 | 535,912 | 345,476 | ||||||||||||
Services | 47,488 | 41,419 | 132,606 | 107,728 | ||||||||||||
Total cost of revenues | 232,835 | 152,491 | 668,518 | 453,204 | ||||||||||||
Gross margin | 260,445 | 213,205 | 762,653 | 615,236 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 94,718 | 65,368 | 259,464 | 184,704 | ||||||||||||
Sales and marketing | 103,640 | 70,039 | 281,703 | 203,200 | ||||||||||||
General and administrative | 23,070 | 17,577 | 62,753 | 43,260 | ||||||||||||
Legal fees associated with indemnification obligations and other related costs, net | (561 | ) | 7,951 | 38,553 | 22,399 | |||||||||||
Provision for class action lawsuit | — | — | — | 160,000 | ||||||||||||
Amortization of intangible assets | 17,052 | 7,846 | 51,666 | 23,664 | ||||||||||||
Acquisition and integration costs | 1,450 | — | 4,794 | — | ||||||||||||
Restructuring costs and facilities lease loss (benefits), net | — | — | 2,329 | (477 | ) | |||||||||||
In-process research and development | — | — | 26,900 | — | ||||||||||||
Goodwill and acquisition-related intangible assets impairment | — | — | 53,306 | — | ||||||||||||
Total operating expenses | 239,369 | 168,781 | 781,468 | 636,750 | ||||||||||||
Income/(loss) from operations | 21,076 | 44,424 | (18,815 | ) | (21,514 | ) | ||||||||||
Interest and other income/(expense), net | 809 | 8,872 | (2,912 | ) | 27,663 | |||||||||||
Interest expense | (22,845 | ) | (1,103 | ) | (70,600 | ) | (4,384 | ) | ||||||||
(Loss) on investments, net | (52 | ) | (36 | ) | (576 | ) | (6,985 | ) | ||||||||
Income/(loss) before provision/(benefit) for income taxes | (1,012 | ) | 52,157 | (92,903 | ) | (5,220 | ) | |||||||||
Income tax provision/(benefit) | 20,021 | 31,891 | 17,280 | (136,709 | ) | |||||||||||
Net income/(loss) | $ | (21,033 | ) | $ | 20,266 | $ | (110,183 | ) | $ | 131,489 | ||||||
Net income/(loss) per share – Basic | $ | (0.05 | ) | $ | 0.05 | $ | (0.28 | ) | $ | 0.35 | ||||||
Net income/(loss) per share – Diluted | $ | (0.05 | ) | $ | 0.05 | $ | (0.28 | ) | $ | 0.34 | ||||||
Shares used in per share calculation – Basic | 406,916 | 371,345 | 390,087 | 376,455 | ||||||||||||
Shares used in per share calculation – Diluted | 406,916 | 392,586 | 390,087 | 396,445 | ||||||||||||
BROCADE COMMUNICATIONS SYSTEMS, INC. | ||||||||
GAAP CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(in thousands) | ||||||||
(unaudited) | ||||||||
August 1, | October 25, | |||||||
2009 | 2008 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 244,179 | $ | 453,884 | ||||
Short-term investments | 5,731 | 152,741 | ||||||
Total cash, cash equivalents and short-term investments | 249,910 | 606,625 | ||||||
Accounts receivable, net | 301,787 | 158,935 | ||||||
Inventories | 55,674 | 21,362 | ||||||
Deferred tax assets | 86,690 | 104,705 | ||||||
Prepaid expenses and other current assets | 75,723 | 49,931 | ||||||
Total current assets | 769,784 | 941,558 | ||||||
Long-term marketable equity securities | — | 177,380 | ||||||
Long-term investments | — | 36,120 | ||||||
Restricted cash | — | 1,075,079 | ||||||
Property and equipment, net | 409,914 | 313,379 | ||||||
Goodwill | 1,668,102 | 268,977 | ||||||
Intangible assets, net | 505,822 | 220,567 | ||||||
Non-current deferred tax assets | 179,792 | 227,795 | ||||||
Other assets | 29,790 | 37,793 | ||||||
Total assets | $ | 3,563,204 | $ | 3,298,648 | ||||
Liabilities and Stockholders’ Equity |
||||||||
Current liabilities: |
||||||||
Accounts payable | $ | 150,616 | $ | 167,660 | ||||
Accrued employee compensation | 112,193 | 107,994 | ||||||
Deferred revenue | 170,695 | 103,372 | ||||||
Current liabilities associated with facilities lease losses | 13,435 | 13,422 | ||||||
Liability associated with class action lawsuit | — | 160,000 | ||||||
Revolving credit facility | 14,050 | — | ||||||
Current portion of long-term debt | 41,545 | 43,606 | ||||||
Convertible subordinated debt | 171,282 | — | ||||||
Purchase commitments | 23,447 | 17,332 | ||||||
Other accrued liabilities | 75,607 | 88,472 | ||||||
Total current liabilities | 772,870 | 701,858 | ||||||
Long-term debt, net of current portion | 912,568 | 1,011,399 | ||||||
Non-current convertible subordinated debt | — | 169,660 | ||||||
Non-current liabilities associated with facilities lease losses | 13,319 | 15,007 | ||||||
Non-current deferred revenue | 59,374 | 37,869 | ||||||
Non-current income tax liability | 108,746 | 67,497 | ||||||
Other non-current liabilities | 10,112 | 13,118 | ||||||
Stockholders’ equity | ||||||||
Common stock | 1,828,162 | 1,393,299 | ||||||
Accumulated other comprehensive loss | (6,585 | ) | (85,877 | ) | ||||
Accumulated deficit | (135,362 | ) | (25,182 | ) | ||||
Total stockholders’ equity | 1,686,215 | 1,282,240 | ||||||
Total liabilities and stockholders’ equity | $ | 3,563,204 | $ | 3,298,648 | ||||
BROCADE COMMUNICATIONS SYSTEMS, INC. | ||||||||
GAAP CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
For the Three Months Ended August 1, 2009 and July 26, 2008 | ||||||||
(in thousands) | ||||||||
(unaudited) | ||||||||
Three Months Ended | ||||||||
August 1, | July 26, | |||||||
2009 | 2008 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | (21,033 | ) | $ | 20,266 | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Excess tax benefit from employee stock plans | — | (3,589 | ) | |||||
Depreciation and amortization | 50,956 | 30,121 | ||||||
Loss on disposal of property and equipment | 218 | 133 | ||||||
Amortization of debt issuance costs | 5,156 | — | ||||||
Net losses on investments and marketable equity securities | 52 | 41 | ||||||
Provision for doubtful accounts receivable and sales allowances | 4,184 | 1,605 | ||||||
Non-cash compensation expense | 43,313 | 11,874 | ||||||
Capitalization of interest cost | (2,311 | ) | — | |||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | (51,734 | ) | (7,828 | ) | ||||
Inventories | 10,092 | (1,951 | ) | |||||
Prepaid expenses and other assets | (14,279 | ) | 2,936 | |||||
Deferred tax assets | — | (10,073 | ) | |||||
Accounts payable | 6,770 | 17,988 | ||||||
Accrued employee compensation | (15,792 | ) | (6,123 | ) | ||||
Deferred revenue | (14,370 | ) | 7,683 | |||||
Other accrued liabilities | 17,775 | 10,940 | ||||||
Liabilities associated with facilities lease losses | (2,366 | ) | (2,372 | ) | ||||
Net cash provided by operating activities | 16,631 | 71,651 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (44,826 | ) | (94,218 | ) | ||||
Purchases of short-term investments | (61 | ) | (65,388 | ) | ||||
Proceeds from maturities and sale of short-term investments | 8,466 | 42,393 | ||||||
Net cash used in investing activities | (36,421 | ) | (117,213 | ) | ||||
Cash flows from financing activities: | ||||||||
Payment of principal related to the term loan | (33,141 | ) | — | |||||
Common stock repurchases | — | (38,112 | ) | |||||
Excess tax benefit from employee stock plans | — | 3,589 | ||||||
Proceeds from issuance of common stock, net | 73,094 | 27,103 | ||||||
Net cash provided by (used in) financing activities | 39,953 | (7,420 | ) | |||||
Effect of exchange rate fluctuations on cash and cash equivalents | 1,390 | (1,152 | ) | |||||
Net increase (decrease) in cash and cash equivalents | 21,553 | (54,134 | ) | |||||
Cash and cash equivalents, beginning of period | 222,626 | 513,533 | ||||||
Cash and cash equivalents, end of period | $ | 244,179 | $ | 459,399 | ||||
BROCADE COMMUNICATIONS SYSTEMS, INC. | ||||||||
GAAP CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
For the Nine Months Ended August 1, 2009 and July 26, 2008 | ||||||||
(in thousands) | ||||||||
(unaudited) | ||||||||
Nine Months Ended | ||||||||
August 1, | July 26, | |||||||
2009 | 2008 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | (110,183 | ) | $ | 131,489 | |||
Adjustments to reconcile net income (loss) to net cash provided by/(used in) operating activities: | ||||||||
Release of valuation allowance | — | (185,176 | ) | |||||
Excess tax benefit from employee stock plans | 986 | (2,505 | ) | |||||
Depreciation and amortization | 145,087 | 89,645 | ||||||
Loss on disposal of property and equipment | 1,369 | 1,328 | ||||||
Amortization of debt issuance costs | 11,856 | — | ||||||
Net losses on investments and marketable equity securities | 570 | 6,488 | ||||||
Provision for doubtful accounts receivable and sales allowances | 9,533 | 4,914 | ||||||
Non-cash compensation expense | 101,505 | 31,521 | ||||||
Capitalization of interest cost | (6,356 | ) | — | |||||
In-process research and development | 26,900 | — | ||||||
Non-cash facilities lease loss benefit | (339 | ) | (477 | ) | ||||
Asset impairment charge | 53,306 | — | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | (75,786 | ) | 3,758 | |||||
Inventories | 43,898 | 3,648 | ||||||
Prepaid expenses and other assets | 6,929 | (19,032 | ) | |||||
Deferred tax assets | 651 | (9,808 | ) | |||||
Accounts payable | (41,867 | ) | 1,196 | |||||
Accrued employee compensation | (56,110 | ) | (3,526 | ) | ||||
Deferred revenue | 21,078 | 17,671 | ||||||
Other accrued liabilities | (5,426 | ) | 46,003 | |||||
Liabilities associated with facilities lease losses | (7,391 | ) | (7,213 | ) | ||||
Liability associated with class action lawsuit | (160,000 | ) | 160,000 | |||||
Net cash provided by /(used in) operating activities | (39,790 | ) | 269,924 | |||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (118,278 | ) | (125,468 | ) | ||||
Purchases of short-term investments | (116 | ) | (166,963 | ) | ||||
Proceeds from sale of marketable equity securities and equity investments | — | 9,926 | ||||||
Proceeds from maturities and sale of short-term investments | 154,931 | 340,838 | ||||||
Purchases of long-term investments | — | (37,731 | ) | |||||
Proceeds from maturities and sale of long-term investments | 30,173 | 22,483 | ||||||
Decrease in restricted cash | 1,075,079 | — | ||||||
Net cash paid in connection with acquisitions | (1,297,482 | ) | (43,554 | ) | ||||
Net cash used in investing activities | (155,693 | ) | (469 | ) | ||||
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 | (108,141 | ) | — | |||||
Common stock repurchases | — | (168,293 | ) | |||||
Excess tax benefit from employee stock plans | (986 | ) | 2,505 | |||||
Proceeds from issuance of common stock, net | 110,280 | 41,803 | ||||||
Proceeds from revolving credit facility | 14,050 | — | ||||||
Net cash used in financing activities | (15,322 | ) | (123,985 | ) | ||||
Effect of exchange rate fluctuations on cash and cash equivalents | 1,100 | (1,826 | ) | |||||
Net increase (decrease) in cash and cash equivalents | (209,705 | ) | 143,644 | |||||
Cash and cash equivalents, beginning of period | 453,884 | 315,755 | ||||||
Cash and cash equivalents, end of period | $ | 244,179 | $ | 459,399 | ||||
BROCADE COMMUNICATIONS SYSTEMS, INC. | |||||||
RECONCILIATION BETWEEN GAAP AND NON-GAAP NET INCOME (LOSS) | |||||||
(in thousands, except per share amounts) | |||||||
(unaudited) | |||||||
Three Months Ended |
|||||||
August 1, | July 26, | ||||||
2009 |
2008 |
||||||
Net income (loss) on a GAAP basis | $ | (21,033 | ) | $ | 20,266 | ||
Adjustments: | |||||||
Stock-based compensation expense included in cost of revenues | 8,459 | 2,638 | |||||
Amortization of intangible assets expense included in cost of revenues | 17,950 | 8,780 | |||||
Legal fees associated with certain pre-acquisition litigation | — | 1,860 | |||||
Total gross margin adjustments | 26,409 | 13,278 | |||||
Legal fees associated with indemnification obligations and other related costs, net | (561 | ) | 7,951 | ||||
Stock-based compensation expense included in research and development | 12,444 | 2,788 | |||||
Stock-based compensation expense included in sales and marketing | 15,013 | 3,195 | |||||
Stock-based compensation expense included in general and administrative | 7,397 | 3,253 | |||||
Amortization of intangible assets expense included in operating expenses | 17,052 | 7,846 | |||||
Acquisition and integration costs | 1,450 | — | |||||
Total operating expense adjustments | 52,795 | 25,033 | |||||
Total operating income adjustments | 79,204 | 38,311 | |||||
Income tax effect of adjustments | (2,795 | ) | 2,643 | ||||
Non-GAAP net income | $ | 55,376 | $ | 61,220 | |||
Non-GAAP net income per share – basic | $ | 0.14 | $ | 0.16 | |||
Non-GAAP net income per share – diluted | $ | 0.12 | $ | 0.16 | |||
Shares used in non-GAAP per share calculation – basic | 406,916 | 371,345 | |||||
Shares used in non-GAAP per share calculation – diluted | 476,888 | 392,586 | |||||
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) | ||||||||
Nine Months Ended | ||||||||
August 1, | July 26, | |||||||
2009 | 2008 | |||||||
Net income (loss) on a GAAP basis | $ | (110,183 | ) | $ | 131,489 | |||
Adjustments: | ||||||||
Stock-based compensation expense included in cost of revenues | 18,593 | 7,501 | ||||||
Amortization of intangible assets expense included in cost of revenues | 47,905 | 28,620 | ||||||
Legal fees associated with certain pre-acquisition litigation | — | 2,319 | ||||||
Total gross margin adjustments | 66,498 | 38,440 | ||||||
Legal fees associated with indemnification obligations and other related costs, net | 38,553 | 22,399 | ||||||
Provision for class action lawsuit | — | 160,000 | ||||||
Stock-based compensation expense included in research and development | 30,115 | 7,939 | ||||||
Stock-based compensation expense included in sales and marketing | 35,886 | 8,327 | ||||||
Stock-based compensation expense included in general and administrative | 16,911 | 7,755 | ||||||
Amortization of intangible assets expense included in operating expenses | 51,666 | 23,664 | ||||||
Acquisition and integration costs | 4,794 | — | ||||||
Restructuring costs and facilities lease losses (benefits), net | 2,329 | (477 | ) | |||||
In-process research and development | 26,900 | — | ||||||
Goodwill and acquisition-related intangible assets impairment | 53,306 | — | ||||||
Total operating expense adjustments | 260,460 | 229,607 | ||||||
Total operating income adjustments | 326,958 | 268,047 | ||||||
Loss on sale of investments, net | — | 6,004 | ||||||
Acquisition-related financing charges | 4,366 | — | ||||||
Income tax effect of adjustments | (55,084 | ) | (220,399 | ) | ||||
Non-GAAP net income | $ | 166,057 | $ | 185,141 | ||||
Non-GAAP net income per share – basic | $ | 0.43 | $ | 0.49 | ||||
Non-GAAP net income per share – diluted | $ | 0.38 | $ | 0.47 | ||||
Shares used in non-GAAP per share calculation – basic | 390,087 | 376,455 | ||||||
Shares used in non-GAAP per share calculation – diluted | 441,666 | 396,445 | ||||||
See explanation of non-GAAP information included herein.
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