BROCADE COMMUNICATIONS SYSTEMS INC

CIK:0001009626|SEC Filings

Condensed Consolidated Statements Of Operations - USD ($) shares in Thousands	3 Months Ended		9 Months Ended
	Jul. 29, 2017	Jul. 30, 2016	Jul. 29, 2017	Jul. 30, 2016
Net revenues:
Product	$ 449,549,000	$ 490,995,000	$ 1,385,273,000	$ 1,400,355,000
Service	99,717,000	99,726,000	298,209,000	287,956,000
Total net revenues	549,266,000	590,721,000	1,683,482,000	1,688,311,000
Cost of revenues:
Product	154,760,000	188,492,000	486,153,000	464,797,000
Service	43,361,000	45,330,000	136,301,000	127,489,000
Total cost of revenues	198,121,000	233,822,000	622,454,000	592,286,000
Gross margin	351,145,000	356,899,000	1,061,028,000	1,096,025,000
Operating expenses:
Research and development	117,116,000	114,996,000	360,164,000	297,516,000
Sales and marketing	153,712,000	167,983,000	506,228,000	468,743,000
General and administrative	27,614,000	32,960,000	92,127,000	78,180,000
Settlement with dissenting stockholder of Ruckus Wireless, Inc.	8,528,000	0	8,528,000	0
Amortization of intangible assets	5,822,000	5,498,000	20,998,000	7,302,000
Acquisition, divestiture, and integration costs	13,246,000	14,868,000	49,519,000	20,625,000
Restructuring charges (benefits)	17,801,000	0	17,801,000	(566,000)
Impairment of equity investments	2,870,000	0	2,870,000	0
Loss on sold and held for sale software product lines	24,315,000	0	24,315,000	0
Total operating expenses	371,024,000	336,305,000	1,082,550,000	871,800,000
Income (loss) from operations	(19,879,000)	20,594,000	(21,522,000)	224,225,000
Interest expense	(15,875,000)	(13,462,000)	(47,317,000)	(33,282,000)
Interest and other income, net	2,580,000	1,557,000	5,136,000	3,317,000
Income (loss) before income tax	(33,174,000)	8,689,000	(63,703,000)	194,260,000
Income tax expense (benefit)	(13,622,000)	(1,806,000)	(27,275,000)	47,034,000
Net income (loss)	(19,552,000)	10,495,000	(36,428,000)	147,226,000
Less: Net loss attributable to noncontrolling interest	(46,000)	0.00	(274,000)	0.00
Net income (loss) attributable to Brocade Communications Systems, Inc.	$ (19,506,000)	$ 10,495,000	$ (36,154,000)	$ 147,226,000
Net income (loss) per share—basic attributable to Brocade Communications Systems, Inc. stockholders	$ (0.05)	$ 0.02	$ (0.09)	$ 0.36
Net income (loss) per share—diluted attributable to Brocade Communications Systems, Inc. stockholders	$ (0.05)	$ 0.02	$ (0.09)	$ 0.35
Shares used in per share calculation—basic	411,898	426,671	408,494	411,709
Shares used in per share calculation—diluted	411,898	434,416	408,494	419,416
Cash dividends declared per share	$ 0.055	$ 0.055	$ 0.165	$ 0.145

Condensed Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Jul. 29, 2017	Jul. 30, 2016
Cash flows from operating activities:
Net income (loss)	$ (36,428)	$ 147,226
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Excess tax benefits from stock-based compensation	0	(1,778)
Depreciation and amortization	118,365	80,979
Loss on disposal of property and equipment	3,506	458
Loss on sold and held for sale software product lines	24,315	0
Net gain on sale of investments	0	(122)
Amortization of debt issuance costs and debt discount	15,571	13,493
Provision (recovery) for doubtful accounts receivable and sales allowances	8,914	(1,946)
Non-cash purchase accounting adjustments to inventory	5,853	20,775
Non-cash stock-based compensation expense	94,471	88,805
Impairment of equity investments	2,870	0
Changes in assets and liabilities, net of acquisitions and divestitures:
Accounts receivable	(16,558)	988
Inventories	(6,044)	5,601
Prepaid expenses and other assets	(16,029)	(9,725)
Deferred tax assets	63	(109)
Accounts payable	(27,370)	5,519
Accrued employee compensation	(56,803)	(57,520)
Deferred revenue	(20,900)	5,359
Other accrued liabilities	(48,799)	(43,874)
Restructuring liabilities	(365)	(1,223)
Net cash provided by operating activities	44,632	252,906
Cash flows from investing activities:
Purchases of non-marketable equity and debt investments	0	(2,000)
Proceeds from maturities and sale of short-term investments	0	150,323
Purchases of property and equipment	(28,618)	(59,810)
Net cash paid in connection with acquisitions	0	(564,888)
Proceeds from collection of note receivable	250	250
Net proceeds from sale of software product line	31,769	0
Net cash provided by (used in) investing activities	3,401	(476,125)
Cash flows from financing activities:
Payment of principal related to the term loan	(60,000)	0
Payment of debt issuance costs	0	(891)
Payment of principal related to capital leases	0	(282)
Payment of accrued merger consideration to dissenting stockholder of Ruckus Wireless, Inc.	(41,280)	0
Common stock repurchases	0	(841,562)
Proceeds from issuance of common stock	41,283	49,195
Payment of cash dividends to stockholders	(67,448)	(61,706)
Proceeds from term loan	0	787,255
Proceeds from noncontrolling interest	0	2,550
Excess tax benefits from stock-based compensation	0	1,778
Net cash used in financing activities	(127,445)	(63,663)
Effect of exchange rate fluctuations on cash and cash equivalents	1,706	(926)
Net decrease in cash and cash equivalents	(77,706)	(287,808)
Cash and cash equivalents, beginning of period	1,257,075	1,440,882
Cash and cash equivalents, end of period	1,179,369	1,153,074
Supplemental disclosures of cash flow information:
Cash paid for interest	36,454	24,264
Cash paid for income taxes	5,306	46,163
Cash Flow, Noncash Investing and Financing Activities Disclosure [Abstract]
Acquisition of a business by the issuance of stock and accrual for an appraisal demand submitted by a dissenting stockholder of that business	$ 0	$ 623,116

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jul. 29, 2017	Oct. 29, 2016
Current assets:
Cash and cash equivalents	$ 1,179,369	$ 1,257,075
Accounts receivable, net of allowances for doubtful accounts of $1,818, and $1,736 as of July 29, 2017, and October 29, 2016, respectively	291,989	284,344
Inventories	70,511	69,355
Prepaid expenses and other current assets	87,128	62,236
Current assets held for sale	26,279	0
Total current assets	1,655,276	1,673,010
Property and equipment, net	416,181	455,326
Goodwill	2,255,326	2,295,184
Core/developed technology intangible assets, net	193,959	248,938
Other intangible assets, net	159,041	200,840
Non-current deferred tax assets	40,057	12,736
Other assets	41,591	53,777
Total assets	4,761,431	4,939,811
Current liabilities:
Accounts payable	97,074	128,685
Accrued employee compensation	144,622	154,165
Deferred revenue	198,704	221,940
Current portion of long-term debt	76,725	76,692
Other accrued liabilities	69,517	113,170
Current liabilities held for sale	8,421	0
Total current liabilities	595,063	694,652
Long-term debt, net of current portion	1,457,602	1,502,063
Non-current deferred revenue	85,055	90,051
Non-current income tax liability	92,582	102,100
Other non-current liabilities	4,330	5,370
Total liabilities	2,234,632	2,394,236
Commitments and contingencies (Note 9)
Stockholders’ equity:
Preferred stock, $0.001 par value, 5,000 shares authorized, no shares issued and outstanding	0	0
Common stock, $0.001 par value, 800,000 shares authorized:
Issued and outstanding: 413,745 and 401,748 shares as of July 29, 2017, and October 29, 2016, respectively	414	402
Additional paid-in capital	1,596,008	1,514,730
Accumulated other comprehensive loss	(23,603)	(27,413)
Retained earnings	951,592	1,055,194
Total Brocade stockholders’ equity	2,524,411	2,542,913
Noncontrolling interest	2,388	2,662
Total stockholders’ equity	2,526,799	2,545,575
Total liabilities and stockholders’ equity	$ 4,761,431	$ 4,939,811