Brocade Reports Fiscal Q4 2011 Results
Brocade Sets Company Revenue Records in Ethernet Business for Q4 and for FY 2011; Repurchases $200 Million in Stock in Q4
(firmenpresse) - SAN JOSE, CA -- (Marketwire) -- 11/21/11 -- (NASDAQ: BRCD) today reported financial results for its fourth fiscal quarter and full fiscal year ended October 29, 2011. Brocade reported fourth quarter revenue of $550 million, representing an increase of over 9% quarter-over-quarter and up slightly year-over-year, and resulting in a diluted loss per share of $(0.01) on a GAAP basis and diluted earnings per share of $0.16 on a non-GAAP basis.
During the fourth quarter, Brocade generated strong operating cash flow of $206 million, repurchased 46.5 million shares of common stock, over 9% of the outstanding shares, valued at approximately $200 million, and paid down $50 million on its existing term loan balance. For the fiscal year, Brocade reduced the outstanding amount of the term loan by a total of $161 million, a 46% reduction from the beginning-year balance, which resulted in a balance of $190 million exiting fiscal year 2011.
Revenue for Brocade's Storage business, including products and services, was $361.3 million in the fourth quarter, up 8% sequentially and down 4% year-over-year. The higher sequential revenue for Storage reflected strong demand across all Storage product families including the ramp of its next-generation 16 gigabit-per-second (Gbps) Fibre Channel products which reached approximately $40 million in the quarter.
Revenue for Brocade's Ethernet business, including products and services, was a record $189.2 million in the fourth quarter, an increase of 12% quarter-over-quarter and an increase of 11% year-over-year. The year-over-year growth in Ethernet was driven primarily by Service Provider and Enterprise customers, with revenues from those customers up 18% from the prior year. The Federal Ethernet business was down 14% year-over-year, but up 39% sequentially, as Federal orders improved in the fourth quarter. Revenue for the Ethernet business for the full fiscal year 2011 was a record $670 million, up 11% compared to fiscal 2010, driven by growth in Service Provider and Enterprise customers.
"Brocade achieved outstanding results in Q4 that were led by record revenues for our Ethernet business, fast adoption of our 16 Gbps Fibre Channel products, improvements in profitability, and a record cash flow quarter from operations," said Michael Klayko, CEO of Brocade. "These strong performances demonstrate that we are executing well on our long-term strategy. Looking at FY 12, we plan to leverage this momentum along with our highly differentiated innovation strategy, expanding product portfolio, and our strong routes to market."
In addition to this press release, Brocade management will host a conference call to discuss fiscal fourth quarter results and fiscal first quarter 2012 outlook today at 2:30 p.m. PT (5:30 p.m. ET). To access the webcast please go to . A replay of the conference call, as well as corresponding slides and written transcript, will be available at .
Other Q4 product, customer and partner announcements are available at .
Q4 effective GAAP tax rate was 110.5% and non-GAAP effective tax rate was 22.9%.
Q4 total Storage Area Networking (SAN) port shipments were approximately 1.1 million.
Please see important note of explanation on Non-GAAP measures below, including a detailed reconciliation between GAAP and Non-GAAP information in the tables included herein.
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 financial measures used in this press release allow management to gain a better understanding of Brocade's comparative operating performance both 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 make more meaningful comparisons of Brocade's operating performance against industry and competitor companies;
the ability to better identify trends in Brocade's underlying business and to 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 Brocade's 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) provision or benefit from certain pre-acquisition litigation (ii) legal fees associated with certain pre-acquisition litigation, (iii) legal fees associated with indemnification obligations and other related costs, net, (iv) acquisition and integration costs, (v) loss on sale of property, (vi) interest expense related to the adoption of new standards relating to convertible debt instruments, (vii) original issue discount and debt issuance costs of debt related to lenders that did not participate in refinancing, and (viii) loss on sale of a subsidiary.
Management also excludes the following non-cash charges in determining non-GAAP net income (i) stock-based compensation expense and (ii) amortization of purchased intangible assets. 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.
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.
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 and net income 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.
This press release contains statements that are forward-looking in nature, including statements regarding the networking industry, Brocade's strategy, Brocade's Ethernet and Storage solutions, and its routes to markets. 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, changes in IT spending levels in one or more of our target markets including the government sector, Brocade's ability to capitalize on new Brocade sales and marketing initiatives, including expanded go-to-market activities in our Ethernet business, customer acceptance of Brocade's Ethernet fabric solutions, Brocade's ability to continue to successfully innovate new products and services on a timely basis and achieve widespread market acceptance, and the effect of increasing market competition and changes in the industry. 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 July 30, 2011. Brocade does not assume any obligation to update or revise any such forward-looking statements, whether as the result of new developments or otherwise.
Brocade (NASDAQ: BRCD) networking solutions help the world's leading organizations transition smoothly to a world where applications and information reside anywhere. ()
Brocade, the B-wing symbol, DCX, Fabric OS, and SAN Health are registered trademarks, and Brocade Assurance, Brocade NET Health, Brocade One, CloudPlex, MLX, VCS, VDX, and When the Mission Is Critical, the Network Is Brocade are trademarks of Brocade Communications Systems, Inc., in the United States and/or in other countries. Other brands, products, or service names mentioned are or may be trademarks or service marks of their respective owners.
© 2011 Brocade Communications Systems, Inc. All Rights Reserved.
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Robert Eggers
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