any thoughts, anyone?
Brocade Announces Second Quarter Fiscal 2001 Financial Results
Storage Networking Leader Meets Revised Expectations for Second Quarter
SAN JOSE, Calif., May 15 /PRNewswire/ -- Brocade Communications Systems, Inc. (Brocade®) (Nasdaq: BRCD - news) reported today financial results for the second quarter of fiscal 2001 (Q2 01). For Q2 01, net revenues were $115.2 million as compared to the $62.1 million reported in the second quarter of fiscal 2000 (Q2 00).
Net income for Q2 01 was $12.0 million as compared to the $13.3 million reported in Q2 00. Diluted net income per share for Q2 01 was $0.05 as compared to the $0.06 reported in Q2 00. During the second quarter, gross margins remained at 60 percent.
In Q2 01, Brocade generated $6.1 million in cash after purchasing $16.9 million in capital equipment and making $10.6 million in minority investments. Total cash at the end of Q2 01 was $217.1 million. Brocade exited the quarter with $5.7 million in deferred revenue. The majority of the deferred revenue was related to inventory held by Brocade master resellers that has not sold through to the end customer.
For Q2 01, accounts receivable days sales outstanding was 58 days and continues to remain within the Brocade target range. Inventory at the end of the second quarter was $8.4 million, and annualized inventory turns were 22 times.
Greg Reyes, Brocade Chairman and CEO, commented on the quarter: ``Considering the current difficult economic environment for technology companies, the second quarter was a period of significant achievement for Brocade. We are pleased that we met the expectations that we set out in April, and we believe that the second quarter was the low water mark for our business. We are now seeing signs that IT budgets may be thawing as companies reprioritize projects based on Return On Investment (ROI). Storage Area Networks (SANs) remain at the top of the priority list. Using Brocade SAN infrastructure, companies can dramatically reduce the cost of managing their data while keeping pace with ever-increasing information storage requirements.''
Brocade President and COO, Michael Byrd added, ``We are sober about the effect that the economy has had on the enterprise technology marketplace and on our short-term business outlook. We are committed to doing what is right for the business and will continue to invest in engineering resources and quota-carrying sales personnel at a rate that will continue to outpace our competitors. We believe that our long-term prospects and competitive position in delivering the world's leading intelligent platform for networking storage have never been stronger. As enterprise capital spending continues to thaw, we are well positioned for growth in the latter part of fiscal 2001.''
Brocade will host a conference call today at 1:30 p.m. Pacific Time. To participate in the conference call, register at the Brocade website at www.brocade.com or call 719-457-2634, confirmation code 487891. During the call, Brocade will discuss details of the second quarter financial results and provide forward-looking guidance for the remainder of fiscal year 2001. A replay of the call will be available for five business days at 719-457-0820, confirmation code 487891.
SECOND QUARTER FISCAL 2001 HIGHLIGHTS
Brocade provides the world's leading intelligent platform for networking storage. Using Brocade SilkWorm® fabric switches, customers can connect servers with storage devices through a SAN, creating a highly reliable, scalable, and secure environment for storage applications.
During the second fiscal quarter of 2001, Brocade continued to execute in all areas of the business. Today, Brocade is the common denominator in virtually every system and storage vendor's SAN solution. The company has shipped more than 900,000 gigabit Fibre Channel ports to date -- nearly four times that of its nearest competitor. During the second quarter, Brocade:
Expanded the bench-strength of its senior management team, with the
promotion of Greg Reyes to Chairman and CEO, Michael Byrd to President and
COO, and Tony Canova to Vice President of Finance and CFO.
Announced the SilkWorm 12000, the industry's first modular, multi-
protocol core fabric switch. With the SilkWorm 12000, Brocade will offer a
complete core-to-edge solution that is the reliable, scalable, and secure
foundation to support next-generation data management, data movement, and
data administration applications.
Announced the Brocade Intelligent Fabric Services Architecture, which
is endorsed by 19 industry leaders, as the foundation for storage area
networking. By increasing the intelligence in the SAN fabric, Brocade is
the only company in the industry to offer the advanced fabric services,
enterprise class security, and open management that are required for
advanced storage applications and multi-tenant storage environments.
Met all development milestones for the SilkWorm 12000 and for
2 Gigabit per second support across the Brocade product line. During the
second quarter, Brocade completed verification of its next-generation ASIC
architecture and is shipping functional units to customers today.
Expanded strategic relationships with the world's leading providers of
next-generation storage applications and services. Today, more than
150 companies are developing products that are optimized to take advantage
of Brocade SAN infrastructure. This quarter, Brocade announced a
relationship with Microsoft to work together to SAN-enable the Windows
operating system, expanded its partnerships with BMC Software, Computer
Associates, and VERITAS Software, and announced a relationship with
Micromuse to allow mutual customers to use existing network management
tools to manage Brocade SANs.
Expanded its relationship with Network Appliance, enabling Network
Appliance customers to connect multiple Network Attached Storage (NAS)
filers and tape devices to a Brocade SAN for LAN-free backup and allowing
NAS customers to take advantage of the reliability and scalability of
Brocade SAN infrastructure.
Deepened its OEM and channel relationships, completing an expanded
resale, service and support agreement with Sun Microsystems and completing
agreements with three leading OEM and reseller partners -- Compaq, Hitachi
Data Systems, and StorageTek -- who will now offer the SilkWorm 6400 to
their customers worldwide. The SilkWorm 6400 is a highly cost-effective,
64-port integrated fabric solution that is available today from Brocade.
Expanded the Brocade systems integration channel, adding twenty-four
new systems integrators worldwide.
Extended its leadership role in delivering SAN standards and end-to-end
interoperability to the industry. The Brocade library of SOLUTIONware®
now spans more than 50 certified configurations and is freely available to
partners and customers on the Brocade website. In addition, 42 leading
storage, server, and infrastructure companies are now members of the
Brocade Fabric Aware® testing and verification program.
Continued aggressive investments in international markets, including
the expansion of Brocade Asia Pacific operations in Beijing, Hong Kong,
Seoul, Singapore, Sydney, and Tokyo.
About Brocade Communications Systems, Inc.
Brocade provides the world's leading intelligent platform for networking storage. For more information, visit the Brocade website at www.brocade.com or contact the company at info@brocade.com.
NOTE: Brocade, SilkWorm, SilkWorm Express, SOLUTIONware, Extended Fabrics, Fabric Aware, Fabric Integrator, Fabric OS, Fabric Threads, Fabric Watch, Fabric Weaver, and QuickLoop are trademarks or registered 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.
This press contains forward-looking statements regarding the Company's financial results and business outlook. These statements include the companies expectations regarding revenue growth, long term prospects and brand name recognition, investments in engineering resources and quota-carrying sales personnel, the status of marketing relationships and economic conditions in our industry. These statements are just predictions and involve risks and uncertainties such that actual results may differ significantly. Actual results could differ materially from those predicted in the forwarding-looking statements as a result of the following risks and uncertainties: quarterly fluctuations in our revenues and operating results; our failure to manage expansion effectively; our ability to develop new and enhanced products that achieve widespread market acceptance; our failure to adequately anticipate future end-user product needs or to accurately forecast end-user demand; risks associated with increased international sales activity; our dependence on OEM customers; our failure to expend distribution channels or to manage distribution relationships; adverse changes in our relationship with Solectron Corporation, the sole manufacturer of our products; our dependence on sole source and limited source suppliers for certain key components including ASICs and power supplies; and the other risks set forth from time to time in our SEC filings, including our quarterly report on Form 10-Q for the quarter ended January 27, 2001 under the heading ``Management's Discussion and Analysis -- Risk Factors.'' We assume no obligation to update any forward-looking information contained in this press release.
BROCADE COMMUNICATIONS SYSTEMS, INC.
BALANCE SHEETS
(in thousands)
April 28, October 28,
2001 2000
(unaudited)
Assets
Current assets:
Cash and cash equivalents $103,099 $27,265
Short-term investments 114,046 127,774
Total cash, cash equivalents and
short-term investments 217,145 155,039
Marketable equity securities 1,118 49,251
Accounts receivable, net 73,060 72,242
Inventories, net 8,370 1,361
Prepaid expenses and other
current assets 10,429 5,462
Total current assets 310,122 283,355
Property and equipment, net 75,056 38,769
Deferred tax assets 205,406 130,250
Other assets 16,287 2,805
Total assets $606,871 $455,179
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $41,190 $23,958
Accrued employee compensation 8,474 23,363
Deferred revenue 5,679 2,056
Other accrued liabilities 27,293 14,925
Total current liabilities 82,636 64,302
Stockholders' equity:
Common stock 438,092 307,091
Deferred stock compensation (1,760) (2,320)
Accumulated other comprehensive income 1,834 44,520
Accumulated earnings 86,069 41,586
Total stockholders' equity 524,235 390,877
Total liabilities and
stockholders' equity $606,871 $455,179
BROCADE COMMUNICATIONS SYSTEMS, INC.
STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
April 28, April 29, April 28, April 29,
2001 2000 2001 2000
Net revenues $115,206 $62,053 $280,230 $104,793
Cost of revenues 46,073 26,053 112,127 46,137
Gross margin 69,133 36,000 168,103 58,656
Operating expenses:
Research and
development 28,391 9,666 54,533 15,694
Sales and
marketing 23,202 8,311 47,033 14,558
General and
administrative 4,606 2,080 8,986 4,116
Amortization of
deferred
compensation 280 280 560 560
Total operating
expenses 56,479 20,337 111,112 34,928
Income from
operations 12,654 15,663 56,991 23,728
Interest and
other income, net 4,462 1,193 6,556 2,378
Income before
income taxes 17,116 16,856 63,547 26,106
Provision for
income taxes 5,135 3,540 19,064 5,482
Net income $11,981 $13,316 $44,483 $20,624
Net income
per share
- basic $0.05 $0.06 $0.20 $0.10
Net income
per share
- diluted $0.05 $0.06 $0.18 $0.09
Shares used in
per share
calculation
- basic 219,865 205,982 217,997 204,032
Shares used in
per share
calculation
- diluted 238,740 241,860 243,298 238,698 |
