Brocade Reports Financial Results for the Second Fiscal Quarter of 2002
Storage Networking Leader Reports 17 Percent Year Over Year Revenue Growth And More Than 9 Percent Quarterly Sequential Revenue Growth
SAN JOSE, Calif., May 15 /PRNewswire-FirstCall/ -- Brocade Communications Systems, Inc. (Brocade®) (Nasdaq: BRCD - News) reported today financial results for the second fiscal quarter ended April 27, 2002 (Q2 02). In Q2 02, net revenues were $135.0 million, which is an increase of more than 17 percent from the $115.2 million reported in the second fiscal quarter of 2001 (Q2 01), and an increase of more than 9 percent from the $123.1 million reported in the first fiscal quarter of 2002 (Q1 02). Brocade exited Q2 02 with $16.1 million in deferred revenue, which is an increase of $2.2 million from Q1 02.
Net income for Q2 02 was $14.0 million, which is an increase of nearly 17 percent from the $12.0 million reported in Q2 01 and a nearly 20 percent increase from the $11.7 million reported in Q1 02. Diluted net income per share for Q2 02 was $0.06, an increase from the $0.05 reported in Q1 02 and $0.05 for Q2 01. During Q2 02, gross margins were 60.2 percent.
In Q2 02 cash and investments increased by $23.8 million, after purchasing approximately $17.8 million in capital equipment. Total cash and investments at the end of Q2 02 were a record $847.7 million. For Q2 02, accounts receivable days sales outstanding were 53 days, an improvement of 1 day over that reported in Q1 02. Inventory at the end of Q2 02 was $5.5 million.
Greg Reyes, Brocade Chairman and CEO, commented on the quarter, "We are extremely pleased with our results for the second fiscal quarter of 2002. In today's business environment, the value proposition for Brocade Storage Area Networks (SANs) resonates more powerfully than ever before with end users; allowing companies to optimize asset utilization, increase productivity, and significantly reduce the total cost of ownership of their storage environments. As companies continue to expand their SAN deployments over a common storage networking platform, the SAN architectural decision is now becoming a strategic business decision to support storage and server consolidation, deliver secure, efficient data backup and assure high data availability and business continuity."
Reyes continued, "With more than 1.6 million Brocade SAN ports deployed worldwide, Brocade is uniquely positioned to expand our market leadership position as the intelligent storage networking platform of choice. We believe that our continued investments in our business, combined with our product leadership and vision, strong OEM and industry partnerships, and unrelenting focus on execution, uniquely position Brocade to capitalize on the expanding market opportunity for intelligent storage area networking infrastructure."
Brocade will host a conference call today, Wednesday, May 15 at 1:30 p.m. Pacific Time to discuss the financial results in detail. To participate in the financial results conference call, please call 712-271-0036, passcode "enterprise." During the call, Brocade will discuss details of the second fiscal quarter of 2002 and provide forward-looking guidance for the remainder of 2002. A simultaneous webcast of the conference call may be viewed at www.brocade.com. An archive of the webcast will be available at www.brocade.com until close of business on Wednesday May 29, 2002.
About Brocade Communications Systems, Inc.
Brocade offers the industry's leading intelligent platform for networking storage. The world's leading systems, applications, and storage vendors have selected Brocade to provide a networking foundation for their SAN solutions. The Brocade SilkWorm® family of fabric switches and software is designed to optimize data availability and storage and server resources in the enterprise. Using Brocade solutions, companies can simplify the implementation of storage area networks, reduce the total cost of ownership of data storage environments, and improve network and application efficiency. For more information, visit the Brocade website at www.brocade.com or contact the company at info@brocade.com.
NOTE: Brocade, the B weave logo and SilkWorm are registered trademarks of Brocade Communications Systems, Inc. or its subsidiaries in the United States 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. All products, plans, and dates are subject to change without notice.
This press release may contain forward-looking statements, as defined under Federal Securities Laws. These forward-looking statements include statements regarding the IT spending environment and the Company's investment in future products. These statements are just predictions and involve risks and uncertainties, such that actual results may differ significantly. These risks include, but are not limited to, 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; the effect of competition, including pricing pressure; our failure to adequately anticipate future OEM and end-user product needs or to accurately forecast end-user demand; risks associated with increased international sales activity; the existence of undetected errors in our products; our dependence on OEM customers; our failure to extend distribution channels or to manage distribution relationships; adverse changes in our relationship with Solectron Corporation, the sole manufacturer of many of our products; our dependence on sole source and limited source suppliers for certain key components including ASICs and power supplies; possible fluctuations in future expenses. These and other risks are set forth in more detail in the Company's Form 10-K for the year ended October 27, 2001 and the Company's Form 10-Q for the quarter ended January 26, 2002. Brocade expressly assumes no obligation to update any such forward-looking statements.
BROCADE COMMUNICATIONS SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
April 27, October 27,
2002 2001
(unaudited)
Assets
Current assets:
Cash and cash equivalents $165,291 $150,118
Short-term investments 41,047 105,030
Total cash, cash equivalents and
short-term investments 206,338 255,148
Marketable equity securities 301 332
Accounts receivable, net 79,052 68,900
Inventories, net 5,499 10,307
Deferred tax assets, net 29,386 28,025
Prepaid expenses and other current assets 12,296 10,022
Total current assets 332,872 372,734
Long-term investments 641,372 --
Property and equipment, net 122,803 97,457
Deferred tax assets, net 225,545 207,209
Convertible subordinated debt issuance costs 11,508 --
Other assets 8,226 6,322
Total assets $1,342,326 $683,722
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $37,633 $25,082
Accrued employee compensation 25,347 21,994
Deferred revenue 16,116 12,630
Current liabilities associated
with lease losses 9,818 11,339
Other accrued liabilities 44,687 43,895
Total current liabilities 133,601 114,940
Noncurrent liabilities associated
with lease losses 26,410 30,896
Convertible subordinated debt 550,000 -
Stockholders' equity:
Common stock 561,892 493,968
Deferred stock compensation (554) (1,038)
Accumulated other comprehensive income 894 522
Retained earnings 70,083 44,434
Total stockholders' equity 632,315 537,886
Total liabilities and stockholders'
equity $1,342,326 $683,722
BROCADE COMMUNICATIONS SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
April 27, April 28, April 27, April 28,
2002 2001 2002 2001
Net revenues $134,950 $115,206 $258,028 $280,230
Cost of revenues 53,673 46,073 102,651 112,127
Gross margin 81,277 69,133 155,377 168,103
Operating expenses:
Research and
development 33,012 28,391 62,314 54,533
Sales and marketing 26,794 23,202 52,384 47,033
General and
administrative 4,840 4,606 9,383 8,986
Amortization of
deferred stock
compensation 242 280 484 560
Total operating
expenses 64,888 56,479 124,565 111,112
Income from
operations 16,389 12,654 30,812 56,991
Interest income 6,555 3,190 10,122 5,308
Interest expense (3,360) -- (4,670) --
Other income
(expense), net 106 1,272 (126) 1,248
Income before
income taxes 19,690 17,116 36,138 63,547
Provision for
income taxes 5,712 5,135 10,489 19,064
Net income $13,978 $11,981 $25,649 $44,483
Net income
per share
- basic $0.06 $0.05 $0.11 $0.20
Net income
per share
- diluted $0.06 $0.05 $0.10 $0.18
Shares used in
per share
calculation
- basic 231,185 219,865 229,720 217,997
Shares used in
per share
calculation
- diluted 245,678 238,740 246,955 243,298
SOURCE: Brocade Communications Systems, Inc.
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