Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Oct. 31, 2015 | Dec. 15, 2015 | May. 01, 2015 | |
Entity Information [Line Items] | |||
Entity Registrant Name | BROCADE COMMUNICATIONS SYSTEMS INC | ||
Entity Central Index Key | 1,009,626 | ||
Current Fiscal Year End Date | --10-31 | ||
Entity Filer Category | Large Accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Oct. 31, 2015 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 409,605,948 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 3,724,624,296 |
Consolidated Statements Of Inco
Consolidated Statements Of Income - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | |
Net revenues: | |||
Product | $ 1,902,401 | $ 1,852,187 | $ 1,870,567 |
Service | 361,059 | 359,080 | 352,297 |
Total net revenues | 2,263,460 | 2,211,267 | 2,222,864 |
Cost of revenues: | |||
Product | 587,515 | 592,441 | 658,362 |
Service | 147,872 | 153,033 | 155,623 |
Total cost of revenues | 735,387 | 745,474 | 813,985 |
Gross margin | 1,528,073 | 1,465,793 | 1,408,879 |
Operating expenses: | |||
Research and development | 356,720 | 345,549 | 378,521 |
Sales and marketing | 585,230 | 554,515 | 567,637 |
General and administrative | 87,623 | 84,941 | 74,518 |
Amortization of intangible assets | 2,556 | 10,280 | 54,256 |
Acquisition and integration costs | 3,942 | 0 | 0 |
Restructuring, goodwill impairment, and other related costs (benefits) (Note 4, 5) | (678) | 89,280 | 25,464 |
Gain on sale of network adapter business | 0 | (4,884) | 0 |
Total operating expenses | 1,035,393 | 1,079,681 | 1,100,396 |
Income from operations | 492,680 | 386,112 | 308,483 |
Interest income | 1,854 | 665 | 1,404 |
Other income, net (Note 14) | 95 | 3,601 | 75,835 |
Interest expense | (55,578) | (36,757) | (55,261) |
Income before income tax | 439,051 | 353,621 | 330,461 |
Income tax expense | 98,689 | 115,650 | 121,838 |
Net income | $ 340,362 | $ 237,971 | $ 208,623 |
Net income per share—basic | $ 0.81 | $ 0.55 | $ 0.46 |
Net income per share—diluted | $ 0.79 | $ 0.53 | $ 0.45 |
Shares used in per share calculation—basic | 420,331 | 435,258 | 450,516 |
Shares used in per share calculation—diluted | 430,556 | 446,859 | 463,705 |
Cash dividends declared per share | $ 0.16 | $ 0.07 | $ 0 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | |
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 340,362 | $ 237,971 | $ 208,623 |
Unrealized gains (losses) on cash flow hedges: | |||
Change in unrealized gains and losses | (3,387) | (1,939) | (1,748) |
Net gains and losses reclassified into earnings | 3,755 | (235) | (376) |
Net unrealized gains (losses) on cash flow hedges | 368 | (2,174) | (2,124) |
Foreign currency translation adjustments | (6,556) | (3,196) | (1,456) |
Total other comprehensive loss | (6,188) | (5,370) | (3,580) |
Total comprehensive income | $ 334,174 | $ 232,601 | $ 205,043 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Oct. 31, 2015 | Nov. 01, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 1,440,882 | $ 1,255,017 |
Accounts receivable, net of allowances for doubtful accounts of $1,838 and $80 as of October 31, 2015, and November 1, 2014, respectively | 235,883 | 224,913 |
Inventories | 40,524 | 38,718 |
Deferred tax assets | 78,675 | 92,692 |
Prepaid expenses and other current assets | 56,235 | 46,665 |
Total current assets | 1,852,199 | 1,658,005 |
Property and equipment, net | 439,224 | 445,433 |
Goodwill | 1,617,161 | 1,567,723 |
Intangible assets, net | 75,623 | 26,658 |
Other assets | 53,971 | 35,856 |
Total assets | 4,038,178 | 3,733,675 |
Current liabilities: | ||
Accounts payable | 98,143 | 93,705 |
Accrued employee compensation | 142,075 | 169,018 |
Deferred revenue | 244,622 | 239,993 |
Other accrued liabilities | 77,524 | 84,592 |
Total current liabilities | 562,364 | 587,308 |
Long-term debt, net of current portion | 795,804 | 595,450 |
Non-current deferred revenue | 72,065 | 71,746 |
Non-current income tax liability | 47,010 | 39,647 |
Non-current deferred tax liabilities | 24,024 | 27,153 |
Other Liabilities, Noncurrent | 3,376 | 4,310 |
Total liabilities | $ 1,504,643 | $ 1,325,614 |
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: 413,923 and 431,470 shares as of October 31, 2015, and November 1, 2014, respectively | 414 | 431 |
Additional paid-in capital | 1,632,984 | 1,774,197 |
Accumulated other comprehensive loss | (25,002) | (18,814) |
Retained earnings | 925,139 | 652,247 |
Total stockholders’ equity | 2,533,535 | 2,408,061 |
Total liabilities and stockholders’ equity | $ 4,038,178 | $ 3,733,675 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Oct. 31, 2015 | Nov. 01, 2014 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowances | $ 1,838 | $ 80 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000 | 5,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 800,000 | 800,000 |
Common stock, shares issued | 413,923 | 431,470 |
Common stock, shares outstanding | 413,923 | 431,470 |
Consolidated Statements Of Cash
Consolidated Statements Of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |||
Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | ||
Cash flows from operating activities: | ||||
Net income | $ 340,362 | $ 237,971 | $ 208,623 | |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Excess tax benefits from stock-based compensation | (48,943) | (64,563) | (3,189) | |
Non-cash tax charges | 0 | 0 | 78,206 | |
Depreciation and amortization | 84,807 | 100,647 | 184,114 | |
Loss on disposal of property and equipment | 3,163 | 5,118 | 6,709 | |
Gain on sale of network adapter business | 0 | (4,884) | 0 | |
Amortization of debt issuance costs and debt discount | 13,715 | 1,151 | 1,214 | |
Write-off of debt discount and debt issuance costs related to lenders that did not participate in refinancing | (4,808) | 0 | (5,360) | |
Net gain on sale of investments | 0 | (5,292) | 0 | |
Provision for doubtful accounts receivable and sales allowances | 5,173 | 7,563 | 9,221 | |
Non-cash stock-based compensation expense | 88,528 | 84,914 | 73,618 | |
Goodwill impairment charge | 0 | 83,382 | [1] | 0 |
Changes in assets and liabilities, net of acquisitions: | ||||
Accounts receivable | (15,989) | 17,121 | (25,509) | |
Inventories | (1,805) | 6,626 | 24,173 | |
Prepaid expenses and other assets | (15,844) | (10,984) | (66,001) | |
Deferred tax assets | 234 | (887) | 4,825 | |
Accounts payable | 107 | 2,339 | (28,862) | |
Accrued employee compensation | (59,703) | (11,382) | (57,859) | |
Deferred revenue | 1,345 | 8,652 | 8,599 | |
Other accrued liabilities | 50,366 | 96,376 | 12,944 | |
Restructuring liabilities | (2,825) | (12,271) | 14,843 | |
Net cash provided by operating activities | 447,499 | 541,597 | 451,029 | |
Cash flows from investing activities: | ||||
Purchases of non-marketable equity and debt investments | (2,150) | (223) | 0 | |
Proceeds from sale of non-marketable equity investments | 1,489 | 10,798 | 0 | |
Purchases of property and equipment | (68,743) | (54,734) | (52,371) | |
Purchase of intangible assets | (7,750) | 0 | 0 | |
Net cash paid in connection with acquisitions | (95,452) | (16,900) | (44,629) | |
Proceeds from collection of note receivable | 250 | 250 | 70,000 | |
Proceeds from sale of network adapter business | 0 | 9,995 | 0 | |
Net cash used in investing activities | (172,356) | (50,814) | (27,000) | |
Cash flows from financing activities: | ||||
Proceeds from senior unsecured notes | 0 | 0 | 296,250 | |
Payment of principal related to senior secured notes | (300,000) | 0 | (300,000) | |
Payment of debt issuance costs | (1,718) | 0 | (992) | |
Payment of principal related to capital leases | (1,818) | (2,485) | (1,627) | |
Common stock repurchases | (343,686) | (335,380) | (240,000) | |
Proceeds from issuance of common stock | 51,376 | 83,994 | 93,771 | |
Payment of cash dividends to stockholders | (67,470) | (30,384) | 0 | |
Proceeds from convertible notes | 565,656 | 0 | 0 | |
Purchase of convertible note hedge | (86,135) | 0 | 0 | |
Proceeds from issuance of warrants | 51,175 | 0 | 0 | |
Excess tax benefits from stock-based compensation | 48,943 | 64,563 | 3,189 | |
Net cash used in financing activities | (83,677) | (219,692) | (149,409) | |
Effect of exchange rate fluctuations on cash and cash equivalents | ||||
Effect of exchange rate fluctuations on cash and cash equivalents | (5,601) | (3,071) | (849) | |
Net increase in cash and cash equivalents | 185,865 | 268,020 | 273,771 | |
Cash and cash equivalents, beginning of year | 1,255,017 | 986,997 | 713,226 | |
Cash and cash equivalents, end of year | 1,440,882 | 1,255,017 | 986,997 | |
Cash paid for interest | ||||
Cash paid for interest | 29,560 | 34,737 | 39,842 | |
Cash paid for income taxes | ||||
Cash paid for income taxes | 41,442 | 22,207 | 14,493 | |
Supplemental schedule of non-cash investing activities: | ||||
Acquisition of property and equipment through capital leases | 0 | 0 | 1,312 | |
Settlement of debt investment in relation to acquisition | $ 150 | $ 0 | $ 0 | |
[1] | In the second quarter of fiscal year 2014, the Company made a strategic change in the allocation of its engineering resources by reducing its investment in engineering and sales for the hardware-based Brocade ADX products and increasing engineering investment in the software-based Brocade ADX products for Layer 4-7 applications. As a result of this change in strategy, the Company expected hardware-based Brocade ADX and related support revenue to be negatively impacted. Based on these changes in estimates, the Company recognized an impairment charge during the second fiscal quarter of 2014 because the book value of its Application Delivery Products (“ADP”) reporting unit net assets, which includes the Brocade ADX products, exceeded the estimated fair value of these assets. The goodwill amount related to the Company’s other reporting units was not impacted. |
Consolidated Statements Of Stoc
Consolidated Statements Of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Total Stockholders’ Equity |
Balance, Value at Oct. 27, 2012 | $ 457 | $ 2,009,190 | $ (9,864) | $ 236,037 | $ 2,235,820 | |
Balance, Shares at Oct. 27, 2012 | 456,913 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Issuance of common stock, Value | $ 29 | 73,778 | 73,807 | |||
Issuance of common stock, Shares | 29,556 | |||||
Common stock repurchases, Value | $ (41) | (239,959) | (240,000) | |||
Common stock repurchases, Shares | (41,184) | |||||
Tax benefit (detriment) from employee stock plans | $ 1,500 | (1,475) | (1,475) | |||
Stock-based compensation | 73,618 | 73,618 | ||||
Change in net unrealized gains on cash flow hedges | (2,124) | (2,124) | (2,124) | |||
Change in cumulative translation adjustments | (1,456) | (1,456) | (1,456) | |||
Net income | 208,623 | 208,623 | 208,623 | |||
Balance, Value at Oct. 26, 2013 | $ 445 | 1,915,152 | (13,444) | 444,660 | 2,346,813 | |
Balance, Shares at Oct. 26, 2013 | 445,285 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Issuance of common stock, Value | $ 24 | 49,565 | 49,589 | |||
Issuance of common stock, Shares | 24,196 | |||||
Common stock repurchases, Value | $ (38) | (335,342) | (335,380) | |||
Common stock repurchases, Shares | (38,011) | |||||
Tax benefit (detriment) from employee stock plans | (59,900) | 59,908 | 59,908 | |||
Stock-based compensation | 84,914 | 84,914 | ||||
Change in net unrealized gains on cash flow hedges | (2,174) | (2,174) | (2,174) | |||
Change in cumulative translation adjustments | (3,196) | (3,196) | (3,196) | |||
Dividends, Common Stock, Cash | (30,384) | (30,384) | ||||
Net income | 237,971 | 237,971 | 237,971 | |||
Balance, Value at Nov. 01, 2014 | $ 431 | 1,774,197 | (18,814) | 652,247 | 2,408,061 | |
Balance, Shares at Nov. 01, 2014 | 431,470 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Issuance of common stock, Value | $ 13 | 18,810 | 18,823 | |||
Issuance of common stock, Shares | 12,031 | |||||
Common stock repurchases, Value | $ (30) | (343,656) | (343,686) | |||
Common stock repurchases, Shares | (29,578) | |||||
Tax benefit (detriment) from employee stock plans | (48,000) | 47,999 | 47,999 | |||
Stock-based compensation | 88,528 | 88,528 | ||||
Adjustments to Additional Paid in Capital, Convertible Debt with Conversion Feature | 47,106 | 47,106 | ||||
Change in net unrealized gains on cash flow hedges | 368 | 368 | 368 | |||
Change in cumulative translation adjustments | (6,556) | (6,556) | (6,556) | |||
Dividends, Common Stock, Cash | (67,470) | (67,470) | ||||
Net income | $ 340,362 | 340,362 | 340,362 | |||
Balance, Value at Oct. 31, 2015 | $ 414 | $ 1,632,984 | $ (25,002) | $ 925,139 | $ 2,533,535 | |
Balance, Shares at Oct. 31, 2015 | 413,923 |
Basis Of Presentation
Basis Of Presentation | 12 Months Ended |
Oct. 31, 2015 | |
Accounting Policies [Abstract] | |
Basis Of Presentation | Basis of Presentation Brocade Communications Systems, Inc. (“Brocade” or the “Company”) is a leading supplier of networking hardware, software, and services, including Storage Area Networking (“SAN”) solutions and Internet Protocol (“IP”) Networking solutions for businesses and organizations of various types and sizes. Brocade’s end customers include global enterprises and other organizations and service providers, such as telecommunication firms, cable operators, and mobile carriers. Brocade’s products, services, and solutions simplify information technology (“IT”) infrastructure, increase resource utilization, ensure availability of mission critical applications, and support key IT services including Internet connectivity, enterprise mobility, virtualization, and cloud computing. The Company’s fiscal year is a 52- or 53-week period ending on the last Saturday in October or the first Saturday in November, respectively. As is customary for companies that use the 52/53-week convention, every fifth year is a 53-week year. Fiscal year 2015 is a 52-week fiscal year, fiscal year 2014 was a 53-week fiscal year, and fiscal year 2013 was a 52-week fiscal year. The Company’s next 53-week fiscal year will be fiscal year 2019 and its next 14-week quarter will be the second quarter of fiscal year 2019. The Company’s Consolidated Financial Statements include the accounts of Brocade and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Use of Estimates in Preparation of Consolidated Financial Statements The preparation of consolidated financial statements and related disclosures in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. Estimates are used for, but not limited to, revenue recognition, sales allowances and programs, allowance for doubtful accounts, stock-based compensation, acquisition purchase price allocations, warranty obligations, inventory valuation and purchase commitments, restructuring costs, incentive compensation, facilities lease losses, impairment of goodwill and other indefinite-lived intangible assets, litigation, income taxes, and investments. Actual results may differ materially from these estimates. |
Summary Of Significant Accounti
Summary Of Significant Accounting Policies | 12 Months Ended |
Oct. 31, 2015 | |
Accounting Policies [Abstract] | |
Summary Of Significant Accounting Policies | Summary of Significant Accounting Policies Cash and Cash Equivalents The Company considers all highly liquid investments with an original or remaining maturity of three months or less at the date of purchase to be cash equivalents. Investments and Equity Securities From time to time, the Company makes equity investments in non-publicly traded companies. These investments are included in “Other assets” on the accompanying Consolidated Balance Sheets and are generally accounted for under the cost method as the Company does not have the ability to exercise significant influence over the respective issuers’ operating and financial policies, nor does it have a liquidation preference that is substantive. The Company monitors its investments in non-publicly traded companies for impairment on a quarterly basis and makes appropriate reductions in carrying values when such impairments are determined to be other-than-temporary. Impairment charges are included in “ Other income, net ” on the Company’s Consolidated Statements of Income. Factors considered in determining an impairment include, but are not limited to, the current business environment including competition and uncertainty of financial condition, going concern considerations such as the rate at which the issuer company utilizes cash and the issuer company’s ability to obtain additional financing to fulfill its stated business plan, the need for changes to the issuer company’s existing business model due to changing business environments and its ability to successfully implement necessary changes, and comparable valuations. The carrying value of the Company’s equity investments in non-publicly traded companies at October 31, 2015 , and November 1, 2014 , was $2.5 million and $0.9 million , respectively. Fair Value of Financial Instruments The fair value of the Company’s financial instruments, including cash equivalents, accounts receivable, accounts payable, and accrued liabilities, approximate cost because of their short maturities. Derivative Financial Instruments In the normal course of business, the Company is exposed to fluctuations in interest rates and the exchange rates associated with foreign currencies. The derivatives entered into by the Company qualify for and are designated as foreign currency cash flow hedges. The derivatives are recognized on the Company’s Consolidated Balance Sheets at their respective fair values. Changes in fair values of outstanding cash flow hedges that are highly effective are recorded in “Accumulated other comprehensive loss” until earnings are affected by cash flows from the underlying hedged transaction. In most cases, amounts recorded in “Accumulated other comprehensive loss” will be recorded in earnings at maturity of the related derivative. The recognition of effective hedge results offsets the gains or losses on the underlying exposure. Cash flows from derivative transactions are classified according to the nature of the risk being hedged by presenting the gain or loss on the matured derivatives and related impact from the underlying hedged transactions in the same line items on the Company’s Consolidated Statements of Income. The Company formally documents all relationships between hedging instruments and hedged items, as well as the risk-management objective and strategy for undertaking hedge transactions. This documentation includes linking all derivatives either to specific assets and liabilities on the consolidated balance sheets or specific firm commitments or forecasted transactions. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives used in hedging transactions have been highly effective in offsetting changes in the cash flows of hedged items and whether those derivatives may be expected to remain highly effective in future periods. The Company discontinues hedge accounting prospectively when (i) the derivative is no longer highly effective in offsetting changes in the cash flows of a hedged item (including hedged items such as firm commitments or forecasted transactions); (ii) the derivative expires or is sold, terminated or exercised; (iii) it is no longer probable that the forecasted transaction will occur; or (iv) management determines that designating the derivative as a hedging instrument is no longer appropriate. When the Company discontinues hedge accounting, but it continues to be probable that the forecasted transaction will occur in the originally expected period, the gain or loss on the derivative remains in accumulated other comprehensive loss and is reclassified into earnings when the forecasted transaction affects earnings. However, if it is no longer probable that a forecasted transaction will occur by the end of the originally specified time period or within an additional two-month period of time thereafter, the gain or loss that was in accumulated other comprehensive loss will be recognized immediately in earnings. In all situations in which hedge accounting is discontinued and the derivative remains outstanding, the Company will carry the derivative at its fair value on the Company’s Consolidated Balance Sheet until maturity and will recognize future changes in the fair value in current period earnings. Any hedge ineffectiveness is recorded in current period earnings within “Other income (loss), net.” Effectiveness is assessed based upon statistical regression analysis of changes in cash flows, as well as other relevant information. Inventories Inventories are stated at the lower of cost (first-in, first-out) or market. Inventory costs include material, labor, and overhead. The Company records inventory write-downs based on excess and obsolete inventory determined primarily by its forecast of future demand. A majority of the Company’s inventory is located off-site at customers’ hubs, third-party managed service depots and at contract manufacturers’ locations. Cash flows related to the sale of inventories are classified as cash flows from operating activities. Property and Equipment Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. An estimated useful life of three years is used for computer equipment and four to seven years is used for software based on the nature of the software purchased. Estimated useful lives of up to four years are used for engineering and other equipment, seven years is used for furniture and an estimated useful life of thirty-nine years is used for buildings. Leasehold improvements are amortized using the straight-line method over the shorter of ten years or the remaining term of the lease. Brocade evaluates long-lived assets, such as property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable in accordance with Accounting Standards Codification (“ASC”) 360-10 Property, Plant and Equipment. Brocade assesses the fair value of the assets based on the undiscounted future cash flow the assets are expected to generate and recognizes an impairment loss when the estimated undiscounted future cash flow expected to result from the use of the asset plus net proceeds expected to result from the disposition of the asset, if any, are less than the carrying value of the asset. When Brocade identifies an impairment, Brocade reduces the carrying amount of the asset to its estimated fair value based on a discounted cash flow approach or, when available and appropriate, to comparable market values. Goodwill, Other Indefinite-lived Intangible Assets and Long-lived Intangible Assets Goodwill and other indefinite-lived intangible assets are generated as a result of business combinations. Our indefinite-lived assets are comprised of acquired in-process research and development (“IPR&D”) and goodwill. IPR&D is an intangible asset accounted as an indefinite-lived asset until the completion or abandonment of the associated research and development effort. During the development period, the Company conducts an IPR&D impairment test annually, as of the first day of the second fiscal quarter, and whenever events or changes in facts and circumstances indicate that it is more likely than not that the IPR&D is impaired. Events which might indicate impairment include, but are not limited to, adverse cost factors, deteriorating financial performance, strategic decisions made in response to economic and competitive conditions, the impact of the economic environment on us and our customer base, and/or other relevant events such as changes in management, key personnel, litigations, or customers. The Company evaluates goodwill on an annual basis during its second fiscal quarter or whenever events occur or facts and circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. An impairment loss is recognized to the extent that the carrying amount of goodwill exceeds the asset’s implied fair value. Events which might indicate impairment include, but are not limited to, strategic decisions made in response to economic and competitive conditions, the impact of the economic environment on the Company’s customer base, material negative changes in relationships with significant customers, and/or a significant decline in the Company’s stock price for a sustained period. Long-lived intangible assets are carried at cost less accumulated amortization. Amortization is recognized on a straight-line basis over the estimated useful life of the respective asset. The Company evaluates intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Examples of such events or circumstances include, but are not limited to, significant underperformance relative to historical or projected future operating results, significant changes in the manner of use of acquired assets or the strategy for the Company’s business, significant negative industry or economic trends, and/or a significant decline in the Company’s stock price for a sustained period. Impairment is recognized based on the difference between the fair value of the asset and its carrying value. For additional discussion, see Note 4 , “ Goodwill and Intangible Assets ,” of the Notes to Consolidated Financial Statements. Litigation Costs The Company is subject to the possibility of legal actions arising in the ordinary course of business. The Company regularly monitors the status of pending legal actions to evaluate both the magnitude and likelihood of any potential losses. An accrual for these potential losses is made when they are probable and the amount of loss, or possible range of loss, can be reasonably estimated. Legal costs related to such potential losses are expensed as incurred. In addition, recoveries are shown as a reduction in litigation costs in the period in which they are realized. Concentrations Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, and accounts receivable. Cash and cash equivalents are primarily maintained at five major financial institutions. Deposits held with banks may be redeemed upon demand and may exceed the amount of insurance provided on such deposits. A majority of the Company’s accounts receivable balance is derived from sales to original equipment manufacturer (“OEM”) partners in the computer storage and server industry. As of October 31, 2015 , one customer individually accounted for 17% of total accounts receivable. As of November 1, 2014 , three customers individually accounted for 15% , 12% , and 11% of total accounts receivable, for a combined total of 38% of total accounts receivable. The Company performs ongoing credit evaluations of its customers and generally does not require collateral on accounts receivable balances. The Company has established reserves for credit losses and sales allowances. For the fiscal years ended October 31, 2015 , November 1, 2014 , and October 26, 2013 , the same three customers accounted for a combined total of 41% ( EMC Corporation (“ EMC ”) with 17% , Hewlett Packard Enterprise Company (“ HPE ”) with 12% , and International Business Machines Corporation (“ IBM ”) with 12% ), 46% ( EMC with 18% , HPE with 12% , and IBM with 16% ), and 46% ( EMC with 18% , HPE with 12% , and IBM with 16% ) of total net revenues, respectively. The Company currently relies on single and limited sources for multiple key components used in the manufacture of its products. Additionally, the Company relies on multiple contract manufacturers (“CMs”) for the production of its products, including Hon Hai Precision Industry Co., Ltd. and Accton Technology Corporation. Although the Company uses standard parts and components for its products where possible, the Company’s CMs currently purchase, on their behalf, several key components used in the manufacture of products from single or limited supplier sources. Revenue Recognition Product revenue. Substantially all of the Company’s products are integrated with software that is essential to the functionality of the equipment. Additionally, the Company provides unspecified software upgrades and enhancements related to the equipment through its maintenance contracts for most of its products. Product revenue is generally recognized when all of the following criteria have been met: • Persuasive evidence of an arrangement exists; • Delivery has occurred; • The fee is fixed or determinable; and • Collectibility is reasonably assured. For newly introduced products, many of the Company’s large OEM customers require a product qualification period during which the Company’s products are tested and approved by the OEM customers for sale to their customers. Revenue recognition and related cost are deferred for shipments to new OEM customers and for shipments of newly introduced products to existing OEM customers until satisfactory evidence of completion of the product qualification has been received from the OEM customer. In addition, revenue from sales to the Company’s distributor customers is recognized in the same period in which the product is actually sold by the distributor (sell-through). The Company reduces revenue for estimated sales allowances at the time of shipment and sales programs at the later of revenue recognition or communication of the commitment for sales incentives. Sales allowances are estimated based on historical sales returns. Sales programs are estimated based on approved sales programs versus claims under such sales programs, current trends and the Company’s expectations regarding future activity. In addition, the Company maintains an allowance for doubtful accounts, which is also accounted for as a reduction in revenue. The Company establishes the allowance for doubtful accounts to ensure accounts receivable are not overstated due to uncollectibility. The Company maintains bad debt reserves based upon the analysis of accounts receivable, historical collection patterns, customer concentrations, customer creditworthiness, current economic trends, changes in customer payment terms and practices, and customer communication. The Company records a specific reserve for individual accounts when it becomes aware of a customer’s likely inability to meet its financial obligations, such as in the case of bankruptcy filings or deterioration in the customer’s operating results or financial position. If circumstances related to customers change, the Company would further adjust estimates of the recoverability of receivables. Multiple-element arrangements. The Company’s multiple-element product offerings include networking hardware with embedded software products and support, which are considered separate units of accounting. For certain of the Company’s products, software and non-software components function together to deliver the tangible products’ essential functionality. The Company allocates revenue to each element in a multiple-element arrangement based upon their relative selling price. When applying the relative selling price method, the Company determines the selling price for each deliverable using vendor-specific objective evidence (“VSOE”) of selling price, if it exists, or third-party evidence (“TPE”) of selling price. If neither VSOE nor TPE of selling price exist for a deliverable, the Company uses its best estimate of selling price for that deliverable. Revenue allocated to each element is then recognized when the basic revenue recognition criteria are met for each element. The Company determines VSOE based on its normal pricing and discounting practices for the specific product or service when sold separately. In determining VSOE, the Company requires that a substantial majority of the selling prices for a product or service fall within a reasonably narrow pricing range. For post-contract customer support (“PCS”), the Company considers stated renewal rates in determining VSOE. In most instances, the Company is not able to establish VSOE for all deliverables in an arrangement with multiple elements. This may be due to the Company infrequently selling each element separately, not pricing products within a narrow range, or only having a limited sales history. When VSOE cannot be established, the Company attempts to establish the selling price for each element based on TPE. TPE is determined based on competitor prices for similar deliverables when sold separately. Generally, the Company’s go-to-market strategy differs from that of its peers and its offerings contain a significant level of customization and differentiation such that the comparable pricing of products with similar functionality cannot be obtained. Furthermore, the Company is unable to reliably determine what similar competitor products’ selling prices are on a stand-alone basis. Therefore, the Company is typically unable to determine TPE. When the Company is unable to establish selling price using VSOE or TPE, the Company uses estimated selling price (“ESP”) in its allocation of the arrangement consideration. The objective of ESP is to determine the price at which the Company would transact a sale if the product or service were sold on a stand-alone basis. ESP is generally used for offerings that are not typically sold on a stand-alone basis or for new or highly customized offerings. The Company determines ESP for a product by considering multiple factors including, but not limited to, geographies, market conditions, competitive landscape, internal costs, gross margin objectives and pricing practices. The determination of ESP is made through consultation with and formal approval by the Company’s management, taking into consideration the go-to-market strategy. The Company regularly reviews VSOE, TPE and ESP, as well as the establishment and updates of these estimates. There was no material impact on revenues during the fiscal year ended October 31, 2015 , nor does the Company expect a material impact in the near term from changes in VSOE, TPE or ESP. Services revenue. Services revenue consists of professional services and maintenance arrangements, including PCS and other professional services. PCS services are offered under renewable, annual fee-based contracts or as part of multiple-element arrangements, and typically include telephone support and upgrades and enhancements to the Company’s operating system software. Revenue related to PCS elements is deferred and recognized ratably over the contractual period. PCS contracts are typically one to three years in length. Professional services are offered under hourly or fixed fee-based contracts. Professional services revenue is recognized as services are performed. Warranty Expense The Company provides standard warranties on its products ranging from one year to limited lifetime warranties. Estimated future warranty costs are accrued at the time of shipment and charged to cost of revenues based upon historical experience, current trends in warranty claims, and the Company’s expectations regarding future experience. Foreign Currency Assets and liabilities of the Company’s international subsidiaries in which the local currency is the functional currency are translated into U.S. dollars at period-end exchange rates. Income and expenses are translated into U.S. dollars at the average exchange rates during the period. The resulting translation adjustments are included in the Company’s Consolidated Balance Sheets in the stockholders’ equity section as a component of accumulated other comprehensive loss. Foreign exchange gains and losses for assets and liabilities of the Company’s international subsidiaries in which the functional currency is the U.S. dollar are recorded in the Company’s Consolidated Statement of Income. Capitalized Software Development Costs Eligible development costs for software to be sold are capitalized upon the establishment of technological feasibility, which is defined as being equivalent to completion of a beta-phase working prototype. Total eligible software development costs have not been material to date. Eligible costs related to internal development or purchase of software for internal use are capitalized and included in “Property and equipment, net.” These costs are being depreciated over the estimated useful lives of four to seven years based on the nature of the software purchased. Advertising Costs The Company expenses all advertising costs as incurred. Advertising costs were $13.6 million , $17.6 million , and $15.3 million for the fiscal years ended October 31, 2015 , November 1, 2014 , and October 26, 2013 , respectively. During the fiscal year ended October 27, 2012, the Company entered into a multi-year arrangement which includes exchanging certain of the Company’s products and services, with the estimated overall fair value of $16.6 million , for advertising. The Company is accounting for this transaction based on fair values of products and services surrendered and recognized $1.1 million , $2.4 million , and $7.1 million of gross operating revenue for the fiscal years ended October 31, 2015 , November 1, 2014 , and October 26, 2013 , respectively. In addition, $4.0 million of the advertising costs for the fiscal year ended October 31, 2015 , were incurred in connection with this multi-year arrangement, and the remaining advertising prepayment is currently recorded within “Prepaid expenses and other current assets” and “Other assets.” Income Taxes The Company recognizes income tax expense for the amount of taxes payable or refundable for the current year. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts, along with net operating loss carryforwards and credit carryforwards. A valuation allowance is recognized to the extent that it is more likely than not that the tax benefits will not be realized. The Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. The Company classifies the liability for unrecognized tax benefits as current to the extent that the Company anticipates payment (or receipt) of cash within one year. Interest and penalties related to uncertain tax positions are recognized in the provision for income taxes. For additional discussion, see Note 15 , “ Income Taxes ,” of the Notes to Consolidated Financial Statements. Computation of Net Income per Share Basic net income per share is computed using the weighted-average number of common shares outstanding during the period, less shares subject to repurchase. Diluted net income per share is computed using the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding during the period that have a dilutive effect on earnings per share. Potentially dilutive common shares result from the assumed exercise of outstanding stock options, assumed vesting of outstanding restricted stock units (“RSUs”), assumed issuance of stock under the employee stock purchase plan, and assumed conversion of outstanding convertible senior unsecured notes and exercise of related warrant transactions, all using the treasury stock method. Stock-Based Compensation The Company accounts for employee equity awards under the fair value method. Accordingly, the Company measures stock-based compensation at the grant date based on the fair value of the award. The fair values of stock options and the Employee Stock Purchase Plan (“ESPP”) are estimated using the Black-Scholes option pricing model. Estimated compensation cost relating to time-based RSUs granted prior to the initial declaration of a quarterly cash dividend on May 22, 2014, is based on the fair value of the Company’s common stock on the date of grant because Brocade did not historically pay cash dividends on its common stock. For time-based RSUs granted on or subsequent to May 22, 2014, the fair value of RSUs is measured based on the grant-date share price, less the present value of expected dividends during the vesting period, discounted at a risk-free interest rate. The fair value of restricted stock units with market conditions (“MSUs”) is estimated using a lattice model that incorporates a Monte Carlo simulation. The Company records stock-based compensation expense over the 24-month offering period in connection with shares issued under its ESPP. The compensation expense for stock-based awards is reduced by an estimate for forfeitures and is recognized over the vesting period of the award under a graded vesting method, except for RSUs granted by the Company, which is recognized over the expected term of the award under a straight-line vesting method. For additional discussion, see Note 12 , “ Stock-Based Compensation ,” of the Notes to Consolidated Financial Statements. The Company accounts for the tax effects of share-based payment awards using the alternative transition method, which includes simplified methods to establish the beginning balance of the additional paid-in capital pool (“APIC Pool”) related to the tax effects of employee stock-based compensation and to determine the subsequent impact on the APIC Pool and consolidated statement of cash flows of the tax effects of employee stock-based compensation awards. New Accounting Pronouncements or Updates Recently Adopted In March 2013, the Financial Accounting Standards Board (“FASB”) issued an update to Accounting Standards Codification (“ASC” or the “Codification”) 830, Foreign Currency Matters: Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity. Under this update, an entity is required to release any cumulative translation adjustment into net income when the entity ceases to have a controlling financial interest resulting from the complete, or substantially complete, liquidation of a subsidiary or group of assets within a foreign entity. This update should be applied prospectively. The Company adopted this update in the first quarter of fiscal year 2015. There was no material impact on the Company’s financial position, results of operations, or cash flows. In June 2015, the FASB issued an update to the Codification, Technical Corrections and Improvements. This update includes various amendments to clarify the Codification, correct unintended application of guidance, or make minor improvements to the Codification. This update is not intended to change U.S. GAAP. The Company adopted this update in the third quarter of fiscal year 2015. There was no material impact on the Company’s financial position, results of operations, or cash flows. Recent Accounting Pronouncements or Updates That Are Not Yet Effective In April 2014, the FASB issued an update to ASC 205 Presentation of Financial Statements (“ASC 205”) and ASC 360 Property, Plant, and Equipment (“ASC 360”): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. Under this update, a discontinued operation may include a component of an entity or a group of components of an entity, or a business or nonprofit activity. Only those disposals of components of an entity that represent a strategic shift that has, or will have, a major effect on an entity’s operations and financial results will be reported as discontinued operations in the financial statements. This update to ASC 205 and ASC 360 should be applied prospectively and will be adopted by the Company in the first quarter of fiscal year 2016. The Company does not expect the adoption of this update to have a material impact on its consolidated financial statements. In May 2014, the FASB issued an update to ASC 606 Revenue from Contracts with Customers (“ASC 606”) that will supersede virtually all existing revenue guidance. Under this update, an entity is required to recognize revenue upon transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. As such, an entity will need to use more judgment and make more estimates than under the current guidance. This update to ASC 606 should be applied retrospectively either to each prior reporting period presented in the financial statements, or only to the most current reporting period presented in the financial statements with a cumulative effect adjustment recorded in the retained earnings. In August 2015, the FASB issued an update to defer the effective date of this update by one year. This update becomes effective and will be adopted by the Company in the first quarter of fiscal year 2019. Early adoption is not permitted for reporting periods before the first quarter of fiscal year 2019. The Company is currently evaluating the impact of this update on its consolidated financial statements. In April 2015, the FASB issued an update to ASC 835, Interest—Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs. Under this update, debt issuance costs are required to be presented as a direct deduction from the carrying amount of the related debt liability, consistent with the presentation of debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by this update. This update is effective for the Company in the first quarter of fiscal year 2017, with early adoption permitted. This update should be applied retrospectively to all prior periods presented in the financial statements and will be early adopted by the Company in the first quarter of fiscal year 2016. The Company does not expect the adoption of this update to have a material impact on its consolidated financial statements. In April 2015, the FASB issued an update to ASC 350, Intangibles—Goodwill and Other—Internal-Use Software: Customer’s Accounting for Fees Paid in Cloud Computing Arrangement. This update provides guidance on the accounting for fees paid in a cloud computing arrangement if the arrangement was determined to include a software license. This update will not change U.S. GAAP for a customer’s accounting for service contracts. This update may be applied either prospectively or retrospectively and will be adopted by the Company in the first quarter of fiscal year 2017. Early adoption is permitted. The Company does not expect the adoption of this update to have a material impact on its consolidated financial statements. In July 2015, the FASB issued an update to ASC 330, Inventory: Simplifying the Measurement of Inventory. Under this update, subsequent measurement of inventory is based on the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and disposal. This update does not apply to inventory that is measured using last-in, first-out or the retail inventory method. This update should be applied prospectively and will be adopted by the Company in the first quarter o |
Acquisitions and Divestitures
Acquisitions and Divestitures | 12 Months Ended |
Oct. 31, 2015 | |
Business Combinations [Abstract] | |
Acquisitions and Divestitures | Acquisitions and Divestitures Acquisitions In March 2015 , the Company completed its acquisition of two businesses to strengthen its software networking portfolio. The total aggregate purchase price of the acquisitions was $96.1 million , consisting of $95.5 million in cash consideration, which is gross of $0.1 million of cash acquired as part of the acquisitions, and $0.5 million in non-cash consideration. For the fiscal year ended October 31, 2015 , the Company recorded direct acquisition costs and integration costs of $1.4 million and $2.5 million , respectively. These costs were expensed as incurred and are presented in the Company’s Consolidated Statements of Income for the fiscal year ended October 31, 2015, as “ Acquisition and integration costs. ” The results of operations for both acquisitions are included in the Company’s Consolidated Statements of Income from the respective dates of acquisition. The Company does not consider these acquisitions to be significant, individually or in the aggregate, to its results of operations or financial position. Therefore, the Company is not presenting pro-forma financial information of combined operations. In connection with these acquisitions, the Company allocated the total purchase consideration to the net assets acquired and liabilities assumed, including identifiable intangible assets, based on their respective fair values at the acquisition dates. The Company determined the fair value of the intangible assets acquired primarily using the income approach and the market approach with the assistance of a valuation firm. Estimates and assumptions with respect to the determination of the fair value of the intangible assets acquired include, but are not limited to, forecasted revenues, discount rates, and comparable market transactions. The following table summarizes the final allocation of the total aggregate purchase price based on the estimated fair values of the assets acquired and liabilities assumed at the acquisition dates (in thousands): Assets acquired: Cash $ 161 Accounts receivable 154 Property and equipment, net 1,432 Identifiable intangible assets: Core/developed technology 28,450 Customer relationships 22,030 Patents with broader applications 1,040 Trade name 500 Non-compete agreements 240 Total identifiable intangible assets 52,260 Goodwill (1) 49,444 Other assets 86 Total assets acquired 103,537 Liabilities assumed: Deferred revenue (3,603 ) Deferred tax liabilities (3,049 ) Other accrued liabilities (795 ) Total liabilities assumed (7,447 ) Net assets acquired $ 96,090 (1) The goodwill recognized primarily represents potential synergies from combining operations of the acquired businesses and the Company, as well as intangible assets that do not qualify for separate recognition. The total amount of goodwill that is expected to be deductible for tax purposes is $38.1 million . In conjunction with the acquisitions, the Company granted RSU awards and cash awards to transferring or continuing employees of the acquired businesses. These awards require the employees to continue providing services to the Company for the duration of the vesting or payout periods. For certain employees, the Company granted RSUs with an aggregate fair value of $6.4 million at the grant date, with RSUs vesting approximately every six months for a total vesting period of approximately two years . The RSUs are accounted for as stock-based compensation expense and reported, as applicable, within “Cost of revenues,” “Research and development,” “Sales and marketing,” and “General and administrative” on the Company’s Consolidated Statements of Income. For the fiscal year ended October 31, 2015, the Company recognized $1.6 million of stock-based compensation expense related to these RSU awards. For certain other employees, the Company will pay a total aggregate amount of $10.3 million as cash awards for their services. The cash awards are paid out in annual installments over a total period of four years . The cash awards are accounted for as employee compensation expense and reported within “Research and development” on the Company’s Consolidated Statements of Income . For the fiscal year ended October 31, 2015, the Company recognized $4.8 million of compensation expense related to these cash awards. For one of the acquisitions, the Company held an existing equity interest in the business at an acquisition-date fair value of $0.4 million . The Company used a market approach based on comparable recent investments in this acquired business to estimate the acquisition-date fair value of the existing equity interest . No gain or loss was recognized as a result of remeasuring the existing equity interest, as the cost of the existing equity interest approximated its fair value. On September 11, 2014 , the Company completed its acquisition of the assets of Vistapointe, Inc. (“Vistapointe”), a privately held developer of network visibility and analytics solutions with facilities located in San Ramon, California and Bangalore, India, and certain assets of its related entities. This acquisition has enhanced Brocade’s leadership role in developing software-based, carrier-grade network visibility and analytics (“NVA”) solutions for mobile network operators. This acquisition has also enhanced Brocade’s leadership in network functions virtualization (“NFV”) technology and gives Brocade a new market to address with visibility and analytics solutions for mobile operators. The results of operations of Vistapointe are included in the Company’s Consolidated Statement of Income from the date of the acquisition. The Company does not consider the acquisition of the assets of Vistapointe to be material to its results of operations or financial position, and therefore, the Company is not presenting pro-forma financial information of combined operations. The total purchase price was $16.9 million , consisting entirely of cash consideration. In addition, the Company paid direct acquisition costs of $0.4 million . In connection with this acquisition, the Company allocated the total purchase consideration to the net assets and liabilities acquired, including identifiable intangible assets, based on their respective fair values at the acquisition date. The following table summarizes the final allocation of the purchase price to the fair value of the assets and liabilities acquired (in thousands): Assets acquired: Identifiable intangible assets: In-process technology $ 2,850 Developed technology 1,710 Trade name 130 Total identifiable intangible assets 4,690 Goodwill 11,475 Property and equipment, net 735 Net assets acquired $ 16,900 On November 9, 2012 , the Company completed its acquisition of Vyatta, Inc. (“Vyatta”), a privately held developer of a software-based network operating system suite headquartered in Belmont, California. Vyatta became a wholly owned subsidiary of the Company as a result of the acquisition. The Vyatta operating system suite is deployed on conventional computer hardware platforms for multiple applications in network virtualization, software-defined networking (“SDN”), NFV, and other private/public cloud computing platforms. The software acquired as part of this acquisition complements Brocade’s investments in IP switches and router products and enables the Company to pursue new market opportunities in data center virtualization, including public cloud, virtual private cloud, and managed services. The results of operations of Vyatta are included in the Company’s Consolidated Statement of Income from the date of the acquisition. The Company does not consider the acquisition of Vyatta to be material to its results of operations or financial position, and therefore, the Company is not presenting pro-forma financial information of combined operations. The total purchase price was $44.8 million , consisting of $43.6 million cash consideration and $1.2 million related to prepaid license fees paid by the Company to Vyatta that was effectively settled at the recorded amount as a result of the acquisition. In addition, the Company paid direct acquisition costs of $0.4 million . Divestitures On January 17, 2014, the Company completed the sale of its network adapter business to QLogic Corporation as part of the Company’s business strategy to focus development on a portfolio of high-performance networking hardware and software-based products and services. The net carrying amount of the network adapter business’ assets and liabilities at the time of the divestiture was $5.1 million , comprised primarily of associated goodwill of $4.1 million . The sale resulted in a gain of $4.9 million , which is presented in the Company’s Consolidated Statements of Income as “ Gain on sale of network adapter business .” |
Goodwill And Intangible Assets
Goodwill And Intangible Assets | 12 Months Ended |
Oct. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill And Intangible Assets | Goodwill and Intangible Assets The following table presents a summary of the net carrying value of the Company’s intangible assets (in thousands): October 31, November 1, Indefinite-lived intangible assets: Goodwill $ 1,617,161 $ 1,567,723 In-process research and development (1) 15,110 15,110 Finite-lived intangible assets: Total intangible assets subject to amortization (2), (3) 60,513 11,548 Total intangible assets $ 1,692,784 $ 1,594,381 (1) Acquired IPR&D is an intangible asset accounted for as an indefinite-lived asset until the completion or abandonment of the associated research and development effort. If the research and development effort associated with the IPR&D is successfully completed, then the IPR&D intangible asset will be amortized over its estimated useful life to be determined at the date the effort is completed. The development effort on the remaining IPR&D intangible asset is expected to be completed by the first quarter of fiscal year 2016. (2) During the fiscal year ended October 31, 2015, the Company purchased a perpetual, nonexclusive license to certain patents for $7.8 million . (3) During the fiscal year ended October 31, 2015, the Company acquired $52.3 million of intangible assets related to the Company’s acquisition of two businesses. See Note 3 , “ Acquisitions and Divestitures ,” of the Notes to Consolidated Financial Statements. The Company conducts the IPR&D impairment test annually, as of the first day of the second fiscal quarter, or when events occur or facts and circumstances indicate that it is more likely than not that the IPR&D is impaired. For the annual IPR&D impairment test for fiscal year 2015, the Company elects the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of the IPR&D assets is less than the carrying amount. If, after assessing the totality of events and circumstances, the Company determines that it is more likely than not that the fair value of the IPR&D assets is less than the carrying amount, then the Company conducts a quantitative analysis to determine the fair value of the IPR&D assets. If the carrying amount of the IPR&D assets exceeds the fair value, then the Company recognizes an impairment loss equal to the difference. Based on the results of the annual IPR&D impairment analysis performed during the second fiscal quarter of 2015, the Company determined that no impairment needed to be recorded. As of October 31, 2015 , no new events or circumstances had arisen since the annual IPR&D impairment analysis performed during the second quarter of fiscal year 2015 that indicated that the fair value of the IPR&D assets may be less than the current carrying amount. The following table summarizes goodwill activity by reportable segment during the fiscal years ended October 31, 2015 , and November 1, 2014 (in thousands): SAN Products IP Networking Products Global Services Total Balance at October 26, 2013 Goodwill $ 176,878 $ 1,358,975 $ 155,416 $ 1,691,269 Accumulated impairment losses — (45,832 ) — (45,832 ) 176,878 1,313,143 155,416 1,645,437 Impairment (1) — (83,382 ) — (83,382 ) Divestitures (2) (474 ) (3,657 ) — (4,131 ) Acquisition — 11,475 — 11,475 Tax and other adjustments (3) (58 ) (1,618 ) — (1,676 ) Balance at November 1, 2014 Goodwill 176,346 1,365,175 155,416 1,696,937 Accumulated impairment losses — (129,214 ) — (129,214 ) 176,346 1,235,961 155,416 1,567,723 Acquisitions (4) — 49,458 — 49,458 Purchase accounting adjustments — (15 ) — (15 ) Tax and other adjustments (3) (21 ) — — (21 ) Translation adjustments — 16 — 16 Balance at October 31, 2015 Goodwill 176,325 1,414,634 155,416 1,746,375 Accumulated impairment losses — (129,214 ) — (129,214 ) $ 176,325 $ 1,285,420 $ 155,416 $ 1,617,161 (1) In the second quarter of fiscal year 2014, the Company made a strategic change in the allocation of its engineering resources by reducing its investment in engineering and sales for the hardware-based Brocade ADX products and increasing engineering investment in the software-based Brocade ADX products for Layer 4-7 applications. As a result of this change in strategy, the Company expected hardware-based Brocade ADX and related support revenue to be negatively impacted. Based on these changes in estimates, the Company recognized an impairment charge during the second fiscal quarter of 2014 because the book value of its Application Delivery Products (“ADP”) reporting unit net assets, which includes the Brocade ADX products, exceeded the estimated fair value of these assets. The goodwill amount related to the Company’s other reporting units was not impacted. (2) The goodwill disposed relates to the sale of the Company’s network adapter business. See Note 3 , “ Acquisitions and Divestitures ,” of the Notes to Consolidated Financial Statements. (3) The goodwill adjustments were primarily a result of tax benefits from the exercise of stock awards of acquired companies. (4) The goodwill acquired relates to the Company’s acquisition of two businesses, which is gross of the adjustments recorded during the purchase price allocation period. See Note 3 , “ Acquisitions and Divestitures ,” of the Notes to Consolidated Financial Statements. The Company conducts its goodwill impairment test annually, as of the first day of the second fiscal quarter, and whenever events occur or facts and circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. For the annual goodwill impairment test, the Company uses the income approach, the market approach, or a combination thereof to determine each reporting unit’s fair value. The income approach provides an estimate of fair value based on discounted expected future cash flows (“DCF”). The market approach provides an estimate of fair value by applying various observable market-based multiples to the reporting unit’s operating results and then applying an appropriate control premium. For the fiscal year 2015 annual goodwill impairment test, the Company used a combination of approaches to estimate each reporting unit’s fair value. The Company believed that at the time of impairment testing performed in the second fiscal quarter of 2015 , the income approach and the market approach were equally representative of a reporting unit’s fair value. Determining the fair value of a reporting unit or an intangible asset requires judgment and involves the use of significant estimates and assumptions. The Company based its fair value estimates on assumptions it believes to be reasonable, but inherently uncertain. Estimates and assumptions with respect to the determination of the fair value of its reporting units using the income approach include, among other inputs: • The Company’s operating forecasts; • The Company’s forecasted revenue growth rates; and • Risk-commensurate discount rates and costs of capital. The Company’s estimates of revenues and costs are based on historical data, various internal estimates, and a variety of external sources, and are developed as part of our regular long-range planning process. The control premium used in market or combined approaches is determined by considering control premiums offered as part of the acquisitions that have occurred in market segments that are comparable with the Company’s reporting units. Based on the results of the annual goodwill impairment analysis performed during the second fiscal quarter of 2015 , the Company determined that no impairment needed to be recorded. As of October 31, 2015 , no new events or circumstances had arisen since the annual goodwill impairment analysis performed during the second quarter of fiscal year 2015 that indicated that the fair values of the reporting units may be less than their current carrying amounts. The Company acquired certain finite-lived intangible assets as part of its acquisitions during the fiscal years ended October 31, 2015 , November 1, 2014 , and October 26, 2013 (see Note 3 , “ Acquisitions and Divestitures ,” of the Notes to Consolidated Financial Statements). The acquired finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives. The Company did not incur costs to renew or extend the term of any acquired finite-lived intangible assets during the fiscal years ended October 31, 2015 , November 1, 2014 , and October 26, 2013 . The following table presents the fair values and weighted-average useful lives of the acquired finite-lived intangible assets (in thousands, except for weighted-average useful life): Fiscal Year Ended October 31, 2015 November 1, 2014 October 26, 2013 Fair Value Weighted- Fair Value Weighted- Fair Value Weighted- Trade names $ 500 6.00 $ 130 5.00 $ 460 4.00 Core/developed technology 28,450 4.04 1,710 5.00 1,040 3.00 Customer relationships 22,030 7.93 — — 1,080 5.00 Non-compete agreements 240 2.00 — — 810 4.00 Patents with broader applications (1) 1,040 15.00 — — — — Total intangible assets $ 52,260 5.91 $ 1,840 5.00 $ 3,390 4.01 (1) These patents were acquired by the Company as part of an acquisition in fiscal year 2015. The potential use of these patents extends beyond their use in the core/developed technology acquired. Intangible assets other than goodwill are amortized on a straight-line basis over the following estimated remaining useful lives, unless the Company has determined these lives to be indefinite. The following tables present details of the Company’s finite-lived intangible assets (in thousands, except for weighted-average remaining useful life): Gross Carrying Value Accumulated Amortization Net Carrying Value Weighted- Average Remaining Useful Life (in years) October 31, 2015 Trade names $ 1,090 $ 415 $ 675 4.36 Core/developed technology 40,530 9,605 30,925 3.49 Patent portfolio license (1) 7,750 849 6,901 17.74 Customer relationships 23,110 2,484 20,626 7.18 Non-compete agreements 1,050 664 386 1.17 Patents with broader applications 1,040 40 1,000 14.38 Total intangible assets $ 74,570 $ 14,057 $ 60,513 6.55 Gross Carrying Value Accumulated Amortization Net Carrying Value Weighted- Average Remaining Useful Life (in years) November 1, 2014 Trade names $ 590 $ 227 $ 363 3.00 Core/developed technology 12,080 1,964 10,116 4.30 Customer relationships 1,080 427 653 3.01 Non-compete agreements 810 394 416 2.01 Total intangible assets (2) $ 14,560 $ 3,012 $ 11,548 4.10 (1) The patent portfolio license was assigned an estimated useful life that reflects the Company’s consumption of the expected defensive benefits related to this license to certain patents. The method of amortization for the patent portfolio license reflects the Company’s estimate of the pattern in which these expected defensive benefits will be used by the Company and is primarily based on the mix of expiration patterns of the individual patents included in the license. (2) During the fiscal year ended November 1, 2014 , $477.3 million of finite-lived intangible assets became fully amortized and, therefore, were removed from the balance sheet. The following table presents the amortization of finite-lived intangible assets included on the Company’s Consolidated Statements of Income (in thousands): Fiscal Year Ended October 31, November 1, October 26, Cost of revenues $ 7,640 $ 8,010 $ 39,731 General and administrative (1) 849 — — Other operating expense 2,556 10,280 54,256 Total $ 11,045 $ 18,290 $ 93,987 (1) The amortization is related to the $7.8 million of perpetual, nonexclusive license to certain patents purchased during the fiscal year ended October 31, 2015. The following table presents the estimated future amortization of finite-lived intangible assets as of October 31, 2015 (in thousands): Fiscal Year Estimated Future Amortization 2016 $ 14,774 2017 14,305 2018 9,785 2019 6,259 2020 5,168 Thereafter 10,222 Total $ 60,513 |
Restructuring And Other Costs
Restructuring And Other Costs | 12 Months Ended |
Oct. 31, 2015 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Other Costs | Restructuring and Other Related Costs The following table provides details of the Company’s restructuring and other related costs (in thousands): Fiscal Year Ended October 31, November 1, 2014 October 26, 2013 Goodwill impairment $ — $ 83,382 $ — Severance and benefits — (1,788 ) 20,413 Contract terminations and other — — 3,981 Lease loss reserve and related costs (benefits) (678 ) 7,686 1,070 Restructuring, goodwill impairment, and other related costs (benefits) $ (678 ) $ 89,280 $ 25,464 The following table provides a reconciliation of the Company’s beginning and ending restructuring liability balances (in thousands): Fiscal 2013 Fourth Quarter Restructuring Plan Other Restructuring Plans Severance and Benefits Contract Terminations and Other Lease Loss Reserve and Related Costs Lease Loss Reserve and Related Costs Total Restructuring liabilities at October 26, 2013 $ 15,216 $ 416 $ — $ 1,794 $ 17,426 Restructuring and other charges 18 — 7,686 — 7,704 Cash payments (13,258 ) (374 ) (3,600 ) (800 ) (18,032 ) Other adjustments, net (1,805 ) — — — (1,805 ) Translation adjustment — — (137 ) — (137 ) Restructuring liabilities at November 1, 2014 171 42 3,949 994 5,156 Restructuring and other charges — — (519 ) (159 ) (678 ) Cash payments — (42 ) (1,411 ) (427 ) (1,880 ) Other adjustments, net (27 ) — — — (27 ) Translation adjustment (34 ) — (208 ) — (242 ) Restructuring liabilities at October 31, 2015 $ 110 $ — $ 1,811 $ 408 $ 2,329 Current restructuring liabilities at October 31, 2015 $ 110 $ — $ 644 $ 336 $ 1,090 Non-current restructuring liabilities at October 31, 2015 $ — $ — $ 1,167 $ 72 $ 1,239 Fiscal 2013 Fourth Quarter Restructuring Plan During the fiscal year ended October 26, 2013, and the first quarter of fiscal year 2014, the Company restructured certain business operations and reduced the Company’s operating expense structure. The restructuring plan was approved by the Company’s management and communicated to the Company’s employees in September 2013 . The restructuring plan included a workforce reduction of approximately 250 employees, primarily in the engineering, sales, and marketing organizations, as well as the cancellation of certain nonrecurring engineering agreements and exit from certain leased facilities. The Company substantially completed the restructuring plan by the end of the first quarter of fiscal year 2014 . Other Restructuring Plans The Company also recorded charges related to estimated facilities lease losses, net of expected sublease income, due to consolidation of real estate space as a result of acquisitions. Cash payments for facilities that are part of the Company’s lease loss reserve are expected to be paid over the respective lease terms through fiscal year 2021 . General The Company reevaluates its estimates and assumptions on a quarterly basis and makes adjustments to the restructuring liabilities balance if necessary. During the fiscal year ended October 31, 2015 , the Company reversed approximately $0.7 million of charges related to estimated facilities lease losses primarily due to favorable changes in expected sublease terms and other related assumptions. The restructuring and other related charges are included in “ Restructuring, goodwill impairment, and other related costs (benefits) ” on the Company’s Consolidated Statements of Income. |
Balance Sheet Details
Balance Sheet Details | 12 Months Ended |
Oct. 31, 2015 | |
Balance Sheet Details [Abstract] | |
Balance Sheet Details | Balance Sheet Details The following tables provide details of selected balance sheet items (in thousands): October 31, November 1, Accounts receivable: Accounts receivable $ 247,376 $ 232,389 Allowance for doubtful accounts (1,838 ) (80 ) Sales allowances (9,655 ) (7,396 ) Accounts receivable, net $ 235,883 $ 224,913 October 31, November 1, Inventories: Raw materials $ 18,788 $ 10,491 Finished goods 21,736 28,227 Inventories $ 40,524 $ 38,718 October 31, November 1, Property and equipment, net: Gross property and equipment Computer equipment $ 14,820 $ 13,679 Software 67,625 62,919 Engineering and other equipment (1) 407,342 383,412 Furniture and fixtures (1) 31,028 29,053 Leasehold improvements 33,986 23,607 Land and building 385,415 384,659 Total gross property and equipment 940,216 897,329 Accumulated depreciation and amortization (1), (2) (500,992 ) (451,896 ) Property and equipment, net $ 439,224 $ 445,433 (1) Engineering and other equipment, furniture and fixtures, and accumulated depreciation and amortization include the following amounts under capital leases as of October 31, 2015 , and November 1, 2014 (in thousands): October 31, November 1, Cost $ 1,312 $ 11,925 Accumulated depreciation (857 ) (7,209 ) Property and equipment, net, under capital leases $ 455 $ 4,716 (2) The following table presents the depreciation of property and equipment included on the Company’s Consolidated Statements of Income (in thousands): Fiscal Year Ended October 31, November 1, October 26, Depreciation expense $ 73,623 $ 82,357 $ 90,127 October 31, November 1, Other accrued liabilities: Income taxes payable $ 7,142 $ 5,632 Accrued warranty 7,599 7,486 Inventory purchase commitments 1,237 2,541 Accrued sales programs 33,637 31,640 Accrued interest 6,523 9,922 Others 21,386 27,371 Other accrued liabilities $ 77,524 $ 84,592 |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Oct. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and also considers assumptions that market participants would use when pricing the asset or liability. The Company applies fair value measurements for both financial and non-financial assets and liabilities. The Company does not have any non-financial assets or liabilities that are required to be measured at fair value on a recurring basis as of October 31, 2015 . The fair value of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, restricted cash, accounts payable and accrued liabilities, approximate cost because of their short maturities. The fair value accounting guidance permits companies to elect fair value measurement for many financial instruments and certain other items that are not required to be accounted for at fair value. The Company did not elect fair value measurement for any eligible financial instruments or other assets. Fair Value Hierarchy The Company utilizes a fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. There are three levels of inputs that may be used to measure fair value: Level 1 Observable inputs that reflect quoted prices in active markets for identical assets or liabilities. Brocade’s assets utilizing Level 1 inputs include money market funds. Level 2 Inputs that reflect quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in less-active markets, or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Brocade’s assets and liabilities utilizing Level 2 inputs include derivative instruments. The Company uses observable market prices for comparable instruments to value its derivative instruments. Level 3 Unobservable inputs that reflect the Company’s own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available. Brocade has no assets or liabilities utilizing Level 3 inputs. During the fiscal year ended October 31, 2015 , the Company had no transfers between levels of the fair value hierarchy of its assets and liabilities measured at fair value. Assets and liabilities measured and recorded at fair value on a recurring basis as of October 31, 2015 , were as follows (in thousands): Fair Value Measurements Using Balance as of October 31, 2015 Quoted Prices in Active Markets for Identical Instruments (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Money market funds (1) $ 1,184,410 $ 1,184,410 $ — $ — Derivative assets 709 — 709 — Total assets measured at fair value $ 1,185,119 $ 1,184,410 $ 709 $ — Liabilities: Derivative liabilities $ 1,125 $ — $ 1,125 $ — Total liabilities measured at fair value $ 1,125 $ — $ 1,125 $ — (1) Money market funds are reported within “Cash and cash equivalents” on the Company’s Consolidated Balance Sheets. Assets and liabilities measured and recorded at fair value on a recurring basis as of November 1, 2014 , were as follows (in thousands): Fair Value Measurements Using Balance as of November 1, 2014 Quoted Prices in Active Markets for Identical Instruments (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Money market funds (1) $ 1,009,283 $ 1,009,283 $ — $ — Derivative assets 99 — 99 — Total assets measured at fair value $ 1,009,382 $ 1,009,283 $ 99 $ — Liabilities: Derivative liabilities $ 1,937 $ — $ 1,937 $ — Total liabilities measured at fair value $ 1,937 $ — $ 1,937 $ — (1) Money market funds are reported within “Cash and cash equivalents” on the Company’s Consolidated Balance Sheets. |
Borrowings
Borrowings | 12 Months Ended |
Oct. 31, 2015 | |
Debt Disclosure [Abstract] | |
Borrowings | Borrowings The following table provides details of the Company’s long-term debt (in thousands, except years and percentages): October 31, 2015 November 1, 2014 Maturity Stated Annual Interest Rate Amount Effective Interest Rate Amount Effective Interest Rate Convertible Senior Unsecured Notes 2020 Convertible Notes 2020 1.375% $ 575,000 4.98 % $ — — % Senior Unsecured Notes 2023 Notes 2023 4.625% 300,000 4.83 % 300,000 4.83 % Senior Secured Notes 2020 Notes 2015 6.875% — 8.39 % 300,000 7.26 % Capital lease obligations 2016 4.630% 298 4.63 % 2,115 5.37 % Total gross long-term debt 875,298 602,115 Unamortized discount (79,196 ) (4,839 ) Current portion of long-term debt (298 ) (1,826 ) Long-term debt, net of current portion $ 795,804 $ 595,450 Convertible Senior Unsecured Notes On January 14, 2015, the Company issued $575.0 million in aggregate principal amount of 1.375% convertible senior unsecured notes due 2020 (the “2020 Convertible Notes”) pursuant to an indenture, dated as of January 14, 2015, between the Company and Wells Fargo Bank, National Association, as the trustee (the “Offering”). Net of an original issue discount, the Company received $565.7 million in proceeds from the Offering. Concurrently with the closing of the Offering, the Company called for redemption its outstanding 6.875% senior secured notes due 2020 (the “2020 Notes”) and irrevocably deposited a portion of the net proceeds from the Offering with the trustee to discharge the 2020 Indenture as described below under “ Senior Secured Notes .” The 2020 Convertible Notes bear interest payable semiannually on January 1 and July 1 of each year, beginning on July 1, 2015. No payments were made toward the principal of the 2020 Convertible Notes during the fiscal year ended October 31, 2015 . The Company separately accounts for the liability and equity components of the 2020 Convertible Notes. The fair value of the liability component, used in the allocation between the liability and equity components as of the date of issuance, was based on the present value of cash flows using a discount rate of 4.57% , the Company’s borrowing rate for a similar debt instrument without the conversion feature. The carrying values of the liability and equity components of the 2020 Convertible Notes are as follows (in thousands): October 31, Principal $ 575,000 Unamortized discount of the liability component (76,311 ) Net carrying amount of liability component $ 498,689 Carrying amount of equity component $ 70,765 As of October 31, 2015 , the remaining period of amortization for the discount is 4.17 years. The amount of interest cost recognized for amortization of the discount and for the contractual interest coupon for the 2020 Convertible Notes was $12.9 million and $6.3 million , respectively, during the fiscal year ended October 31, 2015 . No interest cost was recognized for the 2020 Convertible Notes during the fiscal years ended November 1, 2014 , and October 26, 2013 . As of October 31, 2015 , the fair value of the 2020 Convertible Notes was approximately $568.0 million , which was estimated based on broker trading prices. The 2020 Convertible Notes mature on January 1, 2020 , unless repurchased or converted in accordance with their terms prior to such date. The 2020 Convertible Notes are not callable prior to their maturity. The 2020 Convertible Notes are convertible into common shares of the Company under the circumstances described below. The initial conversion rate is 62.7746 shares of the Company’s common stock per $1,000 principal amount of the notes, which is equal to 36.1 million shares at an initial conversion price of approximately $15.93 per share. The 2020 Convertible Notes contain provisions where the conversion rate is adjusted upon the occurrence of certain events, including if the Company pays a regular, quarterly cash dividend in an amount greater than $0.035 per share. During the fourth fiscal quarter of 2015, the Board of Directors of the Company declared and paid a cash dividend in the amount of $0.045 per share. Accordingly, as of September 8, 2015 , the conversion rate was adjusted to a rate of 62.8879 shares of the Company’s common stock per $1,000 principal amount of the notes, which is equal to 36.2 million shares at a conversion price of approximately $15.90 per share. However, because the adjustment resulted in a change to the conversion rate of less than 1%, as is allowed by the terms of the indenture governing the 2020 Convertible Notes, the Company elected to defer the administration and noteholder notification of such adjustment until the occurrence of (i) a subsequent adjustment to the conversion rate that results in a cumulative adjustment of at least 1% of the current conversion rate, (ii) the conversion of any 2020 Convertible Note, or (iii) certain other events requiring the adjustment to be made under the indenture governing the 2020 Convertible Notes. Holders of the 2020 Convertible Notes may convert all or a portion of their notes prior to the close of business on the business day immediately preceding September 1, 2019, in multiples of $1,000 principal amount, only under the following circumstances: • During any fiscal quarter commencing after the fiscal quarter ending on May 2, 2015 (and only during such fiscal quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price of the notes on each applicable trading day; • During the five -business-day period after any 10 consecutive trading day period in which the trading price per $1,000 principal amount of the notes for each trading day of that 10 consecutive trading day period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate of the notes on each such trading day; or • Upon the occurrence of certain corporate events as specified in the terms of the indenture governing the 2020 Convertible Notes. On or after September 1, 2019, to the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their notes regardless of the foregoing conditions. As of October 31, 2015 , the circumstances for conversion had not been triggered, and the 2020 Convertible Notes were not convertible. The if-converted value of the 2020 Convertible Notes as of October 31, 2015 , did not exceed the principal amount of the 2020 Convertible Notes. If a fundamental change, as specified in the terms of the indenture governing the 2020 Convertible Notes, occurs prior to the maturity date, holders of the notes may require the Company to repurchase the 2020 Convertible Notes at a repurchase price equal to 100% of the principal amount of the 2020 Convertible Notes repurchased, plus accrued and unpaid interest, if any, up to the repurchase date. As of October 31, 2015 , a fundamental change had not occurred and the 2020 Convertible Notes were not re-purchasable. Convertible Note Hedge and Warrants Related to the Convertible Senior Unsecured Notes In connection with the issuance of the 2020 Convertible Notes, the Company entered into convertible note hedge transactions with certain financial institutions (the “counterparties”) with respect to its common stock. Upon conversion of the 2020 Convertible Notes, the convertible note hedge transactions give the Company the right to acquire from the counterparties, subject to anti-dilution adjustments substantially similar to those in the 2020 Convertible Notes, initially approximately 36.1 million shares of the Company’s common stock at an initial strike price of $15.93 per share. Because a dividend in an amount greater than $0.035 per share was declared and paid effective beginning in the third fiscal quarter of 2015, the strike price under the convertible note hedge transactions was adjusted to approximately $15.90 per share. The convertible note hedge transactions are expected generally to reduce the potential common stock dilution, and/or offset potential cash payments in excess of the principal amount of converted notes, upon conversion of the notes in the event that the market price per share of the Company’s common stock, as measured under the terms of the convertible note hedge transactions, is greater than the strike price of the convertible note hedge transactions. The convertible note hedge transactions will be terminated on the maturity date of the 2020 Convertible Notes or earlier under certain circumstances. The $86.1 million cost of the convertible note hedge transactions has been accounted for as an equity transaction. Separately from the convertible note hedge transactions, the Company entered into warrant transactions with the counterparties, pursuant to which the Company sold warrants to the counterparties to acquire, subject to customary anti-dilution adjustments, up to 36.1 million shares in the aggregate at an initial strike price of $20.65 per share. The primary reason the Company entered into these warrant transactions was to partially offset the cost of the convertible note hedge transactions. The warrants mature over 60 trading days, commencing on April 1, 2020 , and are exercisable solely on the maturity dates. The warrants are subject to net share settlement; however, the Company may elect to cash settle the warrants. The Company received gross proceeds of $51.2 million from the warrant transactions, which have been accounted for as an equity transaction. Under the terms of the warrants, the strike price and number of shares to be acquired by the holders of the warrants are adjusted if the Company pays a regular, quarterly cash dividend in an amount greater than $0.035 per share. Accordingly, the terms of the warrants were adjusted to reflect the payment of a cash dividend in the amount of $0.045 per share beginning in the third fiscal quarter of 2015, and, as of September 8, 2015 , the holders of the warrants have the right to acquire up to approximately 36.2 million shares of the Company’s common stock at a strike price of approximately $20.61 per share. See Note 17 , “ Net Income per Share ,” of the Notes to Consolidated Financial Statements for further discussion of the dilutive impact of the 2020 Convertible Notes and the convertible note hedge and warrant transactions. Senior Unsecured Notes In January 2013, the Company issued 4.625% senior unsecured notes in the aggregate principal amount of $300.0 million due 2023 (the “2023 Notes”) pursuant to an indenture, dated as of January 22, 2013 (the “2023 Indenture”), between the Company, certain domestic subsidiaries of the Company that have guaranteed the Company’s obligations under the 2023 Notes, and Wells Fargo Bank, National Association, as the trustee. The guarantees of the 2023 Notes were released upon the termination of the Senior Secured Credit Facility and discharge of the 2020 Indenture, and, as a result, the Company ceased presenting condensed consolidated financial statements for the parent company, the former subsidiary guarantors, and non-guarantor subsidiaries effective in the first fiscal quarter of 2015. See Note 18 , “ Guarantor and Non-Guarantor Subsidiaries ,” of the Notes to Consolidated Financial Statements. The 2023 Notes bear interest payable semiannually on January 15 and July 15 of each year. No payments were made toward the principal of the 2023 Notes during the fiscal year ended October 31, 2015 . As of October 31, 2015 , and November 1, 2014 , the fair value of the 2023 Notes was approximately $293.9 million and $292.4 million , respectively, which was estimated based on broker trading prices. On or after January 15, 2018, the Company may redeem all or part of the 2023 Notes at the redemption prices set forth in the 2023 Indenture, plus accrued and unpaid interest, if any, up to the redemption date. At any time prior to January 15, 2018, the Company may redeem all or a part of the 2023 Notes at a price equal to 100% of the principal amount of the 2023 Notes, plus an applicable premium and accrued and unpaid interest, if any, up to the redemption date. In addition, at any time prior to January 15, 2016, the Company may redeem up to 35% of the principal amount of the 2023 Notes, using the net cash proceeds of one or more sales of the Company’s capital stock, at a redemption price equal to 104.625% of the principal amount of the 2023 Notes redeemed, plus accrued and unpaid interest, if any, up to the redemption date. If the Company experiences a specified change of control triggering event, it must offer to repurchase the 2023 Notes at a repurchase price equal to 101% of the principal amount of the 2023 Notes repurchased, plus accrued and unpaid interest, if any, up to the repurchase date. The 2023 Indenture contains covenants that, among other things, restrict the ability of the Company and its subsidiaries to: • Incur certain liens and enter into certain sale-leaseback transactions; • Create, assume, incur, or guarantee additional indebtedness of the Company’s subsidiaries without such subsidiary guaranteeing the 2023 Notes on a pari passu basis; and • Enter into certain consolidation or merger transactions, or convey, transfer, or lease all or substantially all of the Company’s or its subsidiaries’ assets. These covenants are subject to a number of limitations and exceptions as set forth in the 2023 Indenture. The 2023 Indenture also includes customary events of default, including cross-defaults to other debt of the Company and its subsidiaries. Senior Secured Notes In January 2010, the Company issued $300.0 million in aggregate principal amount of the 2020 Notes pursuant to an indenture, dated as of January 20, 2010, between the Company, certain domestic subsidiaries of the Company that have guaranteed the Company’s obligations under the 2020 Notes, and Wells Fargo Bank, National Association, as the trustee (the “2020 Indenture”). Interest on the 2020 Notes was payable semiannually on January 15 and July 15 of each year. The Company’s obligations under the 2020 Notes were previously guaranteed by certain of the Company’s domestic subsidiaries and secured by a lien on substantially all of the Company’s and the subsidiary guarantors’ assets. On January 14, 2015, the Company called the 2020 Notes for redemption at a redemption price equal to 103.438% of the principal amount of the 2020 Notes, and irrevocably deposited $322.2 million with the trustee for the 2020 Notes to discharge the 2020 Indenture. Due to the deposit and discharge, the guarantees provided by certain of the Company’s domestic subsidiaries, and the liens granted by the Company and the subsidiary guarantors to secure their obligations with respect to the 2020 Notes, were released as of the date of the deposit. As a result, the Company ceased presenting condensed consolidated financial statements for the parent company, the former subsidiary guarantors, and non-guarantor subsidiaries effective in the first fiscal quarter of 2015. See Note 18 , “ Guarantor and Non-Guarantor Subsidiaries ,” of the Notes to Consolidated Financial Statements. The amount deposited with the trustee included $300.0 million to repay the principal amount of the 2020 Notes, $10.3 million representing the difference between the redemption price and the principal amount of the 2020 Notes (“Call Premium”), $10.3 million for accrued interest through January 15, 2015, and $1.6 million of interest payable up to the redemption date of February 13, 2015. The trustee redeemed the 2020 Notes on February 13, 2015, using the deposited amount, extinguishing the Company’s $300.0 million liability for the principal amount of the 2020 Notes. In accordance with the applicable accounting guidance for debt modification and extinguishment, and for interest costs accounting, the Company expensed the Call Premium, remaining debt issuance costs, and remaining original issue discount relating to the 2020 Notes in the first quarter of fiscal year 2015, which totaled $20.4 million . The Company reported this expense within “Interest expense” on the Company’s Consolidated Statements of Income for the fiscal year ended October 31, 2015 . As of November 1, 2014 , the fair value of the 2020 Notes was approximately $312.5 million , which was estimated based on broker trading prices. Senior Secured Credit Facility In October 2008, the Company entered into a credit agreement for (i) a five -year, $1,100.0 million term loan facility and (ii) a five -year, $125.0 million revolving credit facility, which included a $25.0 million swing line loan sub-facility and a $25.0 million letter of credit sub-facility (“Senior Secured Credit Facility”). The credit agreement was subsequently amended in January 2010, June 2011, January 2013, October 2013, and April 2014, to, among other things, remove and update certain covenants, reduce interest rates on the term loan facility, reduce interest rates and fees on the revolving credit facility, and extend the maturity date of the revolving credit facility. There were no principal amounts or commitments outstanding under the term loan facility and the revolving credit facility as of either October 31, 2015 , or November 1, 2014 . On January 9, 2015, the Company terminated the Senior Secured Credit Facility. Debt Maturities As of October 31, 2015 , the Company’s aggregate debt maturities based on outstanding principal were as follows (in thousands): Fiscal Year Principal Balances 2016 $ 298 2017 — 2018 — 2019 — 2020 575,000 Thereafter 300,000 Total $ 875,298 |
Commitments And Contingencies
Commitments And Contingencies | 12 Months Ended |
Oct. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments And Contingencies | Commitments and Contingencies Operating Leases The Company leases certain facilities and certain equipment under various operating agreements expiring through October 2025 . In connection with its facilities lease agreements, the Company has signed unconditional, irrevocable letters of credit totaling $0.1 million as security for the leases. The following table presents the composition of net rent expense included on the Company’s Consolidated Statements of Income (in thousands): Fiscal Year Ended October 31, November 1, October 26, Rent expense $ 22,929 $ 21,928 $ 26,199 Sublease income (7,673 ) (7,264 ) (6,834 ) Net rent expense $ 15,256 $ 14,664 $ 19,365 Future minimum lease payments under all non-cancellable operating leases as of October 31, 2015 , excluding the contractual sublease income of $9.7 million , are as follows (in thousands): Fiscal Year Operating Leases 2016 $ 20,974 2017 12,125 2018 8,465 2019 6,717 2020 6,313 Thereafter 17,712 Total minimum lease payments $ 72,306 Capital Leases Future minimum lease payments under all non-cancellable capital leases as of October 31, 2015 , are as follows (in thousands): Fiscal Year Capital Leases 2016 - Total minimum lease payments $ 304 Amount representing interest (6 ) Present value of net minimum lease payments $ 298 Product Warranties The Company’s accrued liability for estimated future warranty costs is included in “Other accrued liabilities” in the accompanying Consolidated Balance Sheets. The following table summarizes the activity related to the Company’s accrued liability for estimated future warranty costs during the fiscal years ended October 31, 2015 , and November 1, 2014 (in thousands): Accrued Warranty Fiscal Year Ended October 31, November 1, Beginning balance $ 7,486 $ 8,632 Liabilities accrued for warranties issued during the period 4,076 4,683 Warranty claims paid and used during the period (4,164 ) (4,978 ) Changes in liability for pre-existing warranties during the period 201 (851 ) Ending balance $ 7,599 $ 7,486 In addition, the Company has defense and indemnification clauses contained within its various customer contracts. As such, the Company indemnifies the parties to whom it sells its products with respect to the Company’s products, both alone and in certain circumstances when in combination with other products and services, for infringement of any patents, trademarks, copyrights, or trade secrets, as well as against bodily injury or damage to real or tangible personal property caused by a defective Company product. As of October 31, 2015 , there have been no known events or circumstances that have resulted in a material customer contract-related indemnification liability to the Company. Manufacturing and Purchase Commitments Brocade has manufacturing arrangements with its CMs under which Brocade provides product forecasts and places purchase orders in advance of the scheduled delivery of products to Brocade’s customers. The required lead time for placing orders with the CMs depends on the specific product. Brocade issues purchase orders, and the CMs then generate invoices based on prices and payment terms mutually agreed upon and set forth in those purchase orders. Although the purchase orders Brocade places with its CMs are cancellable, the terms of the agreements require Brocade to purchase all inventory components not returnable, usable by, or sold to other customers of the CMs. In addition, Brocade has an arrangement with one of its CMs regarding factory capacity that can be used by the Company. Under this arrangement, the Company receives a credit for exceeding the planned utilization of factory capacity and, conversely, is required to pay additional fees for not utilizing the planned capacity. As of October 31, 2015 , the Company’s aggregate commitment to its CMs for inventory components used in the manufacture of Brocade products was $176.2 million , which the Company expects to utilize during future normal ongoing operations, net of a purchase commitments reserve of $1.2 million , which is reported within “Other accrued liabilities” on the Company’s Consolidated Balance Sheet as of October 31, 2015 . The Company’s purchase commitments reserve reflects the Company’s estimate of purchase commitments it does not expect to utilize in normal ongoing operations. Income Taxes The Company is subject to several ongoing income tax audits and has received notices of proposed adjustments or assessments from certain tax authorities. For additional discussion, see Note 15 , “ Income Taxes ,” of the Notes to Consolidated Financial Statements. The Company believes it has adequate reserves for all open tax years. Legal Proceedings From time to time, the Company is subject to various legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business, including claims of alleged infringement of patents and/or other intellectual property rights and commercial and employment contract disputes. While the outcome of these matters cannot be predicted with certainty, the Company does not believe that the outcome of any of these matters, individually or in the aggregate, will result in losses that are materially in excess of amounts already accrued by the Company. |
Derivative Instruments And Hedg
Derivative Instruments And Hedging Activities | 12 Months Ended |
Oct. 31, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments And Hedging Activities | Derivative Instruments and Hedging Activities In the normal course of business, the Company is exposed to fluctuations in interest rates and the exchange rates associated with foreign currencies. The Company’s primary objective for holding derivative financial instruments is to manage foreign currency exchange rate risk. The Company currently does not manage its exposure to credit risk by entering into derivative instruments. However, the Company manages its exposure to credit risk through its investment policies. As part of these investment policies, the Company generally enters into transactions with high-credit quality counterparties and, by policy, limits the amount of credit exposure to any one counterparty based on its analysis of that counterparty’s relative credit standing. The amounts subject to credit risk related to derivative instruments are generally limited to the amounts, if any, by which a counterparty’s obligations exceed the Company’s obligations with that counterparty. Foreign Currency Exchange Rate Risk A majority of the Company’s revenue, expense, and capital purchasing activities are transacted in U.S. dollars. However, the Company is exposed to foreign currency exchange rate risk inherent in conducting business globally in numerous currencies. The Company is primarily exposed to foreign currency fluctuations related to operating expenses denominated in currencies other than the U.S. dollar, of which the most significant to its operations for the fiscal year ended October 31, 2015 , were the British pound, the euro, the Indian rupee, the Chinese yuan, the Singapore dollar, the Japanese yen, and the Swiss franc. The Company has established a foreign currency risk management program to protect against the volatility of future cash flows caused by changes in foreign currency exchange rates. This program reduces, but does not eliminate, the impact of foreign currency exchange rate movements. The Company utilizes a rolling hedge strategy for the majority of its foreign currency derivative instruments to hedge exposures to the variability in the U.S. dollar equivalent of anticipated non-U.S.-dollar-denominated cash flows. All of the Company’s foreign currency forward contracts are single delivery, which are settled at maturity involving one cash payment. The Company’s foreign currency risk management program includes foreign currency derivatives with a cash flow hedge accounting designation that utilizes foreign currency forward and option contracts to hedge exposures to the variability in the U.S. dollar equivalent of anticipated non-U.S.-dollar-denominated cash flows. These instruments generally have a maturity of less than 15 months . For these derivatives, the Company initially reports the after-tax gain or loss from the effective portion of the hedge as a component of accumulated other comprehensive loss in stockholders’ equity and reclassifies it into earnings in the same period in which the hedged transaction affects earnings. The tax effect allocated to cash flow hedge-related components of other comprehensive loss was not significant for the fiscal years ended October 31, 2015 , November 1, 2014 , and October 26, 2013 . Ineffective cash flow hedges are included in the Company’s net income as part of “Other income, net.” The amount recorded on ineffective cash flow hedges was not significant for the fiscal years ended October 31, 2015 , November 1, 2014 , and October 26, 2013 . Net gains (losses) relating to the effective portion of foreign currency derivatives recorded in the Company’s Consolidated Statements of Income are as follows (in thousands): Fiscal Year Ended October 31, 2015 November 1, 2014 October 26, 2013 Cost of revenues $ (898 ) $ 126 $ 98 Research and development (381 ) (451 ) (60 ) Sales and marketing (2,772 ) 528 356 General and administrative (199 ) 59 31 Total $ (4,250 ) $ 262 $ 425 Alternatively, the Company may choose not to hedge the foreign currency risk associated with its foreign currency exposures if the Company believes such exposure acts as a natural foreign currency hedge for other offsetting amounts denominated in the same currency or if the currency is difficult or too expensive to hedge. The net foreign currency exchange gains and losses recorded as part of “Other income, net” were losses of $0.4 million and $0.3 million for the fiscal years ended October 31, 2015 , and November 1, 2014 , respectively, and gains of $0.1 million for the fiscal year ended October 26, 2013 . As of October 31, 2015 , the Company had gross unrealized loss positions of $1.1 million and gross unrealized gain positions of $0.7 million included in “Other accrued liabilities” and “Prepaid expenses and other current assets,” respectively. Volume of Derivative Activity Total gross notional amounts, presented by currency, are as follows (in thousands): Derivatives Designated as Hedging Instruments Derivatives Not Designated as Hedging Instruments In U.S. dollars October 31, 2015 November 1, 2014 October 31, 2015 November 1, 2014 British pound $ 46,330 $ 11,168 $ — $ 14,891 Euro 40,961 14,404 — 19,200 Indian rupee 35,647 19,413 — — Chinese yuan 15,129 10,406 — — Singapore dollar 13,745 9,242 — — Swiss franc 9,265 7,468 — — Japanese yen 8,809 8,856 — — Total $ 169,886 $ 80,957 $ — $ 34,091 |
Employee Compensation Plans
Employee Compensation Plans | 12 Months Ended |
Oct. 31, 2015 | |
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract] | |
Compensation and Employee Benefit Plans | Employee Compensation Plans In April 2009, the stockholders of Brocade approved the Company’s 2009 Stock Plan, 2009 Director Plan, and 2009 Employee Stock Purchase Plan (“2009 ESPP”), and such plans are now part of the Company’s equity compensation plans. The Company’s 1999 Stock Plan, 1999 Director Option Plan, and 1999 Employee Stock Purchase Plan (“1999 ESPP”) each expired in March 2009. In April 2012, the stockholders of Brocade approved an amendment and restatement of the Company’s 2009 Stock Plan and 2009 ESPP to increase the plans’ share reserves by 35.0 million and 30.0 million shares, respectively. In January 2013, the Compensation Committee (the “Committee”) of the Board of Directors of Brocade adopted the 2013 Inducement Award Plan. The objective of the plan is to provide incentives to attract, retain, and motivate eligible persons whose potential contributions are important to promote the success of the Company. In April 2015, the stockholders of Brocade approved an amendment and restatement of the Company’s 2009 Stock Plan and 2009 Director Plan to increase the plans’ share reserves by 29.5 million and 1.0 million shares, respectively, as well as change the fungible ratio at which RSUs are deducted from and returned to the plans. The 2009 Director Plan was also amended and restated to eliminate the fixed share initial restricted stock unit award granted in connection with an election or appointment to our Board of Directors, change the formula for calculating a pro-rata annual grant for a new director who first becomes a director other than at an annual meeting, and revise the annual restricted stock unit award to cover a fixed value of shares. 2013 Inducement Award Plan The 2013 Inducement Award Plan provides for the grant of stock options, restricted stock, RSUs, stock appreciation rights, performance units, performance shares, and other stock or cash awards to recipients as the Committee may determine. Per the terms of the plan, 2.4 million shares of the Company’s common stock are reserved for issuance under the plan, subject to adjustment for stock dividends, stock splits, or other changes in the Company’s common stock or the Company’s capital structure. In addition, the exercise price of stock options and stock appreciation rights granted under the plan must be at least equal to the fair market value of the Company’s common stock on the date of grant. The term, vesting schedule, and other conditions applicable to grants made under this plan are established by the Committee at the time of grant. 2009 Stock Plan The 2009 Stock Plan provides for the grant of stock options, restricted stock, RSUs, including restricted stock units with market conditions, stock appreciation rights, performance units, performance shares, and other stock or cash awards to employees, directors, and consultants. Per the terms of the 2009 Stock Plan, as amended, 112.5 million shares of the Company’s common stock are reserved for issuance under the plan, plus any shares subject to stock options or similar awards granted under the Company’s 1999 Stock Plan, 1999 Nonstatutory Stock Option Plan (“1999 NSO Plan”), and 2001 McDATA Equity Incentive Plan that expire or otherwise terminate without having been exercised in full, and shares issued pursuant to awards granted under the Company’s 1999 Stock Plan, 1999 NSO Plan, and 2001 McDATA Equity Incentive Plan that are forfeited to or repurchased by the Company, with the maximum number of shares to be added to the 2009 Stock Plan pursuant to this clause equal to 40.3 million shares. 2009 Director Plan The 2009 Director Plan provides for the grant of stock options and RSUs to non-employee directors of the Company. The Board of Directors has reserved 3.0 million shares of the Company’s common stock for issuance under the 2009 Director Plan, plus any shares subject to stock options or similar awards granted under the Company’s 1999 Director Option Plan that expire or otherwise terminate without having been exercised in full, and shares issued pursuant to awards granted under the Company’s 1999 Director Option Plan that are forfeited to or repurchased by the Company, with the maximum number of shares to be added to the 2009 Director Plan pursuant to this clause equal to 0.9 million shares. 2009 Employee Stock Purchase Plan The 2009 ESPP permits eligible employees to purchase shares of the Company’s common stock through payroll deductions for up to 15% of qualified compensation during the offering period. The purchase price is 85% of the lesser of the fair market value of the Company’s common stock on (i) the first trading day of the offering period, or (ii) the last day of each purchase period; provided, however, that the purchase price for subsequent offering periods may be determined by the administrator, subject to compliance with the terms of the 2009 ESPP. A total of 65.0 million shares of the Company’s common stock are reserved for issuance under the 2009 ESPP, as amended. The 2009 ESPP is implemented through consecutive, overlapping offering periods. The offering periods generally start with the first trading day on or after June 1 and December 1 each year and end on the last trading day in the periods ending 24 months later, unless the fair market value of the Company’s common stock on the last day of a purchase period is lower than the fair market value of the Company’s common stock on the first trading day of the offering period, in which case the offering period will end early, immediately after the purchase period, and a new offering period will commence on or about such date. Each offering period is divided into four purchase periods of approximately six months in length. Eligible employees may purchase no more than 3,750 shares of the Company’s common stock during each purchase period. As of October 31, 2015 , 10.5 million shares were available for issuance under the 2009 ESPP. McDATA Equity Plans On January 29, 2007, effective upon the consummation of the merger, Brocade assumed the McDATA equity plans. As of October 31, 2015 , the number of outstanding options under former McDATA equity plans was immaterial. Summary of Equity Compensation Plans The Company may grant stock options, restricted stock awards, and RSUs, including restricted stock units with market conditions, for shares of the Company’s common stock and other types of equity compensation awards to its employees and directors under the various equity compensation plans described above. Effective in April 2015, in accordance with the terms of the 2009 Stock Plan and the 2009 Director Plan, as amended, each award granted other than stock options or stock appreciation rights will count against the applicable plan’s share reserve as 2.03 shares for every one share subject to such award. In addition, the exercise price of stock options and stock appreciation rights granted under the 2009 Stock Plan must be at least equal to the fair market value of the Company’s common stock on the date of grant and the exercise price of incentive stock options granted to any participant who owns more than 10% of the total voting power of all classes of the Company’s outstanding stock must be at least 110% of the fair market value of the Company’s common stock on the date of grant. The term of a stock option and a stock appreciation right may not exceed seven years , except that, with respect to any participant who owns 10% of the voting power of all classes of the Company’s outstanding capital stock, the term of an incentive stock option may not exceed five years . The majority of the stock options, restricted stock awards, and RSUs granted under the Company’s equity compensation plans vest over a period of three to four years . Certain options and awards granted under the 2009 Stock Plan and the 2009 Director Plan vest over shorter or longer periods. As of October 31, 2015 , and November 1, 2014 , approximately 63.4 million and 55.2 million shares, respectively, were authorized for future issuance under the Company’s equity compensation plans, which include stock options, shares to be issued pursuant to the 2009 ESPP, RSUs, and other awards. A total of 36.8 million shares and 30.0 million shares of common stock were available for grant under the Company’s equity compensation plans as of October 31, 2015 , and November 1, 2014 , respectively. Awards that expire, or are cancelled without delivery of shares, generally become available for issuance under the Company’s equity compensation plans. Employee 401(k) Plan The Company sponsors the Brocade Communications Systems, Inc. 401(k) Plan (“401(k) Plan”), which qualifies under Section 401(k) of the Internal Revenue Code and is designed to provide retirement benefits for its eligible employees through tax-deferred salary deductions. Employees may elect to contribute up to 60% of their eligible compensation to the 401(k) Plan. Employee contributions are limited to a maximum annual amount as set periodically by the Internal Revenue Service (“IRS”). The Company matches employee contributions dollar for dollar up to a maximum of $3,000 per calendar year per person. All matching contributions vest immediately. The Company’s matching contributions to the 401(k) Plan totaled $8.7 million , $8.2 million , and $9.2 million for the fiscal years ended October 31, 2015 , November 1, 2014 , and October 26, 2013 , respectively. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Oct. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation Equity Compensation Plan Information The following table summarizes information with respect to shares of the Company’s common stock that may be issued under the Company’s existing equity compensation plans as of October 31, 2015 (in thousands, except per share amounts): Plan Category A Number of Securities to Be Issued Upon Exercise of Outstanding Options, Warrants and Rights B Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights C Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excludes Securities Reflected in Column A) Equity compensation plans approved by stockholders (1) 4,291 (3) $ 8.48 36,834 (5) Equity compensation plans not approved by stockholders (2) 2,400 (4) $ 5.66 — Total 6,691 $ 7.47 36,834 (1) Primarily consist of the 2009 ESPP, the 2009 and 1999 Director Plans, and the 2009 and 1999 Stock Plans. (2) Consist solely of the 2013 Inducement Award Plan described in Note 11 , “ Employee Compensation Plans ,” of the Notes to Consolidated Financial Statements. (3) Amount excludes purchase rights accrued under the 2009 ESPP. As of October 31, 2015 , the 2009 ESPP had a stockholder-approved reserve of 65.0 million shares, of which 10.5 million shares were available for future issuance. (4) All shares were granted in the first quarter of fiscal year 2013. Information relating to equity compensation plans is set forth in Note 11 , “ Employee Compensation Plans ,” of the Notes to Consolidated Financial Statements. (5) Amount consists of 10.5 million , 1.0 million , and 25.3 million shares available for future issuance under the 2009 ESPP, the 2009 Director Plan, and the 2009 Stock Plan, respectively. Stock-based compensation expense, net of estimated forfeitures, was included in the following line items of the Company’s Consolidated Statements of Income as follows (in thousands): Fiscal Year Ended October 31, November 1, October 26, Cost of revenues $ 12,946 $ 14,963 $ 14,519 Research and development 18,714 18,635 17,509 Sales and marketing 38,340 31,650 29,425 General and administrative 18,528 19,666 12,165 Total stock-based compensation expense $ 88,528 $ 84,914 $ 73,618 The following table presents stock-based compensation expense, net of estimated forfeitures, by grant type (in thousands): Fiscal Year Ended October 31, November 1, October 26, Stock options $ 3,675 $ 4,581 $ 2,581 RSUs, including restricted stock units with market conditions 67,735 62,906 50,522 Employee stock purchase plan (“ESPP”) 17,118 17,427 20,515 Total stock-based compensation expense $ 88,528 $ 84,914 $ 73,618 The following table presents the unrecognized compensation expense, net of estimated forfeitures, of the Company’s equity compensation plans as of October 31, 2015 , which is expected to be recognized over the following weighted-average periods (in thousands, except for the weighted-average period): Unrecognized Compensation Expense Weighted- Average Period (In years) Stock options $ 2,379 1.11 RSUs, including restricted stock units with market conditions $ 119,848 2.03 ESPP $ 6,663 0.87 In accordance with the applicable accounting guidance for stock-based compensation, the compensation expense for stock-based awards is reduced by an estimate for forfeitures and is recognized over the requisite service period of the respective awards. To the extent that the actual forfeitures differ from the estimated forfeitures, the Company records the difference in the period that the awards vest. The Company estimates the forward-looking forfeiture rate, using the Company’s historical forfeiture rates, annually during the second fiscal quarter, and whenever events occur or facts and circumstances indicate that the current forfeiture rate estimate is significantly different from historical forfeitures. Changes in the estimated forfeiture rates and differences between the estimated forfeiture rates and actual forfeiture rates may result in significant increases or decreases in stock-based compensation expense from period to period . Based on the results of the annual forfeiture rate analysis performed during the second fiscal quarter of 2015, the Company increased its expected forfeiture rate, which resulted in the Company recording a cumulative adjustment to stock-based compensation expense of $5.6 million in fiscal year 2015. There was no significant impact related to the change in the estimated forfeiture rates in fiscal year 2014. Stock Options The fair value of each option granted during the respective period is estimated on the date of grant using the Black-Scholes valuation model and the assumptions noted in the following table. The dividend yield reflects the cash dividends paid by Brocade starting in the third quarter of fiscal year 2014. The risk-free interest rate is based on the implied yield on a U.S. Treasury zero-coupon issue with a remaining term equal to the expected term of the option. The expected volatility is based on an equal weighted-average of implied volatilities from traded options of the Company’s common stock and historical volatility of the Company’s common stock. The expected term is based on historical exercise behavior. Fiscal Year Ended October 31, November 1, October 26, Expected dividend yield 1.3 % 0.0% - 1.5% 0.0 % Risk-free interest rate 1.1 - 1.8% 0.7 - 2.3% 0.6 - 1.7% Expected volatility 36.5 % 36.8 - 39.4% 39.9 - 44.9% Expected term (in years) 4.5 5.0 5.7 Compensation expense computed under the fair value method for stock options issued is being amortized under a graded vesting method over the options’ vesting period. A summary of stock option activity under the equity compensation plans for the fiscal years ended October 31, 2015 , November 1, 2014 , and October 26, 2013 , is presented as follows: Shares (In thousands) Weighted-Average Exercise Price Weighted-Average Grant Date Fair Value Weighted-Average Remaining Contractual Term (In years) Aggregate Intrinsic Value (In thousands) Outstanding as of October 27, 2012 29,497 $ 5.43 1.61 $ 26,077 Granted 2,875 $ 5.64 $ 2.34 Exercised (13,149 ) $ 3.99 $ 32,324 Forfeited or expired (6,662 ) $ 6.90 Outstanding as of October 26, 2013 12,561 $ 6.19 2.37 $ 24,784 Granted 1,770 $ 9.03 $ 3.16 Exercised (6,971 ) $ 5.93 $ 24,240 Forfeited or expired (1,161 ) $ 8.93 Outstanding as of November 1, 2014 6,199 $ 6.79 4.74 $ 24,452 Granted 1,117 $ 10.89 $ 3.09 Exercised (564 ) $ 6.68 $ 2,980 Forfeited or expired (61 ) $ 8.20 Outstanding as of October 31, 2015 6,691 $ 7.47 4.37 $ 20,252 Vested and expected to vest as of October 31, 2015 6,402 $ 7.39 4.32 $ 19,845 Exercisable and vested as of October 31, 2015 3,981 $ 6.79 3.81 $ 14,575 Restricted Stock Units, Including Restricted Stock Units with Market Conditions Prior to the initial declaration of a quarterly cash dividend on May 22, 2014, the fair value of time-based RSUs was measured based on the grant-date share price because Brocade did not historically pay cash dividends on its common stock. For awards granted on or subsequent to May 22, 2014, the fair value of time-based RSUs is measured based on the grant-date share price, less the present value of expected dividends during the vesting period, discounted at a risk-free interest rate. The fair value of MSUs is estimated using a lattice model that incorporates a Monte Carlo simulation. A summary of the changes in nonvested RSUs, including MSUs, under Brocade’s equity compensation plans during the fiscal years ended October 31, 2015 , November 1, 2014 , and October 26, 2013 , respectively, is presented as follows: Shares (In thousands) Weighted-Average Grant Date Fair Value Nonvested as of October 27, 2012 21,996 $ 3.71 Granted 11,518 $ 5.75 Vested (7,401 ) $ 5.69 Forfeited (3,352 ) $ 5.39 Nonvested as of October 26, 2013 22,761 $ 3.85 Granted 11,582 $ 9.69 Vested (11,750 ) $ 5.59 Forfeited (3,594 ) $ 6.01 Nonvested as of November 1, 2014 18,999 $ 5.93 Granted 10,777 $ 11.46 Vested (8,317 ) $ 7.81 Forfeited (2,260 ) $ 8.69 Nonvested as of October 31, 2015 19,199 $ 9.82 Vested and expected to vest as of October 31, 2015 16,243 $ 9.71 A summary of the changes in nonvested MSUs included in the above summary of changes in nonvested RSUs under Brocade’s equity compensation plans during the fiscal year ended October 31, 2015 , is presented as follows: Shares (In thousands) Weighted-Average Grant Date Fair Value Nonvested as of November 1, 2014 2,019 $ 11.62 Granted 1,510 $ 10.39 Vested (1,310 ) $ 12.30 Forfeited (283 ) $ 11.25 Nonvested as of October 31, 2015 1,936 $ 9.65 Vested and expected to vest as of October 31, 2015 1,258 $ 9.25 Typically, vesting of RSUs occurs over one to four years and is subject to the employee’s continuing service to Brocade. The aggregate intrinsic value of nonvested RSUs at October 31, 2015 , November 1, 2014 , and October 26, 2013 , was $200.1 million , $203.9 million , and $178.8 million , respectively. Employee Stock Purchase Plan Under Brocade’s employee stock purchase plans, including the 2009 ESPP and the 1999 ESPP (together, the “Brocade ESPP”), eligible employees can participate and purchase shares semiannually at the lower of 85% of the fair market value of the Company’s common stock on (i) the first trading day of the offering period, or (ii) the last day of each six-month purchase period. The Brocade ESPP permits eligible employees to purchase common stock through payroll deductions for up to 15% of qualified compensation. The Company accounts for the Brocade ESPP as a compensatory plan and compensation expense is being amortized under a graded vesting method over the 24 -month offering period. In addition, the Company accounts for changes in percentage contribution elected by employees, as well as decreases in the Company’s common stock price on the last day of each six -month purchase period as compared to the common stock price on the first trading day of the offering period, by applying modification accounting which results in an increase in compensation expense during the period of modification. The fair value of the option component of Brocade ESPP shares was estimated using the Black-Scholes option pricing model and the weighted-average assumptions noted in the following table: Fiscal Year Ended October 31, November 1, October 26, Expected dividend yield 1.4 % 1.4 % 0.0 % Risk-free interest rate 0.3 % 0.2 % 0.2 % Expected volatility 27.3 % 30.1 % 39.5 % Expected term (in years) 1.2 1.3 1.3 |
Stockholders' Equity Stockholde
Stockholders' Equity Stockholders' Equity | 12 Months Ended |
Oct. 31, 2015 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Dividends During the fiscal year ended October 31, 2015 , the Company’s Board of Directors declared the following dividends (in thousands, except per share amounts): Declaration Date Dividend per Share Record Date Total Amount Paid Payment Date November 23, 2014 $ 0.035 December 10, 2014 $ 15,106 January 2, 2015 February 16, 2015 $ 0.035 March 10, 2015 $ 14,748 April 2, 2015 May 20, 2015 $ 0.045 June 10, 2015 $ 18,965 July 2, 2015 August 18, 2015 $ 0.045 September 10, 2015 $ 18,651 October 2, 2015 Future dividends are subject to review and approval on a quarterly basis by the Company’s Board of Directors. Convertible Note Hedge and Warrants Related to the Convertible Senior Unsecured Notes In connection with the issuance of the 2020 Convertible Notes, the Company entered into convertible note hedge and warrant transactions with certain financial institutions with respect to its common stock. See Note 8 , “ Borrowings ,” of the Notes to Consolidated Financial Statements for further discussion. Accumulated Other Comprehensive Loss The components of other comprehensive loss and related tax effects for the fiscal years ended October 31, 2015 , and November 1, 2014 , are as follows (in thousands): Fiscal Year Ended October 31, 2015 November 1, 2014 Before-Tax Amount Tax (Expense) Benefit Net-of-Tax Amount Before-Tax Amount Tax Benefit Net-of-Tax Amount Unrealized gains (losses) on cash flow hedges: Change in unrealized gains and losses, foreign exchange contracts $ (3,570 ) $ 183 $ (3,387 ) $ (2,192 ) $ 253 $ (1,939 ) Net gains and losses reclassified into earnings, foreign exchange contracts (1) 4,250 (495 ) 3,755 (262 ) 27 (235 ) Net unrealized gains (losses) on cash flow hedges 680 (312 ) 368 (2,454 ) 280 (2,174 ) Foreign currency translation adjustments (6,556 ) — (6,556 ) (3,196 ) — (3,196 ) Total other comprehensive loss $ (5,876 ) $ (312 ) $ (6,188 ) $ (5,650 ) $ 280 $ (5,370 ) (1) For Consolidated Statements of Income classification of amounts reclassified from accumulated other comprehensive loss, see Note 10 , “ Derivative Instruments and Hedging Activities ,” of the Notes to Consolidated Financial Statements. The changes in accumulated other comprehensive loss by component, net of tax, for the fiscal years ended October 31, 2015 , and November 1, 2014 , are as follows (in thousands): Fiscal Year Ended October 31, 2015 November 1, 2014 Losses on Cash Flow Hedges Foreign Currency Translation Adjustments Total Accumulated Other Comprehensive Loss Gains (Losses) on Cash Flow Hedges Foreign Currency Translation Adjustments Total Accumulated Other Comprehensive Loss Beginning balance $ (1,907 ) $ (16,907 ) $ (18,814 ) $ 267 $ (13,711 ) $ (13,444 ) Change in unrealized gains and losses (3,387 ) (6,556 ) (9,943 ) (1,939 ) (3,196 ) (5,135 ) Net gains and losses reclassified into earnings 3,755 — 3,755 (235 ) — (235 ) Net current-period other comprehensive income (loss) 368 (6,556 ) (6,188 ) (2,174 ) (3,196 ) (5,370 ) Ending balance $ (1,539 ) $ (23,463 ) $ (25,002 ) $ (1,907 ) $ (16,907 ) $ (18,814 ) |
Other Income (Loss), net
Other Income (Loss), net | 12 Months Ended |
Oct. 31, 2015 | |
Other Income and Expenses [Abstract] | |
Other Income (Loss), net | Other Income, Net On May 20, 2013 , Brocade and A10 Networks, Inc. (“A10”) reached an agreement to settle both the lawsuit that Brocade filed against A10, A10’s founder, and other individuals in the United States District Court for the Northern District of California on August 4, 2010, and the lawsuit that A10 filed against Brocade on September 9, 2011, along with all related claims. Among other agreed upon terms, A10 has granted the Company a broad patent license and agreed to pay the Company $5.0 million in cash and issued a $70.0 million unsecured convertible promissory note payable to the Company, which bore interest at 8% per annum. A10 fully paid the unsecured convertible promissory note in the fourth quarter of fiscal year 2013. A10 also has agreed not to use any of the versions of source code that were found to infringe any of Brocade’s copyrights, patents, or trade secrets, except as necessary to service prior versions of product already sold to and in the possession of A10’s customers. In addition, the settlement provides certain mutual covenants not to sue for various periods of time and certain general releases. Based on the fair value of the consideration received as a result of this settlement, the Company recognized a gain of $76.8 million in the third quarter of fiscal year 2013, which is reported within “Other income, net” in the Company’s Consolidated Statements of Income for the fiscal year ended October 26, 2013. |
Income Taxes
Income Taxes | 12 Months Ended |
Oct. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The domestic and international components of income before income tax for the fiscal years ended October 31, 2015 , November 1, 2014 , and October 26, 2013 , are presented as follows (in thousands): Fiscal Year Ended October 31, November 1, October 26, United States $ 250,788 $ 192,730 $ 176,536 International 188,263 160,891 153,925 Total $ 439,051 $ 353,621 $ 330,461 The income tax expense (benefit) for the fiscal years ended October 31, 2015 , November 1, 2014 , and October 26, 2013 , consisted of the following (in thousands): Fiscal Year Ended October 31, November 1, October 26, U.S. federal taxes: Current $ 64,042 $ 61,666 $ (13,666 ) Deferred 14,775 33,065 46,313 Total U.S. federal taxes 78,817 94,731 32,647 State taxes: Current 9,790 16,597 8,091 Deferred 761 (2,599 ) 78,106 Total state taxes 10,551 13,998 86,197 Non-U.S. taxes: Current 9,713 6,655 2,837 Deferred (392 ) 266 157 Total non-U.S. taxes 9,321 6,921 2,994 Total $ 98,689 $ 115,650 $ 121,838 The difference between the U.S. federal statutory tax rate and the Company’s effective tax rate for fiscal years ended October 31, 2015 , November 1, 2014 , and October 26, 2013 , consisted of the following: Fiscal Year Ended October 31, November 1, October 26, U.S. federal statutory tax rate 35.0 % 35.0 % 35.0 % State taxes, net of federal tax benefit 0.2 3.1 4.1 Foreign income taxed at other than U.S. rates (14.5 ) (16.9 ) (17.6 ) Stock-based compensation expense 1.9 2.3 1.9 Research and development credit (0.9 ) (3.1 ) (5.6 ) Permanent items 0.3 0.3 0.3 Change in liabilities for uncertain tax positions 0.5 0.5 (5.1 ) Goodwill impairment charge — 8.3 — Audit settlement and reinstated tax credit — 0.1 1.3 Change in valuation allowance 1.3 1.6 23.7 Other (1.3 ) 1.5 (1.1 ) Effective tax rate 22.5 % 32.7 % 36.9 % In general, the Company’s provision for income taxes differs from the tax computed at the U.S. federal statutory tax rate due to state taxes, non-U.S. operations being taxed at rates lower than the U.S. federal statutory rate, non-deductible stock-based compensation expense, and adjustments to unrecognized tax benefits. The non-U.S. operations primarily relate to our European and Asia Pacific subsidiaries. The effective tax rate in fiscal year 2015 was lower than the U.S. federal statutory tax rate of 35% primarily due to the effects of earnings in foreign jurisdictions being taxed at rates lower than the U.S. federal statutory tax rate, a benefit from a qualified domestic manufacturing deduction, and a benefit from the federal research and development tax credit that was reinstated on December 19, 2014, and made retroactive for calendar year 2014. The effective tax rate in fiscal year 2014 was lower than the U.S. federal statutory tax rate of 35% primarily due to the effects of earnings in foreign jurisdictions being taxed at rates lower than the U.S. federal statutory tax rate and a benefit from the release of tax reserves due to expired statutes of limitations. In addition, the effective tax rate for fiscal year 2014 was negatively impacted by a goodwill impairment charge of $83.4 million , which is nondeductible for tax purposes, and a lower benefit from the federal research and development tax credit which expired on December 31, 2013, and, therefore, was not applicable in calendar year 2014. The Company’s effective tax rate for fiscal year 2015 is lower compared with fiscal years 2014 and 2013 primarily due to the negative impact of a goodwill impairment charge of $83.4 million in fiscal year 2014, which is nondeductible for tax purposes, and a discrete charge of $78.2 million to reduce previously recognized California deferred tax assets due to changes in California law resulting from the passage of Proposition 39 in fiscal year 2013, respectively. As of October 31, 2015 , U.S. federal income taxes and foreign withholding taxes were not provided for on an estimated cumulative total of $873.8 million of undistributed earnings of the Company’s foreign subsidiaries. The Company intends to reinvest current and accumulated earnings of its foreign subsidiaries for expansion of its business operations outside the United States for an indefinite period of time. Our existing cash and cash equivalents totaled $1,440.9 million as of October 31, 2015 . Of this amount, approximately 61% was held by our foreign subsidiaries. If these earnings were distributed to the United States in the form of dividends or otherwise, or if the shares of the relevant foreign subsidiaries were sold or otherwise transferred, the Company could be subject to additional U.S. income taxes, net of foreign tax credits, and foreign withholding taxes. Determination of the amount of unrecognized deferred income tax liability related to these earnings is not practicable. The components of deferred tax assets and deferred tax liabilities for the fiscal years ended October 31, 2015 , and November 1, 2014 , are presented as follows (in thousands): October 31, November 1, Net operating loss carryforwards $ 7,871 $ 8,679 Stock-based compensation expense 19,868 14,202 Tax credit carryforwards 87,830 84,930 Reserves and accruals 110,796 101,301 Other 140 553 Gross deferred tax assets 226,505 209,665 Valuation allowance (88,581 ) (83,489 ) Total deferred tax assets 137,924 126,176 Acquired intangibles and goodwill (18,155 ) (15,433 ) Fixed assets (28,370 ) (31,231 ) Other (35,935 ) (13,368 ) Total deferred tax liabilities (82,460 ) (60,032 ) Total net deferred tax assets $ 55,464 $ 66,144 As of October 31, 2015 , the Company believes that sufficient positive evidence exists from historical operations and projections of taxable income in future years to conclude that it is more likely than not that the Company will realize its deferred tax assets except for California deferred tax assets and capital loss carryforwards. Accordingly, the Company applies a valuation allowance to the California deferred tax assets due to the change in California law that occurred in November 2012, and to capital loss carryforwards due to the limited carryforward periods of these tax assets. As of October 31, 2015 , the Company had federal net operating loss carryforwards of $90.9 million , California state net operating loss carryforwards of $49.7 million and other significant state net operating loss carryforwards of approximately $135.3 million . Additionally, the Company had federal tax credit carryforwards of $119.4 million and state tax credit carryforwards of $178.7 million . The federal net operating loss and tax credit carryforwards expire on various dates between fiscal year 2017 through 2034 . The state net operating loss and credit carryforwards expire on various dates between fiscal year 2015 through 2032 . The federal net operating loss carryforwards and federal tax credit carryforwards include excess tax deductions related to stock-based compensation. Under the current tax law, net operating loss and credit carryforwards available to offset future income in any given year may be limited by statute or upon the occurrence of certain events, including significant changes in ownership interests. As a result of the McDATA, Foundry, and other acquisitions, all of the tax attributes from these companies are subject to an annual limitation. The Company expects some of these tax attributes to expire due to the annual limitation. The Company applies a recognition threshold and measurement attribute for the financial statement recognition and measurement of an income tax position taken or expected to be taken on a tax return. Recognition of a tax position is determined when it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation process. A tax position that meets the more-likely-than-not recognition threshold is measured at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority. A reconciliation of the beginning and ending amount of total gross unrecognized tax benefits, excluding accrued net interest and penalties, is as follows (in thousands): October 31, November 1, Unrecognized tax benefits, beginning balance $ 119,615 $ 112,479 Gross increases for tax positions taken in prior periods 705 3,325 Gross decreases for tax positions taken in prior periods (6,843 ) (4,784 ) Gross increases for tax positions taken in current period 8,418 15,426 Changes due to settlements with taxing authorities — — Reductions resulting from lapses of statutes of limitations (4,326 ) (6,831 ) Unrecognized tax benefits, ending balance $ 117,569 $ 119,615 As of October 31, 2015 , the Company had net unrecognized tax benefits of $79.0 million , all of which, if recognized, would result in a reduction of the Company’s effective tax rate. The IRS and other tax authorities regularly examine the Company’s income tax returns. In October 2014, the IRS issued a Revenue Agent’s Report related to its field examination of the Company’s federal income tax returns for fiscal years 2009 and 2010. The IRS is contesting the Company’s transfer pricing with its foreign subsidiaries. In November 2014, the Company filed a protest to challenge the proposed adjustment, and in March 2015, the issue was moved to the Office of Appeals. In addition, in October 2014, the Geneva Tax Administration issued its final assessments for fiscal years 2003 to 2012, disputing certain of the Company’s transfer pricing arrangements. In November 2014, the Company filed a protest to challenge the final assessments. The Company believes that reserves for unrecognized tax benefits are adequate for all open tax years. The timing of income tax examinations, as well as the amounts and timing of related settlements, if any, are highly uncertain. Before the end of fiscal year 2016, it is reasonably possible that either certain audits will conclude or the statutes of limitations relating to certain income tax examination periods will expire, or both. After we reach settlement with the tax authorities, we expect to record a corresponding adjustment to our unrecognized tax benefits. Taking into consideration the inherent uncertainty as to settlement terms, the timing of payments, and the impact of such settlements on the uncertainty in income taxes, the Company estimates the range of potential decreases in underlying uncertainty in income tax is between $0 and $4.0 million in the next 12 months. The Company classifies interest and penalties related to unrecognized tax benefits as a component of income tax expense. During the fiscal year ended October 31, 2015 , the Company recognized $0.2 million of interest and penalties related to unrecognized tax benefits. There was no material change in interest and penalties during the fiscal year ended November 1, 2014 . The total net accrued interest and penalties included in the Company’s liability related to unrecognized tax benefits as of October 31, 2015 , and November 1, 2014 , was $2.5 million and $2.3 million , respectively. Of the total tax benefits (detriments) resulting from the exercise of employee stock options and employee participation in the Company’s equity compensation plans, the amounts recorded to stockholders’ equity were approximately $48.0 million in fiscal year 2015 , $59.9 million in fiscal year 2014 , and $(1.5) million in fiscal year 2013 . |
Segment Information
Segment Information | 12 Months Ended |
Oct. 31, 2015 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”), or decision-making group, in deciding how to allocate resources and in assessing performance. Financial decisions and the allocation of resources are based on the information from the Company’s internal management reporting system. Currently, the Company’s CODM is its Chief Executive Officer. Brocade is organized into three operating segments, each of which is an individually reportable segment: SAN Products, IP Networking Products, and Global Services. These reportable segments are organized principally by product category. The types of products and services from which each reportable segment derives its revenues are as follows: • SAN Products include infrastructure products and solutions that help customers develop and deploy storage and server consolidation, disaster recovery, and data security, as well as meet compliance requirements regarding data management. These products are used to build storage area networks and are generally used in conjunction with servers and storage subsystems, SAN interconnection components, and server and storage management software applications and tools. Brocade’s family of Fibre Channel (“FC”) SAN backbones, directors, and fabric/embedded switches provide interconnection, bandwidth, and high-speed switching between servers and storage devices. Switches and directors support key applications such as data backup, remote mirroring, and high-availability clustering, as well as high-volume transaction processing applications such as enterprise resource planning and data warehousing. Additionally, Brocade offers a variety of FC fabric extension, switching, and routing solutions; • IP Networking Products include Layer 2 and Layer 3 Ethernet switches and routers that are designed to connect users over private and public networks, including local area, metro, and within and across global data centers. Brocade also offers converged network products, and a portfolio of related software and hardware-based data networking offerings. Additionally, the Company offers Layer 4-7 platforms that are designed for application traffic management and server load balancing; and • Global Services include break/fix maintenance, installation, consulting, network management and software maintenance, and post-contract customer support revenue. At this time, the Company does not track its operating expenses by operating segments because management does not consider this information in its measurement of the performance of the operating segments. The Company also does not track all of its assets by operating segments. The majority of the Company’s assets as of October 31, 2015 , and November 1, 2014 , were attributable to its U.S. operations. Summarized financial information by reportable segment for the fiscal years ended October 31, 2015 , November 1, 2014 , and October 26, 2013 , based on the internal management reporting system, is as follows (in thousands): SAN Products IP Networking Products Global Services Total Fiscal year ended October 31, 2015 Net revenues $ 1,301,231 $ 601,170 $ 361,059 $ 2,263,460 Cost of revenues 311,881 275,634 147,872 735,387 Gross margin $ 989,350 $ 325,536 $ 213,187 $ 1,528,073 Fiscal year ended November 1, 2014 Net revenues $ 1,326,950 $ 525,237 $ 359,080 $ 2,211,267 Cost of revenues 344,466 247,975 153,033 745,474 Gross margin $ 982,484 $ 277,262 $ 206,047 $ 1,465,793 Fiscal year ended October 26, 2013 Net revenues $ 1,318,509 $ 552,058 $ 352,297 $ 2,222,864 Cost of revenues 355,388 302,974 155,623 813,985 Gross margin $ 963,121 $ 249,084 $ 196,674 $ 1,408,879 Revenues are attributed to geographic areas based on where the Company’s products are shipped. Geographic revenue and property and equipment information for the fiscal years ended October 31, 2015 , November 1, 2014 , and October 26, 2013 is presented below (in thousands): Fiscal Year Ended October 31, November 1, October 26, Net revenues: United States $ 1,275,056 $ 1,286,650 $ 1,351,242 International Europe, the Middle East and Africa (1) 610,133 598,196 552,734 Asia Pacific 229,903 183,035 181,461 Japan 93,470 91,062 97,259 Canada, Central and South America 54,898 52,324 40,168 Total international net revenues 988,404 924,617 871,622 Total net revenues $ 2,263,460 $ 2,211,267 $ 2,222,864 (1) Includes net revenues of $400.0 million , $385.2 million , and $339.1 million for the fiscal years ended October 31, 2015 , November 1, 2014 , and October 26, 2013 , respectively, relating to the Netherlands. Fiscal Year Ended October 31, November 1, October 26, Property and equipment, net: United States $ 409,404 $ 426,941 $ 457,622 International 29,820 18,492 15,318 Property and equipment, net $ 439,224 $ 445,433 $ 472,940 |
Net Income Per Share
Net Income Per Share | 12 Months Ended |
Oct. 31, 2015 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | Net Income per Share The following table presents the calculation of basic and diluted net income per share (in thousands, except per share amounts): Fiscal Year Ended October 31, November 1, October 26, Basic net income per share Net income $ 340,362 $ 237,971 $ 208,623 Weighted-average shares used in computing basic net income per share 420,331 435,258 450,516 Basic net income per share $ 0.81 $ 0.55 $ 0.46 Diluted net income per share Net income $ 340,362 $ 237,971 $ 208,623 Weighted-average shares used in computing basic net income per share 420,331 435,258 450,516 Dilutive potential common shares in the form of stock options 1,722 1,995 3,472 Dilutive potential common shares in the form of other share-based awards 8,503 9,606 9,717 Weighted-average shares used in computing diluted net income per share 430,556 446,859 463,705 Diluted net income per share $ 0.79 $ 0.53 $ 0.45 Antidilutive potential common shares in the form of: (1) Warrants issued in conjunction with the 2020 Convertible Notes (2) 28,880 — — Stock options 977 1,725 11,868 Other share-based awards 142 893 167 (1) These amounts are excluded from the computation of diluted net income per share. (2) In connection with the issuance of the 2020 Convertible Notes, the Company entered into convertible note hedge and warrant transactions as described in Note 8 , “ Borrowings .” The 2020 Convertible Notes have no impact on diluted earnings per share until the average quarterly price of the Company’s common stock exceeds the adjusted conversion price of $15.90 per share. If the common stock price exceeds this adjusted conversion price, prior to conversion, the Company will calculate the effect of the additional shares that may be issued using the treasury stock method. If the average price of the Company’s common stock exceeds $20.61 per share for a quarterly period, the Company’s weighted-average shares used in computing diluted net income per share will be impacted by the effect of the additional potential shares that may be issued related to the warrants using the treasury stock method. The convertible note hedge is not considered for purposes of the diluted earnings per share calculation, as its effect would be antidilutive. |
Guarantor And Non-Guarantor Sub
Guarantor And Non-Guarantor Subsidiaries | 12 Months Ended |
Oct. 31, 2015 | |
Guarantor And Non-Guarantor Subsidiaries [Abstract] | |
Guarantor And Non-Guarantor Subsidiaries | Guarantor and Non-Guarantor Subsidiaries On January 20, 2010, the Company issued $300.0 million in aggregate principal amount of the 6.625% senior secured notes due 2018 (the “2018 Notes”) and $300.0 million in aggregate principal amount of the 2020 Notes (together with the 2018 Notes, the “Senior Secured Notes”) pursuant to separate indentures between the Company, certain domestic subsidiaries of the Company, and Wells Fargo Bank, National Association, as the trustee (the “2020 Indenture” and “2018 Indenture,” respectively). In addition, on January 22, 2013, the Company issued $300.0 million in aggregate principal amount of the 2023 Notes. The Company’s obligations under the Senior Secured Notes and the 2023 Notes were previously guaranteed by certain of the Company’s domestic subsidiaries (the “Subsidiary Guarantors”). Each of the Subsidiary Guarantors was 100% owned by the Company and all guarantees were joint and several. Neither the Senior Secured Notes nor the 2023 Notes were guaranteed by certain of the Company’s domestic subsidiaries or any of the Company’s foreign subsidiaries (the “Non-Guarantor Subsidiaries”). The Company determined that the circumstances under which the subsidiary guarantees may be released were customary under applicable SEC guidance, and, as such, the Company previously provided consolidated financial statements in reliance on Item 3-10 of Regulation S-X. The guarantees of the 2018 Notes and 2020 Notes were released on January 22, 2013, and January 14, 2015, respectively, upon the discharge of the 2018 Indenture and 2020 Indenture. The guarantees of the 2023 Notes were released on January 14, 2015, upon termination of the Senior Secured Credit Facility and discharge of the 2020 Indenture. As a result, all guarantees were released prior to January 31, 2015, and the Company ceased presenting condensed consolidated financial statements for the parent company, the former Subsidiary Guarantors, and Non-Guarantor Subsidiaries effective in the first fiscal quarter of 2015. |
Quarterly Summary
Quarterly Summary | 12 Months Ended |
Oct. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Information [Text Block] | BROCADE COMMUNICATIONS SYSTEMS, INC. QUARTERLY SUMMARY (Unaudited) Three Months Ended October 31, 2015 August 1, 2015 May 2, 2015 January 31, 2015 November 1, 2014 August 2, 2014 May 3, 2014 (1) January 25, 2014 (In thousands, except per share and stock price amounts) Quarterly Data: Net revenues $ 588,827 $ 551,819 $ 546,575 $ 576,239 $ 564,358 $ 545,464 $ 536,910 $ 564,535 Gross margin $ 394,277 $ 371,904 $ 372,209 $ 389,683 $ 377,118 $ 361,713 $ 354,292 $ 372,670 Income from operations $ 119,221 $ 119,849 $ 114,205 $ 139,405 $ 126,530 $ 117,897 $ 20,195 $ 121,490 Net income (loss) $ 84,388 $ 91,667 $ 77,040 $ 87,267 $ 83,419 $ 87,352 $ (13,684 ) $ 80,884 Per share amounts: Basic $ 0.20 $ 0.22 $ 0.18 $ 0.20 $ 0.19 $ 0.20 $ (0.03 ) $ 0.18 Diluted $ 0.20 $ 0.21 $ 0.18 $ 0.20 $ 0.19 $ 0.20 $ (0.03 ) $ 0.18 Shares used in computing per share amounts: Basic 414,769 417,299 420,718 428,536 431,843 432,448 436,167 440,573 Diluted 422,315 427,518 433,234 439,156 441,649 441,789 436,167 453,549 Common stock sale prices: High $ 11.28 $ 12.88 $ 12.96 $ 12.43 $ 10.99 $ 9.75 $ 10.96 $ 9.70 Low $ 9.72 $ 9.67 $ 10.85 $ 10.66 $ 8.91 $ 7.95 $ 8.81 $ 7.77 (1) The quarter ended May 3, 2014 , includes the impact of an $83.4 million impairment of goodwill in the Company’s Application Delivery Products reporting unit. |
Valuation And Qualifying Accoun
Valuation And Qualifying Accounts | 12 Months Ended |
Oct. 31, 2015 | |
Valuation and Qualifying Accounts [Abstract] | |
Schedule of Valuation and Qualifying Accounts Disclosure | SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS Fiscal Years Ended October 31, 2015 , November 1, 2014 , and October 26, 2013 Balance at Beginning of Period Additions (Recoveries) Charged to Revenues Deductions (1) Balance at End of Period (In thousands) Allowance for doubtful accounts: 2015 $ 80 $ 1,786 $ (28 ) $ 1,838 2014 $ 575 $ (85 ) $ (410 ) $ 80 2013 $ 833 $ 319 $ (577 ) $ 575 Sales allowances: 2015 $ 7,396 $ 9,466 $ (7,207 ) $ 9,655 2014 $ 7,321 $ 7,563 $ (7,488 ) $ 7,396 2013 $ 9,759 $ 8,885 $ (11,323 ) $ 7,321 (1) Deductions related to the allowance for doubtful accounts and sales allowances represent amounts written off against the allowance and recoveries. |
Basis Of Presentation (Policies
Basis Of Presentation (Policies) | 12 Months Ended |
Oct. 31, 2015 | |
Accounting Policies [Abstract] | |
Fiscal Period Policy | The Company’s fiscal year is a 52- or 53-week period ending on the last Saturday in October or the first Saturday in November, respectively. As is customary for companies that use the 52/53-week convention, every fifth year is a 53-week year. Fiscal year 2015 is a 52-week fiscal year, fiscal year 2014 was a 53-week fiscal year, and fiscal year 2013 was a 52-week fiscal year. The Company’s next 53-week fiscal year will be fiscal year 2019 and its next 14-week quarter will be the second quarter of fiscal year 2019. |
Consolidation Policy | The Company’s Consolidated Financial Statements include the accounts of Brocade and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. |
Use of Estimates in Preparation of Consolidated Financial Statements | Use of Estimates in Preparation of Consolidated Financial Statements The preparation of consolidated financial statements and related disclosures in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. Estimates are used for, but not limited to, revenue recognition, sales allowances and programs, allowance for doubtful accounts, stock-based compensation, acquisition purchase price allocations, warranty obligations, inventory valuation and purchase commitments, restructuring costs, incentive compensation, facilities lease losses, impairment of goodwill and other indefinite-lived intangible assets, litigation, income taxes, and investments. Actual results may differ materially from these estimates. |
Summary Of Significant Accoun29
Summary Of Significant Accounting Policies (Policies) | 12 Months Ended |
Oct. 31, 2015 | |
Accounting Policies [Abstract] | |
Cash and Cash Equivalents, Policy | Cash and Cash Equivalents The Company considers all highly liquid investments with an original or remaining maturity of three months or less at the date of purchase to be cash equivalents. |
Investments and Equity Securities, Policy | Investments and Equity Securities From time to time, the Company makes equity investments in non-publicly traded companies. These investments are included in “Other assets” on the accompanying Consolidated Balance Sheets and are generally accounted for under the cost method as the Company does not have the ability to exercise significant influence over the respective issuers’ operating and financial policies, nor does it have a liquidation preference that is substantive. The Company monitors its investments in non-publicly traded companies for impairment on a quarterly basis and makes appropriate reductions in carrying values when such impairments are determined to be other-than-temporary. Impairment charges are included in “ Other income, net ” on the Company’s Consolidated Statements of Income. Factors considered in determining an impairment include, but are not limited to, the current business environment including competition and uncertainty of financial condition, going concern considerations such as the rate at which the issuer company utilizes cash and the issuer company’s ability to obtain additional financing to fulfill its stated business plan, the need for changes to the issuer company’s existing business model due to changing business environments and its ability to successfully implement necessary changes, and comparable valuations. The carrying value of the Company’s equity investments in non-publicly traded companies at October 31, 2015 , and November 1, 2014 , was $2.5 million and $0.9 million , respectively. |
Fair Value of Financial Instruments, Policy | Fair Value of Financial Instruments The fair value of the Company’s financial instruments, including cash equivalents, accounts receivable, accounts payable, and accrued liabilities, approximate cost because of their short maturities. |
Derivative Financial Instruments, Policy | Derivative Financial Instruments In the normal course of business, the Company is exposed to fluctuations in interest rates and the exchange rates associated with foreign currencies. The derivatives entered into by the Company qualify for and are designated as foreign currency cash flow hedges. The derivatives are recognized on the Company’s Consolidated Balance Sheets at their respective fair values. Changes in fair values of outstanding cash flow hedges that are highly effective are recorded in “Accumulated other comprehensive loss” until earnings are affected by cash flows from the underlying hedged transaction. In most cases, amounts recorded in “Accumulated other comprehensive loss” will be recorded in earnings at maturity of the related derivative. The recognition of effective hedge results offsets the gains or losses on the underlying exposure. Cash flows from derivative transactions are classified according to the nature of the risk being hedged by presenting the gain or loss on the matured derivatives and related impact from the underlying hedged transactions in the same line items on the Company’s Consolidated Statements of Income. The Company formally documents all relationships between hedging instruments and hedged items, as well as the risk-management objective and strategy for undertaking hedge transactions. This documentation includes linking all derivatives either to specific assets and liabilities on the consolidated balance sheets or specific firm commitments or forecasted transactions. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives used in hedging transactions have been highly effective in offsetting changes in the cash flows of hedged items and whether those derivatives may be expected to remain highly effective in future periods. The Company discontinues hedge accounting prospectively when (i) the derivative is no longer highly effective in offsetting changes in the cash flows of a hedged item (including hedged items such as firm commitments or forecasted transactions); (ii) the derivative expires or is sold, terminated or exercised; (iii) it is no longer probable that the forecasted transaction will occur; or (iv) management determines that designating the derivative as a hedging instrument is no longer appropriate. When the Company discontinues hedge accounting, but it continues to be probable that the forecasted transaction will occur in the originally expected period, the gain or loss on the derivative remains in accumulated other comprehensive loss and is reclassified into earnings when the forecasted transaction affects earnings. However, if it is no longer probable that a forecasted transaction will occur by the end of the originally specified time period or within an additional two-month period of time thereafter, the gain or loss that was in accumulated other comprehensive loss will be recognized immediately in earnings. In all situations in which hedge accounting is discontinued and the derivative remains outstanding, the Company will carry the derivative at its fair value on the Company’s Consolidated Balance Sheet until maturity and will recognize future changes in the fair value in current period earnings. Any hedge ineffectiveness is recorded in current period earnings within “Other income (loss), net.” Effectiveness is assessed based upon statistical regression analysis of changes in cash flows, as well as other relevant information. |
Inventory, Policy | Inventories Inventories are stated at the lower of cost (first-in, first-out) or market. Inventory costs include material, labor, and overhead. The Company records inventory write-downs based on excess and obsolete inventory determined primarily by its forecast of future demand. A majority of the Company’s inventory is located off-site at customers’ hubs, third-party managed service depots and at contract manufacturers’ locations. Cash flows related to the sale of inventories are classified as cash flows from operating activities. |
Property and Equipment, Policy | Property and Equipment Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. An estimated useful life of three years is used for computer equipment and four to seven years is used for software based on the nature of the software purchased. Estimated useful lives of up to four years are used for engineering and other equipment, seven years is used for furniture and an estimated useful life of thirty-nine years is used for buildings. Leasehold improvements are amortized using the straight-line method over the shorter of ten years or the remaining term of the lease. Brocade evaluates long-lived assets, such as property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable in accordance with Accounting Standards Codification (“ASC”) 360-10 Property, Plant and Equipment. Brocade assesses the fair value of the assets based on the undiscounted future cash flow the assets are expected to generate and recognizes an impairment loss when the estimated undiscounted future cash flow expected to result from the use of the asset plus net proceeds expected to result from the disposition of the asset, if any, are less than the carrying value of the asset. When Brocade identifies an impairment, Brocade reduces the carrying amount of the asset to its estimated fair value based on a discounted cash flow approach or, when available and appropriate, to comparable market values. |
Goodwill and Intangible Assets, Policy | Goodwill, Other Indefinite-lived Intangible Assets and Long-lived Intangible Assets Goodwill and other indefinite-lived intangible assets are generated as a result of business combinations. Our indefinite-lived assets are comprised of acquired in-process research and development (“IPR&D”) and goodwill. IPR&D is an intangible asset accounted as an indefinite-lived asset until the completion or abandonment of the associated research and development effort. During the development period, the Company conducts an IPR&D impairment test annually, as of the first day of the second fiscal quarter, and whenever events or changes in facts and circumstances indicate that it is more likely than not that the IPR&D is impaired. Events which might indicate impairment include, but are not limited to, adverse cost factors, deteriorating financial performance, strategic decisions made in response to economic and competitive conditions, the impact of the economic environment on us and our customer base, and/or other relevant events such as changes in management, key personnel, litigations, or customers. The Company evaluates goodwill on an annual basis during its second fiscal quarter or whenever events occur or facts and circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. An impairment loss is recognized to the extent that the carrying amount of goodwill exceeds the asset’s implied fair value. Events which might indicate impairment include, but are not limited to, strategic decisions made in response to economic and competitive conditions, the impact of the economic environment on the Company’s customer base, material negative changes in relationships with significant customers, and/or a significant decline in the Company’s stock price for a sustained period. Long-lived intangible assets are carried at cost less accumulated amortization. Amortization is recognized on a straight-line basis over the estimated useful life of the respective asset. The Company evaluates intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Examples of such events or circumstances include, but are not limited to, significant underperformance relative to historical or projected future operating results, significant changes in the manner of use of acquired assets or the strategy for the Company’s business, significant negative industry or economic trends, and/or a significant decline in the Company’s stock price for a sustained period. Impairment is recognized based on the difference between the fair value of the asset and its carrying value. For additional discussion, see Note 4 , “ Goodwill and Intangible Assets ,” of the Notes to Consolidated Financial Statements. |
Litigation Costs, Policy | Litigation Costs The Company is subject to the possibility of legal actions arising in the ordinary course of business. The Company regularly monitors the status of pending legal actions to evaluate both the magnitude and likelihood of any potential losses. An accrual for these potential losses is made when they are probable and the amount of loss, or possible range of loss, can be reasonably estimated. Legal costs related to such potential losses are expensed as incurred. In addition, recoveries are shown as a reduction in litigation costs in the period in which they are realized. |
Revenue Recognition, Policy | Revenue Recognition Product revenue. Substantially all of the Company’s products are integrated with software that is essential to the functionality of the equipment. Additionally, the Company provides unspecified software upgrades and enhancements related to the equipment through its maintenance contracts for most of its products. Product revenue is generally recognized when all of the following criteria have been met: • Persuasive evidence of an arrangement exists; • Delivery has occurred; • The fee is fixed or determinable; and • Collectibility is reasonably assured. For newly introduced products, many of the Company’s large OEM customers require a product qualification period during which the Company’s products are tested and approved by the OEM customers for sale to their customers. Revenue recognition and related cost are deferred for shipments to new OEM customers and for shipments of newly introduced products to existing OEM customers until satisfactory evidence of completion of the product qualification has been received from the OEM customer. In addition, revenue from sales to the Company’s distributor customers is recognized in the same period in which the product is actually sold by the distributor (sell-through). The Company reduces revenue for estimated sales allowances at the time of shipment and sales programs at the later of revenue recognition or communication of the commitment for sales incentives. Sales allowances are estimated based on historical sales returns. Sales programs are estimated based on approved sales programs versus claims under such sales programs, current trends and the Company’s expectations regarding future activity. In addition, the Company maintains an allowance for doubtful accounts, which is also accounted for as a reduction in revenue. The Company establishes the allowance for doubtful accounts to ensure accounts receivable are not overstated due to uncollectibility. The Company maintains bad debt reserves based upon the analysis of accounts receivable, historical collection patterns, customer concentrations, customer creditworthiness, current economic trends, changes in customer payment terms and practices, and customer communication. The Company records a specific reserve for individual accounts when it becomes aware of a customer’s likely inability to meet its financial obligations, such as in the case of bankruptcy filings or deterioration in the customer’s operating results or financial position. If circumstances related to customers change, the Company would further adjust estimates of the recoverability of receivables. Multiple-element arrangements. The Company’s multiple-element product offerings include networking hardware with embedded software products and support, which are considered separate units of accounting. For certain of the Company’s products, software and non-software components function together to deliver the tangible products’ essential functionality. The Company allocates revenue to each element in a multiple-element arrangement based upon their relative selling price. When applying the relative selling price method, the Company determines the selling price for each deliverable using vendor-specific objective evidence (“VSOE”) of selling price, if it exists, or third-party evidence (“TPE”) of selling price. If neither VSOE nor TPE of selling price exist for a deliverable, the Company uses its best estimate of selling price for that deliverable. Revenue allocated to each element is then recognized when the basic revenue recognition criteria are met for each element. The Company determines VSOE based on its normal pricing and discounting practices for the specific product or service when sold separately. In determining VSOE, the Company requires that a substantial majority of the selling prices for a product or service fall within a reasonably narrow pricing range. For post-contract customer support (“PCS”), the Company considers stated renewal rates in determining VSOE. In most instances, the Company is not able to establish VSOE for all deliverables in an arrangement with multiple elements. This may be due to the Company infrequently selling each element separately, not pricing products within a narrow range, or only having a limited sales history. When VSOE cannot be established, the Company attempts to establish the selling price for each element based on TPE. TPE is determined based on competitor prices for similar deliverables when sold separately. Generally, the Company’s go-to-market strategy differs from that of its peers and its offerings contain a significant level of customization and differentiation such that the comparable pricing of products with similar functionality cannot be obtained. Furthermore, the Company is unable to reliably determine what similar competitor products’ selling prices are on a stand-alone basis. Therefore, the Company is typically unable to determine TPE. When the Company is unable to establish selling price using VSOE or TPE, the Company uses estimated selling price (“ESP”) in its allocation of the arrangement consideration. The objective of ESP is to determine the price at which the Company would transact a sale if the product or service were sold on a stand-alone basis. ESP is generally used for offerings that are not typically sold on a stand-alone basis or for new or highly customized offerings. The Company determines ESP for a product by considering multiple factors including, but not limited to, geographies, market conditions, competitive landscape, internal costs, gross margin objectives and pricing practices. The determination of ESP is made through consultation with and formal approval by the Company’s management, taking into consideration the go-to-market strategy. The Company regularly reviews VSOE, TPE and ESP, as well as the establishment and updates of these estimates. There was no material impact on revenues during the fiscal year ended October 31, 2015 , nor does the Company expect a material impact in the near term from changes in VSOE, TPE or ESP. Services revenue. Services revenue consists of professional services and maintenance arrangements, including PCS and other professional services. PCS services are offered under renewable, annual fee-based contracts or as part of multiple-element arrangements, and typically include telephone support and upgrades and enhancements to the Company’s operating system software. Revenue related to PCS elements is deferred and recognized ratably over the contractual period. PCS contracts are typically one to three years in length. Professional services are offered under hourly or fixed fee-based contracts. Professional services revenue is recognized as services are performed. |
Warranty Expense, Policy | Warranty Expense The Company provides standard warranties on its products ranging from one year to limited lifetime warranties. Estimated future warranty costs are accrued at the time of shipment and charged to cost of revenues based upon historical experience, current trends in warranty claims, and the Company’s expectations regarding future experience. |
Foreign Currency, Policy | Foreign Currency Assets and liabilities of the Company’s international subsidiaries in which the local currency is the functional currency are translated into U.S. dollars at period-end exchange rates. Income and expenses are translated into U.S. dollars at the average exchange rates during the period. The resulting translation adjustments are included in the Company’s Consolidated Balance Sheets in the stockholders’ equity section as a component of accumulated other comprehensive loss. Foreign exchange gains and losses for assets and liabilities of the Company’s international subsidiaries in which the functional currency is the U.S. dollar are recorded in the Company’s Consolidated Statement of Income. |
Software to be Sold, Leased, or Otherwise Marketed, Policy | Eligible development costs for software to be sold are capitalized upon the establishment of technological feasibility, which is defined as being equivalent to completion of a beta-phase working prototype. Total eligible software development costs have not been material to date. |
Internal Use Software, Policy | Eligible costs related to internal development or purchase of software for internal use are capitalized and included in “Property and equipment, net.” These costs are being depreciated over the estimated useful lives of four to seven years based on the nature of the software purchased. |
Advertising Costs, Policy | Advertising Costs The Company expenses all advertising costs as incurred. Advertising costs were $13.6 million , $17.6 million , and $15.3 million for the fiscal years ended October 31, 2015 , November 1, 2014 , and October 26, 2013 , respectively. During the fiscal year ended October 27, 2012, the Company entered into a multi-year arrangement which includes exchanging certain of the Company’s products and services, with the estimated overall fair value of $16.6 million , for advertising. The Company is accounting for this transaction based on fair values of products and services surrendered and recognized $1.1 million , $2.4 million , and $7.1 million of gross operating revenue for the fiscal years ended October 31, 2015 , November 1, 2014 , and October 26, 2013 , respectively. In addition, $4.0 million of the advertising costs for the fiscal year ended October 31, 2015 , were incurred in connection with this multi-year arrangement, and the remaining advertising prepayment is currently recorded within “Prepaid expenses and other current assets” and “Other assets.” |
Income Taxes, Policy | Income Taxes The Company recognizes income tax expense for the amount of taxes payable or refundable for the current year. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts, along with net operating loss carryforwards and credit carryforwards. A valuation allowance is recognized to the extent that it is more likely than not that the tax benefits will not be realized. The Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. The Company classifies the liability for unrecognized tax benefits as current to the extent that the Company anticipates payment (or receipt) of cash within one year. Interest and penalties related to uncertain tax positions are recognized in the provision for income taxes. For additional discussion, see Note 15 , “ Income Taxes ,” of the Notes to Consolidated Financial Statements. |
Computation of Net Income (Loss) per Share, Policy | Computation of Net Income per Share Basic net income per share is computed using the weighted-average number of common shares outstanding during the period, less shares subject to repurchase. Diluted net income per share is computed using the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding during the period that have a dilutive effect on earnings per share. Potentially dilutive common shares result from the assumed exercise of outstanding stock options, assumed vesting of outstanding restricted stock units (“RSUs”), assumed issuance of stock under the employee stock purchase plan, and assumed conversion of outstanding convertible senior unsecured notes and exercise of related warrant transactions, all using the treasury stock method. |
Stock-Based Compensation, Policy | Stock-Based Compensation The Company accounts for employee equity awards under the fair value method. Accordingly, the Company measures stock-based compensation at the grant date based on the fair value of the award. The fair values of stock options and the Employee Stock Purchase Plan (“ESPP”) are estimated using the Black-Scholes option pricing model. Estimated compensation cost relating to time-based RSUs granted prior to the initial declaration of a quarterly cash dividend on May 22, 2014, is based on the fair value of the Company’s common stock on the date of grant because Brocade did not historically pay cash dividends on its common stock. For time-based RSUs granted on or subsequent to May 22, 2014, the fair value of RSUs is measured based on the grant-date share price, less the present value of expected dividends during the vesting period, discounted at a risk-free interest rate. The fair value of restricted stock units with market conditions (“MSUs”) is estimated using a lattice model that incorporates a Monte Carlo simulation. The Company records stock-based compensation expense over the 24-month offering period in connection with shares issued under its ESPP. The compensation expense for stock-based awards is reduced by an estimate for forfeitures and is recognized over the vesting period of the award under a graded vesting method, except for RSUs granted by the Company, which is recognized over the expected term of the award under a straight-line vesting method. For additional discussion, see Note 12 , “ Stock-Based Compensation ,” of the Notes to Consolidated Financial Statements. The Company accounts for the tax effects of share-based payment awards using the alternative transition method, which includes simplified methods to establish the beginning balance of the additional paid-in capital pool (“APIC Pool”) related to the tax effects of employee stock-based compensation and to determine the subsequent impact on the APIC Pool and consolidated statement of cash flows of the tax effects of employee stock-based compensation awards. |
Recent Accounting Pronouncements or Updates Recently Adopted or That Are Not Yet Effective, Policy | New Accounting Pronouncements or Updates Recently Adopted In March 2013, the Financial Accounting Standards Board (“FASB”) issued an update to Accounting Standards Codification (“ASC” or the “Codification”) 830, Foreign Currency Matters: Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity. Under this update, an entity is required to release any cumulative translation adjustment into net income when the entity ceases to have a controlling financial interest resulting from the complete, or substantially complete, liquidation of a subsidiary or group of assets within a foreign entity. This update should be applied prospectively. The Company adopted this update in the first quarter of fiscal year 2015. There was no material impact on the Company’s financial position, results of operations, or cash flows. In June 2015, the FASB issued an update to the Codification, Technical Corrections and Improvements. This update includes various amendments to clarify the Codification, correct unintended application of guidance, or make minor improvements to the Codification. This update is not intended to change U.S. GAAP. The Company adopted this update in the third quarter of fiscal year 2015. There was no material impact on the Company’s financial position, results of operations, or cash flows. Recent Accounting Pronouncements or Updates That Are Not Yet Effective In April 2014, the FASB issued an update to ASC 205 Presentation of Financial Statements (“ASC 205”) and ASC 360 Property, Plant, and Equipment (“ASC 360”): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. Under this update, a discontinued operation may include a component of an entity or a group of components of an entity, or a business or nonprofit activity. Only those disposals of components of an entity that represent a strategic shift that has, or will have, a major effect on an entity’s operations and financial results will be reported as discontinued operations in the financial statements. This update to ASC 205 and ASC 360 should be applied prospectively and will be adopted by the Company in the first quarter of fiscal year 2016. The Company does not expect the adoption of this update to have a material impact on its consolidated financial statements. In May 2014, the FASB issued an update to ASC 606 Revenue from Contracts with Customers (“ASC 606”) that will supersede virtually all existing revenue guidance. Under this update, an entity is required to recognize revenue upon transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. As such, an entity will need to use more judgment and make more estimates than under the current guidance. This update to ASC 606 should be applied retrospectively either to each prior reporting period presented in the financial statements, or only to the most current reporting period presented in the financial statements with a cumulative effect adjustment recorded in the retained earnings. In August 2015, the FASB issued an update to defer the effective date of this update by one year. This update becomes effective and will be adopted by the Company in the first quarter of fiscal year 2019. Early adoption is not permitted for reporting periods before the first quarter of fiscal year 2019. The Company is currently evaluating the impact of this update on its consolidated financial statements. In April 2015, the FASB issued an update to ASC 835, Interest—Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs. Under this update, debt issuance costs are required to be presented as a direct deduction from the carrying amount of the related debt liability, consistent with the presentation of debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by this update. This update is effective for the Company in the first quarter of fiscal year 2017, with early adoption permitted. This update should be applied retrospectively to all prior periods presented in the financial statements and will be early adopted by the Company in the first quarter of fiscal year 2016. The Company does not expect the adoption of this update to have a material impact on its consolidated financial statements. In April 2015, the FASB issued an update to ASC 350, Intangibles—Goodwill and Other—Internal-Use Software: Customer’s Accounting for Fees Paid in Cloud Computing Arrangement. This update provides guidance on the accounting for fees paid in a cloud computing arrangement if the arrangement was determined to include a software license. This update will not change U.S. GAAP for a customer’s accounting for service contracts. This update may be applied either prospectively or retrospectively and will be adopted by the Company in the first quarter of fiscal year 2017. Early adoption is permitted. The Company does not expect the adoption of this update to have a material impact on its consolidated financial statements. In July 2015, the FASB issued an update to ASC 330, Inventory: Simplifying the Measurement of Inventory. Under this update, subsequent measurement of inventory is based on the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and disposal. This update does not apply to inventory that is measured using last-in, first-out or the retail inventory method. This update should be applied prospectively and will be adopted by the Company in the first quarter of fiscal year 2018. Early adoption is permitted. The Company does not expect the adoption of this update to have a material impact on its consolidated financial statements. In September 2015, the FASB issued an update to ASC 805, Business Combinations: Simplifying the Accounting Measurement-Period Adjustments. This update simplifies the accounting for adjustments made to provisional amounts recognized in a business combination by eliminating the requirement to retrospectively account for those adjustments. Under this update, the adjustments are recognized in the reporting period in which the adjustment amounts are determined. This update is effective for the Company in the first quarter of fiscal year 2017 and should be applied prospectively. Early adoption is permitted. The Company does not expect the adoption of this update to have a material impact on its consolidated financial statements. In November 2015, the FASB issued an update to ASC 740, Income Taxes: Balance Sheet Classification of Deferred Taxes. This update simplifies the presentation of current and noncurrent deferred tax liabilities and assets. Under this update, the deferred tax liabilities and assets are classified as noncurrent on the balance sheet. The update does not impact the current requirement that deferred tax liabilities and assets be offset and presented as a single amount. This update is effective for the Company in the first quarter of fiscal year 2018 and may be applied either prospectively or retrospectively. Early adoption is permitted. The Company expects the adoption of this update will result in a reclassification of deferred tax amounts on the consolidated balance sheets. |
Goodwill And Intangible Assets
Goodwill And Intangible Assets Goodwill And Intangible Assets (Policies) | 12 Months Ended |
Oct. 31, 2015 | |
Accounting Policies [Abstract] | |
Goodwill and Intangible Assets, Intangible Assets, Indefinite-Lived, Policy | Acquired IPR&D is an intangible asset accounted for as an indefinite-lived asset until the completion or abandonment of the associated research and development effort. If the research and development effort associated with the IPR&D is successfully completed, then the IPR&D intangible asset will be amortized over its estimated useful life to be determined at the date the effort is completed. |
Goodwill and Intangible Assets, Goodwill Policy | The Company conducts its goodwill impairment test annually, as of the first day of the second fiscal quarter, and whenever events occur or facts and circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. For the annual goodwill impairment test, the Company uses the income approach, the market approach, or a combination thereof to determine each reporting unit’s fair value. The income approach provides an estimate of fair value based on discounted expected future cash flows (“DCF”). The market approach provides an estimate of fair value by applying various observable market-based multiples to the reporting unit’s operating results and then applying an appropriate control premium. For the fiscal year 2015 annual goodwill impairment test, the Company used a combination of approaches to estimate each reporting unit’s fair value. The Company believed that at the time of impairment testing performed in the second fiscal quarter of 2015 , the income approach and the market approach were equally representative of a reporting unit’s fair value. Determining the fair value of a reporting unit or an intangible asset requires judgment and involves the use of significant estimates and assumptions. The Company based its fair value estimates on assumptions it believes to be reasonable, but inherently uncertain. Estimates and assumptions with respect to the determination of the fair value of its reporting units using the income approach include, among other inputs: • The Company’s operating forecasts; • The Company’s forecasted revenue growth rates; and • Risk-commensurate discount rates and costs of capital. The Company’s estimates of revenues and costs are based on historical data, various internal estimates, and a variety of external sources, and are developed as part of our regular long-range planning process. The control premium used in market or combined approaches is determined by considering control premiums offered as part of the acquisitions that have occurred in market segments that are comparable with the Company’s reporting units. |
Goodwill and Intangible Assets, Intangible Assets, Policy | Intangible assets other than goodwill are amortized on a straight-line basis over the following estimated remaining useful lives, unless the Company has determined these lives to be indefinite. |
Fair Value Measurements Fair Va
Fair Value Measurements Fair Value Measurements (Policies) | 12 Months Ended |
Oct. 31, 2015 | |
Accounting Policies [Abstract] | |
Fair Value Transfer Policy | Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and also considers assumptions that market participants would use when pricing the asset or liability. The Company applies fair value measurements for both financial and non-financial assets and liabilities. The Company does not have any non-financial assets or liabilities that are required to be measured at fair value on a recurring basis as of October 31, 2015 . The fair value of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, restricted cash, accounts payable and accrued liabilities, approximate cost because of their short maturities. The fair value accounting guidance permits companies to elect fair value measurement for many financial instruments and certain other items that are not required to be accounted for at fair value. The Company did not elect fair value measurement for any eligible financial instruments or other assets. Fair Value Hierarchy The Company utilizes a fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. There are three levels of inputs that may be used to measure fair value: Level 1 Observable inputs that reflect quoted prices in active markets for identical assets or liabilities. Brocade’s assets utilizing Level 1 inputs include money market funds. Level 2 Inputs that reflect quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in less-active markets, or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Brocade’s assets and liabilities utilizing Level 2 inputs include derivative instruments. The Company uses observable market prices for comparable instruments to value its derivative instruments. Level 3 Unobservable inputs that reflect the Company’s own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available. Brocade has no assets or liabilities utilizing Level 3 inputs. During the fiscal year ended October 31, 2015 , the Company had no transfers between levels of the fair value hierarchy of its assets and liabilities measured at fair value. |
Derivative Instruments And He32
Derivative Instruments And Hedging Activities Derivative Instruments And Hedging Activities (Policies) | 12 Months Ended |
Oct. 31, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives, Methods of Accounting, Hedging Derivatives | A majority of the Company’s revenue, expense, and capital purchasing activities are transacted in U.S. dollars. However, the Company is exposed to foreign currency exchange rate risk inherent in conducting business globally in numerous currencies. The Company is primarily exposed to foreign currency fluctuations related to operating expenses denominated in currencies other than the U.S. dollar, of which the most significant to its operations for the fiscal year ended October 31, 2015 , were the British pound, the euro, the Indian rupee, the Chinese yuan, the Singapore dollar, the Japanese yen, and the Swiss franc. The Company has established a foreign currency risk management program to protect against the volatility of future cash flows caused by changes in foreign currency exchange rates. This program reduces, but does not eliminate, the impact of foreign currency exchange rate movements. The Company utilizes a rolling hedge strategy for the majority of its foreign currency derivative instruments to hedge exposures to the variability in the U.S. dollar equivalent of anticipated non-U.S.-dollar-denominated cash flows. All of the Company’s foreign currency forward contracts are single delivery, which are settled at maturity involving one cash payment. The Company’s foreign currency risk management program includes foreign currency derivatives with a cash flow hedge accounting designation that utilizes foreign currency forward and option contracts to hedge exposures to the variability in the U.S. dollar equivalent of anticipated non-U.S.-dollar-denominated cash flows. These instruments generally have a maturity of less than 15 months . For these derivatives, the Company initially reports the after-tax gain or loss from the effective portion of the hedge as a component of accumulated other comprehensive loss in stockholders’ equity and reclassifies it into earnings in the same period in which the hedged transaction affects earnings. The tax effect allocated to cash flow hedge-related components of other comprehensive loss was not significant for the fiscal years ended October 31, 2015 , November 1, 2014 , and October 26, 2013 . Ineffective cash flow hedges are included in the Company’s net income as part of “Other income, net.” The amount recorded on ineffective cash flow hedges was not significant for the fiscal years ended October 31, 2015 , November 1, 2014 , and October 26, 2013 . |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
Vistapointe | |
Business Acquisition | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the final allocation of the purchase price to the fair value of the assets and liabilities acquired (in thousands): Assets acquired: Identifiable intangible assets: In-process technology $ 2,850 Developed technology 1,710 Trade name 130 Total identifiable intangible assets 4,690 Goodwill 11,475 Property and equipment, net 735 Net assets acquired $ 16,900 The following table summarizes the final allocation of the total aggregate purchase price based on the estimated fair values of the assets acquired and liabilities assumed at the acquisition dates (in thousands): Assets acquired: Cash $ 161 Accounts receivable 154 Property and equipment, net 1,432 Identifiable intangible assets: Core/developed technology 28,450 Customer relationships 22,030 Patents with broader applications 1,040 Trade name 500 Non-compete agreements 240 Total identifiable intangible assets 52,260 Goodwill (1) 49,444 Other assets 86 Total assets acquired 103,537 Liabilities assumed: Deferred revenue (3,603 ) Deferred tax liabilities (3,049 ) Other accrued liabilities (795 ) Total liabilities assumed (7,447 ) Net assets acquired $ 96,090 (1) The goodwill recognized primarily represents potential synergies from combining operations of the acquired businesses and the Company, as well as intangible assets that do not qualify for separate recognition. The total amount of goodwill that is expected to be deductible for tax purposes is $38.1 million . |
Goodwill And Intangible Asset34
Goodwill And Intangible Assets (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets and Goodwill | The following table presents a summary of the net carrying value of the Company’s intangible assets (in thousands): October 31, November 1, Indefinite-lived intangible assets: Goodwill $ 1,617,161 $ 1,567,723 In-process research and development (1) 15,110 15,110 Finite-lived intangible assets: Total intangible assets subject to amortization (2), (3) 60,513 11,548 Total intangible assets $ 1,692,784 $ 1,594,381 (1) Acquired IPR&D is an intangible asset accounted for as an indefinite-lived asset until the completion or abandonment of the associated research and development effort. If the research and development effort associated with the IPR&D is successfully completed, then the IPR&D intangible asset will be amortized over its estimated useful life to be determined at the date the effort is completed. The development effort on the remaining IPR&D intangible asset is expected to be completed by the first quarter of fiscal year 2016. (2) During the fiscal year ended October 31, 2015, the Company purchased a perpetual, nonexclusive license to certain patents for $7.8 million . (3) During the fiscal year ended October 31, 2015, the Company acquired $52.3 million of intangible assets related to the Company’s acquisition of two businesses. See Note 3 , “ Acquisitions and Divestitures ,” of the Notes to Consolidated Financial Statements. |
Schedule Of Goodwill Activity By Reportable Segment | The following table summarizes goodwill activity by reportable segment during the fiscal years ended October 31, 2015 , and November 1, 2014 (in thousands): SAN Products IP Networking Products Global Services Total Balance at October 26, 2013 Goodwill $ 176,878 $ 1,358,975 $ 155,416 $ 1,691,269 Accumulated impairment losses — (45,832 ) — (45,832 ) 176,878 1,313,143 155,416 1,645,437 Impairment (1) — (83,382 ) — (83,382 ) Divestitures (2) (474 ) (3,657 ) — (4,131 ) Acquisition — 11,475 — 11,475 Tax and other adjustments (3) (58 ) (1,618 ) — (1,676 ) Balance at November 1, 2014 Goodwill 176,346 1,365,175 155,416 1,696,937 Accumulated impairment losses — (129,214 ) — (129,214 ) 176,346 1,235,961 155,416 1,567,723 Acquisitions (4) — 49,458 — 49,458 Purchase accounting adjustments — (15 ) — (15 ) Tax and other adjustments (3) (21 ) — — (21 ) Translation adjustments — 16 — 16 Balance at October 31, 2015 Goodwill 176,325 1,414,634 155,416 1,746,375 Accumulated impairment losses — (129,214 ) — (129,214 ) $ 176,325 $ 1,285,420 $ 155,416 $ 1,617,161 (1) In the second quarter of fiscal year 2014, the Company made a strategic change in the allocation of its engineering resources by reducing its investment in engineering and sales for the hardware-based Brocade ADX products and increasing engineering investment in the software-based Brocade ADX products for Layer 4-7 applications. As a result of this change in strategy, the Company expected hardware-based Brocade ADX and related support revenue to be negatively impacted. Based on these changes in estimates, the Company recognized an impairment charge during the second fiscal quarter of 2014 because the book value of its Application Delivery Products (“ADP”) reporting unit net assets, which includes the Brocade ADX products, exceeded the estimated fair value of these assets. The goodwill amount related to the Company’s other reporting units was not impacted. (2) The goodwill disposed relates to the sale of the Company’s network adapter business. See Note 3 , “ Acquisitions and Divestitures ,” of the Notes to Consolidated Financial Statements. (3) The goodwill adjustments were primarily a result of tax benefits from the exercise of stock awards of acquired companies. (4) The goodwill acquired relates to the Company’s acquisition of two businesses, which is gross of the adjustments recorded during the purchase price allocation period. See Note 3 , “ Acquisitions and Divestitures ,” of the Notes to Consolidated Financial Statements. |
Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block] | The following table presents the fair values and weighted-average useful lives of the acquired finite-lived intangible assets (in thousands, except for weighted-average useful life): Fiscal Year Ended October 31, 2015 November 1, 2014 October 26, 2013 Fair Value Weighted- Fair Value Weighted- Fair Value Weighted- Trade names $ 500 6.00 $ 130 5.00 $ 460 4.00 Core/developed technology 28,450 4.04 1,710 5.00 1,040 3.00 Customer relationships 22,030 7.93 — — 1,080 5.00 Non-compete agreements 240 2.00 — — 810 4.00 Patents with broader applications (1) 1,040 15.00 — — — — Total intangible assets $ 52,260 5.91 $ 1,840 5.00 $ 3,390 4.01 (1) These patents were acquired by the Company as part of an acquisition in fiscal year 2015. The potential use of these patents extends beyond their use in the core/developed technology acquired. |
Schedule Of Finite-Lived Intangible Assets | The following tables present details of the Company’s finite-lived intangible assets (in thousands, except for weighted-average remaining useful life): Gross Carrying Value Accumulated Amortization Net Carrying Value Weighted- Average Remaining Useful Life (in years) October 31, 2015 Trade names $ 1,090 $ 415 $ 675 4.36 Core/developed technology 40,530 9,605 30,925 3.49 Patent portfolio license (1) 7,750 849 6,901 17.74 Customer relationships 23,110 2,484 20,626 7.18 Non-compete agreements 1,050 664 386 1.17 Patents with broader applications 1,040 40 1,000 14.38 Total intangible assets $ 74,570 $ 14,057 $ 60,513 6.55 Gross Carrying Value Accumulated Amortization Net Carrying Value Weighted- Average Remaining Useful Life (in years) November 1, 2014 Trade names $ 590 $ 227 $ 363 3.00 Core/developed technology 12,080 1,964 10,116 4.30 Customer relationships 1,080 427 653 3.01 Non-compete agreements 810 394 416 2.01 Total intangible assets (2) $ 14,560 $ 3,012 $ 11,548 4.10 (1) The patent portfolio license was assigned an estimated useful life that reflects the Company’s consumption of the expected defensive benefits related to this license to certain patents. The method of amortization for the patent portfolio license reflects the Company’s estimate of the pattern in which these expected defensive benefits will be used by the Company and is primarily based on the mix of expiration patterns of the individual patents included in the license. (2) During the fiscal year ended November 1, 2014 , $477.3 million of finite-lived intangible assets became fully amortized and, therefore, were removed from the balance sheet. |
Schedule Of Amortization Of Intangible Assets Included On Consolidated Statements Of Operations | The following table presents the amortization of finite-lived intangible assets included on the Company’s Consolidated Statements of Income (in thousands): Fiscal Year Ended October 31, November 1, October 26, Cost of revenues $ 7,640 $ 8,010 $ 39,731 General and administrative (1) 849 — — Other operating expense 2,556 10,280 54,256 Total $ 11,045 $ 18,290 $ 93,987 (1) The amortization is related to the $7.8 million of perpetual, nonexclusive license to certain patents purchased during the fiscal year ended October 31, 2015. |
Schedule Of Estimated Future Amortization Of Intangible Assets | The following table presents the estimated future amortization of finite-lived intangible assets as of October 31, 2015 (in thousands): Fiscal Year Estimated Future Amortization 2016 $ 14,774 2017 14,305 2018 9,785 2019 6,259 2020 5,168 Thereafter 10,222 Total $ 60,513 |
Restructuring And Other Costs (
Restructuring And Other Costs (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring and Other Charges | The following table provides details of the Company’s restructuring and other related costs (in thousands): Fiscal Year Ended October 31, November 1, 2014 October 26, 2013 Goodwill impairment $ — $ 83,382 $ — Severance and benefits — (1,788 ) 20,413 Contract terminations and other — — 3,981 Lease loss reserve and related costs (benefits) (678 ) 7,686 1,070 Restructuring, goodwill impairment, and other related costs (benefits) $ (678 ) $ 89,280 $ 25,464 |
Schedule of Restructuring Reserve | The following table provides a reconciliation of the Company’s beginning and ending restructuring liability balances (in thousands): Fiscal 2013 Fourth Quarter Restructuring Plan Other Restructuring Plans Severance and Benefits Contract Terminations and Other Lease Loss Reserve and Related Costs Lease Loss Reserve and Related Costs Total Restructuring liabilities at October 26, 2013 $ 15,216 $ 416 $ — $ 1,794 $ 17,426 Restructuring and other charges 18 — 7,686 — 7,704 Cash payments (13,258 ) (374 ) (3,600 ) (800 ) (18,032 ) Other adjustments, net (1,805 ) — — — (1,805 ) Translation adjustment — — (137 ) — (137 ) Restructuring liabilities at November 1, 2014 171 42 3,949 994 5,156 Restructuring and other charges — — (519 ) (159 ) (678 ) Cash payments — (42 ) (1,411 ) (427 ) (1,880 ) Other adjustments, net (27 ) — — — (27 ) Translation adjustment (34 ) — (208 ) — (242 ) Restructuring liabilities at October 31, 2015 $ 110 $ — $ 1,811 $ 408 $ 2,329 Current restructuring liabilities at October 31, 2015 $ 110 $ — $ 644 $ 336 $ 1,090 Non-current restructuring liabilities at October 31, 2015 $ — $ — $ 1,167 $ 72 $ 1,239 |
Balance Sheet Details (Tables)
Balance Sheet Details (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
Balance Sheet Details [Abstract] | |
Schedule of Accounts Receivable | October 31, November 1, Accounts receivable: Accounts receivable $ 247,376 $ 232,389 Allowance for doubtful accounts (1,838 ) (80 ) Sales allowances (9,655 ) (7,396 ) Accounts receivable, net $ 235,883 $ 224,913 |
Schedule of Inventory | October 31, November 1, Inventories: Raw materials $ 18,788 $ 10,491 Finished goods 21,736 28,227 Inventories $ 40,524 $ 38,718 |
Schedule of Property, Plant and Equipment | October 31, November 1, Property and equipment, net: Gross property and equipment Computer equipment $ 14,820 $ 13,679 Software 67,625 62,919 Engineering and other equipment (1) 407,342 383,412 Furniture and fixtures (1) 31,028 29,053 Leasehold improvements 33,986 23,607 Land and building 385,415 384,659 Total gross property and equipment 940,216 897,329 Accumulated depreciation and amortization (1), (2) (500,992 ) (451,896 ) Property and equipment, net $ 439,224 $ 445,433 (1) Engineering and other equipment, furniture and fixtures, and accumulated depreciation and amortization include the following amounts under capital leases as of October 31, 2015 , and November 1, 2014 (in thousands): October 31, November 1, Cost $ 1,312 $ 11,925 Accumulated depreciation (857 ) (7,209 ) Property and equipment, net, under capital leases $ 455 $ 4,716 (2) The following table presents the depreciation of property and equipment included on the Company’s Consolidated Statements of Income (in thousands): Fiscal Year Ended October 31, November 1, October 26, Depreciation expense $ 73,623 $ 82,357 $ 90,127 |
Schedule of Capital Leased Assets | Engineering and other equipment, furniture and fixtures, and accumulated depreciation and amortization include the following amounts under capital leases as of October 31, 2015 , and November 1, 2014 (in thousands): October 31, November 1, Cost $ 1,312 $ 11,925 Accumulated depreciation (857 ) (7,209 ) Property and equipment, net, under capital leases $ 455 $ 4,716 |
Schedule of Accrued Liabilities | October 31, November 1, Other accrued liabilities: Income taxes payable $ 7,142 $ 5,632 Accrued warranty 7,599 7,486 Inventory purchase commitments 1,237 2,541 Accrued sales programs 33,637 31,640 Accrued interest 6,523 9,922 Others 21,386 27,371 Other accrued liabilities $ 77,524 $ 84,592 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
Schedule Of Assets And Liabilities Measured At Fair Value | Assets and liabilities measured and recorded at fair value on a recurring basis as of October 31, 2015 , were as follows (in thousands): Fair Value Measurements Using Balance as of October 31, 2015 Quoted Prices in Active Markets for Identical Instruments (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Money market funds (1) $ 1,184,410 $ 1,184,410 $ — $ — Derivative assets 709 — 709 — Total assets measured at fair value $ 1,185,119 $ 1,184,410 $ 709 $ — Liabilities: Derivative liabilities $ 1,125 $ — $ 1,125 $ — Total liabilities measured at fair value $ 1,125 $ — $ 1,125 $ — (1) Money market funds are reported within “Cash and cash equivalents” on the Company’s Consolidated Balance Sheets. Assets and liabilities measured and recorded at fair value on a recurring basis as of November 1, 2014 , were as follows (in thousands): Fair Value Measurements Using Balance as of November 1, 2014 Quoted Prices in Active Markets for Identical Instruments (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Money market funds (1) $ 1,009,283 $ 1,009,283 $ — $ — Derivative assets 99 — 99 — Total assets measured at fair value $ 1,009,382 $ 1,009,283 $ 99 $ — Liabilities: Derivative liabilities $ 1,937 $ — $ 1,937 $ — Total liabilities measured at fair value $ 1,937 $ — $ 1,937 $ — (1) Money market funds are reported within “Cash and cash equivalents” on the Company’s Consolidated Balance Sheets. |
Borrowings (Tables)
Borrowings (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | The following table provides details of the Company’s long-term debt (in thousands, except years and percentages): October 31, 2015 November 1, 2014 Maturity Stated Annual Interest Rate Amount Effective Interest Rate Amount Effective Interest Rate Convertible Senior Unsecured Notes 2020 Convertible Notes 2020 1.375% $ 575,000 4.98 % $ — — % Senior Unsecured Notes 2023 Notes 2023 4.625% 300,000 4.83 % 300,000 4.83 % Senior Secured Notes 2020 Notes 2015 6.875% — 8.39 % 300,000 7.26 % Capital lease obligations 2016 4.630% 298 4.63 % 2,115 5.37 % Total gross long-term debt 875,298 602,115 Unamortized discount (79,196 ) (4,839 ) Current portion of long-term debt (298 ) (1,826 ) Long-term debt, net of current portion $ 795,804 $ 595,450 |
Schedule of Carrying Values of Liability and Equity Components | October 31, Principal $ 575,000 Unamortized discount of the liability component (76,311 ) Net carrying amount of liability component $ 498,689 Carrying amount of equity component $ 70,765 |
Schedule Of Debt Maturities | As of October 31, 2015 , the Company’s aggregate debt maturities based on outstanding principal were as follows (in thousands): Fiscal Year Principal Balances 2016 $ 298 2017 — 2018 — 2019 — 2020 575,000 Thereafter 300,000 Total $ 875,298 |
Commitments And Contingencies (
Commitments And Contingencies (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Rent Expense | The following table presents the composition of net rent expense included on the Company’s Consolidated Statements of Income (in thousands): Fiscal Year Ended October 31, November 1, October 26, Rent expense $ 22,929 $ 21,928 $ 26,199 Sublease income (7,673 ) (7,264 ) (6,834 ) Net rent expense $ 15,256 $ 14,664 $ 19,365 |
Schedule of Future Minimum Rental Payments for Operating Leases | Future minimum lease payments under all non-cancellable operating leases as of October 31, 2015 , excluding the contractual sublease income of $9.7 million , are as follows (in thousands): Fiscal Year Operating Leases 2016 $ 20,974 2017 12,125 2018 8,465 2019 6,717 2020 6,313 Thereafter 17,712 Total minimum lease payments $ 72,306 |
Schedule of Future Minimum Lease Payments for Capital Leases | Future minimum lease payments under all non-cancellable capital leases as of October 31, 2015 , are as follows (in thousands): Fiscal Year Capital Leases 2016 - Total minimum lease payments $ 304 Amount representing interest (6 ) Present value of net minimum lease payments $ 298 |
Schedule Of Accrued Liability For Estimated Future Warranty Costs | The following table summarizes the activity related to the Company’s accrued liability for estimated future warranty costs during the fiscal years ended October 31, 2015 , and November 1, 2014 (in thousands): Accrued Warranty Fiscal Year Ended October 31, November 1, Beginning balance $ 7,486 $ 8,632 Liabilities accrued for warranties issued during the period 4,076 4,683 Warranty claims paid and used during the period (4,164 ) (4,978 ) Changes in liability for pre-existing warranties during the period 201 (851 ) Ending balance $ 7,599 $ 7,486 |
Derivative Instruments And He40
Derivative Instruments And Hedging Activities (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule Of Net Gains (Losses) Related To The Effective Portion Of Foreign Currency Derivatives | Net gains (losses) relating to the effective portion of foreign currency derivatives recorded in the Company’s Consolidated Statements of Income are as follows (in thousands): Fiscal Year Ended October 31, 2015 November 1, 2014 October 26, 2013 Cost of revenues $ (898 ) $ 126 $ 98 Research and development (381 ) (451 ) (60 ) Sales and marketing (2,772 ) 528 356 General and administrative (199 ) 59 31 Total $ (4,250 ) $ 262 $ 425 |
Schedule Of Total Gross Notional Amounts, Presented By Currency | Total gross notional amounts, presented by currency, are as follows (in thousands): Derivatives Designated as Hedging Instruments Derivatives Not Designated as Hedging Instruments In U.S. dollars October 31, 2015 November 1, 2014 October 31, 2015 November 1, 2014 British pound $ 46,330 $ 11,168 $ — $ 14,891 Euro 40,961 14,404 — 19,200 Indian rupee 35,647 19,413 — — Chinese yuan 15,129 10,406 — — Singapore dollar 13,745 9,242 — — Swiss franc 9,265 7,468 — — Japanese yen 8,809 8,856 — — Total $ 169,886 $ 80,957 $ — $ 34,091 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Schedule Of Equity Compensation Plans | The following table summarizes information with respect to shares of the Company’s common stock that may be issued under the Company’s existing equity compensation plans as of October 31, 2015 (in thousands, except per share amounts): Plan Category A Number of Securities to Be Issued Upon Exercise of Outstanding Options, Warrants and Rights B Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights C Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excludes Securities Reflected in Column A) Equity compensation plans approved by stockholders (1) 4,291 (3) $ 8.48 36,834 (5) Equity compensation plans not approved by stockholders (2) 2,400 (4) $ 5.66 — Total 6,691 $ 7.47 36,834 (1) Primarily consist of the 2009 ESPP, the 2009 and 1999 Director Plans, and the 2009 and 1999 Stock Plans. (2) Consist solely of the 2013 Inducement Award Plan described in Note 11 , “ Employee Compensation Plans ,” of the Notes to Consolidated Financial Statements. (3) Amount excludes purchase rights accrued under the 2009 ESPP. As of October 31, 2015 , the 2009 ESPP had a stockholder-approved reserve of 65.0 million shares, of which 10.5 million shares were available for future issuance. (4) All shares were granted in the first quarter of fiscal year 2013. Information relating to equity compensation plans is set forth in Note 11 , “ Employee Compensation Plans ,” of the Notes to Consolidated Financial Statements. (5) Amount consists of 10.5 million , 1.0 million , and 25.3 million shares available for future issuance under the 2009 ESPP, the 2009 Director Plan, and the 2009 Stock Plan, respectively. |
Stock-Based Compensation Expense Included In Line Items Of Consolidated Statements Of Operations | Stock-based compensation expense, net of estimated forfeitures, was included in the following line items of the Company’s Consolidated Statements of Income as follows (in thousands): Fiscal Year Ended October 31, November 1, October 26, Cost of revenues $ 12,946 $ 14,963 $ 14,519 Research and development 18,714 18,635 17,509 Sales and marketing 38,340 31,650 29,425 General and administrative 18,528 19,666 12,165 Total stock-based compensation expense $ 88,528 $ 84,914 $ 73,618 |
Stock-Based Compensation Expense By Grant Type | The following table presents stock-based compensation expense, net of estimated forfeitures, by grant type (in thousands): Fiscal Year Ended October 31, November 1, October 26, Stock options $ 3,675 $ 4,581 $ 2,581 RSUs, including restricted stock units with market conditions 67,735 62,906 50,522 Employee stock purchase plan (“ESPP”) 17,118 17,427 20,515 Total stock-based compensation expense $ 88,528 $ 84,914 $ 73,618 |
Stock-Based Compensation, Unrecognized Compensation Expense And Weighted-Average Period | The following table presents the unrecognized compensation expense, net of estimated forfeitures, of the Company’s equity compensation plans as of October 31, 2015 , which is expected to be recognized over the following weighted-average periods (in thousands, except for the weighted-average period): Unrecognized Compensation Expense Weighted- Average Period (In years) Stock options $ 2,379 1.11 RSUs, including restricted stock units with market conditions $ 119,848 2.03 ESPP $ 6,663 0.87 |
Stock options | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | Fiscal Year Ended October 31, November 1, October 26, Expected dividend yield 1.3 % 0.0% - 1.5% 0.0 % Risk-free interest rate 1.1 - 1.8% 0.7 - 2.3% 0.6 - 1.7% Expected volatility 36.5 % 36.8 - 39.4% 39.9 - 44.9% Expected term (in years) 4.5 5.0 5.7 |
Schedule of Share-based Compensation, Stock Options, Activity | A summary of stock option activity under the equity compensation plans for the fiscal years ended October 31, 2015 , November 1, 2014 , and October 26, 2013 , is presented as follows: Shares (In thousands) Weighted-Average Exercise Price Weighted-Average Grant Date Fair Value Weighted-Average Remaining Contractual Term (In years) Aggregate Intrinsic Value (In thousands) Outstanding as of October 27, 2012 29,497 $ 5.43 1.61 $ 26,077 Granted 2,875 $ 5.64 $ 2.34 Exercised (13,149 ) $ 3.99 $ 32,324 Forfeited or expired (6,662 ) $ 6.90 Outstanding as of October 26, 2013 12,561 $ 6.19 2.37 $ 24,784 Granted 1,770 $ 9.03 $ 3.16 Exercised (6,971 ) $ 5.93 $ 24,240 Forfeited or expired (1,161 ) $ 8.93 Outstanding as of November 1, 2014 6,199 $ 6.79 4.74 $ 24,452 Granted 1,117 $ 10.89 $ 3.09 Exercised (564 ) $ 6.68 $ 2,980 Forfeited or expired (61 ) $ 8.20 Outstanding as of October 31, 2015 6,691 $ 7.47 4.37 $ 20,252 Vested and expected to vest as of October 31, 2015 6,402 $ 7.39 4.32 $ 19,845 Exercisable and vested as of October 31, 2015 3,981 $ 6.79 3.81 $ 14,575 |
Restricted stock units | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity | A summary of the changes in nonvested RSUs, including MSUs, under Brocade’s equity compensation plans during the fiscal years ended October 31, 2015 , November 1, 2014 , and October 26, 2013 , respectively, is presented as follows: Shares (In thousands) Weighted-Average Grant Date Fair Value Nonvested as of October 27, 2012 21,996 $ 3.71 Granted 11,518 $ 5.75 Vested (7,401 ) $ 5.69 Forfeited (3,352 ) $ 5.39 Nonvested as of October 26, 2013 22,761 $ 3.85 Granted 11,582 $ 9.69 Vested (11,750 ) $ 5.59 Forfeited (3,594 ) $ 6.01 Nonvested as of November 1, 2014 18,999 $ 5.93 Granted 10,777 $ 11.46 Vested (8,317 ) $ 7.81 Forfeited (2,260 ) $ 8.69 Nonvested as of October 31, 2015 19,199 $ 9.82 Vested and expected to vest as of October 31, 2015 16,243 $ 9.71 |
Market-based stock units | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity | A summary of the changes in nonvested MSUs included in the above summary of changes in nonvested RSUs under Brocade’s equity compensation plans during the fiscal year ended October 31, 2015 , is presented as follows: Shares (In thousands) Weighted-Average Grant Date Fair Value Nonvested as of November 1, 2014 2,019 $ 11.62 Granted 1,510 $ 10.39 Vested (1,310 ) $ 12.30 Forfeited (283 ) $ 11.25 Nonvested as of October 31, 2015 1,936 $ 9.65 Vested and expected to vest as of October 31, 2015 1,258 $ 9.25 |
Employee stock purchase plan | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions | The fair value of the option component of Brocade ESPP shares was estimated using the Black-Scholes option pricing model and the weighted-average assumptions noted in the following table: Fiscal Year Ended October 31, November 1, October 26, Expected dividend yield 1.4 % 1.4 % 0.0 % Risk-free interest rate 0.3 % 0.2 % 0.2 % Expected volatility 27.3 % 30.1 % 39.5 % Expected term (in years) 1.2 1.3 1.3 |
Stockholders' Equity Stockhol42
Stockholders' Equity Stockholders' Equity (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
Equity [Abstract] | |
Schedule of Dividends Payable [Table Text Block] | During the fiscal year ended October 31, 2015 , the Company’s Board of Directors declared the following dividends (in thousands, except per share amounts): Declaration Date Dividend per Share Record Date Total Amount Paid Payment Date November 23, 2014 $ 0.035 December 10, 2014 $ 15,106 January 2, 2015 February 16, 2015 $ 0.035 March 10, 2015 $ 14,748 April 2, 2015 May 20, 2015 $ 0.045 June 10, 2015 $ 18,965 July 2, 2015 August 18, 2015 $ 0.045 September 10, 2015 $ 18,651 October 2, 2015 |
Schedule of Comprehensive Income/Loss Tax Effects | The components of other comprehensive loss and related tax effects for the fiscal years ended October 31, 2015 , and November 1, 2014 , are as follows (in thousands): Fiscal Year Ended October 31, 2015 November 1, 2014 Before-Tax Amount Tax (Expense) Benefit Net-of-Tax Amount Before-Tax Amount Tax Benefit Net-of-Tax Amount Unrealized gains (losses) on cash flow hedges: Change in unrealized gains and losses, foreign exchange contracts $ (3,570 ) $ 183 $ (3,387 ) $ (2,192 ) $ 253 $ (1,939 ) Net gains and losses reclassified into earnings, foreign exchange contracts (1) 4,250 (495 ) 3,755 (262 ) 27 (235 ) Net unrealized gains (losses) on cash flow hedges 680 (312 ) 368 (2,454 ) 280 (2,174 ) Foreign currency translation adjustments (6,556 ) — (6,556 ) (3,196 ) — (3,196 ) Total other comprehensive loss $ (5,876 ) $ (312 ) $ (6,188 ) $ (5,650 ) $ 280 $ (5,370 ) (1) For Consolidated Statements of Income classification of amounts reclassified from accumulated other comprehensive loss, see Note 10 , “ Derivative Instruments and Hedging Activities ,” of the Notes to Consolidated Financial Statements. |
Schedule of Accumulated Other Comprehensive Income (Loss) | The changes in accumulated other comprehensive loss by component, net of tax, for the fiscal years ended October 31, 2015 , and November 1, 2014 , are as follows (in thousands): Fiscal Year Ended October 31, 2015 November 1, 2014 Losses on Cash Flow Hedges Foreign Currency Translation Adjustments Total Accumulated Other Comprehensive Loss Gains (Losses) on Cash Flow Hedges Foreign Currency Translation Adjustments Total Accumulated Other Comprehensive Loss Beginning balance $ (1,907 ) $ (16,907 ) $ (18,814 ) $ 267 $ (13,711 ) $ (13,444 ) Change in unrealized gains and losses (3,387 ) (6,556 ) (9,943 ) (1,939 ) (3,196 ) (5,135 ) Net gains and losses reclassified into earnings 3,755 — 3,755 (235 ) — (235 ) Net current-period other comprehensive income (loss) 368 (6,556 ) (6,188 ) (2,174 ) (3,196 ) (5,370 ) Ending balance $ (1,539 ) $ (23,463 ) $ (25,002 ) $ (1,907 ) $ (16,907 ) $ (18,814 ) |
Income Taxes Income Taxes (Tabl
Income Taxes Income Taxes (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income before Income Tax, Domestic and Foreign | The domestic and international components of income before income tax for the fiscal years ended October 31, 2015 , November 1, 2014 , and October 26, 2013 , are presented as follows (in thousands): Fiscal Year Ended October 31, November 1, October 26, United States $ 250,788 $ 192,730 $ 176,536 International 188,263 160,891 153,925 Total $ 439,051 $ 353,621 $ 330,461 |
Schedule of Components of Income Tax Expense (Benefit) | The income tax expense (benefit) for the fiscal years ended October 31, 2015 , November 1, 2014 , and October 26, 2013 , consisted of the following (in thousands): Fiscal Year Ended October 31, November 1, October 26, U.S. federal taxes: Current $ 64,042 $ 61,666 $ (13,666 ) Deferred 14,775 33,065 46,313 Total U.S. federal taxes 78,817 94,731 32,647 State taxes: Current 9,790 16,597 8,091 Deferred 761 (2,599 ) 78,106 Total state taxes 10,551 13,998 86,197 Non-U.S. taxes: Current 9,713 6,655 2,837 Deferred (392 ) 266 157 Total non-U.S. taxes 9,321 6,921 2,994 Total $ 98,689 $ 115,650 $ 121,838 |
Schedule of Effective Income Tax Rate Reconciliation | The difference between the U.S. federal statutory tax rate and the Company’s effective tax rate for fiscal years ended October 31, 2015 , November 1, 2014 , and October 26, 2013 , consisted of the following: Fiscal Year Ended October 31, November 1, October 26, U.S. federal statutory tax rate 35.0 % 35.0 % 35.0 % State taxes, net of federal tax benefit 0.2 3.1 4.1 Foreign income taxed at other than U.S. rates (14.5 ) (16.9 ) (17.6 ) Stock-based compensation expense 1.9 2.3 1.9 Research and development credit (0.9 ) (3.1 ) (5.6 ) Permanent items 0.3 0.3 0.3 Change in liabilities for uncertain tax positions 0.5 0.5 (5.1 ) Goodwill impairment charge — 8.3 — Audit settlement and reinstated tax credit — 0.1 1.3 Change in valuation allowance 1.3 1.6 23.7 Other (1.3 ) 1.5 (1.1 ) Effective tax rate 22.5 % 32.7 % 36.9 % |
Schedule of Deferred Tax Assets and Liabilities | The components of deferred tax assets and deferred tax liabilities for the fiscal years ended October 31, 2015 , and November 1, 2014 , are presented as follows (in thousands): October 31, November 1, Net operating loss carryforwards $ 7,871 $ 8,679 Stock-based compensation expense 19,868 14,202 Tax credit carryforwards 87,830 84,930 Reserves and accruals 110,796 101,301 Other 140 553 Gross deferred tax assets 226,505 209,665 Valuation allowance (88,581 ) (83,489 ) Total deferred tax assets 137,924 126,176 Acquired intangibles and goodwill (18,155 ) (15,433 ) Fixed assets (28,370 ) (31,231 ) Other (35,935 ) (13,368 ) Total deferred tax liabilities (82,460 ) (60,032 ) Total net deferred tax assets $ 55,464 $ 66,144 |
Summary of Income Tax Contingencies | A reconciliation of the beginning and ending amount of total gross unrecognized tax benefits, excluding accrued net interest and penalties, is as follows (in thousands): October 31, November 1, Unrecognized tax benefits, beginning balance $ 119,615 $ 112,479 Gross increases for tax positions taken in prior periods 705 3,325 Gross decreases for tax positions taken in prior periods (6,843 ) (4,784 ) Gross increases for tax positions taken in current period 8,418 15,426 Changes due to settlements with taxing authorities — — Reductions resulting from lapses of statutes of limitations (4,326 ) (6,831 ) Unrecognized tax benefits, ending balance $ 117,569 $ 119,615 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
Segment Reporting [Abstract] | |
Schedule Of Financial Information By Reportable Segment | Summarized financial information by reportable segment for the fiscal years ended October 31, 2015 , November 1, 2014 , and October 26, 2013 , based on the internal management reporting system, is as follows (in thousands): SAN Products IP Networking Products Global Services Total Fiscal year ended October 31, 2015 Net revenues $ 1,301,231 $ 601,170 $ 361,059 $ 2,263,460 Cost of revenues 311,881 275,634 147,872 735,387 Gross margin $ 989,350 $ 325,536 $ 213,187 $ 1,528,073 Fiscal year ended November 1, 2014 Net revenues $ 1,326,950 $ 525,237 $ 359,080 $ 2,211,267 Cost of revenues 344,466 247,975 153,033 745,474 Gross margin $ 982,484 $ 277,262 $ 206,047 $ 1,465,793 Fiscal year ended October 26, 2013 Net revenues $ 1,318,509 $ 552,058 $ 352,297 $ 2,222,864 Cost of revenues 355,388 302,974 155,623 813,985 Gross margin $ 963,121 $ 249,084 $ 196,674 $ 1,408,879 |
Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas | Geographic revenue and property and equipment information for the fiscal years ended October 31, 2015 , November 1, 2014 , and October 26, 2013 is presented below (in thousands): Fiscal Year Ended October 31, November 1, October 26, Net revenues: United States $ 1,275,056 $ 1,286,650 $ 1,351,242 International Europe, the Middle East and Africa (1) 610,133 598,196 552,734 Asia Pacific 229,903 183,035 181,461 Japan 93,470 91,062 97,259 Canada, Central and South America 54,898 52,324 40,168 Total international net revenues 988,404 924,617 871,622 Total net revenues $ 2,263,460 $ 2,211,267 $ 2,222,864 (1) Includes net revenues of $400.0 million , $385.2 million , and $339.1 million for the fiscal years ended October 31, 2015 , November 1, 2014 , and October 26, 2013 , respectively, relating to the Netherlands. Fiscal Year Ended October 31, November 1, October 26, Property and equipment, net: United States $ 409,404 $ 426,941 $ 457,622 International 29,820 18,492 15,318 Property and equipment, net $ 439,224 $ 445,433 $ 472,940 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
Earnings Per Share [Abstract] | |
Schedule Of Calculation Of Basic And Diluted Net Income (Loss) Per Share | The following table presents the calculation of basic and diluted net income per share (in thousands, except per share amounts): Fiscal Year Ended October 31, November 1, October 26, Basic net income per share Net income $ 340,362 $ 237,971 $ 208,623 Weighted-average shares used in computing basic net income per share 420,331 435,258 450,516 Basic net income per share $ 0.81 $ 0.55 $ 0.46 Diluted net income per share Net income $ 340,362 $ 237,971 $ 208,623 Weighted-average shares used in computing basic net income per share 420,331 435,258 450,516 Dilutive potential common shares in the form of stock options 1,722 1,995 3,472 Dilutive potential common shares in the form of other share-based awards 8,503 9,606 9,717 Weighted-average shares used in computing diluted net income per share 430,556 446,859 463,705 Diluted net income per share $ 0.79 $ 0.53 $ 0.45 Antidilutive potential common shares in the form of: (1) Warrants issued in conjunction with the 2020 Convertible Notes (2) 28,880 — — Stock options 977 1,725 11,868 Other share-based awards 142 893 167 (1) These amounts are excluded from the computation of diluted net income per share. (2) In connection with the issuance of the 2020 Convertible Notes, the Company entered into convertible note hedge and warrant transactions as described in Note 8 , “ Borrowings .” The 2020 Convertible Notes have no impact on diluted earnings per share until the average quarterly price of the Company’s common stock exceeds the adjusted conversion price of $15.90 per share. If the common stock price exceeds this adjusted conversion price, prior to conversion, the Company will calculate the effect of the additional shares that may be issued using the treasury stock method. If the average price of the Company’s common stock exceeds $20.61 per share for a quarterly period, the Company’s weighted-average shares used in computing diluted net income per share will be impacted by the effect of the additional potential shares that may be issued related to the warrants using the treasury stock method. The convertible note hedge is not considered for purposes of the diluted earnings per share calculation, as its effect would be antidilutive. |
Quarterly Summary (Tables)
Quarterly Summary (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Information | BROCADE COMMUNICATIONS SYSTEMS, INC. QUARTERLY SUMMARY (Unaudited) Three Months Ended October 31, 2015 August 1, 2015 May 2, 2015 January 31, 2015 November 1, 2014 August 2, 2014 May 3, 2014 (1) January 25, 2014 (In thousands, except per share and stock price amounts) Quarterly Data: Net revenues $ 588,827 $ 551,819 $ 546,575 $ 576,239 $ 564,358 $ 545,464 $ 536,910 $ 564,535 Gross margin $ 394,277 $ 371,904 $ 372,209 $ 389,683 $ 377,118 $ 361,713 $ 354,292 $ 372,670 Income from operations $ 119,221 $ 119,849 $ 114,205 $ 139,405 $ 126,530 $ 117,897 $ 20,195 $ 121,490 Net income (loss) $ 84,388 $ 91,667 $ 77,040 $ 87,267 $ 83,419 $ 87,352 $ (13,684 ) $ 80,884 Per share amounts: Basic $ 0.20 $ 0.22 $ 0.18 $ 0.20 $ 0.19 $ 0.20 $ (0.03 ) $ 0.18 Diluted $ 0.20 $ 0.21 $ 0.18 $ 0.20 $ 0.19 $ 0.20 $ (0.03 ) $ 0.18 Shares used in computing per share amounts: Basic 414,769 417,299 420,718 428,536 431,843 432,448 436,167 440,573 Diluted 422,315 427,518 433,234 439,156 441,649 441,789 436,167 453,549 Common stock sale prices: High $ 11.28 $ 12.88 $ 12.96 $ 12.43 $ 10.99 $ 9.75 $ 10.96 $ 9.70 Low $ 9.72 $ 9.67 $ 10.85 $ 10.66 $ 8.91 $ 7.95 $ 8.81 $ 7.77 (1) The quarter ended May 3, 2014 , includes the impact of an $83.4 million impairment of goodwill in the Company’s Application Delivery Products reporting unit. |
Summary Of Significant Accoun47
Summary Of Significant Accounting Policies (Property and Equipment Narrative) (Details) | 12 Months Ended |
Oct. 31, 2015 | |
Computer equipment | |
Property, Plant and Equipment | |
Property, Plant and Equipment, Useful Life | 3 years |
Software | Minimum | |
Property, Plant and Equipment | |
Property, Plant and Equipment, Useful Life | 4 years |
Software | Maximum | |
Property, Plant and Equipment | |
Property, Plant and Equipment, Useful Life | 7 years |
Engineering and other equipment | Maximum | |
Property, Plant and Equipment | |
Property, Plant and Equipment, Useful Life | 4 years |
Furniture and fixtures | |
Property, Plant and Equipment | |
Property, Plant and Equipment, Useful Life | 7 years |
Leasehold improvements | Maximum | |
Property, Plant and Equipment | |
Property, Plant and Equipment, Useful Life | 10 years |
Building and Building Improvements | |
Property, Plant and Equipment | |
Property, Plant and Equipment, Useful Life | 39 years |
Summary Of Significant Accoun48
Summary Of Significant Accounting Policies (Concentration of Risk Narrative)(Details) | 12 Months Ended | ||
Oct. 31, 2015customer | Nov. 01, 2014customer | Oct. 26, 2013 | |
Concentration Risk | |||
Number of Financial Institutions | 5 | ||
Customer Concentration Risk | Accounts Receivable | |||
Concentration Risk | |||
Number Of Customers Included In Concentration Disclosures | 1 | 3 | |
Concentration Risk, Percentage | 38.00% | ||
Customer Concentration Risk | Accounts Receivable | Major Customer One | |||
Concentration Risk | |||
Concentration Risk, Percentage | 17.00% | 15.00% | |
Customer Concentration Risk | Accounts Receivable | Major Customer Two | |||
Concentration Risk | |||
Concentration Risk, Percentage | 12.00% | ||
Customer Concentration Risk | Accounts Receivable | Major Customer Three | |||
Concentration Risk | |||
Concentration Risk, Percentage | 11.00% | ||
Customer Concentration Risk | Sales Revenue | |||
Concentration Risk | |||
Number Of Customers Included In Concentration Disclosures | 3 | ||
Concentration Risk, Percentage | 41.00% | 46.00% | 46.00% |
Customer Concentration Risk | Sales Revenue | Major Customer One | |||
Concentration Risk | |||
Concentration Risk, Percentage | 17.00% | 18.00% | 18.00% |
Customer Concentration Risk | Sales Revenue | Major Customer Two | |||
Concentration Risk | |||
Concentration Risk, Percentage | 12.00% | 12.00% | 12.00% |
Customer Concentration Risk | Sales Revenue | Major Customer Three | |||
Concentration Risk | |||
Concentration Risk, Percentage | 12.00% | 16.00% | 16.00% |
Summary Of Significant Accoun49
Summary Of Significant Accounting Policies (Nonmonetary Transactions Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | Oct. 27, 2012 | |
Nonmonetary Transaction | ||||
Advertising expense | $ 13.6 | $ 17.6 | $ 15.3 | |
Exchange of product held-for-sale for advertising services | ||||
Nonmonetary Transaction | ||||
Basis of accounting for assets transferred | The Company is accounting for this transaction based on fair values of products and services surrendered | |||
Estimated overall fair value of barter transaction | $ 16.6 | |||
Gross operating revenue recognized | $ 1.1 | $ 2.4 | $ 7.1 | |
Advertising expense | $ 4 |
Summary Of Significant Accoun50
Summary Of Significant Accounting Policies (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | |
Advertising expense | $ 13.6 | $ 17.6 | $ 15.3 |
Investments in non-publicly traded companies | $ 2.5 | $ 0.9 |
Acquisitions (Schedule of Purch
Acquisitions (Schedule of Purchase Price Allocation) (Details) - USD ($) $ in Thousands | Oct. 31, 2015 | Mar. 31, 2015 | Nov. 01, 2014 | Sep. 11, 2014 | Oct. 26, 2013 |
Business Acquisition, Purchase Price Allocation | |||||
Goodwill | $ 1,617,161 | $ 1,567,723 | $ 1,645,437 | ||
Series of Individually Immaterial Business Acquisitions [Member] | |||||
Business Acquisition, Purchase Price Allocation | |||||
Cash | $ 161 | ||||
Accounts receivable | 154 | ||||
Property and equipment, net | 1,432 | ||||
Identifiable intangible assets: | 52,260 | ||||
Goodwill | 49,444 | ||||
Other assets | 86 | ||||
Total assets acquired | 103,537 | ||||
Deferred revenue | (3,603) | ||||
Deferred tax liabilities | (3,049) | ||||
Other accrued liabilities | (795) | ||||
Total liabilities assumed | (7,447) | ||||
Net assets acquired | 96,090 | ||||
Business Acquisition, Goodwill, Expected Tax Deductible Amount | 38,100 | ||||
Vistapointe | |||||
Business Acquisition, Purchase Price Allocation | |||||
Property and equipment, net | $ 735 | ||||
Identifiable intangible assets: | 4,690 | ||||
Goodwill | 11,475 | ||||
Net assets acquired | 16,900 | ||||
Core/developed technology | Series of Individually Immaterial Business Acquisitions [Member] | |||||
Business Acquisition, Purchase Price Allocation | |||||
Finite-Lived Intangibles | 28,450 | ||||
Core/developed technology | Vistapointe | |||||
Business Acquisition, Purchase Price Allocation | |||||
Finite-Lived Intangibles | 1,710 | ||||
Trade names | Series of Individually Immaterial Business Acquisitions [Member] | |||||
Business Acquisition, Purchase Price Allocation | |||||
Finite-Lived Intangibles | 500 | ||||
Trade names | Vistapointe | |||||
Business Acquisition, Purchase Price Allocation | |||||
Finite-Lived Intangibles | 130 | ||||
Customer relationships | Series of Individually Immaterial Business Acquisitions [Member] | |||||
Business Acquisition, Purchase Price Allocation | |||||
Finite-Lived Intangibles | 22,030 | ||||
Patents with broader applications | Series of Individually Immaterial Business Acquisitions [Member] | |||||
Business Acquisition, Purchase Price Allocation | |||||
Finite-Lived Intangibles | 1,040 | ||||
Non-compete agreements | Series of Individually Immaterial Business Acquisitions [Member] | |||||
Business Acquisition, Purchase Price Allocation | |||||
Finite-Lived Intangibles | $ 240 | ||||
In-process technology | Vistapointe | |||||
Business Acquisition, Purchase Price Allocation | |||||
Indefinite-Lived Intangible Assets | $ 2,850 |
Acquisitions and Divestitures A
Acquisitions and Divestitures Acquisitions (Narrative) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||
May. 02, 2015 | Nov. 01, 2014 | Jan. 26, 2013 | Oct. 31, 2015 | Nov. 01, 2014 | [1] | |
Business Acquisition | ||||||
Finite-Lived Intangible Asset, Useful Life | 6 years 6 months 18 days | 4 years 1 month 6 days | ||||
Series of Individually Immaterial Business Acquisitions [Member] | ||||||
Business Acquisition | ||||||
Effective Date of Acquisition | Mar. 1, 2015 | |||||
Total purchase price | $ 96,100,000 | |||||
Cash consideration | 95,500,000 | |||||
Cash Acquired from Acquisition | 100,000 | |||||
Other consideration transferred | $ 500,000 | |||||
Equity Interest in Acquiree, Fair Value | $ 400,000 | |||||
Equity Interest in Acquiree, Valuation Techniques | The Company used a market approach based on comparable recent investments in this acquired business to estimate the acquisition-date fair value of the existing equity interest | |||||
Equity Interest in Acquiree, Remeasurement Gain (Loss), Net | $ 0 | |||||
Vistapointe | ||||||
Business Acquisition | ||||||
Effective Date of Acquisition | Sep. 11, 2014 | |||||
Total purchase price | $ 16,900,000 | |||||
Cash consideration | 16,900,000 | |||||
Acquisition Cost Expensed | $ 400,000 | |||||
Vyatta | ||||||
Business Acquisition | ||||||
Effective Date of Acquisition | Nov. 9, 2012 | |||||
Total purchase price | $ 44,800,000 | |||||
Cash consideration | 43,600,000 | |||||
Other consideration transferred | 1,200,000 | |||||
Acquisition Cost Expensed | $ 400,000 | |||||
Acquisition-related Costs [Member] | Series of Individually Immaterial Business Acquisitions [Member] | ||||||
Business Acquisition | ||||||
Acquisition Cost Expensed | $ 1,400,000 | |||||
Integration Related Costs | $ 2,500,000 | |||||
Separately Recognized Transactions, Acquisition Cost Expensed, Financial Statement Caption | Acquisition and integration costs. | |||||
Restricted stock units | Series of Individually Immaterial Business Acquisitions [Member] | ||||||
Business Acquisition | ||||||
Separately Recognized Transaction, Aggregate Fair Value | $ 6,400,000 | |||||
Separately Recognized Transaction, Tranche Vesting Period | 6 months | |||||
Separately Recognized Transaction, Total Vesting Period | 2 years | |||||
Separately Recognized Transactions, Accounting Method | The RSUs are accounted for as stock-based compensation expense | |||||
Separately Recognized Transactions, Expenses and Losses, Financial Statement Caption | “Cost of revenues,” “Research and development,” “Sales and marketing,” and “General and administrative” | |||||
Separately Recognized Transactions, Expenses and Losses Recognized | $ 1,600,000 | |||||
Deferred Bonus [Member] | Series of Individually Immaterial Business Acquisitions [Member] | ||||||
Business Acquisition | ||||||
Separately Recognized Transaction, Aggregate Fair Value | $ 10,300,000 | |||||
Separately Recognized Transaction, Total Vesting Period | 4 years | |||||
Separately Recognized Transactions, Accounting Method | The cash awards are accounted for as employee compensation expense | |||||
Separately Recognized Transactions, Expenses and Losses, Financial Statement Caption | “Research and development” | |||||
Separately Recognized Transactions, Expenses and Losses Recognized | $ 4,800,000 | |||||
[1] | During the fiscal year ended November 1, 2014, $477.3 million of finite-lived intangible assets became fully amortized and, therefore, were removed from the balance sheet. |
Acquisitions and Divestitures D
Acquisitions and Divestitures Divestitures (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Jan. 25, 2014 | Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | Jan. 17, 2014 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations | |||||
Disposal Group, Gain (Loss) on Disposal | $ 0 | $ 4,884 | $ 0 | ||
Network Adapter Business [Member] | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations | |||||
Disposal Group, Description and Timing of Disposal | On January 17, 2014, the Company completed the sale of its network adapter business to QLogic Corporation as part of the Company’s business strategy to focus development on a portfolio of high-performance networking hardware and software-based products and services. | ||||
Disposal Group, Including Discontinued Operation, Assets | $ 5,100 | ||||
Disposal Group, Including Discontinued Operation, Goodwill | $ 4,100 | ||||
Disposal Group, Gain (Loss) on Disposal | $ 4,900 | ||||
Disposal Group, Not Discontinued Operation, Gain (Loss) on Disposal, Income Statement Caption | Gain on sale of network adapter business |
Goodwill And Intangible Asset54
Goodwill And Intangible Assets (Schedule of Intangible Assets and Goodwill) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | |||
Intangible Assets, Net (Including Goodwill) | |||||
Goodwill | $ 1,617,161 | $ 1,567,723 | $ 1,645,437 | ||
In-process research and development (1) | [1] | 15,110 | 15,110 | ||
Total intangible assets subject to amortization (2), (3) | [2],[3] | 60,513 | 11,548 | [4] | |
Total intangible assets | 1,692,784 | 1,594,381 | |||
Payments to Acquire Intangible Assets | 7,750 | 0 | 0 | ||
Finite-lived Intangible Assets Acquired | $ 52,260 | $ 1,840 | $ 3,390 | ||
[1] | Acquired IPR&D is an intangible asset accounted for as an indefinite-lived asset until the completion or abandonment of the associated research and development effort. If the research and development effort associated with the IPR&D is successfully completed, then the IPR&D intangible asset will be amortized over its estimated useful life to be determined at the date the effort is completed. The development effort on the remaining IPR&D intangible asset is expected to be completed by the first quarter of fiscal year 2016. | ||||
[2] | During the fiscal year ended October 31, 2015, the Company acquired $52.3 million of intangible assets related to the Company’s acquisition of two businesses. See Note 3, “Acquisitions and Divestitures,” of the Notes to Consolidated Financial Statements. | ||||
[3] | During the fiscal year ended October 31, 2015, the Company purchased a perpetual, nonexclusive license to certain patents for $7.8 million. | ||||
[4] | During the fiscal year ended November 1, 2014, $477.3 million of finite-lived intangible assets became fully amortized and, therefore, were removed from the balance sheet. |
Goodwill And Intangible Asset55
Goodwill And Intangible Assets (Schedule Of Goodwill Activity By Reportable Segment) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||||
Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | ||||
Goodwill | ||||||
Goodwill, Gross, Beginning Balance | $ 1,696,937 | $ 1,691,269 | ||||
Accumulated impairment losses, Beginning Balance | (129,214) | (45,832) | ||||
Goodwill, Net, Beginning Balance | 1,567,723 | 1,645,437 | ||||
Goodwill impairment charge | 0 | (83,382) | [1] | $ 0 | ||
Goodwill, Written off Related to Sale of Business Unit | [2] | (4,131) | ||||
Goodwill, Acquired During Period | 49,458 | [3] | 11,475 | |||
Goodwill, Purchase Accounting Adjustments | (15) | |||||
Goodwill, Tax and other adjustments | (21) | (1,676) | ||||
Goodwill, Gross, Ending Balance | 1,746,375 | 1,696,937 | 1,691,269 | |||
Accumulated impairment losses, Ending Balance | (129,214) | (129,214) | (45,832) | |||
Goodwill, Net, Ending Balance | 1,617,161 | 1,567,723 | 1,645,437 | |||
Goodwill, Translation Adjustments | 16 | |||||
SAN Products | ||||||
Goodwill | ||||||
Goodwill, Gross, Beginning Balance | 176,346 | 176,878 | ||||
Accumulated impairment losses, Beginning Balance | 0 | 0 | ||||
Goodwill, Net, Beginning Balance | 176,346 | 176,878 | ||||
Goodwill impairment charge | [1] | 0 | ||||
Goodwill, Written off Related to Sale of Business Unit | [2] | (474) | ||||
Goodwill, Acquired During Period | 0 | [3] | 0 | |||
Goodwill, Purchase Accounting Adjustments | 0 | |||||
Goodwill, Tax and other adjustments | (21) | (58) | ||||
Goodwill, Gross, Ending Balance | 176,325 | 176,346 | 176,878 | |||
Accumulated impairment losses, Ending Balance | 0 | 0 | 0 | |||
Goodwill, Net, Ending Balance | 176,325 | 176,346 | 176,878 | |||
Goodwill, Translation Adjustments | 0 | |||||
IP Networking Products | ||||||
Goodwill | ||||||
Goodwill, Gross, Beginning Balance | 1,365,175 | 1,358,975 | ||||
Accumulated impairment losses, Beginning Balance | (129,214) | (45,832) | ||||
Goodwill, Net, Beginning Balance | 1,235,961 | 1,313,143 | ||||
Goodwill impairment charge | [1] | (83,382) | ||||
Goodwill, Written off Related to Sale of Business Unit | [2] | (3,657) | ||||
Goodwill, Acquired During Period | 49,458 | [3] | 11,475 | |||
Goodwill, Purchase Accounting Adjustments | (15) | |||||
Goodwill, Tax and other adjustments | 0 | (1,618) | ||||
Goodwill, Gross, Ending Balance | 1,414,634 | 1,365,175 | 1,358,975 | |||
Accumulated impairment losses, Ending Balance | (129,214) | (129,214) | (45,832) | |||
Goodwill, Net, Ending Balance | 1,285,420 | 1,235,961 | 1,313,143 | |||
Goodwill, Translation Adjustments | 16 | |||||
Global Services | ||||||
Goodwill | ||||||
Goodwill, Gross, Beginning Balance | 155,416 | 155,416 | ||||
Accumulated impairment losses, Beginning Balance | 0 | 0 | ||||
Goodwill, Net, Beginning Balance | 155,416 | 155,416 | ||||
Goodwill impairment charge | [1] | 0 | ||||
Goodwill, Written off Related to Sale of Business Unit | [2] | 0 | ||||
Goodwill, Acquired During Period | 0 | [3] | 0 | |||
Goodwill, Purchase Accounting Adjustments | 0 | |||||
Goodwill, Tax and other adjustments | 0 | 0 | ||||
Goodwill, Gross, Ending Balance | 155,416 | 155,416 | 155,416 | |||
Accumulated impairment losses, Ending Balance | 0 | 0 | 0 | |||
Goodwill, Net, Ending Balance | 155,416 | $ 155,416 | $ 155,416 | |||
Goodwill, Translation Adjustments | $ 0 | |||||
[1] | In the second quarter of fiscal year 2014, the Company made a strategic change in the allocation of its engineering resources by reducing its investment in engineering and sales for the hardware-based Brocade ADX products and increasing engineering investment in the software-based Brocade ADX products for Layer 4-7 applications. As a result of this change in strategy, the Company expected hardware-based Brocade ADX and related support revenue to be negatively impacted. Based on these changes in estimates, the Company recognized an impairment charge during the second fiscal quarter of 2014 because the book value of its Application Delivery Products (“ADP”) reporting unit net assets, which includes the Brocade ADX products, exceeded the estimated fair value of these assets. The goodwill amount related to the Company’s other reporting units was not impacted. | |||||
[2] | The goodwill disposed relates to the sale of the Company’s network adapter business. See Note 3, “Acquisitions and Divestitures,” of the Notes to Consolidated Financial Statements. | |||||
[3] | The goodwill acquired relates to the Company’s acquisition of two businesses, which is gross of the adjustments recorded during the purchase price allocation period. See Note 3, “Acquisitions and Divestitures,” of the Notes to Consolidated Financial Statements. |
Goodwill And Intangible Asset56
Goodwill And Intangible Assets Goodwill and Intangible Assets (Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | |
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived Intangible Assets Acquired | $ 52,260 | $ 1,840 | $ 3,390 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 5 years 10 months 27 days | 5 years | 4 years 4 days |
Trade names | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived Intangible Assets Acquired | $ 500 | $ 130 | $ 460 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 6 years | 5 years | 4 years |
Core/developed technology | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived Intangible Assets Acquired | $ 28,450 | $ 1,710 | $ 1,040 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 4 years 14 days | 5 years | 3 years |
Customer relationships | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived Intangible Assets Acquired | $ 22,030 | $ 1,080 | |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 7 years 11 months 6 days | 5 years | |
Non-compete agreements | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived Intangible Assets Acquired | $ 240 | $ 810 | |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 2 years | 4 years | |
Patents with broader applications | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived Intangible Assets Acquired | $ 1,040 | ||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 15 years |
Goodwill And Intangible Asset57
Goodwill And Intangible Assets (Schedule Of Finite-Lived Intangible Assets) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Oct. 31, 2015 | Nov. 01, 2014 | |||
Finite-Lived Intangible Assets | ||||
Gross Carrying Value | $ 74,570 | $ 14,560 | [1] | |
Accumulated Amortization | 14,057 | 3,012 | [1] | |
Net Carrying Value | [2],[3] | $ 60,513 | $ 11,548 | [1] |
Weighted-Average Remaining Useful Life | 6 years 6 months 18 days | 4 years 1 month 6 days | [1] | |
Cost of Fully Amortized Intangible Assets | $ 477,300 | |||
Trade names | ||||
Finite-Lived Intangible Assets | ||||
Gross Carrying Value | $ 1,090 | 590 | ||
Accumulated Amortization | 415 | 227 | ||
Net Carrying Value | $ 675 | $ 363 | ||
Weighted-Average Remaining Useful Life | 4 years 4 months 10 days | 3 years | ||
Core/developed technology | ||||
Finite-Lived Intangible Assets | ||||
Gross Carrying Value | $ 40,530 | $ 12,080 | ||
Accumulated Amortization | 9,605 | 1,964 | ||
Net Carrying Value | $ 30,925 | $ 10,116 | ||
Weighted-Average Remaining Useful Life | 3 years 5 months 26 days | 4 years 3 months 18 days | ||
Patent portfolio license (1) | ||||
Finite-Lived Intangible Assets | ||||
Gross Carrying Value | [4] | $ 7,750 | ||
Accumulated Amortization | [4] | 849 | ||
Net Carrying Value | [4] | $ 6,901 | ||
Weighted-Average Remaining Useful Life | [4] | 17 years 8 months 26 days | ||
Customer relationships | ||||
Finite-Lived Intangible Assets | ||||
Gross Carrying Value | $ 23,110 | $ 1,080 | ||
Accumulated Amortization | 2,484 | 427 | ||
Net Carrying Value | $ 20,626 | $ 653 | ||
Weighted-Average Remaining Useful Life | 7 years 2 months 5 days | 3 years 4 days | ||
Non-compete agreements | ||||
Finite-Lived Intangible Assets | ||||
Gross Carrying Value | $ 1,050 | $ 810 | ||
Accumulated Amortization | 664 | 394 | ||
Net Carrying Value | $ 386 | $ 416 | ||
Weighted-Average Remaining Useful Life | 1 year 2 months 1 day | 2 years 4 days | ||
Patents with broader applications | ||||
Finite-Lived Intangible Assets | ||||
Gross Carrying Value | $ 1,040 | |||
Accumulated Amortization | 40 | |||
Net Carrying Value | $ 1,000 | |||
Weighted-Average Remaining Useful Life | 14 years 4 months 17 days | |||
[1] | During the fiscal year ended November 1, 2014, $477.3 million of finite-lived intangible assets became fully amortized and, therefore, were removed from the balance sheet. | |||
[2] | During the fiscal year ended October 31, 2015, the Company acquired $52.3 million of intangible assets related to the Company’s acquisition of two businesses. See Note 3, “Acquisitions and Divestitures,” of the Notes to Consolidated Financial Statements. | |||
[3] | During the fiscal year ended October 31, 2015, the Company purchased a perpetual, nonexclusive license to certain patents for $7.8 million. | |||
[4] | The patent portfolio license was assigned an estimated useful life that reflects the Company’s consumption of the expected defensive benefits related to this license to certain patents. The method of amortization for the patent portfolio license reflects the Company’s estimate of the pattern in which these expected defensive benefits will be used by the Company and is primarily based on the mix of expiration patterns of the individual patents included in the license. |
Goodwill And Intangible Asset58
Goodwill And Intangible Assets (Schedule Of Amortization Of Intangible Assets Included On Consolidated Statements Of Operations) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | ||
Finite-Lived Intangible Assets | ||||
Amortization | $ 11,045 | $ 18,290 | $ 93,987 | |
Payments to Acquire Intangible Assets | 7,750 | 0 | 0 | |
Cost of revenues | ||||
Finite-Lived Intangible Assets | ||||
Amortization | 7,640 | 8,010 | 39,731 | |
General and administrative | ||||
Finite-Lived Intangible Assets | ||||
Amortization | [1] | 849 | 0 | 0 |
Other Operating Income (Expense) [Member] | ||||
Finite-Lived Intangible Assets | ||||
Amortization | $ 2,556 | $ 10,280 | $ 54,256 | |
[1] | The amortization is related to the $7.8 million of perpetual, nonexclusive license to certain patents purchased during the fiscal year ended October 31, 2015. |
Goodwill And Intangible Asset59
Goodwill And Intangible Assets (Schedule Of Estimated Future Amortization Of Intangible Assets) (Details) - USD ($) $ in Thousands | Oct. 31, 2015 | Nov. 01, 2014 | [3] | |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||||
2,016 | $ 14,774 | |||
2,017 | 14,305 | |||
2,018 | 9,785 | |||
2,019 | 6,259 | |||
2,020 | 5,168 | |||
Thereafter | 10,222 | |||
Total | [1],[2] | $ 60,513 | $ 11,548 | |
[1] | During the fiscal year ended October 31, 2015, the Company acquired $52.3 million of intangible assets related to the Company’s acquisition of two businesses. See Note 3, “Acquisitions and Divestitures,” of the Notes to Consolidated Financial Statements. | |||
[2] | During the fiscal year ended October 31, 2015, the Company purchased a perpetual, nonexclusive license to certain patents for $7.8 million. | |||
[3] | During the fiscal year ended November 1, 2014, $477.3 million of finite-lived intangible assets became fully amortized and, therefore, were removed from the balance sheet. |
Restructuring And Other Costs R
Restructuring And Other Costs Restructuring And Other Costs (Schedule of Restructuring and Other Charges) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | ||
Restructuring Charges [Abstract] | ||||
Goodwill impairment charge | $ 0 | $ 83,382 | [1] | $ 0 |
Severance and benefits | 0 | (1,788) | 20,413 | |
Contract terminations and other | 0 | 0 | 3,981 | |
Contract terminations and other | (678) | 7,686 | 1,070 | |
Restructuring, goodwill impairment, and other related costs | $ (678) | $ 89,280 | $ 25,464 | |
[1] | In the second quarter of fiscal year 2014, the Company made a strategic change in the allocation of its engineering resources by reducing its investment in engineering and sales for the hardware-based Brocade ADX products and increasing engineering investment in the software-based Brocade ADX products for Layer 4-7 applications. As a result of this change in strategy, the Company expected hardware-based Brocade ADX and related support revenue to be negatively impacted. Based on these changes in estimates, the Company recognized an impairment charge during the second fiscal quarter of 2014 because the book value of its Application Delivery Products (“ADP”) reporting unit net assets, which includes the Brocade ADX products, exceeded the estimated fair value of these assets. The goodwill amount related to the Company’s other reporting units was not impacted. |
Restructuring And Other Costs61
Restructuring And Other Costs (Schedule of Restructuring Reserve) (Details) $ in Thousands | 12 Months Ended | |
Oct. 31, 2015USD ($)employess | Nov. 01, 2014USD ($) | |
Restructuring Reserve Rollforward | ||
Restructuring liabilities, Beginning balance | $ 5,156 | $ 17,426 |
Restructuring and other charges | (678) | 7,704 |
Cash payments | (1,880) | (18,032) |
Other adjustments, net | (27) | (1,805) |
Translation adjustment | (242) | 137 |
Restructuring liabilities, Ending balance | 2,329 | 5,156 |
Restructuring Reserve Ending Balance | ||
Current restructuring liabilities | 1,090 | |
Non-current restructuring liabilities | $ 1,239 | |
Initial Period in which Effects are Expected to be Realized | 2,021 | |
Restructuring and Related Cost, Caption that Includes Restructuring Charges | Restructuring, goodwill impairment, and other related costs (benefits) | |
Fiscal 2013 Fourth Quarter Restructuring Plan | ||
Restructuring Reserve Ending Balance | ||
Restructuring and Related Activities, Initiation Date | Sep. 4, 2013 | |
Restructuring and Related Cost, Number of Positions Eliminated, Inception to Date | employess | 250 | |
Restructuring and Related Activities, Expected Completion Date | Jan. 25, 2014 | |
Restructuring and Related Activities, Description | During the fiscal year ended October 26, 2013, and the first quarter of fiscal year 2014, the Company restructured certain business operations and reduced the Company’s operating expense structure. The restructuring plan was approved by the Company’s management and communicated to the Company’s employees in September 2013. The restructuring plan included a workforce reduction of approximately 250 employees, primarily in the engineering, sales, and marketing organizations, as well as the cancellation of certain nonrecurring engineering agreements and exit from certain leased facilities. The Company substantially completed the restructuring plan by the end of the first quarter of fiscal year 2014. | |
Restructuring and Related Activities, Authorized Approval | The restructuring plan was approved by the Company’s management and communicated to the Company’s employees in September 2013. | |
Restructuring Reserve, Adjustment Description | The Company reevaluates its estimates and assumptions on a quarterly basis and makes adjustments to the restructuring liabilities balance if necessary. During the fiscal year ended October 31, 2015, the Company reversed approximately $0.7 million of charges related to estimated facilities lease losses primarily due to favorable changes in expected sublease terms and other related assumptions. | |
Other Restructuring Plans [Member] | ||
Restructuring Reserve Ending Balance | ||
Restructuring and Related Activities, Description | The Company also recorded charges related to estimated facilities lease losses, net of expected sublease income, due to consolidation of real estate space as a result of acquisitions. | |
Severance and Benefits | Fiscal 2013 Fourth Quarter Restructuring Plan | ||
Restructuring Reserve Rollforward | ||
Restructuring liabilities, Beginning balance | $ 171 | 15,216 |
Restructuring and other charges | 0 | 18 |
Cash payments | 0 | (13,258) |
Other adjustments, net | (27) | (1,805) |
Translation adjustment | (34) | 0 |
Restructuring liabilities, Ending balance | 110 | 171 |
Restructuring Reserve Ending Balance | ||
Current restructuring liabilities | 110 | |
Non-current restructuring liabilities | 0 | |
Contract Terminations and Other | Fiscal 2013 Fourth Quarter Restructuring Plan | ||
Restructuring Reserve Rollforward | ||
Restructuring liabilities, Beginning balance | 42 | 416 |
Restructuring and other charges | 0 | 0 |
Cash payments | (42) | (374) |
Other adjustments, net | 0 | 0 |
Translation adjustment | 0 | 0 |
Restructuring liabilities, Ending balance | 0 | 42 |
Restructuring Reserve Ending Balance | ||
Current restructuring liabilities | 0 | |
Non-current restructuring liabilities | 0 | |
Lease Loss Reserve and Related Costs | Fiscal 2013 Fourth Quarter Restructuring Plan | ||
Restructuring Reserve Rollforward | ||
Restructuring liabilities, Beginning balance | 3,949 | 0 |
Restructuring and other charges | (519) | 7,686 |
Cash payments | (1,411) | (3,600) |
Other adjustments, net | 0 | 0 |
Translation adjustment | (208) | 137 |
Restructuring liabilities, Ending balance | 1,811 | 3,949 |
Restructuring Reserve Ending Balance | ||
Current restructuring liabilities | 644 | |
Non-current restructuring liabilities | 1,167 | |
Lease Loss Reserve and Related Costs | Other Restructuring Plans [Member] | ||
Restructuring Reserve Rollforward | ||
Restructuring liabilities, Beginning balance | 994 | 1,794 |
Restructuring and other charges | (159) | 0 |
Cash payments | (427) | (800) |
Other adjustments, net | 0 | 0 |
Translation adjustment | 0 | 0 |
Restructuring liabilities, Ending balance | 408 | $ 994 |
Restructuring Reserve Ending Balance | ||
Current restructuring liabilities | 336 | |
Non-current restructuring liabilities | $ 72 |
Balance Sheet Details (Schedule
Balance Sheet Details (Schedule of Accounts Receivable) (Details) - USD ($) $ in Thousands | Oct. 31, 2015 | Nov. 01, 2014 |
Accounts, Notes, Loans and Financing Receivable | ||
Allowance for Doubtful Accounts | $ (1,838) | $ (80) |
Accounts receivable, net | 235,883 | 224,913 |
Trade Accounts Receivable | ||
Accounts, Notes, Loans and Financing Receivable | ||
Accounts Receivable, Gross | 247,376 | 232,389 |
Allowance for Doubtful Accounts | (1,838) | (80) |
Sales Allowance | (9,655) | (7,396) |
Accounts receivable, net | $ 235,883 | $ 224,913 |
Balance Sheet Details (Schedu63
Balance Sheet Details (Schedule of Inventory) (Details) - USD ($) $ in Thousands | Oct. 31, 2015 | Nov. 01, 2014 |
Inventory | ||
Inventory, Raw Materials | $ 18,788 | $ 10,491 |
Inventory, Finished Goods | 21,736 | 28,227 |
Inventory, Net | $ 40,524 | $ 38,718 |
Balance Sheet Details (Schedu64
Balance Sheet Details (Schedule of Property, Plant and Equipment) (Details) - USD ($) $ in Thousands | Oct. 31, 2015 | Nov. 01, 2014 | |
Property, Plant and Equipment, Net, by Type | |||
Property and equipment, gross | $ 940,216 | $ 897,329 | |
Less: Accumulated depreciation and amortization | [1],[2] | (500,992) | (451,896) |
Total property and equipment, net | 439,224 | 445,433 | |
Computer equipment | |||
Property, Plant and Equipment, Net, by Type | |||
Property and equipment, gross | 14,820 | 13,679 | |
Software | |||
Property, Plant and Equipment, Net, by Type | |||
Property and equipment, gross | 67,625 | 62,919 | |
Engineering and other equipment | |||
Property, Plant and Equipment, Net, by Type | |||
Property and equipment, gross | [1] | 407,342 | 383,412 |
Furniture and fixtures | |||
Property, Plant and Equipment, Net, by Type | |||
Property and equipment, gross | [1] | 31,028 | 29,053 |
Leasehold improvements | |||
Property, Plant and Equipment, Net, by Type | |||
Property and equipment, gross | 33,986 | 23,607 | |
Land and building | |||
Property, Plant and Equipment, Net, by Type | |||
Property and equipment, gross | $ 385,415 | $ 384,659 | |
[1] | Engineering and other equipment, furniture and fixtures, and accumulated depreciation and amortization include the following amounts under capital leases as of October 31, 2015, and November 1, 2014 (in thousands): October 31, 2015 November 1, 2014Cost$1,312 $11,925Accumulated depreciation(857) (7,209)Property and equipment, net, under capital leases$455 $4,716 | ||
[2] | The following table presents the depreciation of property and equipment included on the Company’s Consolidated Statements of Income (in thousands): Fiscal Year Ended October 31, 2015 November 1, 2014 October 26, 2013Depreciation expense$73,623 $82,357 $90,127 |
Balance Sheet Details (Schedu65
Balance Sheet Details (Schedule of Capital Leased Assets) (Details) - USD ($) $ in Thousands | Oct. 31, 2015 | Nov. 01, 2014 |
Capital Leases | ||
Cost | $ 1,312 | $ 11,925 |
Accumulated depreciation | (857) | (7,209) |
Total | $ 455 | $ 4,716 |
Balance Sheet Details (Schedu66
Balance Sheet Details (Schedule of Accrued Liabilities) (Details) - USD ($) $ in Thousands | Oct. 31, 2015 | Nov. 01, 2014 |
Accrued Liabilities, Current | ||
Income taxes payable | $ 7,142 | $ 5,632 |
Accrued warranty | 7,599 | 7,486 |
Inventory purchase commitments | 1,237 | 2,541 |
Accrued sales programs | 33,637 | 31,640 |
Accrued interest | 6,523 | 9,922 |
Others | 21,386 | 27,371 |
Total other accrued liabilities | $ 77,524 | $ 84,592 |
Balance Sheet Details (Narrativ
Balance Sheet Details (Narratives) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | |
Depreciation | |||
Depreciation expense | $ 73,623 | $ 82,357 | $ 90,127 |
Fair Value Measurements (Schedu
Fair Value Measurements (Schedule Of Assets And Liabilities Measured At Fair Value) (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands | Oct. 31, 2015 | Nov. 01, 2014 | |
Assets, Fair Value Disclosure | |||
Money market funds | [1] | $ 1,184,410 | $ 1,009,283 |
Derivative assets | 709 | 99 | |
Total assets measured at fair value | 1,185,119 | 1,009,382 | |
Liabilities, Fair Value Disclosure | |||
Derivative liabilities | 1,125 | 1,937 | |
Total liabilities measured at fair value | 1,125 | 1,937 | |
Quoted Prices In Active Markets For Identical Instruments (Level 1) | |||
Assets, Fair Value Disclosure | |||
Money market funds | [1] | 1,184,410 | 1,009,283 |
Derivative assets | 0 | 0 | |
Total assets measured at fair value | 1,184,410 | 1,009,283 | |
Liabilities, Fair Value Disclosure | |||
Derivative liabilities | 0 | 0 | |
Total liabilities measured at fair value | 0 | 0 | |
Significant Other Observable Inputs (Level 2) | |||
Assets, Fair Value Disclosure | |||
Money market funds | [1] | 0 | 0 |
Derivative assets | 709 | 99 | |
Total assets measured at fair value | 709 | 99 | |
Liabilities, Fair Value Disclosure | |||
Derivative liabilities | 1,125 | 1,937 | |
Total liabilities measured at fair value | 1,125 | 1,937 | |
Significant Unobservable Inputs (Level 3) | |||
Assets, Fair Value Disclosure | |||
Money market funds | [1] | 0 | 0 |
Derivative assets | 0 | 0 | |
Total assets measured at fair value | 0 | 0 | |
Liabilities, Fair Value Disclosure | |||
Derivative liabilities | 0 | 0 | |
Total liabilities measured at fair value | $ 0 | $ 0 | |
[1] | Money market funds are reported within “Cash and cash equivalents” on the Company’s Consolidated Balance Sheets. |
Borrowings (Schedule Of Long-Te
Borrowings (Schedule Of Long-Term Debt) (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Jan. 31, 2015 | Oct. 31, 2015 | Nov. 01, 2014 | |
Debt Instrument | |||
Long-term debt, gross | $ 875,298 | $ 602,115 | |
Unamortized discount | (79,196) | (4,839) | |
Current portion of long-term debt | (298) | (1,826) | |
Long-term debt, net of current portion | $ 795,804 | 595,450 | |
Convertible Senior Unsecured 2020 Notes [Member] | |||
Debt Instrument | |||
Debt Instrument, Maturity Date Range, End | Jan. 1, 2020 | Jan. 1, 2020 | |
Stated annual interest rate | 1.375% | ||
Long-term debt, gross | $ 575,000 | $ 0 | |
Effective interest rate | 4.98% | 0.00% | |
Unamortized discount | $ (76,311) | ||
Senior Unsecured 2023 Notes | |||
Debt Instrument | |||
Debt Instrument, Maturity Date Range, End | Jan. 15, 2023 | ||
Stated annual interest rate | 4.625% | ||
Long-term debt, gross | $ 300,000 | $ 300,000 | |
Effective interest rate | 4.83% | 4.83% | |
Senior Secured 2020 Notes | |||
Debt Instrument | |||
Debt Instrument, Maturity Date Range, End | Jan. 1, 2015 | ||
Stated annual interest rate | 6.875% | ||
Long-term debt, gross | $ 0 | $ 300,000 | |
Effective interest rate | 8.39% | 7.26% | |
Capital Lease Obligations | |||
Debt Instrument | |||
Debt Instrument, Maturity Date Range, End | May 31, 2016 | ||
Stated annual interest rate | 4.63% | ||
Long-term debt, gross | $ 298 | $ 2,115 | |
Effective interest rate | 4.63% | 5.37% |
Borrowings Borrowings (Schedule
Borrowings Borrowings (Schedule of Carrying Values of Liability and Equity Components) (Details) - USD ($) $ in Thousands | Oct. 31, 2015 | Nov. 01, 2014 |
Debt Instrument | ||
Long-term debt, gross | $ 875,298 | $ 602,115 |
Unamortized discount | (79,196) | (4,839) |
Convertible Senior Unsecured 2020 Notes [Member] | ||
Debt Instrument | ||
Long-term debt, gross | 575,000 | $ 0 |
Unamortized discount | (76,311) | |
Long-term Debt | 498,689 | |
Debt Instrument, Convertible, Carrying Amount of Equity Component | $ 70,765 |
Borrowings (Narrative) (Details
Borrowings (Narrative) (Details) $ / shares in Units, shares in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||||
Jan. 31, 2015USD ($)shares$ / shares | Oct. 31, 2015USD ($)shares$ / shares | Jan. 31, 2015USD ($) | Jan. 24, 2009 | Oct. 31, 2015USD ($)$ / sharesshares | Nov. 01, 2014USD ($) | Oct. 26, 2013USD ($) | Jan. 14, 2015USD ($)$ / sharesshares | Jan. 22, 2013USD ($) | Jan. 20, 2010USD ($) | Oct. 31, 2008USD ($) | |||
Convertible Debt [Abstract] | |||||||||||||
Proceeds from convertible notes | $ 565,656,000 | $ 0 | $ 0 | ||||||||||
Payments for Hedge, Financing Activities | 86,135,000 | 0 | 0 | ||||||||||
Proceeds from issuance of warrants | $ 51,175,000 | 0 | 0 | ||||||||||
Convertible Senior Unsecured 2020 Notes [Member] | |||||||||||||
Convertible Debt [Abstract] | |||||||||||||
Debt instrument, face amount | $ 575,000,000 | ||||||||||||
Proceeds from convertible notes | $ 565,700,000 | ||||||||||||
DiscountRateForFairValueOfLiabilityComponent | 4.57% | ||||||||||||
Debt Instrument, Convertible, Remaining Discount Amortization Period | 4 years 2 months 1 day | ||||||||||||
Amortization of Debt Discount (Premium) | $ 12,900,000 | ||||||||||||
Interest Expense, Debt, Excluding Amortization | 6,300,000 | ||||||||||||
Long-term debt, fair value | $ 568,000,000 | $ 568,000,000 | |||||||||||
Debt Instrument, Maturity Date Range, End | Jan. 1, 2020 | Jan. 1, 2020 | |||||||||||
Debt Instrument, Convertible, Conversion Ratio | 62.7746 | 62.8879 | |||||||||||
Debt Instrument, Convertible, Number of Equity Instruments | shares | 36.1 | 36.2 | |||||||||||
Debt Instrument, Convertible, Conversion Price | $ / shares | $ 15.90 | [1],[2] | $ 15.90 | [1],[2] | $ 15.93 | ||||||||
Debt Instrument, Convertible, If-converted Value in Excess of Principal | $ 0 | ||||||||||||
Repurchase price of notes in case of change in control, percentage of face value | 100.00% | ||||||||||||
Option Indexed to Issuer's Equity, Indexed Shares | shares | 36.1 | ||||||||||||
Option Indexed to Issuer's Equity, Strike Price | $ / shares | $ 15.93 | $ 15.90 | |||||||||||
Payments for Hedge, Financing Activities | $ 86,100,000 | ||||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | shares | 36.2 | 36.2 | 36.1 | ||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares | $ 20.61 | $ 20.61 | $ 20.65 | ||||||||||
WarrantsMaturityPeriod | 60 days | ||||||||||||
Class of Warrant or Right, Date from which Warrants or Rights Exercisable | Apr. 1, 2020 | ||||||||||||
Proceeds from issuance of warrants | $ 51,200,000 | ||||||||||||
Unsecured Debt [Abstract] | |||||||||||||
Debt instrument, face amount | $ 575,000,000 | ||||||||||||
Long-term debt, fair value | $ 568,000,000 | $ 568,000,000 | |||||||||||
Repurchase price of notes in case of change in control, percentage of face value | 100.00% | ||||||||||||
Secured Debt [Abstract] | |||||||||||||
Debt instrument, face amount | 575,000,000 | ||||||||||||
Long-term debt, fair value | 568,000,000 | $ 568,000,000 | |||||||||||
Interest Expense, Debt | 0 | $ 0 | |||||||||||
Senior Secured 2020 Notes | |||||||||||||
Convertible Debt [Abstract] | |||||||||||||
Debt instrument, face amount | $ 300,000,000 | ||||||||||||
Long-term debt, fair value | 312,500,000 | ||||||||||||
Debt Instrument, Maturity Date Range, End | Jan. 1, 2015 | ||||||||||||
Unsecured Debt [Abstract] | |||||||||||||
Debt instrument, face amount | 300,000,000 | ||||||||||||
Long-term debt, fair value | 312,500,000 | ||||||||||||
Secured Debt [Abstract] | |||||||||||||
Debt instrument, face amount | $ 300,000,000 | ||||||||||||
Debt Instrument, Redemption Price, Percentage | 103.438% | ||||||||||||
Irrevocable deposit | 322,200,000 | ||||||||||||
Repayment of principal amount | 300,000,000 | ||||||||||||
Call premium | 10,300,000 | ||||||||||||
Debt Instrument, Increase, Accrued Interest | $ 10,300,000 | ||||||||||||
Unpaid interest deposited to escrow | $ 1,600,000 | ||||||||||||
Call premium cost and original issue discount and debt issuance costs related to lenders that did not participate in refinancing | $ 20,400,000 | ||||||||||||
Long-term debt, fair value | 312,500,000 | ||||||||||||
Senior Unsecured 2023 Notes | |||||||||||||
Convertible Debt [Abstract] | |||||||||||||
Debt instrument, face amount | $ 300,000,000 | ||||||||||||
Long-term debt, fair value | 293,900,000 | $ 293,900,000 | 292,400,000 | ||||||||||
Debt Instrument, Maturity Date Range, End | Jan. 15, 2023 | ||||||||||||
Repurchase price of notes in case of change in control, percentage of face value | 101.00% | ||||||||||||
Unsecured Debt [Abstract] | |||||||||||||
Debt instrument, face amount | 300,000,000 | ||||||||||||
Long-term debt, fair value | 293,900,000 | $ 293,900,000 | 292,400,000 | ||||||||||
Redemption price, percentage of face value | 100.00% | ||||||||||||
Redemption amount of notes, percentage of principal amount, when using the net cash proceed from capital stock sale | 35.00% | ||||||||||||
Redemption price, percentage of principal amount, when using the net cash proceed from capital stock sale | 104.625% | ||||||||||||
Repurchase price of notes in case of change in control, percentage of face value | 101.00% | ||||||||||||
Secured Debt [Abstract] | |||||||||||||
Debt instrument, face amount | $ 300,000,000 | ||||||||||||
Long-term debt, fair value | 293,900,000 | $ 293,900,000 | 292,400,000 | ||||||||||
Term Loan Facility | |||||||||||||
Secured Debt [Abstract] | |||||||||||||
Debt Instrument, Original Term of Loan | 5 years | ||||||||||||
Senior secured credit facility, maximum borrowing capacity | $ 1,100,000,000 | ||||||||||||
Senior secured credit facility, amount outstanding | 0 | 0 | 0 | ||||||||||
Revolving Credit Facility | |||||||||||||
Secured Debt [Abstract] | |||||||||||||
Debt Instrument, Original Term of Loan | 5 years | ||||||||||||
Senior secured credit facility, maximum borrowing capacity | 125,000,000 | 125,000,000 | 125,000,000 | 125,000,000 | |||||||||
Senior secured credit facility, amount outstanding | $ 0 | $ 0 | $ 0 | ||||||||||
Swing Line Loan Subfacility | |||||||||||||
Secured Debt [Abstract] | |||||||||||||
Senior secured credit facility, maximum borrowing capacity | 25,000,000 | ||||||||||||
Letter Of Credit Subfacility | |||||||||||||
Secured Debt [Abstract] | |||||||||||||
Senior secured credit facility, maximum borrowing capacity | $ 25,000,000 | ||||||||||||
Trading Price Trigger One [Member] | Convertible Senior Unsecured 2020 Notes [Member] | |||||||||||||
Convertible Debt [Abstract] | |||||||||||||
Debt Instrument, Convertible, Threshold Trading Days | 20 | ||||||||||||
Debt Instrument, Convertible, Threshold Consecutive Trading Days | 30 days | ||||||||||||
Debt Instrument, Convertible, Threshold Percentage of Stock Price Trigger | 130.00% | ||||||||||||
Trading Price Trigger Two [Member] | Convertible Senior Unsecured 2020 Notes [Member] | |||||||||||||
Convertible Debt [Abstract] | |||||||||||||
Debt Instrument, Convertible, Threshold Trading Days | 5 | ||||||||||||
Debt Instrument, Convertible, Threshold Consecutive Trading Days | 10 days | ||||||||||||
Debt Instrument, Convertible, Threshold Percentage of Notes Price Trigger | 98.00% | ||||||||||||
[1] | In connection with the issuance of the 2020 Convertible Notes, the Company entered into convertible note hedge and warrant transactions as described in Note 8, “Borrowings.” The 2020 Convertible Notes have no impact on diluted earnings per share until the average quarterly price of the Company’s common stock exceeds the adjusted conversion price of $15.90 per share. If the common stock price exceeds this adjusted conversion price, prior to conversion, the Company will calculate the effect of the additional shares that may be issued using the treasury stock method. If the average price of the Company’s common stock exceeds $20.61 per share for a quarterly period, the Company’s weighted-average shares used in computing diluted net income per share will be impacted by the effect of the additional potential shares that may be issued related to the warrants using the treasury stock method. The convertible note hedge is not considered for purposes of the diluted earnings per share calculation, as its effect would be antidilutive. | ||||||||||||
[2] | These amounts are excluded from the computation of diluted net income per share. |
Borrowings (Schedule Of Debt Ma
Borrowings (Schedule Of Debt Maturities) (Details) - USD ($) $ in Thousands | Oct. 31, 2015 | Nov. 01, 2014 |
Long-term Debt, by Maturity | ||
2,016 | $ 298 | |
2,017 | 0 | |
2,018 | 0 | |
2,019 | 0 | |
2,020 | 575,000 | |
Thereafter | 300,000 | |
Total | $ 875,298 | $ 602,115 |
Commitments And Contingencies C
Commitments And Contingencies Commitments And Contingencies (Leases Narrative) (Details) $ in Millions | Oct. 31, 2015USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Letters of Credit Outstanding, Amount | $ 0.1 |
Commitments And Contingencies74
Commitments And Contingencies Commitments And Contingencies (Schedule of Rent Expense) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | |
Operating Leases, Rent Expense, Net [Abstract] | |||
Rent expense | $ 22,929 | $ 21,928 | $ 26,199 |
Sublease income | (7,673) | (7,264) | (6,834) |
Rent Expense, Net | $ 15,256 | $ 14,664 | $ 19,365 |
Commitments And Contingencies75
Commitments And Contingencies Commitments And Contingencies (Schedule of Future Minimum Rental Payments for Operating Leases) (Details) $ in Thousands | Oct. 31, 2015USD ($) |
Operating Leases, Future Minimum Payments Due [Abstract] | |
2,016 | $ 20,974 |
2,017 | 12,125 |
2,018 | 8,465 |
2,019 | 6,717 |
2,020 | 6,313 |
Thereafter | 17,712 |
Total minimum lease payments | 72,306 |
Contractual sublease income | $ 9,700 |
Commitments And Contingencies76
Commitments And Contingencies Commitments And Contingencies (Schedule of Future Minimum Lease Payments for Capital Leases) (Details) $ in Thousands | Oct. 31, 2015USD ($) |
Capital Leases, Future Minimum Payments Due | |
2016 - Total minimum lease payments | $ 304 |
Amount representing interest | (6) |
Present value of net minimum lease payments | $ 298 |
Commitments And Contingencies77
Commitments And Contingencies (Schedule Of Accrued Liability For Estimated Future Warranty Costs) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Oct. 31, 2015 | Nov. 01, 2014 | |
Product Warranty Activity | ||
Beginning balance | $ 7,486 | $ 8,632 |
Liabilities accrued for warranties issued during the period | 4,076 | 4,683 |
Warranty claims paid and used during the period | (4,164) | (4,978) |
Changes in liability for pre-existing warranties during the period | 201 | (851) |
Ending balance | $ 7,599 | $ 7,486 |
Commitments And Contingencies78
Commitments And Contingencies (Purchase Commitment Narrative) (Details) - Inventory Purchase Commitment $ in Thousands | Oct. 31, 2015USD ($) |
Purchase Commitment, Excluding Long-term Commitment | |
Purchase Commitment, Remaining Minimum Amount Committed | $ 176,200 |
Purchase Commitment, Recognized Loss | $ 1,237 |
Derivative Instruments And He79
Derivative Instruments And Hedging Activities (Schedule Of Net Gains (Losses) Related To The Effective Portion Of Foreign Currency Derivatives) (Details) - Foreign Exchange Contract - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | |
Derivative Instruments, Gain (Loss) | |||
Net gains (losses) related to the effective portion of foreign currency derivatives | $ (4,250) | $ 262 | $ 425 |
Cost of revenues | |||
Derivative Instruments, Gain (Loss) | |||
Net gains (losses) related to the effective portion of foreign currency derivatives | (898) | 126 | 98 |
Research and development | |||
Derivative Instruments, Gain (Loss) | |||
Net gains (losses) related to the effective portion of foreign currency derivatives | (381) | (451) | (60) |
Sales and marketing | |||
Derivative Instruments, Gain (Loss) | |||
Net gains (losses) related to the effective portion of foreign currency derivatives | (2,772) | 528 | 356 |
General and administrative | |||
Derivative Instruments, Gain (Loss) | |||
Net gains (losses) related to the effective portion of foreign currency derivatives | $ (199) | $ 59 | $ 31 |
Derivative Instruments And He80
Derivative Instruments And Hedging Activities (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||
Maximum derivative instrument maturity period | 15 months | ||
Foreign Currency Transaction [Abstract] | |||
Foreign currency transaction gains (losses) | $ (0.4) | $ (0.3) | $ 0.1 |
Derivatives Designated As Hedging Instruments | Prepaid Expense And Other Current Asset | |||
Derivative Instruments, Gain (Loss) | |||
Gross unrealized gain positions | $ 0.7 | ||
Derivatives Designated As Hedging Instruments | Other Current Liabilities | |||
Derivative Instruments, Gain (Loss) | |||
Gross unrealized loss positions | $ (1.1) |
Derivative Instruments And He81
Derivative Instruments And Hedging Activities (Schedule Of Total Gross Notional Amounts, Presented By Currency) (Details) - USD ($) $ in Thousands | Oct. 31, 2015 | Nov. 01, 2014 |
Derivatives Designated As Hedging Instruments | ||
Derivative | ||
Total gross notional amounts, presented by currency | $ 169,886 | $ 80,957 |
Derivatives Designated As Hedging Instruments | British Pound | ||
Derivative | ||
Total gross notional amounts, presented by currency | 46,330 | 11,168 |
Derivatives Designated As Hedging Instruments | Euro | ||
Derivative | ||
Total gross notional amounts, presented by currency | 40,961 | 14,404 |
Derivatives Designated As Hedging Instruments | India Rupee | ||
Derivative | ||
Total gross notional amounts, presented by currency | 35,647 | 19,413 |
Derivatives Designated As Hedging Instruments | Chinese Yuan | ||
Derivative | ||
Total gross notional amounts, presented by currency | 15,129 | 10,406 |
Derivatives Designated As Hedging Instruments | Singapore Dollar | ||
Derivative | ||
Total gross notional amounts, presented by currency | 13,745 | 9,242 |
Derivatives Designated As Hedging Instruments | Swiss Franc | ||
Derivative | ||
Total gross notional amounts, presented by currency | 9,265 | 7,468 |
Derivatives Designated As Hedging Instruments | Japanese Yen | ||
Derivative | ||
Total gross notional amounts, presented by currency | 8,809 | 8,856 |
Derivatives Not Designated As Hedging Instruments | ||
Derivative | ||
Total gross notional amounts, presented by currency | 0 | 34,091 |
Derivatives Not Designated As Hedging Instruments | British Pound | ||
Derivative | ||
Total gross notional amounts, presented by currency | 0 | 14,891 |
Derivatives Not Designated As Hedging Instruments | Euro | ||
Derivative | ||
Total gross notional amounts, presented by currency | 0 | 19,200 |
Derivatives Not Designated As Hedging Instruments | India Rupee | ||
Derivative | ||
Total gross notional amounts, presented by currency | 0 | 0 |
Derivatives Not Designated As Hedging Instruments | Chinese Yuan | ||
Derivative | ||
Total gross notional amounts, presented by currency | 0 | 0 |
Derivatives Not Designated As Hedging Instruments | Singapore Dollar | ||
Derivative | ||
Total gross notional amounts, presented by currency | 0 | 0 |
Derivatives Not Designated As Hedging Instruments | Swiss Franc | ||
Derivative | ||
Total gross notional amounts, presented by currency | 0 | 0 |
Derivatives Not Designated As Hedging Instruments | Japanese Yen | ||
Derivative | ||
Total gross notional amounts, presented by currency | $ 0 | $ 0 |
Employee Compensation Plans Emp
Employee Compensation Plans Employee Compensation Plans (Narrative) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||
May. 02, 2015 | Apr. 28, 2012 | Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Unrecognized Tax Benefits, Income Tax Penalties and Interest Expense | $ 200,000 | $ (16,000) | |||
Equity Compensation Plans | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Shares authorized for issuance under plan | 63,400,000 | 55,200,000 | |||
Shares available for issuance under plan | 36,800,000 | 30,000,000 | |||
Reduction In Number Of Shares Available For Issuance | 2.03 | ||||
Minimum Percentage Holding Requirement For Principal Shareholder | 10.00% | ||||
Minimum Fair Market Value Of The Shares Granted To Principal Shareholder | 110.00% | ||||
Expiration Date For Stock Options And Stock Appreciation Rights Maximum Time From Grant Date - 10% owners | 5 years | ||||
Expiration Date For Stock Options And Stock Appreciation Rights Maximum Time From Grant Date | 7 years | ||||
Equity Compensation Plans | Minimum | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Award vesting period | 3 years | ||||
Equity Compensation Plans | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Award vesting period | 4 years | ||||
2013 Inducement Award Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Shares authorized for issuance under plan | 2,400,000 | ||||
2009 Stock Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Additional shares authorized under plan | 29,500,000 | 35,000,000 | |||
Shares authorized for issuance under plan | 112,500,000 | ||||
Maximum number of shares to be added to the plan | 40,300,000 | ||||
2009 Director Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Additional shares authorized under plan | 1,000,000 | ||||
Shares authorized for issuance under plan | 3,000,000 | ||||
Maximum number of shares to be added to the plan | 900,000 | ||||
2009 Employee Stock Purchase Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Additional shares authorized under plan | 30,000,000 | ||||
Shares authorized for issuance under plan | 65,000,000 | ||||
Shares available for issuance under plan | 10,500,000 | ||||
Maximum payroll deductions | 15.00% | ||||
Discount from Market Price At Offering Date | 85.00% | ||||
Maximum number of shares to be purchased per employee | 3,750 | ||||
Plan Offering Period | 24 months | ||||
Plan Purchase Period | 6 months | ||||
Number of purchase periods | 4 | ||||
Mcdata Equity Plans | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Shares available for issuance under plan | 0 | ||||
Employee 401 K Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Employee contribution maximum rate | 60.00% | ||||
Maximum company matching contribution per employee | $ 3,000 | ||||
Company's matching contributions to the 401(k) Plan | $ 8,700,000 | $ 8,200,000 | $ 9,200,000 |
Stock-Based Compensation (Sched
Stock-Based Compensation (Schedule Of Equity Compensation Plans) (Details) shares in Thousands | Oct. 31, 2015$ / sharesshares | |
2009 Stock Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Shares authorized for issuance under plan | 112,500 | |
2009 Director Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Shares authorized for issuance under plan | 3,000 | |
2009 Employee Stock Purchase Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Shares available for issuance under plan | 10,500 | |
Shares authorized for issuance under plan | 65,000 | |
Stock option and Employee stock purchase plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Number of securities to be Issued upon exercise of outstanding options, warrants and rights | 6,691 | |
Weighted-average exercise price of options outstanding | $ / shares | $ 7.47 | |
Shares available for issuance under plan | 36,834 | |
Equity Compensation Plans Approved By Stockholders | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Number of securities to be Issued upon exercise of outstanding options, warrants and rights | 4,291 | [1],[2] |
Weighted-average exercise price of options outstanding | $ / shares | $ 8.48 | [2] |
Shares available for issuance under plan | 36,834 | [2],[3] |
Equity Compensation Plans Approved By Stockholders | 2009 Stock Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Shares available for issuance under plan | 25,296 | [2],[3] |
Equity Compensation Plans Approved By Stockholders | 2009 Director Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Shares available for issuance under plan | 988 | [2],[3] |
Equity Compensation Plans Approved By Stockholders | 2009 Employee Stock Purchase Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Shares available for issuance under plan | 10,549 | [2],[3] |
Equity Compensation Plans Not Approved By Stockholders | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Number of securities to be Issued upon exercise of outstanding options, warrants and rights | 2,400 | [4],[5] |
Weighted-average exercise price of options outstanding | $ / shares | $ 5.66 | [5] |
Shares available for issuance under plan | 0 | [5] |
[1] | Amount excludes purchase rights accrued under the 2009 ESPP. As of October 31, 2015, the 2009 ESPP had a stockholder-approved reserve of 65.0 million shares, of which 10.5 million shares were available for future issuance. | |
[2] | Primarily consist of the 2009 ESPP, the 2009 and 1999 Director Plans, and the 2009 and 1999 Stock Plans. | |
[3] | Amount consists of 10.5 million, 1.0 million, and 25.3 million shares available for future issuance under the 2009 ESPP, the 2009 Director Plan, and the 2009 Stock Plan, respectively. | |
[4] | All shares were granted in the first quarter of fiscal year 2013. Information relating to equity compensation plans is set forth in Note 11, “Employee Compensation Plans,” of the Notes to Consolidated Financial Statements. | |
[5] | Consist solely of the 2013 Inducement Award Plan described in Note 11, “Employee Compensation Plans,” of the Notes to Consolidated Financial Statements. |
Stock-Based Compensation (Stock
Stock-Based Compensation (Stock-Based Compensation Expense Included In Line Items Of Consolidated Statements Of Operations) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | |||
Total stock-based compensation | $ 88,528 | $ 84,914 | $ 73,618 |
Cost of revenues | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | |||
Total stock-based compensation | 12,946 | 14,963 | 14,519 |
Research and development | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | |||
Total stock-based compensation | 18,714 | 18,635 | 17,509 |
Sales and marketing | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | |||
Total stock-based compensation | 38,340 | 31,650 | 29,425 |
General and administrative | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | |||
Total stock-based compensation | $ 18,528 | $ 19,666 | $ 12,165 |
Stock-Based Compensation (Sto85
Stock-Based Compensation (Stock-Based Compensation Expense By Grant Type) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award | |||
Total stock-based compensation | $ 88,528 | $ 84,914 | $ 73,618 |
Stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Total stock-based compensation | 3,675 | 4,581 | 2,581 |
Restricted stock units | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Total stock-based compensation | 67,735 | 62,906 | 50,522 |
Employee stock purchase plan | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Total stock-based compensation | $ 17,118 | $ 17,427 | $ 20,515 |
Stock-Based Compensation (Sto86
Stock-Based Compensation (Stock-Based Compensation, Unrecognized Compensation Expense And Weighted-Average Period) (Details) $ in Thousands | 12 Months Ended |
Oct. 31, 2015USD ($) | |
Stock options | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Unrecognized Compensation Expense | $ 2,379 |
Weighted-Average Period | 1 year 1 month 10 days |
Restricted stock units | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Unrecognized Compensation Expense | $ 119,848 |
Weighted-Average Period | 2 years 11 days |
Employee stock purchase plan | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Unrecognized Compensation Expense | $ 6,663 |
Weighted-Average Period | 10 months 13 days |
Stock-Based Compensation (Sch87
Stock-Based Compensation (Schedules of Share-based Payment Award, Stock Options and Employee Stock Purchase Plan, Valuation Assumptions) (Details) | 12 Months Ended | ||
Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | |
Stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Risk free interest rate minimum | 1.10% | 0.70% | 0.60% |
Risk free interest rate maximum | 1.80% | 2.30% | 1.70% |
Expected volatility minimum | 36.50% | 36.80% | 39.90% |
Expected volatility maximum | 36.50% | 39.40% | 44.90% |
Expected term | 4 years 6 months | 5 years | 5 years 8 months 12 days |
Stock options | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Expected dividend yield | 1.30% | 0.00% | 0.00% |
Stock options | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Expected dividend yield | 1.30% | 1.50% | 0.00% |
Employee stock purchase plan | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Expected dividend yield | 1.393% | 1.40% | 0.00% |
Risk free interest rate | 0.335% | 0.20% | 0.20% |
Expected volatility | 27.27% | 30.10% | 39.50% |
Expected term | 1 year 2 months 23 days | 1 year 3 months 18 days | 1 year 3 months 18 days |
Stock-Based Compensation (Sch88
Stock-Based Compensation (Schedule of Share-based Compensation, Stock Options, Activity) (Details) - Stock options - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |||
Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | Oct. 27, 2012 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding | ||||
Stock options, Beginning balance | 6,199 | 12,561 | 29,497 | |
Stock options, Granted | 1,117 | 1,770 | 2,875 | |
Stock options, Exercised | (564) | (6,971) | (13,149) | |
Stock options, Forfeited or expired | (61) | (1,161) | (6,662) | |
Stock options, Ending balance | 6,691 | 6,199 | 12,561 | 29,497 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures | ||||
Weighted Average Exercise Price, Stock options, Beginning balance | $ 6.79 | $ 6.19 | $ 5.43 | |
Weighted Average Exercise Price, Stock options, Granted | 10.89 | 9.03 | 5.64 | |
Weighted Average Exercise Price, Stock options, Exercised | 6.68 | 5.93 | 3.99 | |
Weighted Average Exercise Price, Stock options, Forfeited or expired | 8.20 | 8.93 | 6.90 | |
Weighted Average Exercise Price, Stock options, Ending balance | $ 7.47 | $ 6.79 | $ 6.19 | $ 5.43 |
Aggregate intrinsic value, Stock options, Outstanding | $ 20,252 | $ 24,452 | $ 24,784 | $ 26,077 |
Aggregate intrinsic value, Stock options, Exercised | $ 2,980 | $ 24,240 | $ 32,324 | |
Weighted-average grant date fair value | $ 3.09 | $ 3.16 | $ 2.34 | |
Weighted average remaining contractual term, Stock options, Outstanding | 4 years 4 months 13 days | 4 years 8 months 26 days | 2 years 4 months 13 days | 1 year 7 months 10 days |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest | ||||
Vested and expected to vest, Stock options, Outstanding | 6,402 | |||
Vested and expected to vest, Stock options, Weighted average exercise price | $ 7.39 | |||
Vested and expected to vest, Stock options, Weighted average remaining contractual term | 4 years 3 months 25 days | |||
Vested and expected to vest, Stock options, Outstanding, Aggregate intrinsic value | $ 19,845 | |||
Exercisable and vested, Stock options, Outstanding | 3,981 | |||
Exercisable and vested, Stock options, Weighted average exercise price | $ 6.79 | |||
Exercisable and vested, Stock options, Weighted average remaining contractual term | 3 years 9 months 22 days | |||
Exercisable and vested, Stock options, Outstanding, Aggregate intrinsic value | $ 14,575 |
Stock-Based Compensation (Sch89
Stock-Based Compensation (Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity) (Details) - $ / shares shares in Thousands | 12 Months Ended | ||
Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | |
Restricted stock units | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested | |||
RSUs, Nonvested, Beginning balance | 18,999 | 22,761 | 21,996 |
RSUs, Granted | 10,777 | 11,582 | 11,518 |
RSUs, Vested | (8,317) | (11,750) | (7,401) |
RSUs, Forfeited | (2,260) | (3,594) | (3,352) |
RSUs, Nonvested, Ending balance | 19,199 | 18,999 | 22,761 |
RSUs, Vested and expected to vest | 16,243 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures | |||
RSUs, Weighted-Average Grant Date Fair Value, Beginning balance | $ 5.93 | $ 3.85 | $ 3.71 |
RSUs, Weighted-Average Grant Date Fair Value, Granted | 11.46 | 9.69 | 5.75 |
RSUs, Weighted-Average Grant Date Fair Value, Vested | 7.81 | 5.59 | 5.69 |
RSUs, Weighted-Average Grant Date Fair Value, Forfeited | 8.69 | 6.01 | 5.39 |
RSUs, Weighted-Average Grant Date Fair Value, Ending balance | 9.82 | $ 5.93 | $ 3.85 |
RSUs, Weighted-Average Grant Date Fair Value, Vested and expected to vest | $ 9.71 | ||
Market-based stock units | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested | |||
RSUs, Nonvested, Beginning balance | 2,019 | ||
RSUs, Granted | 1,510 | ||
RSUs, Vested | (1,310) | ||
RSUs, Forfeited | (283) | ||
RSUs, Nonvested, Ending balance | 1,936 | 2,019 | |
RSUs, Vested and expected to vest | 1,258 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures | |||
RSUs, Weighted-Average Grant Date Fair Value, Beginning balance | $ 11.62 | ||
RSUs, Weighted-Average Grant Date Fair Value, Granted | 10.39 | ||
RSUs, Weighted-Average Grant Date Fair Value, Vested | 12.30 | ||
RSUs, Weighted-Average Grant Date Fair Value, Forfeited | 11.25 | ||
RSUs, Weighted-Average Grant Date Fair Value, Ending balance | 9.65 | $ 11.62 | |
RSUs, Weighted-Average Grant Date Fair Value, Vested and expected to vest | $ 9.25 |
Stock-Based Compensation (Narra
Stock-Based Compensation (Narrative) (Details) - USD ($) $ / shares in Millions, $ in Millions | 12 Months Ended | ||
Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award | |||
Change in Accounting Estimate, Description | To the extent that the actual forfeitures differ from the estimated forfeitures, the Company records the difference in the period that the awards vest. The Company estimates the forward-looking forfeiture rate, using the Company’s historical forfeiture rates, annually during the second fiscal quarter, and whenever events occur or facts and circumstances indicate that the current forfeiture rate estimate is significantly different from historical forfeitures. Changes in the estimated forfeiture rates and differences between the estimated forfeiture rates and actual forfeiture rates may result in significant increases or decreases in stock-based compensation expense from period to period | ||
Change in Accounting Estimate, Forfeitures, Cumulative Adjustment | $ (5.6) | $ 0 | |
2009 Employee Stock Purchase Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Discount from Market Price At Offering Date | 85.00% | ||
Maximum payroll deductions | 15.00% | ||
Plan Offering Period | 24 months | ||
Plan Purchase Period | 6 months | ||
Restricted stock units | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
RSUs, Nonvested, Aggregate intrinsic value | $ 200.1 | $ 203.9 | $ 178.8 |
Restricted stock units | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Award vesting period | 1 year | ||
Restricted stock units | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Award vesting period | 4 years | ||
Employee stock purchase plan | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Discount from Market Price At Offering Date | 85.00% | ||
Maximum payroll deductions | 15.00% | ||
Plan Offering Period | 24 months | ||
Plan Purchase Period | 6 months |
Stockholders' Equity Stockhol91
Stockholders' Equity Stockholders' Equity (Schedule of Dividends Payable) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||
Oct. 31, 2015 | Aug. 01, 2015 | May. 02, 2015 | Jan. 31, 2015 | Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | |
Dividends Payable [Line Items] | |||||||
Common Stock, Dividends, Per Share, Declared | $ 0.16 | $ 0.07 | $ 0 | ||||
Payment of cash dividends to stockholders | $ 67,470 | $ 30,384 | $ 0 | ||||
Common Stock | |||||||
Dividends Payable [Line Items] | |||||||
Dividends Payable, Date Declared | Aug. 18, 2015 | May 20, 2015 | Feb. 16, 2015 | Nov. 23, 2014 | |||
Common Stock, Dividends, Per Share, Declared | $ 0.045 | $ 0.045 | $ 0.035 | $ 0.035 | |||
Dividends Payable, Date of Record | Sep. 10, 2015 | Jun. 10, 2015 | Mar. 10, 2015 | Dec. 10, 2014 | |||
Payment of cash dividends to stockholders | $ 18,651 | $ 18,965 | $ 14,748 | $ 15,106 | |||
Dividends Payable, Date to be Paid | Oct. 2, 2015 | Jul. 2, 2015 | Apr. 2, 2015 | Jan. 2, 2015 |
Stockholders' Equity Stockhol92
Stockholders' Equity Stockholders' Equity (Schedule of Taxes related to Other Comprehensive Income/Loss) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | |
Derivatives Qualifying as Hedges, before Tax [Abstract] | |||
Unrealized Gain (Loss) on Derivatives Arising During Period, before Tax | $ (3,570) | $ (2,192) | |
Reclassification Adjustment from AOCI on Derivatives, before Tax | 4,250 | (262) | |
Derivatives Qualifying as Hedges, before Tax | 680 | (2,454) | |
Foreign Currency Transaction and Translation Adjustment, before Tax [Abstract] | |||
Foreign Currency Transaction and Translation Adjustment, before Tax | (6,556) | (3,196) | |
Other Comprehensive Income (Loss), before Tax | (5,876) | (5,650) | |
Derivatives Qualifying as Hedges, Tax Effect [Abstract] | |||
Unrealized Gain (Loss) on Derivatives Arising During Period, Tax | 183 | 253 | |
Reclassification Adjustment from AOCI on Derivatives, Tax | (495) | 27 | |
Derivatives Qualifying as Hedges, Tax | (312) | 280 | |
Foreign Currency Translation Adjustment, Tax [Abstract] | |||
Foreign Currency Translation Adjustment, Tax | 0 | 0 | |
Other Comprehensive Income (Loss), Tax | (312) | 280 | |
Derivatives Qualifying as Hedges, Net of Tax [Abstract] | |||
Unrealized Gain (Loss) on Derivatives Arising During Period, Net of Tax | (3,387) | (1,939) | $ (1,748) |
Reclassification Adjustment from AOCI on Derivatives, Net of Tax | 3,755 | (235) | (376) |
Derivatives Qualifying as Hedges, Net of Tax | 368 | (2,174) | (2,124) |
Foreign Currency Transaction and Translation Adjustment, Net of Tax [Abstract] | |||
Change in cumulative translation adjustments | (6,556) | (3,196) | (1,456) |
Other Comprehensive Income (Loss), Net of Tax | $ (6,188) | $ (5,370) | $ (3,580) |
Stockholders' Equity Stockhol93
Stockholders' Equity Stockholders' Equity (Schedule of Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Accumulated other comprehensive loss | $ (25,002) | $ (18,814) | $ (13,444) |
Other Comprehensive Income (Loss), before Reclassifications, Net of Tax | (9,943) | (5,135) | |
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | 3,755 | (235) | |
Other Comprehensive Income (Loss), Net of Tax | (6,188) | (5,370) | |
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Accumulated other comprehensive loss | (1,539) | (1,907) | 267 |
Other Comprehensive Income (Loss), before Reclassifications, Net of Tax | (3,387) | (1,939) | |
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | 3,755 | (235) | |
Other Comprehensive Income (Loss), Net of Tax | 368 | (2,174) | |
Accumulated Translation Adjustment [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Accumulated other comprehensive loss | (23,463) | (16,907) | $ (13,711) |
Other Comprehensive Income (Loss), before Reclassifications, Net of Tax | (6,556) | (3,196) | |
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | 0 | 0 | |
Other Comprehensive Income (Loss), Net of Tax | $ (6,556) | $ (3,196) |
Stockholders' Equity Stockhol94
Stockholders' Equity Stockholders' Equity (Details) | 12 Months Ended |
Oct. 31, 2015 | |
Equity [Abstract] | |
Stockholders' Equity Note, Derivative Transactions Connected with Contingently Convertible Securities | In connection with the issuance of the 2020 Convertible Notes, the Company entered into convertible note hedge and warrant transactions with certain financial institutions with respect to its common stock. See Note 8, “Borrowings,” of the Notes to Consolidated Financial Statements for further discussion. |
Other Income (Loss), net (Narra
Other Income (Loss), net (Narrative) (Details) - A10 Networks $ in Millions | 12 Months Ended |
Oct. 31, 2015USD ($) | |
Component of Other Income, Nonoperating | |
Gain Litigation Settlement Date | May 20, 2013 |
Other Nonoperating Income | $ 76.8 |
Note Receivable Interest Rate | 8.00% |
Cash | |
Component of Other Income, Nonoperating | |
Other Nonoperating Income | $ 5 |
Notes Receivable | |
Component of Other Income, Nonoperating | |
Other Nonoperating Income | $ 70 |
Income Taxes Income Taxes (Sche
Income Taxes Income Taxes (Schedule of Income before Income Tax, Domestic and Foreign) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | |
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest [Abstract] | |||
United States | $ 250,788 | $ 192,730 | $ 176,536 |
International | 188,263 | 160,891 | 153,925 |
Income before income tax | $ 439,051 | $ 353,621 | $ 330,461 |
Income Taxes Income Taxes (Sc97
Income Taxes Income Taxes (Schedule of Components of Income Tax Expense (Benefit)) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | |
U.S. federal taxes: | |||
Current, U.S. federal taxes | $ 64,042 | $ 61,666 | $ (13,666) |
Deferred, U.S. federal taxes | 14,775 | 33,065 | 46,313 |
Total U.S. federal taxes | 78,817 | 94,731 | 32,647 |
State taxes: | |||
Current, State taxes | 9,790 | 16,597 | 8,091 |
Deferred, State taxes | 761 | (2,599) | 78,106 |
Total state taxes | 10,551 | 13,998 | 86,197 |
Non-U.S. taxes: | |||
Current, Non-U.S. taxes | 9,713 | 6,655 | 2,837 |
Deferred, Non-U.S. taxes | (392) | 266 | 157 |
Total non-U.S. taxes | 9,321 | 6,921 | 2,994 |
Total | $ 98,689 | $ 115,650 | $ 121,838 |
Income Taxes Income Taxes (Sc98
Income Taxes Income Taxes (Schedule of Effective Income Tax Rate Reconciliation) (Details) | 12 Months Ended | ||
Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | |
Effective Income Tax Rate, Continuing Operations, Tax Rate Reconciliation | |||
U.S. federal statutory income tax rate | 35.00% | 35.00% | 35.00% |
State taxes, net of federal tax benefit | 0.20% | 3.10% | 4.10% |
Foreign income taxed at other than U.S. rates | (14.50%) | (16.90%) | (17.60%) |
Stock-based compensation | 1.90% | 2.30% | 1.90% |
Research and development credit | (0.90%) | (3.10%) | (5.60%) |
Permanent items | 0.30% | 0.30% | 0.30% |
Change in liabilities for uncertain tax positions | 0.50% | 0.50% | (5.10%) |
Repatriation from offshore operations | 0.00% | 8.30% | 0.00% |
Audit settlement and reinstated tax credit | 0.00% | 0.10% | 1.30% |
Change in valuation allowance | 1.30% | 1.60% | 23.70% |
Other | (1.30%) | 1.50% | (1.10%) |
Effective tax rate | 22.50% | 32.70% | 36.90% |
Income Taxes Income Taxes (Sc99
Income Taxes Income Taxes (Schedule of Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands | Oct. 31, 2015 | Nov. 01, 2014 |
Deferred Tax Assets, Gross | ||
Net operating loss carry forwards | $ 7,871 | $ 8,679 |
Stock-based compensation expense | 19,868 | 14,202 |
Tax credit carry forwards | 87,830 | 84,930 |
Reserves and accruals | 110,796 | 101,301 |
Other | 140 | 553 |
Gross deferred tax assets | 226,505 | 209,665 |
Valuation allowance | (88,581) | (83,489) |
Total deferred tax assets | 137,924 | 126,176 |
Deferred Tax Liabilities | ||
Acquired intangibles and goodwill | (18,155) | (15,433) |
Fixed assets | (28,370) | (31,231) |
Other | (35,935) | (13,368) |
Total deferred tax liabilities | (82,460) | (60,032) |
Deferred Tax Assets (Liabilities), Net | ||
Total net deferred tax assets | $ 55,464 | $ 66,144 |
Income Taxes Income Taxes (Summ
Income Taxes Income Taxes (Summary of Income Tax Contingencies) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Oct. 31, 2015 | Nov. 01, 2014 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns | ||
Unrecognized tax benefits, beginning balance | $ 119,615 | $ 112,479 |
Gross increases for tax positions taken in prior periods | 705 | 3,325 |
Gross decreases for tax positions taken in prior periods | (6,843) | (4,784) |
Gross increases for tax positions taken in current period | 8,418 | 15,426 |
Changes due to settlements with taxing authorities | 0 | 0 |
Reductions resulting from lapses of statutes of limitations | (4,326) | (6,831) |
Unrecognized tax benefits, ending balance | $ 117,569 | $ 119,615 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | ||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 35.00% | 35.00% | 35.00% | |
Goodwill impairment charge | $ 0 | $ 83,382 | [1] | $ 0 |
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount | 78,200 | |||
Undistributed earnings of the foreign subsidiaries | 873,800 | |||
Cash, cash equivalents and short-term investments | $ 1,440,900 | |||
Percentage of cash and cash equivalents and short term investments held in foreign subsidiaries | 61.00% | |||
Percentage Of Tax Benefit Realized Upon Ultimate Settlement With Taxing Authority | 50.00% | |||
Amount of unrecognized tax benefits that could affect the effect tax rate | $ 79,000 | |||
Lower range of estimated potential decreases in underlying uncertain tax positions | 0 | |||
Upper range of estimated potential decreases in underlying uncertain tax positions | 4,000 | |||
Tax benefit (detriment) from employee stock plans | 48,000 | 59,900 | $ (1,500) | |
Unrecognized Tax Benefits, Income Tax Penalties and Interest Expense | ||||
Unrecognized Tax Benefits, Income Tax Penalties and Interest Expense | 200 | (16) | ||
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued | ||||
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued | 2,500 | $ 2,300 | ||
Internal Revenue Service (IRS) | ||||
Operating loss carryforwards | 90,900 | |||
Tax credit carryforward | $ 119,400 | |||
Operating loss carryforwards, Expiration Date Range | various dates between fiscal year 2017 through 2034 | |||
State and Local Jurisdiction | ||||
Tax credit carryforward | $ 178,700 | |||
Operating loss carryforwards, Expiration Date Range | various dates between fiscal year 2015 through 2032 | |||
California State | ||||
Operating loss carryforwards | $ 49,700 | |||
Other States | ||||
Operating loss carryforwards | $ 135,300 | |||
[1] | In the second quarter of fiscal year 2014, the Company made a strategic change in the allocation of its engineering resources by reducing its investment in engineering and sales for the hardware-based Brocade ADX products and increasing engineering investment in the software-based Brocade ADX products for Layer 4-7 applications. As a result of this change in strategy, the Company expected hardware-based Brocade ADX and related support revenue to be negatively impacted. Based on these changes in estimates, the Company recognized an impairment charge during the second fiscal quarter of 2014 because the book value of its Application Delivery Products (“ADP”) reporting unit net assets, which includes the Brocade ADX products, exceeded the estimated fair value of these assets. The goodwill amount related to the Company’s other reporting units was not impacted. |
Segment Information (Schedule O
Segment Information (Schedule Of Financial Information By Reportable Segment) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||
Oct. 31, 2015 | Aug. 01, 2015 | May. 02, 2015 | [1] | Jan. 31, 2015 | Nov. 01, 2014 | Aug. 02, 2014 | May. 03, 2014 | [1] | Jan. 25, 2014 | Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | |
Segment Reporting Information | |||||||||||||
Net revenues | $ 588,827 | $ 551,819 | $ 546,575 | $ 576,239 | $ 564,358 | $ 545,464 | $ 536,910 | $ 564,535 | $ 2,263,460 | $ 2,211,267 | $ 2,222,864 | ||
Cost of revenues | 735,387 | 745,474 | 813,985 | ||||||||||
Gross margin | $ 394,277 | $ 371,904 | $ 372,209 | $ 389,683 | $ 377,118 | $ 361,713 | $ 354,292 | $ 372,670 | 1,528,073 | 1,465,793 | 1,408,879 | ||
SAN Products | |||||||||||||
Segment Reporting Information | |||||||||||||
Net revenues | 1,301,231 | 1,326,950 | 1,318,509 | ||||||||||
Cost of revenues | 311,881 | 344,466 | 355,388 | ||||||||||
Gross margin | 989,350 | 982,484 | 963,121 | ||||||||||
IP Networking Products | |||||||||||||
Segment Reporting Information | |||||||||||||
Net revenues | 601,170 | 525,237 | 552,058 | ||||||||||
Cost of revenues | 275,634 | 247,975 | 302,974 | ||||||||||
Gross margin | 325,536 | 277,262 | 249,084 | ||||||||||
Global Services | |||||||||||||
Segment Reporting Information | |||||||||||||
Net revenues | 361,059 | 359,080 | 352,297 | ||||||||||
Cost of revenues | 147,872 | 153,033 | 155,623 | ||||||||||
Gross margin | $ 213,187 | $ 206,047 | $ 196,674 | ||||||||||
[1] | The quarter ended May 3, 2014, includes the impact of an $83.4 million impairment of goodwill in the Company’s Application Delivery Products reporting unit. |
Segment Information (Schedul103
Segment Information (Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | ||
Revenues from External Customers and Long-Lived Assets | ||||
Revenues | $ 2,263,460 | $ 2,211,267 | $ 2,222,864 | |
Property and equipment, net | 439,224 | 445,433 | 472,940 | |
United States | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Revenues | 1,275,056 | 1,286,650 | 1,351,242 | |
Property and equipment, net | 409,404 | 426,941 | 457,622 | |
International | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Revenues | 988,404 | 924,617 | 871,622 | |
Property and equipment, net | 29,820 | 18,492 | 15,318 | |
Europe Middle East And Africa, including Netherlands | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Revenues | [1] | 610,133 | 598,196 | 552,734 |
Netherlands | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Revenues | 400,000 | 385,200 | 339,100 | |
Asia Pacific | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Revenues | 229,903 | 183,035 | 181,461 | |
JAPAN | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Revenues | 93,470 | 91,062 | 97,259 | |
Canada Central And South America | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Revenues | $ 54,898 | $ 52,324 | $ 40,168 | |
[1] | Includes net revenues of $400.0 million, $385.2 million, and $339.1 million for the fiscal years ended October 31, 2015, November 1, 2014, and October 26, 2013, respectively, relating to the Netherlands. |
Segment Information Narrative (
Segment Information Narrative (Details) | 12 Months Ended |
Oct. 31, 2015segments | |
Segment Reporting [Abstract] | |
Number of operating segments | 3 |
Number of Reportable Segments | 3 |
Net Income Per Share (Schedule
Net Income Per Share (Schedule Of Calculation Of Basic And Diluted Net Income (Loss) Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||||
Oct. 31, 2015 | Aug. 01, 2015 | May. 02, 2015 | [1] | Jan. 31, 2015 | Nov. 01, 2014 | Aug. 02, 2014 | May. 03, 2014 | [1] | Jan. 25, 2014 | Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | Jan. 14, 2015 | ||||
Basic net income per share | |||||||||||||||||
Net income | $ 340,362 | $ 237,971 | $ 208,623 | ||||||||||||||
Weighted-average shares used in computing basic net income per share | 414,769 | 417,299 | 420,718 | 428,536 | 431,843 | 432,448 | 436,167 | 440,573 | 420,331 | 435,258 | 450,516 | ||||||
Net income per share—basic | $ 0.20 | $ 0.22 | $ 0.18 | $ 0.20 | $ 0.19 | $ 0.20 | $ (0.03) | $ 0.18 | $ 0.81 | $ 0.55 | $ 0.46 | ||||||
Diluted net income per share | |||||||||||||||||
Net income | $ 340,362 | $ 237,971 | $ 208,623 | ||||||||||||||
Weighted-average shares used in computing diluted net income per share | 422,315 | 427,518 | 433,234 | 439,156 | 441,649 | 441,789 | 436,167 | 453,549 | 430,556 | 446,859 | 463,705 | ||||||
Net income per share—diluted | $ 0.20 | $ 0.21 | $ 0.18 | $ 0.20 | $ 0.19 | $ 0.20 | $ (0.03) | $ 0.18 | $ 0.79 | $ 0.53 | $ 0.45 | ||||||
Weighted Average Number of Shares Outstanding Reconciliation | |||||||||||||||||
Weighted-average shares used in computing basic net income per share | 414,769 | 417,299 | 420,718 | 428,536 | 431,843 | 432,448 | 436,167 | 440,573 | 420,331 | 435,258 | 450,516 | ||||||
Dilutive potential common shares in the form of stock options | 1,722 | 1,995 | 3,472 | ||||||||||||||
Dilutive potential common shares in the form of other share-based awards | 8,503 | 9,606 | 9,717 | ||||||||||||||
Weighted-average shares used in computing diluted net income per share | 422,315 | 427,518 | 433,234 | 439,156 | 441,649 | 441,789 | 436,167 | 453,549 | 430,556 | 446,859 | 463,705 | ||||||
Warrant | |||||||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | |||||||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | [2],[3] | 0 | 0 | ||||||||||||||
Stock options | |||||||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | |||||||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | [3] | 977 | 1,725 | 11,868 | |||||||||||||
Other share based awards | |||||||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | |||||||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | [3] | 142 | 893 | 167 | |||||||||||||
Convertible Senior Unsecured 2020 Notes [Member] | |||||||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | |||||||||||||||||
Debt Instrument, Convertible, Conversion Price | $ 15.90 | [2],[3] | $ 15.90 | [2],[3] | $ 15.93 | ||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 20.61 | $ 20.61 | $ 20.65 | ||||||||||||||
Convertible Senior Unsecured 2020 Notes [Member] | Warrant | |||||||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | |||||||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | [2],[3] | 28,880 | |||||||||||||||
[1] | The quarter ended May 3, 2014, includes the impact of an $83.4 million impairment of goodwill in the Company’s Application Delivery Products reporting unit. | ||||||||||||||||
[2] | In connection with the issuance of the 2020 Convertible Notes, the Company entered into convertible note hedge and warrant transactions as described in Note 8, “Borrowings.” The 2020 Convertible Notes have no impact on diluted earnings per share until the average quarterly price of the Company’s common stock exceeds the adjusted conversion price of $15.90 per share. If the common stock price exceeds this adjusted conversion price, prior to conversion, the Company will calculate the effect of the additional shares that may be issued using the treasury stock method. If the average price of the Company’s common stock exceeds $20.61 per share for a quarterly period, the Company’s weighted-average shares used in computing diluted net income per share will be impacted by the effect of the additional potential shares that may be issued related to the warrants using the treasury stock method. The convertible note hedge is not considered for purposes of the diluted earnings per share calculation, as its effect would be antidilutive. | ||||||||||||||||
[3] | These amounts are excluded from the computation of diluted net income per share. |
Guarantor And Non-Guarantor 106
Guarantor And Non-Guarantor Subsidiaries (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 31, 2015 | Jan. 22, 2013 | Jan. 20, 2010 | |
Guarantor And Non-Guarantor Subsidiaries [Abstract] | |||
Description of Guarantees Given by Parent Company | On January 20, 2010, the Company issued $300.0 million in aggregate principal amount of the 6.625% senior secured notes due 2018 (the “2018 Notes”) and $300.0 million in aggregate principal amount of the 2020 Notes (together with the 2018 Notes, the “Senior Secured Notes”) pursuant to separate indentures between the Company, certain domestic subsidiaries of the Company, and Wells Fargo Bank, National Association, as the trustee (the “2020 Indenture” and “2018 Indenture,” respectively). In addition, on January 22, 2013, the Company issued $300.0 million in aggregate principal amount of the 2023 Notes. The Company’s obligations under the Senior Secured Notes and the 2023 Notes were previously guaranteed by certain of the Company’s domestic subsidiaries (the “Subsidiary Guarantors”). Each of the Subsidiary Guarantors was 100% owned by the Company and all guarantees were joint and several. Neither the Senior Secured Notes nor the 2023 Notes were guaranteed by certain of the Company’s domestic subsidiaries or any of the Company’s foreign subsidiaries (the “Non-Guarantor Subsidiaries”). The Company determined that the circumstances under which the subsidiary guarantees may be released were customary under applicable SEC guidance, and, as such, the Company previously provided consolidated financial statements in reliance on Item 3-10 of Regulation S-X. The guarantees of the 2018 Notes and 2020 Notes were released on January 22, 2013, and January 14, 2015, respectively, upon the discharge of the 2018 Indenture and 2020 Indenture. The guarantees of the 2023 Notes were released on January 14, 2015, upon termination of the Senior Secured Credit Facility and discharge of the 2020 Indenture. As a result, all guarantees were released prior to January 31, 2015, and the Company ceased presenting condensed consolidated financial statements for the parent company, the former Subsidiary Guarantors, and Non-Guarantor Subsidiaries effective in the first fiscal quarter of 2015. | ||
Senior Secured 2018 Notes [Member] | |||
Debt Instrument | |||
Debt instrument, face amount | $ 300 | ||
Senior Secured 2020 Notes | |||
Debt Instrument | |||
Debt instrument, face amount | $ 300 | ||
Senior Unsecured 2023 Notes | |||
Debt Instrument | |||
Debt instrument, face amount | $ 300 |
Quarterly Summary (Schedule of
Quarterly Summary (Schedule of Quarterly Financial Information) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||||
Oct. 31, 2015 | Aug. 01, 2015 | May. 02, 2015 | [1] | Jan. 31, 2015 | Nov. 01, 2014 | Aug. 02, 2014 | May. 03, 2014 | Jan. 25, 2014 | Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | |||
Selected Quarterly Financial Information | ||||||||||||||
Net revenues | $ 588,827 | $ 551,819 | $ 546,575 | $ 576,239 | $ 564,358 | $ 545,464 | $ 536,910 | [1] | $ 564,535 | $ 2,263,460 | $ 2,211,267 | $ 2,222,864 | ||
Gross margin | 394,277 | 371,904 | 372,209 | 389,683 | 377,118 | 361,713 | 354,292 | [1] | 372,670 | 1,528,073 | 1,465,793 | 1,408,879 | ||
Income from operations | 119,221 | 119,849 | 114,205 | 139,405 | 126,530 | 117,897 | 20,195 | [1] | 121,490 | $ 492,680 | $ 386,112 | $ 308,483 | ||
Net income (loss) | $ 84,388 | $ 91,667 | $ 77,040 | $ 87,267 | $ 83,419 | $ 87,352 | $ (13,684) | [1] | $ 80,884 | |||||
Net income (loss) per-share—basic | $ 0.20 | $ 0.22 | $ 0.18 | $ 0.20 | $ 0.19 | $ 0.20 | $ (0.03) | [1] | $ 0.18 | $ 0.81 | $ 0.55 | $ 0.46 | ||
Net income (loss) per-share—diluted | $ 0.20 | $ 0.21 | $ 0.18 | $ 0.20 | $ 0.19 | $ 0.20 | $ (0.03) | [1] | $ 0.18 | $ 0.79 | $ 0.53 | $ 0.45 | ||
Shares used in per share calculation—basic | 414,769 | 417,299 | 420,718 | 428,536 | 431,843 | 432,448 | 436,167 | [1] | 440,573 | 420,331 | 435,258 | 450,516 | ||
Shares used in per share calculation—diluted | 422,315 | 427,518 | 433,234 | 439,156 | 441,649 | 441,789 | 436,167 | [1] | 453,549 | 430,556 | 446,859 | 463,705 | ||
Brocade Price Per Share High | $ 11.28 | $ 12.88 | $ 12.96 | $ 12.43 | $ 10.99 | $ 9.75 | $ 10.96 | [1] | $ 9.70 | |||||
Brocade Price Per Share Low | $ 9.72 | $ 9.67 | $ 10.85 | $ 10.66 | $ 8.91 | $ 7.95 | $ 8.81 | [1] | $ 7.77 | |||||
Quarterly Financial Information, Explanatory Disclosure | The quarter ended May 3, 2014, includes the impact of an $83.4 million impairment of goodwill in the Company’s Application Delivery Products reporting unit. | |||||||||||||
Quarterly Financial Information, Explanatory Note, Period | The quarter ended May 3, 2014 | |||||||||||||
Goodwill impairment charge | $ 0 | $ 83,382 | [2] | $ 0 | ||||||||||
[1] | The quarter ended May 3, 2014, includes the impact of an $83.4 million impairment of goodwill in the Company’s Application Delivery Products reporting unit. | |||||||||||||
[2] | In the second quarter of fiscal year 2014, the Company made a strategic change in the allocation of its engineering resources by reducing its investment in engineering and sales for the hardware-based Brocade ADX products and increasing engineering investment in the software-based Brocade ADX products for Layer 4-7 applications. As a result of this change in strategy, the Company expected hardware-based Brocade ADX and related support revenue to be negatively impacted. Based on these changes in estimates, the Company recognized an impairment charge during the second fiscal quarter of 2014 because the book value of its Application Delivery Products (“ADP”) reporting unit net assets, which includes the Brocade ADX products, exceeded the estimated fair value of these assets. The goodwill amount related to the Company’s other reporting units was not impacted. |
Valuation And Qualifying Acc108
Valuation And Qualifying Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Oct. 31, 2015 | Nov. 01, 2014 | Oct. 26, 2013 | ||
Allowance for doubtful accounts | ||||
Valuation and Qualifying Accounts Disclosure | ||||
Balance at Beginning of Period | $ 80 | $ 575 | $ 833 | |
Additions (Recoveries) Charged to Revenues | 1,786 | (85) | 319 | |
Deductions (1) | [1] | (28) | (410) | (577) |
Balance at End of Period | 1,838 | 80 | 575 | |
Sales Allowances | ||||
Valuation and Qualifying Accounts Disclosure | ||||
Balance at Beginning of Period | 7,396 | 7,321 | 9,759 | |
Additions (Recoveries) Charged to Revenues | 9,466 | 7,563 | 8,885 | |
Deductions (1) | [1] | (7,207) | (7,488) | (11,323) |
Balance at End of Period | $ 9,655 | $ 7,396 | $ 7,321 | |
[1] | Deductions related to the allowance for doubtful accounts and sales allowances represent amounts written off against the allowance and recoveries. |