Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Jan. 28, 2017 | Feb. 24, 2017 | |
Entity Information [Line Items] | ||
Entity Registrant Name | BROCADE COMMUNICATIONS SYSTEMS INC | |
Entity Central Index Key | 1,009,626 | |
Current Fiscal Year End Date | --10-28 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jan. 28, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 407,701,822 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes |
Condensed Consolidated Statemen
Condensed Consolidated Statements Of Income - USD ($) shares in Thousands | 3 Months Ended | |
Jan. 28, 2017 | Jan. 30, 2016 | |
Net revenues: | ||
Product | $ 480,617,000 | $ 481,167,000 |
Service | 100,846,000 | 93,117,000 |
Total net revenues | 581,463,000 | 574,284,000 |
Cost of revenues: | ||
Product | 166,655,000 | 144,097,000 |
Service | 47,685,000 | 41,372,000 |
Total cost of revenues | 214,340,000 | 185,469,000 |
Gross margin | 367,123,000 | 388,815,000 |
Operating expenses: | ||
Research and development | 123,503,000 | 93,257,000 |
Sales and marketing | 180,201,000 | 151,827,000 |
General and administrative | 33,497,000 | 22,429,000 |
Amortization of intangible assets | 7,594,000 | 902,000 |
Acquisition and integration costs | 18,037,000 | 0 |
Restructuring and other related benefits | 0 | (566,000) |
Total operating expenses | 362,832,000 | 267,849,000 |
Income from operations | 4,291,000 | 120,966,000 |
Interest expense | (15,493,000) | (9,865,000) |
Interest and other income, net | 458,000 | 669,000 |
Income (loss) before income tax | (10,744,000) | 111,770,000 |
Income tax expense (benefit) | (4,900,000) | 18,124,000 |
Net income (loss) | (5,844,000) | 93,646,000 |
Less: Net loss attributable to noncontrolling interest | 163,000 | 0 |
Net income (loss) attributable to Brocade Communications Systems, Inc. | $ (5,681,000) | $ 93,646,000 |
Net income (loss) per share—basic attributable to Brocade Communications Systems, Inc. stockholders | $ (0.01) | $ 0.23 |
Net income (loss) per share—diluted attributable to Brocade Communications Systems, Inc. stockholders | $ (0.01) | $ 0.23 |
Shares used in per share calculation—basic | 404,995 | 407,902 |
Shares used in per share calculation—diluted | 404,995 | 415,085 |
Cash dividends declared per share | $ 0.055 | $ 0.045 |
Condensed Consolidated Stateme3
Condensed Consolidated Statements of Comprehensive Income - USD ($) | 3 Months Ended | ||
Jan. 28, 2017 | Jan. 30, 2016 | ||
Statement of Comprehensive Income [Abstract] | |||
Net income (loss) | $ (5,844,000) | $ 93,646,000 | |
Net income (loss) attributable to Brocade Communications Systems, Inc. | (5,681,000) | 93,646,000 | |
Unrealized gains (losses) on cash flow hedges: | |||
Change in unrealized gains and losses | (409,000) | (2,300,000) | |
Net gains and losses reclassified into earnings | [1] | 185,000 | 626,000 |
Net unrealized losses on cash flow hedges | (224,000) | (1,674,000) | |
Foreign currency translation adjustments | (1,360,000) | (2,203,000) | |
Total other comprehensive loss | (1,584,000) | (3,877,000) | |
Total comprehensive income (loss) | (7,428,000) | 89,769,000 | |
Less: Net loss attributable to noncontrolling interest | 163,000 | 0 | |
Less: Total other comprehensive loss attributable to noncontrolling interest | 68,000 | 0 | |
Total comprehensive income (loss) attributable to Brocade Communications Systems, Inc. | $ (7,197,000) | $ 89,769,000 | |
[1] | For classification of amounts reclassified from accumulated other comprehensive loss into earnings as reported on the Company’s Condensed Consolidated Statements of Operations, see Note 10, “Derivative Instruments and Hedging Activities,” of the Notes to Condensed Consolidated Financial Statements. |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jan. 28, 2017 | Oct. 29, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 1,230,253 | $ 1,257,075 |
Accounts receivable, net of allowances for doubtful accounts of $1,858, and $1,736 as of January 28, 2017, and October 29, 2016, respectively | 262,413 | 284,344 |
Inventories | 79,452 | 69,355 |
Prepaid expenses and other current assets | 66,888 | 62,236 |
Total current assets | 1,639,006 | 1,673,010 |
Property and equipment, net | 447,209 | 455,326 |
Goodwill | 2,290,205 | 2,295,184 |
Core/developed technology intangible assets, net | 239,879 | 248,938 |
Other intangible assets, net | 189,987 | 200,840 |
Non-current deferred tax assets | 25,634 | 12,736 |
Other assets | 48,902 | 53,777 |
Total assets | 4,880,822 | 4,939,811 |
Current liabilities: | ||
Accounts payable | 85,049 | 128,685 |
Accrued employee compensation | 138,829 | 154,165 |
Deferred revenue | 220,555 | 221,940 |
Current portion of long-term debt | 76,720 | 76,692 |
Other accrued liabilities | 108,335 | 113,170 |
Total current liabilities | 629,488 | 694,652 |
Long-term debt, net of current portion | 1,487,229 | 1,502,063 |
Non-current deferred revenue | 90,429 | 90,051 |
Non-current income tax liability | 92,910 | 102,100 |
Other non-current liabilities | 4,739 | 5,370 |
Total liabilities | 2,304,795 | 2,394,236 |
Commitments and contingencies (Note 9) | ||
Stockholders’ equity: | ||
Preferred stock, $0.001 par value, 5,000 shares authorized, no shares issued and outstanding | 0 | 0 |
Common stock, $0.001 par value, 800,000 shares authorized: | ||
Issued and outstanding: 407,514 and 401,748 shares as of January 28, 2017, and October 29, 2016, respectively | 408 | 402 |
Additional paid-in capital | 1,574,949 | 1,514,730 |
Accumulated other comprehensive loss | (28,997) | (27,413) |
Retained earnings | 1,027,168 | 1,055,194 |
Total Brocade stockholders’ equity | 2,573,528 | 2,542,913 |
Noncontrolling interest | 2,499 | 2,662 |
Total stockholders’ equity | 2,576,027 | 2,545,575 |
Total liabilities and stockholders’ equity | $ 4,880,822 | $ 4,939,811 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Jan. 28, 2017 | Oct. 29, 2016 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowances | $ 1,858 | $ 1,736 |
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 | 407,514 | 401,748 |
Common stock, shares outstanding | 407,514 | 401,748 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements Of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 28, 2017 | Jan. 30, 2016 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (5,844) | $ 93,646 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Excess tax benefits from stock-based compensation | (3,401) | (7,352) |
Depreciation and amortization | 41,866 | 22,812 |
Loss on disposal of property and equipment | 167 | 207 |
Amortization of debt issuance costs and debt discount | 5,194 | 4,325 |
Provision (recovery) for doubtful accounts receivable and sales allowances | 905 | (96) |
Non-cash purchase accounting adjustments to inventory | 1,537 | 0 |
Non-cash stock-based compensation expense | 44,520 | 24,044 |
Changes in assets and liabilities, net of acquisitions: | ||
Accounts receivable | 21,026 | 61,222 |
Inventories | (10,669) | (2,000) |
Prepaid expenses and other assets | (4,362) | 609 |
Deferred tax assets | 142 | 16 |
Accounts payable | (39,601) | (23,859) |
Accrued employee compensation | (29,284) | (38,993) |
Deferred revenue | (2,007) | (13,535) |
Other accrued liabilities | (22,847) | (7,991) |
Restructuring liabilities | (148) | (855) |
Net cash provided by (used in) operating activities | (2,806) | 112,200 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (12,341) | (23,839) |
Proceeds from collection of note receivable | 250 | 250 |
Net cash used in investing activities | (12,091) | (23,589) |
Cash flows from financing activities: | ||
Payment of principal related to the term loan | (20,000) | 0 |
Payment of principal related to capital leases | 0 | (83) |
Common stock repurchases | 0 | (144,490) |
Proceeds from issuance of common stock | 28,028 | 19,482 |
Payment of cash dividends to stockholders | (22,346) | (18,429) |
Excess tax benefits from stock-based compensation | 3,401 | 7,352 |
Net cash used in financing activities | (10,917) | (136,168) |
Effect of exchange rate fluctuations on cash and cash equivalents | (1,008) | (1,316) |
Net decrease in cash and cash equivalents | (26,822) | (48,873) |
Cash and cash equivalents, beginning of period | 1,257,075 | 1,440,882 |
Cash and cash equivalents, end of period | 1,230,253 | 1,392,009 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 15,739 | 10,891 |
Cash paid for income taxes | $ 2,135 | $ 4,798 |
Basis Of Presentation
Basis Of Presentation | 3 Months Ended |
Jan. 28, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis Of Presentation | Basis of Presentation Brocade Communications Systems, Inc. (“Brocade” or the “Company”) has prepared the accompanying Condensed Consolidated Financial Statements pursuant to the rules and regulations of the United States (“U.S.”) Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The Company’s Condensed Consolidated Balance Sheet as of October 29, 2016 , was derived from the Company’s audited consolidated financial statements, but does not include all disclosures required by U.S. GAAP. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended October 29, 2016 . The accompanying Condensed Consolidated Financial Statements are unaudited but, in the opinion of the Company’s management, reflect all adjustments—including normal recurring adjustments—that management considers necessary for a fair presentation of these Condensed Consolidated Financial Statements. The results for the interim periods presented are not necessarily indicative of the results for the full fiscal year or any other future period. 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 2017 is a 52-week fiscal year and fiscal year 2016 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 Condensed Consolidated Financial Statements include the accounts of Brocade and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. In May 2016, the Company entered into a joint venture agreement with Guiyang High-Tech Industrial Investment Group Co., Ltd. (“HTII”) to create Guizhou Huiling Technology Co., Ltd (“GHTC”). The Company consolidates its investment in GHTC as this is a variable interest entity, and the Company is the primary beneficiary. The noncontrolling interest attributed to GHTC is presented as a separate component from the Company’s equity in the equity section of the Company’s Condensed Consolidated Balance Sheets. HTII’s share of GHTC’s earnings are presented separately in the Company’s Condensed Consolidated Statements of Operations . Use of Estimates in Preparation of Condensed Consolidated Financial Statements The preparation of the Company’s Condensed Consolidated Financial Statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and judgments that affect the amounts reported in the Company’s Condensed Consolidated Financial Statements and accompanying notes. Estimates are used for, but not limited to, revenue recognition, sales allowances including discounts, returns, and programs, allowance for doubtful accounts, stock-based compensation, acquisition purchase price allocations, warranty obligations, inventory valuation and purchase commitments, impairment of goodwill and other indefinite-lived intangible assets, litigation, and income taxes. Actual results may differ materially from these estimates. Proposed Acquisition by Broadcom Limited On November 2, 2016, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Broadcom Limited, a limited liability company organized under the laws of the Republic of Singapore (“Broadcom”), Broadcom Corporation, a California corporation and an indirect subsidiary of Broadcom (“Parent”), and Bobcat Merger Sub, Inc., a Delaware corporation and a direct wholly owned subsidiary of Parent (“Merger Sub”), providing for the merger of Merger Sub with and into the Company (the “Merger”), with the Company surviving as a wholly owned subsidiary of Parent. On December 19, 2016, Parent assigned all of its rights under the Merger Agreement to LSI Corporation, a Delaware corporation and an indirect subsidiary of Broadcom. At the effective time of the Merger, each share of the Company’s common stock that is outstanding immediately prior to such time will be cancelled and converted into the right to receive $12.75 per share in cash, without interest, less any required tax withholding. In general, at the effective time of the Merger: (i) Broadcom will assume and convert all vested Brocade stock options that are not in-the-money and all unvested Brocade stock options, restricted stock units and performance stock units, in each case held by continuing employees and service providers; (ii) all vested in-the-money Brocade stock options, after giving effect to any acceleration, will be cashed out; (iii) all other Brocade restricted stock units and performance stock units will accelerate vesting and be cashed out; and (iv) all other Brocade stock options not assumed or cashed out will be cancelled in exchange for no consideration. Consummation of the Merger is subject to certain customary closing conditions, including, without limitation, the absence of certain legal impediments, the expiration or termination of the required waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), antitrust regulatory approval in the People’s Republic of China, the European Union and Japan, review and clearance by the Committee on Foreign Investment in the United States, and approval by the Company’s stockholders. The transaction is not subject to a financing condition. The Company’s stockholders approved the Merger and related matters at a special meeting of stockholders held on January 26, 2017. No further approval by the Company’s stockholders is required with respect to the Merger. On November 30, 2016, each of the Company and Broadcom submitted a notification and report form with the U.S. Federal Trade Commission (the “FTC”) and the Antitrust Division of the U.S. Department of Justice under the HSR Act. On February 3, 2017, each of the Company and Broadcom received a request for additional information and documentary materials, commonly referred to as a “second request,” from the FTC. The FTC’s second request is a standard part of the review process and has the effect of extending the waiting period under the HSR Act until 30 days after the parties substantially comply with the request, unless the waiting period is extended voluntarily by the parties or terminated earlier by the FTC. The Company intends to continue to cooperate fully with the FTC in connection with its review. Assuming timely satisfaction or waiver of all closing conditions, Brocade expects that the Merger will be completed in the third quarter of fiscal year 2017. The Merger Agreement contains certain customary termination rights for the Company and Parent. For example, the Merger Agreement provides that if it is terminated under specified circumstances, including, but not limited to, if the Company accepts a superior acquisition proposal or the Company’s Board of Directors changes or withdraws its recommendation of the Merger, the Company would be required to pay Parent a termination fee of $195.0 million . Effective upon the approval of the Merger and related matters by the Company’s stockholders on January 26, 2017, payment of this termination fee can no longer be triggered. |
Summary Of Significant Accounti
Summary Of Significant Accounting Policies | 3 Months Ended |
Jan. 28, 2017 | |
Accounting Policies [Abstract] | |
Summary Of Significant Accounting Policies | Summary of Significant Accounting Policies There have been no material changes in the Company’s significant accounting policies for the three months ended January 28, 2017 , as compared to those disclosed in Brocade’s Annual Report on Form 10-K for the fiscal year ended October 29, 2016 . New Accounting Pronouncements or Updates Recently Adopted 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 a 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. The Company adopted this update in the first quarter of fiscal year 2017 and has elected to apply this update prospectively. There was no material impact on the Company’s financial position, results of operations, or cash flows. In December 2016, 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 first quarter of fiscal year 2017. 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 May 2014, the FASB issued ASC 606, Revenue from Contracts with Customers , that will supersede virtually all existing revenue guidance. Under this new revenue guidance, 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 new revenue guidance 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 retained earnings. In August 2015, the FASB issued an update to defer the effective date of this new revenue guidance by one year. This new revenue guidance becomes effective and will be adopted by the Company in the first quarter of fiscal year 2019. The Company is currently evaluating the impact of this new revenue guidance on its consolidated financial statements. In March 2016, the FASB issued an update to ASC 606, Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net) , which clarifies the implementation guidance for principal versus agent considerations. In April 2016, the FASB issued an update to ASC 606, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing , which clarifies the guidance related to identifying performance obligations and accounting for licenses of intellectual property. In May 2016, the FASB issued an update to ASC 606, Revenue from Contracts with Customers: Narrow-Scope Improvements and Practical Expedients , which clarifies the guidance related to collectibility and non-cash consideration, as well as provides practical expedients for the transition to ASC 606. In December 2016, the FASB issued an update to ASC 606, Revenue from Contracts with Customers: Technical Corrections and Improvements , which clarifies and corrects any unintended application of the new revenue guidance. None of the 13 issues addressed in this update are expected to have a significant impact. The Company must adopt these updates with the adoption of ASC 606, Revenue from Contracts with Customers . The Company is currently evaluating the impact of these updates 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, 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 January 2016, the FASB issued an update to ASC 825, Financial Instruments—Overall: Recognition and Measurement of Financial Assets and Financial Liabilities . This update consists of eight provisions that provide guidance on the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. This update should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption and prospectively for equity investments without readily determinable fair values. This update becomes effective and will be adopted by the Company in the first quarter of fiscal year 2019. Early adoption is permitted for two of the eight provisions. The Company is currently evaluating the impact of this update on its consolidated financial statements and related disclosures. In February 2016, the FASB issued ASC 842, Leases , that will supersede the existing lease guidance, including on-balance sheet recognition of operating leases for lessees. This new lease guidance should be applied using a modified retrospective approach and will be adopted by the Company in the first quarter of fiscal year 2020. Early adoption is permitted. The Company is currently evaluating the impact of this new lease guidance on its consolidated financial statements. In March 2016, the FASB issued an update to ASC 718, Compensation—Stock Compensation: Improvements to Employee Share-Based Payment Accounting . This update simplifies certain aspects of the accounting for share-based payment transactions, including income taxes, forfeiture rates, classification of awards, and classification in the statement of cash flows. This update becomes effective in the first quarter of fiscal year 2018. Early adoption is permitted. The Company is currently evaluating the impact of this update on its consolidated financial statements. In June 2016, the FASB issued ASC 326, Financial Instrument—Credit Losses , that will supersede the existing methodology for estimating expected credit losses on certain financial instruments. The new impairment methodology eliminates the probable initial recognition threshold and, instead, estimates the expected credit losses in consideration of past events, current conditions, and forecasted information. This update becomes effective in the first quarter of fiscal year 2021. Early adoption is permitted in the first quarter of fiscal year 2020. The Company is currently evaluating the impact of this update on its consolidated financial statements. In August 2016, the FASB issued an update to ASC 230, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments . This update consists of eight provisions that provide guidance on the classification of certain cash receipts and cash payments. If practicable, this update should be applied using a retrospective transition method to each period presented. For the provisions that are impracticable to apply retrospectively, those provisions may be applied prospectively as of the earliest date practicable. This update becomes effective and will be adopted by the Company in the first quarter of fiscal year 2019. Early adoption is permitted. The Company is currently evaluating the impact of this update on its consolidated financial statements and related disclosures. In October 2016, the FASB issued an update to ASC 740, Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory . This update requires the recognition of current and deferred income taxes for intra-entity transfers of assets other than inventory. This update should be applied using a modified retrospective approach and becomes effective in the first quarter of fiscal year 2019. Early adoption is permitted. The Company is currently evaluating the impact of this update on its consolidated financial statements. In November 2016, the FASB issued an update to ASC 230, Statement of Cash Flows: Restricted Cash . This update requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This update should be applied using a retrospective transition method and becomes effective in the first quarter of fiscal year 2019. Early adoption is permitted. The Company is currently evaluating the impact of this update on its consolidated financial statements. In January 2017, the FASB issued an update to ASC 805, Business Combinations: Clarifying the Definition of a Business , which clarifies the definition of a business and adds guidance to assist entities with evaluating whether the transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This update should be applied prospectively and becomes effective in the first fiscal quarter of 2019. 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 January 2017, the FASB issued an update to ASC 350, Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment , which simplifies the goodwill impairment process by eliminating Step 2 from the quantitative goodwill impairment test. Under this update, goodwill is only impaired for the amount the net assets of the reporting unit exceeds its fair value. The impairment loss should not exceed the carrying amount of goodwill, including any impact from tax deductible goodwill. This update should be applied prospectively and becomes effective in the first fiscal quarter of 2021. Early adoption is permitted. The Company does not expect the adoption of this update to have a material impact on its consolidated financial statements. 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 eight 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 January 28, 2017 , one customer (EMC Corporation (“EMC”), which was acquired by Dell, Inc. on September 7, 2016, combined with direct sales to Dell, Inc. (together “Dell EMC”)) individually accounted for 28% of total accounts receivable. As of October 29, 2016 , two customers accounted for a combined total of 42% (Dell EMC with 29% and Hewlett Packard Enterprise Company (“HPE”) with 13% ) 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 three months ended January 28, 2017 , one customer (Dell EMC) individually accounted for 19% of the Company’s total net revenues. For the three months ended January 30, 2016 , two customers individually accounted for 20% (EMC) and 14% (International Business Machines Corporation) of the Company’s total net revenues for a combined total of 34% of total net revenues. 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., Accton Technology Corporation, Universal Scientific Industrial (Shanghai) Co., Ltd., Flextronics Telecom Systems Ltd., and Cape EMS Manufacturing (M) Sdn. Bhd., and has a service repair arrangement with Flex Ltd. Although the Company uses standard parts and components for its products where possible, the Company’s CMs currently purchase, on the Company’s behalf, several key components used in the manufacture of products from single- or limited-source suppliers. The Company also entered into license agreements with some of its suppliers, including Qualcomm Inc., for technologies and components that are used in its products. |
Acquisitions
Acquisitions | 3 Months Ended |
Jan. 28, 2017 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions Prior Fiscal Year Acquisitions Acquisition of Ruckus Wireless, Inc. (“Ruckus”) On May 27, 2016 (“Acquisition Date”), the Company completed its acquisition of Ruckus, a public company incorporated in the state of Delaware, to strengthen its Internet Protocol (“IP”) Networking product portfolio by adding Ruckus’ wireless products and services to the Company’s networking solutions. Immediately prior to the completion of the acquisition, there were 92.2 million outstanding shares of Ruckus common stock, which included 3.2 million shares of Ruckus common stock owned by a dissenting former Ruckus stockholder who has filed a petition in Delaware Court of Chancery seeking appraisal of the fair value of those shares under Delaware law. As a result, no cash payment had been made and no shares had been issued to the dissenting stockholder as of January 28, 2017 . Based on the $8.60 per share closing price of the Company’s common stock on the Acquisition Date, the total purchase consideration paid or payable was $1.3 billion , which includes the amount relating to the appraisal petition filed by the dissenting former Ruckus stockholder, which was accrued as of January 28, 2017 , and reported within “Other accrued liabilities” on the Company’s Condensed Consolidated Balance Sheets. For the three months ended January 28, 2017 , the Company recorded direct acquisition costs of $0.9 million and integration costs of $3.9 million . These costs were expensed as incurred and are presented in the Company’s Condensed Consolidated Statements of Operations for the three months ended January 28, 2017 , as “Acquisition and integration costs.” In connection with the acquisition of Ruckus, 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 Date. The following table summarizes the allocation of the total purchase consideration to the fair value of the assets acquired and liabilities assumed (in thousands): Assets acquired: Cash and cash equivalents $ 95,515 Short-term investments 150,257 Accounts receivable, net of allowances for doubtful accounts of $2,100 41,339 Inventories 64,000 Prepaid expenses and other current assets 5,201 Property and equipment, net 27,060 Identifiable intangible assets 418,000 Other assets 1,697 Total assets acquired 803,069 Liabilities assumed: Accounts payable 16,375 Accrued employee compensation 17,514 Deferred revenue 14,520 Other accrued liabilities 33,809 Non-current deferred revenue 9,767 Non-current deferred tax liabilities 64,233 Other non-current liabilities 40,561 Total liabilities assumed 196,779 Net assets acquired, excluding goodwill (a) 606,290 Total purchase consideration (b) 1,275,060 Estimated goodwill (b) - (a) $ 668,770 Goodwill represents the excess of the total purchase consideration over the fair value of the underlying assets acquired and liabilities assumed. Goodwill is attributable to planned growth in new markets and synergies expected to be achieved from the combined operations of the Company and Ruckus. Goodwill of $349.4 million was assigned to the IP Networking Products reporting unit, and goodwill of $319.4 million was assigned to the Global Services reporting unit. Goodwill recognized in the acquisition is no t deductible for tax purposes. The fair value of identified intangible assets and their respective useful lives are as follows (in thousands, except for estimated useful life): Approximate Fair Value Estimated Useful Life (In years) Trade name/trademark $ 42,000 11 Customer relationships 118,000 1 - 7 Developed technology 230,000 6 - 7 In-process research and development (“IPR&D”) (1) 28,000 N/A (1) Total intangible assets $ 418,000 (1) IPR&D will be accounted for as an indefinite-lived intangible asset until the underlying projects are completed or abandoned. The total purchase consideration allocation reflects the Company’s preliminary estimates and is subject to revision as additional information in relation to the tax liabilities becomes available during the remainder of the measurement period. This period is not to exceed 12 months from the acquisition date. During the three months ended January 28, 2017 , the Company obtained additional information related to the fair value of inventories, property and equipment, identifiable intangible assets, deferred revenue, and deferred tax liabilities. As a result, the Company recorded a measurement period adjustment resulting in a net decrease in goodwill of $5.0 million . The impact on the line items “Cost of revenues” and “Acquisition and integration costs” on the Company’s Condensed Consolidated Statements of Operations was immaterial during the three months ended January 28, 2017 . |
Goodwill And Intangible Assets
Goodwill And Intangible Assets | 3 Months Ended |
Jan. 28, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill And Intangible Assets | Goodwill and Intangible Assets The following table summarizes goodwill activity by reportable segment during the three months ended January 28, 2017 (in thousands): Storage Area Networking (“SAN”) Products IP Networking Products Global Services Total Balance at October 29, 2016 Goodwill $ 176,320 $ 1,698,641 $ 549,437 $ 2,424,398 Accumulated impairment losses — (129,214 ) — (129,214 ) 176,320 1,569,427 549,437 2,295,184 Purchase accounting adjustments — 69,637 (74,616 ) (4,979 ) Balance at January 28, 2017 Goodwill 176,320 1,768,278 474,821 2,419,419 Accumulated impairment losses — (129,214 ) — (129,214 ) $ 176,320 $ 1,639,064 $ 474,821 $ 2,290,205 The Company conducts its goodwill impairment test annually, as of the first day of the fourth 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 2016 annual goodwill impairment test, the Company used a combination of these approaches to estimate each reporting unit’s fair value. At the time that the fiscal year 2016 annual goodwill impairment test was performed, the Company believed that 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 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 are 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 the Company’s regular long-range planning process. The control premium used in the market approach or as part of combined approaches was determined by considering control premiums offered as part of the acquisitions where acquired companies were comparable with the Company’s reporting units. Based on the results of the annual goodwill impairment analysis performed during the fourth fiscal quarter of 2016, the Company determined that no impairment charge needed to be recorded. As of January 28, 2017 , no new events had occurred nor had any facts or circumstances changed since the annual goodwill impairment analysis performed during the fourth quarter of fiscal year 2016 that indicated that the fair values of the reporting units may be less than their current carrying amounts. 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 Company did not incur costs to renew or extend the term of any acquired finite-lived intangible assets during the three months ended January 28, 2017 . The following tables present details of the Company’s intangible assets, excluding goodwill (in thousands, except for weighted-average remaining useful life): January 28, 2017 Gross Accumulated Net Weighted- Finite-lived intangible assets: Trade names $ 43,090 $ 3,279 $ 39,810 10.27 Core/developed technology 290,290 50,411 239,879 5.29 Patent portfolio license (1) 7,750 2,194 5,556 16.51 Customer relationships 141,110 22,422 118,688 6.16 Non-compete agreements 1,050 1,030 20 0.13 Patents with broader applications 1,040 127 913 13.13 Total finite-lived intangible assets 484,330 79,463 404,866 5.84 Indefinite-lived intangible assets, excluding goodwill: IPR&D (2) 25,000 — 25,000 Total indefinite-lived intangible assets, excluding goodwill 25,000 — 25,000 Total intangible assets, excluding goodwill $ 509,330 $ 79,463 $ 429,866 October 29, 2016 Gross Accumulated Net Weighted- Finite-lived intangible assets: Trade names $ 45,090 $ 2,359 $ 42,731 10.51 Core/developed technology 286,290 37,352 248,938 5.51 Patent portfolio license (1) 7,750 1,935 5,815 17.00 Customer relationships 143,110 15,813 127,297 6.32 Non-compete agreements 1,050 983 67 0.29 Patents with broader applications 1,040 110 930 13.38 Total finite-lived intangible assets 484,330 58,552 425,778 6.08 Indefinite-lived intangible assets, excluding goodwill: IPR&D (2) 24,000 — 24,000 Total indefinite-lived intangible assets, excluding goodwill 24,000 — 24,000 Total intangible assets, excluding goodwill $ 508,330 $ 58,552 $ 449,778 (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) 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 Company conducts the IPR&D impairment test annually, as of the first day of the fourth fiscal quarter, and whenever 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, 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 fourth fiscal quarter of 2016, the Company determined that no impairment needed to be recorded. As of January 28, 2017 , no new events had occurred nor had any facts or circumstances changed since the annual IPR&D impairment analysis performed during the fourth quarter of fiscal year 2016 that indicated that the fair value of the IPR&D assets may be less than the current carrying amount. The amortization of finite-lived intangible assets is included in the following line items of the Company’s Condensed Consolidated Statements of Operations as follows (in thousands): Three Months Ended January 28, 2017 January 30, 2016 Cost of revenues $ 13,060 $ 3,154 General and administrative (1) 259 277 Amortization of intangible assets 7,594 902 Total $ 20,913 $ 4,333 (1) The amortization is related to the $7.8 million of perpetual, nonexclusive license to certain patents purchased in fiscal year 2015. The following table presents the estimated future amortization of finite-lived intangible assets as of January 28, 2017 (in thousands): Fiscal Year Estimated Future Amortization 2017 (remaining nine months) $ 58,323 2018 70,090 2019 66,562 2020 65,630 2021 61,876 Thereafter 82,385 Total $ 404,866 |
Balance Sheet Details
Balance Sheet Details | 3 Months Ended |
Jan. 28, 2017 | |
Balance Sheet Details [Abstract] | |
Balance Sheet Details | Balance Sheet Details The following tables provide details of selected balance sheet items (in thousands): January 28, October 29, Inventories: Raw materials $ 19,420 $ 17,793 Finished goods 60,032 51,562 Inventories $ 79,452 $ 69,355 January 28, October 29, Property and equipment, net: Gross property and equipment Computer equipment $ 19,877 $ 19,710 Software 92,198 89,132 Engineering and other equipment 446,282 445,115 Furniture and fixtures 34,085 33,788 Leasehold improvements 35,007 37,973 Land and building 386,163 386,163 Total gross property and equipment 1,013,612 1,011,881 Accumulated depreciation and amortization (1) (566,403 ) (556,555 ) Property and equipment, net $ 447,209 $ 455,326 (1) The following table presents the depreciation of property and equipment included on the Company’s Condensed Consolidated Statements of Operations (in thousands): Three Months Ended January 28, January 30, Depreciation expense $ 20,953 $ 18,479 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Jan. 28, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements 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 January 28, 2017 . 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. During the three months ended January 28, 2017 , 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 January 28, 2017 , were as follows (in thousands): Fair Value Measurements Using Balance as of Quoted Prices in Significant Other Significant Assets: Money market funds (1) $ 871,751 $ 871,751 $ — $ — Derivative assets 129 — 129 — Total assets measured at fair value $ 871,880 $ 871,751 $ 129 $ — Liabilities: Derivative liabilities $ 442 $ — $ 442 $ — Total liabilities measured at fair value $ 442 $ — $ 442 $ — (1) Money market funds are reported within “Cash and cash equivalents” on the Company’s Condensed Consolidated Balance Sheets. Assets and liabilities measured and recorded at fair value on a recurring basis as of October 29, 2016 , were as follows (in thousands): Fair Value Measurements Using Balance as of Quoted Prices in Significant Other Significant Assets: Money market funds (1) $ 914,724 $ 914,724 $ — $ — Derivative assets 514 — 514 — Total assets measured at fair value $ 915,238 $ 914,724 $ 514 $ — Liabilities: Derivative liabilities $ 354 $ — $ 354 $ — Total liabilities measured at fair value $ 354 $ — $ 354 $ — (1) Money market funds are reported within “Cash and cash equivalents” on the Company’s Condensed Consolidated Balance Sheets. |
Restructuring and Other Costs
Restructuring and Other Costs | 3 Months Ended |
Jan. 28, 2017 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Other Costs | Restructuring and Other Related Benefits The following table provides details of “ Restructuring and other related benefits ” included in the Company’s Condensed Consolidated Statements of Operations (in thousands): Three Months Ended January 28, January 30, Lease loss reserve and related benefits $ — $ (566 ) 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 Lease Loss Reserve and Related Costs Lease Loss Reserve and Related Costs Total Restructuring liabilities at October 29, 2016 $ 109 $ 714 $ 72 $ 895 Cash payments — (69 ) (72 ) (141 ) Translation adjustment (2 ) (5 ) — (7 ) Restructuring liabilities at January 28, 2017 $ 107 $ 640 $ — $ 747 Current restructuring liabilities at January 28, 2017 $ 107 $ 246 $ — $ 353 Non-current restructuring liabilities at January 28, 2017 $ — $ 394 $ — $ 394 Fiscal 2013 Fourth Quarter Restructuring Plan During the fourth quarter of fiscal year 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 included a workforce reduction, as well as the cancellation of certain non-recurring engineering agreements and exits from certain leased facilities. The restructuring plan was substantially completed in 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 primarily 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 re-evaluates its estimates and assumptions on a quarterly basis and makes adjustments to the restructuring liabilities balance if necessary. |
Borrowings
Borrowings | 3 Months Ended |
Jan. 28, 2017 | |
Debt Disclosure [Abstract] | |
Borrowings | Borrowings The following table provides details of the Company’s long-term debt (in thousands, except years and percentages): January 28, 2017 October 29, 2016 Maturity Stated Annual Interest Rate Amount Effective Interest Rate Amount Effective Interest Rate Senior Credit Facility: Term Loan Facility 2021 variable $ 760,000 2.80 % $ 780,000 2.53 % Convertible Senior Unsecured Notes: 2020 Convertible Notes 2020 1.375% 575,000 4.98 % 575,000 4.98 % Senior Unsecured Notes: 2023 Notes 2023 4.625% 300,000 4.83 % 300,000 4.83 % Total gross long-term debt 1,635,000 1,655,000 Unamortized discount (68,495 ) (73,540 ) Unamortized debt issuance costs (2,556 ) (2,705 ) Current portion of long-term debt (76,720 ) (76,692 ) Long-term debt, net of current portion $ 1,487,229 $ 1,502,063 Senior Credit Facility In connection with the acquisition of Ruckus on May 27, 2016, the Company entered into a Credit Agreement (the “Credit Agreement”) with Wells Fargo Bank, N.A., as the administrative agent, swingline lender, and issuing lender, and certain other lenders (collectively, the “Lenders”). The Credit Agreement provides for a term loan facility of $800.0 million (the “Term Loan Facility”) and a revolving credit facility of $100.0 million (the “Revolving Facility,” and together with the Term Loan Facility, the “Senior Credit Facility”). The Revolving Facility includes a $25.0 million letter of credit subfacility and a $10.0 million swing line loan subfacility. The proceeds of the Term Loan Facility were used to finance a portion of the acquisition of Ruckus and related fees and expenses, the repurchase of shares of the Company’s common stock, and fees and expenses related to the Senior Credit Facility. Loans made under the Senior Credit Facility bear interest, at the Company’s option, either (i) at a base rate which is based in part on the greatest of (A) the prime rate, (B) the federal funds rate plus 0.50%, or (C) LIBOR for an interest period of one month plus 1.00%, plus an applicable margin that will vary between 0.00% and 0.75% based on the Company’s total leverage ratio, or (ii) at a LIBOR-based rate, plus an applicable margin that will vary between 1.00% and 1.75% based on the Company’s total leverage ratio. For purposes of calculating the applicable rate, the base rate and LIBOR-based rate are subject to a floor of 0.00%. For base rate loans, interest is payable on the last business day of January, April, July, and October of each year. For LIBOR rate loans, interest is payable on the last day of each interest period for the LIBOR-based rate, and if such interest period extends over three months, at the end of each three-month interval during such interest period. Commitments under the Revolving Facility are subject to an initial commitment fee starting at 0.30% , and are later subject to adjustment between 0.20% and 0.35% based on the Company’s total leverage ratio. Letters of credit issued under the letter of credit subfacility are subject to an initial commission fee starting at 1.50% , and are later subject to adjustment between 1.00% and 1.75% based on the Company’s total leverage ratio, and an issuance fee of 0.125% . The final maturity of the Senior Credit Facility will occur on May 27, 2021, except that if any of the 1.375% convertible senior unsecured notes due 2020 remain outstanding on October 2, 2019, and certain other conditions have not been met, then the final maturity of the Senior Credit Facility will occur on October 2, 2019. Notwithstanding the foregoing, upon the request of the Company made to all applicable Lenders, and provided that no event of default exists or will occur immediately thereafter, individual Lenders may agree to extend the maturity date of its commitments under the Revolving Facility and loans under the Term Loan Facility. The Company is permitted to make voluntary prepayments of the Senior Credit Facility at any time without payment of a premium or penalty. The Company is required to make mandatory prepayments of loans under the Term Loan Facility (without payment of a premium or penalty) with (i) net cash proceeds from issuances of debt (other than certain permitted debt), (ii) net cash proceeds from certain non-ordinary course asset sales (subject to reinvestment rights and other exceptions), and (iii) casualty proceeds and condemnation awards (subject to reinvestment rights and other exceptions). Commencing October 31, 2016, the loans under the Term Loan Facility will amortize in equal quarterly installments in an aggregate annual amount equal to 10% of the original principal amount thereof, with any remaining balance payable on the final maturity date of the loans under the Term Loan Facility. The loans under the Revolving Facility and all accrued and unpaid interest thereon are due in full on the maturity date. There were no principal amounts outstanding under the revolving credit facility, and the full $100.0 million was available for future borrowing under the revolving credit facility as of January 28, 2017 . A voluntary prepayment in the amount of $20.0 million was made towards the principal of the Term Loan Facility during the three months ended January 28, 2017 . As of January 28, 2017 , the fair value of the Term Loan Facility was approximately $748.0 million , which was estimated based on fair value for similar instruments. The obligations under the Senior Credit Facility and certain cash management and hedging obligations are fully and unconditionally guaranteed by certain of the Company’s direct and indirect subsidiaries (including Ruckus, but excluding certain immaterial subsidiaries, subsidiaries whose guarantee would result in material adverse tax consequences and subsidiaries whose guarantee is prohibited by applicable law) pursuant to a subsidiary guaranty agreement. The Company’s obligations under the Senior Credit Facility are unsecured, provided that upon the occurrence of certain events (including if the Company’s corporate family rating from Moody’s falls below Ba1 and from S&P falls below BB+ at any time (referred to as a “Ratings Downgrade”)) or the incurrence of certain indebtedness in excess of $600.0 million (such occurrence or the occurrence of a Ratings Downgrade being a “Collateral Trigger Event”), then such obligations, as well as certain cash management and hedging obligations, will be required to be secured, subject to certain exceptions, by 100% of the equity interests of all present and future restricted subsidiaries directly held by the Company or any guarantor. As of the date hereof, all of the Company’s subsidiaries are restricted subsidiaries under the Senior Credit Facility. The Company must provide such security within 90 days (or 20 business days with respect to the equity interests of material U.S. subsidiaries) of such Collateral Trigger Event. The Credit Agreement contains financial maintenance covenants, including a (i) maximum total leverage ratio as of the last date of any fiscal quarter not to exceed 3.50:1.00; subject to certain step-downs to 3.25:1.00 and 3.00:1.00 for fiscal periods ending on or after April 30, 2017, and April 30, 2018, respectively, and (ii) a minimum interest coverage ratio of not less than 3.50:1.00. The Credit Agreement also contains restrictive covenants that limit, among other things, the Company’s and its restricted subsidiaries’ ability to: • Incur additional indebtedness or issue certain preferred equity, pay dividends, or make other distributions or other restricted payments (including stock repurchases); • Sell assets other than on terms specified by the Credit Agreement; • Amend the terms of certain other indebtedness and organizational documents; • Create liens on certain assets to secure debt, consolidate, merge, sell, or otherwise dispose of all or substantially all of their assets; and • Enter into certain transactions with affiliates, or change their lines of business, fiscal years, and accounting practices, in each case, subject to customary exceptions. The Credit Agreement also sets forth customary events of default, including upon the failure to make timely payments under the Senior Credit Facility, the failure to satisfy certain covenants, cross-default and cross-acceleration to other material debt for borrowed money, the occurrence of a change of control, and specified events of bankruptcy and insolvency. As discussed under Note 1 , “ Basis of Presentation ,” of the Notes to Condensed Consolidated Financial Statements, on November 2, 2016, the Company entered into a merger agreement with Broadcom under which Broadcom agreed to acquire Brocade. The consummation of the proposed acquisition by Broadcom would constitute a “change of control” under the events of default under the Credit Agreement. 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 indenture governing the 2020 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 three months ended January 28, 2017 . 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): January 28, October 29, Principal $ 575,000 $ 575,000 Unamortized discount of the liability component (55,038 ) (59,398 ) Net carrying amount of liability component $ 519,962 $ 515,602 Carrying amount of equity component $ 51,406 $ 55,374 As of January 28, 2017 , and October 29, 2016 , the remaining period of amortization for the discount is 2.92 years and 3.17 years, respectively. The following table presents the amount of interest cost recognized for amortization of the discount and for the contractual interest coupon for the 2020 Convertible Notes for the following periods (in thousands): Three Months Ended January 28, January 30, Amortization of discount $ 4,360 $ 4,150 Contractual interest coupon $ 1,977 $ 1,977 As of January 28, 2017 , and October 29, 2016 , the fair value of the 2020 Convertible Notes was approximately $579.6 million and $564.5 million , respectively, 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 first fiscal quarter of 2017, the Board of Directors of the Company declared and paid a cash dividend in the amount of $0.055 per share. Accordingly, as of December 8, 2016 , the conversion rate was adjusted to a rate of 63.4021 shares of the Company’s common stock per $1,000 principal amount of the notes, which is equal to 36.5 million shares at a conversion price of approximately $15.77 per share. The adjustment, combined with previous adjustments for which noteholder notification was not required, resulted in a change to the conversion rate of more than 1%, and by the terms of the indenture governing the 2020 Convertible Notes, the Company notified the noteholders of the adjustment. 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 January 28, 2017 , 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 January 28, 2017 , 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 January 28, 2017 , a fundamental change had not occurred and the 2020 Convertible Notes were not re-purchasable. The consummation of the proposed Broadcom acquisition would constitute a “fundamental change” as well as a “make-whole fundamental change” under the terms of the indenture governing the 2020 Convertible Notes. Accordingly, holders of the 2020 Convertible Notes will have the right to require the Company to repurchase their notes upon the consummation of the proposed Broadcom acquisition. In addition, the consummation of the Broadcom acquisition will cause the 2020 Convertible Notes to become convertible for a specified period of time following such consummation, will result in an adjustment to the conversion rate for conversions of the 2020 Convertible Notes during a specified period of time following such consummation, and will require that the Company settle all such conversions in cash. 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 has been adjusted to approximately $15.77 per share as of December 8, 2016 . 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 $0.055 per share beginning in the third fiscal quarter of 2016. As of December 8, 2016 , the holders of the warrants have the right to acquire up to approximately 36.5 million shares of the Company’s common stock at a strike price of approximately $20.45 per share. See Note 15 , “ Net Income (Loss) per Share ,” of the Notes to Condensed Consolidated Financial Statements for further discussion of the dilutive impact of the 2020 Convertible Notes and the convertible note hedge and warrant transactions. The consummation of the proposed acquisition by Broadcom would result in a termination of the warrant transactions, in which case the Company would be required to settle such transactions in cash. In addition, announcements relating to the proposed transaction may result in adjustments to the terms of the warrant transactions to take into account the economic effect of the proposed transactions, which could result in greater amounts becoming due upon termination or otherwise have a dilutive effect. 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 in the first fiscal quarter of 2015. 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 three months ended January 28, 2017 . As of January 28, 2017 , and October 29, 2016 , the fair value of the 2023 Notes was approximately $301.5 million and $297.0 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. 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 consummation of the proposed acquisition by Broadcom could result in a Change of Control Triggering Event if the acquisition is accompanied or followed within a specific period by certain downgrades of the ratings of the 2023 Notes. 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 subsidiaries 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. Debt Maturities As of January 28, 2017 , the Company’s aggregate debt maturities based on outstanding principal were as follows (in thousands): Fiscal Year Principal Balances 2017 (remaining nine months) $ 60,000 2018 80,000 2019 80,000 2020 655,000 2021 460,000 Thereafter 300,000 Total $ 1,635,000 |
Commitments And Contingencies
Commitments And Contingencies | 3 Months Ended |
Jan. 28, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments And Contingencies | Commitments and Contingencies Product Warranties The Company’s accrued liability for estimated future warranty costs is included in “Other accrued liabilities” in the accompanying Condensed Consolidated Balance Sheets. The following table summarizes the activity related to the Company’s accrued liability for estimated future warranty costs during the three months ended January 28, 2017 , and January 30, 2016 (in thousands): Accrued Warranty Three Months Ended January 28, January 30, Beginning balance $ 8,326 $ 7,599 Liabilities accrued for warranties issued during the period 845 978 Warranty claims paid and used during the period (778 ) (1,144 ) Changes in liability for pre-existing warranties during the period 199 (225 ) Ending balance $ 8,592 $ 7,208 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 January 28, 2017 , 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 ordered per Brocade’s forecast, which are 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 underutilizing the planned capacity. As of January 28, 2017 , the Company’s aggregate commitment to its CMs for inventory components used in the manufacture of Brocade products was $151.0 million , which the Company expects to utilize during future normal ongoing operations, net of a purchase commitments reserve of $2.1 million , which is reported within “Other accrued liabilities” on the Company’s Condensed Consolidated Balance Sheet as of January 28, 2017 . 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 13 , “ Income Taxes ,” of the Notes to Condensed 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, including those identified below, 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. The Company accrues a liability when management believes that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. The Company believes it has recorded adequate provisions for any such matters and, as of January 28, 2017 , it was not reasonably possible that a material loss had been incurred in excess of the amounts recognized in the Company’s financial statements. However, litigation is inherently uncertain, and the outcome of these matters cannot be predicted with certainty. Accordingly, cash flows or results of operations could be materially affected in any particular period by the resolution of one or more of these matters. Ruckus Acquisition-Related Litigation A putative class action captioned Hussey v. Ruckus Wireless, Inc., et al. is pending in the United States District Court for the Northern District of California (referred to as the “Hussey action”). The original complaint in the Hussey action filed on June 3, 2016, alleged that Ruckus, members of the Ruckus board of directors, Ruckus’ chief financial officer, Brocade, and a Brocade subsidiary violated Section 14(e) of the Exchange Act based on allegedly false and/or misleading statements and/or alleged omissions in the Solicitation/Recommendation Statement on Schedule 14D-9 filed by Ruckus with the SEC on April 29, 2016, and violated Section 14(d)(7) of the Exchange Act and Rule 14d-10 promulgated thereunder based on the allegedly differential consideration received by members of the Ruckus board of directors and Ruckus’ chief financial officer in connection with the acquisition. An amended complaint filed on October 24, 2016, named the same defendants as the original complaint and alleged that the defendants violated Sections 14(e), 14(d)(7), and 20(a) of the Exchange Act and Rule 14d-10 promulgated thereunder, that the members of the Ruckus board of directors breached their fiduciary duties to Ruckus stockholders, and that Ruckus’ chief financial officer, Brocade and the Brocade subsidiary aided and abetted the members of the Ruckus board of directors in breaching their fiduciary duties to Ruckus stockholders by purportedly doing one or more of the following: agreeing to terms preferential to the defendants and other Ruckus insiders; accepting overly restrictive deal protection measures in the merger agreement; failing to negotiate for a collar on Brocade’s stock price; engaging a financial advisor with conflicts of interest; providing allegedly false, misleading, and/or incomplete disclosures regarding conflicts of interest and the opinion of Ruckus’s financial advisors; and ultimately agreeing to unfair transaction consideration for the Ruckus shares. The amended complaint sought an award of damages in an unspecified amount. On December 8, 2016, all defendants filed a motion to dismiss the amended complaint. On February 21, 2017, the court granted the motion and dismissed the amended complaint, with leave to amend as to all claims except the claim for violations of Section 14(d)(7) of the Exchange Act and Rule 14d-10 promulgated thereunder, which claim was dismissed without leave to amend. The plaintiff is required to file any further amended complaint regarding its remaining claims on or before March 20, 2017. Ruckus Acquisition-Related Appraisal Demand On May 25, 2016, Ruckus received an appraisal demand letter seeking an appraisal under Section 262 of the Delaware General Corporation Law (“Section 262”) of the fair value of 3.2 million Ruckus shares purported to be beneficially owned by Verition Multi-Strategy Master Fund Ltd. (the “Dissenter”) that purportedly dissented from the merger of Ruckus with and into a wholly owned subsidiary of the Company. Under Section 262, the Dissenter is entitled to have those shares appraised by the Delaware Court of Chancery and receive payment of the “fair value” of such shares together with statutory interest as determined by the Delaware Court of Chancery, provided that Dissenter complies with the requirements of Section 262. The Dissenter filed a petition for appraisal in the Delaware Court of Chancery on September 22, 2016, captioned Verition Multi-Strategy Master Fund Ltd. v. Ruckus Wireless, Inc. The dollar amount that the Company may be required to pay to the Dissenter will be determined by the Delaware Court of Chancery and may be more than, less than, or equal to $6.45 in cash and 0.75 shares of Brocade common stock with respect to each of the 3.2 million shares. Broadcom Acquisition-Related Litigation Subsequent to the announcement that Brocade had agreed to be acquired by Broadcom, six purported class action complaints have been filed on behalf of Brocade’s stockholders against Brocade and members of its board of directors in the United States District Court for the Northern District of California. Three of the six complaints also name Broadcom Limited, Broadcom Corporation, and/or Bobcat Merger Sub, Inc. as defendants. The six complaints are captioned as follows: Steinberg v. Brocade Communications Systems, Inc., et al. (filed December 12, 2016) (the “Steinberg action”); Gross v. Brocade Communications Systems, Inc., et al. (filed December 15, 2016); Bragan v. Brocade Communications Systems, Inc., et al. (filed December 21, 2016); Jha v. Brocade Communications Systems, Inc., et al. (filed December 21, 2016) (the “Jha action”); Chuakay v. Brocade Communications Systems, Inc., et al. (filed January 5, 2017) (the “Chuakay action”); and Matthew v. Brocade Communications Systems, Inc., et al. (filed January 18, 2017) (collectively, the “Broadcom Acquisition-Related Litigation”). The complaints each allege violations of Sections 14(a) and 20(a) of the Exchange Act and SEC Rule 14a-9 arising out of the Company’s preliminary proxy statement filed with the SEC on December 6, 2016 (the “preliminary proxy statement”) and/or the Company’s definitive proxy statement filed with the SEC on December 20, 2016 (the “definitive proxy statement”) relating to Broadcom’s proposed acquisition of Brocade. Specifically, the plaintiffs allege that the preliminary proxy statement and/or the definitive proxy statement omits material information regarding the background of the transaction, the Company’s financial projections, the Company’s intrinsic value and prospects, the valuation analyses performed by Evercore Group L.L.C. (“Evercore”), the Company’s financial advisor in connection with the transaction, and alleged conflicts of interest faced by Evercore. The plaintiffs in each action seek to enjoin the defendants from consummating the transaction, or, if the transaction is consummated, the plaintiffs alternatively seek rescission and/or damages. The plaintiffs also seek costs and fees. On January 11, 2017, the plaintiff in the Jha action filed a motion (the “Injunction Motion”) seeking to preliminarily enjoin the special meeting of Brocade stockholders scheduled for January 26, 2017, at which time Brocade stockholders were to vote on the transaction. The plaintiffs in the Steinberg action and the Chuakay action subsequently joined the Injunction Motion. To mitigate the risk of the Broadcom Acquisition-Related Litigation delaying or adversely affecting the transaction, and to minimize the expense of defending the Broadcom Acquisition-Related Litigation, and without admitting any liability or wrongdoing, on January 18, 2017, the Company made certain disclosures that supplemented and revised those contained in the definitive proxy statement. The plaintiffs in the Jha action, the Steinberg action, and the Chuakay action subsequently withdrew the Injunction Motion. |
Derivative Instruments And Hedg
Derivative Instruments And Hedging Activities | 3 Months Ended |
Jan. 28, 2017 | |
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 three months ended January 28, 2017 , were the British pound , the euro , the Indian rupee , the Chinese yuan , the Singapore dollar , the Swiss franc , the Japanese yen , and the Australian dollar . 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 three months ended January 28, 2017, and January 30, 2016 . Ineffective cash flow hedges are included in the Company’s net income as part of “ Interest and other income, net .” The amount recorded on ineffective cash flow hedges was not significant for the three months ended January 28, 2017, and January 30, 2016 . Net losses relating to the effective portion of foreign currency derivatives, which are offset by net gains on the underlying exposures, are recorded in the Company’s Condensed Consolidated Statements of Operations as follows (in thousands): Three Months Ended January 28, 2017 January 30, 2016 Cost of revenues $ (27 ) $ (94 ) Research and development (35 ) (199 ) Sales and marketing (132 ) (374 ) General and administrative (13 ) (27 ) Total $ (207 ) $ (694 ) 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. As a result of foreign currency fluctuations, the net foreign currency exchange gains and losses recorded as part of “ Interest and other income, net ” were losses of $1.6 million and losses of $0.3 million for the three months ended January 28, 2017 and January 30, 2016 , respectively. As of January 28, 2017 , the Company had gross unrealized loss positions of $0.4 million and gross unrealized gain positions of $0.1 million included in “Other accrued liabilities” and “Prepaid expenses and other current assets,” respectively. Volume of Derivative Activity All derivatives are designated as hedging instruments as of January 28, 2017 , and October 29, 2016 . Total gross notional amounts, presented by currency, are as follows (in thousands): Derivatives Designated In U.S. dollars January 28, 2017 October 29, 2016 British pound $ 31,556 $ 42,783 Euro 23,470 34,070 Indian rupee 22,763 32,275 Chinese yuan 13,730 19,805 Singapore dollar 10,195 15,057 Swiss franc 10,163 14,426 Japanese yen 6,312 9,944 Australian dollar 5,526 7,876 Total $ 123,715 $ 176,236 |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Jan. 28, 2017 | |
Share-based Compensation, Allocation and Classification in Financial Statements [Abstract] | |
Stockholders' Equity and Stock-Based Compensation | Stock-Based Compensation Stock-based compensation expense, net of estimated forfeitures, is included in the following line items of the Company’s Condensed Consolidated Statements of Operations as follows (in thousands): Three Months Ended January 28, 2017 January 30, 2016 Cost of revenues $ 5,650 $ 2,905 Research and development 12,074 5,476 Sales and marketing 16,814 11,078 General and administrative 10,975 4,585 Total stock-based compensation expense $ 45,513 $ 24,044 The following table presents stock-based compensation expense, net of estimated forfeitures, by grant type (in thousands): Three Months Ended January 28, 2017 January 30, 2016 Stock options $ 655 $ 729 RSUs, including restricted stock units with market conditions 27,336 19,793 Employee stock purchase plan (“ESPP”) (1) 17,522 3,522 Total stock-based compensation expense $ 45,513 $ 24,044 (1) The ESPP stock-based compensation expense recognized in the three months ended January 28, 2017 , includes the acceleration of all of the unamortized expense in the first quarter of fiscal year 2017 due to the suspension of the Company’s ESPP without concurrent replacement awards as required under the terms of the merger agreement with Broadcom. The following table presents the unrecognized compensation expense, net of estimated forfeitures, by grant type and the related weighted-average periods over which this expense is expected to be recognized as of January 28, 2017 (in thousands, except for the weighted-average period): Unrecognized Compensation Expense Weighted- Average Period (In years) Stock options $ 949 0.75 RSUs, including restricted stock units with market conditions $ 145,530 1.99 The following table presents details on grants made by the Company for the following periods: Three Months Ended January 28, 2017 January 30, 2016 Granted Weighted-Average Granted Weighted-Average RSUs, including stock units with market conditions 3,799 $ 9.13 3,476 $ 7.96 The total intrinsic value of stock options exercised for three months ended January 28, 2017 , and January 30, 2016 , was $8.6 million and $0.1 million , respectively. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Jan. 28, 2017 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Dividends During the three months ended January 28, 2017 , 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 20, 2016 $ 0.055 December 12, 2016 $ 22,346 January 4, 2017 Future dividends are subject to review and approval on a quarterly basis by the Company’s Board of Directors or a committee thereof, and are limited under the terms of the Merger Agreement (as defined in Note 1 , “ Basis of Presentation ,” of the Notes to Condensed Consolidated Financial Statements). 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 Condensed Consolidated Financial Statements for further discussion. Accumulated Other Comprehensive Loss The components of other comprehensive loss and related tax effects for the three months ended January 28, 2017 , and January 30, 2016 , are as follows (in thousands): Three Months Ended January 28, 2017 January 30, 2016 Before-Tax Amount Tax (Expense) Benefit Net-of-Tax Amount Before-Tax Amount Tax (Expense) Benefit Net-of-Tax Amount Unrealized gains (losses) on cash flow hedges: Change in unrealized gains and losses, foreign exchange contracts $ (450 ) $ 41 $ (409 ) $ (2,413 ) $ 113 $ (2,300 ) Net gains and losses reclassified into earnings, foreign exchange contracts (1) 207 (22 ) 185 694 (68 ) 626 Net unrealized gains (losses) on cash flow hedges (243 ) 19 (224 ) (1,719 ) 45 (1,674 ) Foreign currency translation adjustments (1,360 ) — (1,360 ) (2,203 ) — (2,203 ) Total other comprehensive loss $ (1,603 ) $ 19 $ (1,584 ) $ (3,922 ) $ 45 $ (3,877 ) (1) For classification of amounts reclassified from accumulated other comprehensive loss into earnings as reported on the Company’s Condensed Consolidated Statements of Operations , see Note 10 , “ Derivative Instruments and Hedging Activities ,” of the Notes to Condensed Consolidated Financial Statements. The changes in accumulated other comprehensive loss by component, net of tax, for the three months ended January 28, 2017 , and January 30, 2016 , are as follows (in thousands): Three Months Ended January 28, 2017 January 30, 2016 Losses on Cash Flow Hedges Foreign Currency Translation Adjustments Total Accumulated Other Comprehensive Loss Losses on Cash Flow Hedges Foreign Currency Translation Adjustments Total Accumulated Other Comprehensive Loss Beginning balance $ (871 ) $ (26,542 ) $ (27,413 ) $ (1,539 ) $ (23,463 ) $ (25,002 ) Change in unrealized gains and losses (409 ) (1,360 ) (1,769 ) (2,300 ) (2,203 ) (4,503 ) Net gains and losses reclassified into earnings 185 — 185 626 — 626 Net current-period other comprehensive loss (224 ) (1,360 ) (1,584 ) (1,674 ) (2,203 ) (3,877 ) Ending balance $ (1,095 ) $ (27,902 ) $ (28,997 ) $ (3,213 ) $ (25,666 ) $ (28,879 ) |
Income Taxes
Income Taxes | 3 Months Ended |
Jan. 28, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes 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 tax rate, non-deductible stock-based compensation expense, tax credits, and adjustments to unrecognized tax benefits. The non-U.S. operations primarily relate to its European, Asia Pacific, and Japanese subsidiaries. The Company recorded an income tax benefit for the three months ended January 28, 2017 , compared to an income tax expense for the three months ended January 30, 2016 , primarily due to an operating loss before tax and a net discrete benefit from reserve releases as a result of reaching settlement on certain transfer pricing issues with the Geneva Tax Administration (“GTA”) during the three months ended January 28, 2017 . The effective tax rate for the three months ended January 28, 2017 , was higher than the U.S. federal statutory tax rate of 35% primarily due to the impact of a net discrete benefit as a result of reaching settlement with the GTA on the small pre-tax loss. The Company’s total gross unrecognized tax benefits, excluding interest and penalties, were $193.3 million as of January 28, 2017 . If the total gross unrecognized tax benefits as of January 28, 2017 , were recognized in the future, approximately $144.2 million would decrease the Company’s effective tax rate. The IRS and other tax authorities regularly examine the Company’s income tax returns. In December 2016, the Company reached an agreement with the GTA for fiscal years through 2015, with the exception of fiscal year 2014. The timing of tax examinations, as well as the amounts and timing of related settlements, if any, are highly uncertain. Before the end of fiscal year 2017, it is reasonably possible that either certain audits will conclude or the statutes of limitations relating to certain tax examination periods will expire, or both. After the Company reaches settlement with the tax authorities, the Company expects to record a corresponding adjustment to its 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 $2 million in the next 12 months. |
Segment Information
Segment Information | 3 Months Ended |
Jan. 28, 2017 | |
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. 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 January 28, 2017 , were attributable to its U.S. operations. Summarized financial information by reportable segment for the three months ended January 28, 2017, and January 30, 2016 , based on the internal management reporting system, is as follows (in thousands): SAN Products IP Networking Products Global Services Total Three months ended January 28, 2017 Net revenues $ 306,873 $ 173,744 $ 100,846 $ 581,463 Cost of revenues 75,730 90,925 47,685 214,340 Gross margin $ 231,143 $ 82,819 $ 53,161 $ 367,123 Three months ended January 30, 2016 Net revenues $ 347,058 $ 134,109 $ 93,117 $ 574,284 Cost of revenues 81,204 62,893 41,372 185,469 Gross margin $ 265,854 $ 71,216 $ 51,745 $ 388,815 |
Net Income Per Share
Net Income Per Share | 3 Months Ended |
Jan. 28, 2017 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share | Net Income (Loss) per Share The following table presents the calculation of basic and diluted net income (loss) per share (in thousands, except per share amounts): Three Months Ended January 28, January 30, Basic net income (loss) per share Net income (loss) attributable to Brocade $ (5,681 ) $ 93,646 Weighted-average shares used in computing basic net income (loss) per share 404,995 407,902 Basic net income (loss) per share—attributable to Brocade stockholders $ (0.01 ) $ 0.23 Diluted net income (loss) per share Net income (loss) attributable to Brocade $ (5,681 ) $ 93,646 Weighted-average shares used in computing basic net income (loss) per share 404,995 407,902 Dilutive potential common shares in the form of stock options — 1,332 Dilutive potential common shares in the form of other share-based awards — 5,851 Weighted-average shares used in computing diluted net income (loss) per share 404,995 415,085 Diluted net income (loss) per share—attributable to Brocade stockholders $ (0.01 ) $ 0.23 Antidilutive potential common shares in the form of: (1) Warrants issued in conjunction with the 2020 Convertible Notes (2) 36,456 36,200 Stock options 1,944 1,874 Other share-based awards 8,957 984 (1) These amounts are excluded from the computation of diluted net income (loss) 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 $15.77 per share. If the common stock price exceeds this adjusted conversion price, then, 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 $20.45 per share for a quarterly period, the Company’s weighted-average shares used in computing diluted net income (loss) 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. |
Basis Of Presentation (Policies
Basis Of Presentation (Policies) | 3 Months Ended |
Jan. 28, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [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 2017 is a 52-week fiscal year and fiscal year 2016 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 Condensed Consolidated Financial Statements include the accounts of Brocade and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. In May 2016, the Company entered into a joint venture agreement with Guiyang High-Tech Industrial Investment Group Co., Ltd. (“HTII”) to create Guizhou Huiling Technology Co., Ltd (“GHTC”). The Company consolidates its investment in GHTC as this is a variable interest entity, and the Company is the primary beneficiary. |
Use of Estimates in Preparation of Condensed Consolidated Financial Statements | Use of Estimates in Preparation of Condensed Consolidated Financial Statements The preparation of the Company’s Condensed Consolidated Financial Statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and judgments that affect the amounts reported in the Company’s Condensed Consolidated Financial Statements and accompanying notes. Estimates are used for, but not limited to, revenue recognition, sales allowances including discounts, returns, and programs, allowance for doubtful accounts, stock-based compensation, acquisition purchase price allocations, warranty obligations, inventory valuation and purchase commitments, impairment of goodwill and other indefinite-lived intangible assets, litigation, and income taxes. Actual results may differ materially from these estimates. |
Summary of Significant Accoun23
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Jan. 28, 2017 | |
Accounting Policies [Abstract] | |
Consolidation, Variable Interest Entity, Policy | |
New Accounting Pronouncements, Policy | New Accounting Pronouncements or Updates Recently Adopted 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 a 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. The Company adopted this update in the first quarter of fiscal year 2017 and has elected to apply this update prospectively. There was no material impact on the Company’s financial position, results of operations, or cash flows. In December 2016, 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 first quarter of fiscal year 2017. 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 May 2014, the FASB issued ASC 606, Revenue from Contracts with Customers , that will supersede virtually all existing revenue guidance. Under this new revenue guidance, 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 new revenue guidance 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 retained earnings. In August 2015, the FASB issued an update to defer the effective date of this new revenue guidance by one year. This new revenue guidance becomes effective and will be adopted by the Company in the first quarter of fiscal year 2019. The Company is currently evaluating the impact of this new revenue guidance on its consolidated financial statements. In March 2016, the FASB issued an update to ASC 606, Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net) , which clarifies the implementation guidance for principal versus agent considerations. In April 2016, the FASB issued an update to ASC 606, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing , which clarifies the guidance related to identifying performance obligations and accounting for licenses of intellectual property. In May 2016, the FASB issued an update to ASC 606, Revenue from Contracts with Customers: Narrow-Scope Improvements and Practical Expedients , which clarifies the guidance related to collectibility and non-cash consideration, as well as provides practical expedients for the transition to ASC 606. In December 2016, the FASB issued an update to ASC 606, Revenue from Contracts with Customers: Technical Corrections and Improvements , which clarifies and corrects any unintended application of the new revenue guidance. None of the 13 issues addressed in this update are expected to have a significant impact. The Company must adopt these updates with the adoption of ASC 606, Revenue from Contracts with Customers . The Company is currently evaluating the impact of these updates 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, 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 January 2016, the FASB issued an update to ASC 825, Financial Instruments—Overall: Recognition and Measurement of Financial Assets and Financial Liabilities . This update consists of eight provisions that provide guidance on the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. This update should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption and prospectively for equity investments without readily determinable fair values. This update becomes effective and will be adopted by the Company in the first quarter of fiscal year 2019. Early adoption is permitted for two of the eight provisions. The Company is currently evaluating the impact of this update on its consolidated financial statements and related disclosures. In February 2016, the FASB issued ASC 842, Leases , that will supersede the existing lease guidance, including on-balance sheet recognition of operating leases for lessees. This new lease guidance should be applied using a modified retrospective approach and will be adopted by the Company in the first quarter of fiscal year 2020. Early adoption is permitted. The Company is currently evaluating the impact of this new lease guidance on its consolidated financial statements. In March 2016, the FASB issued an update to ASC 718, Compensation—Stock Compensation: Improvements to Employee Share-Based Payment Accounting . This update simplifies certain aspects of the accounting for share-based payment transactions, including income taxes, forfeiture rates, classification of awards, and classification in the statement of cash flows. This update becomes effective in the first quarter of fiscal year 2018. Early adoption is permitted. The Company is currently evaluating the impact of this update on its consolidated financial statements. In June 2016, the FASB issued ASC 326, Financial Instrument—Credit Losses , that will supersede the existing methodology for estimating expected credit losses on certain financial instruments. The new impairment methodology eliminates the probable initial recognition threshold and, instead, estimates the expected credit losses in consideration of past events, current conditions, and forecasted information. This update becomes effective in the first quarter of fiscal year 2021. Early adoption is permitted in the first quarter of fiscal year 2020. The Company is currently evaluating the impact of this update on its consolidated financial statements. In August 2016, the FASB issued an update to ASC 230, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments . This update consists of eight provisions that provide guidance on the classification of certain cash receipts and cash payments. If practicable, this update should be applied using a retrospective transition method to each period presented. For the provisions that are impracticable to apply retrospectively, those provisions may be applied prospectively as of the earliest date practicable. This update becomes effective and will be adopted by the Company in the first quarter of fiscal year 2019. Early adoption is permitted. The Company is currently evaluating the impact of this update on its consolidated financial statements and related disclosures. In October 2016, the FASB issued an update to ASC 740, Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory . This update requires the recognition of current and deferred income taxes for intra-entity transfers of assets other than inventory. This update should be applied using a modified retrospective approach and becomes effective in the first quarter of fiscal year 2019. Early adoption is permitted. The Company is currently evaluating the impact of this update on its consolidated financial statements. In November 2016, the FASB issued an update to ASC 230, Statement of Cash Flows: Restricted Cash . This update requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This update should be applied using a retrospective transition method and becomes effective in the first quarter of fiscal year 2019. Early adoption is permitted. The Company is currently evaluating the impact of this update on its consolidated financial statements. In January 2017, the FASB issued an update to ASC 805, Business Combinations: Clarifying the Definition of a Business , which clarifies the definition of a business and adds guidance to assist entities with evaluating whether the transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This update should be applied prospectively and becomes effective in the first fiscal quarter of 2019. 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 January 2017, the FASB issued an update to ASC 350, Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment , which simplifies the goodwill impairment process by eliminating Step 2 from the quantitative goodwill impairment test. Under this update, goodwill is only impaired for the amount the net assets of the reporting unit exceeds its fair value. The impairment loss should not exceed the carrying amount of goodwill, including any impact from tax deductible goodwill. This update should be applied prospectively and becomes effective in the first fiscal quarter of 2021. Early adoption is permitted. The Company does not expect the adoption of this update to have a material impact on its consolidated financial statements. |
Goodwill And Intangible Assets
Goodwill And Intangible Assets (Policies) | 3 Months Ended |
Jan. 28, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets, Goodwill Policy | The Company conducts its goodwill impairment test annually, as of the first day of the fourth 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 2016 annual goodwill impairment test, the Company used a combination of these approaches to estimate each reporting unit’s fair value. At the time that the fiscal year 2016 annual goodwill impairment test was performed, the Company believed that 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 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 are 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 the Company’s regular long-range planning process. The control premium used in the market approach or as part of combined approaches was determined by considering control premiums offered as part of the acquisitions where acquired companies were 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. |
Goodwill and Intangible Assets, Intangible Assets, Indefinite-Lived, Policy | 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. |
Fair Value Measurements Fair Va
Fair Value Measurements Fair Value Measurements (Policies) | 3 Months Ended |
Jan. 28, 2017 | |
Accounting Policies [Abstract] | |
Fair Value Transfer Policy | 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 January 28, 2017 . 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. During the three months ended January 28, 2017 , the Company had no transfers between levels of the fair value hierarchy of its assets and liabilities measured at fair value. |
Derivative Instruments and He26
Derivative Instruments and Hedging Activities Derivative Instruments And Hedging Activities (Policies) | 3 Months Ended |
Jan. 28, 2017 | |
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 three months ended January 28, 2017 , were the British pound , the euro , the Indian rupee , the Chinese yuan , the Singapore dollar , the Swiss franc , the Japanese yen , and the Australian dollar . 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 three months ended January 28, 2017, and January 30, 2016 . Ineffective cash flow hedges are included in the Company’s net income as part of “ Interest and other income, net .” The amount recorded on ineffective cash flow hedges was not significant for the three months ended January 28, 2017, and January 30, 2016 . |
Goodwill And Intangible Asset27
Goodwill And Intangible Assets (Tables) | 3 Months Ended |
Jan. 28, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule Of Goodwill Activity By Reportable Segment | The following table summarizes goodwill activity by reportable segment during the three months ended January 28, 2017 (in thousands): Storage Area Networking (“SAN”) Products IP Networking Products Global Services Total Balance at October 29, 2016 Goodwill $ 176,320 $ 1,698,641 $ 549,437 $ 2,424,398 Accumulated impairment losses — (129,214 ) — (129,214 ) 176,320 1,569,427 549,437 2,295,184 Purchase accounting adjustments — 69,637 (74,616 ) (4,979 ) Balance at January 28, 2017 Goodwill 176,320 1,768,278 474,821 2,419,419 Accumulated impairment losses — (129,214 ) — (129,214 ) $ 176,320 $ 1,639,064 $ 474,821 $ 2,290,205 |
Schedule of Intangible Assets | The following tables present details of the Company’s intangible assets, excluding goodwill (in thousands, except for weighted-average remaining useful life): January 28, 2017 Gross Accumulated Net Weighted- Finite-lived intangible assets: Trade names $ 43,090 $ 3,279 $ 39,810 10.27 Core/developed technology 290,290 50,411 239,879 5.29 Patent portfolio license (1) 7,750 2,194 5,556 16.51 Customer relationships 141,110 22,422 118,688 6.16 Non-compete agreements 1,050 1,030 20 0.13 Patents with broader applications 1,040 127 913 13.13 Total finite-lived intangible assets 484,330 79,463 404,866 5.84 Indefinite-lived intangible assets, excluding goodwill: IPR&D (2) 25,000 — 25,000 Total indefinite-lived intangible assets, excluding goodwill 25,000 — 25,000 Total intangible assets, excluding goodwill $ 509,330 $ 79,463 $ 429,866 October 29, 2016 Gross Accumulated Net Weighted- Finite-lived intangible assets: Trade names $ 45,090 $ 2,359 $ 42,731 10.51 Core/developed technology 286,290 37,352 248,938 5.51 Patent portfolio license (1) 7,750 1,935 5,815 17.00 Customer relationships 143,110 15,813 127,297 6.32 Non-compete agreements 1,050 983 67 0.29 Patents with broader applications 1,040 110 930 13.38 Total finite-lived intangible assets 484,330 58,552 425,778 6.08 Indefinite-lived intangible assets, excluding goodwill: IPR&D (2) 24,000 — 24,000 Total indefinite-lived intangible assets, excluding goodwill 24,000 — 24,000 Total intangible assets, excluding goodwill $ 508,330 $ 58,552 $ 449,778 (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) 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 complet |
Schedule Of Amortization Of Intangible Assets Included On Consolidated Statements Of Operations | The amortization of finite-lived intangible assets is included in the following line items of the Company’s Condensed Consolidated Statements of Operations as follows (in thousands): Three Months Ended January 28, 2017 January 30, 2016 Cost of revenues $ 13,060 $ 3,154 General and administrative (1) 259 277 Amortization of intangible assets 7,594 902 Total $ 20,913 $ 4,333 (1) The amortization is related to the $7.8 million of perpetual, nonexclusive license to certain patents purchased in fiscal year 2015. |
Schedule Of Estimated Future Amortization Of Intangible Assets | The following table presents the estimated future amortization of finite-lived intangible assets as of January 28, 2017 (in thousands): Fiscal Year Estimated Future Amortization 2017 (remaining nine months) $ 58,323 2018 70,090 2019 66,562 2020 65,630 2021 61,876 Thereafter 82,385 Total $ 404,866 |
Balance Sheet Details (Tables)
Balance Sheet Details (Tables) | 3 Months Ended |
Jan. 28, 2017 | |
Balance Sheet Details [Abstract] | |
Schedule of Inventory | The following tables provide details of selected balance sheet items (in thousands): January 28, October 29, Inventories: Raw materials $ 19,420 $ 17,793 Finished goods 60,032 51,562 Inventories $ 79,452 $ 69,355 |
Schedule of Property, Plant and Equipment | January 28, October 29, Property and equipment, net: Gross property and equipment Computer equipment $ 19,877 $ 19,710 Software 92,198 89,132 Engineering and other equipment 446,282 445,115 Furniture and fixtures 34,085 33,788 Leasehold improvements 35,007 37,973 Land and building 386,163 386,163 Total gross property and equipment 1,013,612 1,011,881 Accumulated depreciation and amortization (1) (566,403 ) (556,555 ) Property and equipment, net $ 447,209 $ 455,326 (1) The following table presents the depreciation of property and equipment included on the Company’s Condensed Consolidated Statements of Operations (in thousands): Three Months Ended January 28, January 30, Depreciation expense $ 20,953 $ 18,479 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Jan. 28, 2017 | |
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 January 28, 2017 , were as follows (in thousands): Fair Value Measurements Using Balance as of Quoted Prices in Significant Other Significant Assets: Money market funds (1) $ 871,751 $ 871,751 $ — $ — Derivative assets 129 — 129 — Total assets measured at fair value $ 871,880 $ 871,751 $ 129 $ — Liabilities: Derivative liabilities $ 442 $ — $ 442 $ — Total liabilities measured at fair value $ 442 $ — $ 442 $ — (1) Money market funds are reported within “Cash and cash equivalents” on the Company’s Condensed Consolidated Balance Sheets. Assets and liabilities measured and recorded at fair value on a recurring basis as of October 29, 2016 , were as follows (in thousands): Fair Value Measurements Using Balance as of Quoted Prices in Significant Other Significant Assets: Money market funds (1) $ 914,724 $ 914,724 $ — $ — Derivative assets 514 — 514 — Total assets measured at fair value $ 915,238 $ 914,724 $ 514 $ — Liabilities: Derivative liabilities $ 354 $ — $ 354 $ — Total liabilities measured at fair value $ 354 $ — $ 354 $ — (1) Money market funds are reported within “Cash and cash equivalents” on the Company’s Condensed Consolidated Balance Sheets. |
Restructuring and Other Costs (
Restructuring and Other Costs (Tables) | 3 Months Ended |
Jan. 28, 2017 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring and Other Charges | The following table provides details of “ Restructuring and other related benefits ” included in the Company’s Condensed Consolidated Statements of Operations (in thousands): Three Months Ended January 28, January 30, Lease loss reserve and related benefits $ — $ (566 ) |
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 Lease Loss Reserve and Related Costs Lease Loss Reserve and Related Costs Total Restructuring liabilities at October 29, 2016 $ 109 $ 714 $ 72 $ 895 Cash payments — (69 ) (72 ) (141 ) Translation adjustment (2 ) (5 ) — (7 ) Restructuring liabilities at January 28, 2017 $ 107 $ 640 $ — $ 747 Current restructuring liabilities at January 28, 2017 $ 107 $ 246 $ — $ 353 Non-current restructuring liabilities at January 28, 2017 $ — $ 394 $ — $ 394 |
Borrowings (Tables)
Borrowings (Tables) | 3 Months Ended |
Jan. 28, 2017 | |
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): January 28, 2017 October 29, 2016 Maturity Stated Annual Interest Rate Amount Effective Interest Rate Amount Effective Interest Rate Senior Credit Facility: Term Loan Facility 2021 variable $ 760,000 2.80 % $ 780,000 2.53 % Convertible Senior Unsecured Notes: 2020 Convertible Notes 2020 1.375% 575,000 4.98 % 575,000 4.98 % Senior Unsecured Notes: 2023 Notes 2023 4.625% 300,000 4.83 % 300,000 4.83 % Total gross long-term debt 1,635,000 1,655,000 Unamortized discount (68,495 ) (73,540 ) Unamortized debt issuance costs (2,556 ) (2,705 ) Current portion of long-term debt (76,720 ) (76,692 ) Long-term debt, net of current portion $ 1,487,229 $ 1,502,063 |
Schedule of Carrying Values of Liability and Equity Components | The carrying values of the liability and equity components of the 2020 Convertible Notes are as follows (in thousands): January 28, October 29, Principal $ 575,000 $ 575,000 Unamortized discount of the liability component (55,038 ) (59,398 ) Net carrying amount of liability component $ 519,962 $ 515,602 Carrying amount of equity component $ 51,406 $ 55,374 |
Schedule Of Debt Maturities | As of January 28, 2017 , the Company’s aggregate debt maturities based on outstanding principal were as follows (in thousands): Fiscal Year Principal Balances 2017 (remaining nine months) $ 60,000 2018 80,000 2019 80,000 2020 655,000 2021 460,000 Thereafter 300,000 Total $ 1,635,000 |
Commitments And Contingencies (
Commitments And Contingencies (Tables) | 3 Months Ended |
Jan. 28, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
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 three months ended January 28, 2017 , and January 30, 2016 (in thousands): Accrued Warranty Three Months Ended January 28, January 30, Beginning balance $ 8,326 $ 7,599 Liabilities accrued for warranties issued during the period 845 978 Warranty claims paid and used during the period (778 ) (1,144 ) Changes in liability for pre-existing warranties during the period 199 (225 ) Ending balance $ 8,592 $ 7,208 |
Derivative Instruments And He33
Derivative Instruments And Hedging Activities (Tables) | 3 Months Ended |
Jan. 28, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule Of Net Gains (Losses) Related To The Effective Portion Of Foreign Currency Derivatives | Net losses relating to the effective portion of foreign currency derivatives, which are offset by net gains on the underlying exposures, are recorded in the Company’s Condensed Consolidated Statements of Operations as follows (in thousands): Three Months Ended January 28, 2017 January 30, 2016 Cost of revenues $ (27 ) $ (94 ) Research and development (35 ) (199 ) Sales and marketing (132 ) (374 ) General and administrative (13 ) (27 ) Total $ (207 ) $ (694 ) |
Schedule Of Total Gross Notional Amounts, Presented By Currency | Total gross notional amounts, presented by currency, are as follows (in thousands): Derivatives Designated In U.S. dollars January 28, 2017 October 29, 2016 British pound $ 31,556 $ 42,783 Euro 23,470 34,070 Indian rupee 22,763 32,275 Chinese yuan 13,730 19,805 Singapore dollar 10,195 15,057 Swiss franc 10,163 14,426 Japanese yen 6,312 9,944 Australian dollar 5,526 7,876 Total $ 123,715 $ 176,236 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Jan. 28, 2017 | |
Share-based Compensation, Allocation and Classification in Financial Statements [Abstract] | |
Stock-Based Compensation Expense Included In Line Items Of Consolidated Statements Of Operations | Stock-based compensation expense, net of estimated forfeitures, is included in the following line items of the Company’s Condensed Consolidated Statements of Operations as follows (in thousands): Three Months Ended January 28, 2017 January 30, 2016 Cost of revenues $ 5,650 $ 2,905 Research and development 12,074 5,476 Sales and marketing 16,814 11,078 General and administrative 10,975 4,585 Total stock-based compensation expense $ 45,513 $ 24,044 |
Stock-Based Compensation Expense By Grant Type | The following table presents stock-based compensation expense, net of estimated forfeitures, by grant type (in thousands): Three Months Ended January 28, 2017 January 30, 2016 Stock options $ 655 $ 729 RSUs, including restricted stock units with market conditions 27,336 19,793 Employee stock purchase plan (“ESPP”) (1) 17,522 3,522 Total stock-based compensation expense $ 45,513 $ 24,044 |
Stock-Based Compensation, Unrecognized Compensation Expense And Weighted-Average Period | The following table presents the unrecognized compensation expense, net of estimated forfeitures, by grant type and the related weighted-average periods over which this expense is expected to be recognized as of January 28, 2017 (in thousands, except for the weighted-average period): Unrecognized Compensation Expense Weighted- Average Period (In years) Stock options $ 949 0.75 RSUs, including restricted stock units with market conditions $ 145,530 1.99 |
Schedule of Share-based Compensation, Activity | The following table presents details on grants made by the Company for the following periods: Three Months Ended January 28, 2017 January 30, 2016 Granted Weighted-Average Granted Weighted-Average RSUs, including stock units with market conditions 3,799 $ 9.13 3,476 $ 7.96 The total intrinsic value of stock options exercised for three months ended January 28, 2017 , and January 30, 2016 , was $8.6 million and $0.1 million , respectively. |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Jan. 28, 2017 | |
Equity [Abstract] | |
Schedule of Dividends Payable [Table Text Block] | During the three months ended January 28, 2017 , 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 20, 2016 $ 0.055 December 12, 2016 $ 22,346 January 4, 2017 |
Schedule of Comprehensive Income (Loss) Tax Effects | The components of other comprehensive loss and related tax effects for the three months ended January 28, 2017 , and January 30, 2016 , are as follows (in thousands): Three Months Ended January 28, 2017 January 30, 2016 Before-Tax Amount Tax (Expense) Benefit Net-of-Tax Amount Before-Tax Amount Tax (Expense) Benefit Net-of-Tax Amount Unrealized gains (losses) on cash flow hedges: Change in unrealized gains and losses, foreign exchange contracts $ (450 ) $ 41 $ (409 ) $ (2,413 ) $ 113 $ (2,300 ) Net gains and losses reclassified into earnings, foreign exchange contracts (1) 207 (22 ) 185 694 (68 ) 626 Net unrealized gains (losses) on cash flow hedges (243 ) 19 (224 ) (1,719 ) 45 (1,674 ) Foreign currency translation adjustments (1,360 ) — (1,360 ) (2,203 ) — (2,203 ) Total other comprehensive loss $ (1,603 ) $ 19 $ (1,584 ) $ (3,922 ) $ 45 $ (3,877 ) (1) For classification of amounts reclassified from accumulated other comprehensive loss into earnings as reported on the Company’s Condensed Consolidated Statements of Operations , see Note 10 , “ Derivative Instruments and Hedging Activities ,” of the Notes to Condensed Consolidated Financial Statements. |
Schedule of Accumulated Other Comprehensive Income (Loss) | The changes in accumulated other comprehensive loss by component, net of tax, for the three months ended January 28, 2017 , and January 30, 2016 , are as follows (in thousands): Three Months Ended January 28, 2017 January 30, 2016 Losses on Cash Flow Hedges Foreign Currency Translation Adjustments Total Accumulated Other Comprehensive Loss Losses on Cash Flow Hedges Foreign Currency Translation Adjustments Total Accumulated Other Comprehensive Loss Beginning balance $ (871 ) $ (26,542 ) $ (27,413 ) $ (1,539 ) $ (23,463 ) $ (25,002 ) Change in unrealized gains and losses (409 ) (1,360 ) (1,769 ) (2,300 ) (2,203 ) (4,503 ) Net gains and losses reclassified into earnings 185 — 185 626 — 626 Net current-period other comprehensive loss (224 ) (1,360 ) (1,584 ) (1,674 ) (2,203 ) (3,877 ) Ending balance $ (1,095 ) $ (27,902 ) $ (28,997 ) $ (3,213 ) $ (25,666 ) $ (28,879 ) |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Jan. 28, 2017 | |
Segment Reporting [Abstract] | |
Schedule Of Financial Information By Reportable Segment | Summarized financial information by reportable segment for the three months ended January 28, 2017, and January 30, 2016 , based on the internal management reporting system, is as follows (in thousands): SAN Products IP Networking Products Global Services Total Three months ended January 28, 2017 Net revenues $ 306,873 $ 173,744 $ 100,846 $ 581,463 Cost of revenues 75,730 90,925 47,685 214,340 Gross margin $ 231,143 $ 82,819 $ 53,161 $ 367,123 Three months ended January 30, 2016 Net revenues $ 347,058 $ 134,109 $ 93,117 $ 574,284 Cost of revenues 81,204 62,893 41,372 185,469 Gross margin $ 265,854 $ 71,216 $ 51,745 $ 388,815 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 3 Months Ended |
Jan. 28, 2017 | |
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 (loss) per share (in thousands, except per share amounts): Three Months Ended January 28, January 30, Basic net income (loss) per share Net income (loss) attributable to Brocade $ (5,681 ) $ 93,646 Weighted-average shares used in computing basic net income (loss) per share 404,995 407,902 Basic net income (loss) per share—attributable to Brocade stockholders $ (0.01 ) $ 0.23 Diluted net income (loss) per share Net income (loss) attributable to Brocade $ (5,681 ) $ 93,646 Weighted-average shares used in computing basic net income (loss) per share 404,995 407,902 Dilutive potential common shares in the form of stock options — 1,332 Dilutive potential common shares in the form of other share-based awards — 5,851 Weighted-average shares used in computing diluted net income (loss) per share 404,995 415,085 Diluted net income (loss) per share—attributable to Brocade stockholders $ (0.01 ) $ 0.23 Antidilutive potential common shares in the form of: (1) Warrants issued in conjunction with the 2020 Convertible Notes (2) 36,456 36,200 Stock options 1,944 1,874 Other share-based awards 8,957 984 (1) These amounts are excluded from the computation of diluted net income (loss) 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 $15.77 per share. If the common stock price exceeds this adjusted conversion price, then, 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 $20.45 per share for a quarterly period, the Company’s weighted-average shares used in computing diluted net income (loss) per share will be impacted by the effect of the additional potential shares that may be issued related to the warrants using the treasury stock method. The convertible note hedge is not considered for purposes of the diluted earnings per share calculation, as its effect would be antidilutive. |
Basis of Presentation Basis Of
Basis of Presentation Basis Of Presentation (Narrative) (Details) - Broadcom [Member] - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Jan. 28, 2017 | Nov. 02, 2016 | |
Share Price | $ 12.75 | |
Termination Fee | $ 195 |
Summary Of Significant Accoun39
Summary Of Significant Accounting Policies (Concentration of Risk Narrative)(Details) | 3 Months Ended | 12 Months Ended | |
Jan. 28, 2017customer | Jan. 30, 2016customer | Oct. 29, 2016customer | |
Concentration Risk | |||
Number of Financial Institutions | 8 | ||
Customer Concentration Risk | Accounts Receivable | |||
Concentration Risk | |||
Concentration Risk, Percentage | 42.00% | ||
Number Of Customers Included In Concentration Disclosures | 1 | 2 | |
Customer Concentration Risk | Accounts Receivable | Major Customer One | |||
Concentration Risk | |||
Concentration Risk, Percentage | 28.00% | 29.00% | |
Customer Concentration Risk | Accounts Receivable | Major Customer Two | |||
Concentration Risk | |||
Concentration Risk, Percentage | 13.00% | ||
Customer Concentration Risk | Sales Revenue, Segment | |||
Concentration Risk | |||
Concentration Risk, Percentage | 34.00% | ||
Number Of Customers Included In Concentration Disclosures | 1 | 2 | |
Customer Concentration Risk | Sales Revenue, Segment | Major Customer One | |||
Concentration Risk | |||
Concentration Risk, Percentage | 19.00% | 20.00% | |
Customer Concentration Risk | Sales Revenue, Segment | Major Customer Two | |||
Concentration Risk | |||
Concentration Risk, Percentage | 14.00% |
Acquisitions (Narrative) (Detai
Acquisitions (Narrative) (Details) - USD ($) $ / shares in Units, shares in Thousands | 3 Months Ended | ||||
Jan. 28, 2017 | Jan. 30, 2016 | Oct. 29, 2016 | May 27, 2016 | ||
Business Acquisition [Line Items] | |||||
Common stock, shares outstanding | 407,514 | 401,748 | |||
Acquisition and integration costs | $ 18,037,000 | $ 0 | |||
Goodwill | 2,290,205,000 | $ 2,295,184,000 | |||
Goodwill, Purchase Accounting Adjustments | [1] | 4,979,000 | |||
IP Networking Products | |||||
Business Acquisition [Line Items] | |||||
Goodwill | 1,639,064,000 | 1,569,427,000 | |||
Goodwill, Purchase Accounting Adjustments | 69,637,000 | ||||
Global Services | |||||
Business Acquisition [Line Items] | |||||
Goodwill | 474,821,000 | $ 549,437,000 | |||
Goodwill, Purchase Accounting Adjustments | (74,616,000) | ||||
Ruckus | |||||
Business Acquisition [Line Items] | |||||
Common stock, shares outstanding | 92,200 | ||||
Share Price | $ 8.60 | ||||
Total purchase consideration (b) | 1,275,060,000 | ||||
Business Combination, Integration Related Costs | $ 3,872,000 | ||||
Goodwill | $ 668,770,000 | ||||
Business Acquisition, Goodwill, Expected Tax Deductible Amount | 0 | ||||
Business Combination, Provisional Information, Initial Accounting Incomplete, Items | The total purchase consideration allocation reflects the Company’s preliminary estimates and is subject to revision as additional information in relation to the tax liabilities becomes available during the remainder of the measurement period. This period is not to exceed 12 months from the acquisition date. | ||||
Goodwill, Purchase Accounting Adjustments | $ 5,000,000 | ||||
Ruckus | Acquisition Costs [Member] | |||||
Business Acquisition [Line Items] | |||||
Acquisition and integration costs | $ 897,000 | ||||
Ruckus | IP Networking Products | |||||
Business Acquisition [Line Items] | |||||
Goodwill | 349,400,000 | ||||
Ruckus | Global Services | |||||
Business Acquisition [Line Items] | |||||
Goodwill | $ 319,400,000 | ||||
Shares Dissented [Member] | Ruckus | |||||
Business Acquisition [Line Items] | |||||
Common stock, shares outstanding | 3,200 | ||||
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Acquisitions Acquisitions (Sche
Acquisitions Acquisitions (Schedule of Purchase Price Allocation) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Jan. 28, 2017 | Oct. 29, 2016 | May 27, 2016 | |
Liabilities assumed: | |||
Goodwill | $ 2,290,205 | $ 2,295,184 | |
Ruckus | |||
Assets acquired: | |||
Cash and cash equivalents | $ 95,515 | ||
Short-term investments | 150,257 | ||
Accounts receivable, net of allowances for doubtful accounts of $2,100 | 41,339 | ||
Inventories | 64,000 | ||
Prepaid expenses and other current assets | 5,201 | ||
Property and equipment, net | 27,060 | ||
Identifiable intangible assets | 418,000 | ||
Other assets | 1,697 | ||
Total assets acquired | 803,069 | ||
Liabilities assumed: | |||
Accounts payable | 16,375 | ||
Accrued employee compensation | 17,514 | ||
Deferred revenue | 14,520 | ||
Other accrued liabilities | 33,809 | ||
Non-current deferred revenue | 9,767 | ||
Deferred tax liabilities | 64,233 | ||
Other non-current liabilities | 40,561 | ||
Total liabilities assumed | 196,779 | ||
Net assets acquired | 606,290 | ||
Total purchase consideration (b) | $ 1,275,060 | ||
Goodwill | $ 668,770 |
Acquisitions Acquisitions (Sc42
Acquisitions Acquisitions (Schedule of Intangible Assets Acquired as Part of Business Combination) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||||
Jul. 30, 2016 | Jan. 28, 2017 | Oct. 29, 2016 | May 27, 2016 | ||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Indefinite-Lived Intangible Assets (Excluding Goodwill) | $ 25,000 | $ 24,000 | |||
In Process Research and Development [Member] | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Indefinite-Lived Intangible Assets (Excluding Goodwill) | [1] | $ 25,000 | $ 24,000 | ||
Ruckus | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Identifiable intangible assets | $ 418,000 | ||||
Ruckus | In Process Research and Development [Member] | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Indefinite-Lived Intangible Assets | 28,000 | ||||
Ruckus | Trade names | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | 42,000 | ||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 11 years | ||||
Ruckus | Customer relationships | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | 118,000 | ||||
Ruckus | Customer relationships | Minimum [Member] | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 1 year | ||||
Ruckus | Customer relationships | Maximum [Member] | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 7 years | ||||
Ruckus | Core/developed technology | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | $ 230,000 | ||||
Ruckus | Core/developed technology | Minimum [Member] | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 6 years | ||||
Ruckus | Core/developed technology | Maximum [Member] | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 7 years | ||||
[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. |
Goodwill And Intangible Asset43
Goodwill And Intangible Assets (Schedule Of Goodwill Activity By Reportable Segment) (Details) $ in Thousands | 3 Months Ended | |
Jan. 28, 2017USD ($) | ||
Goodwill [Line Items] | ||
Goodwill, Purchase Accounting Adjustments | $ 4,979 | [1] |
Goodwill | ||
Goodwill, Gross, Beginning Balance | 2,424,398 | |
Accumulated impairment losses, Beginning Balance | (129,214) | |
Goodwill, Net, Beginning Balance | 2,295,184 | |
Goodwill, Gross, Ending Balance | 2,419,419 | |
Accumulated impairment losses, Ending Balance | (129,214) | |
Goodwill, Net, Ending Balance | 2,290,205 | |
Storage Area Networking (“SAN”) Products | ||
Goodwill [Line Items] | ||
Goodwill, Purchase Accounting Adjustments | 0 | |
Goodwill | ||
Goodwill, Gross, Beginning Balance | 176,320 | |
Accumulated impairment losses, Beginning Balance | 0 | |
Goodwill, Net, Beginning Balance | 176,320 | |
Goodwill, Gross, Ending Balance | 176,320 | |
Accumulated impairment losses, Ending Balance | 0 | |
Goodwill, Net, Ending Balance | 176,320 | |
IP Networking Products | ||
Goodwill [Line Items] | ||
Goodwill, Purchase Accounting Adjustments | 69,637 | |
Goodwill | ||
Goodwill, Gross, Beginning Balance | 1,698,641 | |
Accumulated impairment losses, Beginning Balance | (129,214) | |
Goodwill, Net, Beginning Balance | 1,569,427 | |
Goodwill, Gross, Ending Balance | 1,768,278 | |
Accumulated impairment losses, Ending Balance | (129,214) | |
Goodwill, Net, Ending Balance | 1,639,064 | |
Global Services | ||
Goodwill [Line Items] | ||
Goodwill, Purchase Accounting Adjustments | (74,616) | |
Goodwill | ||
Goodwill, Gross, Beginning Balance | 549,437 | |
Accumulated impairment losses, Beginning Balance | 0 | |
Goodwill, Net, Beginning Balance | 549,437 | |
Goodwill, Gross, Ending Balance | 474,821 | |
Accumulated impairment losses, Ending Balance | 0 | |
Goodwill, Net, Ending Balance | $ 474,821 | |
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Goodwill And Intangible Asset44
Goodwill And Intangible Assets (Schedule Of Intangible Assets) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Jan. 28, 2017 | Oct. 29, 2016 | ||
Intangible Assets | |||
Gross Carrying Value | $ 484,330 | $ 484,330 | |
Accumulated Amortization | 79,463 | 58,552 | |
Net Carrying Value | $ 404,866 | $ 425,778 | |
Weighted- Average Remaining Useful Life (In years) | 5 years 10 months 2 days | 6 years 29 days | |
Indefinite-Lived Intangible Assets (Excluding Goodwill) | $ 25,000 | $ 24,000 | |
Intangible Assets, Gross (Excluding Goodwill) | 509,330 | 508,330 | |
Intangible assets, net | 429,866 | 449,778 | |
In Process Research and Development [Member] | |||
Intangible Assets | |||
Indefinite-Lived Intangible Assets (Excluding Goodwill) | [1] | 25,000 | 24,000 |
Trade names | |||
Intangible Assets | |||
Gross Carrying Value | 43,090 | 45,090 | |
Accumulated Amortization | 3,279 | 2,359 | |
Net Carrying Value | $ 39,810 | $ 42,731 | |
Weighted- Average Remaining Useful Life (In years) | 10 years 3 months 7 days | 10 years 6 months 4 days | |
Core/developed technology | |||
Intangible Assets | |||
Gross Carrying Value | $ 290,290 | $ 286,290 | |
Accumulated Amortization | 50,411 | 37,352 | |
Net Carrying Value | $ 239,879 | $ 248,938 | |
Weighted- Average Remaining Useful Life (In years) | 5 years 3 months 14 days | 5 years 6 months 4 days | |
Patent portfolio license (1) | |||
Intangible Assets | |||
Gross Carrying Value | [2] | $ 7,750 | $ 7,750 |
Accumulated Amortization | [2] | 2,194 | 1,935 |
Net Carrying Value | [2] | $ 5,556 | $ 5,815 |
Weighted- Average Remaining Useful Life (In years) | [2] | 16 years 6 months 4 days | 17 years |
Customer relationships | |||
Intangible Assets | |||
Gross Carrying Value | $ 141,110 | $ 143,110 | |
Accumulated Amortization | 22,422 | 15,813 | |
Net Carrying Value | $ 118,688 | $ 127,297 | |
Weighted- Average Remaining Useful Life (In years) | 6 years 1 month 28 days | 6 years 3 months 25 days | |
Non-compete agreements | |||
Intangible Assets | |||
Gross Carrying Value | $ 1,050 | $ 1,050 | |
Accumulated Amortization | 1,030 | 983 | |
Net Carrying Value | $ 20 | $ 67 | |
Weighted- Average Remaining Useful Life (In years) | 1 month 17 days | 3 months 14 days | |
Patents with broader applications | |||
Intangible Assets | |||
Gross Carrying Value | $ 1,040 | $ 1,040 | |
Accumulated Amortization | 127 | 110 | |
Net Carrying Value | $ 913 | $ 930 | |
Weighted- Average Remaining Useful Life (In years) | 13 years 1 month 17 days | 13 years 4 months 17 days | |
[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. | ||
[2] | 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 Asset45
Goodwill And Intangible Assets (Schedule Of Amortization Of Intangible Assets Included On Consolidated Statements Of Operations) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Jan. 28, 2017 | Jan. 30, 2016 | Oct. 31, 2015 | ||
Amortization of Finite-Lived Intangible Assets [Line Items] | ||||
Amortization | $ 20,913 | $ 4,333 | ||
Cost of revenues | ||||
Amortization of Finite-Lived Intangible Assets [Line Items] | ||||
Amortization | 13,060 | 3,154 | ||
General and administrative | ||||
Amortization of Finite-Lived Intangible Assets [Line Items] | ||||
Amortization | [1] | 259 | 277 | |
Other Operating Income (Expense) | ||||
Amortization of Finite-Lived Intangible Assets [Line Items] | ||||
Amortization | $ 7,594 | $ 902 | ||
Patent portfolio license (1) | ||||
Amortization of Finite-Lived Intangible Assets [Line Items] | ||||
Purchase of intangible assets | [2] | $ (7,750) | ||
[1] | The amortization is related to the $7.8 million of perpetual, nonexclusive license to certain patents purchased in fiscal year 2015. | |||
[2] | The patent portfolio license was assigned an estimated useful life that reflects the Company’s consumption of the expected defensive benefits related to this license to certain patents. The method of amortization for the patent portfolio license reflects the Company’s estimate of the pattern in which these expected defensive benefits will be used by the Company and is primarily based on the mix of expiration patterns of the individual patents included in the license. |
Goodwill And Intangible Asset46
Goodwill And Intangible Assets (Schedule Of Estimated Future Amortization Of Intangible Assets) (Details) - USD ($) $ in Thousands | Jan. 28, 2017 | Oct. 29, 2016 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
2017 (remaining nine months) | $ 58,323 | |
2,018 | 70,090 | |
2,019 | 66,562 | |
2,020 | 65,630 | |
2,021 | 61,876 | |
Thereafter | 82,385 | |
Total | $ 404,866 | $ 425,778 |
Balance Sheet Details (Schedule
Balance Sheet Details (Schedule of Inventory) (Details) - USD ($) $ in Thousands | Jan. 28, 2017 | Oct. 29, 2016 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 19,420 | $ 17,793 |
Finished goods | 60,032 | 51,562 |
Inventory, Net | $ 79,452 | $ 69,355 |
Balance Sheet Details (Schedu48
Balance Sheet Details (Schedule of Property, Plant and Equipment) (Details) - USD ($) $ in Thousands | Jan. 28, 2017 | Oct. 29, 2016 | |
Property, Plant and Equipment | |||
Property and equipment, gross | $ 1,013,612 | $ 1,011,881 | |
Less: Accumulated depreciation and amortization | [1] | (566,403) | (556,555) |
Total property and equipment, net | 447,209 | 455,326 | |
Computer equipment | |||
Property, Plant and Equipment | |||
Property and equipment, gross | 19,877 | 19,710 | |
Software | |||
Property, Plant and Equipment | |||
Property and equipment, gross | 92,198 | 89,132 | |
Engineering and other equipment | |||
Property, Plant and Equipment | |||
Property and equipment, gross | 446,282 | 445,115 | |
Furniture and fixtures | |||
Property, Plant and Equipment | |||
Property and equipment, gross | 34,085 | 33,788 | |
Leasehold improvements | |||
Property, Plant and Equipment | |||
Property and equipment, gross | 35,007 | 37,973 | |
Land and building | |||
Property, Plant and Equipment | |||
Property and equipment, gross | $ 386,163 | $ 386,163 | |
[1] | The following table presents the depreciation of property and equipment included on the Company’s Condensed Consolidated Statements of Operations (in thousands): Three Months Ended January 28, 2017 January 30, 2016Depreciation expense$20,953 $18,479 |
Balance Sheet Details (Narrativ
Balance Sheet Details (Narratives) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 28, 2017 | Jan. 30, 2016 | |
Balance Sheet Details [Abstract] | ||
Depreciation expense | $ 20,953 | $ 18,479 |
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 | Jan. 28, 2017 | Oct. 29, 2016 | |
Assets | |||
Money market funds | [1] | $ 871,751 | $ 914,724 |
Derivative assets | 129 | 514 | |
Total assets measured at fair value | 871,880 | 915,238 | |
Liabilities | |||
Derivative liabilities | 442 | 354 | |
Total liabilities measured at fair value | 442 | 354 | |
Quoted Prices In Active Markets For Identical Instruments (Level 1) | |||
Assets | |||
Money market funds | [1] | 871,751 | 914,724 |
Derivative assets | 0 | 0 | |
Total assets measured at fair value | 871,751 | 914,724 | |
Liabilities | |||
Derivative liabilities | 0 | 0 | |
Total liabilities measured at fair value | 0 | 0 | |
Significant Other Observable Inputs (Level 2) | |||
Assets | |||
Money market funds | [1] | 0 | 0 |
Derivative assets | 129 | 514 | |
Total assets measured at fair value | 129 | 514 | |
Liabilities | |||
Derivative liabilities | 442 | 354 | |
Total liabilities measured at fair value | 442 | 354 | |
Significant Unobservable Inputs (Level 3) | |||
Assets | |||
Money market funds | [1] | 0 | 0 |
Derivative assets | 0 | 0 | |
Total assets measured at fair value | 0 | 0 | |
Liabilities | |||
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 Condensed Consolidated Balance Sheets. |
Restructuring and Other Costs51
Restructuring and Other Costs (Schedule of Restructuring and Other Charges) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 28, 2017 | Jan. 30, 2016 | |
Restructuring Charges [Abstract] | ||
Business Exit Costs | $ 0 | $ (566) |
Restructuring and Other Costs52
Restructuring and Other Costs (Schedule of Restructuring Reserve) (Details) $ in Thousands | 3 Months Ended |
Jan. 28, 2017USD ($) | |
Restructuring | |
Initial Period in which Effects are Expected to be Realized | 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. |
Restructuring Reserve Rollforward | |
Restructuring liabilities, Beginning balance | $ 895 |
Cash payments | (141) |
Translation adjustment | (7) |
Restructuring liabilities, Ending balance | 747 |
Restructuring Reserve Ending Balance | |
Current restructuring liabilities | 353 |
Non-current restructuring liabilities | $ 394 |
Fiscal 2013 Fourth Quarter Restructuring Plan | |
Restructuring | |
Restructuring and Related Activities, Description | During the fourth quarter of fiscal year 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 included a workforce reduction, as well as the cancellation of certain non-recurring engineering agreements and exits from certain leased facilities. The restructuring plan was substantially completed in the first quarter of fiscal year 2014. |
Restructuring Reserve, Adjustment Description | The Company re-evaluates its estimates and assumptions on a quarterly basis and makes adjustments to the restructuring liabilities balance if necessary. |
Other Restructuring Plans [Member] | |
Restructuring | |
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 primarily as a result of acquisitions. |
Severance and Benefits | Fiscal 2013 Fourth Quarter Restructuring Plan | |
Restructuring Reserve Rollforward | |
Restructuring liabilities, Beginning balance | $ 109 |
Cash payments | 0 |
Translation adjustment | (2) |
Restructuring liabilities, Ending balance | 107 |
Restructuring Reserve Ending Balance | |
Current restructuring liabilities | 107 |
Non-current restructuring liabilities | 0 |
Lease Loss Reserve and Related Costs | Fiscal 2013 Fourth Quarter Restructuring Plan | |
Restructuring Reserve Rollforward | |
Restructuring liabilities, Beginning balance | 714 |
Cash payments | (69) |
Translation adjustment | (5) |
Restructuring liabilities, Ending balance | 640 |
Restructuring Reserve Ending Balance | |
Current restructuring liabilities | 246 |
Non-current restructuring liabilities | 394 |
Lease Loss Reserve and Related Costs | Other Restructuring Plans [Member] | |
Restructuring Reserve Rollforward | |
Restructuring liabilities, Beginning balance | 72 |
Cash payments | (72) |
Translation adjustment | 0 |
Restructuring liabilities, Ending balance | 0 |
Restructuring Reserve Ending Balance | |
Current restructuring liabilities | 0 |
Non-current restructuring liabilities | $ 0 |
Borrowings (Schedule Of Long-Te
Borrowings (Schedule Of Long-Term Debt) (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | |
Jan. 31, 2015 | Jan. 28, 2017 | Oct. 29, 2016 | |
Debt Instrument | |||
Long-term debt, gross | $ 1,635,000 | $ 1,655,000 | |
Unamortized discount | (68,495) | (73,540) | |
Unamortized debt issuance costs | (2,556) | (2,705) | |
Current portion of long-term debt | (76,720) | (76,692) | |
Long-term debt, net of current portion | $ 1,487,229 | 1,502,063 | |
Convertible Senior Unsecured 2020 Notes | |||
Debt Instrument | |||
Maturity | Jan. 1, 2020 | Jan. 1, 2020 | |
Stated annual interest rate | 1.375% | ||
Long-term debt, gross | $ 575,000 | $ 575,000 | |
Effective interest rate | 4.98% | 4.98% | |
Unamortized discount | $ (55,038) | $ (59,398) | |
Senior Unsecured 2023 Notes | |||
Debt Instrument | |||
Maturity | Jan. 15, 2023 | ||
Stated annual interest rate | 4.625% | ||
Long-term debt, gross | $ 300,000 | $ 300,000 | |
Effective interest rate | 4.83% | 4.83% | |
Term Loan Facility | |||
Debt Instrument | |||
Maturity | May 27, 2021 | ||
Long-term debt, gross | $ 760,000 | $ 780,000 | |
Effective interest rate | 2.80% | 2.53% |
Borrowings (Schedule of Carryin
Borrowings (Schedule of Carrying Values of Liability and Equity Components) (Details) - USD ($) $ in Thousands | Jan. 28, 2017 | Oct. 29, 2016 |
Debt Instrument | ||
Long-term debt, gross | $ 1,635,000 | $ 1,655,000 |
Unamortized discount | (68,495) | (73,540) |
Convertible Senior Unsecured 2020 Notes | ||
Debt Instrument | ||
Long-term debt, gross | 575,000 | 575,000 |
Unamortized discount | (55,038) | (59,398) |
Long-term Debt | 519,962 | 515,602 |
Carrying amount of equity component | $ 51,406 | $ 55,374 |
Borrowings (Narrative) (Details
Borrowings (Narrative) (Details) - USD ($) $ / shares in Units, shares in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||
Jan. 31, 2015 | Jan. 28, 2017 | Jan. 30, 2016 | Oct. 29, 2016 | Jan. 14, 2015 | Jan. 22, 2013 | |
Debt Instrument | ||||||
Repayments of Other Long-term Debt | $ 20,000,000 | $ 0 | ||||
Cash dividends declared per share | $ 0.055 | $ 0.045 | ||||
Convertible Senior Unsecured 2020 Notes | ||||||
Debt Instrument | ||||||
Long-Term Debt, Fair Value | $ 579,600,000 | $ 564,500,000 | ||||
Debt Instrument, Face Amount | $ 575,000,000 | |||||
Proceeds from convertible notes | $ 565,700,000 | |||||
DiscountRateForFairValueOfLiabilityComponent | 4.57% | |||||
Debt Instrument, Convertible, Remaining Discount Amortization Period | 2 years 11 months 3 days | 3 years 2 months 2 days | ||||
Maturity | Jan. 1, 2020 | Jan. 1, 2020 | ||||
Debt Instrument, Convertible, Conversion Ratio | 62.7746 | 63.4021 | ||||
Debt Instrument, Convertible, Number of Equity Instruments | 36,100,000 | 36,500,000 | ||||
Debt Instrument, Convertible, Conversion Price | $ 15.93 | $ 15.77 | ||||
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% | |||||
Shares Covered By Note Hedge | 36.1 | |||||
Note Hedge, Exercise Price | $ 15.93 | $ 15.77 | ||||
Purchase of convertible hedge | $ 86,100,000 | |||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 36.5 | 36.1 | ||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 20.65 | $ 20.45 | ||||
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 | |||||
Convertible Senior Unsecured 2020 Notes | Trading Price Trigger One | ||||||
Debt Instrument | ||||||
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% | |||||
Convertible Senior Unsecured 2020 Notes | Trading Price Trigger Two | ||||||
Debt Instrument | ||||||
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% | |||||
Senior Unsecured 2023 Notes | ||||||
Debt Instrument | ||||||
Long-Term Debt, Fair Value | $ 301,500,000 | $ 297,000,000 | ||||
Debt Instrument, Face Amount | $ 300,000,000 | |||||
Maturity | Jan. 15, 2023 | |||||
Repurchase price of notes in case of change in control, percentage of face value | 101.00% | |||||
Debt Instrument, Redemption Price, Percentage | 100.00% | |||||
Senior Credit Facility | ||||||
Debt Instrument | ||||||
Line of Credit Facility, Interest Rate Description | Loans made under the Senior Credit Facility bear interest, at the Company’s option, either (i) at a base rate which is based in part on the greatest of (A) the prime rate, (B) the federal funds rate plus 0.50%, or (C) LIBOR for an interest period of one month plus 1.00%, plus an applicable margin that will vary between 0.00% and 0.75% based on the Company’s total leverage ratio, or (ii) at a LIBOR-based rate, plus an applicable margin that will vary between 1.00% and 1.75% based on the Company’s total leverage ratio. For purposes of calculating the applicable rate, the base rate and LIBOR-based rate are subject to a floor of 0.00%. For base rate loans, interest is payable on the last business day of January, April, July, and October of each year. For LIBOR rate loans, interest is payable on the last day of each interest period for the LIBOR-based rate, and if such interest period extends over three months, at the end of each three-month interval during such interest period. | |||||
Line of Credit Facility, Collateral | The Company’s obligations under the Senior Credit Facility are unsecured, provided that upon the occurrence of certain events (including if the Company’s corporate family rating from Moody’s falls below Ba1 and from S&P falls below BB+ at any time (referred to as a “Ratings Downgrade”)) or the incurrence of certain indebtedness in excess of $600.0 million (such occurrence or the occurrence of a Ratings Downgrade being a “Collateral Trigger Event”), then such obligations, as well as certain cash management and hedging obligations, will be required to be secured, subject to certain exceptions, by 100% of the equity interests of all present and future restricted subsidiaries directly held by the Company or any guarantor. | |||||
Term Loan Facility | ||||||
Debt Instrument | ||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 800,000,000 | |||||
Repayments of Other Long-term Debt | 20,000,000 | |||||
Long-Term Debt, Fair Value | $ 748,000,000 | |||||
Maturity | May 27, 2021 | |||||
Revolving Credit Facility | ||||||
Debt Instrument | ||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 100,000,000 | |||||
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage | 0.30% | |||||
Line of Credit Facility, Fair Value of Amount Outstanding | $ 0 | |||||
Revolving Credit Facility | Minimum [Member] | ||||||
Debt Instrument | ||||||
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage | 0.20% | |||||
Revolving Credit Facility | Maximum [Member] | ||||||
Debt Instrument | ||||||
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage | 0.35% | |||||
Letter of Credit Subfacility | ||||||
Debt Instrument | ||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 25,000,000 | |||||
Line Of Credit Facility Commission Fee Percentage | 1.50% | |||||
Line Of Credit Facility Issuance Fee Percentage | 0.125% | |||||
Letter of Credit Subfacility | Minimum [Member] | ||||||
Debt Instrument | ||||||
Line Of Credit Facility Commission Fee Percentage | 1.00% | |||||
Letter of Credit Subfacility | Maximum [Member] | ||||||
Debt Instrument | ||||||
Line Of Credit Facility Commission Fee Percentage | 1.75% | |||||
Swing Line Loan Subfacility | ||||||
Debt Instrument | ||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 10,000,000 |
Borrowings Borrowings (Schedule
Borrowings Borrowings (Schedule Of Interest Expense) (Details) - Convertible Senior Unsecured 2020 Notes - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 28, 2017 | Jan. 30, 2016 | |
Amortization of discount | $ 4,360 | $ 4,150 |
Interest Expense, Debt, Excluding Amortization | $ 1,977 | $ 1,977 |
Borrowings (Schedule Of Debt Ma
Borrowings (Schedule Of Debt Maturities) (Details) - USD ($) $ in Thousands | Jan. 28, 2017 | Oct. 29, 2016 |
Long-term Debt, by Maturity [Abstract] | ||
2017 (remaining nine months) | $ 60,000 | |
2,018 | 80,000 | |
2,019 | 80,000 | |
2,020 | 655,000 | |
2,021 | 460,000 | |
Thereafter | 300,000 | |
Long-term debt, gross | $ 1,635,000 | $ 1,655,000 |
Commitments And Contingencies58
Commitments And Contingencies (Schedule Of Accrued Liability For Estimated Future Warranty Costs) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 28, 2017 | Jan. 30, 2016 | |
Product Warranty Activity | ||
Beginning balance | $ 8,326 | $ 7,599 |
Liabilities accrued for warranties issued during the period | 845 | 978 |
Warranty claims paid and used during the period | (778) | (1,144) |
Changes in liability for pre-existing warranties during the period | 199 | (225) |
Ending balance | $ 8,592 | $ 7,208 |
Commitments And Contingencies59
Commitments And Contingencies (Purchase Commitment Narrative) (Details) (Details) - Inventory Purchase Commitment $ in Millions | Jan. 28, 2017USD ($) |
Purchase Commitment, Excluding Long-term Commitment [Line Items] | |
Purchase Commitment, Remaining Minimum Amount Committed | $ 151 |
Purchase Commitment, Recognized Loss | $ 2.1 |
Commitments and Contingencies C
Commitments and Contingencies Commitments and Contingencies (Legal Proceedings) (Details) shares in Thousands | Jan. 28, 2017shares | Oct. 29, 2016shares | May 27, 2016$ / sharesshares |
Legal Proceedings [Line Items] | |||
Common stock, shares outstanding | 407,514 | 401,748 | |
Ruckus | |||
Legal Proceedings [Line Items] | |||
Common stock, shares outstanding | 92,200 | ||
Cash Per Share in Acquisition | $ / shares | $ 6.45 | ||
Common Stock Per Share in Acquisition | 0.75 | ||
Shares Dissented [Member] | Ruckus | |||
Legal Proceedings [Line Items] | |||
Common stock, shares outstanding | 3,200 |
Derivative Instruments And He61
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 | 3 Months Ended | |
Jan. 28, 2017 | Jan. 30, 2016 | |
Derivative Instruments, Gain (Loss) | ||
Net gains (losses) related to the effective portion of foreign currency derivatives | $ (207) | $ (694) |
Cost of revenues | ||
Derivative Instruments, Gain (Loss) | ||
Net gains (losses) related to the effective portion of foreign currency derivatives | (27) | (94) |
Research and development | ||
Derivative Instruments, Gain (Loss) | ||
Net gains (losses) related to the effective portion of foreign currency derivatives | (35) | (199) |
Sales and marketing | ||
Derivative Instruments, Gain (Loss) | ||
Net gains (losses) related to the effective portion of foreign currency derivatives | (132) | (374) |
General and administrative | ||
Derivative Instruments, Gain (Loss) | ||
Net gains (losses) related to the effective portion of foreign currency derivatives | $ (13) | $ (27) |
Derivative Instruments And He62
Derivative Instruments And Hedging Activities (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 28, 2017 | Jan. 30, 2016 | |
Derivative Instruments, Gain (Loss) | ||
Foreign currency transaction gains (losses) | $ (1.6) | $ (0.3) |
Maximum [Member] | ||
Derivative Instruments, Gain (Loss) | ||
Derivative instrument maturity period | 15 months | |
Derivatives Designated As Hedging Instruments | Other Current Assets [Member] | ||
Derivative Instruments, Gain (Loss) | ||
Gross unrealized gain positions | $ 0.1 | |
Derivatives Designated As Hedging Instruments | Other Current Liabilities [Member] | ||
Derivative Instruments, Gain (Loss) | ||
Gross unrealized loss positions | $ (0.4) |
Derivative Instruments And He63
Derivative Instruments And Hedging Activities (Schedule Of Total Gross Notional Amounts, Presented By Currency) (Details) - Derivatives Designated As Hedging Instruments - USD ($) $ in Thousands | Jan. 28, 2017 | Oct. 29, 2016 |
Derivative | ||
Total gross notional amounts, presented by currency | $ 123,715 | $ 176,236 |
United Kingdom, Pounds | ||
Derivative | ||
Total gross notional amounts, presented by currency | 31,556 | 42,783 |
Euro Member Countries, Euro | ||
Derivative | ||
Total gross notional amounts, presented by currency | 23,470 | 34,070 |
India, Rupees | ||
Derivative | ||
Total gross notional amounts, presented by currency | 22,763 | 32,275 |
China, Yuan Renminbi | ||
Derivative | ||
Total gross notional amounts, presented by currency | 13,730 | 19,805 |
Singapore, Dollars | ||
Derivative | ||
Total gross notional amounts, presented by currency | 10,195 | 15,057 |
Switzerland, Francs | ||
Derivative | ||
Total gross notional amounts, presented by currency | 10,163 | 14,426 |
Japan, Yen | ||
Derivative | ||
Total gross notional amounts, presented by currency | 6,312 | 9,944 |
Australia, Dollars | ||
Derivative | ||
Total gross notional amounts, presented by currency | $ 5,526 | $ 7,876 |
Stock-Based Compensation (Stock
Stock-Based Compensation (Stock-Based Compensation Expense Included In Line Items Of Consolidated Statements Of Operations) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 28, 2017 | Jan. 30, 2016 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | ||
Total stock-based compensation expense | $ 45,513 | $ 24,044 |
Cost of revenues | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | ||
Total stock-based compensation expense | 5,650 | 2,905 |
Research and development | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | ||
Total stock-based compensation expense | 12,074 | 5,476 |
Sales and marketing | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | ||
Total stock-based compensation expense | 16,814 | 11,078 |
General and administrative | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | ||
Total stock-based compensation expense | $ 10,975 | $ 4,585 |
Stock-Based Compensation (Sto65
Stock-Based Compensation (Stock-Based Compensation Expense By Grant Type) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Jan. 28, 2017 | Jan. 30, 2016 | ||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Total stock-based compensation expense | $ 45,513 | $ 24,044 | |
Stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Total stock-based compensation expense | 655 | 729 | |
RSUs, including restricted stock units with market conditions | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Total stock-based compensation expense | 27,336 | 19,793 | |
Employee stock purchase plan (“ESPP”) (1) | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Total stock-based compensation expense | $ 17,522 | [1] | $ 3,522 |
[1] | The ESPP stock-based compensation expense recognized in the three months ended January 28, 2017, includes the acceleration of all of the unamortized expense in the first quarter of fiscal year 2017 due to the suspension of the Company’s ESPP without concurrent replacement awards as required under the terms of the merger agreement with Broadcom. |
Stock-Based Compensation (Sto66
Stock-Based Compensation (Stock-Based Compensation, Unrecognized Compensation Expense And Weighted-Average Period) (Details) $ in Thousands | 3 Months Ended |
Jan. 28, 2017USD ($) | |
Stock options | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Unrecognized Compensation Expense | $ 949 |
Weighted-Average Period (in years) | 9 months |
RSUs, including restricted stock units with market conditions | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Unrecognized Compensation Expense | $ 145,530 |
Weighted-Average Period (in years) | 1 year 11 months 26 days |
Stock-Based Compensation (Sched
Stock-Based Compensation (Schedule of Share-based Compensation, Activity) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | |
Jan. 28, 2017 | Jan. 30, 2016 | |
Stock options | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Stock options, Exercises in Period, Total Intrinsic Value | $ 8.6 | $ 0.1 |
RSUs, including restricted stock units with market conditions | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
RSUs, Granted | 3,799 | 3,476 |
RSUs, Weighted-Average Grant Date Fair Value (dollars per share) | $ 9.13 | $ 7.96 |
Stockholders' Equity Stockholde
Stockholders' Equity Stockholders' Equity (Schedule of Dividends Payable) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Jan. 28, 2017 | Jan. 30, 2016 | |
Dividends Payable [Line Items] | ||
Cash dividends declared per share | $ 0.055 | $ 0.045 |
Payments of Ordinary Dividends, Common Stock | $ 22,346 | $ 18,429 |
Common Stock | ||
Dividends Payable [Line Items] | ||
Dividends Payable, Date Declared | Nov. 20, 2016 | |
Dividends Payable, Date of Record | Dec. 12, 2016 | |
Payments of Ordinary Dividends, Common Stock | $ 22,346 | |
Dividends Payable, Date to be Paid | Jan. 4, 2017 |
Stockholders' Equity (Schedule
Stockholders' Equity (Schedule of Comprehensive Income (Loss) Tax Effects) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Jan. 28, 2017 | Jan. 30, 2016 | ||
Unrealized gains (losses) on cash flow hedges, before tax | |||
Change in unrealized gains and losses, foreign exchange contracts, before tax | $ (450) | $ (2,413) | |
Net gains and losses reclassified into earnings, foreign exchange contracts, before tax | [1] | 207 | 694 |
Net unrealized losses on cash flow hedges, before tax | (243) | (1,719) | |
Foreign currency translation adjustments, before tax | |||
Foreign currency translation adjustments, before tax | (1,360) | (2,203) | |
Total other comprehensive loss, before tax | (1,603) | (3,922) | |
Unrealized gains (losses) on cash flow hedges, tax | |||
Change in unrealized gains and losses, foreign exchange contracts, tax | 41 | 113 | |
Net gains and losses reclassified into earnings, foreign exchange contracts, tax | [1] | (22) | (68) |
Net unrealized losses on cash flow hedges, tax | 19 | 45 | |
Foreign currency translation adjustments, tax | |||
Foreign currency translation adjustments, tax | 0 | 0 | |
Total other comprehensive loss, tax | 19 | 45 | |
Unrealized gains (losses) on cash flow hedges, net of tax | |||
Change in unrealized gains and losses, foreign exchange contracts, net of tax | (409) | (2,300) | |
Net gains and losses reclassified into earnings, foreign exchange contracts, net of tax | [1] | 185 | 626 |
Net unrealized gains (losses) on cash flow hedges | (224) | (1,674) | |
Foreign currency translation adjustments, net of tax | |||
Foreign currency translation adjustments, net of tax | (1,360) | (2,203) | |
Total other comprehensive income (loss) | $ (1,584) | $ (3,877) | |
[1] | For classification of amounts reclassified from accumulated other comprehensive loss into earnings as reported on the Company’s Condensed Consolidated Statements of Operations, see Note 10, “Derivative Instruments and Hedging Activities,” of the Notes to Condensed Consolidated Financial Statements. |
Stockholders' Equity Stockhol70
Stockholders' Equity Stockholder's Equity (Schedule of Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Jan. 28, 2017 | Jan. 30, 2016 | Oct. 29, 2016 | Oct. 31, 2015 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Accumulated other comprehensive loss | $ (28,997) | $ (28,879) | $ (27,413) | $ (25,002) |
Change in unrealized gains and losses | (1,769) | (4,503) | ||
Net gains and losses reclassified into earnings | (185) | (626) | ||
Total other comprehensive income (loss) | (1,584) | (3,877) | ||
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Accumulated other comprehensive loss | (1,095) | (3,213) | (871) | (1,539) |
Change in unrealized gains and losses | (409) | (2,300) | ||
Net gains and losses reclassified into earnings | (185) | (626) | ||
Total other comprehensive income (loss) | (224) | (1,674) | ||
Accumulated Translation Adjustment [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Accumulated other comprehensive loss | (27,902) | (25,666) | $ (26,542) | $ (23,463) |
Change in unrealized gains and losses | (1,360) | (2,203) | ||
Net gains and losses reclassified into earnings | 0 | 0 | ||
Total other comprehensive income (loss) | $ (1,360) | $ (2,203) |
Stockholders' Equity Stockhol71
Stockholders' Equity Stockholders' Equity (Details) | 3 Months Ended |
Jan. 28, 2017 | |
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 Condensed Consolidated Financial Statements for further discussion. |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) $ in Millions | 3 Months Ended |
Jan. 28, 2017USD ($) | |
Current Income Tax Expense (Benefit), Continuing Operations | |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 35.00% |
Income Tax Contingency | |
Unrecognized Tax Benefits | $ 193.3 |
Amount of unrecognized tax benefits that could affect the effect tax rate | 144.2 |
Minimum [Member] | |
Income Tax Contingency | |
Decrease in Unrecognized Tax Benefits is Reasonably Possible | 0 |
Maximum [Member] | |
Income Tax Contingency | |
Decrease in Unrecognized Tax Benefits is Reasonably Possible | $ 2 |
Segment Information (Schedule O
Segment Information (Schedule Of Financial Information By Reportable Segment) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 28, 2017 | Jan. 30, 2016 | |
Segment Reporting Information | ||
Net revenues | $ 581,463 | $ 574,284 |
Cost of revenues | 214,340 | 185,469 |
Gross margin | 367,123 | 388,815 |
Storage Area Networking (“SAN”) Products | ||
Segment Reporting Information | ||
Net revenues | 306,873 | 347,058 |
Cost of revenues | 75,730 | 81,204 |
Gross margin | 231,143 | 265,854 |
IP Networking Products | ||
Segment Reporting Information | ||
Net revenues | 173,744 | 134,109 |
Cost of revenues | 90,925 | 62,893 |
Gross margin | 82,819 | 71,216 |
Global Services | ||
Segment Reporting Information | ||
Net revenues | 100,846 | 93,117 |
Cost of revenues | 47,685 | 41,372 |
Gross margin | $ 53,161 | $ 51,745 |
Segment Information Narrative (
Segment Information Narrative (Details) | 3 Months Ended |
Jan. 28, 2017segments | |
Segment Reporting [Abstract] | |
Number of operating segments | 3 |
Number of reportable operating 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 | |||
Jan. 28, 2017 | Jan. 30, 2016 | Jan. 31, 2015 | ||
Earnings Per Share, Basic | ||||
Net income (loss) attributable to Brocade Communications Systems, Inc. | $ (5,681) | $ 93,646 | ||
Weighted-average shares used in computing basic net income (loss) per share | 404,995 | 407,902 | ||
Net income (loss) per share—basic attributable to Brocade Communications Systems, Inc. stockholders | $ (0.01) | $ 0.23 | ||
Earnings Per Share, Diluted | ||||
Net income (loss) attributable to Brocade Communications Systems, Inc. | $ (5,681) | $ 93,646 | ||
Weighted-average shares used in computing diluted net income (loss) per share | 404,995 | 415,085 | ||
Net income (loss) per share—diluted attributable to Brocade Communications Systems, Inc. stockholders | $ (0.01) | $ 0.23 | ||
Weighted Average Number of Shares Outstanding Reconciliation | ||||
Weighted-average shares used in computing basic net income (loss) per share | 404,995 | 407,902 | ||
Dilutive potential common shares in the form of stock options | 0 | 1,332 | ||
Dilutive potential common shares in the form of other share-based awards | 0 | 5,851 | ||
Weighted-average shares used in computing diluted net income (loss) per share | 404,995 | 415,085 | ||
Stock options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Antidilutive potential common shares | [1] | 1,944 | 1,874 | |
Other share-based awards | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Antidilutive potential common shares | [1] | 8,957 | 984 | |
Convertible Senior Unsecured 2020 Notes | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Debt Instrument, Convertible, Conversion Price | $ 15.77 | $ 15.93 | ||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 20.45 | $ 20.65 | ||
Convertible Senior Unsecured 2020 Notes | Warrant | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Antidilutive potential common shares | [1],[2] | 36,456 | 36,200 | |
[1] | These amounts are excluded from the computation of diluted net income (loss) 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 $15.77 per share. If the common stock price exceeds this adjusted conversion price, then, 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 $20.45 per share for a quarterly period, the Company’s weighted-average shares used in computing diluted net income (loss) 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. |