10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 30, 2016

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 000-25601

Brocade Communications Systems, Inc.

(Exact name of registrant as specified in its charter)

Delaware	77-0409517
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

130 Holger Way

San Jose, CA 95134-1376

(408) 333-8000

(Address, including zip code, of principal

executive offices and registrant’s telephone

number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ý	Accelerated filer  o	Non-accelerated filer  o	Smaller reporting company  o
	(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ¨    No  x

The number of shares outstanding of the registrant’s common stock as of August 26, 2016, was 400,870,091 shares.

BROCADE COMMUNICATIONS SYSTEMS, INC.

FORM 10-Q

For the Quarter Ended July 30, 2016

TABLE OF CONTENTS

		Page
PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Statements of Income for the Three and Nine Months Ended July 30, 2016, and August 1, 2015	1
	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended July 30, 2016, and August 1, 2015	2
	Condensed Consolidated Balance Sheets as of July 30, 2016, and October 31, 2015	3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended July 30, 2016, and August 1, 2015	4
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4.	Controls and Procedures	50
PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	50
Item 1A.	Risk Factors	51
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	68
Item 6.	Exhibits	69
SIGNATURES		70

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements regarding future events and future results. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including, but not limited to, statements regarding future revenue, margins, expenses, tax provisions, tax treatment, earnings, cash flows, benefit obligations, debt repayments, stock repurchases, or other financial items; any statements of the plans, strategies, and objectives of management for future operations, including planned investments or acquisitions; any statements concerning expected development, performance, success, market conditions, or market share relating to products or services; any statements regarding future economic conditions or performance; any statements regarding pending litigation, including claims or disputes; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. Words such as “expects,” “anticipates,” “assumes,” “targets,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “may,” “should,” “could,” “depend,” and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are based on current expectations, estimates, forecasts, and projections about the industries in which Brocade operates, and the beliefs and assumptions of management. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict, including those identified below, under “Part II—Other Information, Item 1A. Risk Factors” and elsewhere herein. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Furthermore, Brocade undertakes no obligation to revise or update any forward-looking statements for any reason.

Additional Information

Brocade and the B-wing symbol are registered trademarks of Brocade Communications Systems, Inc., in the United States and/or in other countries. Other brands, products, or service names mentioned may be trademarks of Brocade or others.

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

BROCADE COMMUNICATIONS SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended						Nine Months Ended
	July 30, 2016			August 1, 2015			July 30, 2016			August 1, 2015
	(In thousands, except per share amounts)
Net revenues:
Product	$	490,995		$	463,200		$	1,400,355		$	1,407,681
Service	99,726			88,619			287,956			266,952
Total net revenues	590,721			551,819			1,688,311			1,674,633
Cost of revenues:
Product	188,492			144,243			464,797			431,781
Service	45,330			35,672			127,489			109,056
Total cost of revenues	233,822			179,915			592,286			540,837
Gross margin	356,899			371,904			1,096,025			1,133,796
Operating expenses:
Research and development	114,996			85,072			297,516			262,173
Sales and marketing	167,983			144,883			468,743			428,199
General and administrative	32,960			20,422			78,180			65,815
Amortization of intangible assets	5,498			889			7,302			1,654
Acquisition and integration costs	14,868			789			20,625			3,133
Restructuring and other related benefits	—			—			(566		)	(637		)
Total operating expenses	336,305			252,055			871,800			760,337
Income from operations	20,594			119,849			224,225			373,459
Interest expense	(13,462		)	(9,778		)	(33,282		)	(45,754		)
Interest and other income, net	1,557			947			3,317			854
Income before income tax	8,689			111,018			194,260			328,559
Income tax expense (benefit)	(1,806		)	19,351			47,034			72,585
Net income	$	10,495		$	91,667		$	147,226		$	255,974
Net income per share—basic	$	0.02		$	0.22		$	0.36		$	0.61
Net income per share—diluted	$	0.02		$	0.21		$	0.35		$	0.59
Shares used in per share calculation—basic	426,671			417,299			411,709			422,184
Shares used in per share calculation—diluted	434,416			427,518			419,416			433,303
Cash dividends declared per share	$	0.055		$	0.045		$	0.145		$	0.115

See accompanying Notes to Condensed Consolidated Financial Statements.

1

BROCADE COMMUNICATIONS SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended						Nine Months Ended
	July 30, 2016			August 1, 2015			July 30, 2016			August 1, 2015
	(In thousands)
Net income	$	10,495		$	91,667		$	147,226		$	255,974
Other comprehensive income and loss, net of tax:
Unrealized gains (losses) on cash flow hedges:
Change in unrealized gains and losses	(700		)	(414		)	(1,035		)	(2,332		)
Net gains and losses reclassified into earnings	482			831			1,831			2,544
Net unrealized gains (losses) on cash flow hedges	(218		)	417			796			212
Foreign currency translation adjustments	(1,628		)	(492		)	(1,760		)	(5,781		)
Total other comprehensive loss	(1,846		)	(75		)	(964		)	(5,569		)
Total comprehensive income	$	8,649		$	91,592		$	146,262		$	250,405

See accompanying Notes to Condensed Consolidated Financial Statements.

2

BROCADE COMMUNICATIONS SYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	July 30, 2016			October 31, 2015
	(In thousands, except par value)
ASSETS
Current assets:
Cash and cash equivalents	$	1,153,074		$	1,440,882
Accounts receivable, net of allowances for doubtful accounts of $3,836 and $1,838 as of July 30, 2016, and October 31, 2015, respectively	278,180			235,883
Inventories	81,182			40,524
Deferred tax assets	—			78,675
Prepaid expenses and other current assets	86,922			56,235
Total current assets	1,599,358			1,852,199
Property and equipment, net	459,812			439,224
Goodwill	2,324,315			1,617,161
Intangible assets, net	434,921			75,623
Non-current deferred tax assets	3,918			813
Other assets	51,441			51,133
Total assets	$	4,873,765		$	4,036,153
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	121,093		$	98,143
Accrued employee compensation	134,471			142,075
Deferred revenue	257,460			244,622
Current portion of long-term debt	76,627			298
Other accrued liabilities	111,559			77,226
Total current liabilities	701,210			562,364
Long-term debt, net of current portion	1,516,761			793,779
Non-current deferred revenue	87,875			72,065
Non-current income tax liability	100,208			47,010
Non-current deferred tax liabilities	—			24,024
Other non-current liabilities	6,908			3,376
Total liabilities	2,412,962			1,502,618
Commitments and contingencies (Note 9)
Stockholders’ equity:
Brocade stockholders’ equity:
Preferred stock, $0.001 par value, 5,000 shares authorized, no shares issued and outstanding	—			—
Common stock, $0.001 par value, 800,000 shares authorized:
Issued and outstanding: 400,679 and 413,923 shares as of July 30, 2016, and October 31, 2015, respectively	401			414
Additional paid-in capital	1,473,159			1,632,984
Accumulated other comprehensive loss	(25,966		)	(25,002		)
Retained earnings	1,010,659			925,139
Total Brocade stockholders’ equity	2,458,253			2,533,535
Noncontrolling interest	2,550			—
Total stockholders’ equity	2,460,803			2,533,535
Total liabilities and stockholders’ equity	$	4,873,765		$	4,036,153

See accompanying Notes to Condensed Consolidated Financial Statements.

3

BROCADE COMMUNICATIONS SYSTEMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
	Nine Months Ended
	July 30, 2016			August 1, 2015
	(In thousands)
Cash flows from operating activities:
Net income	$	147,226		$	255,974
Adjustments to reconcile net income to net cash provided by operating activities:
Excess tax benefits from stock-based compensation	(1,778		)	(41,981		)
Depreciation and amortization	80,979			62,569
Loss on disposal of property and equipment	458			1,620
Net gain on sale of investments	(122		)	—
Amortization of debt issuance costs and debt discount	13,493			9,443
Write-off of debt discount and debt issuance costs related to lenders that did not participate in refinancing	—			4,808
Provision (recovery) for doubtful accounts receivable and sales allowances	(1,946		)	7,189
Non-cash purchase accounting adjustments to inventory	20,775			—
Non-cash stock-based compensation expense	88,805			64,594
Changes in assets and liabilities, net of acquisitions:
Accounts receivable	988			17,959
Inventories	5,601			(1,778		)
Prepaid expenses and other assets	(9,725		)	(20,854		)
Deferred tax assets	(109		)	531
Accounts payable	5,519			2,266
Accrued employee compensation	(57,520		)	(94,852		)
Deferred revenue	5,359			(14,220		)
Other accrued liabilities	(43,874		)	16,478
Restructuring liabilities	(1,223		)	(2,514		)
Net cash provided by operating activities	252,906			267,232
Cash flows from investing activities:
Purchases of non-marketable equity and debt investments	(2,000		)	(2,150		)
Proceeds from maturities and sale of short-term investments	150,323			—
Proceeds from sale of non-marketable equity investment	—			1,489
Purchases of property and equipment	(59,810		)	(53,142		)
Purchase of intangible assets	—			(7,750		)
Net cash paid in connection with acquisitions	(564,888		)	(95,452		)
Proceeds from collection of note receivable	250			250
Net cash used in investing activities	(476,125		)	(156,755		)

4

BROCADE COMMUNICATIONS SYSTEMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS—Continued (Unaudited)
	Nine Months Ended
	July 30, 2016			August 1, 2015
	(In thousands)
Cash flows from financing activities:
Payment of principal related to senior secured notes	—			(300,000		)
Payment of debt issuance costs	(891		)	(1,718		)
Payment of principal related to capital leases	(282		)	(1,677		)
Common stock repurchases	(841,562		)	(312,601		)
Proceeds from issuance of common stock	49,195			51,345
Payment of cash dividends to stockholders	(61,706		)	(48,819		)
Proceeds from term loan	787,255			—
Proceeds from convertible notes	—			565,656
Purchase of convertible note hedge	—			(86,135		)
Proceeds from issuance of warrants	—			51,175
Proceeds from noncontrolling interest	2,550			—
Excess tax benefits from stock-based compensation	1,778			41,981
Net cash used in financing activities	(63,663		)	(40,793		)
Effect of exchange rate fluctuations on cash and cash equivalents	(926		)	(5,030		)
Net increase (decrease) in cash and cash equivalents	(287,808		)	64,654
Cash and cash equivalents, beginning of period	1,440,882			1,255,017
Cash and cash equivalents, end of period	$	1,153,074		$	1,319,671
Supplemental disclosures of cash flow information:
Cash paid for interest	$	24,264		$	29,560
Cash paid for income taxes	$	46,163		$	35,372
Supplemental schedule of non-cash investing activities:
Settlement of debt investment in relation to acquisition	$	—		$	150
Acquiring a business through the issuance of stock	$	623,116		$	—

See accompanying Notes to Condensed Consolidated Financial Statements.

5

BROCADE COMMUNICATIONS SYSTEMS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. 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 31, 2015, 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 31, 2015.

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 2016 is a 52-week fiscal year and fiscal year 2015 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 not presented separately in the Company’s Condensed Consolidated Statements of Income as these amounts are not material for any of the fiscal periods presented.

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 and programs, allowance for doubtful accounts, stock-based compensation, acquisition purchase price allocations, warranty obligations, inventory valuation and purchase commitments, restructuring costs, incentive compensation, facilities lease losses, impairment of goodwill and other indefinite-lived intangible assets, litigation, and income taxes. Actual results may differ materially from these estimates.

2. Summary of Significant Accounting Policies

There have been no material changes in the Company’s significant accounting policies for the nine months endedJuly 30, 2016, as compared to those disclosed in Brocade’s Annual Report on Form 10-K for the fiscal year ended October 31, 2015.

Consolidation of Variable Interest Entities

The Company uses a qualitative approach in assessing the consolidation requirement for variable interest entities. The approach focuses on identifying which enterprise has the power to direct the activities that most significantly impact the variable interest entity’s economic performance and which enterprise has the obligation to absorb losses or the right to receive benefits from the variable interest entity. In the event that the Company is the primary beneficiary of a variable interest entity, the assets, liabilities, and results of operations of the variable interest entity will be included in the Company’s consolidated financial statements.

6

New Accounting Pronouncements or Updates Recently Adopted

In April 2014, the Financial Accounting Standards Board (“FASB”) issued an update to Accounting Standards Codification (“ASC”) 205, Presentation of Financial Statements, and ASC 360, Property, Plant, and Equipment: Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. Under this update, a discontinued operation may include a component of an entity or a group of components of an entity, a business, or nonprofit activity. Only those disposals of components of an entity that represent a strategic shift that has, or will have, a major effect on an entity’s operations and financial results will be reported as discontinued operations in the financial statements. This update should be applied prospectively. The Company adopted this update in the first quarter of fiscal year 2016. There was no material impact on the Company’s financial position, results of operations, or cash flows.

In April 2015, the FASB issued an update to ASC 835, Interest—Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs. Under this update, debt issuance costs are required to be presented as a direct deduction from the carrying amount of the related debt liability, consistent with the presentation of debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by this update. This update should be applied retrospectively to all prior periods presented in the financial statements. The Company adopted this update in the first quarter of fiscal year 2016. There was no material impact on the Company’s financial position, results of operations, or cash flows.

In September 2015, the FASB issued an update to ASC 805, Business Combinations: Simplifying the Accounting Measurement-Period Adjustments. This update simplifies the accounting for adjustments made to provisional amounts recognized in a business combination by eliminating the requirement to retrospectively account for those adjustments. Under this update, the adjustments are recognized in the reporting period in which the adjustment amounts are determined. This update should be applied prospectively. The Company adopted this update in the first quarter of fiscal year 2016. There was no material impact on the Company’s financial position, results of operations, or cash flows.

In November 2015, the FASB issued an update to ASC 740, Income Taxes: Balance Sheet Classification of Deferred Taxes. This update simplifies the presentation of current and non-current deferred tax liabilities and assets. Under this update, the deferred tax liabilities and assets are classified as non-current on the balance sheet. The update does not impact the current requirement that deferred tax liabilities and assets be offset and presented as a single amount. This update may be applied either prospectively or retrospectively. The Company adopted this update in the first quarter of fiscal year 2016 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.

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. Early adoption is not permitted for reporting periods before the first quarter of fiscal year 2018. 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. 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 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. This update may be applied either prospectively or retrospectively and will be adopted by the Company in the first quarter of fiscal year 2017. Early adoption is permitted. The Company does not expect the adoption of this update to have a material impact on its consolidated financial statements.

7

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.

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 six 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 July 30, 2016, two customers individually accounted for 18% and 10% of total accounts receivable, for a combined total of 28% of total accounts receivable. As of October 31, 2015, one customer individually accounted for 17% of total accounts receivable and no other customers individually accounted for more than 10% 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 July 30, 2016, two customers individually accounted for 12% and 12% of the Company’s total net revenues for a combined total of 24% of total net revenues. For the three months ended August 1, 2015, three customers individually accounted for 16%, 15%, and 12% of the Company’s total net revenues for a combined total of 43% of total net revenues.

8

The Company currently relies on single and limited sources for multiple key components used in the manufacture of its products. Additionally, the Company relies on multiple contract manufacturers (“CMs”) for the production of its products, including Hon Hai Precision Industry Co., Ltd. and Accton Technology Corporation. Although the Company uses standard parts and components for its products where possible, the Company’s CMs currently purchase, on 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.

3. Acquisitions

Current 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.

Pursuant to the terms of the Agreement and Plan of Merger entered into between the Company, Ruckus, and a Company subsidiary, Ruckus stockholders were entitled to receive $6.45 in cash and 0.75 shares of the Company’s common stock in exchange for each outstanding share of Ruckus common stock. The results of operations for the acquired business are included in the Company’s Condensed Consolidated Statements of Income from the Acquisition Date. 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 submitted and not withdrawn a demand for 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 July 30, 2016.

Based on the $8.60 per share closing price of the Company’s common stock on May 27, 2016, the total preliminary purchase consideration paid or payable was $1.3 billion, consisting of $574.0 million in cash for outstanding Ruckus shares less dissenting shares, $78.3 million in cash for outstanding vested Ruckus stock options allocated to preliminary purchase consideration, $574.0 million of equity interests in the Company, $7.4 million of the fair value of replacement awards allocated to the preliminary purchase consideration, and $41.7 million relating to the appraisal demand submitted by the dissenting former Ruckus stockholder, which was accrued as of July 30, 2016, and reported within “Other accrued liabilities” on the Company’s Condensed Consolidated Balance Sheets.

The Company recorded direct acquisition costs of $10.2 million and $15.2 million for the three and nine months ended July 30, 2016, respectively, and integration costs of $4.6 million and $5.4 million for the three and nine months ended July 30, 2016, respectively. These costs were expensed as incurred and are presented in the Company’s Condensed Consolidated Statements of Income for the three and nine months ended July 30, 2016, as “Acquisition and integration costs.”

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In connection with this acquisition, the Company allocated the total preliminary 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 preliminary allocation of the total preliminary 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	149,615
Accounts receivable, net of allowances for doubtful accounts of $2,100	41,339
Inventories	66,000
Prepaid expenses and other current assets	5,953
Property and equipment, net	21,777
Identifiable intangible assets	380,000
Other assets	1,697
Total assets acquired	761,896
Liabilities assumed:
Accounts payable	16,375
Accrued employee compensation	17,514
Deferred revenue	13,923
Other accrued liabilities	33,810
Non-current deferred revenue	9,364
Non-current deferred tax liabilities	57,677
Other non-current liabilities	40,561
Total liabilities assumed	189,224
Net assets acquired, excluding goodwill (a)	572,672
Total preliminary purchase consideration (b)	1,275,448
Estimated goodwill (b) - (a)	$	702,776

Goodwill represents the excess of the total preliminary 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 $303.8 million was assigned to the IP Networking Products reporting unit, and goodwill of $398.9 million was assigned to the Global Services reporting unit. Goodwill recognized in the acquisition is not deductible for tax purposes.

A preliminary assessment of 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	$	44,000	15.00
Customer relationships	118,000		1 - 7
Developed technology	195,000		6 - 7
In-process research and development (“IPR&D”) (1)	23,000		N/A (1)
Total intangible assets	$	380,000

⁽¹⁾  IPR&D will be accounted for as an indefinite-lived intangible asset until the underlying projects are completed or abandoned.

The total preliminary purchase consideration and allocation reflects the Company’s preliminary estimates and is subject to revision as additional information in relation to the preliminary purchase consideration and the fair value of the underlying assets acquired and liabilities assumed becomes available.Additional information that existed as of the Acquisition Date may become known to the Company during the remainder of the measurement period. This period is not to exceed 12 months from the acquisition date.

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Pursuant to the terms of the Agreement and Plan of Merger, all unvested Ruckus awards, then comprised of restricted stock units (“RSUs”), performance-based RSUs, and stock options, were canceled and replaced with Company RSUs and stock options (“replacement awards”). Per ASC 805, Business Combinations, the replacement of stock options or other share-based payment awards in conjunction with a business combination represents a modification of share-based payment awards that must be accounted for in accordance with ASC 718, Compensation—Stock Compensation. As a result of the Company’s obligation to issue replacement awards, a portion of the fair-value-based measure of replacement awards is included in measuring the purchase consideration transferred in the business combination. To determine the portion of the replacement awards that is part of the purchase consideration, the Company measured the fair value of both the replacement awards and the historical Ruckus awards as of the Acquisition Date, in accordance with ASC 718. The fair value of the replacement awards, whether vested or unvested, was included in the preliminary purchase consideration to the extent that pre-acquisition services had been rendered. The preliminary purchase consideration also included the fair value of accelerated vesting for awards that vested at the Acquisition Date due to change-in-control provisions.

In addition, the Company accelerated 20% to 50% of the vesting of unvested replacement awards granted to eight Ruckus executives and modified the vesting schedules of unvested replacement awards granted to those eight plus an additional four Ruckus executives. As a result, the Company recorded $4.7 million as an expense in the three and nine months ended July 30, 2016.

As of July 30, 2016, the fair value of the remaining unvested replacement awards of $28.6 million will be recorded as stock-based compensation expense over the applicable future vesting periods.

For the three and nine months ended July 30, 2016, the Company’s Condensed Consolidated Statements of Income included revenue and loss from operations of $77.8 million and $37.6 million, respectively, attributable to the operations of the Ruckus business since the Acquisition Date.

Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information presents the consolidated results of the Company and Ruckus for the three and nine months ended July 30, 2016, and August 1, 2015, giving effect to the acquisition and the related debt financing as if they had occurred on November 2, 2014, and combines the historical financial results of the Company and Ruckus. The unaudited pro forma financial information includes adjustments to give effect to pro forma events that are directly attributable to the acquisition and the related debt financing. The pro forma financial information includes adjustments to amortization and depreciation for intangible assets and property, plant, and equipment acquired, adjustments to stock-based compensation expense, the effect of acquisition on inventory acquired and deferred revenue, interest expense for the additional indebtedness, and acquisition and integration costs. The unaudited pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the results of operations of future periods. The unaudited pro forma financial information does not give effect to the potential impact of current financial conditions, regulatory matters, or any anticipated synergies, operating efficiencies, or cost savings that may be associated with the acquisition. Consequently, actual results will differ from the unaudited pro forma financial information presented below (in thousands, except for per share amounts):

	Three Months Ended					Nine Months Ended
	July 30, 2016			August 1, 2015		July 30, 2016		August 1, 2015
Unaudited pro forma consolidated results:
Pro forma revenues	$	600,530		$	655,663	$	1,900,664	$	1,953,490
Pro forma net income (loss)	$	(21,936	)	$	85,843	$	100,982	$	168,212
Pro forma net income (loss) per share—basic	$	(0.05	)	$	0.21	$	0.25	$	0.40
Pro forma net income (loss) per share—diluted	$	(0.05	)	$	0.20	$	0.24	$	0.38

Unaudited pro forma net income for the nine months ended August 1, 2015, includes nonrecurring pro forma adjustments directly attributable to the acquisition to the effect of inventory acquired and acquisition and integration costs of $39.8 million and $20.6 million, respectively. No such adjustments are included in any other periods.

Other Fiscal Year 2016 Acquisition

In March 2016, the Company completed its acquisition of a privately held developer of software for data center automation to strengthen its IP Networking product portfolio. The Company does not consider this acquisition to be material to its results of operations or financial position. Therefore, the Company is not presenting pro forma financial information of combined operations.

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Prior Fiscal Year Acquisitions

In March 2015, the Company completed its acquisition of two businesses to strengthen its software networking portfolio. The total aggregate purchase price of the acquisitions was $96.1 million. The total net aggregate purchase price of the acquisitions, net of $0.1 million of cash acquired as part of the acquisitions, was $95.5 million in cash consideration and $0.5 million in non-cash consideration.

The Company recorded direct acquisition costs of $1.5 million for the nine months ended August 1, 2015, and integration costs of $0.8 million and $1.7 million for the three and nine months ended August 1, 2015, respectively. These costs were expensed as incurred and are presented in the Company’s Condensed Consolidated Statements of Income for the three and nine months ended August 1, 2015, as “Acquisition and integration costs.”

The results of operations for both acquisitions are included in the Company’s Condensed Consolidated Statements of Income from the respective dates of acquisition. The Company does not consider these acquisitions to be significant, individually or in the aggregate, to its results of operations or financial position. Therefore, the Company is not presenting pro forma financial information of combined operations.

In connection with these acquisitions, the Company allocated the total purchase consideration to the net assets acquired and liabilities assumed, including identifiable intangible assets, based on their respective fair values at the acquisition dates. The Company also granted RSU awards and cash awards to transferring or continuing employees of the acquired businesses. These awards require the employees to continue providing services to the Company for the duration of the vesting or payout periods.

The RSUs are accounted for as stock-based compensation expense and reported, as applicable, within “Cost of revenues,” “Research and development,” “Sales and marketing,” and “General and administrative” on the Company’s Condensed Consolidated Statements of Income. For the three and nine months ended July 30, 2016, the Company recognized $0.5 million and $1.4 million, respectively, of stock-based compensation expense related to these RSU awards. For the three and nine months ended August 1, 2015, the Company recognized $0.9 million and $1.1 million, respectively, of stock-based compensation expense related to these RSU awards.

The cash awards are accounted for as employee compensation expense and reported within “Research and development” on the Company’s Condensed Consolidated Statements of Income. For the three and nine months ended July 30, 2016, the Company recognized $0.9 million and $3.4 million, respectively, of compensation expense related to these cash awards. For the three and nine months ended August 1, 2015, the Company recognized $1.6 million and $2.0 million, respectively, of compensation expense related to these cash awards.

4. Goodwill and Intangible Assets

The following table summarizes goodwill activity by reportable segment during the nine months ended July 30, 2016 (in thousands):

	Storage Area Networking (“SAN”)  Products			IP Networking Products			Global Services		Total
Balance at October 31, 2015
Goodwill	$	176,325		$	1,414,634		$	155,416	$	1,746,375
Accumulated impairment losses	—			(129,214		)	—		(129,214		)
	176,325			1,285,420			155,416		1,617,161
Acquisitions (1)	—			308,456			398,936		707,392
Tax adjustments (2)	(5		)	—			—		(5		)
Translation adjustments	—			(233		)	—		(233		)
Balance at July 30, 2016
Goodwill	176,320			1,722,857			554,352		2,453,529
Accumulated impairment losses	—			(129,214		)	—		(129,214		)
	$	176,320		$	1,593,643		$	554,352	$	2,324,315

⁽¹⁾  The goodwill acquired relates to the acquisitions completed in March 2016 and May 2016. See Note 3, “Acquisitions,” of the Notes to Condensed Consolidated Financial Statements.

⁽²⁾  The goodwill adjustments were primarily a result of tax benefits from the exercise of stock awards of acquired companies.

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The Company conducts its goodwill impairment test annually 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. Effective on the first day of the fourth fiscal quarter, the Company changed the date of its annual impairment test for goodwill from the first day of the second fiscal quarter to the first day of the fourth fiscal quarter. This change in the annual impairment test date was made to better coincide with the timing of when the Company prepares its annual budget and financial plans as part of its regular long-range planning process. 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 initial 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 initial 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 market or 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 initial annual goodwill impairment analysis performed during the second fiscal quarter of 2016, the Company determined that no impairment needed to be recorded. As of July 30, 2016, no new events had occurred nor had any facts or circumstances changed since the annual goodwill impairment analysis performed during the second 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 nine months ended July 30, 2016.

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The following tables present details of the Company’s intangible assets, excluding goodwill (in thousands, except for weighted-average remaining useful life):

	July 30, 2016
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Weighted- Average Remaining Useful Life (In years)
Finite-lived intangible assets:
Trade names	$	45,090	$	1,105	$	43,985	14.71
Core/developed technology (1) (2)	254,290		23,834		230,456		5.67
Patent portfolio license (3)	7,750		1,669		6,081		17.00
Customer relationships	141,110		8,805		132,305		6.52
Non-compete agreements	1,050		904		146		0.46
Patents with broader applications	1,040		92		948		13.63
Total finite-lived intangible assets	450,330		36,409		413,921		6.72
Indefinite-lived intangible assets, excluding goodwill:
IPR&D (1)	21,000		—		21,000
Total indefinite-lived intangible assets, excluding goodwill	21,000		—		21,000
Total intangible assets, excluding goodwill	$	471,330	$	36,409	$	434,921
	October 31, 2015
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Weighted- Average Remaining Useful Life (In years)
Finite-lived intangible assets:
Trade names	$	1,090	$	415	$	675	4.36
Core/developed technology	40,530		9,605		30,925		3.49
Patent portfolio license (3)	7,750		849		6,901		17.74
Customer relationships	23,110		2,484		20,626		7.18
Non-compete agreements	1,050		664		386		1.17
Patents with broader applications	1,040		40		1,000		14.38
Total finite-lived intangible assets	74,570		14,057		60,513		6.55
Indefinite-lived intangible assets, excluding goodwill:
IPR&D (1)	15,110		—		15,110
Total indefinite-lived intangible assets, excluding goodwill	15,110		—		15,110
Total intangible assets, excluding goodwill	$	89,680	$	14,057	$	75,623

⁽¹⁾  Acquired IPR&D are intangible assets accounted for as indefinite-lived assets until the completion or abandonment of the associated research and development efforts. If the research and development efforts associated with the IPR&D are successfully completed, then the IPR&D intangible assets will be amortized over the estimated useful lives to be determined as of the date the efforts are completed. During the three months ended July 30, 2016, the Company acquired $23.0 million in IPR&D intangible assets in connection with the acquisition of Ruckus. The research and development efforts associated with these IPR&D intangible assets are expected to be completed in fiscal years 2016 and 2017. During the nine months endedJuly 30, 2016, research and development efforts were completed on $17.1 million of the IPR&D intangible assets, and the completed IPR&D intangible assets are being amortized as core/developed technology over the estimated useful lives of five to seven years.

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⁽²⁾  During the nine months endedJuly 30, 2016, $1.0 million of finite-lived intangible assets became fully amortized and, therefore, were removed from the balance sheet.

⁽³⁾  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.

The Company conducts the IPR&D impairment test annually and whenever events occur or facts and circumstances indicate that it is more likely than not that the IPR&D is impaired. Effective on the first day of the fourth fiscal quarter, the Company changed the date of its annual impairment test for IPR&D from the first day of the second fiscal quarter to the first day of the fourth fiscal quarter. This change in the annual impairment test date was made to better coincide with the timing of when the Company prepares its annual budget and financial plans as part of its regular long-range planning process. 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.

The Company has not identified any changes in circumstances requiring an interim IPR&D impairment test for the nine months endedJuly 30, 2016, and therefore, the Company determined that no impairment needed to be recorded.

The amortization of finite-lived intangible assets is included in the following line items of the Company’s Condensed Consolidated Statements of Income as follows (in thousands):

	Three Months Ended				Nine Months Ended
	July 30, 2016		August 1, 2015		July 30, 2016		August 1, 2015
Cost of revenues	$	8,922	$	2,549	$	15,269	$	5,043
General and administrative (1)	271		889		821		1,654
Amortization of intangible assets	5,498		280		7,302		570
Total	$	14,691	$	3,718	$	23,392	$	7,267

⁽¹⁾  The amortization is related to the $7.8 million of perpetual, non-exclusive license to certain patents purchased during the fiscal year ended October 31, 2015.

The following table presents the estimated future amortization of finite-lived intangible assets as of July 30, 2016 (in thousands):

Fiscal Year	Estimated Future Amortization
2016 (remaining three months)	$	18,998
2017	72,063
2018	63,562
2019	60,039
2020	59,082
Thereafter	140,177
Total	$	413,921

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5. Balance Sheet Details

The following tables provide details of selected balance sheet items (in thousands):

	July 30, 2016		October 31, 2015
Inventories:
Raw materials	$	17,613	$	18,788
Finished goods	63,569		21,736
Inventories	$	81,182	$	40,524

	July 30, 2016			October 31, 2015
Property and equipment, net:
Gross property and equipment
Computer equipment	$	18,886		$	14,820
Software	84,337			67,625
Engineering and other equipment (1)	443,808			407,342
Furniture and fixtures (1)	33,468			31,028
Leasehold improvements	37,315			33,986
Land and building	386,163			385,415
Total gross property and equipment	1,003,977			940,216
Accumulated depreciation and amortization (1) (2)	(544,165		)	(500,992		)
Property and equipment, net	$	459,812		$	439,224

⁽¹⁾  Engineering and other equipment, furniture and fixtures, and accumulated depreciation and amortization include the following amounts under capital leases as of July 30, 2016, and October 31, 2015 (in thousands):

	July 30, 2016			October 31, 2015
Cost of capitalized leases	$	270		$	1,312
Accumulated depreciation	(255		)	(857		)
Property and equipment, net, under capital leases	$	15		$	455

⁽²⁾  The following table presents the depreciation of property and equipment included in the Company’s Condensed Consolidated Statements of Income (in thousands):

	Three Months Ended				Nine Months Ended
	July 30, 2016		August 1, 2015		July 30, 2016		August 1, 2015
Depreciation expense	$	20,393	$	18,605	$	57,531	$	55,302

6. 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 July 30, 2016.

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.

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During the nine months ended July 30, 2016, 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 July 30, 2016, were as follows (in thousands):

			Fair Value Measurements Using
	Balance as of  July 30, 2016		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds (1)	$	885,152	$	885,152	$	—	$	—
Derivative assets	477		—		477		—
Total assets measured at fair value	$	885,629	$	885,152	$	477	$	—
Liabilities:
Derivative liabilities	$	759	$	—	$	759	$	—

⁽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 31, 2015, were as follows (in thousands):

			Fair Value Measurements Using
	Balance as of  October 31, 2015		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds (1)	$	1,184,410	$	1,184,410	$	—	$	—
Derivative assets	709		—		709		—
Total assets measured at fair value	$	1,185,119	$	1,184,410	$	709	$	—
Liabilities:
Derivative liabilities	$	1,125	$	—	$	1,125	$	—

⁽¹⁾  Money market funds are reported within “Cash and cash equivalents” on the Company’s Condensed Consolidated Balance Sheets.

7. 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 Income (in thousands):

	Three Months Ended				Nine Months Ended
	July 30, 2016		August 1, 2015		July 30, 2016			August 1, 2015
Lease loss reserve and related benefits	$	—	$	—	$	(566	)	$	(637	)

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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 31, 2015	$	110	$	1,811		$	408		$	2,329
Restructuring and other related benefits	—		(566		)	—			(566		)
Cash payments	—		(380		)	(260		)	(640		)
Translation adjustment	—		(17		)	—			(17		)
Restructuring liabilities at July 30, 2016	$	110	$	848		$	148		$	1,106
Current restructuring liabilities at July 30, 2016	$	110	$	350		$	148		$	608
Non-current restructuring liabilities at July 30, 2016	$	—	$	498		$	—		$	498

Fiscal 2013 Fourth Quarter Restructuring Plan

During the fiscal year ended October 26, 2013, and the first quarter of fiscal year 2014, the Company restructured certain business operations and reduced the Company’s operating expense structure. The restructuring plan 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 as a result of acquisitions.

Cash payments for facilities that are part of the Company’s lease loss reserve are expected to be paid over the respective lease terms through fiscal year 2021.

General

The Company reevaluates its estimates and assumptions on a quarterly basis and makes adjustments to the restructuring liabilities balance if necessary. During the nine months ended July 30, 2016, the Company reversed $0.6 million of charges related to estimated facilities lease losses due to a change in lease terms for a certain facility.

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8. Borrowings

The following table provides details of the Company’s long-term debt (in thousands, except years and percentages):

			July 30, 2016					October 31, 2015
	Maturity	Stated Annual Interest Rate	Amount			Effective Interest Rate		Amount			Effective Interest Rate
Senior Credit Facility:
Term Loan Facility	2021	variable	$	800,000		2.50	%	$	—		—	%
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	%
Capital lease obligations	2016	4.625%	16			4.63	%	298			4.63	%
Total gross long-term debt			1,675,016					875,298
Unamortized discount			(78,755		)			(79,196		)
Unamortized debt issuance costs			(2,873		)			(2,025		)
Current portion of long-term debt			(76,627		)			(298		)
Long-term debt, net of current portion			$	1,516,761				$	793,779

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 million (the “Term Loan Facility”) and a revolving credit facility of $100 million (the “Revolving Facility,” and together with the Term Loan Facility, the “Senior Credit Facility”). The Revolving Facility includes a $25 million letter of credit subfacility and a $10 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 undrawn 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 a 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.

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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 million was available for future borrowing under the revolving credit facility as of July 30, 2016. No payments were made toward the principal of the Term Loan Facility during the nine months ended July 30, 2016.

As of July 30, 2016, the fair value of the Term Loan Facility was approximately $786.5 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 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. 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.

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 the redemption of its outstanding 6.875% senior secured notes due 2020 (the “2020 Notes”) and irrevocably deposited a portion of the net proceeds from the Offering with the trustee to discharge the 2020 Indenture as described below under “Senior Secured Notes.”

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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 nine months ended July 30, 2016.

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):

	July 30, 2016			October 31, 2015
Principal	$	575,000		$	575,000
Unamortized discount of the liability component	(63,706		)	(76,311		)
Net carrying amount of liability component	$	511,294		$	498,689
Carrying amount of equity component	$	59,293		$	70,765

As of July 30, 2016, the remaining period of amortization for the discount is 3.42 years.

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				Nine Months Ended
	July 30, 2016		August 1, 2015		July 30, 2016		August 1, 2015
Amortization of discount	$	4,254	$	4,048	$	12,606	$	8,792
Contractual interest coupon	$	1,977	$	1,977	$	5,930	$	4,323

As of July 30, 2016, and October 31, 2015, the fair value of the 2020 Convertible Notes was approximately $560.4 million and $568.0 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 shares of common stock 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 third fiscal quarter of 2016, the Board of Directors of the Company declared and paid a cash dividend in the amount of $0.055 per share. Accordingly, as of June 8, 2016, the conversion rate was adjusted to a rate of 63.1587 shares of the Company’s common stock per $1,000 principal amount of the notes, which is equal to 36.3 million shares at a conversion price of approximately $15.83 per share. The adjustment resulted in a change to the conversion rate of less than 1%, and by the terms of the indenture governing the 2020 Convertible Notes, the Company is allowed and elected to defer the noteholder notification of such adjustment until the occurrence of (i) a subsequent adjustment to the conversion rate that results in a cumulative adjustment of at least 1% of the current conversion rate, (ii) the conversion of any 2020 Convertible Note, or (iii) certain other events requiring the adjustment to be made under the indenture governing the 2020 Convertible Notes.

Holders of the 2020 Convertible Notes may convert all or a portion of their notes prior to the close of business on the business day immediately preceding September 1, 2019, in multiples of $1,000 principal amount, only under the following circumstances:

• During any fiscal quarter commencing after the fiscal quarter ending on May 2, 2015 (and only during such fiscal quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price of the notes on each applicable trading day;

• During the five-business-day period after any 10 consecutive trading day period in which the trading price per $1,000 principal amount of the notes for each trading day of that 10 consecutive trading day period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate of the notes on each such trading day; or

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• 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, through 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 July 30, 2016, 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 July 30, 2016, 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 July 30, 2016, a fundamental change had not occurred and the 2020 Convertible Notes were not re-purchasable.

Convertible Note Hedge and Warrants Related to the Convertible Senior Unsecured Notes

In connection with the issuance of the 2020 Convertible Notes, the Company entered into convertible note hedge transactions with certain financial institutions (the “counterparties”) with respect to its common stock. Upon conversion of the 2020 Convertible Notes, the convertible note hedge transactions give the Company the right to acquire from the counterparties, subject to anti-dilution adjustments substantially similar to those in the 2020 Convertible Notes, initially approximately 36.1 million shares of the Company’s common stock at an initial strike price of $15.93 per share. Because a dividend in an amount greater than $0.035 per share was declared and paid effective beginning in the third fiscal quarter of 2015, the strike price under the convertible note hedge transactions has been adjusted to approximately $15.83 per share as of June 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 $0.045 per share beginning in the third fiscal quarter of 2015, and, as of June 8, 2016, the holders of the warrants have the right to acquire up to approximately 36.3 million shares of the Company’s common stock at a strike price of approximately $20.52 per share.

See Note 15, “Net Income 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.

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 nine months ended July 30, 2016.

As of July 30, 2016, and October 31, 2015, the fair value of the 2023 Notes was approximately $296.2 million and $293.9 million, respectively, which was estimated based on broker trading prices.

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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 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.

Senior Secured Notes

In January 2010, the Company issued $300.0 million in aggregate principal amount of the 2020 Notes pursuant to an indenture, dated as of January 20, 2010, between the Company, certain domestic subsidiaries of the Company, and Wells Fargo Bank, National Association, as the trustee (the “2020 Indenture”). Interest on the 2020 Notes was payable semiannually on January 15 and July 15 of each year. The Company’s obligations under the 2020 Notes were previously guaranteed by certain of the Company’s domestic subsidiaries and secured by a lien on substantially all of the Company’s and the subsidiary guarantors’ assets.

On January 14, 2015, the Company called the 2020 Notes for redemption at a redemption price equal to 103.438% of the principal amount of the 2020 Notes, and irrevocably deposited $322.2 million with the trustee for the 2020 Notes to discharge the 2020 Indenture. Due to the deposit and discharge, the guarantees provided by certain of the Company’s domestic subsidiaries, and the liens granted by the Company and the subsidiary guarantors to secure their obligations with respect to the 2020 Notes, were released as of the date of the deposit.

The amount deposited with the trustee included $300.0 million to repay the principal amount of the 2020 Notes, $10.3 million representing the difference between the redemption price and the principal amount of the 2020 Notes (“Call Premium”), $10.3 million for accrued interest through January 15, 2015, and $1.6 million of interest payable up to the redemption date of February 13, 2015. The trustee redeemed the 2020 Notes on February 13, 2015, using the deposited amount, extinguishing the Company’s $300.0 million liability for the principal amount of the 2020 Notes.

In accordance with the applicable accounting guidance for debt modification and extinguishment, and for interest costs accounting, the Company expensed the Call Premium, remaining debt issuance costs, and remaining original issue discount relating to the 2020 Notes in the first quarter of fiscal year 2015, which totaled $20.4 million. The Company reported this expense within “Interest expense” on the Company’s Condensed Consolidated Statements of Income for the nine months endedAugust 1, 2015.

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Debt Maturities

As of July 30, 2016, the Company’s aggregate debt maturities based on outstanding principal were as follows (in thousands):

Fiscal Year	Principal Balances
2016 (remaining three months)	$	20,016
2017	80,000
2018	80,000
2019	80,000
2020	655,000
Thereafter	760,000
Total	$	1,675,016

9. 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 nine months endedJuly 30, 2016, and August 1, 2015 (in thousands):

	Accrued Warranty
	Nine Months Ended
	July 30, 2016			August 1, 2015
Beginning balance	$	7,599		$	7,486
Warranty liability assumed from acquisitions	760			—
Liabilities accrued for warranties issued during the period	2,768			3,059
Warranty claims paid and used during the period	(2,736		)	(3,221		)
Changes in liability for pre-existing warranties during the period	(60		)	(125		)
Ending balance	$	8,331		$	7,199

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 July 30, 2016, 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 that 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.

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As of July 30, 2016, the Company’s aggregate commitment to its CMs for inventory components used in the manufacture of Brocade products was $220.0 million, which the Company expects to utilize during future normal ongoing operations, net of a purchase commitments reserve of $3.6 million, which is reported within “Other accrued liabilities” on the Company’s Condensed Consolidated Balance Sheet as of July 30, 2016. 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 July 30, 2016, 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

Subsequent to the announcement that Brocade had entered into an agreement to acquire Ruckus on April 3, 2016, three putative stockholder class action complaints relating to the acquisition were filed on behalf of purported Ruckus stockholders in the Superior Court of California, County of Santa Clara, a fourth putative stockholder class action complaint was filed in the United States District Court for the District of Delaware, and a fifth putative class action complaint was filed in the United States District Court for the Northern District of California. The complaints in the three California state court actions are captioned: Maguire v. Ruckus Wireless, Inc., et al. (filed April 12, 2016 and amended on May 10, 2016; referred to as the “Maguire action”); Jaljouli v. Ruckus Wireless, Inc., et al., (filed April 19, 2016; referred to as the “Jaljouli action”); and Small v. Ruckus Wireless, Inc., et al. (filed May 12, 2016; referred to as the “Small action”). The complaint in the Delaware federal court action is captioned Borrego v. Ruckus Wireless, Inc., et al. (filed May 11, 2016; referred to as the “Borrego action”). The complaint in the California federal court action is captioned Hussey v. Ruckus Wireless, Inc., et al. (filed June 3, 2016; referred to as the “Hussey action”).

The complaints in the Maguire, Jaljouli and Small actions contain similar allegations and name Ruckus and members of the Ruckus board of directors as defendants; the Maguire and Jaljouli actions also name Brocade and a Brocade subsidiary as defendants. In general, the complaints allege that the members of the Ruckus board of directors breached their fiduciary duties to Ruckus stockholders by purportedly doing one or more of the following: agreeing to unfair and inadequate transaction consideration for the Ruckus shares; accepting unreasonable deal protection measures in the merger agreement that would dissuade other potential bidders from making competing offers; failing to properly value Ruckus and take steps to maximize the sale value of Ruckus; engaging in self-dealing; and providing allegedly false, misleading, and/or incomplete disclosures regarding the transaction, the negotiations leading up to it, and the opinion of Ruckus’ financial advisor. The complaints in the Maguire and Jaljouli actions also allege that one or more of Ruckus, Brocade, and the Brocade subsidiary aided and abetted the members of the Ruckus board of directors in breaching their fiduciary duties to Ruckus stockholders.

The complaint in the Borrego action alleges that Ruckus and members of the Ruckus board of directors violated Sections 14(e), 14(d)(4) and 20(a) 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. The complaint in the Hussey action, which names Ruckus, members of the Ruckus board of directors, Ruckus’ chief financial officer, Brocade, and a Brocade subsidiary as defendants, contains a similar Section 14(e) claim and also alleges that the defendants violated Section14(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.

The plaintiffs in one or more of these five actions have requested relief including, among other things, certification as a class, rescission and invalidation of the merger agreement or related agreements, injunctive relief, imposition of a constructive trust, an award of damages and an accounting, an award of the costs and disbursements of the action (including reasonable attorneys’ and experts’ fees), and other equitable relief that the court may deem just and proper.

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The Small action was voluntarily dismissed by the plaintiff on August 29, 2016.

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 a shareholder (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 Company is not aware of any action being commenced in the Delaware Court of Chancery relating to the Dissenter’s appraisal demand. If the Dissenter does not timely and properly commence and prosecute to judgment such an appraisal action, the Dissenter may be entitled to receive $6.45 in cash and 0.75 shares of Brocade common stock with respect to each of the 3.2 million shares subject to its appraisal demand, with an aggregate value of $41.3 million as of July 30, 2016. Otherwise, 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 that amount.

10. 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 and nine months ended July 30, 2016, were the euro, the British pound, the Indian rupee, the Chinese yuan, the Singapore dollar, the Japanese yen, and the Swiss franc. The Company has established a foreign currency risk management program to protect against the volatility of future cash flows caused by changes in foreign currency exchange rates. This program reduces, but does not eliminate, the impact of foreign currency exchange rate movements.

The Company utilizes a rolling hedge strategy for the majority of its foreign currency derivative instruments to hedge exposures to the variability in the U.S. dollar equivalent of anticipated non-U.S.-dollar-denominated cash flows. All of the Company’s foreign currency forward contracts are single delivery, which are settled at maturity involving one cash payment. The Company’s foreign currency risk management program includes foreign currency derivatives with a cash flow hedge accounting designation that utilizes foreign currency forward and option contracts to hedge exposures to the variability in the U.S. dollar equivalent of anticipated non-U.S.-dollar-denominated cash flows. These instruments generally have a maturity of less than 15 months. For these derivatives, the Company initially reports the after-tax gain or loss from the effective portion of the hedge as a component of accumulated other comprehensive loss in stockholders’ equity and reclassifies it into earnings in the same period in which the hedged transaction affects earnings. The tax effect allocated to cash flow hedge-related components of other comprehensive loss was not material for the three and nine months ended July 30, 2016, and August 1, 2015.

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 material for the three and nine months ended July 30, 2016, and August 1, 2015.

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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 Income as follows (in thousands):

	Three Months Ended						Nine Months Ended
	July 30, 2016			August 1, 2015			July 30, 2016			August 1, 2015
Cost of revenues	$	(35	)	$	(141	)	$	(195	)	$	(605	)
Research and development	(342		)	(206		)	(968		)	(273		)
Sales and marketing	(120		)	(542		)	(764		)	(1,866		)
General and administrative	(10		)	(52		)	(54		)	(135		)
Total	$	(507	)	$	(941	)	$	(1,981	)	$	(2,879	)

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 $0.2 million and $0.8 million for the three and nine months ended July 30, 2016, respectively, and gains of $0.3 million and losses of $0.6 million for the three and nine months ended August 1, 2015, respectively.

As of July 30, 2016, the Company had gross unrealized loss positions of $0.8 million and gross unrealized gain positions of $0.5 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 July 30, 2016, and October 31, 2015. Total gross notional amounts, presented by currency, are as follows (in thousands):

	Derivatives Designated as Hedging Instruments
In U.S. dollars	July 30, 2016		October 31, 2015
Euro	$	10,410	$	40,961
British pound	9,940		46,330
Indian rupee	8,836		35,647
Chinese yuan	3,629		15,129
Singapore dollar	3,484		13,745
Japanese yen	2,606		8,809
Swiss franc	2,365		9,265
Total	$	41,270	$	169,886

11. 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 Income as follows (in thousands):

	Three Months Ended				Nine Months Ended
	July 30, 2016		August 1, 2015		July 30, 2016		August 1, 2015
Cost of revenues	$	5,965	$	3,955	$	12,400	$	9,757
Research and development	9,206		5,226		19,805		13,239
Sales and marketing	17,756		10,601		39,886		27,651
General and administrative	11,716		4,655		21,384		13,947
Total stock-based compensation expense	$	44,643	$	24,437	$	93,475	$	64,594

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The following table presents stock-based compensation expense, net of estimated forfeitures, by grant type (in thousands):

	Three Months Ended				Nine Months Ended
	July 30, 2016		August 1, 2015		July 30, 2016		August 1, 2015
Stock options	$	3,291	$	973	$	4,727	$	2,865
RSUs, including restricted stock units with market conditions	35,604		18,941		75,986		48,192
Employee stock purchase plan (“ESPP”)	5,748		4,523		12,762		13,537
Total stock-based compensation expense	$	44,643	$	24,437	$	93,475	$	64,594

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 July 30, 2016 (in thousands, except for the weighted-average period):

	Unrecognized Compensation Expense		Weighted- Average Period (In years)
Stock options	$	2,161	1.10
RSUs, including restricted stock units with market conditions	$	166,357	2.69
ESPP	$	24,497	1.21

The following table presents details on grants made by the Company for the following periods:

	Nine Months Ended
	July 30, 2016			August 1, 2015
	Granted (Shares in thousands)	Weighted-Average Grant Date Fair Value		Granted (Shares in thousands)	Weighted-Average Grant Date Fair Value
Stock options	1,390	$	1.36	1,117	$	3.09
RSUs, including stock units with market conditions	17,879	$	7.90	10,251	$	11.53

The total intrinsic value of stock options exercised for the nine months ended July 30, 2016, and August 1, 2015, was $1.2 million and $2.9 million, respectively.

12. Stockholders’ Equity

Dividends

During the nine months ended July 30, 2016, 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 22, 2015	$	0.045	December 10, 2015	$	18,429	January 4, 2016
February 16, 2016	$	0.045	March 10, 2016	$	18,016	April 4, 2016
May 18, 2016	$	0.055	June 10, 2016	$	25,261	July 5, 2016

Future dividends are subject to review and approval on a quarterly basis by the Company’s Board of Directors or a committee thereof.

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.

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Accumulated Other Comprehensive Loss

The components of other comprehensive loss and related tax effects for the three months endedJuly 30, 2016, and August 1, 2015, are as follows (in thousands):

	Three Months Ended
	July 30, 2016									August 1, 2015
	Before-Tax Amount			Tax Expense			Net-of-Tax Amount			Before-Tax Amount			Tax Expense			Net-of-Tax Amount
Unrealized gains (losses) on cash flow hedges:
Change in unrealized gains and losses, foreign exchange contracts	$	(715	)	$	15		$	(700	)	$	(361	)	$	(53	)	$	(414	)
Net gains and losses reclassified into earnings, foreign exchange contracts (1)	507			(25		)	482			941			(110		)	831
Net unrealized gains (losses) on cash flow hedges	(208		)	(10		)	(218		)	580			(163		)	417
Foreign currency translation adjustments	(1,628		)	—			(1,628		)	(492		)	—			(492		)
Total other comprehensive income (loss)	$	(1,836	)	$	(10	)	$	(1,846	)	$	88		$	(163	)	$	(75	)

The components of other comprehensive loss and related tax effects for the nine months endedJuly 30, 2016, and August 1, 2015, are as follows (in thousands):

	Nine Months Ended
	July 30, 2016									August 1, 2015
	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	$	(1,056	)	$	21		$	(1,035	)	$	(2,558	)	$	226		$	(2,332	)
Net gains and losses reclassified into earnings, foreign exchange contracts (1)	1,981			(150		)	1,831			2,879			(335		)	2,544
Net unrealized gains (losses) on cash flow hedges	925			(129		)	796			321			(109		)	212
Foreign currency translation adjustments	(1,760		)	—			(1,760		)	(5,781		)	—			(5,781		)
Total other comprehensive loss	$	(835	)	$	(129	)	$	(964	)	$	(5,460	)	$	(109	)	$	(5,569	)

⁽¹⁾ For classification of amounts reclassified from accumulated other comprehensive loss into earnings as reported on the Company’s Condensed Consolidated Statements of Income, 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 nine months endedJuly 30, 2016, and August 1, 2015, are as follows (in thousands):

	Nine Months Ended
	July 30, 2016									August 1, 2015
	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	$	(1,539	)	$	(23,463	)	$	(25,002	)	$	(1,907	)	$	(16,907	)	$	(18,814	)
Change in unrealized gains and losses	(1,035		)	(1,760		)	(2,795		)	(2,332		)	(5,781		)	(8,113		)
Net gains and losses reclassified into earnings	1,831			—			1,831			2,544			—			2,544
Net current-period other comprehensive income (loss)	796			(1,760		)	(964		)	212			(5,781		)	(5,569		)
Ending balance	$	(743	)	$	(25,223	)	$	(25,966	)	$	(1,695	)	$	(22,688	)	$	(24,383	)

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13. 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, the effect of 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. Earnings of the Company’s subsidiaries outside of the United States primarily relate to its European, Asia Pacific, and Japan businesses.

The Company recorded an income tax benefit for the three months ended July 30, 2016, primarily due to a discrete benefit from reserve releases as a result of reaching a settlement on certain transfer pricing issues with the Internal Revenue Service (“IRS”) and certain expired statute of limitations.

The effective tax rate for the three and nine months ended July 30, 2016, was lower than the U.S. federal statutory tax rate of 35% primarily due to a discrete benefit from reserve releases as a result of reaching a settlement on certain transfer pricing issues with the IRS and benefits from the federal research and development tax credit, which was permanently reinstated retroactive to January 1, 2015, by the passage of the Protecting Americans from Tax Hikes Act of 2015.

The effective tax rate for the nine months ended July 30, 2016, was higher compared with the effective tax rate for the nine months ended August 1, 2015, primarily due to an increase in unrecognized tax benefits related to certain intercompany transactions during the nine months ended July 30, 2016.

The Company’s total gross unrecognized tax benefits, excluding interest and penalties, were $189.1 million as of July 30, 2016. If the total gross unrecognized tax benefits as of July 30, 2016, were recognized in the future, approximately $144.0 million would decrease the Company’s effective tax rate.

The IRS and other tax authorities regularly examine the Company’s income tax returns. In June 2016, the Company reached agreement with the IRS on certain transfer pricing issues in the Company’s federal income tax returns for fiscal years 2009 and 2010. In October 2014, the Geneva Tax Administration issued its final assessments for fiscal years 2003 to 2012, disputing certain of the Company’s transfer pricing arrangements. In November 2014, the Company filed a protest to challenge the final assessments. The Company believes that reserves for unrecognized tax benefits are adequate for all open tax years. The timing of tax examinations, as well as the amounts and timing of related settlements, if any, are highly uncertain. Before the end of fiscal year 2016, it is reasonably possible that either certain audits will conclude or the statutes of limitations relating to certain 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 $5 million in the next 12 months.

14. Segment Information

Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”), or decision-making group, in deciding how to allocate resources and in assessing performance. Financial decisions and the allocation of resources are based on the information from the Company’s internal management reporting system. Currently, the Company’s CODM is its Chief Executive Officer.

Brocade is organized into three operating segments, each of which is an individually reportable segment: SAN Products, IP Networking Products, and Global Services. These reportable segments are organized principally by product category. The results of the Ruckus business are included in the IP Networking Products and Global Services reportable segments from the date of acquisition.

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 July 30, 2016, were attributable to its U.S. operations.

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Summarized financial information by reportable segment for the three and nine months ended July 30, 2016, and August 1, 2015, based on the internal management reporting system, is as follows (in thousands):

	SAN Products		IP Networking Products		Global Services		Total
Three months ended July 30, 2016
Net revenues	$	282,114	$	208,881	$	99,726	$	590,721
Cost of revenues	70,630		117,862		45,330		233,822
Gross margin	$	211,484	$	91,019	$	54,396	$	356,899
Three months ended August 1, 2015
Net revenues	$	309,451	$	153,749	$	88,619	$	551,819
Cost of revenues	73,657		70,586		35,672		179,915
Gross margin	$	235,794	$	83,163	$	52,947	$	371,904
Nine months ended July 30, 2016
Net revenues	$	925,799	$	474,556	$	287,956	$	1,688,311
Cost of revenues	223,806		240,991		127,489		592,286
Gross margin	$	701,993	$	233,565	$	160,467	$	1,096,025
Nine months ended August 1, 2015
Net revenues	$	976,362	$	431,319	$	266,952	$	1,674,633
Cost of revenues	233,150		198,631		109,056		540,837
Gross margin	$	743,212	$	232,688	$	157,896	$	1,133,796

15. Net Income per Share

The following table presents the calculation of basic and diluted net income per share (in thousands, except per share amounts):

	Three Months Ended				Nine Months Ended
	July 30, 2016		August 1, 2015		July 30, 2016		August 1, 2015
Basic net income per share
Net income	$	10,495	$	91,667	$	147,226	$	255,974
Weighted-average shares used in computing basic net income per share	426,671		417,299		411,709		422,184
Basic net income per share	$	0.02	$	0.22	$	0.36	$	0.61
Diluted net income per share
Net income	$	10,495	$	91,667	$	147,226	$	255,974
Weighted-average shares used in computing basic net income per share	426,671		417,299		411,709		422,184
Dilutive potential common shares in the form of stock options	1,227		1,772		1,329		1,777
Dilutive potential common shares in the form of other share-based awards	6,518		8,447		6,378		9,342
Weighted-average shares used in computing diluted net income per share	434,416		427,518		419,416		433,303
Diluted net income per share	$	0.02	$	0.21	$	0.35	$	0.59
Antidilutive potential common shares in the form of:(1)
Warrants issued in conjunction with the 2020 Convertible Notes (2)	36,316		36,125		36,251		26,453
Stock options	2,838		1,109		2,029		934
Other share-based awards	2,120		100		1,140		33

⁽¹⁾  These amounts are excluded from the computation of diluted net income per share.

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⁽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 $15.83 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 $20.52 per share for a quarterly period, the Company’s weighted-average shares used in computing diluted net income per share will be impacted by the effect of the additional potential shares that may be issued related to the warrants using the treasury stock method. The convertible note hedge is not considered for purposes of the diluted earnings per share calculation, as its effect would be antidilutive.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the Condensed Consolidated Financial Statements and the notes thereto included in Item 1 of this Quarterly Report on Form 10-Q and with Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report filed on Form 10-K with the Securities and Exchange Commission on December 22, 2015. This section and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements that involve risks and uncertainties. Forward-looking statements can also be identified by words such as “expects,” “anticipates,” “assumes,” “targets,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “may,” “should,” “could,” “depend,”and variations of such words and similar expressions. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in the subsection entitled “Risk Factors” below.

Overview

We are a leading supplier of networking hardware, software, and services for businesses and organizations of various types and sizes. Our end customers include global enterprises and other organizations that use our products and services as part of their communications infrastructure and service providers, such as telecommunication firms, cable operators, and mobile carriers that use our products and services as part of their commercial operations. Our business model is focused on two key markets: Storage Area Networking (“SAN”), where we offer our SAN products, including modular directors, fixed-configuration and embedded switches, as well as network management and monitoring capabilities; and Internet Protocol (“IP”) Networking, where we offer IP routers, Ethernet switches, wireless access points and controllers, network security, analytics, and monitoring, as well as products used to manage application delivery. Our IP Networking products are available in modular and fixed hardware-based form factors and can be deployed in both traditional network and next-generation fabric designs. Our IP Networking products also include a range of virtualized network software offerings, including a virtual routing software suite, application delivery controller and load balancer, and a cloud-based wireless controller offering. In addition, for mobile service providers, our products include a virtual evolved packet core (“vEPC”) solution and a software analytics probe and application monitoring application. We also provide product-related customer support and services in both our SAN business and IP Networking business.

Key customer information technology (“IT”) initiatives, such as virtualization, enterprise mobility, data center consolidation, cloud computing, and migration to higher performance technologies, such as solid state storage, continue to rely on our mission-critical SAN-based solutions. We are known as a storage networking innovator and have a leading SAN market share position. Our SAN business strategy is to continue to expand and diversify our partner base and introduce new, innovative solutions for both our large installed base and potential new customers. For example, we recently launched our Gen 6 Fibre Channel SAN platform. This next generation of switches and directors delivers superior performance and scalability designed to support the demanding workloads from mission-critical applications. In addition, we continue to add new SAN partners, expand relationships with existing partners, and introduce new products, such as the Brocade Analytics Monitoring Platform. This new platform provides customers the ability to improve operational performance, stability, and security within their storage environments.

Our IP Networking business strategies are intended to increase new customer accounts and expand our current market share through product innovations, acquisitions, and the development and expansion of our routes to market. Examples include Ethernet fabric switches, virtualized software networking products, and the acquisition of Ruckus Wireless, Inc. (“Ruckus”), which was completed on May 27, 2016. The Ruckus acquisition, which provides us access to both the Ruckus product portfolio and Ruckus’ channels to market, enhances our scale and competitive positioning in both the enterprise and service provider markets and compliments our mobility strategy that we announced in February 2016. Longer term, we expect the Ruckus acquisition to strengthen our ability to pursue emerging opportunities around 5G mobile services, Internet of Things, Smart Cities, in-building LTE, and cellular/Wi-Fi convergence.

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The success of our IP Networking business, in particular, will depend on customers recognizing the benefits of upgrading their data center networks to fabric-based networking architectures, upgrading their wireline and wireless infrastructure at the network edge, and adopting our virtualized software-based networking solutions. In particular, our future success in this area would be negatively impacted if the technological transition to virtual software-based solutions does not occur at the anticipated rate or at all. While our software networking product revenues have not been material to date, there is customer interest in software networking products, and we believe that customers prefer to buy networking products from suppliers that offer a portfolio of solutions that address their current and future needs. We plan to continue to support our growth strategy with continuous innovation, leveraging the strategic investments we have made in our core businesses, developing emerging technologies such as software-defined networking (“SDN”), network functions virtualization (“NFV”), and network visibility and analytics (“NVA”), introducing new products, making strategic acquisitions, and enhancing our existing partnerships and forming new partnerships through our various distribution channels.

We continue to expand our software networking capabilities through technology innovation and strategic acquisitions. In September 2014, we completed an acquisition that enhances our leadership in NFV technology and gives us a new market to address with visibility and analytics solutions for mobile operators. In March 2015, we completed two acquisitions, in which we acquired a virtual application delivery controller (“vADC”) software product line and a vEPC software product line, respectively. The acquired vADC software expands our NFV portfolio and addresses the needs of service providers and enterprise accounts. The acquired vEPC software, which has formed the basis for a mobility platform for building open, next-generation networks, primarily addresses emerging mobile applications and services, including mobile virtual private networks. In addition to these acquisitions, in April 2015, we launched a portfolio of IP Networking products designed specifically to support IP storage deployments.

We continue to face multiple challenges as customers consider moving specific workloads to the cloud, evaluate hyper-converged architectures, and assess new architectures based on software, servers, and a mix of proprietary- and commodity-networking hardware. We also continue to be affected by worldwide macroeconomic conditions and face the possibility that these conditions could deteriorate and create a more cautious capital spending environment in the IT sector. In addition, U.S. federal customers are important to our business, and spending by the U.S. government can be variable and difficult to predict. We are also cautious about the stability and health of certain international markets and current global and country-specific dynamics, such as the drop in the value of the euro and the Chinese yuan versus the U.S. dollar in the past fiscal year, slowing economic growth in China, Russia-related geopolitical uncertainty, and the withdrawal of the United Kingdom from the European Union as voted by the British citizens during the June 23, 2016, referendum, also commonly known as Brexit. These factors may impact our business and those of our partners. Our diversified portfolio of products helps mitigate the effect of some of these challenges, and we expect IT spending levels to generally rise in the long term. However, it is difficult for us to offset the effects of short-term reductions in IT spending. In addition, we are making investments in software offerings and people with software-oriented skill sets to adapt as the market transitions.

We expect our SAN and IP Networking revenues to fluctuate depending on the demand for our existing and future products and services, and the quality of the sales support for our products and services from our distribution and reseller partners, as well as the timing of product transitions by our original equipment manufacturer (“OEM”) partners. The average selling prices per port for our SAN and IP Networking products have typically declined over time, unless impacted favorably by a new product introduction or product mix, and we expect this dynamic to continue.

Our plans for our operating cash flows are to provide liquidity for operations, capital investment, and other strategic initiatives, including investments and acquisitions to strengthen our networking portfolios, and to return capital to stockholders in the form of stock repurchases and dividends. In September 2015, we reconfirmed our priorities for the use of operating cash flows and our intent to, after those priorities are met, return at least 60% of our annual adjusted free cash flow to stockholders in the form of stock repurchases or dividends. We define adjusted free cash flow as operating cash flow, adjusted for the impact of the excess tax benefits from stock-based compensation, less capital expenditures. In the third quarter of fiscal year 2016, our Board of Directors declared and paid a quarterly cash dividend of $0.055 per share of our common stock for a total of $25.3 million. On August 24, 2016, our Board of Directors declared a quarterly cash dividend of $0.055 per share of our common stock to be paid on October 3, 2016, to stockholders of record as of the close of market on September 9, 2016. Future dividend payments are subject to review and approval on a quarterly basis by our Board of Directors.

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Overview of Financial Results

The following table, which includes results of operations for the Ruckus business from the acquisition date of May 27, 2016, provides an overview of some of our financial results (in thousands, except percentages):

	Three Months Ended						Nine Months Ended
	July 30, 2016			August 1, 2015			July 30, 2016			August 1, 2015
Total net revenues	$	590,721		$	551,819		$	1,688,311		$	1,674,633
Gross margin	$	356,899		$	371,904		$	1,096,025		$	1,133,796
Gross margin, as a percentage of total net revenues	60.4		%	67.4		%	64.9		%	67.7		%
Income from operations	$	20,594		$	119,849		$	224,225		$	373,459
Income from operations, as a percentage of total net revenues	3.5		%	21.7		%	13.3		%	22.3		%
Net income	$	10,495		$	91,667		$	147,226		$	255,974

Results of Operations

Our results of operations for the three and nine months ended July 30, 2016, and August 1, 2015, are reported in this discussion and analysis as a percentage of total net revenues, except for gross margin with respect to each reportable segment, which is indicated as a percentage of the respective reportable segment net revenues.

Revenues. Our revenues are derived primarily from sales of our SAN and IP Networking products and support and services related to these products, which we call Global Services.

Our total net revenues are summarized as follows (in thousands, except percentages):

	Three Months Ended
	July 30, 2016				August 1, 2015
	Net Revenues		% of Net Revenues		Net Revenues		% of Net Revenues		Increase/(Decrease)			% Change
SAN Products	$	282,114	47.7	%	$	309,451	56.1	%	$	(27,337	)	(8.8	)%
IP Networking Products	208,881		35.4	%	153,749		27.9	%	55,132			35.9	%
Global Services	99,726		16.9	%	88,619		16.0	%	11,107			12.5	%
Total net revenues	$	590,721	100.0	%	$	551,819	100.0	%	$	38,902		7.0	%

	Nine Months Ended
	July 30, 2016				August 1, 2015
	Net Revenues		% of Net Revenues		Net Revenues		% of Net Revenues		Increase/(Decrease)			% Change
SAN Products	$	925,799	54.8	%	$	976,362	58.3	%	$	(50,563	)	(5.2	)%
IP Networking Products	474,556		28.1	%	431,319		25.8	%	43,237			10.0	%
Global Services	287,956		17.1	%	266,952		15.9	%	21,004			7.9	%
Total net revenues	$	1,688,311	100.0	%	$	1,674,633	100.0	%	$	13,678		0.8	%

The increase in total net revenues for the three months ended July 30, 2016, compared with the three months ended August 1, 2015, reflects higher sales for our IP Networking products and Global Services offerings, partially offset by lower sales for our SAN products, as further described below.

• The decrease in SAN product revenues was caused by a decrease in director product revenues, primarily due to the weaker storage demand environment, partially offset by a slight increase in embedded and fixed-configuration switch product revenues. As a result, the number of ports shipped decreased by 10.0% during the three months ended July 30, 2016, the effect of which was partially offset by a 1.3% increase in the average selling price per port related to favorable product mix;

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• The increase in IP Networking product revenues primarily reflects $73.1 million in revenue from our newly acquired wireless products due to the recent acquisition of Ruckus and, to a lesser extent, higher software networking product revenue primarily due to growth in the virtual router, SDN controller, and network visibility and analytics offerings. The increase is partially offset by a decrease in switch and routing product revenues primarily due to weaker demand from federal, large network carrier, and enterprise customers; and

• The increase in Global Services revenues was primarily due to an increase in SAN and IP hardware support renewal contracts, an increase in service volume related to our new wireless products from the acquisition of Ruckus, higher vADC software support revenue, and higher support and services revenue from federal customers.

The increase in total net revenues for the nine months ended July 30, 2016, compared with the nine months ended August 1, 2015, reflects higher sales for our IP Networking products and Global Services offerings, partially offset by lower sales for our SAN products, as further described below.

• The decrease in SAN product revenues was caused by a decrease in director, embedded, and fixed-configuration switch product revenues, primarily due to the weaker storage demand environment. The number of ports shipped decreased by 9.6% during the nine months ended July 30, 2016, due to the challenging business environment, the effect of which was partially offset by a 4.9% increase in the average selling price per port related to improved product mix;

• The increase in IP Networking product revenues primarily reflects $73.1 million in revenue from our newly acquired wireless products due to the recent acquisition of Ruckus and, to a lesser extent, increases in campus switching, data center switching, and software networking products. Campus switch revenue growth is attributed to the education vertical market, particularly the stimulus from the U.S. federal government funding of technology improvements for schools, commonly known as the E-Rate program. Data center switching revenues increased due to stronger enterprise customer demand for fixed switches. Software networking revenues increased primarily due to the vADC software product line acquired in the second quarter of fiscal year 2015. This increase was partially offset by decreases in revenue from data center routing products, primarily due to weaker demand from large network carrier, enterprise, and federal customers; and

• The increase in Global Services revenues was primarily due to an increase in support revenue related to our vADC software product line acquired in the second quarter of fiscal year 2015, an increase in renewal support contracts for our SAN and IP hardware products, an increase in service volume related to our newly acquired wireless products, an increase in support and services revenue from federal customers, as well as an increase in professional services revenues.

Our total net revenues by geographic area are summarized as follows (in thousands, except percentages):

	Three Months Ended
	July 30, 2016				August 1, 2015
	Net Revenues		% of Net Revenues		Net Revenues		% of Net Revenues		Increase/(Decrease)			% Change
United States (“U.S.”)	$	339,460	57.4	%	$	317,183	57.5	%	$	22,277		7.0	%
Europe, the Middle East and Africa (1)	122,371		20.7	%	142,050		25.7	%	(19,679		)	(13.9	)%
Asia Pacific	91,967		15.6	%	56,160		10.2	%	35,807			63.8	%
Japan	25,315		4.3	%	22,065		4.0	%	3,250			14.7	%
Canada, Central and South America	11,608		2.0	%	14,361		2.6	%	(2,753		)	(19.2	)%
Total net revenues	$	590,721	100.0	%	$	551,819	100.0	%	$	38,902		7.0	%

⁽¹⁾  Includes net revenues of $59.3 million and $91.5 million for the three months ended July 30, 2016, and the three months ended August 1, 2015, respectively, relating to the Netherlands.

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	Nine Months Ended
	July 30, 2016				August 1, 2015
	Net Revenues		% of Net Revenues		Net Revenues		% of Net Revenues		Increase/(Decrease)			% Change
U.S.	$	920,137	54.5	%	$	954,751	57.0	%	$	(34,614	)	(3.6	)%
Europe, the Middle East and Africa (1)	436,409		25.8	%	447,199		26.7	%	(10,790		)	(2.4	)%
Asia Pacific	222,978		13.2	%	163,861		9.8	%	59,117			36.1	%
Japan	75,546		4.5	%	67,768		4.0	%	7,778			11.5	%
Canada, Central and South America	33,241		2.0	%	41,054		2.5	%	(7,813		)	(19.0	)%
Total net revenues	$	1,688,311	100.0	%	$	1,674,633	100.0	%	$	13,678		0.8	%

⁽¹⁾  Includes net revenues of $260.8 million and $295.6 million for the nine months ended July 30, 2016, and the nine months ended August 1, 2015, respectively, relating to the Netherlands.

Revenues are attributed to geographic areas based on where our products are shipped. However, certain OEM partners take possession of our products domestically and then distribute these products to their international customers. Because we account for those OEM revenues as domestic revenues, we cannot be certain of the extent to which our domestic and international revenue mix is impacted by the logistics practices of our OEM partners, but the end-user location data that is available indicates that international revenues comprise a larger percentage of our total net revenues than the attributed revenues above indicate.

International revenues for the three months endedJuly 30, 2016, was flat as a percentage of total net revenues compared with the three months endedAugust 1, 2015. International revenues for the nine months endedJuly 30, 2016, increased to 45.5% as a percentage of total net revenues compared with 43.0% for the nine months endedAugust 1, 2015, primarily due to a shift in the mix of OEM customer delivery location for our SAN products.

A significant portion of our revenues is concentrated among a relatively small number of OEM customers. For the three months endedJuly 30, 2016, two customers each individually accounted for 12% of our total net revenues for a combined total of 24% of total net revenues. For the three months endedAugust 1, 2015, three customers individually accounted for 16%, 15%, and 12% of our total net revenues for a combined total of 43% of total net revenues. For the nine months ended July 30, 2016, three customers individually accounted for 17%, 11%, and 10% of our total net revenues for a combined total of 38% of total net revenues. For the nine months ended August 1, 2015, three customers individually accounted for 17%, 13%, and 11% of our total net revenues for a combined total of 41% of total net revenues. We expect that a significant portion of our future revenues will continue to come from sales of products to a relatively small number of OEM partners and to the U.S. federal government and its individual agencies through our distributors and resellers. Therefore, the loss of, or significant decrease in the level of sales to, or a change in the ordering pattern of any one of these customers could seriously harm our financial condition and results of operations.

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Gross margin. Gross margin is summarized as follows (in thousands, except percentages). Gross margin as a percentage of net revenues is indicated as a percentage of the respective reportable segment net revenues, except for total gross margin, which is stated as a percentage of total net revenues.

	Three Months Ended
	July 30, 2016				August 1, 2015
	Gross Margin		% of Net Revenues		Gross Margin		% of Net Revenues		Increase/(Decrease)			% Points Change
SAN Products	$	211,484	75.0	%	$	235,794	76.2	%	$	(24,310	)	(1.2	)%
IP Networking Products	91,019		43.6	%	83,163		54.1	%	7,856			(10.5	)%
Global Services	54,396		54.5	%	52,947		59.7	%	1,449			(5.2	)%
Total gross margin	$	356,899	60.4	%	$	371,904	67.4	%	$	(15,005	)	(7.0	)%

	Nine Months Ended
	July 30, 2016				August 1, 2015
	Gross Margin		% of Net Revenues		Gross Margin		% of Net Revenues		Increase/(Decrease)			% Points Change
SAN Products	$	701,993	75.8	%	$	743,212	76.1	%	$	(41,219	)	(0.3	)%
IP Networking Products	233,565		49.2	%	232,688		53.9	%	877			(4.7	)%
Global Services	160,467		55.7	%	157,896		59.1	%	2,571			(3.4	)%
Total gross margin	$	1,096,025	64.9	%	$	1,133,796	67.7	%	$	(37,771	)	(2.8	)%

The changes in gross margin percentage for each reportable segment for the three months ended July 30, 2016, compared with the three months ended August 1, 2015, were primarily due to the following factors (the percentages below reflect the impact on gross margin):

• SAN gross margins relative to net revenues decreased primarily due to higher salaries and higher variable incentive compensation;

• IP Networking gross margins relative to net revenues decreased primarily due to the amortization of the purchase accounting adjustment in connection with the preliminary fair valuation of inventory acquired from Ruckus. In addition, IP Networking gross margins decreased due to amortization of IP Networking-related intangible assets acquired in the second and third quarters of fiscal year 2016; and

• Global Services gross margins relative to net revenues decreased primarily due to higher salaries and higher variable incentive compensation, as well as increased personnel as a result of the Ruckus acquisition and increased staffing related to our continued focus on customer satisfaction and our software business.

The changes in gross margin percentage for each reportable segment for the nine months ended July 30, 2016, compared with the nine months ended August 1, 2015, were primarily due to the following factors (the percentages below reflect the impact on gross margin):

• SAN gross margins relative to net revenues decreased primarily due to higher salaries and higher variable incentive compensation;

• IP Networking gross margins relative to net revenues decreased primarily due to the amortization of the purchase accounting adjustment in connection with the preliminary fair valuation of inventory acquired from Ruckus. In addition, IP Networking gross margins decreased due to amortization of IP Networking-related intangible assets acquired in the second quarter of fiscal year 2015 and the second and third quarters of fiscal year 2016; and

• Global Services gross margins relative to net revenues decreased primarily due to higher salaries and higher variable incentive compensation, as well as other compensation expense due to increased personnel from the Ruckus acquisition and increased staffing related to our continued focus on customer satisfaction and our software business.

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Research and development expenses. Research and development (“R&D”) expenses consist primarily of compensation and related expenses for personnel engaged in engineering and R&D activities, fees paid to consultants and outside service providers, engineering expenses, which primarily consist of non-recurring engineering charges and prototyping expenses related to the design, development, testing, and enhancement of our products, depreciation related to engineering and test equipment, and allocated expenses related to legal, IT, facilities, and other shared functions.

R&D expenses are summarized as follows (in thousands, except percentages):

	July 30, 2016				August 1, 2015
R&D expenses:	Expense		% of Net Revenues		Expense		% of Net Revenues		Increase		% Change
Three months ended	$	114,996	19.5	%	$	85,072	15.4	%	$	29,924	35.2	%
Nine months ended	$	297,516	17.6	%	$	262,173	15.7	%	$	35,343	13.5	%

R&D expenses increased for the three months ended July 30, 2016, compared with the three months ended August 1, 2015, primarily due to the following (in thousands):

	Increase
Salaries and other compensation	$	22,323
Stock-based compensation expense	3,980
Expenses related to legal, IT, facilities, and other shared functions	2,625
Various individually insignificant items	996
Total change	$	29,924

Salaries and other compensation increased primarily due to increased personnel as a result of the Ruckus acquisition and higher variable incentive compensation expense. Stock-based compensation expense increased primarily due to the restricted stock units and options assumed as part of the Ruckus acquisition. Expenses related to legal, IT, facilities, and other shared functions allocated to R&D activities increased overall primarily due to higher facilities costs primarily as a result of the incremental expense related to the Ruckus acquisition.

R&D expenses increased for the nine months ended July 30, 2016, compared with the nine months ended August 1, 2015, primarily due to the following (in thousands):

	Increase/(Decrease)
Salaries and other compensation	$	29,441
Stock-based compensation expense	6,566
Various individually insignificant items	(664		)
Total change	$	35,343

Salaries and other compensation increased primarily due to increased personnel from the acquisitions that occurred in the second quarter of fiscal year 2015 and third quarter of fiscal year 2016. Stock-based compensation expense increased primarily due to the restricted stock units and options assumed as part of the Ruckus acquisition, higher grant-date fair values of grants being amortized in the recent years due to a gradual increase in our stock price since fiscal year 2014, and lower estimated forfeiture rates used in fiscal year 2016 than in fiscal year 2015.

Sales and marketing expenses. Sales and marketing (“S&M”) expenses consist primarily of salaries, commissions, and related expenses for personnel engaged in sales and marketing functions, costs associated with promotional and marketing programs, travel and entertainment expenses, and allocated expenses related to legal, IT, facilities, and other shared functions.

S&M expenses are summarized as follows (in thousands, except percentages):

	July 30, 2016				August 1, 2015
S&M expenses:	Expense		% of Net Revenues		Expense		% of Net Revenues		Increase		% Change
Three months ended	$	167,983	28.4	%	$	144,883	26.3	%	$	23,100	15.9	%
Nine months ended	$	468,743	27.8	%	$	428,199	25.6	%	$	40,544	9.5	%

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S&M expenses increased for the three months endedJuly 30, 2016, compared with the three months endedAugust 1, 2015, primarily due to the following (in thousands):

	Increase
Salaries and other compensation	$	9,735
Stock-based compensation expense	7,155
Expenses related to legal, IT, facilities, and other shared functions	2,734
Travel and entertainment expense	1,541
Various individually insignificant items	1,935
Total change	$	23,100

Salaries and other compensation increased primarily due to increased personnel as a result of the Ruckus acquisition, partially offset by lower variable incentive compensation expense. Stock-based compensation expense increased primarily due to the restricted stock units and options assumed as part of the Ruckus acquisition. Expenses related to legal, IT, facilities, and other shared functions allocated to S&M activities increased overall primarily due to higher facilities costs primarily as a result of the incremental expense related to the Ruckus acquisition. Travel and entertainment expense increased primarily due to the sales force assumed in connection with the Ruckus acquisition.

S&M expenses increased for the nine months endedJuly 30, 2016, compared with the nine months endedAugust 1, 2015, primarily due to the following (in thousands):

	Increase/(Decrease)
Salaries and other compensation	$	23,278
Stock-based compensation expense	12,236
Outside services expense	3,186
Expenses related to legal, IT, facilities, and other shared functions	2,609
Various individually insignificant items	(765		)
Total change	$	40,544

Salaries and other compensation increased primarily due to increased personnel as a result of the Ruckus acquisition. Stock-based compensation expense increased primarily due to the restricted stock units and options assumed as part of the Ruckus acquisition, higher grant-date fair values of grants being amortized in the recent years due to a gradual increase in our stock price since fiscal year 2014, and lower estimated forfeiture rates used in fiscal year 2016 than in fiscal year 2015. Outside services expense increased primarily due to consulting services and sales training expenses. Expenses related to legal, IT, facilities, and other shared functions allocated to S&M activities increased primarily due to higher facilities costs primarily as a result of the incremental expense related to the Ruckus acquisition.

General and administrative expenses. General and administrative (“G&A”) expenses consist primarily of compensation and related expenses for corporate management, finance and accounting, human resources, legal, IT, facilities, and investor relations, as well as recruiting expenses, professional fees, and other corporate expenses, less certain expenses allocated to cost of revenue, R&D, and sales and marketing.

G&A expenses are summarized as follows (in thousands, except percentages):

	July 30, 2016				August 1, 2015
G&A expenses:	Expense		% of Net Revenues		Expense		% of Net Revenues		Increase		% Change
Three months ended	$	32,960	5.6	%	$	20,422	3.7	%	$	12,538	61.4	%
Nine months ended	$	78,180	4.6	%	$	65,815	3.9	%	$	12,365	18.8	%

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G&A expenses increased for the three months ended July 30, 2016, compared with the three months ended August 1, 2015, primarily due to the following (in thousands):

	Increase
Stock-based compensation expense	$	7,061
Salaries and other compensation	3,631
Expenses related to legal, IT, facilities, and other shared functions	1,100
Various individually insignificant items	746
Total change	$	12,538

Stock-based compensation increased primarily due to the restricted stock units and options assumed as part of the Ruckus acquisition, higher grant-date fair values of grants being amortized in the recent years due to a gradual increase in our stock price since fiscal year 2014, and lower estimated forfeiture rates used in the third quarter of fiscal year 2016 than in the previous year, as well as an increase in employee stock purchase plan expense. Salaries and other compensation expense increased primarily due to increased personnel as a result of the Ruckus acquisition and higher variable incentive compensation expense. Expenses related to legal, IT, facilities, and other shared functions allocated to G&A activities increased primarily due to higher facilities costs primarily as a result of the incremental expense related to the Ruckus acquisition.

G&A expenses increased for the nine months ended July 30, 2016, compared with the nine months endedAugust 1, 2015, primarily due to the following (in thousands):

	Increase/(Decrease)
Stock-based compensation expense	$	7,437
Expenses related to legal, IT, facilities, and other shared functions	2,715
Salaries and other compensation	2,356
Various individually insignificant items	(143		)
Total change	$	12,365

Stock-based compensation expense increased primarily due to the restricted stock units and options assumed as part of the Ruckus acquisition, higher grant-date fair values of grants being amortized in the recent years due to a gradual increase in our stock price since fiscal year 2014, lower estimated forfeiture rates used in fiscal year 2016 than in fiscal year 2015, and an increase in restricted stock units with market conditions granted to employees in recent quarters. Expenses related to legal, IT, facilities, and other shared functions allocated to G&A activities increased primarily due to higher facilities costs primarily as a result of the incremental expense related to the Ruckus acquisition. Salaries and other compensation expense increased primarily due to increased personnel as a result of the Ruckus acquisition and higher variable incentive compensation expense.

Amortization of intangible assets. Amortization of intangible assets is summarized as follows (in thousands, except percentages):

	July 30, 2016				August 1, 2015
Amortization of intangible assets:	Expense		% of Net Revenues		Expense		% of Net Revenues		Increase		% Change
Three months ended	$	5,498	0.9	%	$	889	0.2	%	$	4,609	518.4	%
Nine months ended	$	7,302	0.4	%	$	1,654	0.1	%	$	5,648	341.5	%

The increase in amortization of intangible assets for the three months ended July 30, 2016, compared with the three months ended August 1, 2015, was primarily due to the addition of finite-lived intangible assets in connection with the acquisition of Ruckus, completion of the R&D efforts associated with our in-process research and development (“IPR&D”) intangible assets during the nine months ended July 30, 2016, as well as due to the acquisition completed in the second fiscal quarter of 2016. The increase in amortization of intangible assets for the nine months ended July 30, 2016, compared with the nine months ended August 1, 2015, was primarily due to the addition of intangible assets in connection with our acquisitions completed in the second fiscal quarter of 2015 and second and third fiscal quarters of 2016 (see Note 4, “Goodwill and Intangible Assets,” of the Notes to Condensed Consolidated Financial Statements).

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Acquisition and integration costs. Acquisition and integration costs are summarized as follows (in thousands, except percentages):

	July 30, 2016				August 1, 2015
Acquisition and integration costs:	Expense		% of Net Revenues		Expense		% of Net Revenues		Increase		% Change
Three months ended	$	14,868	2.5	%	$	789	0.1	%	$	14,079	*
Nine months ended	$	20,625	1.2	%	$	3,133	0.2	%	$	17,492	558.3	%

*    Not meaningful

The increase in acquisition and integration costs for the three and nine months ended July 30, 2016, compared with the three and nine months ended August 1, 2015, was primarily due to initial consulting services and other professional fees incurred in the second and third fiscal quarters of 2016 in connection with the Ruckus acquisition, which was much larger and therefore resulted in greater costs being incurred than the comparatively smaller two acquisitions completed in the second fiscal quarter of 2015 (see Note 3, “Acquisitions,” of the Notes to Condensed Consolidated Financial Statements).

Restructuring and other related benefits. Restructuring and other related benefits are summarized as follows (in thousands, except percentages):

	July 30, 2016					August 1, 2015
Restructuring and other related benefits:	Benefit			% of Net Revenues		Benefit			% of Net Revenues		(Increase)/Decrease		% Change
Nine months ended	$	(566	)	—	%	$	(637	)	—	%	$	71	(11.1	)%

We did not incur any restructuring and other related benefits for the three months ended July 30, 2016, and the three months ended August 1, 2015. Restructuring and other related benefits for the nine months ended July 30, 2016, were primarily due to a favorable change in lease terms for a certain facility. In addition, restructuring and other related benefits for the nine months ended August 1, 2015, were due to favorable changes in expected sublease terms and other related assumptions for estimated facilities lease losses (see Note 7, “Restructuring and Other Related Benefits,” of the Notes to Condensed Consolidated Financial Statements).

Interest expense. Interest expense primarily represents the interest cost associated with our senior secured notes, senior unsecured notes, and convertible senior unsecured notes (see Note 8, “Borrowings,” of the Notes to Condensed Consolidated Financial Statements).

Interest expense is summarized as follows (in thousands, except percentages):

	July 30, 2016					August 1, 2015
Interest expense:	Expense			% of Net Revenues		Expense			% of Net Revenues		(Increase)/Decrease			% Change
Three months ended	$	(13,462	)	(2.3	)%	$	(9,778	)	(1.8	)%	$	(3,684	)	(37.7	)%
Nine months ended	$	(33,282	)	(2.0	)%	$	(45,754	)	(2.7	)%	$	12,472		27.3	%

Interest expense increased for the three months ended July 30, 2016, compared with the three months ended August 1, 2015, primarily due to the completion of the $800.0 million term loan in connection with the Ruckus acquisition (see Note 8, “Borrowings,” of the Notes to Condensed Consolidated Financial Statements).

In January 2015, we issued $575.0 million in aggregate principal amount of 1.375% convertible senior unsecured notes due 2020 (the “2020 Convertible Notes”) in a private placement. The proceeds from this offering were used to redeem all of the outstanding 6.875% senior secured notes due 2020 (the “2020 Notes”), which had a higher interest rate, and for general corporate purposes. Interest expense decreased for the nine months ended July 30, 2016, compared with the nine months ended August 1, 2015, primarily due to the $15.1 million expense that we recorded in the first quarter of fiscal year 2015 for the call premium, debt issuance costs, and original issue discount relating to the redemption of our 2020 Notes. The decrease in interest expense was also due to the refinancing of the 2020 Notes at a lower interest rate.

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Interest and other income, net. Interest and other income, net, is summarized as follows (in thousands, except percentages):

	July 30, 2016				August 1, 2015
Interest and other income, net:	Income		% of Net Revenues		Income		% of Net Revenues		Increase		% Change
Three months ended	$	1,557	0.3	%	$	947	0.2	%	$	610	64.4	%
Nine months ended	$	3,317	0.2	%	$	854	0.1	%	$	2,463	288.4	%

The increase in interest and other income, net, for the three and nine months ended July 30, 2016, was primarily related to an increase in interest income for our money market funds due to an increase in interest rates. Interest and other income, net, was not material for the three and nine months ended August 1, 2015.

Income tax expense (benefit).Income tax expense (benefit) and the effective tax rates are summarized as follows (in thousands, except effective tax rates):

	Three Months Ended						Nine Months Ended
	July 30, 2016			August 1, 2015			July 30, 2016			August 1, 2015
Income tax expense (benefit)	$	(1,806	)	$	19,351		$	47,034		$	72,585
Effective tax rate	(20.8		)%	17.4		%	24.2		%	22.1		%

In general, our provision for income taxes differs from the tax computed at the U.S. federal statutory tax rate due to state taxes, the effect of 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. Earnings of our subsidiaries outside of the United States primarily relate to our European, Asia Pacific, and Japan businesses.

We recorded an income tax benefit for the three months ended July 30, 2016, primarily due to a discrete benefit from reserve releases as a result of reaching a settlement on certain transfer pricing issues with the Internal Revenue Service (“IRS”) and certain expired statute of limitations.

The effective tax rate for the three and nine months ended July 30, 2016, was lower than the U.S. federal statutory tax rate of 35% primarily due to a discrete benefit from reserve releases as a result of reaching a settlement on certain transfer pricing issues with the IRS and benefits from the federal research and development tax credit, which was permanently reinstated retroactive to January 1, 2015, by the passage of the Protecting Americans from Tax Hikes Act of 2015.

The effective tax rate for the nine months ended July 30, 2016, was higher compared with the effective tax rate for the nine months ended August 1, 2015, primarily due to an increase in unrecognized tax benefits related to certain intercompany transactions during the nine months ended July 30, 2016.

Our income tax provision could change as a result of many factors, including the effects of changing tax laws and regulations or changes to the mix of IP Networking versus SAN products, which have different gross margins, and changes to the mix of domestic versus international profits. Many of these factors are largely impacted by the buying behavior of our OEM and channel partners. As estimates and judgments are used to project such domestic and international earnings, the impact to our future tax provision could vary if the current estimates or assumptions change. In addition, we do not forecast discrete events, such as settlement of tax audits with governmental authorities, due to their inherent uncertainty. Such settlements have in the past, and could in the future, materially impact our tax expense.

For further discussion of our income tax provision, see Note 13, “Income Taxes,” of the Notes to Condensed Consolidated Financial Statements.

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Liquidity and Capital Resources

	July 30, 2016			October 31, 2015			Decrease
	(In thousands)
Cash and cash equivalents	$	1,153,074		$	1,440,882		$	(287,808	)
Percentage of total assets	24		%	36		%

We use cash generated by operations as our primary source of liquidity. We expect that cash provided by operating activities will fluctuate in future periods as a result of a number of factors, including fluctuations in our revenues, the timing of product shipments during the quarter, accounts receivable collections, inventory and supply chain management, the timing and amount of tax, and other payments or receipts. For additional discussion, see “Part II—Other Information, Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q.

Based on past performance and current expectations, we believe that internally generated cash flows and cash on hand will be generally sufficient to support business operations, capital expenditures, stock repurchases, cash dividends, contractual obligations, and other liquidity requirements, including our debt service requirements (which increased as a result of the additional indebtedness incurred in connection with the Ruckus acquisition on May 27, 2016), associated with our operations for at least the next 12 months. We may also use our operating cash flows or access sources of capital, or a combination thereof, to strengthen our networking portfolios through acquisitions and strategic investments. In addition, we have up to $100 million available under our revolving credit facility to provide additional liquidity. There are no other transactions, arrangements, or other relationships with unconsolidated entities or other persons that are reasonably likely to materially affect liquidity of, availability of, or our requirements for, capital resources.

Financial Condition

Our operating cash flows provide liquidity for operations, capital investment, and other strategic initiatives, including investments and acquisitions to strengthen our networking portfolios, and to return capital to stockholders in the form of stock repurchases or dividends. We have in the past stated our priorities for the use of operating cash flows and our intent to, after those priorities are met, return at least 60% of our annual adjusted free cash flow to stockholders in the form of stock repurchases or dividends. Adjusted free cash flow is operating cash flow, adjusted for the impact of the excess tax benefits from stock-based compensation, less capital expenditures. In the third quarter of fiscal year 2014, our Board of Directors initiated a quarterly cash dividend of $0.035 per share of our common stock. Beginning in the third quarter of fiscal year 2015, our Board of Directors increased our quarterly cash dividend to $0.045 per share of our common stock. Dividends of $0.045 per share were declared and paid in the first and second quarters of fiscal year 2016. Beginning in the third quarter of fiscal year 2016, our Board of Directors increased our quarterly cash dividend to and subsequently declared a dividend of $0.055 per share of our common stock. On August 24, 2016, our Board of Directors declared a quarterly cash dividend of $0.055 per share of our common stock to be paid on October 3, 2016, to stockholders of record as of the close of market on September 9, 2016. Future dividends are subject to review and approval on a quarterly basis by our Board of Directors.

For the nine months ended July 30, 2016, we generated $252.9 million in cash from operating activities, which was due to our net income excluding non-cash items, partially offset by cash used for changes in assets and liabilities.

Net cash used in investing activities for the nine months ended July 30, 2016, totaled $476.1 million and was primarily the result of $564.9 million in cash paid for acquisitions and $59.8 million in purchases of property and equipment, partially offset by the $150.3 million in proceeds from maturities and sale of short-term investments acquired from Ruckus.

Net cash used in financing activities for the nine months ended July 30, 2016, totaled $63.7 million and was primarily the result of $841.6 million in stock repurchases and $61.7 million in cash dividend payments, partially offset by the $787.3 million in proceeds from the term loan and $49.2 million in proceeds from the issuance of common stock from Employee Stock Purchase Plan purchases and stock option exercises. For the nine months ended July 30, 2016, we repurchased 92.0 million shares of our common stock pursuant to our stock repurchase program.

Net proceeds from the issuance of common stock in connection with employee participation in our equity compensation plans have historically been a significant component of our liquidity. The extent to which we receive proceeds from these plans can increase or decrease based upon changes in the market price of our common stock, and from the amount and type of awards granted. For example, we have changed the mix of restricted stock unit and stock option awards granted towards granting fewer stock option awards in recent years, which reduces the net proceeds from the issuance of common stock in connection with participation in our equity compensation plans. As a result, our cash flow resulting from the issuance of common stock in connection with employee participation in our equity compensation plans has varied over time.

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A majority of our accounts receivable balance is derived from sales to our OEM partners. We perform ongoing credit evaluations of our customers and generally do not require collateral or security interests on accounts receivable balances. We have established reserves for credit losses and sales allowances. While we have not experienced material credit losses in any of the periods presented, there can be no assurance that we will not experience material credit losses in the future.

Nine Months EndedJuly 30, 2016, Compared to Nine Months EndedAugust 1, 2015

Operating Activities. Cash provided by operating activities is net income adjusted for certain non-cash items and changes in certain assets and liabilities.

Net cash provided by operating activities decreased by $14.3 million primarily due to decreased accounts receivable collections and higher payments with respect to increased operating expenses and acquisition costs due to Ruckus. Lower payments with respect to employee variable incentive compensation partially offset this decrease in net cash provided by operating activities.

Investing Activities. Net cash used in investing activities increased by $319.4 million primarily due to an increase of $469.4 million of cash used for the acquisitions during the nine months ended July 30, 2016, as compared to the cash used for the acquisitions during the nine months ended August 1, 2015, partially offset by the $150.3 million in proceeds from maturities and sale of short-term investments during the nine months ended July 30, 2016.

Financing Activities. Net cash used in financing activities increased by $22.9 million primarily due to the increase in common stock repurchases in the nine months ended July 30, 2016, as compared with the nine months ended August 1, 2015, partially offset by the increase in net proceeds received from borrowings in the nine months ended July 30, 2016, as compared with the nine months ended August 1, 2015.

Liquidity

Manufacturing and Purchase Commitments. We have manufacturing arrangements with contract manufacturers under which we provide up to 12-month product forecasts and place purchase orders in advance of the scheduled delivery of products to our customers. Our purchase commitments reserve reflects our estimate of purchase commitments we do not expect to utilize in normal operations in accordance with our policy (see Note 9, “Commitments and Contingencies,” of the Notes to Condensed Consolidated Financial Statements).

Income Taxes. We intend to reinvest indefinitely all current and accumulated earnings of our foreign subsidiaries for expansion of our business operations outside the United States. Therefore, we do not currently accrue U.S. income taxes on the earnings of our foreign subsidiaries.

Our existing cash and cash equivalents totaled $1.2 billion as of July 30, 2016. Of this amount, approximately 86% was held by our foreign subsidiaries. We do not currently anticipate a need for these funds held by our foreign subsidiaries for our domestic operations. Under current tax laws and regulations, if these funds are distributed to any of our U.S. entities in the form of dividends or otherwise, we may be subject to additional U.S. income taxes (subject to an adjustment for foreign tax credits) and foreign withholding taxes.

The IRS and other tax authorities regularly examine our income tax returns (see Note 13, “Income Taxes,” of the Notes to Condensed Consolidated Financial Statements). We believe we have adequate reserves for all open tax years.

Senior Unsecured Notes. In January 2013, we issued $300.0 million in aggregate principal amount of the 2023 Notes. We used the proceeds from the issuance of the 2023 Notes and cash on hand to redeem all of the outstanding principal amount of senior secured notes due 2018 in the second quarter of fiscal year 2013. See Note 8, “Borrowings,” of the Notes to Condensed Consolidated Financial Statements.

The 2023 Notes were issued pursuant to an indenture, dated as of January 22, 2013, among the subsidiary guarantors named therein, us, and Wells Fargo Bank, National Association, as trustee (the “2023 Indenture”). The 2023 Indenture contains covenants that, among other things, restrict our ability and the ability of our subsidiaries to:

• Incur certain liens and enter into certain sale-leaseback transactions;

• Create, assume, incur, or guarantee additional indebtedness of our 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 our or our subsidiaries’ assets.

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These covenants are subject to a number of other limitations and exceptions as set forth in the 2023 Indenture. We were in compliance with all applicable covenants of the 2023 Indenture as of July 30, 2016.

Convertible Senior Unsecured Notes. In January 2015, we issued $575.0 million in aggregate principal amount of the 2020 Convertible Notes pursuant to an indenture, dated as of January 14, 2015, between us and Wells Fargo Bank, National Association, as the trustee (the “2015 Indenture”). Net of an original issue discount, we received $565.7 million in proceeds from the offering of the 2020 Convertible Notes. We used a portion of the net proceeds to discharge the 2020 Indenture and redeem all of the outstanding principal amount of the 2020 Notes, pay $35.0 million for the cost of the convertible note hedge transactions, net of the proceeds from the issuance of warrants, and to repurchase approximately 4.1 million shares of our common stock for $48.9 million at a purchase price of $11.80 per share, which was the closing price on January 8, 2015, the date of the pricing of the 2020 Convertible Notes. We intend to use the remaining net proceeds of $159.6 million for general corporate purposes, including potential acquisitions and other business development activities. The 2020 Convertible Notes are unsecured and have a significantly lower interest rate of 1.375% compared to 6.875% for the 2020 Notes. Interest is payable on January 1 and July 1 of each year, beginning on July 1, 2015. See Note 8, “Borrowings,” of the Notes to Condensed Consolidated Financial Statements.

Senior Credit Facility. On May 27, 2016, we entered into a credit agreement (the “Credit Agreement”) with Wells Fargo Bank, Deutsche Bank AG New York Branch, SunTrust Bank and certain other lenders. The Credit Agreement provided us with a term loan facility of $800 million, which was fully drawn at the time of, and the proceeds used to fund in part, the Ruckus acquisition, and a revolving credit facility of $100 million, which is available to finance ongoing working capital requirements and other general corporate purposes. The initial term loan has a term of five years and bears interest at floating rates based on LIBOR, plus a 1.5% interest margin. See Note 8, “Borrowings,” of the Notes to Condensed Consolidated Financial Statements.

There were no principal amounts outstanding under the revolving credit facility, and the full $100 million was available for future borrowing under the revolving credit facility as of July 30, 2016.

We are required to make mandatory prepayments of the term loan facility (without payment of a premium or penalty) with net cash proceeds from issuances of debt (other than certain permitted debt), net cash proceeds from certain non-ordinary course asset sales (subject to reinvestment rights and other exceptions), and 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 Credit Agreement contains financial maintenance covenants, including a 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 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, our and certain of our 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.

These covenants are subject to a number of other limitations and exceptions as set forth in the Credit Agreement. We were in compliance with all applicable covenants of the Credit Agreement as of July 30, 2016.

The obligations under the term loan facility and certain cash management and hedging obligations are fully and unconditionally guaranteed by certain of our direct and indirect subsidiaries. On May 27, 2016, subsequent to the completion of the Ruckus acquisition, and in accordance with the covenants contained in the 2023 Indenture and 2015 Indenture, Ruckus, us, and certain other of our subsidiaries, and Wells Fargo Bank, N.A., as trustee, entered into supplemental indentures pursuant to which such subsidiaries fully and unconditionally guaranteed our obligations under the 2023 Indenture and 2015 Indenture.

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Stock Repurchase Program. As of July 30, 2016, our Board of Directors had authorized a total of approximately $3.5 billion for the repurchase of our common stock since the inception of the program in August 2004. The purchases may be made, from time to time, in the open market or by privately negotiated transactions, and are funded from available working capital. The number of shares to be purchased and the timing of purchases are based on the level of our cash balances, general business and market conditions, the trading price of our common stock, and other factors, including alternative investment opportunities. For the three months ended July 30, 2016, we repurchased 72.7 million shares primarily due to our efforts to repurchase shares equivalent to the number of shares issued as stock consideration in connection with the completion of the Ruckus acquisition for an aggregate purchase price of $660.7 million. Approximately $979.4 million remained authorized for future repurchases under this program as of July 30, 2016.

Contractual Obligations

The following table summarizes our contractual obligations, including interest expense, and commitments as of July 30, 2016 (in thousands):

	Total		Less Than 1 Year		1–3 Years		3–5 Years		More Than 5 Years
Contractual Obligations:
Term loan facility (1)	$	860,263	$	95,537	$	186,465	$	578,261	$	—
Convertible senior unsecured notes due 2020 (1)	601,999		7,906		15,813		578,280		—
Senior unsecured notes due 2023 (1)	389,768		13,875		27,750		27,750		320,393
Non-cancellable operating leases (2)	92,955		23,070		26,798		19,920		23,167
Non-cancellable capital leases (1)	16		16		—		—		—
Purchase obligations (1)	16,205		3,023		4,056		4,056		5,070
Purchase commitments, gross (3)	223,580		223,580		—		—		—
Total contractual obligations	$	2,184,786	$	367,007	$	260,882	$	1,208,267	$	348,630
Other Commitments:
Standby letters of credit	$	236	n/a		n/a		n/a		n/a
Unrecognized tax benefits and related accrued interest (4)	$	191,867	n/a		n/a		n/a		n/a

⁽¹⁾  Amount reflects total anticipated cash payments, including anticipated interest payments.

⁽²⁾  Amount excludes contractual sublease income of $3.8 million, which consists of $3.4 million to be received in less than one year, $0.3 million to be received in one to three years, and $0.1 million to be received in three to five years.

⁽³⁾  Amount reflects total gross purchase commitments under our manufacturing arrangements with a third-party contract manufacturer. Of this amount, we have accrued reserves of $3.6 million for estimated purchase commitments that we do not expect to utilize in normal operations within the next 12 months, in accordance with our policy.

⁽⁴⁾  As of July 30, 2016, we had a gross liability for unrecognized tax benefits of $189.1 million and an accrual for the payment of related interest and penalties of $2.7 million.

Off-Balance Sheet Arrangements

As part of our ongoing business, we do not participate in transactions that generate material relationships with unconsolidated entities or financial partnerships, such as entities often referred to as “structured finance” or “special purpose entities,” which would have been established for the purpose of facilitating off-balance sheet arrangements or for other contractually narrow or limited purposes. As of July 30, 2016, we did not have any significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Securities and Exchange Commission (“SEC”) Regulation S-K.

Critical Accounting Policies and Estimates

There have been no material changes in the matters for which we make critical accounting policies and estimates in the preparation of our Condensed Consolidated Financial Statements during the nine months ended July 30, 2016, as compared to those disclosed in our Annual Report on Form 10-K for the fiscal year ended October 31, 2015, except for the areas discussed below.

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Impairment of Goodwill and Other Indefinite-Lived Intangible Assets.

Goodwill and other indefinite-lived intangible assets are generated as a result of business combinations. Our indefinite-lived assets consist of acquired IPR&D and goodwill.

Change in Annual Impairment Testing Date. Effective on the first day of the fourth fiscal quarter, we changed the date of our annual impairment test for IPR&D and goodwill from the first day of the second fiscal quarter to the first day of the fourth fiscal quarter. This change in the annual impairment test date was made to better coincide with the timing of when we prepare our annual budget and financial plans as part of our regular long-range planning process. These financial plans are a key component in estimating the fair value of our reporting units, which is the basis for performing our annual impairment test. We believe that the change in our annual impairment test date is preferable as it allows us to better utilize our most current projections in the annual impairment test.

IPR&D Impairment Testing. 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. During the development period, we conduct our IPR&D impairment test annually and whenever events or changes in facts and circumstances indicate that it is more likely than not that the IPR&D is impaired. Events that might indicate impairment include, but are not limited to, adverse cost factors, deteriorating financial performance, strategic decisions made in response to economic and competitive conditions, the impact of the economic environment on us and our customer base, and/or other relevant events, such as changes in management, key personnel, litigation, or customers. Our ongoing consideration of factors such as these could result in IPR&D impairment charges in the future, which could adversely affect our net income.

Goodwill Impairment Testing. We conduct our goodwill impairment test annually 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. Events that might indicate impairment include, but are not limited to, strategic decisions made in response to economic and competitive conditions, the impact of the economic environment on our customer base, material negative changes in relationships with significant customers, and/or a significant decline in our stock price for a sustained period. Our ongoing consideration of factors such as these could result in goodwill impairment charges in the future, which could adversely affect our net income.

We perform the two-step goodwill impairment test to identify potential goodwill impairment and measure the amount of a goodwill impairment loss to be recognized, if any. The first step tests for potential impairment by comparing the fair value of reporting units with reporting units’ net asset values. The reporting units are determined by the components of our operating segments that constitute a business for which both (i) discrete financial information is available and (ii) segment management regularly reviews the operating results of that component. If the fair value of the reporting unit exceeds the carrying value of the reporting unit’s net assets, then goodwill is not impaired, and no further testing is required. If the fair value of the reporting unit is below the carrying value of the reporting unit’s net assets, then the second step is required to measure the amount of potential impairment. The second step requires an assignment of the reporting unit’s fair value to the reporting unit’s assets and liabilities, using the relevant acquisition accounting guidance, to determine the implied fair value of the reporting unit’s goodwill. The implied fair value of the reporting unit’s goodwill is then compared with the carrying amount of the reporting unit’s goodwill to determine the goodwill impairment loss to be recognized, if any. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, we record an impairment loss equal to the difference. In the normal course of business, we generate a significant amount of unrecorded intangible assets through R&D and other activities. As a result, this greatly reduces the implied fair value of the reporting unit’s goodwill that is calculated when the second step is required to be performed. Thus, the impairment loss may be much more significant than the difference between the fair value of the reporting unit determined during the first step and the carrying value of the reporting unit’s net assets.

To determine the reporting units’ fair values, we use the income approach, the market approach, or a combination thereof. The income approach provides an estimate of fair value based on discounted expected future cash flows. The market approach provides an estimate of the fair value by applying various observable market-based multiples to the reporting units’ operating results and then applying an appropriate control premium.

Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. We based our fair value estimates on assumptions we believe to be reasonable, but these estimates and assumptions are inherently uncertain. Estimates and assumptions with respect to the determination of the fair value of our reporting units using the income approach include, among other inputs:

• Our operating forecasts;

• Our forecasted revenue growth rates; and

• Risk-commensurate discount rates and costs of capital.

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Our estimates of revenues and costs are based on historical data, various internal estimates, and a variety of external sources, and are developed as part of our regular long-range planning process. The control premium used in market or combined approaches was determined by considering control premiums offered as part of the acquisitions where acquired companies were comparable with our reporting units.

Consistent with prior years, and before the change in our annual impairment test date, we performed our annual goodwill impairment test using measurement data as of the first day of the second fiscal quarter of 2016. At the time of the initial fiscal year 2016 annual goodwill impairment testing, our reporting units were: SAN Products; IP Networking Products; and Global Services.

During our initial fiscal year 2016 annual goodwill impairment test, we used a combination of the income approach and market approach, weighted equally, to estimate each reporting unit’s fair value.

During the first step of the initial goodwill impairment testing, we determined that all our reporting units passed the first step of goodwill impairment testing and no further testing was required. However, changes in the underlying assumptions can adversely impact fair value because some of the inherent estimates and assumptions used in determining the fair value of these reportable segments are complex and subjective. Accordingly, for the IP Networking Products reporting unit, we performed the sensitivity analysis below to quantify the impact of certain key assumptions on that reporting unit’s fair value estimate. The key assumptions impacting our estimates were (i) discount rates and (ii) discounted cash flow (“DCF”) terminal value multipliers. As these assumptions ultimately reflect the risk of achieving reporting units’ revenue and cash flow projections, we determined that a separate sensitivity analysis for changes in revenue and cash flow projections was not meaningful.

The respective fair values of the SAN Products and Global Services reporting units were substantially in excess of these reporting units’ carrying values, and the fair values of those reporting units were, therefore, not subject to a sensitivity analysis.

As of the date of the initial fiscal year 2016 annual goodwill impairment testing, the carrying value of the IP Networking Products reporting unit’s goodwill was $1.3 billion. Based on our initial fiscal year 2016 annual goodwill impairment test, the estimated fair value of the IP Networking Products reporting unit’s net assets, which include goodwill, exceeded the carrying value of these net assets by approximately $80 million. The following table summarizes the approximate impact that a change in certain key assumptions would have on the estimated fair value of the IP Networking Products reporting unit, leaving all other assumptions unchanged:

	Change	Approximate Impact on Fair Value (In millions)	Excess of Fair Value over Carrying Value (In millions)
Discount rate	±1%	$(44) - 47	$37 - 128
DCF terminal value multiplier	±0.5x	$(34) - 34	$46 - 115

Recent Accounting Pronouncements

For a description of recent accounting pronouncements, including the expected dates of adoption and estimated effects, if any, on our Condensed Consolidated Financial Statements, see Note 2, “Summary of Significant Accounting Policies,” of the Notes to Condensed Consolidated Financial Statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

In the normal course of business, we are exposed to market risks related to changes in interest rates, foreign currency exchange rates, and equity prices that could impact our financial position and results of operations. Our risk management strategy with respect to these three market risks may include the use of derivative financial instruments. We use derivative contracts only to manage our existing underlying exposures. Accordingly, we do not use derivative contracts for speculative purposes. Our risks and risk management strategy are outlined below. Actual gains and losses in the future may differ materially from the sensitivity analysis presented below based on changes in the timing and level of interest rates and our actual exposures and hedges.

Interest Rate Risk

Our exposure to market risk due to changes in the general level of U.S. interest rates relates primarily to our term loan and cash equivalents.

We are exposed to changes in interest rates as a result of our borrowings under our term loan, which in the third quarter of fiscal year 2016, bore interest at floating rates based on LIBOR, plus a 1.5% interest margin. Based on outstanding principal indebtedness of $800.0 million under our term loan as of July 30, 2016, if market rates average 1% above the current interest

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rate, our annual interest expense would increase by approximately $8.0 million. Our remaining material borrowings as of July 30, 2016, bear interest at fixed rates and therefore were not sensitive to changes in interest rates.

Our cash and cash equivalents are primarily maintained at six major financial institutions. The primary objective of our investment activities is the preservation of principal while maximizing investment income and minimizing risk. We had $0.9 billion invested in money market funds as of July 30, 2016, which were not materially sensitive to changes in interest rates due to the short duration of these investments.

We were not subject to material interest rate risk in geographical areas outside of the United States as a substantial portion of our cash and cash equivalents is invested in money market funds in U.S. dollars that have a fixed share price.

Foreign Currency Exchange Rate Risk

We are exposed to foreign currency exchange rate risk inherent in conducting business globally in numerous currencies. We are 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 our operations for the nine months endedJuly 30, 2016, were the euro, the British pound, the Indian rupee, the Chinese yuan, the Singapore dollar, the Japanese yen, and the Swiss franc. Because we report in U.S. dollars and we have a net expense position in foreign currencies, we benefit from a stronger U.S. dollar and may be adversely affected by a weaker U.S. dollar relative to the foreign currency. We use foreign currency forward and option contracts designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in our forecasted operating expenses denominated in certain currencies other than the U.S. dollar. We recognize the gains and losses on foreign currency forward contracts in the same period as the remeasurement losses and gains of the related foreign currency denominated exposures.

We also may enter into other non-designated derivatives that consist primarily of forward contracts to minimize the risks associated with the foreign exchange effects of revaluing monetary assets and liabilities. Monetary assets and liabilities denominated in foreign currencies and any associated outstanding forward contracts are marked-to-market, with realized and unrealized gains and losses included in earnings.

Alternatively, we may choose not to hedge the foreign currency risk associated with our foreign currency exposures if we believe 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 of July 30, 2016, the gross notional amount of our cash flow derivative instruments was $41.3 million, and we had hedges in place through October 13, 2016.

We have performed a sensitivity analysis as of July 30, 2016, using a modeling technique that measures the change in the fair values arising from a hypothetical 10% adverse movement in the levels of foreign currency exchange rates relative to the U.S. dollar, with all other variables held constant. The analysis covers all of our foreign currency contracts offset by the underlying exposures. The foreign currency exchange rates we used were based on market rates in effect on July 30, 2016. The sensitivity analysis indicated that a hypothetical 10% adverse movement in foreign currency exchange rates would not result in a material foreign exchange loss as of July 30, 2016.

Equity Price Risk

From time to time, we have made equity investments in companies that develop technology or provide services that are complementary to, or broaden the markets for, our products or services and further our business objectives. We had no investments in publicly traded equity securities as of July 30, 2016. The aggregate cost of our equity investments in non-publicly traded companies was $4.5 million as of July 30, 2016. We monitor our equity investments for impairment on a periodic basis. In the event that the carrying value of the equity investment exceeds its fair value, and we determine the decline in value to be other than temporary, we reduce the carrying value to its current fair value. Generally, we do not attempt to reduce or eliminate our market exposure on these equity securities. We do not purchase our equity securities with the intent to use them for speculative purposes.

Our common stock is quoted on the NASDAQ Global Select Market under the symbol “BRCD.” On July 29, 2016, the last business day of our third fiscal quarter of 2016, the last reported sale price of our common stock on the NASDAQ Global Select Market was $9.30 per share.

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Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Act”), as of the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”).

The purpose of this evaluation is to determine if, as of the Evaluation Date, our disclosure controls and procedures are effective such that the information required to be disclosed in the reports we file or submit under the Act (i) is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective.

(b) Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Act, that occurred during the quarter ended July 30, 2016, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Under guidelines established by the SEC, a company is allowed to exclude the internal control over financial reporting of an acquired business from its assessment of its internal control over financial reporting for the fiscal year in which the business was acquired. We acquired Ruckus on May 27, 2016, and are in the process of integrating the acquired business’ internal control over financial reporting into our overall internal control over financial reporting process. Accordingly, we expect to exclude the internal control over financial reporting of the Ruckus business from our assessment of internal control over financial reporting as of October 29, 2016. Ruckus’ post-acquisition revenue included in our Condensed Consolidated Statements of Income for the three months ended July 30, 2016, was approximately 13.2% of our consolidated net revenues for the three months ended July 30, 2016, and Ruckus’ total assets reported on our Condensed Consolidated Balance Sheet as of July 30, 2016, was approximately 15.6% of our consolidated total assets as of July 30, 2016.

Limitations on the Effectiveness of Disclosure Controls and Procedures.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and implemented, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues within a company are detected. The inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

Ruckus Acquisition-Related Litigation

The information set forth under the heading “Ruckus Acquisition-Related Litigation” in Note 9, “Commitments and Contingencies,” of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q is incorporated herein by reference.

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Other Legal Proceedings

From time to time, the Company is subject to various legal other proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business, including claims of alleged infringement of patents and/or other intellectual property rights and commercial and employment contract disputes. While the outcome of these matters cannot be predicted with certainty, the Company does not believe that the outcome of any of these matters, individually or in the aggregate, will result in losses that are materially in excess of amounts already accrued by the Company.

Item 1A. Risk Factors

Failure to successfully compete in the networking market could prevent Brocade from increasing or maintaining revenue, profitability, and cash flows with respect to its networking solutions.

The networking market, particularly the data center market, is highly competitive and is undergoing significant transitions due to the adoption of new technologies, such as cloud computing, virtualization, software networking, and infrastructure-as-a-service. For example, companies such as Amazon Web Services, Inc., Microsoft Corporation, and more recently both Cisco Systems, Inc. (“Cisco”) and Hewlett Packard Enterprise Company (“HPE”), offer cloud computing services for the enterprise market, and some customers may choose to procure networking as a service rather than implement on-site networking solutions. Brocade sells into certain sections of the enterprise market which, over time, could shift their information technology (“IT”) spending substantially or completely to cloud services. If Brocade is unable to build and sustain relationships with companies that will continue to invest in their own on-site networks, Brocade’s revenue and profitability could be adversely affected.

Other shifts in the networking market are also creating competitive challenges for Brocade. For example, data center buying patterns are shifting to converged infrastructures in which computer, network, and storage systems are sold as bundled solutions. If Brocade is unsuccessful in having its products included in those bundled solutions, Brocade’s market share could be adversely affected. Also, Juniper Networks, Inc. (“Juniper”) and HPE have launched new offerings, including “whitebox” switches, which those companies have promoted as a low-cost option for networking equipment purchasers. These and other market dynamics, as well as further commoditization of networking products, could negatively impact Brocade’s business and financial results.

Following its acquisition of Ruckus Wireless, Inc. (“Ruckus”), Brocade became a vendor of wireless networking products. Previously, Brocade had relied on partner relationships developed with other companies for access to wireless networking technologies, including access to wireless networking products to supplement Brocade’s wireline campus business. Those partner relationships may be adversely affected by the fact that Brocade now competes with those companies’ wireless networking businesses.

Cisco maintains a dominant position in the networking market; however, customers also have many choices in both traditional and emerging networking technology and networking providers. These other competitors in the networking market include A10 Networks, Inc.; Alcatel-Lucent (recently acquired by Nokia Corporation); Arista Networks, Inc.; Avaya Inc.; Extreme Networks, Inc.; F5 Networks, Inc.; Huawei Technologies Co. Ltd.; Juniper; and QLogic Corporation (“QLogic”). Many of Brocade’s competitors have longer operating histories; greater financial, technical, sales, marketing, and other resources; more name recognition; and larger customer-installed bases than Brocade. These companies’ businesses may have better economies of scale, and therefore these companies could also adopt more aggressive pricing policies than Brocade. Some of these companies’ brands are better known by end users than Brocade’s brand, and channel partners often prefer to sell well-known brands to end-user accounts. In addition, these companies have in the past, and could in the future, enhance their business models through divestitures and acquisitions, which could impact Brocade’s partner ecosystem and Brocade’s go-to-market model. Also, any one of these competitors could devote more resources to develop, promote, and sell their products, and, therefore, could respond more quickly to changes in customer or market requirements and adopt more aggressive pricing policies. Brocade’s failure to successfully compete in the networking market would harm its business and financial results.

Conditions in the Storage Area Networking (“SAN”) market could adversely affect Brocade’s business, financial results, and growth prospects.

Approximately two-thirds of Brocade’s fiscal year 2015 revenue was generated from its SAN business. As such, Brocade’s business, financial results, and growth prospects may be impacted significantly by SAN market conditions. For example, the overall size of the SAN market contracted in 2015 from a revenue perspective due to, among other factors, the increasing efficiency of SAN products, the adoption of other networking protocols, changes in data center architectures, hyper-converged solutions and other new storage technologies, and the other competitive factors described in the risk factor above.

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Revenue generated from sales of Brocade’s SAN products is also impacted by the amount of storage capacity deployed by its SAN customers. While the amount of storage capacity deployed is growing, the rate of that growth has declined in recent years.

In addition, revenue generated from sales of Brocade’s SAN products is impacted by the average selling price for those products. While the overall average selling price for Brocade’s SAN products has increased in recent periods, that increase has been largely due to the introduction of new products. Accordingly, that trend may not be sustained if Brocade is unable to continue to successfully introduce and obtain customer acceptance of new SAN products at the same rate, or at all.

The health of the overall SAN market will also depend on continued market participation by other SAN ecosystem vendors, such as Avago Technologies and QLogic, who produce Fibre Channel host bus adapters for servers and storage arrays.

If Brocade fails to successfully address these SAN market conditions, Brocade’s business, financial results, and growth prospects may be adversely affected.

A limited number of major original equipment manufacturer (“OEM”) partners comprise a significant portion of Brocade’s revenues; the loss of revenue from, or decreased inventory levels held by, any of these major OEM partners could significantly reduce Brocade’s revenues and adversely affect its financial results.

Brocade’s SAN business depends on recurring purchases from a limited number of large OEM partners for a substantial portion of its revenues, specifically EMC Corporation (“EMC”), HPE, and International Business Machines Corporation (“IBM”). As a result, revenues from these large OEM partners have a significant impact on Brocade’s quarterly and annual financial results. For fiscal years 2015, 2014, and 2013, these three OEM partners each represented 10% or more of Brocade’s total net revenues, for a combined total of 41%, 46%, and 46% of total net revenues, respectively. Brocade’s agreements with its OEM partners are typically cancellable, non-exclusive, and have no minimum or specific timing requirements for purchases. Brocade’s OEM partners could increase the amount purchased from Brocade’s competitors, introduce their own technology, or experience lower demand for Brocade SAN products from their end customers.

Also, one or more of Brocade’s OEM partners could elect to divest certain lines of business, split their business, or consolidate or enter into a strategic partnership with one of Brocade’s competitors, such as IBM’s sale of certain lines of business to Lenovo Group Limited, HPE recently becoming a separate public company, and the pending acquisition of EMC by Dell Inc. (“Dell”), which could reduce or eliminate Brocade’s future revenue opportunities with that OEM partner. In addition, business execution or other operating performance issues experienced by Brocade’s OEM partners may adversely affect Brocade’s revenue and financial results. Brocade anticipates that a significant portion of its revenues and operating results from its SAN business will continue to depend on sales to a relatively small number of OEM partners. Brocade’s business and financial results could be harmed by the loss of any one significant OEM partner, a decrease in the level of sales to any one such partner, a change in any one such partner’s go-to-market strategy, or an unsuccessful negotiation on key terms, conditions, or timing of purchase orders placed during a quarter.

Brocade may not realize the anticipated benefits of past or future acquisitions, divestitures, and strategic investments, and the integration of acquired companies or technologies or divestiture of businesses may negatively impact Brocade’s business and financial results.

Brocade has acquired—or made strategic investments in—other companies, products, or technologies, and Brocade expects to make additional acquisitions and strategic investments in the future. In the third quarter of fiscal year 2016, Brocade acquired Ruckus. In the second quarter of fiscal year 2015, Brocade acquired its virtual evolved packet core, also known as vEPC, software product line and related assets from Connectem Inc. and its virtual application delivery controller, also known as vADC, software product line and related assets from Riverbed Technology, Inc. The ability of Brocade to realize the anticipated benefits of its acquisitions and strategic investments involves numerous risks, including, but not limited to, the following:

• Difficulties in successfully integrating the acquired businesses and realizing any expected synergies;

• Failure to communicate to customers the capabilities of the combined company;

• Unanticipated costs, litigation, and other contingent liabilities, including liabilities associated with acquired intellectual property;

• Diversion of management’s attention from Brocade’s daily operations and business;

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• Adverse effects on existing business relationships with suppliers and customers, including delays or cancellations of customer purchases, as well as revenue attrition in excess of anticipated levels if existing customers alter or reduce their historical buying patterns;

• Risks associated with entering into markets in which Brocade has limited or no prior experience, including the potential for a lower level of understanding of specific market dynamics;

• Inability to attract and retain key employees;

• Inability to successfully develop new products and services on a timely basis to address the market opportunities of the combined company;

• Inability to compete effectively against companies already serving the broader market opportunities expected to be available to the combined company;

• Inability to qualify the combined company’s products with OEM partners on a timely basis, or at all;

• Inability to successfully integrate financial reporting and IT systems;

• Inability to develop software-oriented back office systems and processes necessary to sell and support a variety of software-based offerings;

• Failure to successfully manage additional business locations, including the infrastructure and resources necessary to support and integrate such locations;

• Assumption or incurrence of debt and contingent liabilities and related obligations to service such liabilities and potential limitations on Brocade’s operations in order to satisfy financial and other negative operating covenants;

• Additional costs, such as increased costs of manufacturing and service; costs associated with excess or obsolete inventory; costs of employee redeployment, relocation, and retention, including salary increases or bonuses; accelerated amortization of deferred equity compensation, severance payments, reorganization, or closure of facilities; taxes; advisor and professional fees; and termination of contracts that provide redundant or conflicting services;

• The impact of acquisition- and integration-related costs, goodwill or in-process research and development impairment charges, amortization costs for acquired intangible assets, and acquisition accounting treatment, including the loss of deferred revenue and increases in the fair values of inventory and other acquired assets, on Brocade’s operating results and financial condition; and

• The target market for the acquired products may not develop within the expected time frame or may evolve in a different technical direction.

Integration and other risks associated with acquisitions can be more pronounced for larger and more complicated transactions. For example, Brocade completed its acquisition of Ruckus in May 2016 and is in the process of combining the businesses and operations of the two companies. The size of the acquisition of Ruckus increases both the scope and consequence of the ongoing risks and challenges associated with those efforts. Brocade may not successfully address those risks and challenges in a timely manner, or at all. If that occurs, Brocade may not fully realize all of the anticipated benefits of the Ruckus acquisition, and its revenue, expenses, operating results and financial condition could be adversely affected.

Brocade may also divest certain businesses or product lines from time to time. For example, Brocade sold its network adapter business to QLogic during the first quarter of fiscal year 2014. Such divestitures involve risks, such as difficulty separating out portions of or entire businesses, distracting employees, incurring potential loss of revenue, negatively impacting margins, and potentially disrupting customer relationships. Brocade may also incur significant costs associated with exit or disposal activities, related impairment charges, or both.

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Uncertainty about or a slowdown in the domestic and/or international economies has adversely affected, and may increasingly adversely affect, Brocade’s operating results and financial condition.

In recent years, the rate of economic growth in the United States and in certain other countries, including China, has declined. In addition, uncertainty exists about the future growth of the domestic and international economies. Such uncertainty and slowdowns have resulted in, and may again result in, lower growth or a decline in IT-related spending, and, consequently, lead to lower growth or a decline in the networking market (including high-performance data networking solutions). Historically, IT spending has declined as general economic and market conditions have worsened due to geopolitical uncertainty. In addition, IT spending by international customers may decline as the value of the local currencies weaken against the U.S. dollar. Brocade is particularly susceptible to reductions in IT spending because the purchase of networking solutions is often discretionary and may involve a significant commitment of capital and other resources. The loss or delay of orders from any of Brocade’s more significant customers, such as individual branches or agencies within the U.S. federal government (including the Department of Defense or certain intelligence agencies where Brocade’s revenue is concentrated), or customers within the service provider, financial services, education (including technology improvements for schools funded by the U.S. federal government commonly known as the E-Rate program), and health sectors, could also cause Brocade’s revenue and profitability to suffer. For example, Brocade’s revenue and operating results could be negatively impacted if the U.S. federal government experiences delays in procurement due to longer decision-making time frames and/or a shift in IT procurement priorities. Economic uncertainty has caused, and may cause further, reductions in Brocade’s revenue, profitability, and cash flows, along with increased price competition, increased operating costs, and longer fulfillment cycles. Moreover, economic uncertainty may exacerbate many other risks noted elsewhere in this Form 10-Q, which could adversely affect Brocade’s business operations and financial condition.

Brocade’s future revenue growth depends on its ability to successfully introduce and achieve market acceptance of new products, services, and support offerings on a timely basis.

Developing new products, services (including software networking), and support offerings requires significant up-front investments that may not result in revenues for an extended period of time, if at all. Brocade must achieve market acceptance of its new product and support offerings on a timely basis in order to realize the benefits of its investments. However, the market for networking solutions, driven in part by the growth and evolution of the Internet and adoption of new technologies, such as software-defined networking (“SDN”), network functions virtualization (“NFV”), and Wi-Fi-related cloud services, is characterized by rapidly changing technology, accelerated product introduction cycles, changes in customer requirements, and evolving industry standards. In addition, many of Brocade’s new products, services, and support offerings will be directed towards customers, including hyperscale cloud providers and large service providers, with whom Brocade does not have strong existing sales relationships and who may require longer periods of time to evaluate products prior to making purchases. Sales to these customers may be challenging because sales are often based on long-term relationships and network incumbency and the complex system environments maintained by these customers often require interoperation with a variety of other vendors and back office applications. Brocade’s future success depends largely upon its ability to address the rapidly changing needs of both new and existing customers by: allowing connectivity to other devices and partnering effectively; keeping pace with technological developments and emerging industry standards; and delivering high-quality, reliable, and cost-effective products, product enhancements, and services and support offerings on a timely basis.

Other factors that may affect Brocade’s successful introduction of new products, services, and support offerings include, but are not limited to, Brocade’s ability to:

• Properly predict the market for new products, services, and support offerings, including features, cost-effectiveness, scalability, and pricing—all of which can be particularly challenging for initial product offerings in new markets;

• Differentiate Brocade’s new products, services, and support offerings from its competitors’ offerings;

• Address the interoperability complexities of Brocade’s products with its OEM partners’ server and storage products and Brocade’s competitors’ products;

• Determine which route(s) to market will be most effective; and

• Manage product transitions, including forecasting demand, managing excess and obsolete inventories, addressing product cost structures, and managing different sales and support requirements.

Failure to successfully introduce competitive products, services, and support offerings on a timely basis may harm Brocade’s business and adversely affect Brocade’s financial results.

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If Brocade is unable to successfully transition from older products and corresponding support and service offerings to new products and corresponding support and service offerings on a timely basis, its business and financial results could be adversely affected.

As Brocade introduces new or enhanced products, such as Brocade’s recently introduced Gen 6 Fibre Channel SAN platform, it must successfully manage the transition from older products to minimize disruption in customers’ ordering patterns, avoid excessive levels of older product inventories, maintain existing support revenue streams, and provide sufficient supplies of new products to meet customer demands. The introduction of new or enhanced products may shorten the life cycle of Brocade’s existing products or replace the sales of some of Brocade’s current products, thereby offsetting the benefit of a successful product introduction. When Brocade introduces new or enhanced products, it faces numerous risks related to product transitions, including the inability to accurately forecast demand, manage excess and obsolete inventories, address new or higher product cost structures, and manage different sales and support requirements due to the type or complexity of the new or enhanced products. In addition, customer evaluation periods or any customer uncertainty regarding the timeline for rolling out new products, or Brocade’s plans for future support of existing products, may cause customers to delay purchase decisions or to purchase competing products, which would adversely affect Brocade’s business and financial results.

The prices of Brocade’s Internet Protocol (“IP”) Networking products have declined in the past and Brocade expects the prices of its products to decline in the future, which could reduce Brocade’s revenues, gross margins, and profitability.

The average selling price for Brocade’s IP Networking products has typically declined in the past and will likely decline in the future as a result of competitive pricing pressures, broader macroeconomic factors, product mix, new product introductions by Brocade or competitors, the entrance of new competitors, and other factors. In particular, if economic conditions deteriorate and create a more cautious capital spending environment in the IT sector, Brocade and its competitors could pursue more aggressive pricing strategies in an effort to maintain or increase revenues. If Brocade is unable to offset a decline in the average selling price of Brocade’s IP Networking products by increasing the volume of products shipped and/or reducing product manufacturing costs, including key components such as optics, Brocade’s revenues, gross margins, and profitability could be adversely affected.

Brocade’s failure to execute on its overall sales strategy or successfully leverage its channel and direct sales capabilities could significantly reduce its revenues and negatively affect its business, financial results, and growth prospects.

Brocade offers networking solutions through a multipath distribution strategy, including distributors, resellers, a direct sales force, and OEMs. However, Brocade’s efforts to increase sales through this multipath distribution strategy may not generate incremental revenue opportunities. Several of Brocade’s major OEM customers, including Dell, IBM, HPE, and Oracle Corporation, have acquired companies that offer IP Networking solutions that are competitive with Brocade offerings. A loss of, or significant reduction in, revenue through one of Brocade’s paths to market would negatively impact its business and financial results.

As the networking industry continues to evolve, partners with which Brocade does not have long-standing relationships, such as cloud service providers that provide routing and infrastructure-as-a-service and global systems integrators that provide complete solutions to end users interested in upgrading to more modern architectures, may become increasingly important. In addition, as more enterprises purchase infrastructure-as-a-service offerings from hyperscale cloud providers and large service providers, sales through some of Brocade’s existing paths to market could decline. If Brocade fails to build or grow successful relationships with these partners and service providers, Brocade’s business and financial results could be adversely affected.

Brocade’s failure to successfully develop new and/or maintain its current channel partner relationships, or the failure of these partners to sell Brocade’s products, could reduce Brocade’s growth prospects significantly. In addition, Brocade’s ability to respond to the needs of its distribution and reseller partners in the future may also depend on third parties producing complementary products and applications for Brocade products to enable these partners to be competitive in the market. In addition, Brocade may not successfully achieve its expanded go-to-market objectives, which include effectively maintaining or expanding sales through its distribution channels and successfully managing distribution and reseller partner relationships. If Brocade fails to respond successfully to the needs of these distribution and reseller partners and their customers, Brocade’s business and financial results could be adversely affected.

If Brocade does not manage the risks associated with its wireless networking business properly, its revenue and profitability could be adversely affected.

As described below, the risks that accompany Brocade’s new wireless networking business differ from those of Brocade’s other businesses.

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The success of Brocade’s wireless networking business depends on the continued growth and reliance on Wi-Fi, particularly in the service provider and enterprise markets. The recent growth of the market for Wi-Fi networks is being driven by the increased use of Wi-Fi-enabled mobile devices and the use of Wi-Fi as a preferred connectivity option to support video, voice, and other higher-bandwidth uses. As a result, mobile service providers and enterprises are struggling to address the capacity gap. A number of barriers may prevent service providers or their subscribers from adopting Wi-Fi technology to address the capacity gap in wireless networks. For example, Wi-Fi operates over an unlicensed radio spectrum, and if the Wi-Fi spectrum becomes crowded, Wi-Fi solutions will be a less attractive option for service providers. In addition, in order for Wi-Fi solutions to adequately address the capacity gap, mobile devices should automatically switch from a cellular data network to the service provider’s Wi-Fi network, when available and appropriate, which does not generally occur. There is no guarantee that service providers and enterprises will continue to utilize Wi-Fi technology, that use of Wi-Fi-enabled mobile devices will continue to increase, or that Wi-Fi will continue to be the preferred connectivity option for the uses described above. If another technology were found to be superior to Wi-Fi by service providers or enterprises, it could adversely affect Brocade’s revenue and profitability.

Brocade’s wireless products are designed to interoperate with cellular networks and mobile devices using Wi-Fi technology. These networks and devices have varied and complex specifications. As a result, Brocade must attempt to ensure that its products interoperate effectively with all of these existing and planned networks and devices. To meet these requirements, Brocade must continue to undertake development and testing efforts that require significant capital and employee resources. Brocade may not accomplish these development efforts quickly or cost-effectively, or at all. If Brocade’s wireless products do not interoperate effectively, orders for Brocade’s wireless products could be delayed or canceled, potentially resulting in the loss of existing and potential end customers; Brocade could experience significant warranty, support and repair costs; and the attention of Brocade’s engineering personnel could be diverted from its product development efforts. In addition, Brocade’s end customers may require Brocade’s products to comply with new and rapidly evolving security or other certifications and standards. If Brocade’s wireless products are late in achieving or fail to achieve compliance with these certifications and standards, and/or if Brocade’s competitors achieve compliance with these certifications and standards, such end customers may not purchase Brocade’s products, which would adversely affect Brocade’s revenue and profitability.

Brocade’s wireless products have been deployed in many different locations and user environments and are capable of providing connectivity to many different types of Wi-Fi-enabled devices operating a variety of applications. The ability of Brocade’s wireless products to operate effectively can be negatively impacted by many different elements unrelated to its products. For example, a user’s experience may suffer from an incorrect setting in a Wi-Fi device. Although certain technical problems experienced by users may not be caused by Brocade’s products, users often perceive the underlying cause to be a result of poor performance of the wireless network. This perception, even if incorrect, could harm Brocade’s business and reputation.

Brocade has a substantial amount of acquired intangible assets, goodwill, and deferred tax assets on its balance sheet, and if Brocade is required to record impairment charges for these assets, such impairment charges could adversely affect Brocade’s financial results.

Brocade has a substantial amount of acquired intangible assets and goodwill on its balance sheet related to Brocade’s prior acquisitions. Brocade’s determination of the fair value of its long-lived assets relies on management’s assumptions of future revenues, operating costs, and other relevant factors. Brocade’s estimates with respect to the useful life or ultimate recoverability of Brocade’s carrying basis of assets, including acquired intangible assets, could change as a result of changes in management’s assumptions. If management’s estimates of future operating results change or if there are changes to other assumptions, such as the discount rate applied to future cash flows, then the estimated fair value of Brocade’s reporting units could change significantly, which could result in goodwill impairment charges. The risk of a future goodwill impairment charge is comparatively high for the IP Networking Products reporting unit because based on the Company’s initial fiscal year 2016 annual goodwill impairment test, the estimated fair value of that reporting unit’s net assets, which include goodwill, exceeded the carrying value of those net assets by only approximately $80 million. For a sensitivity analysis that quantifies the impact of certain key assumptions used by Brocade on the fair value estimates for the IP Networking Products reporting unit, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in Part I, Item 2 of this Form 10-Q. If future impairment tests should result in a charge to earnings, Brocade’s financial results would be adversely affected.

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Brocade has determined that, more likely than not, it will realize its deferred tax assets based on positive evidence of its historical operations and projections of future income, except for the deferred tax assets related to California and remaining capital loss carryforwards for which a valuation allowance has been applied. In the event that future income by jurisdiction is less than what is currently projected, Brocade may be required to apply a valuation allowance to these deferred tax assets in jurisdictions where realization of such assets is no longer more likely than not, which could result in a charge to earnings that would adversely affect Brocade’s financial results.

Cyberattacks and data security breaches could disrupt Brocade’s operations, negatively impact Brocade’s reputation, and erode customers’ trust.

Cyberattacks and other malicious attacks could lead to data breaches, computer break-ins, malware, viruses, and unauthorized tampering with Brocade’s computer systems, intellectual property, and confidential information about its customers and partners. These attacks could disrupt Brocade’s operations, negatively impact Brocade’s reputation, and erode customers’ trust. Despite implementation of cybersecurity measures, Brocade may not successfully limit attacks by malicious third parties if they attempt to undermine or disrupt those cybersecurity measures.

Additionally, if an actual or perceived cyberattack or data security breach occurs in Brocade’s network or in one of Brocade’s customer’s network, regardless of whether the breach is attributable to Brocade’s products, the market perception of the effectiveness of Brocade’s products could be harmed. Brocade may suffer reputational harm and Brocade’s customers’ trust may be eroded as a result of a data security breach involving customers’ or employees’ information, which could negatively impact profitability and/or increase expenses. Customers have become increasingly sensitive to government-sponsored surveillance and may believe that, as a U.S.-based manufacturer, Brocade’s equipment contains “backdoor” code that would allow customer data to be compromised by either governmental bodies or other third parties. As a result, customers may choose not to deploy Brocade networking products, which could negatively impact Brocade’s business and financial results.

Brocade’s revenues, operating results, and cash flows may fluctuate from period to period due to a number of factors, which makes predicting financial results difficult.

IT spending is subject to cyclical and uneven fluctuations, which could cause Brocade’s financial results to fluctuate unevenly and unpredictably. For example, the U.S. federal budget for government IT spending can be highly seasonal and subject to delays, reductions, and uncertainty due to changes in the political and legislative environment. It can also be difficult to predict the degree to which end-customer demand and the seasonality and uneven sales patterns of Brocade’s OEM partners or other customers will affect Brocade’s business in the future, particularly as Brocade releases new or enhanced products. While Brocade’s first and fourth fiscal quarters are typically stronger quarters for SAN products and Brocade’s third and fourth fiscal quarters are typically stronger quarters for IP Networking solutions, future buying patterns may differ from historical seasonality. If the mix of revenue changes, it may also cause results to differ from historical seasonality. Accordingly, Brocade’s quarterly and annual revenues, operating results, cash flows, and other financial and operating metrics may vary significantly in the future, and the results of any prior periods should not be relied upon as an indication of future performance.

If Brocade loses key employees or is unable to hire additional qualified employees, its business may be negatively impacted.

Brocade’s success depends, to a significant degree, upon the continued contributions of its employees, including executive officers, engineers, sales representatives, and others, many of whom would be difficult to replace. Departures, appointments, and changes in roles and responsibilities of officers or other key members of management may disrupt Brocade’s business and adversely affect Brocade’s operating results.

Brocade believes its future success depends, in large part, upon its ability to attract highly skilled employees and operate effectively in geographically diverse locations. Brocade has relied heavily on equity awards in the form of stock options and restricted stock units as one means for recruiting and retaining highly skilled employees. The number of shares available for issuance under Brocade’s 2009 Stock Plan is limited, and any increase in the number of shares available under that plan must be approved by Brocade’s stockholders. The extent to which Brocade is able to obtain such stockholder approval depends on a variety of factors, including assessments by stockholders and proxy advisory firms of Brocade’s historical equity award granting practices. The effectiveness of these equity awards in recruiting and retaining employees could be reduced if Brocade has to reduce the size of the equity awards granted to its employees or if there is a sustained decline in the trading price of Brocade’s shares. There are also limited qualified employees in each of Brocade’s markets, and competition for such employees is very aggressive. In particular, Brocade operates in various locations with highly competitive labor markets, including Bangalore, India, and San Jose, California. Brocade may experience difficulty in hiring key management and qualified employees with skills in nearly all areas of Brocade’s business and operations.

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The loss of the services of any of Brocade’s key employees, the inability to attract or retain qualified employees in the future, or delays in hiring required employees—particularly sales and engineering employees—could delay the development and introduction of Brocade’s products or services and/or negatively affect its ability to sell products or services.

Failure to accurately forecast demand for Brocade’s products or to successfully manage the production of its products could increase Brocade’s product cost and adversely affect its revenue, margins and profitability.

Brocade provides product forecasts to its contract manufacturers (“CMs”) and places purchase orders with them in advance of the scheduled delivery of products to Brocade’s customers. In preparing sales and demand forecasts, Brocade relies largely on input from its sales force, partners, resellers, and end-user customers. If Brocade is unable to accurately forecast demand, or if Brocade fails to effectively communicate with its distribution partners about end-user demand or other time-sensitive information, Brocade’s ability to successfully manage production could be negatively impacted. Brocade’s ability to accurately forecast demand also may become increasingly limited as Brocade introduces new or enhanced products, begins phasing out certain products, or acquires other companies or businesses. If these forecasts are inaccurate, Brocade may be unable to obtain adequate manufacturing capacity from its CMs to meet customers’ delivery requirements, which could cause customers to cancel their orders for Brocade products. Inaccurate forecasts also could cause Brocade to accumulate excess inventories or incur costs associated with excess manufacturing capacity. If customers cancel their orders, Brocade’s revenue may be adversely affected. If excess inventories accumulate, Brocade’s gross margins may be negatively impacted by write-downs for excess and/or obsolete inventory. In addition, Brocade will experience higher fixed costs as it expands its CMs’ capabilities for forecasted demand, which could negatively affect Brocade’s margins if demand decreases suddenly and Brocade is unable to reduce these fixed costs.

Additionally, most of Brocade’s manufacturing overhead and expenses are fixed in the short term or incurred in advance of receipt of corresponding revenue, and Brocade may not be able to reduce such expenses sufficiently to offset declining product prices. As a result, Brocade’s gross margins may be adversely affected by fluctuations in manufacturing volumes, component costs, foreign currency exchange rates, the mix of product configurations sold, and the mix of distribution channels through which its products are sold. Brocade’s gross margins may also be adversely affected if product or related warranty costs associated with Brocade’s products are greater than previously experienced.

Brocade has extensive international operations, which expose its business and operations to additional risks.

Brocade has significant international operations, and a significant portion of Brocade’s sales occur in international jurisdictions. In addition, Brocade’s CMs have significant operations in China and other locations outside the United States. Brocade’s international sales of its IP Networking solutions have primarily depended on its distributors and resellers. Maintenance or expansion of international sales or international operations involves inherent risks that Brocade may not be able to control, including, but not limited to, the following:

• Compliance with U.S. and other applicable government regulations prohibiting certain end-uses and restricting trade with embargoed or sanctioned countries, such as Iran and Russia, and with denied parties;

• Difficulty in conducting due diligence with respect to business partners in certain international markets;

• Exposure to economic instability or fluctuations in international markets, such as China, that could cause reductions in IT spending;

• Exposure to inflationary risks and/or wage inflation in certain countries, such as India;

• Increased exposure to foreign currency exchange rate fluctuations, including currencies such as the British pound, the Chinese yuan, the euro, the Indian rupee, the Japanese yen, the Singapore dollar, and the Swiss franc;

• Exposure to sovereign debt risk and political and economic instability in certain regions of Europe, including Russia and Turkey, and certain countries with newly advanced economies, including China and Brazil;

• Multiple potentially conflicting and changing governmental laws, regulations, and practices, including differing environmental, data privacy, export, import, trade, manufacturing, tax, labor, and employment laws;

• Compliance with U.S. and other applicable government regulation of exports and imports, and associated licensing requirements, particularly in the area of encryption technology;

• Reduced or limited protection of intellectual property rights, particularly in jurisdictions that have less developed intellectual property regimes, such as China and India;

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• Commercial laws and business practices that favor local competition;

• In certain international regions, particularly those with rapidly developing economies, it may be common to engage in business practices that are prohibited by anti-bribery laws, such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act;

• Increased complexity, time, and costs of managing international operations;

• Managing research and development and sales teams in geographically diverse locations, including teams divided between the United States, the United Kingdom, and India;

• Effective communications across multiple geographies, cultures, and languages;

• Recruiting sales and technical support personnel with the skills to design, manufacture, sell, and support Brocade’s products in international markets;

• Longer sales cycles and manufacturing lead times;

• Increased complexity and cost of providing customer support and maintenance for international customers;

• Difficulties in collecting accounts receivable;

• Increased complexity of logistics and distribution arrangements; and

• Increased complexity of accounting rules and financial reporting requirements.

In addition, the June 2016 announcement of the results of the United Kingdom European Union membership referendum (commonly referred to as Brexit) advising for the exit of the United Kingdom from the European Union has created economic, financial, and regulatory uncertainty, which may cause Brocade’s customers to closely monitor their costs and reduce their spending on Brocade’s products and services.

Any of these factors could negatively impact Brocade’s business, revenues, and profitability.

If product orders are received late in a fiscal quarter, Brocade may be unable to recognize revenue for these orders in the same quarter, which could adversely affect quarterly financial results.

Brocade’s IP Networking business typically experiences significantly higher levels of customer orders toward the end of a fiscal period. Customer orders received toward the end of the period may not ship within the period due to a lack of available inventory and manufacturing lead times. The inability to ship within the quarter in which the customer orders are received could negatively impact Brocade’s financial results in a particular quarter.

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Brocade is subject to—and will continue to be subject to—intellectual property infringement claims and litigation that are costly to defend and/or settle, which could result in significant damages and other costs to Brocade and limit Brocade’s ability to use certain technologies in the future.

Brocade competes in markets in which companies are frequently subject to claims and related litigation regarding patent and other intellectual property rights. Third parties have, from time to time, asserted patent, copyright, trade secret, and/or other intellectual property-related claims against Brocade and/or employees of Brocade. These claims may be, and have in the past been, made against Brocade’s products and services, subcomponents of its products, methods performed by its products or a combination of products, including third-party products, methods used in its operations, or uses of its products by its customers. The claimant may seek various remedies against Brocade, such as money damages, disgorgement of profits, injunctions barring sales of infringing goods, or exclusion orders barring import of products into the U.S., among other possible remedies. Moreover, these claims may concern Brocade’s hiring of a former employee of the third-party claimant. Brocade and companies acquired by Brocade have in the past incurred, and will likely incur in the future, substantial expenses to defend against such third-party claims. In particular, as a result of the acquisition of Ruckus, Brocade now competes in new markets, including the Wireless LAN market, that may result in relatively greater numbers of third-party intellectual property claims. Brocade’s suppliers and customers also may be subject to third-party intellectual property claims with respect to their own products, which could negatively impact the suppliers’ ability to supply Brocade with components or customers’ willingness to purchase products from Brocade. In addition, Brocade may be subject to claims, defenses, and indemnification obligations with respect to third-party intellectual property rights pursuant to Brocade’s agreements with suppliers, OEM and channel partners, or customers. If Brocade refuses to indemnify or defend such claims, for instance, even in situations where the allegations are meritless, then suppliers, partners, or customers may refuse to do business with Brocade. Parties that assert such intellectual property claims may be unreasonable in their demands, or may simply refuse to settle, which could lead to prolonged periods of litigation, additional burdens on employees or other resources, distraction from Brocade’s business operations, component supply stoppages, expensive settlement payments, and lost sales. Furthermore, there is little or no information publicly available concerning market or fair values for licenses and/or settlement fees, which can lead to overpayment of license or settlement fees. Any of the above scenarios could have an adverse effect on Brocade’s financial position, financial results, cash flows, and future business prospects.

Undetected software or hardware errors could increase Brocade’s costs, reduce its revenues, and delay market acceptance of its products.

Networking products frequently contain undetected software or hardware errors when first introduced or as new versions are released. As Brocade continues to expand its product portfolio to include software-centric products, which may include software licensed from third parties, errors may be found from time to time in these products. In addition, through its acquisitions, Brocade has assumed—and may in the future assume—products previously developed by an acquired company that have not been through the same level of product development, testing, and quality control processes used by Brocade, and may have known and/or undetected errors. Some types of errors may not be detected until the product is installed in a user environment. In addition, Brocade products are often combined with other products, including software from other vendors, and these products often need to interoperate. For IT products that have different specifications, utilize multiple protocol standards, or may be procured from other vendors, it may be difficult to identify the source of any problems. Identifying the source of and remediating these problems may cause Brocade to incur significant warranty and repair costs, divert the attention of engineering personnel from product development efforts, and cause significant customer relations problems, resulting in lower profitability from increased costs and/or decreased revenue. Moreover, the occurrence of hardware and software errors, whether caused by Brocade products or another vendor’s products, could delay market acceptance of new or enhanced Brocade products.

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Brocade’s supply chain is dependent on sole-source and limited-source suppliers and a limited number of major CMs, either one or both of which may significantly impact Brocade’s financial results.

Although Brocade uses standard parts and components for its products where possible, Brocade’s CMs currently purchase, on Brocade’s behalf, several key components used in the manufacture of its products from single- or limited-source suppliers. Brocade’s single-source components include, but are not limited to, its application-specific integrated circuits (commonly referred to as “ASICs”) and its Wi-Fi chipsets. Brocade’s principal limited-source components include memory, certain oscillators, microprocessors, certain connectors, certain logic chips, power supplies, programmable logic devices, printed circuit boards, certain optical components, packet processors, and switch fabric components. Brocade generally acquires these components through purchase orders and has no long-term commitments regarding supply or pricing with such suppliers. If Brocade is unable to obtain these and other components when required, or if Brocade’s suppliers experience component defects, Brocade may not be able to deliver its products to customers in a timely manner and may be required to repair or retrofit products previously delivered to customers, at significant expense to Brocade. In addition, a challenging economic or industry environment could cause some of these sole-source or limited-source suppliers to delay or halt production, go out of business, or be acquired by third parties, which could result in a disruption in Brocade’s supply chain. Brocade’s supply chain could also be disrupted in a variety of other circumstances that may impact its suppliers and partners, including adverse results from intellectual property litigation or natural disasters. Any manufacturing disruption by these sole-source or limited-source suppliers could severely impair Brocade’s ability to fulfill orders and may significantly impact its financial results.

In addition, the loss of any of Brocade’s major CMs, or portions of their capacity, could significantly impact Brocade’s ability to produce its products for an indefinite period of time. Qualifying a new CM and commencing volume production is typically a lengthy and expensive process. A CM may move the production lines for Brocade’s products to new locations or factories, and this may result in delays or disruptions. If Brocade changes any of its CMs or if any of its CMs experience unplanned delays, disruptions, capacity constraints, component parts shortages, or quality control problems in their manufacturing operations, shipment of Brocade’s products to customers could be delayed and result in loss of revenues.

Brocade’s intellectual property rights may be infringed upon or misappropriated by others, and Brocade may not be able to protect or enforce its intellectual property rights.

Brocade’s intellectual property rights may be infringed upon or misappropriated by others, including by competitors, partners, former employees, foreign governments, or other third parties. In some cases, such infringement or misappropriation may be undetectable, or enforcement of Brocade’s intellectual property rights may be impractical. Brocade has filed, and may in the future file, lawsuits against third parties in an effort to enforce its intellectual property rights. Intellectual property litigation is expensive and unpredictable. There can be no assurance that Brocade will prevail in such assertions or enforcement efforts, either on the merits, or with respect to particular relief sought, such as damages or an injunction. Nor can there be any assurance that any awarded damages ultimately will be paid to Brocade. Furthermore, the opposing party may attempt to prove that the asserted intellectual property rights are invalid or unenforceable, and, if successful, may seek recompense for its attorneys’ fees and costs or countersue Brocade as part of its defense. Finally, there can be no assurance that any attempt by Brocade to enforce its intellectual property rights, even if successful in court, will improve Brocade’s sales, diminish the defendant’s sales, or stop the defendant’s allegedly unfair competition.

Brocade relies on a combination of patent, copyright, trademark, and trade secret laws, along with measures such as physical and operational security and contractual restrictions, to protect its intellectual property rights in its proprietary technologies, but none of these methods of protection may be entirely appropriate or adequate to address all risks that could result in a loss of intellectual property rights. Loss or violation of Brocade’s intellectual property rights could adversely affect Brocade’s business and operating results, through a loss of revenue or an increase in expenses.

Brocade relies on licenses from third parties, and the loss or inability to obtain any such license could adversely affect its business.

Many Brocade products are designed to include software or other intellectual property licensed from third parties. There can be no assurance that the necessary licenses will be available on acceptable terms, if at all. Brocade’s inability to obtain certain licenses or other rights on favorable terms could have an adverse effect on Brocade’s business, operating results, and financial condition, including its ability to continue to distribute or support affected products.

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In addition, if Brocade has failed, or in the future fails, to adequately manage the use of commercial or “open-source” software in Brocade’s products, or if companies acquired by Brocade fail in such regard, Brocade may be subject to copyright infringement litigation or other claims. Furthermore, Brocade may be required, for commercially licensed software, to pay penalties or undergo costly audits pursuant to the license agreement. In the case of open-source software, Brocade may be required to license proprietary portions of its products on a royalty-free basis, disclose proprietary parts of source code, or commence costly product redesigns that could result in a loss of intellectual property rights, product performance degradation, or a delay in shipping products to customers and result in loss of revenue.

Brocade’s planned upgrade of its enterprise resource planning (“ERP”) software solution could result in significant disruptions to its operations.

Brocade is in the process of upgrading its ERP software solution to a newer version. Brocade expects the upgrade to be completed in fiscal year 2017. Implementation of the upgraded solution is highly dependent on coordination of numerous software and system providers and internal business teams. Brocade may experience difficulties as it transitions to the upgraded systems and processes, including loss or corruption of data, delayed shipments, decreases in productivity as its personnel implement and become familiar with new systems and processes, increased costs and lost revenues. In addition, transitioning to the upgraded solution requires a significant investment of capital and personnel resources. Difficulties in implementing the upgraded solution or significant system failures could disrupt Brocade’s operations and have an adverse effect on its capital resources, financial condition, results of operations or cash flows.

Implementation of the upgraded ERP solution will have a significant impact on Brocade’s business processes and information systems across a significant portion of its operations. As a result, Brocade will be undergoing significant changes in its operational processes and internal controls as the implementation progresses, which in turn will require significant change management. If Brocade is unable to successfully manage these changes as it implements the upgraded ERP solution, its ability to conduct, manage and control routine business functions could be negatively affected, and significant disruptions to its business could occur. In addition, Brocade could incur material unanticipated expenses, including additional costs of implementation or costs of conducting business. These risks could result in significant business disruptions or divert management’s attention from key strategic initiatives and have an adverse effect on Brocade’s capital resources, financial condition, results of operations, or cash flows.

Business interruptions could adversely affect Brocade’s business operations.

Brocade’s business operations and the operations of its suppliers, CMs, and customers are vulnerable to interruptions caused by acts of terrorism, fires, earthquakes, tsunamis, nuclear reactor leaks, hurricanes, power losses, telecommunications failures, and other events beyond Brocade’s control. For example, a substantial portion of Brocade’s facilities, including its corporate headquarters, are located near major earthquake faults. Brocade does not have multiple-site capacity for all of its services in the event of a business disruption. In the event of a major earthquake, Brocade could experience business interruption resulting from destruction of facilities or other infrastructure and from loss of life. Brocade carries a limited amount of earthquake insurance, which may not be sufficient to cover earthquake-related losses, and has not set aside funds or reserves to cover other potential earthquake-related losses. Additionally, major public health issues, such as an outbreak of a pandemic or epidemic, may interrupt business operations of Brocade, its CMs, its customers, or its suppliers in those geographic regions affected by that particular health issue. In addition, one of Brocade’s CMs has a major facility located in an area that is subject to hurricanes, and Brocade’s suppliers could face other natural disasters, such as floods, earthquakes, extreme weather, and fires. In the event that a business interruption occurs that affects Brocade, its suppliers, CMs, or customers, shipments could be delayed or cancelled, and Brocade’s business operations and financial results could be harmed.

In addition, Brocade may suffer reputational harm and may not carry sufficient insurance to compensate for financial losses that may occur as a result of any of these events. Any such event could have an adverse effect on Brocade’s business, operating results, and financial condition, and could expose Brocade to significant third-party claims of liability and damages.

Any failure by Brocade to meet its current capital return objectives could have an adverse effect on its reputation and stock price.

Based on past performance and current expectations, Brocade believes that internally generated cash flows and cash on hand will be generally sufficient to support business operations, contractual obligations, and other liquidity requirements, including its debt service requirements, associated with its operations for at least the next 12 months. Brocade also uses its operating cash flows, proceeds from the issuance of new shares, access sources of capital, or a combination thereof, to strengthen its business through acquisitions and strategic investments.

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Brocade has, in the past, stated its priorities for the use of operating cash flows and its intent to, after those priorities are met, return at least 60% of its annual adjusted free cash flow to stockholders in the form of stock repurchases or dividends. Brocade’s ability to return at least 60% of its annual adjusted free cash flow to stockholders is limited by, among other things, Delaware law. In addition, Brocade’s plans and expectations relating to its return of capital to stockholders may change, as they did in May 2016, due to, among other things, the need to allocate capital to other priorities, such as the acquisition of Ruckus. If Brocade is unable to meet its stated past or current capital return objectives, or if the Board of Directors decides to further alter the capital return objective, Brocade’s reputation and its stock price may be adversely affected.

Brocade is required to assess its internal control over financial reporting on an annual basis, and any adverse findings from such assessment could result in a loss of investor confidence in its financial reports, significant expense to remediate any internal control deficiencies, and ultimately have an adverse effect on its stock price.

Brocade is required to assess the effectiveness of its internal control over financial reporting annually, as required by Section 404 of the Sarbanes-Oxley Act of 2002. Brocade does not expect its evaluation of the effectiveness of its internal control over financial reporting as of October 29, 2016, to include the internal controls of Ruckus, which Brocade acquired in May 2016. Even though, as of October 31, 2015, its most recent internal control effectiveness evaluation date, Brocade concluded that its internal control over financial reporting was effective, Brocade needs to maintain its processes and systems and adapt them as its business grows and changes, including to reflect its integration of Ruckus, as well as any future acquisitions Brocade may undertake. This continuous process of maintaining and adapting its internal controls and complying with Section 404 is expensive, time consuming, and requires significant management attention. In addition, Brocade cannot be certain that its internal control measures will continue to provide adequate control over its financial processes and reporting or ensure compliance with Section 404.

If Brocade or its independent registered public accounting firm identifies material weaknesses in Brocade’s internal controls, the disclosure of that fact, even if quickly remedied, may cause investors to lose confidence in Brocade’s financial statements and its stock price may decline. Remediation of a material weakness could require Brocade to incur significant expenses and, if Brocade fails to remedy any material weakness, its financial statements may be inaccurate, its ability to report its financial results on a timely and accurate basis may be adversely affected, its access to the capital markets may be restricted, its stock price may decline, and Brocade may be subject to sanctions or investigation by regulatory authorities, including the U.S. Securities and Exchange Commission (“SEC”) or the NASDAQ Stock Market LLC (“NASDAQ”). Brocade may also be required to restate its financial statements from prior periods.

Brocade’s business is subject to increasingly complex and changing legal and regulatory requirements that could adversely affect its business, financial results, and stock price.

Brocade is subject to the changing rules and regulations of federal and state governments, as well as the stock exchange on which Brocade’s common stock is listed. These entities, including the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, the SEC, the Internal Revenue Service (the “IRS”), the Financial Industry Regulatory Authority, Inc., and NASDAQ, have issued a significant number of new regulations over the last several years and continue to develop additional regulations and requirements. Further, Brocade is subject to various rules and regulations of certain foreign jurisdictions. Brocade’s efforts to comply with these requirements have resulted in, and are likely to continue to result in, an increase in expenses and a diversion of management’s time from other business activities.

For example, the Dodd-Frank Wall Street Reform and Consumer Protection Act requires that public companies disclose whether certain minerals, commonly known as “conflict minerals,” are necessary to the functionality or production of a product manufactured or contracted to be manufactured by those companies, and, if so, if those minerals originated in the Democratic Republic of the Congo or an adjoining country. These requirements could adversely affect the sourcing, availability, and pricing of minerals used in the manufacture of certain components that are incorporated in Brocade products. In addition, Brocade’s supply chain is complex, so Brocade may face reputational challenges with its partners, customers, stockholders, and other stakeholders if the origins of the conflict minerals used in its products cannot be verified sufficiently.

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Similarly, Brocade is subject to environmental and other regulations governing product safety, materials usage, packaging, and other environmental impacts in the countries where Brocade products are sold. For example, many Brocade products are subject to laws and regulations that restrict the use of certain substances such as lead, mercury, hexavalent chromium, and cadmium, and that require Brocade to assume responsibility for collecting, treating, recycling, and disposing of products when they have reached the end of their useful life. For example, in Europe, environmental restrictions apply to products sold in that region, and certain Brocade partners require compliance with these or other more stringent requirements. In addition, recycling, labeling, and related requirements apply to Brocade products sold in Europe and China. If Brocade products do not comply with local environmental laws, Brocade could be subject to fines, civil and criminal sanctions, and contract damage claims. In addition, Brocade could be prohibited from shipping non-compliant products into certain jurisdictions and required to recall and replace any non-compliant products already shipped, which would disrupt the ability to ship products and result in reduced revenue, increased warranty expense, increased obsolete or excess inventories, and harm to Brocade’s business and customer relationships.

Brocade’s wireless products are subject to governmental regulations in a variety of jurisdictions. In order to achieve and maintain market acceptance, Brocade’s wireless products must continue to comply with these regulations, as well as a significant number of industry standards. In the United States, Brocade’s products must comply with various regulations defined by the Federal Communications Commission (“FCC”), Underwriters Laboratories, and others. Brocade must also comply with similar international regulations. For example, Brocade’s wireless communication products operate through the transmission of radio signals, and radio emissions are subject to regulation in the United States and in other countries in which Brocade does business. In the United States, various federal agencies including the Center for Devices and Radiological Health of the United States Food and Drug Administration, the FCC, the Occupational Safety and Health Administration, and various state agencies have promulgated regulations that concern radio/electromagnetic emissions standards. Member countries of the European Union have enacted similar standards concerning electrical safety and electromagnetic compatibility and emissions, as well as chemical substances and use standards. As these regulations and standards evolve, and if new regulations or standards are implemented, Brocade will be required to modify its products or develop and support new versions of its products, and Brocade’s compliance with these regulations and standards may become more burdensome. The failure of Brocade’s wireless products to comply, or delays in compliance, with the various existing and evolving industry regulations and standards could prevent or delay introduction of Brocade’s products, which could harm Brocade’s business. End-customer uncertainty regarding future policies may also affect demand for communications products, including Brocade’s wireless products. If existing laws or regulations regarding the use of Brocade’s wireless products or related services are enforced in a manner not contemplated by Brocade’s end customers, it could expose them or Brocade to liability and adversely affect Brocade’s wireless networking business. Moreover, channel partners or end customers may require Brocade, or Brocade may otherwise deem it necessary or advisable, to alter its wireless products to address actual or anticipated changes in the regulatory environment. Brocade’s inability to alter its wireless products to address these requirements and any regulatory changes may adversely affect Brocade’s wireless networking business.

In addition, Brocade is subject to laws, rules, and regulations in the United States and other countries relating to the collection, use, and security of personal information and data. Brocade has incurred, and will continue to incur, expenses to comply with privacy and security standards, protocols, and obligations imposed by applicable laws, regulations, industry standards, and contracts. In addition, such data privacy laws, regulations, and other obligations may negatively impact Brocade’s ability to execute transactions and pursue business opportunities. The privacy and data protection-related laws, rules, and regulations applicable to Brocade are also subject to significant change. For example, in October 2015, the Court of Justice of the European Union invalidated a safe harbor framework that allowed Brocade and other U.S. companies to meet certain European legal requirements for transferring personal data from Europe to the United States. Brocade is in the process of evaluating and considering changes to its data handling practices as a result of this court decision. In April 2016, the European Parliament approved the General Data Protection Regulation. This regulation, when effective in May 2018, will impose more stringent data protection requirements on U.S. companies collecting personal data from European Union residents and establish greater penalties for noncompliance. Any inability to comply with applicable privacy or data protection laws, regulations, or other obligations could result in significant cost and liability, damage Brocade’s reputation, and adversely affect its business.

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Changes to Brocade’s provision for income taxes or unfavorable outcomes of tax audits could adversely impact Brocade’s financial condition or results.

Brocade is subject to income and other taxes in the United States, including those required by both state and federal governmental agencies, such as the IRS, and numerous foreign jurisdictions. Brocade’s provision for income taxes could be increased due to changes in tax laws in the jurisdictions in which Brocade does business, including an increase in tax rates or an adverse change in the treatment of an item of income or expense. In this regard, the United States, countries in the European Union, and other countries where Brocade operates have enacted or are proposing changes to relevant tax, accounting, and other laws, regulations, and interpretations, including fundamental changes to tax laws applicable to multinational corporations. In addition, future effective tax rates could be subject to volatility or adversely affected by changes in the geographic mix of earnings in countries with differing statutory rates, changes in the valuation of deferred tax assets and liabilities, and tax effects of stock-based compensation. These potential changes could increase Brocade’s effective tax rate or result in other costs in the future.

Brocade is subject to periodic audits or other reviews by such governmental agencies, and is currently under examination by the IRS and several state and foreign tax jurisdictions for various years. Audits by the IRS and other governmental tax agencies are subject to inherent uncertainties and could result in unfavorable outcomes, including potential fines or penalties. While Brocade regularly assesses the likely outcomes of these audits in order to determine the appropriateness of its tax provision, the occurrence of an unfavorable outcome in any specific period could have an adverse effect on Brocade’s financial condition or results for that period or future periods. The expense of defending and resolving such an audit may be significant.

Brocade is exposed to various risks related to legal proceedings or claims that could adversely affect its financial condition or results.

Brocade is a party to lawsuits in the normal course of its business. The results of complex legal proceedings are difficult to predict. Responding to lawsuits brought against Brocade, or legal actions initiated by Brocade, can often be expensive, time-consuming, and disruptive to normal business operations. Unfavorable outcomes from these claims and/or lawsuits could adversely affect Brocade’s business, financial results, or financial condition, and Brocade could incur substantial monetary liability and/or be required to change its business practices. In view of the uncertainties, potential risks, and expenses of litigation, Brocade may, from time to time, settle such disputes, even where Brocade had meritorious claims or defenses, by agreeing to settlement agreements that, depending on their terms, may significantly impact Brocade’s financial condition or results.

Brocade’s stock price may fluctuate, which could cause the value of an investment in Brocade’s shares to decline.

Brocade’s stock price has fluctuated in the past and may be subject to wide fluctuations in the future in response to various factors. Brocade does not have the ability to influence or control many of these factors. In addition to the factors discussed elsewhere in this “Risk Factors” section, factors that could affect Brocade’s stock price include, among others:

• Actual or anticipated changes in Brocade’s operating results;

• Whether Brocade’s operating results or forecasts meet the expectations of securities analysts or investors;

• Actual or anticipated changes in the expectations of securities analysts or investors;

• Recommendations by securities analysts or changes in their earnings estimates;

• The announcement or timing of announcement of Brocade’s quarterly or annual operating results;

• Announcements of actual or anticipated operating results by Brocade’s competitors, Brocade’s OEM partners, and other companies in the IT industry;

• Speculation, coverage or sentiment in the media or the investment community about, or actual changes in, Brocade’s business, strategic position, competitive position, market share, operations, prospects, future stock price performance, or Brocade’s industry in general;

• The announcement of new, planned, or contemplated products; services; commercial relationships; technological innovations; acquisitions; divestitures; or other significant transactions by Brocade or its competitors;

• Brocade’s level of success, or perceived level of success, in integrating acquisitions, including the Ruckus acquisition;

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• Adverse changes to Brocade’s relationships with any of its OEM partners;

• Changes in the business strategy or execution of any of Brocade’s OEM partners;

• Departures of key employees;

• Litigation or disputes involving Brocade, Brocade’s industry, or both;

• General economic conditions and trends;

• Uncertainties relating to the potential outcome of the November 2016 presidential election in the United States;

• Sales of Brocade’s stock by Brocade’s officers, directors, or significant stockholders; and

• The timing and amount of dividends and stock repurchases.

In addition, the stock market in general, and the market for technology companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. Accordingly, broad market and industry factors may adversely affect Brocade’s stock price regardless of Brocade’s operating performance. In addition, Brocade’s stock price might also fluctuate in reaction to events that affect other companies in Brocade’s industry even if these events do not directly affect or involve Brocade.

If Brocade’s stock price fluctuates widely, Brocade may become the target of securities litigation. Securities litigation could result in substantial costs and divert Brocade’s management’s attention and resources from Brocade’s business.

Brocade has incurred substantial indebtedness that may decrease its business flexibility, access to capital, and/or increase its borrowing costs, which may adversely affect Brocade’s operations and financial results.

As of July 30, 2016, Brocade had approximately $1.7 billion in principal amount of outstanding indebtedness, including $575 million of indebtedness under the 1.375% convertible senior unsecured notes due 2020 (the “2020 Convertible Notes”), $300 million of unsecured indebtedness under the 4.625% senior notes due 2023 (the “2023 Notes”), and $800 million of indebtedness under a term loan facility. In connection with the completion of the Ruckus acquisition in May 2016, Brocade entered into a Credit Agreement (the “Credit Agreement”) with Wells Fargo Bank, National Association, and certain other lenders (collectively, the “Lenders”) pursuant to which the Lenders have provided Brocade with a term loan facility of $800 million (the “Term Loan Facility”) and a revolving credit facility of $100 million (the “Revolving Facility,” and together with the Term Loan Facility, the “Senior Credit Facility”) (see Note 8, “Borrowings,” of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q). Brocade’s substantially increased indebtedness could have the effect, among other things, of reducing Brocade’s flexibility to respond to changing business and economic conditions. In addition, a substantial amount of cash will be required to pay interest, make scheduled principal amortization payments, and repay at maturity Brocade’s indebtedness, which may adversely impact Brocade’s cash resources, reduce Brocade’s business flexibility and reduce the funds otherwise available for working capital, capital expenditures, acquisitions, share repurchases, and other general corporate purposes, and may limit the ability of Brocade to meet its target of returning at least 60% of its annual adjusted free cash flow to Brocade stockholders in the form of share repurchases or cash dividends. Moreover, Brocade’s increased indebtedness may put the company at a competitive disadvantage relative to other companies with lower indebtedness levels.

The Credit Agreement contains financial maintenance covenants, including a maximum total leverage ratio and a minimum interest coverage ratio. The Credit Agreement also contains restrictive covenants that limit, among other things, Brocade’s and certain of its 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, enter into certain transactions with affiliates, or change their lines of business, fiscal years and accounting practices, in each case, subject to certain exceptions. The indenture governing the 2023 Notes contains several negative covenants that restrict the incurrence of debt by Brocade’s subsidiaries, restrict the incurrence of liens on principal properties, and restrict Brocade and its subsidiaries from engaging in certain sale-leaseback transactions. In addition, the indentures governing both the 2020 Convertible Notes and the 2023 Notes impose covenants that restrict Brocade’s ability to effect certain mergers, consolidations, or sales of assets and require Brocade to offer to repurchase the notes upon the occurrence of certain “Fundamental Changes” or “Change of Control Triggering Events.”

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The financial and other covenants agreed to by Brocade in connection with such indebtedness could, among other things, reduce Brocade’s flexibility to respond to changing business and economic conditions, increase borrowing costs (if further debt financing is desired), and adversely affect Brocade’s operations and financial results. Brocade’s failure to comply with these covenants would result in a default under the applicable indenture or the Credit Agreement, which could permit the holders to accelerate such debt or demand payment in exchange for a waiver of such default. A default under one debt instrument could also result in cross-defaults under Brocade’s other debt instruments, negatively impact the price and liquidity of Brocade’s debt and equity securities, negatively impact Brocade’s credit ratings, and impair Brocade’s ability to access sources of capital. If any of Brocade’s debt is accelerated, Brocade may not have sufficient funds available to repay such debt.

Agencies rating Brocade’s debt securities may lower Brocade’s credit rating. This could further negatively impact the price and liquidity of Brocade’s debt and equity securities and Brocade’s ability to access sources of capital. In addition, in the event of certain credit rating downgrades, Brocade’s obligations under the Senior Credit Facility, which are currently unsecured, will be required to be secured, subject to certain exceptions, by the equity interests of certain Brocade subsidiaries.

Although interest rates have remained at low levels in recent years, they may increase for various reasons, including an increase in inflation, Federal Reserve Board actions, domestic or international fiscal policies, or domestic or international events impacting financial or capital markets. Higher interest rates or an increase in the credit spread for Brocade’s rating could negatively impact Brocade’s ability to raise additional debt or refinance existing debt. In addition, the indebtedness under the Senior Credit Facility has a floating interest rate, and an increase in interest rates may negatively impact Brocade’s financial results.

The occurrence of a “Fundamental Change” with respect to the 2020 Convertible Notes or a “Change of Control Triggering Event” with respect to the 2023 Notes or a conversion of the 2020 Convertible Notes could negatively impact Brocade’s cash flows and financial position.

Holders of the 2020 Convertible Notes have the right to require Brocade to repurchase their convertible notes upon the occurrence of a “Fundamental Change” and holders of the 2023 Notes have the right to require Brocade to repurchase their senior notes upon the occurrence of a “Change of Control Triggering Event” (as defined in the indentures governing the 2020 Convertible Notes and the 2023 Notes, respectively), in each case at a repurchase price equal to 100% of the principal amount of the applicable notes to be repurchased, plusaccrued and unpaid interest, if any. In addition, upon conversion of the 2020 Convertible Notes, Brocade will be required to make cash payments up to the full conversion value in respect of the convertible notes being converted, unless Brocade elects to only deliver shares of its common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share). It is Brocade’s current intent and policy to settle conversions of the 2020 Convertible Notes through the delivery of cash up to the principal amount of converted convertible notes, together with shares of common stock, to satisfy any conversion obligation in excess of such specified dollar amount. However, if Brocade elects to settle conversions of the 2020 Convertible Notes solely in shares of common stock, such settlement would result in additional dilution to Brocade’s stockholders and could result in more dilutive accounting treatment for the 2020 Convertible Notes. The 2020 Convertible Notes may be converted at the option of the holders during certain periods as a result of, among other things, fluctuations in Brocade’s stock price.

If Brocade is required to make repurchases of the 2020 Convertible Notes or the 2023 Notes or make cash payments in respect of conversions of the 2020 Convertible Notes, Brocade may not have enough available cash or be able to obtain financing on acceptable terms (or at all) at the time. Further, these obligations would negatively impact Brocade’s cash flows and could limit its ability to use its available cash and cash flow for other liquidity needs, including working capital, capital expenditures, acquisitions, investments, and other general corporate purposes. Brocade’s ability to repurchase the notes or to pay cash upon conversions of the 2020 Convertible Notes may also be limited by law, by regulatory authority, or by agreements governing its future indebtedness.

Provisions in Brocade’s charter documents, customer agreements, and Delaware law could discourage, delay, or prevent a change in control of Brocade, which could hinder stockholders’ ability to receive a premium for Brocade’s common stock and adversely affect the value of Brocade’s convertible notes.

Provisions of Brocade’s certificate of incorporation and bylaws may discourage, delay, or prevent a merger or mergers that a stockholder may consider favorable. These provisions include, but are not limited to:

• Authorizing the issuance of preferred stock without stockholder approval;

• Prohibiting cumulative voting in the election of directors;

67

• Limitations on who may call special meetings of stockholders and when special meetings of stockholders may be called; and

• Prohibiting stockholder actions by written consent.

Certain provisions of Delaware law also may discourage, delay, or prevent someone from acquiring or merging with Brocade, and Brocade’s agreements with certain Brocade customers require that Brocade give prior notice of a change of control and grant certain manufacturing rights following a change of control. Brocade’s various change of control provisions could prevent or delay a change in control of Brocade, which could hinder stockholders’ ability to receive a premium for Brocade’s common stock and could adversely affect the value of Brocade’s convertible notes.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

There were no unregistered sales of equity securities during the three months ended July 30, 2016.

Issuer Purchases of Equity Securities

The following table summarizes stock repurchase activity for the three months endedJuly 30, 2016 (in thousands, except per share amounts):

Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program (1)	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program (1)
May 1, 2016 to May 28, 2016	1,575	$	8.66	1,575	$	1,626,435
May 29, 2016 to June 25, 2016	39,350	$	9.07	39,350	$	1,269,689
June 26, 2016 to July 30, 2016	31,746	$	9.14	31,746	$	979,372
Total	72,671	$	9.09	72,671

⁽¹⁾  As of July 30, 2016, Brocade’s Board of Directors had authorized a stock repurchase program for an aggregate amount of up to approximately $3.5 billion (consisting of an original $100 million authorization on August 18, 2004, plus subsequent authorizations of an additional $200 million on January 16, 2007, $500 million on November 29, 2007, $500 million on May 16, 2012, $692 million on September 25, 2013, $700 million on September 25, 2015, and $800 million on April 3, 2016), which was used for determining the amounts in these columns. The number of shares purchased and the timing of purchases are based on the level of the Company’s cash balances, general business and market conditions, the trading price of the Company’s common stock, and other factors, including alternative investment opportunities.

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Item 6. Exhibits

EXHIBIT INDEX

Exhibit Number	Description of Document
10.1	Credit Agreement, dated as of May 27, 2016, among Brocade Communications Systems, Inc., Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender and Issuing Lender, and the other Lenders party thereto (incorporated by reference to Exhibit 10.1 from Brocade’s current report on Form 8-K filed on May 27, 2016)
10.2*	Brocade Communications Systems, Inc. Amended and Restated Inducement Award Plan, effective as of May 24, 2016 (incorporated by reference to Exhibit 10.1 from Brocade’s Post-Effective Amendment Number 1 to Form S-4 on Form S-8 Registration Statement filed on June 3, 2016)
31.1	Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer
31.2	Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer
32.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
*	Indicates management compensatory plan, contract, or arrangement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		Brocade Communications Systems, Inc.
Date:	September 2, 2016	By:	/s/ Daniel W. Fairfax
			Daniel W. Fairfax Senior Vice President and Chief Financial Officer

70

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO EXCHANGE ACT RULE 13a-14(a)/15(d)-14(a) AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Lloyd A. Carney, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended July 30, 2016 of Brocade Communications Systems, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 2, 2016

/s/ Lloyd A. Carney

Lloyd A. Carney

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO EXCHANGE ACT RULE 13a-14(a)/15(d)-14(a) AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Daniel W. Fairfax, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended July 30, 2016 of Brocade Communications Systems, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 2, 2016

/s/ Daniel W. Fairfax

Daniel W. Fairfax

Senior Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

AND PRINCIPAL FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Lloyd A. Carney, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of Brocade Communications Systems, Inc. for the fiscal quarter ended July 30, 2016 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Brocade Communications Systems, Inc.

Date: September 2, 2016

By:	/s/ Lloyd A. Carney
	Lloyd A. Carney
	Chief Executive Officer
	(Principal Executive Officer)

I, Daniel W. Fairfax, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of Brocade Communications Systems, Inc. for the fiscal quarter ended July 30, 2016 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Brocade Communications Systems, Inc.

Date: September 2, 2016

By:	/s/ Daniel W. Fairfax
	Daniel W. Fairfax
	Senior Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

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Document And Entity Information - shares	9 Months Ended
	Jul. 30, 2016	Aug. 26, 2016
Entity Information [Line Items]
Entity Registrant Name	BROCADE COMMUNICATIONS SYSTEMS INC
Entity Central Index Key	0001009626
Current Fiscal Year End Date	--10-29
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Jul. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		400,870,091
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes

XML

Condensed Consolidated Statements Of Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Jul. 30, 2016	Aug. 01, 2015	Jul. 30, 2016	Aug. 01, 2015
Net revenues:
Product	$ 490,995	$ 463,200	$ 1,400,355	$ 1,407,681
Service	99,726	88,619	287,956	266,952
Total net revenues	590,721	551,819	1,688,311	1,674,633
Cost of revenues:
Product	188,492	144,243	464,797	431,781
Service	45,330	35,672	127,489	109,056
Total cost of revenues	233,822	179,915	592,286	540,837
Gross margin	356,899	371,904	1,096,025	1,133,796
Operating expenses:
Research and development	114,996	85,072	297,516	262,173
Sales and marketing	167,983	144,883	468,743	428,199
General and administrative	32,960	20,422	78,180	65,815
Amortization of intangible assets	5,498	889	7,302	1,654
Acquisition and integration costs	14,868	789	20,625	3,133
Restructuring and other related benefits	0	0	(566)	(637)
Total operating expenses	336,305	252,055	871,800	760,337
Income from operations	20,594	119,849	224,225	373,459
Interest expense	(13,462)	(9,778)	(33,282)	(45,754)
Interest and other income, net	1,557	947	3,317	854
Income before income tax	8,689	111,018	194,260	328,559
Income tax expense (benefit)	(1,806)	19,351	47,034	72,585
Net income	$ 10,495	$ 91,667	$ 147,226	$ 255,974
Net income per share—basic	$ 0.02	$ 0.22	$ 0.36	$ 0.61
Net income per share—diluted	$ 0.02	$ 0.21	$ 0.35	$ 0.59
Shares used in per share calculation—basic	426,671	417,299	411,709	422,184
Shares used in per share calculation—diluted	434,416	427,518	419,416	433,303
Cash dividends declared per share	$ 0.055	$ 0.045	$ 0.145	$ 0.115

XML

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Jul. 30, 2016	Aug. 01, 2015	Jul. 30, 2016	Aug. 01, 2015
Statement of Comprehensive Income [Abstract]
Net income		$ 10,495	$ 91,667	$ 147,226	$ 255,974
Unrealized gains (losses) on cash flow hedges:
Change in unrealized gains and losses		(700)	(414)	(1,035)	(2,332)
Net gains and losses reclassified into earnings	[1]	482	831	1,831	2,544
Net unrealized gains (losses) on cash flow hedges		(218)	417	796	212
Foreign currency translation adjustments		(1,628)	(492)	(1,760)	(5,781)
Total other comprehensive loss		(1,846)	(75)	(964)	(5,569)
Total comprehensive income		$ 8,649	$ 91,592	$ 146,262	$ 250,405

[1] For classification of amounts reclassified from accumulated other comprehensive loss into earnings as reported on the Company’s Condensed Consolidated Statements of Income, see Note 10, “Derivative Instruments and Hedging Activities,” of the Notes to Condensed Consolidated Financial Statements.

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jul. 30, 2016	Oct. 31, 2015
Current assets:
Cash and cash equivalents	$ 1,153,074	$ 1,440,882
Accounts receivable, net of allowances for doubtful accounts of $3,836 and $1,838 as of July 30, 2016, and October 31, 2015, respectively	278,180	235,883
Inventories	81,182	40,524
Deferred tax assets	0	78,675
Prepaid expenses and other current assets	86,922	56,235
Total current assets	1,599,358	1,852,199
Property and equipment, net	459,812	439,224
Goodwill	2,324,315	1,617,161
Intangible assets, net	434,921	75,623
Non-current deferred tax assets	3,918	813
Other assets	51,441	51,133
Total assets	4,873,765	4,036,153
Current liabilities:
Accounts payable	121,093	98,143
Accrued employee compensation	134,471	142,075
Deferred revenue	257,460	244,622
Current portion of long-term debt	76,627	298
Other accrued liabilities	111,559	77,226
Total current liabilities	701,210	562,364
Long-term debt, net of current portion	1,516,761	793,779
Non-current deferred revenue	87,875	72,065
Non-current income tax liability	100,208	47,010
Non-current deferred tax liabilities	0	24,024
Other non-current liabilities	6,908	3,376
Total liabilities	2,412,962	1,502,618
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: 400,679 and 413,923 shares as of July 30, 2016, and October 31, 2015, respectively	401	414
Additional paid-in capital	1,473,159	1,632,984
Accumulated other comprehensive loss	(25,966)	(25,002)
Retained earnings	1,010,659	925,139
Total Brocade stockholders’ equity	2,458,253	2,533,535
Noncontrolling interest	2,550	0
Total stockholders’ equity	2,460,803	2,533,535
Total liabilities and stockholders’ equity	$ 4,873,765	$ 4,036,153

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Jul. 30, 2016	Oct. 31, 2015
Statement of Financial Position [Abstract]
Accounts receivable, allowances	$ 1,736	$ 1,838
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	400,679	413,923
Common stock, shares outstanding	400,679	413,923

XML

Condensed Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Jul. 30, 2016	Aug. 01, 2015
Cash flows from operating activities:
Net income	$ 147,226	$ 255,974
Adjustments to reconcile net income to net cash provided by operating activities:
Excess tax benefits from stock-based compensation	(1,778)	(41,981)
Depreciation and amortization	80,979	62,569
Loss on disposal of property and equipment	458	1,620
Net gain on sale of investments	(122)	0
Amortization of debt issuance costs and debt discount	13,493	9,443
Write-off of debt discount and debt issuance costs related to lenders that did not participate in refinancing	0	4,808
Provision (recovery) for doubtful accounts receivable and sales allowances	(1,946)	7,189
Non-cash purchase accounting adjustments to inventory	20,775	0
Non-cash stock-based compensation expense	88,805	64,594
Changes in assets and liabilities, net of acquisitions:
Accounts receivable	988	17,959
Inventories	5,601	(1,778)
Prepaid expenses and other assets	(9,725)	(20,854)
Deferred tax assets	(109)	531
Accounts payable	5,519	2,266
Accrued employee compensation	(57,520)	(94,852)
Deferred revenue	5,359	(14,220)
Other accrued liabilities	(43,874)	16,478
Restructuring liabilities	(1,223)	(2,514)
Net cash provided by operating activities	252,906	267,232
Cash flows from investing activities:
Purchases of non-marketable equity and debt investments	(2,000)	(2,150)
Proceeds from maturities and sale of short-term investments	150,323	0
Proceeds from sale of non-marketable equity investment	0	1,489
Purchases of property and equipment	(59,810)	(53,142)
Purchase of intangible assets	0	(7,750)
Net cash paid in connection with acquisitions	(564,888)	(95,452)
Proceeds from collection of note receivable	250	250
Net cash used in investing activities	(476,125)	(156,755)
Cash flows from financing activities:
Payment of principal related to senior secured notes	0	300,000
Payment of debt issuance costs	(891)	(1,718)
Payment of principal related to capital leases	(282)	(1,677)
Common stock repurchases	(841,562)	(312,601)
Proceeds from issuance of common stock	49,195	51,345
Payment of cash dividends to stockholders	(61,706)	(48,819)
Proceeds from term loan	787,255	0
Proceeds from convertible notes	0	565,656
Purchase of convertible note hedge	0	(86,135)
Proceeds from issuance of warrants	0	51,175
Proceeds from noncontrolling interest	2,550	0
Excess tax benefits from stock-based compensation	1,778	41,981
Net cash used in financing activities	(63,663)	(40,793)
Effect of exchange rate fluctuations on cash and cash equivalents	(926)	(5,030)
Net increase (decrease) in cash and cash equivalents	(287,808)	64,654
Cash and cash equivalents, beginning of period	1,440,882	1,255,017
Cash and cash equivalents, end of period	1,153,074	1,319,671
Supplemental disclosures of cash flow information:
Cash paid for interest	24,264	29,560
Cash paid for income taxes	46,163	35,372
Settlement of debt investment in relation to acquisition	0	150
Acquiring a business through the issuance of stock	$ 623,116	$ 0

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Basis Of Presentation

9 Months Ended

Jul. 30, 2016

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 31, 2015, 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 31, 2015.

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 2016 is a 52-week fiscal year and fiscal year 2015 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 not presented separately in the Company’s Condensed Consolidated Statements of Income as these amounts are not material for any of the fiscal periods presented.

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 and programs, allowance for doubtful accounts, stock-based compensation, acquisition purchase price allocations, warranty obligations, inventory valuation and purchase commitments, restructuring costs, incentive compensation, facilities lease losses, impairment of goodwill and other indefinite-lived intangible assets, litigation, and income taxes. Actual results may differ materially from these estimates.

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Summary Of Significant Accounting Policies

9 Months Ended

Jul. 30, 2016

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 nine months endedJuly 30, 2016, as compared to those disclosed in Brocade’s Annual Report on Form 10-K for the fiscal year ended October 31, 2015.

Consolidation of Variable Interest Entities

The Company uses a qualitative approach in assessing the consolidation requirement for variable interest entities. The approach focuses on identifying which enterprise has the power to direct the activities that most significantly impact the variable interest entity’s economic performance and which enterprise has the obligation to absorb losses or the right to receive benefits from the variable interest entity. In the event that the Company is the primary beneficiary of a variable interest entity, the assets, liabilities, and results of operations of the variable interest entity will be included in the Company’s consolidated financial statements.

New Accounting Pronouncements or Updates Recently Adopted

In April 2014, the Financial Accounting Standards Board (“FASB”) issued an update to Accounting Standards Codification (“ASC”) 205, Presentation of Financial Statements, and ASC 360, Property, Plant, and Equipment: Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. Under this update, a discontinued operation may include a component of an entity or a group of components of an entity, a business, or nonprofit activity. Only those disposals of components of an entity that represent a strategic shift that has, or will have, a major effect on an entity’s operations and financial results will be reported as discontinued operations in the financial statements. This update should be applied prospectively. The Company adopted this update in the first quarter of fiscal year 2016. There was no material impact on the Company’s financial position, results of operations, or cash flows.

In April 2015, the FASB issued an update to ASC 835, Interest—Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs. Under this update, debt issuance costs are required to be presented as a direct deduction from the carrying amount of the related debt liability, consistent with the presentation of debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by this update. This update should be applied retrospectively to all prior periods presented in the financial statements. The Company adopted this update in the first quarter of fiscal year 2016. There was no material impact on the Company’s financial position, results of operations, or cash flows.

In September 2015, the FASB issued an update to ASC 805, Business Combinations: Simplifying the Accounting Measurement-Period Adjustments. This update simplifies the accounting for adjustments made to provisional amounts recognized in a business combination by eliminating the requirement to retrospectively account for those adjustments. Under this update, the adjustments are recognized in the reporting period in which the adjustment amounts are determined. This update should be applied prospectively. The Company adopted this update in the first quarter of fiscal year 2016. There was no material impact on the Company’s financial position, results of operations, or cash flows.

In November 2015, the FASB issued an update to ASC 740, Income Taxes: Balance Sheet Classification of Deferred Taxes. This update simplifies the presentation of current and non-current deferred tax liabilities and assets. Under this update, the deferred tax liabilities and assets are classified as non-current on the balance sheet. The update does not impact the current requirement that deferred tax liabilities and assets be offset and presented as a single amount. This update may be applied either prospectively or retrospectively. The Company adopted this update in the first quarter of fiscal year 2016 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.

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. Early adoption is not permitted for reporting periods before the first quarter of fiscal year 2018. 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. 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 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. This update may be applied either prospectively or retrospectively and will be adopted by the Company in the first quarter of fiscal year 2017. Early adoption is permitted. The Company does not expect the adoption of this update to have a material impact on its consolidated financial statements.

In July 2015, the FASB issued an update to ASC 330, Inventory: Simplifying the Measurement of Inventory. Under this update, 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.

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 six 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 July 30, 2016, two customers individually accounted for 18% and 10% of total accounts receivable, for a combined total of 28% of total accounts receivable. As of October 31, 2015, one customer individually accounted for 17% of total accounts receivable and no other customers individually accounted for more than 10% 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 July 30, 2016, two customers individually accounted for 12% and 12% of the Company’s total net revenues for a combined total of 24% of total net revenues. For the three months ended August 1, 2015, three customers individually accounted for 16%, 15%, and 12% of the Company’s total net revenues for a combined total of 43% 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. and Accton Technology Corporation. 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.

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Acquisitions

9 Months Ended

Jul. 30, 2016

Business Combinations [Abstract]

Acquisitions

Acquisitions

Current 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.

Pursuant to the terms of the Agreement and Plan of Merger entered into between the Company, Ruckus, and a Company subsidiary, Ruckus stockholders were entitled to receive $6.45 in cash and 0.75 shares of the Company’s common stock in exchange for each outstanding share of Ruckus common stock. The results of operations for the acquired business are included in the Company’s Condensed Consolidated Statements of Income from the Acquisition Date. 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 submitted and not withdrawn a demand for 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 July 30, 2016.

Based on the $8.60 per share closing price of the Company’s common stock on May 27, 2016, the total preliminary purchase consideration paid or payable was $1.3 billion, consisting of $574.0 million in cash for outstanding Ruckus shares less dissenting shares, $78.3 million in cash for outstanding vested Ruckus stock options allocated to preliminary purchase consideration, $574.0 million of equity interests in the Company, $7.4 million of the fair value of replacement awards allocated to the preliminary purchase consideration, and $41.7 million relating to the appraisal demand submitted by the dissenting former Ruckus stockholder, which was accrued as of July 30, 2016, and reported within “Other accrued liabilities” on the Company’s Condensed Consolidated Balance Sheets.

The Company recorded direct acquisition costs of $10.2 million and $15.2 million for the three and nine months ended July 30, 2016, respectively, and integration costs of $4.6 million and $5.4 million for the three and nine months ended July 30, 2016, respectively. These costs were expensed as incurred and are presented in the Company’s Condensed Consolidated Statements of Income for the three and nine months ended July 30, 2016, as “Acquisition and integration costs.”

In connection with this acquisition, the Company allocated the total preliminary 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 preliminary allocation of the total preliminary 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	149,615
Accounts receivable, net of allowances for doubtful accounts of $2,100	41,339
Inventories	66,000
Prepaid expenses and other current assets	5,953
Property and equipment, net	21,777
Identifiable intangible assets	380,000
Other assets	1,697
Total assets acquired	761,896
Liabilities assumed:
Accounts payable	16,375
Accrued employee compensation	17,514
Deferred revenue	13,923
Other accrued liabilities	33,810
Non-current deferred revenue	9,364
Non-current deferred tax liabilities	57,677
Other non-current liabilities	40,561
Total liabilities assumed	189,224
Net assets acquired, excluding goodwill (a)	572,672
Total preliminary purchase consideration (b)	1,275,448
Estimated goodwill (b) - (a)	$	702,776

Goodwill represents the excess of the total preliminary 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 $303.8 million was assigned to the IP Networking Products reporting unit, and goodwill of $398.9 million was assigned to the Global Services reporting unit. Goodwill recognized in the acquisition is not deductible for tax purposes.

A preliminary assessment of 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	$	44,000	15.00
Customer relationships	118,000		1 - 7
Developed technology	195,000		6 - 7
In-process research and development (“IPR&D”) (1)	23,000		N/A (1)
Total intangible assets	$	380,000

⁽¹⁾  IPR&D will be accounted for as an indefinite-lived intangible asset until the underlying projects are completed or abandoned.

The total preliminary purchase consideration and allocation reflects the Company’s preliminary estimates and is subject to revision as additional information in relation to the preliminary purchase consideration and the fair value of the underlying assets acquired and liabilities assumed becomes available.Additional information that existed as of the Acquisition Date may become known to the Company during the remainder of the measurement period. This period is not to exceed 12 months from the acquisition date.

Pursuant to the terms of the Agreement and Plan of Merger, all unvested Ruckus awards, then comprised of restricted stock units (“RSUs”), performance-based RSUs, and stock options, were canceled and replaced with Company RSUs and stock options (“replacement awards”). Per ASC 805, Business Combinations, the replacement of stock options or other share-based payment awards in conjunction with a business combination represents a modification of share-based payment awards that must be accounted for in accordance with ASC 718, Compensation—Stock Compensation. As a result of the Company’s obligation to issue replacement awards, a portion of the fair-value-based measure of replacement awards is included in measuring the purchase consideration transferred in the business combination. To determine the portion of the replacement awards that is part of the purchase consideration, the Company measured the fair value of both the replacement awards and the historical Ruckus awards as of the Acquisition Date, in accordance with ASC 718. The fair value of the replacement awards, whether vested or unvested, was included in the preliminary purchase consideration to the extent that pre-acquisition services had been rendered. The preliminary purchase consideration also included the fair value of accelerated vesting for awards that vested at the Acquisition Date due to change-in-control provisions.

In addition, the Company accelerated 20% to 50% of the vesting of unvested replacement awards granted to eight Ruckus executives and modified the vesting schedules of unvested replacement awards granted to those eight plus an additional four Ruckus executives. As a result, the Company recorded $4.7 million as an expense in the three and nine months ended July 30, 2016.

As of July 30, 2016, the fair value of the remaining unvested replacement awards of $28.6 million will be recorded as stock-based compensation expense over the applicable future vesting periods.

For the three and nine months ended July 30, 2016, the Company’s Condensed Consolidated Statements of Income included revenue and loss from operations of $77.8 million and $37.6 million, respectively, attributable to the operations of the Ruckus business since the Acquisition Date.

Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information presents the consolidated results of the Company and Ruckus for the three and nine months ended July 30, 2016, and August 1, 2015, giving effect to the acquisition and the related debt financing as if they had occurred on November 2, 2014, and combines the historical financial results of the Company and Ruckus. The unaudited pro forma financial information includes adjustments to give effect to pro forma events that are directly attributable to the acquisition and the related debt financing. The pro forma financial information includes adjustments to amortization and depreciation for intangible assets and property, plant, and equipment acquired, adjustments to stock-based compensation expense, the effect of acquisition on inventory acquired and deferred revenue, interest expense for the additional indebtedness, and acquisition and integration costs. The unaudited pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the results of operations of future periods. The unaudited pro forma financial information does not give effect to the potential impact of current financial conditions, regulatory matters, or any anticipated synergies, operating efficiencies, or cost savings that may be associated with the acquisition. Consequently, actual results will differ from the unaudited pro forma financial information presented below (in thousands, except for per share amounts):

	Three Months Ended					Nine Months Ended
	July 30, 2016			August 1, 2015		July 30, 2016		August 1, 2015
Unaudited pro forma consolidated results:
Pro forma revenues	$	600,530		$	655,663	$	1,900,664	$	1,953,490
Pro forma net income (loss)	$	(21,936	)	$	85,843	$	100,982	$	168,212
Pro forma net income (loss) per share—basic	$	(0.05	)	$	0.21	$	0.25	$	0.40
Pro forma net income (loss) per share—diluted	$	(0.05	)	$	0.20	$	0.24	$	0.38

Unaudited pro forma net income for the nine months ended August 1, 2015, includes nonrecurring pro forma adjustments directly attributable to the acquisition to the effect of inventory acquired and acquisition and integration costs of $39.8 million and $20.6 million, respectively. No such adjustments are included in any other periods.

Other Fiscal Year 2016 Acquisition

In March 2016, the Company completed its acquisition of a privately held developer of software for data center automation to strengthen its IP Networking product portfolio. The Company does not consider this acquisition to be material to its results of operations or financial position. Therefore, the Company is not presenting pro forma financial information of combined operations.

Prior Fiscal Year Acquisitions

In March 2015, the Company completed its acquisition of two businesses to strengthen its software networking portfolio. The total aggregate purchase price of the acquisitions was $96.1 million. The total net aggregate purchase price of the acquisitions, net of $0.1 million of cash acquired as part of the acquisitions, was $95.5 million in cash consideration and $0.5 million in non-cash consideration.

The Company recorded direct acquisition costs of $1.5 million for the nine months ended August 1, 2015, and integration costs of $0.8 million and $1.7 million for the three and nine months ended August 1, 2015, respectively. These costs were expensed as incurred and are presented in the Company’s Condensed Consolidated Statements of Income for the three and nine months ended August 1, 2015, as “Acquisition and integration costs.”

The results of operations for both acquisitions are included in the Company’s Condensed Consolidated Statements of Income from the respective dates of acquisition. The Company does not consider these acquisitions to be significant, individually or in the aggregate, to its results of operations or financial position. Therefore, the Company is not presenting pro forma financial information of combined operations.

In connection with these acquisitions, the Company allocated the total purchase consideration to the net assets acquired and liabilities assumed, including identifiable intangible assets, based on their respective fair values at the acquisition dates. The Company also granted RSU awards and cash awards to transferring or continuing employees of the acquired businesses. These awards require the employees to continue providing services to the Company for the duration of the vesting or payout periods.

The RSUs are accounted for as stock-based compensation expense and reported, as applicable, within “Cost of revenues,” “Research and development,” “Sales and marketing,” and “General and administrative” on the Company’s Condensed Consolidated Statements of Income. For the three and nine months ended July 30, 2016, the Company recognized $0.5 million and $1.4 million, respectively, of stock-based compensation expense related to these RSU awards. For the three and nine months ended August 1, 2015, the Company recognized $0.9 million and $1.1 million, respectively, of stock-based compensation expense related to these RSU awards.

The cash awards are accounted for as employee compensation expense and reported within “Research and development” on the Company’s Condensed Consolidated Statements of Income. For the three and nine months ended July 30, 2016, the Company recognized $0.9 million and $3.4 million, respectively, of compensation expense related to these cash awards. For the three and nine months ended August 1, 2015, the Company recognized $1.6 million and $2.0 million, respectively, of compensation expense related to these cash awards.

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Goodwill And Intangible Assets

9 Months Ended

Jul. 30, 2016

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 nine months ended July 30, 2016 (in thousands):

	Storage Area Networking (“SAN”)  Products			IP Networking Products			Global Services		Total
Balance at October 31, 2015
Goodwill	$	176,325		$	1,414,634		$	155,416	$	1,746,375
Accumulated impairment losses	—			(129,214		)	—		(129,214		)
	176,325			1,285,420			155,416		1,617,161
Acquisitions (1)	—			308,456			398,936		707,392
Tax adjustments (2)	(5		)	—			—		(5		)
Translation adjustments	—			(233		)	—		(233		)
Balance at July 30, 2016
Goodwill	176,320			1,722,857			554,352		2,453,529
Accumulated impairment losses	—			(129,214		)	—		(129,214		)
	$	176,320		$	1,593,643		$	554,352	$	2,324,315

⁽¹⁾  The goodwill acquired relates to the acquisitions completed in March 2016 and May 2016. See Note 3, “Acquisitions,” of the Notes to Condensed Consolidated Financial Statements.

⁽²⁾  The goodwill adjustments were primarily a result of tax benefits from the exercise of stock awards of acquired companies.

The Company conducts its goodwill impairment test annually 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. Effective on the first day of the fourth fiscal quarter, the Company changed the date of its annual impairment test for goodwill from the first day of the second fiscal quarter to the first day of the fourth fiscal quarter. This change in the annual impairment test date was made to better coincide with the timing of when the Company prepares its annual budget and financial plans as part of its regular long-range planning process. 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 initial 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 initial 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 market or 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 initial annual goodwill impairment analysis performed during the second fiscal quarter of 2016, the Company determined that no impairment needed to be recorded. As of July 30, 2016, no new events had occurred nor had any facts or circumstances changed since the annual goodwill impairment analysis performed during the second 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 nine months ended July 30, 2016.

The following tables present details of the Company’s intangible assets, excluding goodwill (in thousands, except for weighted-average remaining useful life):

	July 30, 2016
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Weighted- Average Remaining Useful Life (In years)
Finite-lived intangible assets:
Trade names	$	45,090	$	1,105	$	43,985	14.71
Core/developed technology (1) (2)	254,290		23,834		230,456		5.67
Patent portfolio license (3)	7,750		1,669		6,081		17.00
Customer relationships	141,110		8,805		132,305		6.52
Non-compete agreements	1,050		904		146		0.46
Patents with broader applications	1,040		92		948		13.63
Total finite-lived intangible assets	450,330		36,409		413,921		6.72
Indefinite-lived intangible assets, excluding goodwill:
IPR&D (1)	21,000		—		21,000
Total indefinite-lived intangible assets, excluding goodwill	21,000		—		21,000
Total intangible assets, excluding goodwill	$	471,330	$	36,409	$	434,921
	October 31, 2015
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Weighted- Average Remaining Useful Life (In years)
Finite-lived intangible assets:
Trade names	$	1,090	$	415	$	675	4.36
Core/developed technology	40,530		9,605		30,925		3.49
Patent portfolio license (3)	7,750		849		6,901		17.74
Customer relationships	23,110		2,484		20,626		7.18
Non-compete agreements	1,050		664		386		1.17
Patents with broader applications	1,040		40		1,000		14.38
Total finite-lived intangible assets	74,570		14,057		60,513		6.55
Indefinite-lived intangible assets, excluding goodwill:
IPR&D (1)	15,110		—		15,110
Total indefinite-lived intangible assets, excluding goodwill	15,110		—		15,110
Total intangible assets, excluding goodwill	$	89,680	$	14,057	$	75,623

⁽¹⁾  Acquired IPR&D are intangible assets accounted for as indefinite-lived assets until the completion or abandonment of the associated research and development efforts. If the research and development efforts associated with the IPR&D are successfully completed, then the IPR&D intangible assets will be amortized over the estimated useful lives to be determined as of the date the efforts are completed. During the three months ended July 30, 2016, the Company acquired $23.0 million in IPR&D intangible assets in connection with the acquisition of Ruckus. The research and development efforts associated with these IPR&D intangible assets are expected to be completed in fiscal years 2016 and 2017. During the nine months endedJuly 30, 2016, research and development efforts were completed on $17.1 million of the IPR&D intangible assets, and the completed IPR&D intangible assets are being amortized as core/developed technology over the estimated useful lives of five to seven years.

⁽²⁾  During the nine months endedJuly 30, 2016, $1.0 million of finite-lived intangible assets became fully amortized and, therefore, were removed from the balance sheet.

⁽³⁾  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.

The Company conducts the IPR&D impairment test annually and whenever events occur or facts and circumstances indicate that it is more likely than not that the IPR&D is impaired. Effective on the first day of the fourth fiscal quarter, the Company changed the date of its annual impairment test for IPR&D from the first day of the second fiscal quarter to the first day of the fourth fiscal quarter. This change in the annual impairment test date was made to better coincide with the timing of when the Company prepares its annual budget and financial plans as part of its regular long-range planning process. 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.

The Company has not identified any changes in circumstances requiring an interim IPR&D impairment test for the nine months endedJuly 30, 2016, and therefore, the Company determined that no impairment needed to be recorded.

The amortization of finite-lived intangible assets is included in the following line items of the Company’s Condensed Consolidated Statements of Income as follows (in thousands):

	Three Months Ended				Nine Months Ended
	July 30, 2016		August 1, 2015		July 30, 2016		August 1, 2015
Cost of revenues	$	8,922	$	2,549	$	15,269	$	5,043
General and administrative (1)	271		889		821		1,654
Amortization of intangible assets	5,498		280		7,302		570
Total	$	14,691	$	3,718	$	23,392	$	7,267

⁽¹⁾  The amortization is related to the $7.8 million of perpetual, non-exclusive license to certain patents purchased during the fiscal year ended October 31, 2015.

The following table presents the estimated future amortization of finite-lived intangible assets as of July 30, 2016 (in thousands):

Fiscal Year	Estimated Future Amortization
2016 (remaining three months)	$	18,998
2017	72,063
2018	63,562
2019	60,039
2020	59,082
Thereafter	140,177
Total	$	413,921

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Balance Sheet Details

9 Months Ended

Jul. 30, 2016

Balance Sheet Details [Abstract]

Balance Sheet Details

Balance Sheet Details

The following tables provide details of selected balance sheet items (in thousands):

	July 30, 2016		October 31, 2015
Inventories:
Raw materials	$	17,613	$	18,788
Finished goods	63,569		21,736
Inventories	$	81,182	$	40,524

	July 30, 2016			October 31, 2015
Property and equipment, net:
Gross property and equipment
Computer equipment	$	18,886		$	14,820
Software	84,337			67,625
Engineering and other equipment (1)	443,808			407,342
Furniture and fixtures (1)	33,468			31,028
Leasehold improvements	37,315			33,986
Land and building	386,163			385,415
Total gross property and equipment	1,003,977			940,216
Accumulated depreciation and amortization (1) (2)	(544,165		)	(500,992		)
Property and equipment, net	$	459,812		$	439,224

⁽¹⁾  Engineering and other equipment, furniture and fixtures, and accumulated depreciation and amortization include the following amounts under capital leases as of July 30, 2016, and October 31, 2015 (in thousands):

	July 30, 2016			October 31, 2015
Cost of capitalized leases	$	270		$	1,312
Accumulated depreciation	(255		)	(857		)
Property and equipment, net, under capital leases	$	15		$	455

⁽²⁾  The following table presents the depreciation of property and equipment included in the Company’s Condensed Consolidated Statements of Income (in thousands):

	Three Months Ended				Nine Months Ended
	July 30, 2016		August 1, 2015		July 30, 2016		August 1, 2015
Depreciation expense	$	20,393	$	18,605	$	57,531	$	55,302

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Fair Value Measurements

9 Months Ended

Jul. 30, 2016

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 July 30, 2016.

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 nine months ended July 30, 2016, 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 July 30, 2016, were as follows (in thousands):

			Fair Value Measurements Using
	Balance as of  July 30, 2016		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds (1)	$	885,152	$	885,152	$	—	$	—
Derivative assets	477		—		477		—
Total assets measured at fair value	$	885,629	$	885,152	$	477	$	—
Liabilities:
Derivative liabilities	$	759	$	—	$	759	$	—

⁽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 31, 2015, were as follows (in thousands):

			Fair Value Measurements Using
	Balance as of  October 31, 2015		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds (1)	$	1,184,410	$	1,184,410	$	—	$	—
Derivative assets	709		—		709		—
Total assets measured at fair value	$	1,185,119	$	1,184,410	$	709	$	—
Liabilities:
Derivative liabilities	$	1,125	$	—	$	1,125	$	—

⁽¹⁾  Money market funds are reported within “Cash and cash equivalents” on the Company’s Condensed Consolidated Balance Sheets.

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Restructuring and Other Costs

9 Months Ended

Jul. 30, 2016

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 Income (in thousands):

	Three Months Ended				Nine Months Ended
	July 30, 2016		August 1, 2015		July 30, 2016			August 1, 2015
Lease loss reserve and related benefits	$	—	$	—	$	(566	)	$	(637	)

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 31, 2015	$	110	$	1,811		$	408		$	2,329
Restructuring and other related benefits	—		(566		)	—			(566		)
Cash payments	—		(380		)	(260		)	(640		)
Translation adjustment	—		(17		)	—			(17		)
Restructuring liabilities at July 30, 2016	$	110	$	848		$	148		$	1,106
Current restructuring liabilities at July 30, 2016	$	110	$	350		$	148		$	608
Non-current restructuring liabilities at July 30, 2016	$	—	$	498		$	—		$	498

Fiscal 2013 Fourth Quarter Restructuring Plan

During the fiscal year ended October 26, 2013, and the first quarter of fiscal year 2014, the Company restructured certain business operations and reduced the Company’s operating expense structure. The restructuring plan 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 as a result of acquisitions.

Cash payments for facilities that are part of the Company’s lease loss reserve are expected to be paid over the respective lease terms through fiscal year 2021.

General

The Company reevaluates its estimates and assumptions on a quarterly basis and makes adjustments to the restructuring liabilities balance if necessary. During the nine months ended July 30, 2016, the Company reversed $0.6 million of charges related to estimated facilities lease losses due to a change in lease terms for a certain facility.

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Borrowings

9 Months Ended

Jul. 30, 2016

Debt Disclosure [Abstract]

Borrowings

Borrowings

The following table provides details of the Company’s long-term debt (in thousands, except years and percentages):

			July 30, 2016					October 31, 2015
	Maturity	Stated Annual Interest Rate	Amount			Effective Interest Rate		Amount			Effective Interest Rate
Senior Credit Facility:
Term Loan Facility	2021	variable	$	800,000		2.50	%	$	—		—	%
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	%
Capital lease obligations	2016	4.625%	16			4.63	%	298			4.63	%
Total gross long-term debt			1,675,016					875,298
Unamortized discount			(78,755		)			(79,196		)
Unamortized debt issuance costs			(2,873		)			(2,025		)
Current portion of long-term debt			(76,627		)			(298		)
Long-term debt, net of current portion			$	1,516,761				$	793,779

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 million (the “Term Loan Facility”) and a revolving credit facility of $100 million (the “Revolving Facility,” and together with the Term Loan Facility, the “Senior Credit Facility”). The Revolving Facility includes a $25 million letter of credit subfacility and a $10 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 undrawn 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 a 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 million was available for future borrowing under the revolving credit facility as of July 30, 2016. No payments were made toward the principal of the Term Loan Facility during the nine months ended July 30, 2016.

As of July 30, 2016, the fair value of the Term Loan Facility was approximately $786.5 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 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. 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.

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 the redemption of its outstanding 6.875% senior secured notes due 2020 (the “2020 Notes”) and irrevocably deposited a portion of the net proceeds from the Offering with the trustee to discharge the 2020 Indenture as described below under “Senior Secured Notes.”

The 2020 Convertible Notes bear interest payable semiannually on January 1 and July 1 of each year, beginning on July 1, 2015. No payments were made toward the principal of the 2020 Convertible Notes during the nine months ended July 30, 2016.

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):

	July 30, 2016			October 31, 2015
Principal	$	575,000		$	575,000
Unamortized discount of the liability component	(63,706		)	(76,311		)
Net carrying amount of liability component	$	511,294		$	498,689
Carrying amount of equity component	$	59,293		$	70,765

As of July 30, 2016, the remaining period of amortization for the discount is 3.42 years.

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				Nine Months Ended
	July 30, 2016		August 1, 2015		July 30, 2016		August 1, 2015
Amortization of discount	$	4,254	$	4,048	$	12,606	$	8,792
Contractual interest coupon	$	1,977	$	1,977	$	5,930	$	4,323

As of July 30, 2016, and October 31, 2015, the fair value of the 2020 Convertible Notes was approximately $560.4 million and $568.0 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 shares of common stock 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 third fiscal quarter of 2016, the Board of Directors of the Company declared and paid a cash dividend in the amount of $0.055 per share. Accordingly, as of June 8, 2016, the conversion rate was adjusted to a rate of 63.1587 shares of the Company’s common stock per $1,000 principal amount of the notes, which is equal to 36.3 million shares at a conversion price of approximately $15.83 per share. The adjustment resulted in a change to the conversion rate of less than 1%, and by the terms of the indenture governing the 2020 Convertible Notes, the Company is allowed and elected to defer the noteholder notification of such adjustment until the occurrence of (i) a subsequent adjustment to the conversion rate that results in a cumulative adjustment of at least 1% of the current conversion rate, (ii) the conversion of any 2020 Convertible Note, or (iii) certain other events requiring the adjustment to be made under the indenture governing the 2020 Convertible Notes.

Holders of the 2020 Convertible Notes may convert all or a portion of their notes prior to the close of business on the business day immediately preceding September 1, 2019, in multiples of $1,000 principal amount, only under the following circumstances:

• During any fiscal quarter commencing after the fiscal quarter ending on May 2, 2015 (and only during such fiscal quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price of the notes on each applicable trading day;

• During the five-business-day period after any 10 consecutive trading day period in which the trading price per $1,000 principal amount of the notes for each trading day of that 10 consecutive trading day period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate of the notes on each such trading day; or

• Upon the occurrence of certain corporate events as specified in the terms of the indenture governing the 2020 Convertible Notes.

On or after September 1, 2019, through 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 July 30, 2016, 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 July 30, 2016, 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 July 30, 2016, a fundamental change had not occurred and the 2020 Convertible Notes were not re-purchasable.

Convertible Note Hedge and Warrants Related to the Convertible Senior Unsecured Notes

In connection with the issuance of the 2020 Convertible Notes, the Company entered into convertible note hedge transactions with certain financial institutions (the “counterparties”) with respect to its common stock. Upon conversion of the 2020 Convertible Notes, the convertible note hedge transactions give the Company the right to acquire from the counterparties, subject to anti-dilution adjustments substantially similar to those in the 2020 Convertible Notes, initially approximately 36.1 million shares of the Company’s common stock at an initial strike price of $15.93 per share. Because a dividend in an amount greater than $0.035 per share was declared and paid effective beginning in the third fiscal quarter of 2015, the strike price under the convertible note hedge transactions has been adjusted to approximately $15.83 per share as of June 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 $0.045 per share beginning in the third fiscal quarter of 2015, and, as of June 8, 2016, the holders of the warrants have the right to acquire up to approximately 36.3 million shares of the Company’s common stock at a strike price of approximately $20.52 per share.

See Note 15, “Net Income 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.

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 nine months ended July 30, 2016.

As of July 30, 2016, and October 31, 2015, the fair value of the 2023 Notes was approximately $296.2 million and $293.9 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 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.

Senior Secured Notes

In January 2010, the Company issued $300.0 million in aggregate principal amount of the 2020 Notes pursuant to an indenture, dated as of January 20, 2010, between the Company, certain domestic subsidiaries of the Company, and Wells Fargo Bank, National Association, as the trustee (the “2020 Indenture”). Interest on the 2020 Notes was payable semiannually on January 15 and July 15 of each year. The Company’s obligations under the 2020 Notes were previously guaranteed by certain of the Company’s domestic subsidiaries and secured by a lien on substantially all of the Company’s and the subsidiary guarantors’ assets.

On January 14, 2015, the Company called the 2020 Notes for redemption at a redemption price equal to 103.438% of the principal amount of the 2020 Notes, and irrevocably deposited $322.2 million with the trustee for the 2020 Notes to discharge the 2020 Indenture. Due to the deposit and discharge, the guarantees provided by certain of the Company’s domestic subsidiaries, and the liens granted by the Company and the subsidiary guarantors to secure their obligations with respect to the 2020 Notes, were released as of the date of the deposit.

The amount deposited with the trustee included $300.0 million to repay the principal amount of the 2020 Notes, $10.3 million representing the difference between the redemption price and the principal amount of the 2020 Notes (“Call Premium”), $10.3 million for accrued interest through January 15, 2015, and $1.6 million of interest payable up to the redemption date of February 13, 2015. The trustee redeemed the 2020 Notes on February 13, 2015, using the deposited amount, extinguishing the Company’s $300.0 million liability for the principal amount of the 2020 Notes.

In accordance with the applicable accounting guidance for debt modification and extinguishment, and for interest costs accounting, the Company expensed the Call Premium, remaining debt issuance costs, and remaining original issue discount relating to the 2020 Notes in the first quarter of fiscal year 2015, which totaled $20.4 million. The Company reported this expense within “Interest expense” on the Company’s Condensed Consolidated Statements of Income for the nine months endedAugust 1, 2015.

Debt Maturities

As of July 30, 2016, the Company’s aggregate debt maturities based on outstanding principal were as follows (in thousands):

Fiscal Year	Principal Balances
2016 (remaining three months)	$	20,016
2017	80,000
2018	80,000
2019	80,000
2020	655,000
Thereafter	760,000
Total	$	1,675,016

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Commitments And Contingencies

9 Months Ended

Jul. 30, 2016

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 nine months endedJuly 30, 2016, and August 1, 2015 (in thousands):

	Accrued Warranty
	Nine Months Ended
	July 30, 2016			August 1, 2015
Beginning balance	$	7,599		$	7,486
Warranty liability assumed from acquisitions	760			—
Liabilities accrued for warranties issued during the period	2,768			3,059
Warranty claims paid and used during the period	(2,736		)	(3,221		)
Changes in liability for pre-existing warranties during the period	(60		)	(125		)
Ending balance	$	8,331		$	7,199

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 July 30, 2016, 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 that 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 July 30, 2016, the Company’s aggregate commitment to its CMs for inventory components used in the manufacture of Brocade products was $220.0 million, which the Company expects to utilize during future normal ongoing operations, net of a purchase commitments reserve of $3.6 million, which is reported within “Other accrued liabilities” on the Company’s Condensed Consolidated Balance Sheet as of July 30, 2016. 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 July 30, 2016, 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

Subsequent to the announcement that Brocade had entered into an agreement to acquire Ruckus on April 3, 2016, three putative stockholder class action complaints relating to the acquisition were filed on behalf of purported Ruckus stockholders in the Superior Court of California, County of Santa Clara, a fourth putative stockholder class action complaint was filed in the United States District Court for the District of Delaware, and a fifth putative class action complaint was filed in the United States District Court for the Northern District of California. The complaints in the three California state court actions are captioned: Maguire v. Ruckus Wireless, Inc., et al. (filed April 12, 2016 and amended on May 10, 2016; referred to as the “Maguire action”); Jaljouli v. Ruckus Wireless, Inc., et al., (filed April 19, 2016; referred to as the “Jaljouli action”); and Small v. Ruckus Wireless, Inc., et al. (filed May 12, 2016; referred to as the “Small action”). The complaint in the Delaware federal court action is captioned Borrego v. Ruckus Wireless, Inc., et al. (filed May 11, 2016; referred to as the “Borrego action”). The complaint in the California federal court action is captioned Hussey v. Ruckus Wireless, Inc., et al. (filed June 3, 2016; referred to as the “Hussey action”).

The complaints in the Maguire, Jaljouli and Small actions contain similar allegations and name Ruckus and members of the Ruckus board of directors as defendants; the Maguire and Jaljouli actions also name Brocade and a Brocade subsidiary as defendants. In general, the complaints allege that the members of the Ruckus board of directors breached their fiduciary duties to Ruckus stockholders by purportedly doing one or more of the following: agreeing to unfair and inadequate transaction consideration for the Ruckus shares; accepting unreasonable deal protection measures in the merger agreement that would dissuade other potential bidders from making competing offers; failing to properly value Ruckus and take steps to maximize the sale value of Ruckus; engaging in self-dealing; and providing allegedly false, misleading, and/or incomplete disclosures regarding the transaction, the negotiations leading up to it, and the opinion of Ruckus’ financial advisor. The complaints in the Maguire and Jaljouli actions also allege that one or more of Ruckus, Brocade, and the Brocade subsidiary aided and abetted the members of the Ruckus board of directors in breaching their fiduciary duties to Ruckus stockholders.

The complaint in the Borrego action alleges that Ruckus and members of the Ruckus board of directors violated Sections 14(e), 14(d)(4) and 20(a) 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. The complaint in the Hussey action, which names Ruckus, members of the Ruckus board of directors, Ruckus’ chief financial officer, Brocade, and a Brocade subsidiary as defendants, contains a similar Section 14(e) claim and also alleges that the defendants violated Section14(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.

The plaintiffs in one or more of these five actions have requested relief including, among other things, certification as a class, rescission and invalidation of the merger agreement or related agreements, injunctive relief, imposition of a constructive trust, an award of damages and an accounting, an award of the costs and disbursements of the action (including reasonable attorneys’ and experts’ fees), and other equitable relief that the court may deem just and proper.

The Small action was voluntarily dismissed by the plaintiff on August 29, 2016.

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 a shareholder (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 Company is not aware of any action being commenced in the Delaware Court of Chancery relating to the Dissenter’s appraisal demand. If the Dissenter does not timely and properly commence and prosecute to judgment such an appraisal action, the Dissenter may be entitled to receive $6.45 in cash and 0.75 shares of Brocade common stock with respect to each of the 3.2 million shares subject to its appraisal demand, with an aggregate value of $41.3 million as of July 30, 2016. Otherwise, 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 that amount.

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Derivative Instruments And Hedging Activities

9 Months Ended

Jul. 30, 2016

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 and nine months ended July 30, 2016, were the euro, the British pound, the Indian rupee, the Chinese yuan, the Singapore dollar, the Japanese yen, and the Swiss franc. The Company has established a foreign currency risk management program to protect against the volatility of future cash flows caused by changes in foreign currency exchange rates. This program reduces, but does not eliminate, the impact of foreign currency exchange rate movements.

The Company utilizes a rolling hedge strategy for the majority of its foreign currency derivative instruments to hedge exposures to the variability in the U.S. dollar equivalent of anticipated non-U.S.-dollar-denominated cash flows. All of the Company’s foreign currency forward contracts are single delivery, which are settled at maturity involving one cash payment. The Company’s foreign currency risk management program includes foreign currency derivatives with a cash flow hedge accounting designation that utilizes foreign currency forward and option contracts to hedge exposures to the variability in the U.S. dollar equivalent of anticipated non-U.S.-dollar-denominated cash flows. These instruments generally have a maturity of less than 15 months. For these derivatives, the Company initially reports the after-tax gain or loss from the effective portion of the hedge as a component of accumulated other comprehensive loss in stockholders’ equity and reclassifies it into earnings in the same period in which the hedged transaction affects earnings. The tax effect allocated to cash flow hedge-related components of other comprehensive loss was not material for the three and nine months ended July 30, 2016, and August 1, 2015.

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 material for the three and nine months ended July 30, 2016, and August 1, 2015.

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 Income as follows (in thousands):

	Three Months Ended						Nine Months Ended
	July 30, 2016			August 1, 2015			July 30, 2016			August 1, 2015
Cost of revenues	$	(35	)	$	(141	)	$	(195	)	$	(605	)
Research and development	(342		)	(206		)	(968		)	(273		)
Sales and marketing	(120		)	(542		)	(764		)	(1,866		)
General and administrative	(10		)	(52		)	(54		)	(135		)
Total	$	(507	)	$	(941	)	$	(1,981	)	$	(2,879	)

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 $0.2 million and $0.8 million for the three and nine months ended July 30, 2016, respectively, and gains of $0.3 million and losses of $0.6 million for the three and nine months ended August 1, 2015, respectively.

As of July 30, 2016, the Company had gross unrealized loss positions of $0.8 million and gross unrealized gain positions of $0.5 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 July 30, 2016, and October 31, 2015. Total gross notional amounts, presented by currency, are as follows (in thousands):

	Derivatives Designated as Hedging Instruments
In U.S. dollars	July 30, 2016		October 31, 2015
Euro	$	10,410	$	40,961
British pound	9,940		46,330
Indian rupee	8,836		35,647
Chinese yuan	3,629		15,129
Singapore dollar	3,484		13,745
Japanese yen	2,606		8,809
Swiss franc	2,365		9,265
Total	$	41,270	$	169,886

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Stock-Based Compensation

9 Months Ended

Jul. 30, 2016

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 Income as follows (in thousands):

	Three Months Ended				Nine Months Ended
	July 30, 2016		August 1, 2015		July 30, 2016		August 1, 2015
Cost of revenues	$	5,965	$	3,955	$	12,400	$	9,757
Research and development	9,206		5,226		19,805		13,239
Sales and marketing	17,756		10,601		39,886		27,651
General and administrative	11,716		4,655		21,384		13,947
Total stock-based compensation expense	$	44,643	$	24,437	$	93,475	$	64,594

The following table presents stock-based compensation expense, net of estimated forfeitures, by grant type (in thousands):

	Three Months Ended				Nine Months Ended
	July 30, 2016		August 1, 2015		July 30, 2016		August 1, 2015
Stock options	$	3,291	$	973	$	4,727	$	2,865
RSUs, including restricted stock units with market conditions	35,604		18,941		75,986		48,192
Employee stock purchase plan (“ESPP”)	5,748		4,523		12,762		13,537
Total stock-based compensation expense	$	44,643	$	24,437	$	93,475	$	64,594

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 July 30, 2016 (in thousands, except for the weighted-average period):

	Unrecognized Compensation Expense		Weighted- Average Period (In years)
Stock options	$	2,161	1.10
RSUs, including restricted stock units with market conditions	$	166,357	2.69
ESPP	$	24,497	1.21

The following table presents details on grants made by the Company for the following periods:

	Nine Months Ended
	July 30, 2016			August 1, 2015
	Granted (Shares in thousands)	Weighted-Average Grant Date Fair Value		Granted (Shares in thousands)	Weighted-Average Grant Date Fair Value
Stock options	1,390	$	1.36	1,117	$	3.09
RSUs, including stock units with market conditions	17,879	$	7.90	10,251	$	11.53

The total intrinsic value of stock options exercised for the nine months ended July 30, 2016, and August 1, 2015, was $1.2 million and $2.9 million, respectively.

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Stockholders' Equity

9 Months Ended

Jul. 30, 2016

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

Dividends

During the nine months ended July 30, 2016, 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 22, 2015	$	0.045	December 10, 2015	$	18,429	January 4, 2016
February 16, 2016	$	0.045	March 10, 2016	$	18,016	April 4, 2016
May 18, 2016	$	0.055	June 10, 2016	$	25,261	July 5, 2016

Future dividends are subject to review and approval on a quarterly basis by the Company’s Board of Directors or a committee thereof.

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 endedJuly 30, 2016, and August 1, 2015, are as follows (in thousands):

	Three Months Ended
	July 30, 2016									August 1, 2015
	Before-Tax Amount			Tax Expense			Net-of-Tax Amount			Before-Tax Amount			Tax Expense			Net-of-Tax Amount
Unrealized gains (losses) on cash flow hedges:
Change in unrealized gains and losses, foreign exchange contracts	$	(715	)	$	15		$	(700	)	$	(361	)	$	(53	)	$	(414	)
Net gains and losses reclassified into earnings, foreign exchange contracts (1)	507			(25		)	482			941			(110		)	831
Net unrealized gains (losses) on cash flow hedges	(208		)	(10		)	(218		)	580			(163		)	417
Foreign currency translation adjustments	(1,628		)	—			(1,628		)	(492		)	—			(492		)
Total other comprehensive income (loss)	$	(1,836	)	$	(10	)	$	(1,846	)	$	88		$	(163	)	$	(75	)

The components of other comprehensive loss and related tax effects for the nine months endedJuly 30, 2016, and August 1, 2015, are as follows (in thousands):

	Nine Months Ended
	July 30, 2016									August 1, 2015
	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	$	(1,056	)	$	21		$	(1,035	)	$	(2,558	)	$	226		$	(2,332	)
Net gains and losses reclassified into earnings, foreign exchange contracts (1)	1,981			(150		)	1,831			2,879			(335		)	2,544
Net unrealized gains (losses) on cash flow hedges	925			(129		)	796			321			(109		)	212
Foreign currency translation adjustments	(1,760		)	—			(1,760		)	(5,781		)	—			(5,781		)
Total other comprehensive loss	$	(835	)	$	(129	)	$	(964	)	$	(5,460	)	$	(109	)	$	(5,569	)

⁽¹⁾ For classification of amounts reclassified from accumulated other comprehensive loss into earnings as reported on the Company’s Condensed Consolidated Statements of Income, 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 nine months endedJuly 30, 2016, and August 1, 2015, are as follows (in thousands):

	Nine Months Ended
	July 30, 2016									August 1, 2015
	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	$	(1,539	)	$	(23,463	)	$	(25,002	)	$	(1,907	)	$	(16,907	)	$	(18,814	)
Change in unrealized gains and losses	(1,035		)	(1,760		)	(2,795		)	(2,332		)	(5,781		)	(8,113		)
Net gains and losses reclassified into earnings	1,831			—			1,831			2,544			—			2,544
Net current-period other comprehensive income (loss)	796			(1,760		)	(964		)	212			(5,781		)	(5,569		)
Ending balance	$	(743	)	$	(25,223	)	$	(25,966	)	$	(1,695	)	$	(22,688	)	$	(24,383	)

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Income Taxes

9 Months Ended

Jul. 30, 2016

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, the effect of 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. Earnings of the Company’s subsidiaries outside of the United States primarily relate to its European, Asia Pacific, and Japan businesses.

The Company recorded an income tax benefit for the three months ended July 30, 2016, primarily due to a discrete benefit from reserve releases as a result of reaching a settlement on certain transfer pricing issues with the Internal Revenue Service (“IRS”) and certain expired statute of limitations.

The effective tax rate for the three and nine months ended July 30, 2016, was lower than the U.S. federal statutory tax rate of 35% primarily due to a discrete benefit from reserve releases as a result of reaching a settlement on certain transfer pricing issues with the IRS and benefits from the federal research and development tax credit, which was permanently reinstated retroactive to January 1, 2015, by the passage of the Protecting Americans from Tax Hikes Act of 2015.

The effective tax rate for the nine months ended July 30, 2016, was higher compared with the effective tax rate for the nine months ended August 1, 2015, primarily due to an increase in unrecognized tax benefits related to certain intercompany transactions during the nine months ended July 30, 2016.

The Company’s total gross unrecognized tax benefits, excluding interest and penalties, were $189.1 million as of July 30, 2016. If the total gross unrecognized tax benefits as of July 30, 2016, were recognized in the future, approximately $144.0 million would decrease the Company’s effective tax rate.

The IRS and other tax authorities regularly examine the Company’s income tax returns. In June 2016, the Company reached agreement with the IRS on certain transfer pricing issues in the Company’s federal income tax returns for fiscal years 2009 and 2010. In October 2014, the Geneva Tax Administration issued its final assessments for fiscal years 2003 to 2012, disputing certain of the Company’s transfer pricing arrangements. In November 2014, the Company filed a protest to challenge the final assessments. The Company believes that reserves for unrecognized tax benefits are adequate for all open tax years. The timing of tax examinations, as well as the amounts and timing of related settlements, if any, are highly uncertain. Before the end of fiscal year 2016, it is reasonably possible that either certain audits will conclude or the statutes of limitations relating to certain 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 $5 million in the next 12 months.

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Segment Information

9 Months Ended

Jul. 30, 2016

Segment Reporting [Abstract]

Segment Information

Segment Information

Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”), or decision-making group, in deciding how to allocate resources and in assessing performance. Financial decisions and the allocation of resources are based on the information from the Company’s internal management reporting system. Currently, the Company’s CODM is its Chief Executive Officer.

Brocade is organized into three operating segments, each of which is an individually reportable segment: SAN Products, IP Networking Products, and Global Services. These reportable segments are organized principally by product category. The results of the Ruckus business are included in the IP Networking Products and Global Services reportable segments from the date of acquisition.

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 July 30, 2016, were attributable to its U.S. operations.

Summarized financial information by reportable segment for the three and nine months ended July 30, 2016, and August 1, 2015, based on the internal management reporting system, is as follows (in thousands):

	SAN Products		IP Networking Products		Global Services		Total
Three months ended July 30, 2016
Net revenues	$	282,114	$	208,881	$	99,726	$	590,721
Cost of revenues	70,630		117,862		45,330		233,822
Gross margin	$	211,484	$	91,019	$	54,396	$	356,899
Three months ended August 1, 2015
Net revenues	$	309,451	$	153,749	$	88,619	$	551,819
Cost of revenues	73,657		70,586		35,672		179,915
Gross margin	$	235,794	$	83,163	$	52,947	$	371,904
Nine months ended July 30, 2016
Net revenues	$	925,799	$	474,556	$	287,956	$	1,688,311
Cost of revenues	223,806		240,991		127,489		592,286
Gross margin	$	701,993	$	233,565	$	160,467	$	1,096,025
Nine months ended August 1, 2015
Net revenues	$	976,362	$	431,319	$	266,952	$	1,674,633
Cost of revenues	233,150		198,631		109,056		540,837
Gross margin	$	743,212	$	232,688	$	157,896	$	1,133,796

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Net Income Per Share

9 Months Ended

Jul. 30, 2016

Earnings Per Share [Abstract]

Net Income (Loss) Per Share

Net Income per Share

The following table presents the calculation of basic and diluted net income per share (in thousands, except per share amounts):

	Three Months Ended				Nine Months Ended
	July 30, 2016		August 1, 2015		July 30, 2016		August 1, 2015
Basic net income per share
Net income	$	10,495	$	91,667	$	147,226	$	255,974
Weighted-average shares used in computing basic net income per share	426,671		417,299		411,709		422,184
Basic net income per share	$	0.02	$	0.22	$	0.36	$	0.61
Diluted net income per share
Net income	$	10,495	$	91,667	$	147,226	$	255,974
Weighted-average shares used in computing basic net income per share	426,671		417,299		411,709		422,184
Dilutive potential common shares in the form of stock options	1,227		1,772		1,329		1,777
Dilutive potential common shares in the form of other share-based awards	6,518		8,447		6,378		9,342
Weighted-average shares used in computing diluted net income per share	434,416		427,518		419,416		433,303
Diluted net income per share	$	0.02	$	0.21	$	0.35	$	0.59
Antidilutive potential common shares in the form of:(1)
Warrants issued in conjunction with the 2020 Convertible Notes (2)	36,316		36,125		36,251		26,453
Stock options	2,838		1,109		2,029		934
Other share-based awards	2,120		100		1,140		33

⁽¹⁾  These amounts are excluded from the computation of diluted net income per share.

⁽²⁾  In connection with the issuance of the 2020 Convertible Notes, the Company entered into convertible note hedge and warrant transactions as described in Note 8, “Borrowings.” The 2020 Convertible Notes have no impact on diluted earnings per share until the average quarterly price of the Company’s common stock exceeds the adjusted conversion price of $15.83 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 $20.52 per share for a quarterly period, the Company’s weighted-average shares used in computing diluted net income per share will be impacted by the effect of the additional potential shares that may be issued related to the warrants using the treasury stock method. The convertible note hedge is not considered for purposes of the diluted earnings per share calculation, as its effect would be antidilutive.

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Basis Of Presentation (Policies)

9 Months Ended

Jul. 30, 2016

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 2016 is a 52-week fiscal year and fiscal year 2015 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 and programs, allowance for doubtful accounts, stock-based compensation, acquisition purchase price allocations, warranty obligations, inventory valuation and purchase commitments, restructuring costs, incentive compensation, facilities lease losses, impairment of goodwill and other indefinite-lived intangible assets, litigation, and income taxes. Actual results may differ materially from these estimates.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Jul. 30, 2016

Accounting Policies [Abstract]

Consolidation, Variable Interest Entity, Policy

Consolidation of Variable Interest Entities

The Company uses a qualitative approach in assessing the consolidation requirement for variable interest entities. The approach focuses on identifying which enterprise has the power to direct the activities that most significantly impact the variable interest entity’s economic performance and which enterprise has the obligation to absorb losses or the right to receive benefits from the variable interest entity. In the event that the Company is the primary beneficiary of a variable interest entity, the assets, liabilities, and results of operations of the variable interest entity will be included in the Company’s consolidated financial statements.

New Accounting Pronouncements, Policy

New Accounting Pronouncements or Updates Recently Adopted

In April 2014, the Financial Accounting Standards Board (“FASB”) issued an update to Accounting Standards Codification (“ASC”) 205, Presentation of Financial Statements, and ASC 360, Property, Plant, and Equipment: Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. Under this update, a discontinued operation may include a component of an entity or a group of components of an entity, a business, or nonprofit activity. Only those disposals of components of an entity that represent a strategic shift that has, or will have, a major effect on an entity’s operations and financial results will be reported as discontinued operations in the financial statements. This update should be applied prospectively. The Company adopted this update in the first quarter of fiscal year 2016. There was no material impact on the Company’s financial position, results of operations, or cash flows.

In April 2015, the FASB issued an update to ASC 835, Interest—Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs. Under this update, debt issuance costs are required to be presented as a direct deduction from the carrying amount of the related debt liability, consistent with the presentation of debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by this update. This update should be applied retrospectively to all prior periods presented in the financial statements. The Company adopted this update in the first quarter of fiscal year 2016. There was no material impact on the Company’s financial position, results of operations, or cash flows.

In September 2015, the FASB issued an update to ASC 805, Business Combinations: Simplifying the Accounting Measurement-Period Adjustments. This update simplifies the accounting for adjustments made to provisional amounts recognized in a business combination by eliminating the requirement to retrospectively account for those adjustments. Under this update, the adjustments are recognized in the reporting period in which the adjustment amounts are determined. This update should be applied prospectively. The Company adopted this update in the first quarter of fiscal year 2016. There was no material impact on the Company’s financial position, results of operations, or cash flows.

In November 2015, the FASB issued an update to ASC 740, Income Taxes: Balance Sheet Classification of Deferred Taxes. This update simplifies the presentation of current and non-current deferred tax liabilities and assets. Under this update, the deferred tax liabilities and assets are classified as non-current on the balance sheet. The update does not impact the current requirement that deferred tax liabilities and assets be offset and presented as a single amount. This update may be applied either prospectively or retrospectively. The Company adopted this update in the first quarter of fiscal year 2016 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.

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. Early adoption is not permitted for reporting periods before the first quarter of fiscal year 2018. 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. 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 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. This update may be applied either prospectively or retrospectively and will be adopted by the Company in the first quarter of fiscal year 2017. Early adoption is permitted. The Company does not expect the adoption of this update to have a material impact on its consolidated financial statements.

In July 2015, the FASB issued an update to ASC 330, Inventory: Simplifying the Measurement of Inventory. Under this update, 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.

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Goodwill And Intangible Assets (Policies)

9 Months Ended

Jul. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets, Goodwill Policy

The Company conducts its goodwill impairment test annually 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. Effective on the first day of the fourth fiscal quarter, the Company changed the date of its annual impairment test for goodwill from the first day of the second fiscal quarter to the first day of the fourth fiscal quarter. This change in the annual impairment test date was made to better coincide with the timing of when the Company prepares its annual budget and financial plans as part of its regular long-range planning process. 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 initial 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 initial 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 market or 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

Acquired IPR&D are intangible assets accounted for as indefinite-lived assets until the completion or abandonment of the associated research and development efforts. If the research and development efforts associated with the IPR&D are successfully completed, then the IPR&D intangible assets will be amortized over the estimated useful lives to be determined as of the date the efforts are completed.

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Fair Value Measurements Fair Value Measurements (Policies)

9 Months Ended

Jul. 30, 2016

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 July 30, 2016.

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 nine months ended July 30, 2016, the Company had no transfers between levels of the fair value hierarchy of its assets and liabilities measured at fair value.

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Derivative Instruments and Hedging Activities Derivative Instruments And Hedging Activities (Policies)

9 Months Ended

Jul. 30, 2016

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 and nine months ended July 30, 2016, were the euro, the British pound, the Indian rupee, the Chinese yuan, the Singapore dollar, the Japanese yen, and the Swiss franc. The Company has established a foreign currency risk management program to protect against the volatility of future cash flows caused by changes in foreign currency exchange rates. This program reduces, but does not eliminate, the impact of foreign currency exchange rate movements.

The Company utilizes a rolling hedge strategy for the majority of its foreign currency derivative instruments to hedge exposures to the variability in the U.S. dollar equivalent of anticipated non-U.S.-dollar-denominated cash flows. All of the Company’s foreign currency forward contracts are single delivery, which are settled at maturity involving one cash payment. The Company’s foreign currency risk management program includes foreign currency derivatives with a cash flow hedge accounting designation that utilizes foreign currency forward and option contracts to hedge exposures to the variability in the U.S. dollar equivalent of anticipated non-U.S.-dollar-denominated cash flows. These instruments generally have a maturity of less than 15 months. For these derivatives, the Company initially reports the after-tax gain or loss from the effective portion of the hedge as a component of accumulated other comprehensive loss in stockholders’ equity and reclassifies it into earnings in the same period in which the hedged transaction affects earnings. The tax effect allocated to cash flow hedge-related components of other comprehensive loss was not material for the three and nine months ended July 30, 2016, and August 1, 2015.

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 material for the three and nine months ended July 30, 2016, and August 1, 2015.

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Goodwill And Intangible Assets (Tables)

9 Months Ended

Jul. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule Of Goodwill Activity By Reportable Segment

The following table summarizes goodwill activity by reportable segment during the nine months ended July 30, 2016 (in thousands):

	Storage Area Networking (“SAN”)  Products			IP Networking Products			Global Services		Total
Balance at October 31, 2015
Goodwill	$	176,325		$	1,414,634		$	155,416	$	1,746,375
Accumulated impairment losses	—			(129,214		)	—		(129,214		)
	176,325			1,285,420			155,416		1,617,161
Acquisitions (1)	—			308,456			398,936		707,392
Tax adjustments (2)	(5		)	—			—		(5		)
Translation adjustments	—			(233		)	—		(233		)
Balance at July 30, 2016
Goodwill	176,320			1,722,857			554,352		2,453,529
Accumulated impairment losses	—			(129,214		)	—		(129,214		)
	$	176,320		$	1,593,643		$	554,352	$	2,324,315

⁽¹⁾  The goodwill acquired relates to the acquisitions completed in March 2016 and May 2016. See Note 3, “Acquisitions,” of the Notes to Condensed Consolidated Financial Statements.

⁽²⁾  The goodwill adjustments were primarily a result of tax benefits from the exercise of stock awards of acquired companies.

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):

	July 30, 2016
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Weighted- Average Remaining Useful Life (In years)
Finite-lived intangible assets:
Trade names	$	45,090	$	1,105	$	43,985	14.71
Core/developed technology (1) (2)	254,290		23,834		230,456		5.67
Patent portfolio license (3)	7,750		1,669		6,081		17.00
Customer relationships	141,110		8,805		132,305		6.52
Non-compete agreements	1,050		904		146		0.46
Patents with broader applications	1,040		92		948		13.63
Total finite-lived intangible assets	450,330		36,409		413,921		6.72
Indefinite-lived intangible assets, excluding goodwill:
IPR&D (1)	21,000		—		21,000
Total indefinite-lived intangible assets, excluding goodwill	21,000		—		21,000
Total intangible assets, excluding goodwill	$	471,330	$	36,409	$	434,921
	October 31, 2015
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Weighted- Average Remaining Useful Life (In years)
Finite-lived intangible assets:
Trade names	$	1,090	$	415	$	675	4.36
Core/developed technology	40,530		9,605		30,925		3.49
Patent portfolio license (3)	7,750		849		6,901		17.74
Customer relationships	23,110		2,484		20,626		7.18
Non-compete agreements	1,050		664		386		1.17
Patents with broader applications	1,040		40		1,000		14.38
Total finite-lived intangible assets	74,570		14,057		60,513		6.55
Indefinite-lived intangible assets, excluding goodwill:
IPR&D (1)	15,110		—		15,110
Total indefinite-lived intangible assets, excluding goodwill	15,110		—		15,110
Total intangible assets, excluding goodwill	$	89,680	$	14,057	$	75,623

⁽¹⁾  Acquired IPR&D are intangible assets accounted for as indefinite-lived assets until the completion or abandonment of the associated research and development efforts. If the research and development efforts associated with the IPR&D are successfully completed, then the IPR&D intangible assets will be amortized over the estimated useful lives to be determined as of the date the efforts are completed. During the three months ended July 30, 2016, the Company acquired $23.0 million in IPR&D intangible assets in connection with the acquisition of Ruckus. The research and development efforts associated with these IPR&D intangible assets are expected to be completed in fiscal years 2016 and 2017. During the nine months endedJuly 30, 2016, research and development efforts were completed on $17.1 million of the IPR&D intangible assets, and the completed IPR&D intangible assets are being amortized as core/developed technology over the estimated useful lives of five to seven years.

⁽²⁾  During the nine months endedJuly 30, 2016, $1.0 million of finite-lived intangible assets became fully amortized and, therefore, were removed from the balance sheet.

⁽³⁾  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.

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 Income as follows (in thousands):

	Three Months Ended				Nine Months Ended
	July 30, 2016		August 1, 2015		July 30, 2016		August 1, 2015
Cost of revenues	$	8,922	$	2,549	$	15,269	$	5,043
General and administrative (1)	271		889		821		1,654
Amortization of intangible assets	5,498		280		7,302		570
Total	$	14,691	$	3,718	$	23,392	$	7,267

⁽¹⁾  The amortization is related to the $7.8 million of perpetual, non-exclusive license to certain patents purchased during the fiscal year ended October 31, 2015.

Schedule Of Estimated Future Amortization Of Intangible Assets

The following table presents the estimated future amortization of finite-lived intangible assets as of July 30, 2016 (in thousands):

Fiscal Year	Estimated Future Amortization
2016 (remaining three months)	$	18,998
2017	72,063
2018	63,562
2019	60,039
2020	59,082
Thereafter	140,177
Total	$	413,921

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Balance Sheet Details (Tables)

9 Months Ended

Jul. 30, 2016

Balance Sheet Details [Abstract]

Schedule of Inventory

The following tables provide details of selected balance sheet items (in thousands):

	July 30, 2016		October 31, 2015
Inventories:
Raw materials	$	17,613	$	18,788
Finished goods	63,569		21,736
Inventories	$	81,182	$	40,524

Schedule of Property, Plant and Equipment

	July 30, 2016			October 31, 2015
Property and equipment, net:
Gross property and equipment
Computer equipment	$	18,886		$	14,820
Software	84,337			67,625
Engineering and other equipment (1)	443,808			407,342
Furniture and fixtures (1)	33,468			31,028
Leasehold improvements	37,315			33,986
Land and building	386,163			385,415
Total gross property and equipment	1,003,977			940,216
Accumulated depreciation and amortization (1) (2)	(544,165		)	(500,992		)
Property and equipment, net	$	459,812		$	439,224

⁽¹⁾  Engineering and other equipment, furniture and fixtures, and accumulated depreciation and amortization include the following amounts under capital leases as of July 30, 2016, and October 31, 2015 (in thousands):

	July 30, 2016			October 31, 2015
Cost of capitalized leases	$	270		$	1,312
Accumulated depreciation	(255		)	(857		)
Property and equipment, net, under capital leases	$	15		$	455

⁽²⁾  The following table presents the depreciation of property and equipment included in the Company’s Condensed Consolidated Statements of Income (in thousands):

	Three Months Ended				Nine Months Ended
	July 30, 2016		August 1, 2015		July 30, 2016		August 1, 2015
Depreciation expense	$	20,393	$	18,605	$	57,531	$	55,302

Schedule of Capital Leased Assets

Engineering and other equipment, furniture and fixtures, and accumulated depreciation and amortization include the following amounts under capital leases as of July 30, 2016, and October 31, 2015 (in thousands):

	July 30, 2016			October 31, 2015
Cost of capitalized leases	$	270		$	1,312
Accumulated depreciation	(255		)	(857		)
Property and equipment, net, under capital leases	$	15		$	455

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Fair Value Measurements (Tables)

9 Months Ended

Jul. 30, 2016

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 July 30, 2016, were as follows (in thousands):

			Fair Value Measurements Using
	Balance as of  July 30, 2016		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds (1)	$	885,152	$	885,152	$	—	$	—
Derivative assets	477		—		477		—
Total assets measured at fair value	$	885,629	$	885,152	$	477	$	—
Liabilities:
Derivative liabilities	$	759	$	—	$	759	$	—

⁽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 31, 2015, were as follows (in thousands):

			Fair Value Measurements Using
	Balance as of  October 31, 2015		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds (1)	$	1,184,410	$	1,184,410	$	—	$	—
Derivative assets	709		—		709		—
Total assets measured at fair value	$	1,185,119	$	1,184,410	$	709	$	—
Liabilities:
Derivative liabilities	$	1,125	$	—	$	1,125	$	—

⁽¹⁾  Money market funds are reported within “Cash and cash equivalents” on the Company’s Condensed Consolidated Balance Sheets.

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Restructuring and Other Costs (Tables)

9 Months Ended

Jul. 30, 2016

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 Income (in thousands):

	Three Months Ended				Nine Months Ended
	July 30, 2016		August 1, 2015		July 30, 2016			August 1, 2015
Lease loss reserve and related benefits	$	—	$	—	$	(566	)	$	(637	)

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 31, 2015	$	110	$	1,811		$	408		$	2,329
Restructuring and other related benefits	—		(566		)	—			(566		)
Cash payments	—		(380		)	(260		)	(640		)
Translation adjustment	—		(17		)	—			(17		)
Restructuring liabilities at July 30, 2016	$	110	$	848		$	148		$	1,106
Current restructuring liabilities at July 30, 2016	$	110	$	350		$	148		$	608
Non-current restructuring liabilities at July 30, 2016	$	—	$	498		$	—		$	498

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Borrowings (Tables)

9 Months Ended

Jul. 30, 2016

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):

			July 30, 2016					October 31, 2015
	Maturity	Stated Annual Interest Rate	Amount			Effective Interest Rate		Amount			Effective Interest Rate
Senior Credit Facility:
Term Loan Facility	2021	variable	$	800,000		2.50	%	$	—		—	%
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	%
Capital lease obligations	2016	4.625%	16			4.63	%	298			4.63	%
Total gross long-term debt			1,675,016					875,298
Unamortized discount			(78,755		)			(79,196		)
Unamortized debt issuance costs			(2,873		)			(2,025		)
Current portion of long-term debt			(76,627		)			(298		)
Long-term debt, net of current portion			$	1,516,761				$	793,779

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):

	July 30, 2016			October 31, 2015
Principal	$	575,000		$	575,000
Unamortized discount of the liability component	(63,706		)	(76,311		)
Net carrying amount of liability component	$	511,294		$	498,689
Carrying amount of equity component	$	59,293		$	70,765

Schedule Of Debt Maturities

As of July 30, 2016, the Company’s aggregate debt maturities based on outstanding principal were as follows (in thousands):

Fiscal Year	Principal Balances
2016 (remaining three months)	$	20,016
2017	80,000
2018	80,000
2019	80,000
2020	655,000
Thereafter	760,000
Total	$	1,675,016

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Commitments And Contingencies (Tables)

9 Months Ended

Jul. 30, 2016

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 nine months endedJuly 30, 2016, and August 1, 2015 (in thousands):

	Accrued Warranty
	Nine Months Ended
	July 30, 2016			August 1, 2015
Beginning balance	$	7,599		$	7,486
Warranty liability assumed from acquisitions	760			—
Liabilities accrued for warranties issued during the period	2,768			3,059
Warranty claims paid and used during the period	(2,736		)	(3,221		)
Changes in liability for pre-existing warranties during the period	(60		)	(125		)
Ending balance	$	8,331		$	7,199

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Derivative Instruments And Hedging Activities (Tables)

9 Months Ended

Jul. 30, 2016

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 Income as follows (in thousands):

	Three Months Ended						Nine Months Ended
	July 30, 2016			August 1, 2015			July 30, 2016			August 1, 2015
Cost of revenues	$	(35	)	$	(141	)	$	(195	)	$	(605	)
Research and development	(342		)	(206		)	(968		)	(273		)
Sales and marketing	(120		)	(542		)	(764		)	(1,866		)
General and administrative	(10		)	(52		)	(54		)	(135		)
Total	$	(507	)	$	(941	)	$	(1,981	)	$	(2,879	)

Schedule Of Total Gross Notional Amounts, Presented By Currency

Total gross notional amounts, presented by currency, are as follows (in thousands):

	Derivatives Designated as Hedging Instruments
In U.S. dollars	July 30, 2016		October 31, 2015
Euro	$	10,410	$	40,961
British pound	9,940		46,330
Indian rupee	8,836		35,647
Chinese yuan	3,629		15,129
Singapore dollar	3,484		13,745
Japanese yen	2,606		8,809
Swiss franc	2,365		9,265
Total	$	41,270	$	169,886

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Stock-Based Compensation (Tables)

9 Months Ended

Jul. 30, 2016

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 Income as follows (in thousands):

	Three Months Ended				Nine Months Ended
	July 30, 2016		August 1, 2015		July 30, 2016		August 1, 2015
Cost of revenues	$	5,965	$	3,955	$	12,400	$	9,757
Research and development	9,206		5,226		19,805		13,239
Sales and marketing	17,756		10,601		39,886		27,651
General and administrative	11,716		4,655		21,384		13,947
Total stock-based compensation expense	$	44,643	$	24,437	$	93,475	$	64,594

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				Nine Months Ended
	July 30, 2016		August 1, 2015		July 30, 2016		August 1, 2015
Stock options	$	3,291	$	973	$	4,727	$	2,865
RSUs, including restricted stock units with market conditions	35,604		18,941		75,986		48,192
Employee stock purchase plan (“ESPP”)	5,748		4,523		12,762		13,537
Total stock-based compensation expense	$	44,643	$	24,437	$	93,475	$	64,594

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 July 30, 2016 (in thousands, except for the weighted-average period):

	Unrecognized Compensation Expense		Weighted- Average Period (In years)
Stock options	$	2,161	1.10
RSUs, including restricted stock units with market conditions	$	166,357	2.69
ESPP	$	24,497	1.21

Schedule of Share-based Compensation, Activity

The following table presents details on grants made by the Company for the following periods:

	Nine Months Ended
	July 30, 2016			August 1, 2015
	Granted (Shares in thousands)	Weighted-Average Grant Date Fair Value		Granted (Shares in thousands)	Weighted-Average Grant Date Fair Value
Stock options	1,390	$	1.36	1,117	$	3.09
RSUs, including stock units with market conditions	17,879	$	7.90	10,251	$	11.53

The total intrinsic value of stock options exercised for the nine months ended July 30, 2016, and August 1, 2015, was $1.2 million and $2.9 million, respectively.

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Stockholders' Equity (Tables)

9 Months Ended

Jul. 30, 2016

Equity [Abstract]

Schedule of Dividends Payable [Table Text Block]

During the nine months ended July 30, 2016, 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 22, 2015	$	0.045	December 10, 2015	$	18,429	January 4, 2016
February 16, 2016	$	0.045	March 10, 2016	$	18,016	April 4, 2016
May 18, 2016	$	0.055	June 10, 2016	$	25,261	July 5, 2016

Schedule of Comprehensive Income (Loss) Tax Effects

The components of other comprehensive loss and related tax effects for the three months endedJuly 30, 2016, and August 1, 2015, are as follows (in thousands):

	Three Months Ended
	July 30, 2016									August 1, 2015
	Before-Tax Amount			Tax Expense			Net-of-Tax Amount			Before-Tax Amount			Tax Expense			Net-of-Tax Amount
Unrealized gains (losses) on cash flow hedges:
Change in unrealized gains and losses, foreign exchange contracts	$	(715	)	$	15		$	(700	)	$	(361	)	$	(53	)	$	(414	)
Net gains and losses reclassified into earnings, foreign exchange contracts (1)	507			(25		)	482			941			(110		)	831
Net unrealized gains (losses) on cash flow hedges	(208		)	(10		)	(218		)	580			(163		)	417
Foreign currency translation adjustments	(1,628		)	—			(1,628		)	(492		)	—			(492		)
Total other comprehensive income (loss)	$	(1,836	)	$	(10	)	$	(1,846	)	$	88		$	(163	)	$	(75	)

The components of other comprehensive loss and related tax effects for the nine months endedJuly 30, 2016, and August 1, 2015, are as follows (in thousands):

	Nine Months Ended
	July 30, 2016									August 1, 2015
	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	$	(1,056	)	$	21		$	(1,035	)	$	(2,558	)	$	226		$	(2,332	)
Net gains and losses reclassified into earnings, foreign exchange contracts (1)	1,981			(150		)	1,831			2,879			(335		)	2,544
Net unrealized gains (losses) on cash flow hedges	925			(129		)	796			321			(109		)	212
Foreign currency translation adjustments	(1,760		)	—			(1,760		)	(5,781		)	—			(5,781		)
Total other comprehensive loss	$	(835	)	$	(129	)	$	(964	)	$	(5,460	)	$	(109	)	$	(5,569	)

⁽¹⁾ For classification of amounts reclassified from accumulated other comprehensive loss into earnings as reported on the Company’s Condensed Consolidated Statements of Income, 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 nine months endedJuly 30, 2016, and August 1, 2015, are as follows (in thousands):

	Nine Months Ended
	July 30, 2016									August 1, 2015
	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	$	(1,539	)	$	(23,463	)	$	(25,002	)	$	(1,907	)	$	(16,907	)	$	(18,814	)
Change in unrealized gains and losses	(1,035		)	(1,760		)	(2,795		)	(2,332		)	(5,781		)	(8,113		)
Net gains and losses reclassified into earnings	1,831			—			1,831			2,544			—			2,544
Net current-period other comprehensive income (loss)	796			(1,760		)	(964		)	212			(5,781		)	(5,569		)
Ending balance	$	(743	)	$	(25,223	)	$	(25,966	)	$	(1,695	)	$	(22,688	)	$	(24,383	)

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Segment Information (Tables)

9 Months Ended

Jul. 30, 2016

Segment Reporting [Abstract]

Schedule Of Financial Information By Reportable Segment

Summarized financial information by reportable segment for the three and nine months ended July 30, 2016, and August 1, 2015, based on the internal management reporting system, is as follows (in thousands):

	SAN Products		IP Networking Products		Global Services		Total
Three months ended July 30, 2016
Net revenues	$	282,114	$	208,881	$	99,726	$	590,721
Cost of revenues	70,630		117,862		45,330		233,822
Gross margin	$	211,484	$	91,019	$	54,396	$	356,899
Three months ended August 1, 2015
Net revenues	$	309,451	$	153,749	$	88,619	$	551,819
Cost of revenues	73,657		70,586		35,672		179,915
Gross margin	$	235,794	$	83,163	$	52,947	$	371,904
Nine months ended July 30, 2016
Net revenues	$	925,799	$	474,556	$	287,956	$	1,688,311
Cost of revenues	223,806		240,991		127,489		592,286
Gross margin	$	701,993	$	233,565	$	160,467	$	1,096,025
Nine months ended August 1, 2015
Net revenues	$	976,362	$	431,319	$	266,952	$	1,674,633
Cost of revenues	233,150		198,631		109,056		540,837
Gross margin	$	743,212	$	232,688	$	157,896	$	1,133,796

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Net Income Per Share (Tables)

9 Months Ended

Jul. 30, 2016

Earnings Per Share [Abstract]

Schedule Of Calculation Of Basic And Diluted Net Income (Loss) Per Share

The following table presents the calculation of basic and diluted net income per share (in thousands, except per share amounts):

	Three Months Ended				Nine Months Ended
	July 30, 2016		August 1, 2015		July 30, 2016		August 1, 2015
Basic net income per share
Net income	$	10,495	$	91,667	$	147,226	$	255,974
Weighted-average shares used in computing basic net income per share	426,671		417,299		411,709		422,184
Basic net income per share	$	0.02	$	0.22	$	0.36	$	0.61
Diluted net income per share
Net income	$	10,495	$	91,667	$	147,226	$	255,974
Weighted-average shares used in computing basic net income per share	426,671		417,299		411,709		422,184
Dilutive potential common shares in the form of stock options	1,227		1,772		1,329		1,777
Dilutive potential common shares in the form of other share-based awards	6,518		8,447		6,378		9,342
Weighted-average shares used in computing diluted net income per share	434,416		427,518		419,416		433,303
Diluted net income per share	$	0.02	$	0.21	$	0.35	$	0.59
Antidilutive potential common shares in the form of:(1)
Warrants issued in conjunction with the 2020 Convertible Notes (2)	36,316		36,125		36,251		26,453
Stock options	2,838		1,109		2,029		934
Other share-based awards	2,120		100		1,140		33

⁽¹⁾  These amounts are excluded from the computation of diluted net income per share.

⁽²⁾  In connection with the issuance of the 2020 Convertible Notes, the Company entered into convertible note hedge and warrant transactions as described in Note 8, “Borrowings.” The 2020 Convertible Notes have no impact on diluted earnings per share until the average quarterly price of the Company’s common stock exceeds the adjusted conversion price of $15.83 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 $20.52 per share for a quarterly period, the Company’s weighted-average shares used in computing diluted net income per share will be impacted by the effect of the additional potential shares that may be issued related to the warrants using the treasury stock method. The convertible note hedge is not considered for purposes of the diluted earnings per share calculation, as its effect would be antidilutive.

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Summary Of Significant Accounting Policies (Concentration of Risk Narrative)(Details)	9 Months Ended		12 Months Ended
	Jul. 30, 2016 customer	Aug. 01, 2015 customer	Oct. 31, 2015 customer
Concentration Risk
Number of Financial Institutions	6
Customer Concentration Risk | Accounts Receivable
Concentration Risk
Concentration Risk, Percentage	28.00%
Number Of Customers Included In Concentration Disclosures	2		1
Customer Concentration Risk | Accounts Receivable | Major Customer One
Concentration Risk
Concentration Risk, Percentage	18.00%		17.00%
Customer Concentration Risk | Accounts Receivable | Major Customer Two
Concentration Risk
Concentration Risk, Percentage	10.00%
Customer Concentration Risk | Sales Revenue, Segment
Concentration Risk
Concentration Risk, Percentage	24.00%	43.00%
Number Of Customers Included In Concentration Disclosures	2	3
Customer Concentration Risk | Sales Revenue, Segment | Major Customer One
Concentration Risk
Concentration Risk, Percentage	12.00%	16.00%
Customer Concentration Risk | Sales Revenue, Segment | Major Customer Two
Concentration Risk
Concentration Risk, Percentage	12.00%	15.00%
Customer Concentration Risk | Sales Revenue, Segment | Major Customer Three
Concentration Risk
Concentration Risk, Percentage		12.00%

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Acquisitions (Narrative) (Details) $ / shares in Units, shares in Thousands	3 Months Ended			9 Months Ended
	Jul. 30, 2016 USD ($) employess shares	Aug. 01, 2015 USD ($)	May 02, 2015 USD ($)	Jul. 30, 2016 USD ($) shares	Aug. 01, 2015 USD ($)	May 27, 2016 USD ($) $ / shares shares	Oct. 31, 2015 USD ($) shares
Business Acquisition [Line Items]
Common stock, shares outstanding | shares	400,679			400,679			413,923
Acquisition and integration costs	$ 14,868,000	$ 789,000		$ 20,625,000	$ 3,133,000
Goodwill	2,324,315,000			2,324,315,000			$ 1,617,161,000
IP Networking Products
Business Acquisition [Line Items]
Goodwill	1,593,643,000			1,593,643,000			1,285,420,000
Global Services
Business Acquisition [Line Items]
Goodwill	554,352,000			554,352,000			$ 155,416,000
Ruckus
Business Acquisition [Line Items]
Cash Per Share in Acquisition | $ / shares						$ 6.45
Common Stock Per Share in Acquisition						0.75
Common stock, shares outstanding | shares						92,200
Share Price | $ / shares						$ 8.60
Total preliminary purchase consideration (b)	1,275,448,000
Payments to Acquire Businesses, Gross	574,000,000
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable	574,000,000
Business Combination, Consideration Transferred, Liabilities Incurred	41,700,000
Business Combination, Integration Related Costs	4,636,000			5,407,000
Goodwill						$ 702,776,000
Business Acquisition, Goodwill, Expected Tax Deductible Amount						0
Business Combination, Pro Forma Information, Revenue of Acquiree since Acquisition Date, Actual	77,802,000			77,802,000
Business Combination, Pro Forma Information, Earnings or Loss of Acquiree since Acquisition Date, Actual	(37,611,000)			(37,611,000)
Pro forma net income (loss)	$ (21,936,000)	85,843,000		$ 100,982,000	168,212,000
Business Combination, Provisional Information, Initial Accounting Incomplete, Reasons				Additional information that existed as of the Acquisition Date may become known to the Company during the remainder of the measurement period.
Business Combination, Provisional Information, Initial Accounting Incomplete, Items				The total preliminary purchase consideration and allocation reflects the Company’s preliminary estimates and is subject to revision as additional information in relation to the preliminary purchase consideration and the fair value of the underlying assets acquired and liabilities assumed becomes available.
Ruckus | With Immediate Acceleration [Member]
Business Acquisition [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Plan Modification, Number of Employees Affected | employess	8
Ruckus | Without Immediate Acceleration [Member]
Business Acquisition [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Plan Modification, Number of Employees Affected | employess	4
Ruckus | Immediate Acceleration of Vested Options [Member]
Business Acquisition [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Plan Modification, Incremental Compensation Cost	$ 4,679,000			$ 4,679,000
Ruckus | Other Post-Combination Expense [Member]
Business Acquisition [Line Items]
Separately Recognized Transaction, Unamortized Stock Compensation Expense	28,600,000			28,600,000
Ruckus | Acquisition Costs [Member]
Business Acquisition [Line Items]
Acquisition and integration costs	10,232,000			$ 15,219,000
Ruckus | IP Networking Products
Business Acquisition [Line Items]
Goodwill						303,800,000
Ruckus | Global Services
Business Acquisition [Line Items]
Goodwill						$ 398,900,000
Ruckus | Vested Options [Member]
Business Acquisition [Line Items]
Other Consideration Transferred	78,300,000
Ruckus | Replacement Awards [Member]
Business Acquisition [Line Items]
Other Consideration Transferred	7,400,000
Series of Individually Immaterial Business Acquisitions [Member]
Business Acquisition [Line Items]
Total preliminary purchase consideration (b)			$ 96,100,000
Cash Acquired from Acquisition			100,000
Payments to Acquire Businesses, Gross			95,500,000
Other Consideration Transferred			$ 500,000
Business Combination, Integration Related Costs		800,000			1,700,000
Series of Individually Immaterial Business Acquisitions [Member] | Acquisition Costs [Member]
Business Acquisition [Line Items]
Acquisition and integration costs					1,469,000
Series of Individually Immaterial Business Acquisitions [Member] | RSU Grant
Business Acquisition [Line Items]
Business Combination, Separately Recognized Transactions, Accounting Method				The RSUs are accounted for as stock-based compensation expense
Separately Recognized Transaction, Expense Recognized	500,000	900,000		$ 1,400,000	1,100,000
Series of Individually Immaterial Business Acquisitions [Member] | Cash Retention Award
Business Acquisition [Line Items]
Business Combination, Separately Recognized Transactions, Accounting Method				The cash awards are accounted for as employee compensation expense
Separately Recognized Transaction, Expense Recognized	$ 900,000	$ 1,600,000		$ 3,400,000	2,000,000
Shares Dissented [Member] | Ruckus
Business Acquisition [Line Items]
Common stock, shares outstanding | shares						3,200
Fair Value Adjustment to Inventory [Member]
Business Acquisition [Line Items]
Pro forma net income (loss)					39,812,000
Acquisition-related Costs [Member]
Business Acquisition [Line Items]
Pro forma net income (loss)					$ 20,625,000

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Acquisitions Acquisitions (Schedule of Purchase Price Allocation) (Details) - USD ($) $ in Thousands	3 Months Ended
	Jul. 30, 2016	May 27, 2016	Oct. 31, 2015
Liabilities assumed:
Goodwill	$ 2,324,315		$ 1,617,161
Ruckus
Assets acquired:
Cash and cash equivalents		$ 95,515
Short-term investments		149,615
Accounts receivable, net of allowances for doubtful accounts of $2,100		41,339
Inventories		66,000
Prepaid expenses and other current assets		5,953
Property and equipment, net		21,777
Identifiable intangible assets		380,000
Other assets		1,697
Total assets acquired		761,896
Liabilities assumed:
Accounts payable		16,375
Accrued employee compensation		17,514
Deferred revenue		13,923
Other accrued liabilities		33,810
Non-current deferred revenue		9,364
Non-current deferred tax liabilities		57,677
Other non-current liabilities		40,561
Total liabilities assumed		189,224
Net assets acquired		572,672
Total preliminary purchase consideration (b)	$ 1,275,448
Goodwill		$ 702,776

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Acquisitions Acquisitions (Schedule of Intangible Assets Acquired as Part of Business Combination) (Details) - USD ($) $ in Thousands		3 Months Ended
		Jul. 30, 2016	May 27, 2016	Oct. 31, 2015
Acquired Finite-Lived Intangible Assets [Line Items]
Indefinite-Lived Intangible Assets (Excluding Goodwill)		$ 21,000		$ 15,110
In Process Research and Development [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Indefinite-Lived Intangible Assets (Excluding Goodwill)	[1]	$ 21,000		$ 15,110
Ruckus
Acquired Finite-Lived Intangible Assets [Line Items]
Identifiable intangible assets			$ 380,000
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			23,000
Ruckus | Trade names
Acquired Finite-Lived Intangible Assets [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles			44,000
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life		15 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 (1) (2)
Acquired Finite-Lived Intangible Assets [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles			$ 195,000
Ruckus | Core/developed technology (1) (2) | Minimum [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life		6 years
Ruckus | Core/developed technology (1) (2) | Maximum [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life		7 years

[1] Acquired IPR&D are intangible assets accounted for as indefinite-lived assets until the completion or abandonment of the associated research and development efforts. If the research and development efforts associated with the IPR&D are successfully completed, then the IPR&D intangible assets will be amortized over the estimated useful lives to be determined as of the date the efforts are completed. During the three months ended July 30, 2016, the Company acquired $23.0 million in IPR&D intangible assets in connection with the acquisition of Ruckus. The research and development efforts associated with these IPR&D intangible assets are expected to be completed in fiscal years 2016 and 2017. During the nine months ended July 30, 2016, research and development efforts were completed on $17.1 million of the IPR&D intangible assets, and the completed IPR&D intangible assets are being amortized as core/developed technology over the estimated useful lives of five to seven years.

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Acquisitions Acquisitions (Schedule of Pro Forma Information) (Details) - Ruckus - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Jul. 30, 2016	Aug. 01, 2015	Jul. 30, 2016	Aug. 01, 2015
Pro forma revenues	$ 600,530	$ 655,663	$ 1,900,664	$ 1,953,490
Pro forma net income (loss)	$ (21,936)	$ 85,843	$ 100,982	$ 168,212
Pro forma net income (loss) per share—basic	$ (0.05)	$ 0.21	$ 0.25	$ 0.40
Pro forma net income (loss) per share—diluted	$ (0.05)	$ 0.20	$ 0.24	$ 0.38

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Goodwill And Intangible Assets (Schedule Of Goodwill Activity By Reportable Segment) (Details) $ in Thousands	9 Months Ended
	Jul. 30, 2016 USD ($)
Goodwill
Goodwill, Gross, Beginning Balance	$ 1,746,375
Accumulated impairment losses, Beginning Balance	(129,214)
Goodwill, Net, Beginning Balance	1,617,161
Acquisitions (1)	707,392	[1]
Goodwill, Tax and other adjustments	(5)	[2]
Goodwill, Translation Adjustments	(233)
Goodwill, Gross, Ending Balance	2,453,529
Accumulated impairment losses, Ending Balance	(129,214)
Goodwill, Net, Ending Balance	2,324,315
Storage Area Networking (“SAN”) Products
Goodwill
Goodwill, Gross, Beginning Balance	176,325
Accumulated impairment losses, Beginning Balance	0
Goodwill, Net, Beginning Balance	176,325
Acquisitions (1)	0	[1]
Goodwill, Tax and other adjustments	(5)	[2]
Goodwill, Translation Adjustments	0
Goodwill, Gross, Ending Balance	176,320
Accumulated impairment losses, Ending Balance	0
Goodwill, Net, Ending Balance	176,320
IP Networking Products
Goodwill
Goodwill, Gross, Beginning Balance	1,414,634
Accumulated impairment losses, Beginning Balance	(129,214)
Goodwill, Net, Beginning Balance	1,285,420
Acquisitions (1)	308,456	[1]
Goodwill, Tax and other adjustments	0	[2]
Goodwill, Translation Adjustments	(233)
Goodwill, Gross, Ending Balance	1,722,857
Accumulated impairment losses, Ending Balance	(129,214)
Goodwill, Net, Ending Balance	1,593,643
Global Services
Goodwill
Goodwill, Gross, Beginning Balance	155,416
Accumulated impairment losses, Beginning Balance	0
Goodwill, Net, Beginning Balance	155,416
Acquisitions (1)	398,936	[1]
Goodwill, Tax and other adjustments	0	[2]
Goodwill, Translation Adjustments	0
Goodwill, Gross, Ending Balance	554,352
Accumulated impairment losses, Ending Balance	0
Goodwill, Net, Ending Balance	$ 554,352

[1] The goodwill acquired relates to the acquisitions completed in March 2016 and May 2016. See Note 3, “Acquisitions,” of the Notes to Condensed Consolidated Financial Statements.

[2] The goodwill adjustments were primarily a result of tax benefits from the exercise of stock awards of acquired companies.

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Goodwill And Intangible Assets (Schedule Of Intangible Assets) (Details) - USD ($) $ in Thousands		9 Months Ended		12 Months Ended
		Jul. 30, 2016		Oct. 31, 2015	May 27, 2016
Intangible Assets
Gross Carrying Value		$ 450,330		$ 74,570
Accumulated Amortization		36,409		14,057
Net Carrying Value		$ 413,921		$ 60,513
Weighted- Average Remaining Useful Life (In years)		6 years 8 months 19 days		6 years 6 months 18 days
Indefinite-Lived Intangible Assets (Excluding Goodwill)		$ 21,000		$ 15,110
Intangible Assets, Gross (Excluding Goodwill)		471,330		89,680
Intangible assets, net		434,921		75,623
Indefinite-lived Intangible Assets, Period Increase (Decrease)		(17,100)
CostofFullyAmortizedIntangibleAssets		$ 1,000
Minimum [Member]
Intangible Assets
UsefulLifeofCompletedIPRD		5 years
Maximum [Member]
Intangible Assets
UsefulLifeofCompletedIPRD		7 years
In Process Research and Development [Member]
Intangible Assets
Indefinite-Lived Intangible Assets (Excluding Goodwill)	[1]	$ 21,000		15,110
Trade names
Intangible Assets
Gross Carrying Value		45,090		1,090
Accumulated Amortization		1,105		415
Net Carrying Value		$ 43,985		$ 675
Weighted- Average Remaining Useful Life (In years)		14 years 8 months 16 days		4 years 4 months 10 days
Core/developed technology (1) (2)
Intangible Assets
Gross Carrying Value	[2]	$ 254,290	[1]	$ 40,530
Accumulated Amortization	[2]	23,834	[1]	9,605
Net Carrying Value	[2]	$ 230,456	[1]	$ 30,925
Weighted- Average Remaining Useful Life (In years)	[2]	5 years 8 months 1 day	[1]	3 years 5 months 26 days
Patent portfolio license (3)
Intangible Assets
Gross Carrying Value	[3]	$ 7,750		$ 7,750
Accumulated Amortization	[3]	1,669		849
Net Carrying Value	[3]	$ 6,081		$ 6,901
Weighted- Average Remaining Useful Life (In years)	[3]	17 years		17 years 8 months 26 days
Customer relationships
Intangible Assets
Gross Carrying Value		$ 141,110		$ 23,110
Accumulated Amortization		8,805		2,484
Net Carrying Value		$ 132,305		$ 20,626
Weighted- Average Remaining Useful Life (In years)		6 years 6 months 7 days		7 years 2 months 5 days
Non-compete agreements
Intangible Assets
Gross Carrying Value		$ 1,050		$ 1,050
Accumulated Amortization		904		664
Net Carrying Value		$ 146		$ 386
Weighted- Average Remaining Useful Life (In years)		5 months 16 days		1 year 2 months 1 day
Patents with broader applications
Intangible Assets
Gross Carrying Value		$ 1,040		$ 1,040
Accumulated Amortization		92		40
Net Carrying Value		$ 948		$ 1,000
Weighted- Average Remaining Useful Life (In years)		13 years 7 months 17 days		14 years 4 months 17 days
Ruckus | In Process Research and Development [Member]
Intangible Assets
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Indefinite-Lived Intangible Assets					$ 23,000

[1] Acquired IPR&D are intangible assets accounted for as indefinite-lived assets until the completion or abandonment of the associated research and development efforts. If the research and development efforts associated with the IPR&D are successfully completed, then the IPR&D intangible assets will be amortized over the estimated useful lives to be determined as of the date the efforts are completed. During the three months ended July 30, 2016, the Company acquired $23.0 million in IPR&D intangible assets in connection with the acquisition of Ruckus. The research and development efforts associated with these IPR&D intangible assets are expected to be completed in fiscal years 2016 and 2017. During the nine months ended July 30, 2016, research and development efforts were completed on $17.1 million of the IPR&D intangible assets, and the completed IPR&D intangible assets are being amortized as core/developed technology over the estimated useful lives of five to seven years.

[2] During the nine months ended July 30, 2016, $1.0 million of finite-lived intangible assets became fully amortized and, therefore, were removed from the balance sheet.

[3] 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.

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Goodwill And Intangible Assets (Schedule Of Amortization Of Intangible Assets Included On Consolidated Statements Of Operations) (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Jul. 30, 2016	Aug. 01, 2015	Jul. 30, 2016	Aug. 01, 2015
Amortization of Finite-Lived Intangible Assets [Line Items]
Amortization		$ 14,691	$ 3,718	$ 23,392	$ 7,267
Payments to Acquire Intangible Assets				0	7,750
Cost of revenues
Amortization of Finite-Lived Intangible Assets [Line Items]
Amortization		8,922	2,549	15,269	5,043
Other Operating Income (Expense)
Amortization of Finite-Lived Intangible Assets [Line Items]
Amortization		5,498	280	7,302	570
General and administrative
Amortization of Finite-Lived Intangible Assets [Line Items]
Amortization	[1]	$ 271	$ 889	$ 821	$ 1,654

[1] The amortization is related to the $7.8 million of perpetual, non-exclusive license to certain patents purchased during the fiscal year ended October 31, 2015.

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Goodwill And Intangible Assets (Schedule Of Estimated Future Amortization Of Intangible Assets) (Details) - USD ($) $ in Thousands	Jul. 30, 2016	Oct. 31, 2015
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2016 (remaining three months)	$ 18,998
2017	72,063
2018	63,562
2019	60,039
2020	59,082
Thereafter	140,177
Total	$ 413,921	$ 60,513

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Balance Sheet Details (Schedule of Inventory) (Details) - USD ($) $ in Thousands	Jul. 30, 2016	Oct. 31, 2015
Inventory Disclosure [Abstract]
Raw materials	$ 17,613	$ 18,788
Finished goods	63,569	21,736
Inventory, Net	$ 81,182	$ 40,524

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Balance Sheet Details (Schedule of Property, Plant and Equipment) (Details) - USD ($) $ in Thousands		Jul. 30, 2016	Oct. 31, 2015
Property, Plant and Equipment
Property and equipment, gross		$ 1,003,977	$ 940,216
Less: Accumulated depreciation and amortization	[1],[2]	(544,165)	(500,992)
Total property and equipment, net		459,812	439,224
Computer equipment
Property, Plant and Equipment
Property and equipment, gross		18,886	14,820
Software
Property, Plant and Equipment
Property and equipment, gross		84,337	67,625
Engineering and other equipment
Property, Plant and Equipment
Property and equipment, gross	[1]	443,808	407,342
Furniture and fixtures
Property, Plant and Equipment
Property and equipment, gross	[1]	33,468	31,028
Leasehold improvements
Property, Plant and Equipment
Property and equipment, gross		37,315	33,986
Land and building
Property, Plant and Equipment
Property and equipment, gross		$ 386,163	$ 385,415

[1] Engineering and other equipment, furniture and fixtures, and accumulated depreciation and amortization include the following amounts under capital leases as of July 30, 2016, and October 31, 2015 (in thousands): July 30, 2016 October 31, 2015Cost of capitalized leases$270 $1,312Accumulated depreciation(255) (857)Property and equipment, net, under capital leases$15 $455

[2] The following table presents the depreciation of property and equipment included in the Company’s Condensed Consolidated Statements of Income (in thousands): Three Months Ended Nine Months Ended July 30, 2016 August 1, 2015 July 30, 2016 August 1, 2015Depreciation expense$20,393 $18,605 $57,531 $55,302

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Balance Sheet Details (Schedule of Capital Leased Assets) (Details) - USD ($) $ in Thousands	Jul. 30, 2016	Oct. 31, 2015
Capital Leases
Cost	$ 270	$ 1,312
Accumulated depreciation	(255)	(857)
Total	$ 15	$ 455

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Balance Sheet Details (Narratives) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jul. 30, 2016	Aug. 01, 2015	Jul. 30, 2016	Aug. 01, 2015
Balance Sheet Details [Abstract]
Depreciation expense	$ 20,393	$ 18,605	$ 57,531	$ 55,302

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Fair Value Measurements (Schedule Of Assets And Liabilities Measured At Fair Value) (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands		Jul. 30, 2016	Oct. 31, 2015
Assets
Money market funds	[1]	$ 885,152	$ 1,184,410
Derivative assets		477	709
Total assets measured at fair value		885,629	1,185,119
Liabilities
Derivative liabilities		759	1,125
Total liabilities measured at fair value		759	1,125
Quoted Prices In Active Markets For Identical Instruments (Level 1)
Assets
Money market funds	[1]	885,152	1,184,410
Derivative assets		0	0
Total assets measured at fair value		885,152	1,184,410
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		477	709
Total assets measured at fair value		477	709
Liabilities
Derivative liabilities		759	1,125
Total liabilities measured at fair value		759	1,125
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.

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Restructuring and Other Costs (Schedule of Restructuring and Other Charges) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jul. 30, 2016	Aug. 01, 2015	Jul. 30, 2016	Aug. 01, 2015
Restructuring Charges [Abstract]
Business Exit Costs	$ 0	$ 0	$ (566)	$ (637)

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Restructuring and Other Costs (Schedule of Restructuring Reserve) (Details) $ in Thousands	9 Months Ended
	Jul. 30, 2016 USD ($)
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	$ 2,329
Restructuring Charges	(566)
Cash payments	(640)
Translation adjustment	(17)
Restructuring liabilities, Ending balance	1,106
Restructuring Reserve Ending Balance
Current restructuring liabilities	608
Non-current restructuring liabilities	$ 498
Fiscal 2013 Fourth Quarter Restructuring Plan
Restructuring
Restructuring and Related Activities, Description	During the fiscal year ended October 26, 2013, and the first quarter of fiscal year 2014, the Company restructured certain business operations and reduced the Company’s operating expense structure. The restructuring plan 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 reevaluates its estimates and assumptions on a quarterly basis and makes adjustments to the restructuring liabilities balance if necessary. During the nine months ended July 30, 2016, the Company reversed $0.6 million of charges related to estimated facilities lease losses due to a change in lease terms for a certain facility.
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 as a result of acquisitions.
Severance and Benefits | Fiscal 2013 Fourth Quarter Restructuring Plan
Restructuring Reserve Rollforward
Restructuring liabilities, Beginning balance	$ 110
Restructuring Charges	0
Cash payments	0
Translation adjustment	0
Restructuring liabilities, Ending balance	110
Restructuring Reserve Ending Balance
Non-current restructuring liabilities	0
Lease Loss Reserve and Related Costs | Fiscal 2013 Fourth Quarter Restructuring Plan
Restructuring Reserve Rollforward
Restructuring liabilities, Beginning balance	1,811
Restructuring Charges	(566)
Cash payments	(380)
Translation adjustment	(17)
Restructuring liabilities, Ending balance	848
Restructuring Reserve Ending Balance
Current restructuring liabilities	350
Non-current restructuring liabilities	498
Lease Loss Reserve and Related Costs | Other Restructuring Plans [Member]
Restructuring Reserve Rollforward
Restructuring liabilities, Beginning balance	408
Restructuring Charges	0
Cash payments	(260)
Translation adjustment	0
Restructuring liabilities, Ending balance	148
Restructuring Reserve Ending Balance
Non-current restructuring liabilities	$ 0

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Borrowings (Schedule Of Long-Term Debt) (Details) - USD ($) $ in Thousands	1 Months Ended	9 Months Ended
	Jan. 31, 2015	Jul. 30, 2016	Oct. 31, 2015
Debt Instrument
Long-term debt, gross		$ 1,675,016	$ 875,298
Unamortized discount		(78,755)	(79,196)
Unamortized debt issuance costs		(2,873)	(2,025)
Current portion of long-term debt		(76,627)	(298)
Long-term debt, net of current portion		$ 1,516,761	793,779
Convertible Senior Unsecured 2020 Notes
Debt Instrument
Maturity	Jan. 01, 2020	Jan. 01, 2020
Stated annual interest rate		1.375%
Long-term debt, gross		$ 575,000	$ 575,000
Effective interest rate		4.98%	4.98%
Unamortized discount		$ (63,706)	$ (76,311)
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%
Capital Lease Obligations
Debt Instrument
Maturity		May 31, 2016
Stated annual interest rate		4.625%
Long-term debt, gross		$ 16	$ 298
Effective interest rate		4.63%	4.63%
Term Loan Facility
Debt Instrument
Maturity		May 27, 2021
Long-term debt, gross		$ 800,000	$ 0
Effective interest rate		2.50%	0.00%

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Borrowings (Schedule of Carrying Values of Liability and Equity Components) (Details) - USD ($) $ in Thousands	Jul. 30, 2016	Oct. 31, 2015
Debt Instrument
Long-term debt, gross	$ 1,675,016	$ 875,298
Unamortized discount	(78,755)	(79,196)
Convertible Senior Unsecured 2020 Notes
Debt Instrument
Long-term debt, gross	575,000	575,000
Unamortized discount	(63,706)	(76,311)
Long-term Debt	511,294	498,689
Carrying amount of equity component	$ 59,293	$ 70,765

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Borrowings (Narrative) (Details) $ / shares in Units, shares in Millions	1 Months Ended	3 Months Ended					9 Months Ended
	Jan. 31, 2015 USD ($) shares $ / shares	Jul. 30, 2016 USD ($) $ / shares shares	Apr. 30, 2016 $ / shares	Jan. 30, 2016 $ / shares	Aug. 01, 2015 $ / shares	Jan. 31, 2015 USD ($)	Jul. 30, 2016 USD ($) shares $ / shares	Aug. 01, 2015 USD ($) $ / shares	Oct. 31, 2015 USD ($)	Jan. 14, 2015 USD ($) $ / shares shares	Jan. 22, 2013 USD ($)	Jan. 20, 2010 USD ($)
Debt Instrument
Proceeds from convertible notes							$ 0	$ 565,656,000
Cash dividends declared per share | $ / shares		$ 0.055	$ 0.045	$ 0.045	$ 0.045		$ 0.145	$ 0.115
Purchase of convertible hedge							$ 0	$ 86,135,000
Proceeds from issuance of warrants							$ 0	$ 51,175,000
Senior Secured 2020 Notes
Debt Instrument
Debt Instrument, Face Amount												$ 300,000,000
Debt Instrument, Redemption Price, Percentage							103.438%
Irrevocable deposit										$ 322,200,000
Repayment of principal amount										300,000,000
Call premium										10,300,000
Debt Instrument, Increase, Accrued Interest						$ 10,300,000
Unpaid interest deposited to escrow										1,600,000
Call premium cost and original issue discount and debt issuance costs related to lenders that did not participate in refinancing						$ 20,400,000
Convertible Senior Unsecured 2020 Notes
Debt Instrument
Long-Term Debt, Fair Value		$ 560,400,000					$ 560,400,000		$ 568,000,000
Debt Instrument, Face Amount										$ 575,000,000
Proceeds from convertible notes	$ 565,700,000
DiscountRateForFairValueOfLiabilityComponent	4.57%
Debt Instrument, Convertible, Remaining Discount Amortization Period							3 years 5 months 1 day
Maturity	Jan. 01, 2020						Jan. 01, 2020
Debt Instrument, Convertible, Conversion Ratio	62.7746						63.1587
Debt Instrument, Convertible, Number of Equity Instruments | shares	36.1						36.3
Debt Instrument, Convertible, Conversion Price | $ / shares		$ 15.83					$ 15.83			$ 15.93
Debt Instrument, Convertible, If-converted Value in Excess of Principal							$ 0
Repurchase price of notes in case of change in control, percentage of face value	100.00%
Shares Covered By Note Hedge | shares										36.1
Note Hedge, Exercise Price | $ / shares	$ 15.93						$ 15.83
Purchase of convertible hedge	$ 86,100,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | shares		36.3					36.3			36.1
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares		$ 20.52					$ 20.52			$ 20.65
Class of Warrant or Right, Date from which Warrants or Rights Exercisable	Apr. 01, 2020
WarrantsMaturityPeriod	60 days
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		$ 296,200,000					$ 296,200,000		$ 293,900,000
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 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					$ 800,000,000
Long-Term Debt, Fair Value		786,500,000					$ 786,500,000
Maturity							May 27, 2021
Revolving Credit Facility
Debt Instrument
Line of Credit Facility, Maximum Borrowing Capacity		100,000,000					$ 100,000,000
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage							0.30%
Line of Credit Facility, Fair Value of Amount Outstanding		0					$ 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					$ 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					$ 10,000,000

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Borrowings Borrowings (Schedule Of Interest Expense) (Details) - Convertible Senior Unsecured 2020 Notes - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jul. 30, 2016	Aug. 01, 2015	Jul. 30, 2016	Aug. 01, 2015
Amortization of discount	$ 4,254	$ 4,048	$ 12,606	$ 8,792
Interest Expense, Debt, Excluding Amortization	$ 1,977	$ 1,977	$ 5,930	$ 4,323

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Borrowings (Schedule Of Debt Maturities) (Details) - USD ($) $ in Thousands	Jul. 30, 2016	Oct. 31, 2015
Long-term Debt, by Maturity [Abstract]
2016 (remaining three months)	$ 20,016
2017	80,000
2018	80,000
2019	80,000
2020	655,000
Thereafter	760,000
Long-term debt, gross	$ 1,675,016	$ 875,298

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Commitments And Contingencies (Schedule Of Accrued Liability For Estimated Future Warranty Costs) (Details) - USD ($) $ in Thousands	9 Months Ended
	Jul. 30, 2016	Aug. 01, 2015
Product Warranty Activity
Beginning balance	$ 7,599	$ 7,486
Standard Product Warranty Accrual, Additions from Business Acquisition	760	0
Liabilities accrued for warranties issued during the period	2,768	3,059
Warranty claims paid and used during the period	(2,736)	(3,221)
Changes in liability for pre-existing warranties during the period	(60)	(125)
Ending balance	$ 8,331	$ 7,199

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Commitments And Contingencies (Purchase Commitment Narrative) (Details) (Details) - Inventory Purchase Commitment $ in Millions	Jul. 30, 2016 USD ($)
Purchase Commitment, Excluding Long-term Commitment [Line Items]
Purchase Commitment, Remaining Minimum Amount Committed	$ 220.0
Purchase Commitment, Recognized Loss	$ 3.6

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Commitments and Contingencies Commitments and Contingencies (Legal Proceedings) (Details) $ / shares in Units, shares in Thousands, $ in Millions	3 Months Ended
	Jul. 30, 2016 USD ($) shares	May 27, 2016 $ / shares shares	Oct. 31, 2015 shares
Legal Proceedings [Line Items]
Common stock, shares outstanding	400,679		413,923
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
Business Combination, Consideration Transferred, Liabilities Incurred | $	$ 41.7
Ruckus | Aggregate Value of Dissenting Shares [Member]
Legal Proceedings [Line Items]
Business Combination, Consideration Transferred, Liabilities Incurred | $	$ 41.3
Shares Dissented [Member] | Ruckus
Legal Proceedings [Line Items]
Common stock, shares outstanding		3,200

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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		9 Months Ended
	Jul. 30, 2016	Aug. 01, 2015	Jul. 30, 2016	Aug. 01, 2015
Derivative Instruments, Gain (Loss)
Net gains (losses) related to the effective portion of foreign currency derivatives	$ (507)	$ (941)	$ (1,981)	$ (2,879)
Cost of revenues
Derivative Instruments, Gain (Loss)
Net gains (losses) related to the effective portion of foreign currency derivatives	(35)	(141)	(195)	(605)
Research and development
Derivative Instruments, Gain (Loss)
Net gains (losses) related to the effective portion of foreign currency derivatives	(342)	(206)	(968)	(273)
Sales and marketing
Derivative Instruments, Gain (Loss)
Net gains (losses) related to the effective portion of foreign currency derivatives	(120)	(542)	(764)	(1,866)
General and administrative
Derivative Instruments, Gain (Loss)
Net gains (losses) related to the effective portion of foreign currency derivatives	$ (10)	$ (52)	$ (54)	$ (135)

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Derivative Instruments And Hedging Activities (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Jul. 30, 2016	Aug. 01, 2015	Jul. 30, 2016	Aug. 01, 2015
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Maximum derivative instrument maturity period			15 months
Foreign Currency Transaction [Abstract]
Foreign currency transaction gains (losses)	$ (0.2)	$ 0.3	$ (0.8)	$ (0.6)
Derivatives Designated As Hedging Instruments | Other Current Assets [Member]
Derivative Instruments, Gain (Loss)
Gross unrealized gain positions	0.5		0.5
Derivatives Designated As Hedging Instruments | Other Current Liabilities [Member]
Derivative Instruments, Gain (Loss)
Gross unrealized loss positions	$ (0.8)		$ (0.8)

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Derivative Instruments And Hedging Activities (Schedule Of Total Gross Notional Amounts, Presented By Currency) (Details) - Derivatives Designated As Hedging Instruments - USD ($) $ in Thousands	Jul. 30, 2016	Oct. 31, 2015
Derivative
Total gross notional amounts, presented by currency	$ 41,270	$ 169,886
United Kingdom, Pounds
Derivative
Total gross notional amounts, presented by currency	9,940	46,330
Euro Member Countries, Euro
Derivative
Total gross notional amounts, presented by currency	10,410	40,961
India, Rupees
Derivative
Total gross notional amounts, presented by currency	8,836	35,647
China, Yuan Renminbi
Derivative
Total gross notional amounts, presented by currency	3,629	15,129
Singapore, Dollars
Derivative
Total gross notional amounts, presented by currency	3,484	13,745
Japan, Yen
Derivative
Total gross notional amounts, presented by currency	2,606	8,809
Switzerland, Francs
Derivative
Total gross notional amounts, presented by currency	$ 2,365	$ 9,265

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Stock-Based Compensation (Stock-Based Compensation Expense Included In Line Items Of Consolidated Statements Of Operations) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jul. 30, 2016	Aug. 01, 2015	Jul. 30, 2016	Aug. 01, 2015
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Total stock-based compensation expense	$ 44,643	$ 24,437	$ 93,475	$ 64,594
Cost of revenues
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Total stock-based compensation expense	5,965	3,955	12,400	9,757
Research and development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Total stock-based compensation expense	9,206	5,226	19,805	13,239
Sales and marketing
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Total stock-based compensation expense	17,756	10,601	39,886	27,651
General and administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Total stock-based compensation expense	$ 11,716	$ 4,655	$ 21,384	$ 13,947

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Stock-Based Compensation (Stock-Based Compensation Expense By Grant Type) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jul. 30, 2016	Aug. 01, 2015	Jul. 30, 2016	Aug. 01, 2015
Share-based Compensation Arrangement by Share-based Payment Award
Total stock-based compensation expense	$ 44,643	$ 24,437	$ 93,475	$ 64,594
Stock options
Share-based Compensation Arrangement by Share-based Payment Award
Total stock-based compensation expense	3,291	973	4,727	2,865
RSUs, including restricted stock units with market conditions
Share-based Compensation Arrangement by Share-based Payment Award
Total stock-based compensation expense	35,604	18,941	75,986	48,192
Employee stock purchase plan (“ESPP”)
Share-based Compensation Arrangement by Share-based Payment Award
Total stock-based compensation expense	$ 5,748	$ 4,523	$ 12,762	$ 13,537

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Stock-Based Compensation (Stock-Based Compensation, Unrecognized Compensation Expense And Weighted-Average Period) (Details) $ in Thousands	9 Months Ended
	Jul. 30, 2016 USD ($)
Stock options
Share-based Compensation Arrangement by Share-based Payment Award
Unrecognized Compensation Expense	$ 2,161
Weighted-Average Period (in years)	1 year 1 month 6 days
RSUs, including restricted stock units with market conditions
Share-based Compensation Arrangement by Share-based Payment Award
Unrecognized Compensation Expense	$ 166,357
Weighted-Average Period (in years)	2 years 8 months 8 days
Employee stock purchase plan (“ESPP”)
Share-based Compensation Arrangement by Share-based Payment Award
Unrecognized Compensation Expense	$ 24,497
Weighted-Average Period (in years)	1 year 2 months 16 days

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Stock-Based Compensation (Schedule of Share-based Compensation, Activity) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	9 Months Ended
	Jul. 30, 2016	Aug. 01, 2015
Stock options
Share-based Compensation Arrangement by Share-based Payment Award
Stock options, Granted	1,390	1,117
Stock options, Weighted-Average Grant Date Fair Value (dollars per share)	$ 1.36	$ 3.09
Stock options, Exercises in Period, Total Intrinsic Value	$ 1.2	$ 2.9
RSUs, including restricted stock units with market conditions
Share-based Compensation Arrangement by Share-based Payment Award
RSUs, Granted	17,879	10,251
RSUs, Weighted-Average Grant Date Fair Value (dollars per share)	$ 7.90	$ 11.53

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Stockholders' Equity Stockholders' Equity (Schedule of Dividends Payable) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended				9 Months Ended
	Jul. 30, 2016	Apr. 30, 2016	Jan. 30, 2016	Aug. 01, 2015	Jul. 30, 2016	Aug. 01, 2015
Dividends Payable [Line Items]
Cash dividends declared per share	$ 0.055	$ 0.045	$ 0.045	$ 0.045	$ 0.145	$ 0.115
Payments of Ordinary Dividends, Common Stock					$ 61,706	$ 48,819
Common Stock
Dividends Payable [Line Items]
Dividends Payable, Date Declared	May 18, 2016	Feb. 16, 2016	Nov. 22, 2015
Dividends Payable, Date of Record	Jun. 10, 2016	Mar. 10, 2016	Dec. 10, 2015
Payments of Ordinary Dividends, Common Stock	$ 25,261	$ 18,016	$ 18,429
Dividends Payable, Date to be Paid	Jul. 05, 2016	Apr. 04, 2016	Jan. 04, 2016

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Stockholders' Equity Stockholders' Equity (Details)	9 Months Ended
	Jul. 30, 2016
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.

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Stockholders' Equity (Schedule of Comprehensive Income (Loss) Tax Effects) (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Jul. 30, 2016	Aug. 01, 2015	Jul. 30, 2016	Aug. 01, 2015
Unrealized gains (losses) on cash flow hedges, before tax
Change in unrealized gains and losses, foreign exchange contracts, before tax		$ (715)	$ (361)	$ (1,056)	$ (2,558)
Net gains and losses reclassified into earnings, foreign exchange contracts, before tax	[1]	507	941	1,981	2,879
Net unrealized losses on cash flow hedges, before tax		(208)	580	925	321
Foreign currency translation adjustments, before tax
Foreign currency translation adjustments, before tax		(1,628)	(492)	(1,760)	(5,781)
Total other comprehensive loss, before tax		(1,836)	88	(835)	(5,460)
Unrealized gains (losses) on cash flow hedges, tax
Change in unrealized gains and losses, foreign exchange contracts, tax		15	(53)	21	226
Net gains and losses reclassified into earnings, foreign exchange contracts, tax	[1]	(25)	(110)	(150)	(335)
Net unrealized losses on cash flow hedges, tax		(10)	(163)	(129)	(109)
Foreign currency translation adjustments, tax
Foreign currency translation adjustments, tax		0	0	0	0
Total other comprehensive loss, tax		(10)	(163)	(129)	(109)
Unrealized gains (losses) on cash flow hedges, net of tax
Change in unrealized gains and losses, foreign exchange contracts, net of tax		(700)	(414)	(1,035)	(2,332)
Net gains and losses reclassified into earnings, foreign exchange contracts, net of tax	[1]	482	831	1,831	2,544
Net unrealized gains (losses) on cash flow hedges		(218)	417	796	212
Foreign currency translation adjustments, net of tax
Foreign currency translation adjustments, net of tax		(1,628)	(492)	(1,760)	(5,781)
Total other comprehensive income (loss)		$ (1,846)	$ (75)	$ (964)	$ (5,569)

[1] For classification of amounts reclassified from accumulated other comprehensive loss into earnings as reported on the Company’s Condensed Consolidated Statements of Income, see Note 10, “Derivative Instruments and Hedging Activities,” of the Notes to Condensed Consolidated Financial Statements.

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Stockholders' Equity (Schedule of Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Thousands	9 Months Ended
	Jul. 30, 2016	Aug. 01, 2015
Accumulated Other Comprehensive Income (Loss)
AOCI, Net of Tax, Beginning Balance	$ (25,002)	$ (18,814)
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax
Change in unrealized gains and losses	(2,795)	(8,113)
Net gains and losses reclassified into earnings	1,831	2,544
Net current-period other comprehensive income (loss)	(964)	(5,569)
AOCI, Net of Tax, Ending Balance	(25,966)	(24,383)
Losses on Cash Flow Hedges
Accumulated Other Comprehensive Income (Loss)
AOCI, Net of Tax, Beginning Balance	(1,539)	(1,907)
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax
Change in unrealized gains and losses	(1,035)	(2,332)
Net gains and losses reclassified into earnings	1,831	2,544
Net current-period other comprehensive income (loss)	796	212
AOCI, Net of Tax, Ending Balance	(743)	(1,695)
Foreign Currency Translation Adjustments
Accumulated Other Comprehensive Income (Loss)
AOCI, Net of Tax, Beginning Balance	(23,463)	(16,907)
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax
Change in unrealized gains and losses	(1,760)	(5,781)
Net gains and losses reclassified into earnings	0	0
Net current-period other comprehensive income (loss)	(1,760)	(5,781)
AOCI, Net of Tax, Ending Balance	$ (25,223)	$ (22,688)

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Income Taxes (Narrative) (Details) $ in Millions	9 Months Ended
	Jul. 30, 2016 USD ($)
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	$ 189.1
Amount of unrecognized tax benefits that could affect the effect tax rate	144.0
Minimum [Member]
Income Tax Contingency
Decrease in Unrecognized Tax Benefits is Reasonably Possible	0.0
Maximum [Member]
Income Tax Contingency
Decrease in Unrecognized Tax Benefits is Reasonably Possible	$ 5.0

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Segment Information (Schedule Of Financial Information By Reportable Segment) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jul. 30, 2016	Aug. 01, 2015	Jul. 30, 2016	Aug. 01, 2015
Segment Reporting Information
Net revenues	$ 590,721	$ 551,819	$ 1,688,311	$ 1,674,633
Service	99,726	88,619	287,956	266,952
Cost of revenues	233,822	179,915	592,286	540,837
Gross margin	356,899	371,904	1,096,025	1,133,796
Storage Area Networking (“SAN”) Products
Segment Reporting Information
Net revenues	282,114	309,451	925,799	976,362
Cost of revenues	70,630	73,657	223,806	233,150
Gross margin	211,484	235,794	701,993	743,212
IP Networking Products
Segment Reporting Information
Net revenues	208,881	153,749	474,556	431,319
Cost of revenues	117,862	70,586	240,991	198,631
Gross margin	91,019	83,163	233,565	232,688
Global Services
Segment Reporting Information
Net revenues	99,726	88,619	287,956	266,952
Cost of revenues	45,330	35,672	127,489	109,056
Gross margin	$ 54,396	$ 52,947	$ 160,467	$ 157,896

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Segment Information Narrative (Details)	9 Months Ended
	Jul. 30, 2016 segments
Segment Reporting [Abstract]
Number of operating segments	3
Number of reportable operating segments	3

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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		9 Months Ended
		Jul. 30, 2016	Aug. 01, 2015	Jul. 30, 2016	Aug. 01, 2015	Jan. 14, 2015
Earnings Per Share, Basic
Net income		$ 10,495	$ 91,667	$ 147,226	$ 255,974
Weighted-average shares used in computing basic net income per share		426,671	417,299	411,709	422,184
Net income per share—basic		$ 0.02	$ 0.22	$ 0.36	$ 0.61
Earnings Per Share, Diluted
Net income		$ 10,495	$ 91,667	$ 147,226	$ 255,974
Weighted-average shares used in computing diluted net income per share		434,416	427,518	419,416	433,303
Net income per share—diluted		$ 0.02	$ 0.21	$ 0.35	$ 0.59
Weighted Average Number of Shares Outstanding Reconciliation
Weighted-average shares used in computing basic net income per share		426,671	417,299	411,709	422,184
Dilutive potential common shares in the form of stock options		1,227	1,772	1,329	1,777
Dilutive potential common shares in the form of other share-based awards		6,518	8,447	6,378	9,342
Weighted-average shares used in computing diluted net income per share		434,416	427,518	419,416	433,303
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share
Antidilutive potential common shares	[1]	2,838	1,109	2,029	934
Other share-based awards
Antidilutive Securities Excluded from Computation of Earnings Per Share
Antidilutive potential common shares	[1]	2,120	100	1,140	33
Convertible Senior Unsecured 2020 Notes
Antidilutive Securities Excluded from Computation of Earnings Per Share
Debt Instrument, Convertible, Conversion Price		$ 15.83		$ 15.83		$ 15.93
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 20.52		$ 20.52		$ 20.65
Convertible Senior Unsecured 2020 Notes | Warrant
Antidilutive Securities Excluded from Computation of Earnings Per Share
Antidilutive potential common shares	[1],[2]	36,316	36,125	36,251	26,453

[1] These amounts are excluded from the computation of diluted net income per share.

[2] In connection with the issuance of the 2020 Convertible Notes, the Company entered into convertible note hedge and warrant transactions as described in Note 8, “Borrowings.” The 2020 Convertible Notes have no impact on diluted earnings per share until the average quarterly price of the Company’s common stock exceeds the adjusted conversion price of $15.83 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 $20.52 per share for a quarterly period, the Company’s weighted-average shares used in computing diluted net income per share will be impacted by the effect of the additional potential shares that may be issued related to the warrants using the treasury stock method. The convertible note hedge is not considered for purposes of the diluted earnings per share calculation, as its effect would be antidilutive.