SAN JOSE, Calif. -- Brocade Communications Systems, Inc. (Nasdaq: BRCD) today announced that it has reached an agreement in principle with lead plaintiffs to settle the federal securities class-action lawsuit originally filed in May 2005 in the United States District Court for the Northern District of California against the Company and certain former directors and officers. The litigation relates to the Company's restatement of certain financial results in 2005 due to stock-based compensation accounting issues.
Under the terms of the preliminary settlement, Brocade will pay $160 million to the plaintiff class in exchange for the dismissal with prejudice of all claims against all defendants in the litigation. The settlement is subject to final documentation and approval by the federal district court.
Based on the preliminary settlement, Brocade recorded an estimated settlement expense of $160 million on a pre-tax basis. This expense has been included in the Company's results of operations for the three and six months ended April 26, 2008 and will be reflected in its Quarterly Report on Form 10-Q for the quarter ended April 26, 2008, which Brocade expects to file no later than Thursday, June 5, 2008. This expense is not expected to impact the Company's non-GAAP results of operations.
Brocade believes that this settlement is in the best interest of its shareholders and the Company as it significantly reduces the uncertainty associated with this ongoing litigation. Further, this resolution enables the Company to put the class action behind it and continue to focus on the business of developing and delivering industry-leading data center solutions for its customers worldwide.
Brocade Communications Systems Inc.