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Brocade Delays 10-Q Filing

Brocade Communications Systems Inc. has delayed filing its Form 10-Q, originally due tomorrow, because of accounting irregularities regarding stock options granted last year and earlier.
MANHASSET, N.Y. — Brocade Communications Systems Inc. has delayed filing of its Form 10-Q for the second fiscal quarter ended April 30, 2005, due Thursday, June 9.

An audit committee appointed by Brocade (San Jose, Calif.) has been performing an independent review of the company's stock option accounting regarding leaves of absence from 2001 through 2004. On May 16, the company announced it could not rely on the documentation used to support the recorded measurement dates for stock options granted in August 2003 through November 2004.

In addition, Brocade determined that from 2001 through 2004, it had not appropriately accounted for the cost of stock based compensation for certain employees on leaves of absences (LOA) and in transition roles prior to ceasing employment with Brocade.

The company is restating its financial statements for the fiscal years ending 2002 through 2004 to record additional charges for stock-based compensation expense. Brocade expects related adjustments to be made to its final financial information for fiscal 2001, as needed.

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