Brocade Communications Systems (BRCD) 8-K Brocade Reports Fiscal Q2 2012 Results

Q2 FY 2012 EARNINGS

May 17, 2012

Exhibit 99.2

Page 1 of 35

Brocade Q2 FY 2012 Earnings

5/17/2012

©

2012 Brocade Communications Systems, Inc.

Prepared comments provided by Rob Eggers, Investor Relations

Thank you for your interest in Brocade’s Q2 Fiscal 2012 earnings presentation, which includes prepared remarks, slides, and a

press release detailing fiscal second quarter 2012 financial results. The press release was issued shortly after 1:00 p.m. Pacific

time on May 17, 2012, via Marketwire. The press release, along with these prepared comments and slides, has been furnished to

the SEC on Form 8-K and will be made available on Brocade’s Investor Relations website at www.brcd.com.

Cautionary Statements and Disclosures

Please see risk factors on Form 10-Q and Form 10-K filed with the SEC

This presentation includes forward-looking statements regarding Brocade’s financial results, plans, guidance, strategy

and business outlook, tax rate, OEM inventory, real estate and briefing centers, share repurchases, as well as EMEA

economic outlook, worldwide SAN demand, and IT spending, which are only predictions and involve risks and

uncertainties such that actual results may vary significantly. These and other risks are set forth in more detail in our

Form 10-Q for the fiscal quarter ended January 28, 2012 and our Form 10-K for the fiscal year ended October 29, 2011.

These forward-looking statements reflect beliefs, assumptions, outlook, estimates, and predictions as of today, and

Brocade expressly assumes no obligation to update any such forward-looking statements.

In addition, this presentation includes various third-party estimates regarding the total available market and other

measures, which do not necessarily reflect the views of Brocade.

Further, Brocade does not guarantee the accuracy or

reliability of any such information or forecast.

Certain financial information is presented on a non-GAAP basis. Management believes that non-GAAP financial

measures used in this presentation allow management to gain a better understanding of Brocade’s comparative

operating

performance

both

from

period

to

period,

and

to

its

competitors’

operating

results.

Management

also

believes

these non-GAAP financial measures help indicate Brocade's baseline performance before gains, losses or charges that

are considered by management to be outside of ongoing operating results. Accordingly, management uses these non-

GAAP financial measures for planning and forecasting of future periods and in making decisions regarding operations

performance and the allocation of resources. The most directly comparable GAAP information and a reconciliation

between the non-GAAP and GAAP figures are provided in the accompanying press release, which has been furnished to

the SEC on Form 8-K and posted on Brocade’s website, and is included in the subsequent slide in this presentation.

Page 2 of 35

Brocade Q2 FY 2012 Earnings

5/17/2012

©

2012 Brocade Communications Systems, Inc.

Quarterly Net Income (Loss)

GAAP/Non-GAAP Reconciliation

(In $1,000s)

Q2 11

Q3 11

Q4 11

Q1 12

Q2 12

Net income (loss) on a GAAP basis

$26,079

$1,937

($4,324)

$58,584

$39,296

Gross margin adjustments:

Stock-based compensation

4,167

4,234

4,345

4,375

4,596

Amortization of acquired intangibles

14,466

14,466

14,090

14,090

10,713

Provision for (benefit from) certain pre-acquisition litigation

–

(14,334)

–

–

–

Legal fees associated with certain pre-acquisition litigation

216

92

59

(51)

–

Total gross margin adjustments

18,849

4,458

18,494

18,415

15,309

Operating expense adjustments:

Stock-based compensation

18,363

16,733

15,326

17,444

19,262

Amortization of acquired intangibles

15,023

15,023

14,476

14,993

14,737

Legal fees associated with indemnification obligations and other

related costs, net

–

–

–

–

–

Loss on sale of subsidiary

–

–

12,756

–

–

Total operating expense adjustments

33,386

31,756

42,558

32,437

33,999

Total operating income adjustments

52,235

36,214

61,052

50,851

49,308

Original issue discount and debt issuance costs of debt related to lenders

that did not participate in the refinancing

–

25,465

–

–

–

Income tax effect of adjustments

(17,037)

(17,657)

22,018

(16,623)

(16,380)

Non-GAAP net income

61,277

45,959

78,746

92,812

72,224

Page 3 of 35

Brocade Q2 FY 2012 Earnings

5/17/2012

©

2012 Brocade Communications Systems, Inc.

Additional Financial Information:

Q2 11

Q1 12

Q2 12

GAAP gross margin

59.9%

61.5%

62.0%

Non-GAAP gross margin

63.4%

64.8%

64.8%

GAAP product gross margin

62.6%

63.2%

64.0%

Non-GAAP product gross margin

66.2%

66.6%

66.9%

GAAP services gross margin

46.4%

52.0%

51.7%

Non-GAAP services gross margin

49.0%

54.5%

54.3%

GAAP operating margin

8.4%

12.4%

9.5%

Non-GAAP operating margin

18.0%

21.5%

18.6%

Agenda

Prepared comments followed by live Q&A call

Dan Fairfax

CFO

Mike Klayko

CEO

Page 4 of 35

Brocade Q2 FY 2012 Earnings

5/17/2012

©

2012 Brocade Communications Systems, Inc.

Today’s prepared comments include remarks by Mike Klayko, Brocade CEO,

regarding the company’s quarterly results, its strategy,

and a review of operations, as well as industry trends and market/technology drivers related to its business; and by Dan Fairfax,

Brocade CFO, who will provide a financial review.

A management discussion and live question-and-answer conference call will be webcast beginning at 2:30 p.m. Pacific Time on May

17 at www.brcd.com

and will be archived on the Brocade Investor Relations website.

Fiscal 2012: Q2 Earnings

Mike Klayko, CEO

Page 5 of 35

Brocade Q2 FY 2012 Earnings

5/17/2012

©

2012 Brocade Communications Systems, Inc.

Prepared comments provided by Mike Klayko, CEO

Q2 Executive Summary

Includes non-GAAP results*

* For non-GAAP results, please see GAAP reconciliation

•

$543M revenue

•

$0.08 GAAP EPS, up 58% Yr./Yr.

•

$0.15 non-GAAP EPS, up 24% Yr./Yr.

•

64.8% non-GAAP gross margin, up 140

basis points Yr./Yr.

•

18.6% non-GAAP operating margin, up 60

basis points Yr./Yr.

•

$140M operating cash flow; $50M debt

reduction and $25M share repurchase in Q2

•

>100,000 Brocade VDX

ports now installed

at 550 customers globally

•

Highly successful

launch of Brocade ICX/

HyperEdge

technology for the campus LAN

•

23% of Director/Switch revenue from 16

Gbps

Fibre Channel products which helped

drive market share gains

•

Strong

#2 market share position in 100 GbE

•

Service Provider business up 18% Yr./Yr.

OVERALL RESULTS

QUARTER HIGHLIGHTS

Page 6 of 35

Brocade Q2 FY 2012 Earnings

5/17/2012

©

2012 Brocade Communications Systems, Inc.

Brocade exited Q2 with $543 million in revenue and $0.15 in EPS on a non-GAAP basis. We reported revenue at the high-end of our

guidance and we exceeded our expectation for EPS, which was up 24% Yr./Yr. and marked the third consecutive quarter of non-

GAAP EPS growth of nearly 20% or more.  The solid Yr./Yr. improvement in EPS was primarily driven by an expansion of both gross

margin and operating margin, lower interest expense, and a reduction in the Company’s share count. Our Q2 revenue was slightly

down Yr./Yr. primarily due to the divestiture of the SBS business unit in late 2011. However, the increased focus on our core

businesses, as well as emerging target markets, helped improve gross margin and profitability.

An important part of our growth strategy is to focus our investments in key target markets, selecting those areas where we can

leverage our technology and market leadership. Over the past two

years we have made strategic investments that have reduced

profitability, but we do believe that the aggregate return over time will be significant to our business. We are now at an inflection

point where we expect to grow profits faster than revenue by driving efficiencies into our business. 

To date, this strategy includes the introduction of new, highly-differentiated products with improved cost structures, the divestiture of

a low-margin business unit, the development of our channel for efficient sales coverage, and the prioritization of resources and

investment dollars into high-growth markets.

(continued on next page)

Q2 Executive Summary (script continued)

Includes non-GAAP results*

* For non-GAAP results, please see GAAP reconciliation

OVERALL RESULTS

QUARTER

HIGHLIGHTS

•

$543M revenue

•

$0.08 GAAP EPS, up 58% Yr./Yr.

•

$0.15 non-GAAP EPS, up 24% Yr./Yr.

•

64.8% non-GAAP gross margin, up 140

basis points Yr./Yr.

•

18.6% non-GAAP operating margin, up 60

basis points Yr./Yr.

•

$140M operating cash flow; $50M debt

reduction and $25M share repurchase in Q2

•

>100,000 Brocade VDX

ports now installed

at 550 customers globally

•

Highly successful launch of Brocade ICX/

HyperEdge

technology for the campus LAN

•

23% of Director/Switch revenue from 16

Gbps

Fibre

Channel products which helped

drive market share gains

•

Strong

#2 market share position in 100 GbE

•

Service Provider business up 18% Yr./Yr.

Page 7 of 35

Brocade Q2 FY 2012 Earnings

5/17/2012

©

2012 Brocade Communications Systems, Inc.

(continued from previous page)

We

have

also

been

aggressively

reducing

our

term

loan

and

opportunistically

repurchasing

shares,

which

returns

cash

to

our

shareholders.

The

Board

of

Directors

has

recently

increased

our

authorization

for

our

stock

repurchase

plan,

which

was

originally

approved

in

2004.

To

date

we

repurchased

more

than

$650

million,

or

108

million

shares,

and

have

approximately

$124

million

dollars

remaining

under

the

plan.

The

refreshed

plan

increases

our

authorization

by

another

$500

million

dollars

to

approximately

$624

million

dollars.

To

fund

the

updated

program,

we

plan

to

utilize

cash

from

operations

and

we

may

consider

monetizing

our

San

Jose

campus

depending

on

market

conditions.

On

to

the

quarter,

one

of

the

highlights

in

Q2

was

the

strength

of

our

Storage

business,

which

generated

$400

million

in

total

revenue,

representing

a

3%

increase

Yr./Yr.

in

what

is

typically

a

seasonally

soft

quarter.

A

key

driver

was

our

16

Gbps

SAN

portfolio,

which

accounted

for

23%

of

Director

and

Switch

Storage

product

sales

in

Q2

and

helped

us

gain

market

share.

In

our

Ethernet

business,

we

generated

revenue

of

$143

million

in

Q2,

down

10%

Yr./Yr.,

due

in

part

to

softness

in

Federal

sales

and

lower

average

selling

prices

driven

by

product

mix,

competitive

pricing

pressures,

as

well

as

the

transition

to

a

two-tier

distribution

model.

The

transition

in

our

go-to-market

model

has

also

impacted

sales

execution

in

the

short

term.

Our

Ethernet

business

quarter-over-quarter

benefitted

from

11%

growth

in

the

Enterprise

business,

but

was

offset

by

smaller

router

orders

from

our

Service

Provider

customers

after

a

record

Q1.

Despite

the

challenges

that

exist

in

our

Ethernet

business

and

the

competitive

environment

in

the

market,

we

are

seeing

encouraging

results

and

are

taking

active

steps

that

position

us

well

for

near-term

and

longer-term

success.

These

include:

•

Accelerating

customer

adoption

of

our

Ethernet

fabrics.

We

exited

Q2

with

a

global

installed

base

of

more

than

550

Brocade

VDX

customers

that

have

deployed

more

than

100,000

ports

to

date;

•

Expansion

in

our

100

GbE

(Gigabit

Ethernet)

routing

business,

a

segment

where

we

now

hold

the

No.

2

market

share

position

according

to

the

Dell’Oro

Group;

•

Strength

in

our

Service

Provider

business,

which

is

growing

18%

year-over-year

as

we

continue

to

expand

and

diversify

our

customer

base;

and

•

Execution

of

important

initiatives

in

our

channel,

campus

LAN,

and

Ethernet

fabric

businesses

including

two

executive

appointments,

which

I’ll

cover

in

greater

detail

later.

In

addition,

the

feedback

from

recent

meetings

we’ve

had

with

hundreds

of

partners

and

customers

affirms

that

our

business

and

innovation

strategies

for

the

Ethernet

market

are

on

the

right

track.

During

the

last

few

months,

Brocade

hosted

several

successful

Partner

Summits

and

Customer

Forums

in

APAC,

EMEA

and

the

Americas,

which

helped

us

gauge

the

effectiveness

of

our

go-to-market

strategy.

We

are

excited

about

the

interest

we

have

received

and,

through

this

outreach,

we

are

consistently

hearing

that

our

channel

programs

and

our

technology

portfolio

differentiate

Brocade

in

a

positive

way.

New Regional Customer Briefing Centers

Drives faster sales cycle

EMEA AND APAC BRIEFING CENTER OPENINGS

EMEA AND APAC BRIEFING CENTER OPENINGS

Page 8 of 35

Brocade Q2 FY 2012 Earnings

5/17/2012

©

2012 Brocade Communications Systems, Inc.

In Q2, we also opened two new state-of-the-art regional briefing centers in Singapore and in the United Kingdom to better serve our

customers and partners and to help accelerate the sales cycle in

those regions. These facilities complement the capabilities of our

executive briefing center in San Jose which has a track record of helping us win new accounts and close competitive bids. I expect the

same level of success in these new regional briefing centers, and I am pleased to be able to offer additional localized showcases for

our innovation.

Executing on FY12 Playbook

1.

Differentiate Through Innovation

2.

Grow Top Line Profitably

3.

Execute on 2011 Investments

4.

Increase Shareholder Value

5.

Be an Employer of Choice

Page 9 of 35

Brocade Q2 FY 2012 Earnings

5/17/2012

©

2012 Brocade Communications Systems, Inc.

I am pleased with our ability to execute on our FY12 Playbook and I believe that we are now in a better position to drive both revenue

growth and profit expansion. Our strategic initiatives will help

drive innovation, leverage our investments, and maintain a high-level of

focus through the remainder of FY12 with our constant goal of increasing shareholder value.

Ethernet Fabric

Strength of Innovation Portfolio

Platforms to grow revenue profitably

100 GbE

Campus LAN

16 Gbps SAN

Software-Defined

Networking

Page 10 of 35

Brocade Q2 FY 2012 Earnings

5/17/2012

©

2012 Brocade Communications Systems, Inc.

At the heart of our strategy is a commitment to innovation, which is key for any technology leader. By leveraging our previous

product and technology investments, Brocade is now positioned favorably to compete in both established markets such as campus

LAN and storage networking, as well as emerging, high-growth markets such as Ethernet fabrics, 100 GbE routing, and software-

defined networking. We are now shipping many innovative, highly differentiated products to customers worldwide in each of these

technology markets and we expect these products to help drive revenue growth and margin expansion going forward. Customers

are deploying our networking solutions into production environments to address important IT imperatives, including cloud

computing, highly scalable server virtualization, consumerization of IT through BYOD, Big Data, and business-class video

communications. I’ll now cover the Q2 highlights by segment in greater detail.

Campus LAN Highlights

Page 11 of 35

Brocade Q2 FY 2012 Earnings

5/17/2012

©

2012 Brocade Communications Systems, Inc.

An important part of our long-term growth strategy is focused on the $13 billion campus LAN market. To be successful in this highly

competitive market over the long term, Brocade needs a simple, high-availability, cost-effective, and complete product portfolio as

well as a strong channel presence with a focused go-to-market plan to deliver these solutions to customers. Over the past 24 months

we have been building both a compelling product portfolio for the campus LAN and a robust two-tier distribution channel to extend

our reach into the enterprise. The road has not been without its

bumps, but in Q2 we made significant strides and announcements to

position us for growth in this market going forward.

First, with the launch of “The Effortless Network”

vision and product portfolio in Q2, Brocade has strengthened its ability to compete

in the campus LAN market with differentiated products and technology. The foundation of The Effortless Network vision is a complete

access layer campus portfolio, which now includes the new Brocade ICX 6430/6450 switches. These switches fill a gap in Brocade’s

campus product portfolio and are designed for the entry-level switch market. Brocade’s refreshed campus switch portfolio is purpose-

built to be delivered through the channel and will help expand margins for Brocade while giving customers a cost-effective solution.

But the true differentiator of The Effortless Network vision is Brocade’s HyperEdge™

technology, which is designed to deliver new

levels of automation and simplification that offer significant cost savings and investment protection. We announced

The Effortless Network vision as part of a global virtual launch

that exceeded our target goals for audience participation and has

generated strong customer demand for our new Brocade ICX portfolio.

Channel Development

New leadership and programs to drive profitability

Q2 Channel Highlights

•

Hosted Partner Summits in EMEA,

APAC, and Americas

•

Successfully launched The Effortless

Network campus LAN portfolio

•

Enhanced Alliance Partner Network for

campus LAN

•

Delivered campus networking solutions

with Microsoft

Regan McGrath

VP OF GLOBAL CHANNEL SALES

AND MARKETING

•

25 years of IT industry

experience

•Last led Americas Sales,

Brocade’s largest

geography

•Will oversee both

worldwide channel sales

and marketing to drive

increased levels of

integration

25 years of IT industry

Last led Americas Sales,

Brocade’s largest

geography

Will oversee both

worldwide channel sales

and marketing to drive

increased levels of

integration

experience

Page 12 of 35

Brocade Q2 FY 2012 Earnings

5/17/2012

©

2012 Brocade Communications Systems, Inc.

Second, we executed a number of strategic initiatives in our channel business to better align our sales and marketing efforts. A

key

change that we made was the appointment of Regan McGrath as VP of Global Channel Sales and Marketing. Regan brings more than

25 years of IT industry experience, most recently as VP of Americas Sales at Brocade where he led the largest regional channel sales

team for the company. In this new role, Regan will oversee both channel sales and marketing on a global basis to drive increased

levels of integration between the two disciplines in order to address the unique needs of the channel.

In addition to Regan’s appointment, we introduced a number of enhancements in Q2 to our Alliance Partner Network (APN) designed

specifically to generate new campus LAN business. We believe that these enhancements will allow us to further develop our presence

in this market and fully leverage the competitive benefits of our differentiated technology.

As Brocade remains committed to innovation, we continue to invest in key campus LAN solutions with partners. In Q2, we unveiled an

architectural framework with Microsoft to deliver the network foundation for easy-to-manage and scalable Microsoft Lync

deployments for both data center and campus environments. This architectural framework includes Brocade ICX and VDX switches as

part of the overall solution.

Ethernet Fabrics for Mission-Critical Environments

Q2 customer deployments

Virtualized Data Centers

Virtualized Data Centers

High-end Video Networking

High-end Video Networking

Page 13 of 35

Brocade Q2 FY 2012 Earnings

5/17/2012

©

2012 Brocade Communications Systems, Inc.

Another important part of our long-term strategy in the Ethernet market is growing our presence in the data center. Data center LAN is

a $6 billion market and is undergoing a significant evolution as

companies accelerate their virtualization deployments with an

expected 80% of data traffic being east-west by 2014. Ethernet fabrics are the optimal platform for high-growth virtualization and

cloud businesses and we are progressing well in our goal to maintain thought leadership with our game-changing technology. A year

ago, in the category Brocade helped launch, we had an installed base of just above 100 customers as the market was just beginning

to form. Today, Brocade has deployed Ethernet fabric-enabled products in more than 550 customers worldwide and has shipped

more than 100,000 Brocade VDX ports, many in high-performance, mission-critical environments. As the competition is now trying to

catch up with their own fabric solutions, they are validating the market and technology direction that Brocade has established.

In the Ethernet fabric category, I want to highlight two customer wins that Brocade announced in Q2, namely the deployments at

United Broadcast Facilities and Rushes; both players in the high-end video production and broadcast industries. Each of these

customers requires a network infrastructure capable of moving large amounts of data. They also require a very low-latency

infrastructure that video networking demands. Brocade Ethernet fabrics deliver on both critical requirements. Ethernet fabrics are

also engineered to support large scale server virtualization. Deployments at Watson, Farley and Williams, SunPower, and Government

Employees Health Association (GEHA) are all recent examples of organizations that are implementing Brocade’s innovative Ethernet

fabrics as the foundation for their virtualized data center strategies.

Ethernet Fabric Partner Momentum

Integral component of private cloud and data center hosting solutions

Brocade VDX/VCS

technology in EMC’s

VSPEX converged

infrastructure

solution

Fujitsu launching 

Brocade VDX

switch in cloud

and analytics

solution bundle

HDS launches

new Brocade

VDX embedded

switch for blade

servers

NetApp launches 

Brocade VDX for

its Unified Storage

Architecture

COMPUTE

STORAGE

HYPERVISOR

Page 14 of 35

Brocade Q2 FY 2012 Earnings

5/17/2012

©

2012 Brocade Communications Systems, Inc.

In Q2 Brocade also generated tremendous momentum among key, strategic partners indicating that Ethernet fabrics provide an

essential, core technology in private cloud, data center hosting

solutions. For example, Brocade and EMC announced the inclusion

of

Brocade VDX switches and VCS Fabric technology (along with other

Brocade networking solutions) as part of the EMC VSPEX

reference architectures. These architectures are optimized for EMC’s global reseller network and targeted at small and medium-sized

businesses that are looking to leverage private clouds. Other key partner wins in Q2 included:

•

NetApp

becoming

the

first

to

OEM

Brocade

VDX

switches

as

part

of

its

Unified

Storage

Architecture;

•

The

launch

of

the

new

Ethernet

fabric

embedded

switch

(Brocade

VDX

6746)

for

Hitachi

blade

servers—first

of

its

kind;

•

Fujitsu

making

Brocade

VDX

switches

available

as

part

of

its

Cloud

and

Analytics

solution

bundle.

Q2 Ethernet Fabric Highlights

•

Increased partner ecosystem

•

Grew installed base to more

than 550

•

Shipped more than 100,000

Brocade VDX ports to date

Strategic Investments in Ethernet Fabric Market

Accelerating momentum and market leadership

Phil O’Reilly

VP OF SALES, ETHERNET FABRICS

•20 years of IT and

manufacturing industry

experience

•SVP for the Americas

and US Federal Sales at

Juniper Networks

•Will lead the global effort

to continue increased

Ethernet fabric adoption

and advance Brocade’s

leadership position

20 years of IT and

manufacturing industry

SVP for the Americas

and US Federal Sales at

Juniper Networks

Will lead the global effort

to continue increased

Ethernet fabric adoption

and advance Brocade’s

leadership position

experience

Brocade Q2 FY 2012 Earnings

5/17/2012

©

2012 Brocade Communications Systems, Inc.

Page 15 of 35

We continue to make strategic investments to press our time-to-market advantage and industry leadership in the Ethernet fabric

business.

A

key

part

of

this

strategy

is

the

appointment

of

Phil

O’Reilly

as

VP

of

Sales,

Ethernet

Fabrics.

Phil

has

more

than

20

years

of experience in senior sales and marketing positions across the

networking industry and has been instrumental in building

businesses in the past. Phil will lead a dedicated team to grow our presence in this exciting market. Our objective with this team is to

have a focused effort to win sales opportunities that are becoming more available as customers migrate from traditional data center

networks

to

Ethernet

fabrics.

Along

with

Phil’s

dedicated

team,

we

are

in

a

good

position

for

continued

growth

with

our

industry-

leading portfolio of Ethernet fabric solutions. Later this year we look forward to bring significant advancements to our portfolio that

will offer new features, functionality and greater scalability for virtualized data centers.

100 GbE Momentum

Dell ‘Oro ranks Brocade in No. 2 position for 100 GbE

“Brocade was the only vendor who could

build a bridge towards 100 GbE while

leveraging the existing infrastructure—this

was a key factor in our decision-making

process…

The Brocade MLXe provides the

platform and Brocade has given us a

blueprint for the future.”

DAVID JENT, Associate Vice President of Networks, Indiana University

Monon100 links GigaPoP

with Internet2, a national

research and education network.

Page 16 of 35

Brocade Q2 FY 2012 Earnings

5/17/2012

©

2012 Brocade Communications Systems, Inc.

The third area of focus of our Ethernet strategy is on the $14 billion Service Provider market. We have been successful in growing

our revenue in this customer segment over the past two years by offering high-performance and high-density routing platforms. The

enormous growth of network traffic requires customers to continually adopt higher-performance technologies. Brocade was the first

in the networking industry to introduce a high-density 100 GbE

module in a routing platform, which has been well received by

customers who require the massive scalability that it enables.

The Brocade 100 GbE

deployment at Indiana University as part of its Monon100 network project is a prime example of the benefits

of this technology. We are extremely pleased to help Indiana become the first state in the country to launch a 100 GbE

network

dedicated to research and education. With this high-performance network, Indiana University scientists, medical researchers and

students can now rapidly share and expedite the processing of massive amounts of data created by modern digital instruments,

such as revolutionary DNA sequencers, advanced electron microscopes, and large particle accelerators such as the Large Hadron

Collider at CERN.

SAN Momentum and Adoption

16 Gbps Fibre Channel strategy driving revenue growth and profitability

Expanded 16 Gbps portfolio available

through all major OEMs including these

four 10% customers.

Brocade DCX 8510

Brocade DCX 8510

(4 and 8 slot)

(4 and 8 slot)

Brocade 1860

Brocade 1860

Fabric Adapter

Fabric Adapter

Brocade

Brocade

6505 Switch

6505 Switch

6510 Switch

6510 Switch

Page 17 of 35

Brocade Q2 FY 2012 Earnings

5/17/2012

©

2012 Brocade Communications Systems, Inc.

As I mentioned earlier, our Storage business performed well in Q2. A key driver of this was the strength of 16 Gbps SAN sales,

which accounted for 23% of Director and Switch revenue in the quarter. Our strategy has always been to be first-to-market with

the fastest, most reliable, efficient, and easiest to manage networks. The pace of the current transition highlights the overall

health of the Fibre Channel SAN market, which posted record results in the last calendar quarter of 2011, according to the

Dell’Oro Group.

In Q2, Brocade extended its leadership in the 16 Gbps market by adding the Brocade 6505 entry-level SAN switch to our

portfolio. Brocade has the industry’s most comprehensive 16 Gbps SAN portfolio that includes backbones/directors, switches,

and fabric adapters. As of Q2, all of our major OEMs have made our expanded 16 Gbps switch portfolio generally available to

their customers.

We are confident in the long-term opportunity in SAN and our ability to maintain our leadership position in this market. In our

annual customer survey published last fall, approximately 80% of Brocade customers said they expect to maintain or increase

Fibre Channel spending over the next three years and we continue to be in the best position to meet that critical demand.

Software-Defined Networking

•

Separate control and data plane

•

The evolving network:

•

More programmatic through OpenFlow

•

Faster adapting to meet business needs

•

Reduced costs and power consumption

•

Powerful abstractions and open API

•

Hide physical infrastructure complexity

•

Spawn service and application innovation

•

Enable partnership of technology providers

A new networking paradigm

Services (Applications)

Network OS/Controller

Page 18 of 35

Brocade Q2 FY 2012 Earnings

5/17/2012

©

2012 Brocade Communications Systems, Inc.

As I mentioned, our goal is to focus our investments in high-growth target markets that will result in revenue growth and increased

profitability. An example of a new market that is just emerging is software-defined networking, or SDN, which we believe has the

potential to transform networking infrastructure into a platform

for innovation, enabling our customers to deliver new services and

applications faster and at greater scale.

Brocade is a pioneer and active participant in the SDN arena and

has demonstrated its commitment to build SDN-ready solutions

with its support for OpenFlow

and OpenStack

standards. Recently, Brocade participated in a number of proof-of-concept

interoperability tests at major industry forums including the Open Networking Summit and Interop

2012. We are preparing to unveil

our complete SDN strategy in the coming weeks, including an update on our SDN-ready product roadmap.

•

Non-GAAP EPS up 24% Yr./Yr.

•

Strong Storage quarter led by 16 Gbps adoption

•

Ethernet business leadership in Ethernet fabrics,

100 GbE routing, and innovative Brocade

HyperEdge technology

•

Well positioned for continued growth of revenue

and profitability

Summary

Page 19 of 35

Brocade Q2 FY 2012 Earnings

5/17/2012

©

2012 Brocade Communications Systems, Inc.

In summary, we are pleased with our Q2 performance that was at the high-end of our revenue guidance and exceeded our

expectation for EPS. Q2 was led by a strong performance in our Storage business that is indicative of good customer traction for

Fibre Channel and our 16 Gbps portfolio.

While the overall Ethernet business environment remained challenging, we did deliver promising results in key product areas

including Ethernet fabric adoption, 100 GbE momentum, and customer demand for the new Brocade ICX campus LAN switches

following the launch of our cutting-edge vision for The Effortless Network. We have also taken important steps to help grow the

Ethernet business through focused initiatives in the channel and

in our Ethernet fabric business.

I believe we are executing well to our FY 12 Playbook fundamentals. Our goal for the remainder of FY 12 is to continue to grow

revenue and to increase profits faster than revenue as part of our on-going efforts to drive shareholder value.

Q2 FY 2012 Financials

Dan Fairfax, CFO

Page 20 of 35

Brocade Q2 FY 2012 Earnings

5/17/2012

©

2012 Brocade Communications Systems, Inc.

Prepared comments provided by Dan Fairfax, CFO

Key Financial Metrics

* Non-GAAP, please see GAAP reconciliation

Q2 11

Q3 11

Q4 11

Q1 12

Q2 12

Q2 12

Qtr./Qtr.

Q2 12

Yr./Yr.

Revenue

$548M

$503M

$550M

$561M

$543M

-3%

-1%

Storage product revenue

$329M

$275M

$303M

$353M

$343M

-3%

+4%

Ethernet product revenue

$129M

$139M

$158M

$123M

$113M

-8%

-12%

Global Services revenue

$91M

$89M

$89M

$84M

$87M

+4%

-4%

Non-GAAP gross margin*

63.4%

61.8%

62.9%

64.8%

64.8%

+0.0 pts

+1.4 pts

Non-GAAP operating margin*

18.0%

14.0%

21.0%

21.5%

18.6%

-2.9 pts

+0.6 pts

GAAP EPS—diluted

$0.05

$0.00

-$0.01

$0.12

$0.08

-34%

+58%

Non-GAAP EPS—diluted*

$0.12

$0.09

$0.16

$0.20

$0.15

-24%

+24%

Operating cash flow

$114M

$11M

$206M

$127M

$140M

+10%

+23%

Net debt

$394M

$374M

$382M

$241M

$131M

-46%

-67%

Brocade Q2 FY 2012 Earnings

5/17/2012

©

2012 Brocade Communications Systems, Inc.

Page 21 of 35

In Q2 12 Brocade generated revenue of $543.4M, down slightly compared to the Q2 11 results that included $5.1M of SBS

revenue, and down 3% Qtr./Qtr. in a seasonally soft quarter. Storage product revenue grew 4% Yr./Yr. driven by growth of our

Director products and the continued ramp of our industry-leading 16 Gbps portfolio. Storage product revenue was down 3% Qtr./Qtr.

in our seasonally softer Q2 and represented 63% of total revenue

in the quarter, unchanged compared to Q1 and higher than the

60% reported in Q2 11.

Q2 Ethernet product revenue was down 8% Qtr./Qtr. and down 12% Yr./Yr. Our Ethernet business continued to be impacted by

seasonally slower Federal spending and the competitive Enterprise environment. Service Provider revenue was up 18% Yr./Yr. but

lower sequentially. Ethernet product revenue in Q2 represented 21% of total revenue, down slightly from 22% in Q1 12 and down

from 23% in Q2 11.

Global Services revenue was $87M in Q2, up 4% Qtr./Qtr. and down

4% Yr./Yr. The year-over-year decline was primarily due to lower

professional services revenue as a result of the sale of our SBS

consulting business at the end of FY11. Our Global Services revenue

represented approximately 16% of total Q2 revenue, up slightly from Q1 and down slightly from the previous year.

Non-GAAP gross margin was 64.8% in Q2, up 140 basis points from Q2 11 and unchanged compared to Q1. The higher-than-

expected gross margin was driven by a favorable product mix and improved inventory management. Non-GAAP operating margin was

18.6% in Q2, 160 basis points above the high-end of the guidance we provided for the quarter.

Q2 GAAP EPS on a diluted basis was $0.08 and grew 58% from Q2 11. Non-GAAP EPS was $0.15 for the quarter and grew 24% from

Q2 11. The effective GAAP tax benefit was 1.8% and the effective

non-GAAP tax rate was 17.8% for the quarter. The lower-than-

expected non-GAAP tax rate was due to the release of tax reserves following the conclusion of a recent audit by the Internal Revenue

Service. Excluding the benefit of the tax reserve release, non-GAAP EPS would have been $0.13 in Q2.

During Q2 we generated $140M in operating cash flow and paid down $50M on our term loan. Net debt was $131M exiting the

quarter, down from $241M at the end of Q1. Weighted average diluted shares outstanding were 477M in Q2, up slightly as expected

from 469M in Q1, and reflect $25M or 4.4M in share repurchases during the quarter which helped offset the share increase due to

the exercise of options and other employee stock programs. So far in Q3, we have repurchased more than $30M shares in the open

market, which brings the total to more than $260M in share repurchases since Q3 11.

Total Storage Business Revenue

$389.4

$334.3

$361.3

Revenue Segment Split

$406.4

Product growth of 3% year-over-year led by 16 Gbps ramp

$389.4

$334.3

$361.3

Product and Global Services Split

$406.4

$400.1

$400.1

$136.5

$115.4

$127.9

$144.6

$152.3

$143.9

$115.8

$127.6

$155.5

$144.5

$48.4

$44.2

$47.4

$52.9

$46.1

$60.6

$58.9

$58.4

$53.5

$57.2

Q2 11

Q3 11

Q4 11

Q1 12

Q2 12

Global

Services

Server

Switch

Director

$328.8

$275.4

$302.9

$352.9

$342.9

$60.6

$58.9

$58.4

$53.5

$57.2

Q2 11

Q3 11

Q4 11

Q1 12

Q2 12

Global

Services

Products

Brocade Q2 FY 2012 Earnings

5/17/2012

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2012 Brocade Communications Systems, Inc.

Page 22 of 35

Turning to our Storage business, including hardware and Storage-based support and services, Q2 revenue was $400.1M, up 3% from

Q2 11 and down 2% sequentially.

Strong demand for Storage products continues to be driven by the

ramp of 16 Gbps products, data center virtualization, and solid

business results for many of our OEM partners. Storage product revenue was $342.9M in the quarter, up 4% Yr./Yr and down 3%

sequentially from our record Q1 revenue. Demand for our 16 Gbps portfolio of products continues to grow Qtr./Qtr. with

approximately 23% of Director and Switch revenue coming from our

new 16 Gbps products.

We experienced very good revenue growth with our Director products in Q2 with 12% growth Yr./Yr. and 5% growth Qtr./Qtr. in a

seasonally soft quarter. Switch revenue was down 7% Qtr./Qtr. and flat Yr./Yr. As Mike mentioned, we launched our entry-level 16

Gbps switch with our major OEMs during the quarter and we expect

16 Gbps revenue growth to accelerate for our switches during the

second half of the year.

Our Server product group, including embedded switches and server

adapter products (HBAs and Mezzanine Cards), posted revenue

of $46.1M, down 5% Yr./Yr. and down 13% from a very strong Q1. Embedded switch revenue was down 6% Yr./Yr. driven by lower

server sales at our OEM partners, while our server adapter product revenue was up 5% Yr./Yr.

We have begun launching our 16 Gbps

embedded switch products in Q3 which will help to drive growth in this product group going forward.

Storage-based support and services revenue was $57.2M in the quarter, down 6% Yr./Yr. driven primarily by the sale of our SBS

services subsidiary in Q4 11, and up 7% Qtr./Qtr. resulting from

higher maintenance, product repair and professional services

revenue.

Total Ethernet Business Revenue

$158.9

$168.5

$189.2

$158.9

$168.5

$189.2

Customer Segment Split

$154.3

$154.3

Product and Global Services Split

$143.4

$143.4

$128.7

$138.9

$158.1

$123.4

$113.2

$30.2

$29.6

$31.1

$30.8

$30.2

Q2 11

Q3 11

Q4 11

Q1 12

Q2 12

Services

Products

Global

$97.9

$90.6

$108.1

$69.2

$76.7

$42.5

$53.4

$47.2

$64.5

$50.3

$18.5

$24.5

$33.9

$20.5

$16.4

Q2 11

Q3 11

Q4 11

Q1 12

Q2 12

Federal

Service

Provider

Enterprise

Brocade Q2 FY 2012 Earnings

5/17/2012

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2012 Brocade Communications Systems, Inc.

Page 23 of 35

Moving on to our Ethernet business, including hardware and Ethernet-based support and services, Q2 revenue was $143.4M, down

10% Yr./Yr. and down 7% sequentially.

As we look at the Q2 Ethernet customer segment split, including products and services, the Service Provider customer segment

generated $50.3M in revenue, up 18% Yr./Yr. and down sequentially due in part to fewer large customer project deployments and

softer Service Provider spending. Our Federal Ethernet customer business generated $16.4M in revenue which was down 20%

sequentially and down 12% compared to Q2 11 in a difficult Federal spending environment. The Enterprise customer business

declined 22% year-over-year due in part to our shift in sales model to primarily a two-tiered distribution channel which has slowed

closure rates and negatively impacted average selling prices. Average selling prices to our Enterprise customers were also negatively

impacted by a mix shift to lower priced campus LAN products. We did see improvement in our Enterprise business sequentially as

revenue grew 11% Qtr./Qtr. Going forward, we expect this business to improve following the launch of the new Brocade ICX campus

products and as we execute better with our channel partners.

From a geographic viewpoint, Q2 Ethernet revenue was up in Japan

year-over-year, while the Americas and the other international

geographies were all lower compared to Q2 11.

We continued to see good progress with our Ethernet fabric-enabled products, including our award-winning Brocade VDX switches. In

Q2 we saw sequential revenue growth of 9% for Ethernet fabric-enabled products which reached approximately $8M. Through the

first half of 2012, we have achieved $15M in revenue, which is nearly equal to the Ethernet fabric revenue for the full year 2011. We

have shipped over 100,000 ports in this product segment to over 550 customers to date including some large new customers Mike

mentioned earlier.

Revenue: Routes to Market,

10% Customers, Geographic Splits

Routes to Market

Geographic Split

Brocade Q2 FY 2012 Earnings

5/17/2012

©

2012 Brocade Communications Systems, Inc.

Page 24 of 35

53%

43%

41%

48%

58%

11%

18%

21%

21%

12%

36%

39%

38%

31%

30%

Q2 11

Q3 11

Q4 11

Q1 12

Q2 12

Channel/Direct

Other OEM

10% Customers

38%

39%

38%

39%

35%

62%

61%

62%

61%

65%

Q2 11

Q3 11

Q4 11

Q1 12

Q2 12

Domestic

International

In Q2, four of our customers, EMC, HP, IBM, and HDS each contributed at least 10% of the total company revenue. These 10%

customers collectively contributed 58% of revenue in Q2, up from

48% in Q1, when HDS was not a 10% customer, and up from 53%

in Q2 11. Other OEMs as a group represented 12% of revenue in Q2, up slightly from 11% in Q2 11 and down from 21% in Q1 when

HDS was not a 10% customer. Channel and Direct routes to market contributed 30% of revenue in Q2, a slight decrease from 31%

in Q1 and down from 36% in Q2 11. The increase in the percentage

of revenue going through OEM routes to market was driven by

the shift in revenue mix to more Storage revenue which is predominately shipped to OEM partners.

The mix of business based on ship-to location was 65% domestic and 35% international in the quarter, reflecting a shift in mix to

more domestic revenue from 61% in Q1. In Q2 11 the revenue mix was 62% domestic and 38% international. Since some of our

OEMs take delivery of our products domestically and then ship internationally to their end-users, the percentage of international

revenue based on end-user location would be higher.

Revenue and Non-GAAP Gross Margin*

* Non-GAAP, please see GAAP reconciliation

Revenue Split by Product/Services

$548

$503

$550

$561

Non-GAAP Gross Margin*by Product/Services

$543

Brocade Q2 FY 2012 Earnings

5/17/2012

©

2012 Brocade Communications Systems, Inc.

Page 25 of 35

$457

$414

$461

$477

$456

$91

$89

$89

$84

$87

Q2 11

Q3 11

Q4 11

Q1 12

Q2 12

Global

Services

Product

63.4%

61.8%

62.9%

64.8%

64.8%

66.2%

64.5%

64.7%

66.6%

66.9%

49.0%

49.5%

53.4%

54.5%

54.3%

Q2 11

Q3 11

Q4 11

Q1 12

Q2 12

Total

Product

Global Services

Q2 non-GAAP Company gross margin of 64.8% was above the guidance range of 62.0% to 63.0% we provided for the quarter.

Gross margin improved 140 basis points year-over-year driven by favorable product mix and lower charges for inventory reserves.

Gross margin was unchanged from Q1.

Q2 product non-GAAP gross margin was 66.9%, higher than our 63% to 66% target range, and up from 66.6% in Q1 and 66.2%

in Q2 11 due primarily to product mix. Q2 Storage non-GAAP gross margin was in the mid-70’s, unchanged compared to Q1, but

higher compared to Q2 11, driven by year-over-year revenue growth and a favorable product mix to Directors and 16 Gbps

products. Q2 Ethernet non-GAAP gross margin was in the mid-40’s, unchanged compared to Q1. Ethernet gross margins were

lower year-over-year due to unfavorable overhead absorption on lower revenue and lower ASPs due to the unfavorable product

mix and the shift in sales to the channel.

Global Services non-GAAP gross margin was 54.3% in Q2, up significantly compared to the 49.0% reported in Q2 11 driven

primarily from the sale of SBS, and slightly down quarter-over-quarter. Global Services gross margin in the quarter was slightly

above our target model of 51% to 54%.

Operating Performance vs. Target Model (FY 12)

* Non-GAAP, please see GAAP reconciliation

Non-GAAP Gross Margin*

Non-GAAP Operating Expenses*

as a Percentage of Revenues

FY 12 target model: 44–46%

FY 12 target model: 61–63%

FY 12 target model: 16–18%

Outperformed target model in both profitability measurements

Non-GAAP Operating Margin*

Brocade Q2 FY 2012 Earnings

5/17/2012

©

2012 Brocade Communications Systems, Inc.

Page 26 of 35

63.4%

61.8%

62.9%

64.8%

64.8%

45.4%

47.8%

41.8%

43.3%

46.2%

Q2 11

Q3 11

Q4 11

Q1 12

Q2 12

Q2 11

Q3 11

Q4 11

Q1 12

Q2 12

18.0%

14.0%

21.0%

21.5%

18.6%

Q2 11

Q3 11

Q4 11

Q1 12

Q2 12

Non-GAAP gross margins were 64.8% for Q2, above the high-end of our target model range of 61% to 63% for FY12.

On a non-GAAP basis, total operating expenses were 46.2% of revenues in Q2, at the high-end of our target model of 44% to 46% for

FY12 and higher compared to 45.4% reported in Q2 11. Operating expenses on a dollar basis increased from Q1 driven by higher

engineering and prototype spending, launch costs for new product

offerings, increased litigation costs and normal seasonal

spending increases in Q2. Ending headcount was 4,600 in Q2, up slightly from the prior quarter.

Non-GAAP operating margin was 18.6% in Q2, up 60 basis points compared to Q2 11. The operating margin was above the high-end

of our expected range of 15.5% to 17.0% for the quarter.

Balance Sheet and Cash Flow Highlights

As of April 28, 2012

* Adjusted EBITDA is as defined in the term debt credit agreement

Q2 11

Q3 11

Q4 11

Q1 12

Q2 12

Q2 12

Qtr./Qtr.

Q2 12

Yr./Yr.

Cash from operations

$114M

$11M

$206M

$127M

$140M

+10%

+23%

Capital expenditures

$27M

$26M

$20M

$18M

$21M

+17%

-22%

Free cash flow

$87M

($15M)

$186M

$109M

$119M

+9%

+37%

Debt payments

$59M

$12M

$50M

$70M

$50M

-29%

-15%

Cash, equivalents, and

short-term investments

$466M

$473M

$415M

$485M

$545M

+12%

+17%

Senior secured debt

$860M

$847M

$797M

$726M

$676M

-7%

-21%

Adjusted EBITDA*

$121M

$91M

$138M

$140M

$123M

-12%

+2%

Stock repurchase

$0

$10M

$201M

$0

$25M

–

–

Senior secured leverage ratio

1.86x

1.87x

1.72x

1.48x

1.37x

-7%

-26%

Covenant

2.5x

2.5x

2.5x

2.25x

2.25x

–

–

Fixed charge coverage ratio

2.26x

2.29x

2.63x

3.05x

3.48x

+14%

+54%

Covenant

1.5x

1.5x

1.5x

1.75x

1.75x

–

–

Brocade Q2 FY 2012 Earnings

5/17/2012

©

2012 Brocade Communications Systems, Inc.

Page 27 of 35

Cash generated from operations was $140M in Q2, up 23% Yr./Yr. and up 10% sequentially. We continued to see favorable

shipment linearity in the quarter which resulted in DSOs of 36 days, unchanged from Q1. Total capital expenditures in the

quarter were $21M.

Cash, equivalents, and short-term investments were $545M, up $60M from Q1 and up $79M from Q2 11. With the $50M

principal reduction of our term loan in Q2, our remaining term loan principal is now $70M exiting the quarter. As I mentioned

earlier, we repurchased $25M of common stock during Q2 and have already purchased more than $30M in additional stock in

Q3. Our Board recently authorized an increase in the balance of the authorized stock repurchase program of $500M. Brocade

expects to continue to be active on a regular basis with share repurchases.

Over the past 12 months, we have repurchased more than 52 million shares and have reduced our interest expense by more

than 33% by refinancing and paying down our term loan.

Adjusted EBITDA in the quarter was $123M, which was up compared to Q2 11 and down $17M Qtr/Qtr. The Senior Secured

Leverage Ratio was 1.37x and the Fixed Charge Coverage Ratio was 3.48x. Both ratios have improved significantly over the past

year and have comfortable headroom to the covenant requirements of our term credit agreement.

Q3 2012 Planning Assumptions and Outlook

IT market conditions

•

Uncertainty around macro economic conditions,

especially in EMEA

•

Individual customer segments, such as Federal,

are more uncertain than others

Brocade business

•

Expect Storage revenue growth to be higher

than TAM growth of 5% for FY12

•

Expect sequential growth in Ethernet

Other P&L items

•

Structural tax rate will be 27% to 29% for 2H12

OEM inventories

•

Expected range of one to two weeks of supply

EPS

•

Continue share repurchases

* Non-GAAP, please see GAAP reconciliation

Outlook

Q3 2012

Revenue range (4–8% Yr./Yr. growth)

$525M–$545M

Non-GAAP gross margin*

63.3%–63.8%

Non-GAAP operating expenses*

45.8%–47.3%

Non-GAAP operating margin*

16.0%–18.0%

Other income/other expense

~($13M)

Non-GAAP tax rate*

27%–29%

Fully diluted shares outstanding

470M–475M

Non-GAAP EPS* (22–44% Yr./Yr. growth)

$0.11–$0.13

Operating cash flow

$55M–$75M

Capital expenditures

~$20M

Free cash flow

$35M–$55M

Planning Assumptions

Brocade Q2 FY 2012 Earnings

5/17/2012

©

2012 Brocade Communications Systems, Inc.

Page 28 of 35

Looking forward to Q3 12, we contemplated the following in setting our outlook:

•

The current macro environment and economy continue to show uncertainty, especially within the Eurozone countries.

•

The overall IT spending is growing but individual customer segments, such as Federal, may experience more uncertainty than

others.

•

We continued to see encouraging demand trends for our Storage products in Q2 and expect the market to grow at about 5% this

year. We expect our growth rate for FY12 to be higher than the industry growth rate based on the performance of the first half

and our Q3 guidance.

•

We expect to see sequential growth in the Ethernet business in Q3.

•

We expect to hold operating expense dollars relatively flat for the second half of the year.

•

At the end of Q2, OEM inventory was a little less than one and one-half weeks based on Storage business revenue and we

expect OEMs to hold between one week and two weeks of inventory going forward. OEM inventory levels have and may change

due to seasonally stronger and weaker quarters of the year.

•

From a tax rate perspective, we are planning at a structural rate of 27% to 29% non-GAAP for the rest of the year. Discrete

events, like what we experienced in Q2, can impact our tax rate from time to time. However we do not provide guidance on such

events due to the inherent uncertainty of their timing.

•

We plan to continue our share repurchases and the guidance reflects the share repurchases already completed in Q3.

•

Finally, based on our outlook, we expect to grow overall revenue

by 4% to 8% Yr./Yr. and EPS by 22% to 44% Yr./Yr. in Q3, in

accordance to our stated objective to grow EPS faster than revenue.

Prepared Comments and Live Conference Call

May 17, 2012, 2:30pm

Jason Nolet

VP of Data Center

Networking

Dan Fairfax

CFO

John McHugh

CMO & VP of

Marketing

Ian Whiting

SVP of WW Sales

Mike Klayko

CEO

Dave Stevens

CTO & VP of

Corporate

Development

Brocade Q2 FY 2012 Earnings

5/17/2012

©

2012 Brocade Communications Systems, Inc.

Page 29 of 35

Prepared comments provided by Rob Eggers, Investor Relations

That

concludes

Brocade’s

prepared

comments.

At

2:30

p.m.

Pacific

Time

on

May

17

Brocade

will

host

a

webcast

conference

call

at

www.brcd.com.

Thank you for your interest in Brocade.

Appendix

Brocade Q2 FY 2012 Earnings

5/17/2012

©

2012 Brocade Communications Systems, Inc.

Page 30 of 35

Net Debt: Defined as Total Debt Less Total Cash

Decreased by over $940M from Q1 09 to Q2 12

Approximately 88%

reduction in 3+ years

$1.073

$713

$503

$131

Q1 09

Q1 10

Q1 11

Q2 12

Brocade Q2 FY 2012 Earnings

5/17/2012

©

2012 Brocade Communications Systems, Inc.

Page 31 of 35

Q2 Cash and Debt Metrics

* Adjusted EBITDA is as defined in the term debt credit agreement                   ** Cash, equivalents and short-term investments

Adjusted EBITDA* Performance

(In Millions)

Reducing Debt Position

(In Millions)

Within Debt Covenant

Cash Balance**

(In Millions)

$860

$847

$797

$726

$676

$252

$240

$190

$120

$70

Q2 11

Q3 11

Q4 11

Q1 12

Q2 12

Total Secured Debt

Term Debt

$466

$473

$415

$485

$545

Q2 11

Q3 11

Q4 11

Q1 12

Q2 12

Ending Cash Balance

1.86

1.87

1.72

1.48

1.37

2.50

2.50

2.50

2.25

2.25

Q2 11

Q3 11

Q4 11

Q1 12

Q2 12

Senior

Debt

Leverage

Ratio

Covenant

$121

$91

$138

$140

$123

$463

$452

$464

$490

$492

Q2 11

Q3 11

Q4 11

Q1 12

Q2 12

Quarter

Trailing

12

Months

Brocade Q2 FY 2012 Earnings

5/17/2012

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2012 Brocade Communications Systems, Inc.

Page 32 of 35

Adjusted EBITDA and Sr. Secured Leverage Ratio

As defined in the term credit agreement

Consolidated Senior Secured Leverage Ratio

Q2 FY 11

Q3 FY 11

Q4 FY 11

Q1 FY 12

Q2 FY 12

$ Thousand

Actual

Actual

Actual

Actual

Actual

Consolidated Net Income (Loss)

$26,079

$1,937

($4,324)

$58,584

$39,296

Plus

(i) Consolidated Interest Charges

$20,745

$42,066

$13,483

$13,047

$12,729

(ii) Provision for Federal, state, local and foreign income taxes payable

$0

$0

$45,446

$0

$0

(iii) Depreciation and amortization expense

$51,712

$51,220

$50,898

$50,105

$47,419

(iv) Fees, costs and expenses incurred on or prior to the Acquisition Closing Date in connection with the

Acquisition and the financing thereof

$0

$0

$0

$0

$0

(v) Any cash restructuring charges and integration costs in connection with the Acquisition, in an aggregate

amount not to exceed $75,000,000

$0

$0

$0

$0

$0

(vi) Non-cash restructuring charges incurred in connection with the Transaction, all as approved by

Arrangers

$779

$687

$580

$483

$440

(vii) Other non-recurring expenses reducing such Consolidated Net Income which do not represent a cash

item in such period or any future period (in each case of or by the Borrower and its Subsidiaries for such

Measurement Period)

$1,735

$136

$13,035

$0

$0

(viii) Any non-cash charges for stock compensation expense in compliance with FAS 123R and

amortization

of

the

fair

value

of

unvested

options

under

the

Acquired

Business’

employee

stock

option

plan assumed by the Borrower

$22,530

$20,969

$19,670

$21,819

$23,858

(ix)

Legal fees and expenses relating to the Borrower’s indemnification obligations for the benefit of its

former officers and directors in connection with its historical stock option litigation

$0

$0

$0

$0

$0

Minus

(i)

Federal, state, local and foreign income tax credits

$612

$10,300

$0

$3,207

$708

(ii)

All non-cash items increasing Consolidated Net Income (in each case of or by the Borrower and its

Subsidiaries for such Measurement Period)

$1,992

$15,408

$1,024

$840

$326

Consolidated EBITDA

$120,976

$91,307

$137,764

$139,991

$122,708

4 Quarter Trailing Consolidated EBITDA

$463,371

$452,483

$464,266

$490,038

$491,770

Consolidated Senior Secured Debt

$859,983

$847,031

$796,782

$726,325

$675,863

Consolidated Senior Secured Leverage Ratio (x)

1.86

1.87

1.72

1.48

1.37

Brocade Q2 FY 2012 Earnings

5/17/2012

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2012 Brocade Communications Systems, Inc.

Page 33 of 35

Segment Revenue Detail

Product and Customer segment breakdown

Q2 11

Q3 11

Q4 11

Q1 12

Q2 12

SAN Product Breakdown

Directors

41%

42%

42%

41%

45%

Switches

44%

42%

42%

44%

42%

Server

15%

16%

16%

15%

13%

Ethernet Product Breakdown

Chassis

57%

52%

50%

57%

52%

Stackables

43%

48%

50%

43%

48%

Brocade Q2 FY 2012 Earnings

5/17/2012

©

2012 Brocade Communications Systems, Inc.

Page 34 of 35

Thank You

www.brcd.com

Brocade Q2 FY 2012 Earnings

5/17/2012

©

2012 Brocade Communications Systems, Inc.

Page 35 of 35