8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): February 17, 2016

Brocade Communications Systems, Inc.

(Exact name of registrant as specified in its charter)

Delaware	000-25601	77-0409517
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)

130 Holger Way

San Jose, CA 95134-1376

(Address, including zip code, of principal executive offices)

(408) 333-8000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On February 17, 2016, Brocade Communications Systems, Inc. (the “Company”) issued a press release regarding financial results for the first quarter ended January 30, 2016. The Company also posted on its website (www.brcd.com) slides with accompanying prepared remarks regarding such financial results and forward-looking statements, including statements relating to the Company’s estimated financial results of the second quarter of fiscal year 2016. Copies of the press release and slides with accompanying prepared remarks by the Company are attached as Exhibits 99.1 and 99.2, respectively, and the information in Exhibits 99.1 and 99.2 is incorporated herein by reference.

The information in Item 2.02 and Item 9.01 in this Current Report on Form 8-K and the exhibits attached hereto shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit

Number Description of Document

99.1 Press release, dated February 17, 2016, regarding financial results of Brocade Communications Systems, Inc. for the first quarter ended January 30, 2016.

99.2 Slides with accompanying prepared remarks of Brocade Communications Systems, Inc., dated February 17, 2016, regarding financial results for the first quarter ended January 30, 2016, and forward-looking statements, including statements relating to the Company’s estimated financial results of the second quarter of fiscal year 2016.

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 hereunto duly authorized.

		BROCADE COMMUNICATIONS SYSTEMS, INC.
Date:	February 17, 2016	By:	/s/ Daniel W. Fairfax
			Daniel W. Fairfax
			Senior Vice President and Chief Financial Officer

EX-99.1

Exhibit 99.1

BROCADE CONTACTS
Public Relations Ed Graczyk Tel: 408-333-1836 egraczyk@brocade.com	Investor Relations Michael Iburg Tel: 408-333-0233 miburg@brocade.com

Brocade Reports Fiscal Q1 2016 Results

SAN JOSE, Calif., February 17, 2016 — Brocade^® (NASDAQ: BRCD) today reported financial results for its first fiscal quarter ended January 30, 2016. Brocade reported first quarter revenue of $574 million, flat year-over-year and down 2% quarter-over-quarter. The Company reported GAAP diluted earnings per share (EPS) of $0.23, up from $0.20 in Q1 2015 and up from $0.20 in Q4 2015. Non-GAAP diluted EPS was $0.29 for Q1 2016, up from $0.27 in Q1 2015 and up from $0.26 in Q4 2015. Tax benefits recognized in Q1 2016 increased both GAAP and non-GAAP diluted EPS by approximately $0.02 in the quarter.

“Brocade delivered another solid quarter, exceeding our revenue and earnings expectations,” said Lloyd Carney, CEO of Brocade. “In particular, SAN revenue exceeded our outlook range, driven by strong customer demand for Fibre Channel storage array capacity. We believe that industry analysts’ long-term projections for storage capacity growth is a solid indicator of the ongoing durability and health of our storage networking business. Looking forward, I am excited that over the next several quarters we will make a number of innovative new product announcements that we expect will expand our addressable market and enhance our capabilities in advanced storage networks, software defined data centers, and open, software-enabled New IP architectures.”

Key Financial Metrics:

	Q1 2016			Q4 2015			Q1 2015			Q1 2016 vs. Q4 2015		Q1 2016 vs. Q1 2015
Revenue	$	574	M	$	589	M	$	576	M	(2	%)	—
GAAP EPS—diluted	$	0.23		$	0.20		$	0.20		13	%	14	%
Non-GAAP EPS—diluted	$	0.29		$	0.26		$	0.27		12	%	6	%
GAAP gross margin	67.7		%	67.0		%	67.6		%	0.7 pts		0.1 pts
Non-GAAP gross margin	68.8		%	67.9		%	68.4		%	0.9 pts		0.4 pts
GAAP operating margin	21.1		%	20.2		%	24.2		%	0.9 pts		(3.1) pts
Non-GAAP operating margin	25.9		%	25.0		%	28.5		%	0.9 pts		(2.6) pts

Please see important note of explanation about the use of non-GAAP financial measures below, including a detailed reconciliation between GAAP and non-GAAP information in the tables included herein.

Highlights:

• SAN product revenue of $347 million, although above our outlook range, was down 2% year-over-year. The year-over-year decline was primarily the result of softer demand for embedded and fixed-configuration Fibre Channel switches, partially offset by continued growth in director revenue. Sequentially, SAN product revenue increased 7%, which is consistent with typical fiscal Q1 seasonality. The sequential revenue increase was driven by increased fixed-configuration switch sales while director and embedded sales were flat. Brocade believes the resiliency of its Fibre Channel SAN business is primarily due to continued growth in overall Fibre Channel storage array capacity. Both IDC and Gartner predict strong storage array capacity growth throughout their long-range forecasts.

• IP Networking product revenue was within our outlook range at $134 million, up 1% year-over-year. The growth was primarily due to stronger switch sales, up 19%, offset by weaker router sales, down 25%. The increased revenue year-over-year was primarily from enterprise customers, as revenue from the service provider and U.S. federal customers was down year-over-year. Sequentially, IP Networking product revenue decreased 21%. This was due to lower Ethernet switch and routing revenues, which were down 22% and 19%, respectively. This sequential decrease was primarily due to a more pronounced U.S. federal seasonal decline and lower router sales to service provider customers.

Page 1 of 10

• On February 16, 2016, Brocade announced a mobility platform and vision for building open, New IP networks that can support new services and business models for mobile network operators as they prepare for 5G adoption. These innovative offerings are expected to open a new addressable worldwide market for Brocade. They uniquely position the company as a disrupter as operators enter the next wave of infrastructure investment. The company also announced collaboration with 14 technology partners, enabling mobile operators to accelerate the adoption of SDN, NFV, and mobile edge computing and transform their operations to achieve increased automation and service agility. Brocade and its partners will be demonstrating these new mobile networking solutions at Mobile World Congress to be held February 22-25 in Barcelona, Spain.

Board Declares Dividend:

• The Brocade Board of Directors has declared a quarterly cash dividend of $0.045 per share of the Company’s common stock. The dividend payment will be made on April 4, 2016, to stockholders of record at the close of market on March 10, 2016.

Brocade management will host a conference call to discuss the fiscal first quarter results and the fiscal second quarter outlook today at 2:30 p.m. PT (5:30 p.m. ET). To access the webcast, please go to www.brcd.com/events.cfm. A replay of the conference call, prepared comments and slides, as well as a written transcript, will be available at www.brcd.com.

Other Q1 2016 product, customer, and partner announcements are available at http://newsroom.brocade.com/.

Brocade (www.brocade.com)

130 Holger Way, San Jose, CA 95134

T. 408.333.8000 F. 408.333.8101

Page 2 of 10

Financial Highlights and Additional Financial Information

	Q1 2016		Q4 2015		Q1 2015
Routes to market as a % of total net revenues:
OEM revenues	67	%	62	%	67	%
Channel/Direct revenues	33	%	38	%	33	%
10% or greater customer revenues	34	%	29	%	44	%
Geographic split as a % of total net revenues (1):
Domestic revenues	55	%	54	%	58	%
International revenues	45	%	46	%	42	%
Segment split as a % of total net revenues:
SAN product revenues	61	%	55	%	61	%
IP Networking product revenues	23	%	29	%	23	%
Global Services revenues	16	%	16	%	16	%
SAN business revenues (2)	70	%	65	%	71	%
IP Networking business revenues (2)	30	%	35	%	29	%
IP Networking product revenues by use category (3) (4):
Data Center	53	%	60	%	53	%
Enterprise Campus	38	%	35	%	34	%
Carrier Network (MAN/WAN)	9	%	5	%	13	%

Additional information:	Q1 2016			Q4 2015			Q1 2015
GAAP net income	$	94	M	$	84	M	$	87	M
Non-GAAP net income	$	119	M	$	108	M	$	118	M
GAAP operating income	$	121	M	$	119	M	$	139	M
Non-GAAP operating income	$	149	M	$	147	M	$	164	M
EBITDA	$	144	M	$	141	M	$	159	M
GAAP effective tax rate	16.2		%	23.6		%	23.1		%
Non-GAAP effective tax rate	16.7		%	24.2		%	23.1		%
Cash and cash equivalents	$	1,392	M	$	1,441	M	$	1,359	M
Restricted cash (5)	$	—		$	—		$	312	M
Deferred revenues	$	303	M	$	317	M	$	310	M
Capital expenditures	$	24	M	$	16	M	$	17	M
Total debt, net of discount (6)	$	798	M	$	794	M	$	1,082	M
Cash, net of senior debt, convertible debt and capitalized leases (7)	$	517	M	$	566	M	$	483	M
Cash provided by operations	$	112	M	$	180	M	$	10	M
Days sales outstanding	28 days			36 days			38 days
Employees at end of period	4,712			4,640			4,305
SAN port shipments	1.0		M	1.0		M	1.1		M
Share repurchases (8)	$	144.5	M	$	31.1	M	$	132.4	M

Please see important note of explanation about the use of non-GAAP financial measures below, including a detailed reconciliation between GAAP and non-GAAP information in the tables included herein.

(1) Revenues are attributed to geographic areas based on product delivery location. Since some OEM partners take delivery of Brocade products domestically and then ship internationally to their end users, the percentage of international revenues based on end-user location would likely be higher.

(2) SAN and IP Networking business revenues include hardware and software product, support, and services revenues.

(3) Product revenue by use category is estimated based on analysis of the information the Company collects in its sales management system. The estimated percentage of revenue by use category may fluctuate quarter to quarter due to seasonality and the timing of large customer orders.

(4) Each use category includes enterprise, service provider, and government revenues.

Page 3 of 10

(5) Q1 2015 restricted cash was used to redeem the $300 million principal of the 2020 senior secured notes, and pay for the associated call premium and interest earned on February 13, 2015.

(6) Q1 2016, Q4 2015, and Q1 2015 total debt, net of discount, includes the debt discount recorded for the conversion feature that is required to be separately accounted for as equity for the $575 million convertible debt, thereby reducing the carrying value of the debt. The unamortized debt discount for the conversion feature was $66 million as of January 30, 2016, $69 million as of October 31, 2015, and $80 million as of January 31, 2015.

(7) Q1 2015 Cash, net of senior debt, convertible debt and capitalized leases excludes restricted cash of $312 million and the 2020 senior secured notes of $300 million that have been called and were redeemed on February 13, 2015.

(8) $3.5 million of the $132.4 million in share repurchases in Q1 2015 were pending cash settlement as of January 31, 2015.

Non-GAAP Financial Measures

To supplement financial information presented on a GAAP basis, Brocade provides information presented on a non-GAAP basis. These non-GAAP financial measures are not computed in accordance with, or as an alternative to, financial information presented on a GAAP basis. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP measures. The most directly comparable GAAP information and a reconciliation between the GAAP and non-GAAP amounts is provided in the tables at the end of this press release.

Management believes that the non-GAAP financial measures used in this press release allow management to gain a better understanding of Brocade’s comparative operating performance, both from period to period and relative to its competitors. These non-GAAP financial measures also help with the determination of 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 and the allocation of resources.

Management believes these non-GAAP financial measures, when read in conjunction with Brocade’s GAAP financials, provide useful information to investors by offering:

• the ability to make more meaningful period-to-period comparisons of Brocade’s ongoing operating results;

• the ability to make more meaningful comparisons of Brocade’s operating performance relative to its competitors;

• the ability to better identify trends in Brocade’s underlying business and to perform related trend analyses; and

• a better understanding of how management plans and measures Brocade’s underlying business.

Management excludes certain gains or losses and benefits or costs in determining non-GAAP financial measures that are the result of infrequent events or events that arise outside the ordinary course of Brocade’s continuing operations. Management believes that it is appropriate to evaluate Brocade’s operating performance by excluding those items that are not indicative of ongoing operating results or limit comparability. Such items include, but are not limited to: (i) call premium cost and write-off of debt discount and debt issuance costs related to lenders that did not participate in Brocade’s Q1 2015 debt refinancing; (ii) acquisition and integration costs; and (iii) restructuring and other related benefits.

Management also excludes the following non-cash charges in determining non-GAAP financial measures: (i) stock-based compensation expense; (ii) amortization of purchased intangible assets; and (iii) non-cash interest expense related to the convertible debt.

Management believes that the exclusion of stock-based compensation allows for more accurate comparisons of Brocade’s operating results to Brocade’s peer companies because of the varying use of valuation methodologies and subjective assumptions and the variety of award types. In addition, the exclusion of the expense associated with the amortization of acquisition-related intangible assets is appropriate because a significant portion of the purchase price for acquisitions may be allocated to intangible assets that have short lives, and the exclusion of amortization expense allows comparisons of operating results that are consistent over time for Brocade’s newly acquired and long-held businesses. In connection with the convertible debt, under the relevant accounting guidance, a non-cash interest expense is recognized for the convertible debt as an imputed interest expense for the conversion feature. Management believes excluding the non-cash interest expense related to the convertible debt from its non-GAAP financial measures is useful for investors because the expense does not represent a cash outflow in the respective reporting periods and is not indicative of ongoing operating performance.

Page 4 of 10

Finally, management believes that it is appropriate to exclude the tax effects of the items noted above in order to present a more meaningful measure of non-GAAP net income.

Limitations: These non-GAAP financial measures have limitations because they do not include all items of income and expense that impact the company. In addition, these non-GAAP financial measures may not be comparable to similar measurements reported by other companies. Management compensates for these limitations by relying primarily on its GAAP results and using non-GAAP financial measures only supplementally. Management also provides robust and detailed reconciliations of each non-GAAP financial measure to its most directly comparable GAAP measure, and management encourages investors to review carefully those reconciliations.

Forward-Looking Statements

This press release contains forward-looking statements including, but not limited to, statements regarding Brocade’s financial results, goals, plans, strategy, business outlook and prospects. These statements are based on current expectations as of the date of this press release and involve a number of risks, uncertainties and assumptions that may cause actual results to differ significantly. The risks, uncertainties and assumptions include, but are not limited to: the effect on Brocade of increasing market competition and changes in the industry; the impact on Brocade of conditions in the market for Storage Area Networking products; Brocade’s ability to execute on its sales strategy and plans for future operations; the impact on Brocade of macroeconomic trends and events and changes in IT spending levels; Brocade’s ability to introduce and achieve market acceptance of new products and support offerings on a timely basis; risks associated with Brocade’s international operations; and integration and other risks associated with acquisitions, divestitures and strategic investments. These and other risks are set forth in more detail in Brocade’s Annual Report on Form 10-K for the fiscal year ended October 31, 2015. Brocade expressly assumes no obligation to update any such forward-looking statements whether as the result of new developments or otherwise.

About Brocade

Brocade (NASDAQ: BRCD) networking solutions help the world’s leading organizations transition smoothly to a world where applications and information reside anywhere.(www.brocade.com)

ADX, Brocade, Brocade Assurance, the B-wing symbol, ClearLink, DCX, Fabric OS, Fabric Vision, HyperEdge, ICX, MLX, MyBrocade, OpenScript, The Effortless Network, vADX, VCS, VDX, vPlane, and Vyatta 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.

© 2016 Brocade Communications Systems, Inc. All Rights Reserved.

Page 5 of 10

BROCADE COMMUNICATIONS SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended
	January 30, 2016			January 31, 2015
	(In thousands, except per share amounts)
Net revenues:
Product	$	481,167		$	486,238
Service	93,117			90,001
Total net revenues	574,284			576,239
Cost of revenues:
Product	144,097			149,926
Service	41,372			36,630
Total cost of revenues	185,469			186,556
Gross margin	388,815			389,683
Operating expenses:
Research and development	93,257			85,231
Sales and marketing	151,827			140,238
General and administrative	22,429			24,671
Amortization of intangible assets	902			138
Restructuring and other related benefits	(566		)	—
Total operating expenses	267,849			250,278
Income from operations	120,966			139,405
Interest expense	(9,865		)	(25,424		)
Interest and other income (loss), net	669			(559		)
Income before income tax	111,770			113,422
Income tax expense	18,124			26,155
Net income	$	93,646		$	87,267
Net income per share—basic	$	0.23		$	0.20
Net income per share—diluted	$	0.23		$	0.20
Shares used in per share calculation—basic	407,902			428,536
Shares used in per share calculation—diluted	415,085			439,156
Cash dividends declared per share	$	0.045		$	0.035

Page 6 of 10

BROCADE COMMUNICATIONS SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended
	January 30, 2016			January 31, 2015
	(In thousands)
Net income	$	93,646		$	87,267
Other comprehensive income and loss, net of tax:
Unrealized gains (losses) on cash flow hedges:
Change in unrealized gains and losses	(2,300		)	(1,774		)
Net gains and losses reclassified into earnings	626			603
Net unrealized losses on cash flow hedges	(1,674		)	(1,171		)
Foreign currency translation adjustments	(2,203		)	(4,221		)
Total other comprehensive loss	(3,877		)	(5,392		)
Total comprehensive income	$	89,769		$	81,875

Page 7 of 10

BROCADE COMMUNICATIONS SYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	January 30, 2016			October 31, 2015
	(In thousands, except par value)
ASSETS
Current assets:
Cash and cash equivalents	$	1,392,009		$	1,440,882
Accounts receivable, net of allowances for doubtful accounts of $1,741 and $1,838 as of January 30, 2016, and October 31, 2015, respectively	174,757			235,883
Inventories	42,586			40,524
Deferred tax assets	—			78,675
Prepaid expenses and other current assets	51,708			56,235
Total current assets	1,661,060			1,852,199
Property and equipment, net	442,158			439,224
Goodwill	1,617,041			1,617,161
Intangible assets, net	71,290			75,623
Non-current deferred tax assets	68,968			813
Other assets	48,378			51,133
Total assets	$	3,908,895		$	4,036,153
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	74,019		$	98,143
Accrued employee compensation	112,951			142,075
Deferred revenue	228,582			244,622
Other accrued liabilities	69,287			77,524
Total current liabilities	484,839			562,364
Long-term debt, net of current portion	798,103			793,779
Non-current deferred revenue	74,571			72,065
Non-current income tax liability	47,651			47,010
Non-current deferred tax liabilities	—			24,024
Other non-current liabilities	2,538			3,376
Total liabilities	1,407,702			1,502,618
Commitments and contingencies
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: 402,556 and 413,923 shares as of January 30, 2016, and October 31, 2015, respectively	403			414
Additional paid-in capital	1,529,313			1,632,984
Accumulated other comprehensive loss	(28,879		)	(25,002		)
Retained earnings	1,000,356			925,139
Total stockholders’ equity	2,501,193			2,533,535
Total liabilities and stockholders’ equity	$	3,908,895		$	4,036,153

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BROCADE COMMUNICATIONS SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended
	January 30, 2016			January 31, 2015
	(In thousands)
Cash flows from operating activities:
Net income	$	93,646		$	87,267
Adjustments to reconcile net income to net cash provided by operating activities:
Excess tax benefits from stock-based compensation	(7,352		)	(16,102		)
Depreciation and amortization	22,812			19,575
Loss on disposal of property and equipment	207			444
Amortization of debt issuance costs and debt discount	4,325			1,056
Call premium cost and write-off of debt discount and debt issuance costs related to lenders that did not participate in refinancing	—			15,122
Provision for doubtful accounts receivable and sales allowances	(96		)	2,403
Non-cash stock-based compensation expense	24,044			24,082
Changes in assets and liabilities, net of acquisitions:
Restricted cash	—			(11,918		)
Accounts receivable	61,222			(17,256		)
Inventories	(2,000		)	1,155
Prepaid expenses and other assets	609			(5,746		)
Deferred tax assets	16			494
Accounts payable	(23,859		)	(8,776		)
Accrued employee compensation	(38,993		)	(77,033		)
Deferred revenue	(13,535		)	(2,190		)
Other accrued liabilities	(7,991		)	(1,423		)
Restructuring liabilities	(855		)	(761		)
Net cash provided by operating activities	112,200			10,393
Cash flows from investing activities:
Purchases of property and equipment	(23,839		)	(16,514		)
Purchase of intangible assets	—			(7,750		)
Proceeds from collection of note receivable	250			250
Net cash used in investing activities	(23,589		)	(24,014		)
Cash flows from financing activities:
Increase in restricted cash	—			(300,000		)
Payment of debt issuance costs	—			(409		)
Payment of principal related to capital leases	(83		)	(1,154		)
Common stock repurchases	(144,490		)	(128,966		)
Proceeds from issuance of common stock	19,482			21,036
Payment of cash dividends to stockholders	(18,429		)	(15,106		)
Proceeds from convertible notes	—			565,656
Purchase of convertible note hedge	—			(86,135		)
Proceeds from issuance of warrants	—			51,175
Excess tax benefits from stock-based compensation	7,352			16,102
Net cash provided by (used in) financing activities	(136,168		)	122,199
Effect of exchange rate fluctuations on cash and cash equivalents	(1,316		)	(4,230		)
Net increase (decrease) in cash and cash equivalents	(48,873		)	104,348
Cash and cash equivalents, beginning of period	1,440,882			1,255,017
Cash and cash equivalents, end of period	$	1,392,009		$	1,359,365

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BROCADE COMMUNICATIONS SYSTEMS, INC.

RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL MEASURES

(Unaudited)

	Three Months Ended
	January 30, 2016			October 31, 2015			January 31, 2015
	(In thousands, except per share amounts)
Non-GAAP adjustments
Stock-based compensation expense included in cost of revenues	$	2,905		$	3,189		$	3,816
Amortization of intangible assets expense included in cost of revenues	3,154			2,598			637
Total gross margin impact from non-GAAP adjustments	6,059			5,787			4,453
Stock-based compensation expense included in research and development	5,476			5,475			4,933
Stock-based compensation expense included in sales and marketing	11,078			10,689			9,843
Stock-based compensation expense included in general and administrative	4,585			4,581			5,490
Amortization of intangible assets expense included in operating expenses	902			902			138
Acquisition and integration costs	—			809			—
Restructuring and other related benefits	(566		)	(41		)	—
Total operating income impact from non-GAAP adjustments	27,534			28,202			24,857
Call premium cost and write-off of debt discount and debt issuance costs related to lenders that did not participate in refinancing	—			—			15,122
Convertible debt interest	3,776			3,730			678
Income tax effect of non-tax adjustments	(5,770		)	(8,363		)	(9,499		)
Total net income impact from non-GAAP adjustments	$	25,540		$	23,569		$	31,158
Gross margin reconciliation
GAAP gross margin	$	388,815		$	394,277		$	389,683
Total gross margin impact from non-GAAP adjustments	6,059			5,787			4,453
Non-GAAP gross margin	$	394,874		$	400,064		$	394,136
GAAP gross margin, as a percentage of total net revenues	67.7		%	67.0		%	67.6		%
Non-GAAP gross margin, as a percentage of total net revenues	68.8		%	67.9		%	68.4		%
Operating income reconciliation
GAAP operating income	$	120,966		$	119,221		$	139,405
Total operating income impact from non-GAAP adjustments	27,534			28,202			24,857
Non-GAAP operating income	$	148,500		$	147,423		$	164,262
GAAP operating income, as a percentage of total net revenues	21.1		%	20.2		%	24.2		%
Non-GAAP operating income, as a percentage of total net revenues	25.9		%	25.0		%	28.5		%
Net income and net income per share reconciliation
Net income on a GAAP basis	$	93,646		$	84,388		$	87,267
Total net income impact from non-GAAP adjustments	25,540			23,569			31,158
Non-GAAP net income	$	119,186		$	107,957		$	118,425
Non-GAAP net income per share—basic	$	0.29		$	0.26		$	0.28
Non-GAAP net income per share—diluted	$	0.29		$	0.26		$	0.27
Shares used in non-GAAP per share calculation—basic	407,902			414,769			428,536
Shares used in non-GAAP per share calculation—diluted	415,085			422,315			439,156

Page 10 of 10

EX-99.2

Q1 FY 2016 Earnings

Prepared Comments and Slides

February 17, 2016

Michael Iburg

Investor Relations

Phone: 408-333-0233

miburg@Brocade.com

Ed Graczyk

Media Relations

Phone: 408-333-1836

egraczyk@Brocade.com

NASDAQ: BRCD

Brocade Q1 FY 2016 Earnings    2/17/2016

Prepared comments provided by Michael Iburg, Investor Relations

Thank you for your interest in Brocade’s Q1 Fiscal 2016 earnings presentation, which includes prepared remarks, cautionary statements and disclosures, slides, and a press release detailing fiscal first quarter 2016 results. The press release, along with these prepared comments and slides, has been furnished to the SEC on Form 8-K and has been made available on the Brocade Investor Relations website atwww.brcd.com. The press release will be issued subsequently via Marketwired.

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Brocade Q1 FY 2016 Earnings    2/17/2016

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Brocade Q1 FY 2016 Earnings    2/17/2016

Today’s prepared comments include remarks by Lloyd Carney, 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 at

2:30 p.m. Pacific Time on February 17 at www.brcd.comand will be archived on the Brocade Investor Relations website.

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Brocade Q1 FY 2016 Earnings    2/17/2016

Prepared comments provided by Lloyd Carney, CEO

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Brocade Q1 FY 2016 Earnings    2/17/2016

We delivered another solid quarter, exceeding our revenue and earnings expectations. In particular, storage networking product revenue exceeded our outlook range, underscoring the continued demand for Fibre Channel connectivity in both traditional and flash-based storage networking environments. IP Networking revenue was within the outlook range provided in November, though at the lower end, primarily driven by a more pronounced seasonal decline in the U.S. federal market. We exceeded our gross margin, operating margin, and cash flow targets for the quarter, and repurchased more than $140M of common stock.

During the quarter, we added a number of acclaimed thought leaders to our management team, attracting domain experts in key areas such as mobility, machine learning, massively scalable systems, and security. In November, we announced that Hadi Nahari joined Brocade as vice president and security chief technology officer, with more than 20 years of technology experience, including his most recent position as chief security architect of mobile and software platforms at NVIDIA. We also announced that industry sales veteran Pete Peterson joined Brocade as vice president of worldwide channel sales, bringing significant sales and leadership experience, including 20 years in senior management positions at Tech Data Corporation.

In addition to broadening our corporate leadership team, we were also very pleased to welcome Kim Goodman to our Board of Directors. Kim brings significant experience in strategic planning, finance and operations through executive-level positions at American Express Company, as well as a wealth of networking and software knowledge from her accomplished career at Dell. I am excited to add such a respected member to our already outstanding Board of Directors as we execute on our strategy of enabling open, software-enabled New IP networks.

We were excited to announce yesterday an advanced, software-centric mobility platform, vision, and ecosystem for building open, New IP networks that support new services and new business models for mobile network operators as 5G approaches. Over the next several quarters, we plan to introduce a number of innovative new products that we expect will enhance our capabilities, expand our addressable market, and help drive growth.

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Brocade Q1 FY 2016 Earnings    2/17/2016

Storage networking revenue surpassed our expectations, underscoring our belief that continued growth in overall Fibre Channel storage array capacity, as predicted by IDC and Gartner, is a solid indicator of the ongoing durability of our storage networking business. Our year-over-year revenue performance in Q1 was primarily driven by continued growth in directors, offset by declines in our switch and embedded revenue.

As part our strategy to grow and diversify our SAN partnerships, during Q1 we broadened our relationship with Inspur Group, a top cloud-based infrastructure provider in China. Inspur will leverage Brocade Fibre Channel products to support its new generation of Inspur 19000 blade servers.

We continue to drive new revenue opportunities that leverage our sizable installed base of Fibre Channel customers. During the quarter, we recognized our first revenue from the recently announced Brocade Analytics Monitoring Platform (AMP), an innovative new SAN monitoring and analytics solution. This solution is resonating well with customers because it offers concrete business value and a tangible return on investment.

In December 2015, Brocade and Qlogic demonstrated the industry’s first non-volatile memory express (NVMe) solution leveraging Brocade’s Fibre Channel fabric technology. NVMe provides a standards-based approach for PCI Express solid state drive access that significantly improves performance by reducing latency and streamlining the command set.  This demonstration is another proof point of Fibre Channel’s importance for enabling exciting new storage technologies as well Brocade’s leadership within the storage networking market.

In the first half of this year, we expect to launch our Gen 6 Fibre Channel technology, with advanced capabilities specifically designed to address the performance, reliability and scalability requirements for virtualization, flash-based storage networking environments, and new data center architectures. Our technology roadmap continues to set the standard for innovation in the industry, and we are excited to honor that heritage with a full portfolio of leading-edge solutions for next-generation storage networking.

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Brocade Q1 FY 2016 Earnings    2/17/2016

IP Networking revenue in Q1 was within our outlook range, but below the midpoint, primarily the result of a more pronounced seasonal decline within the U.S. federal market. As a result, we are maintaining a more modest view of our IP Networking business in the first half of the year. However, we do expect significant improvement in the second half as the U.S. federal market becomes seasonally stronger and new products provide an opportunity to accelerate growth.

We continue to expand our portfolio of fabric offerings with two new fabric technologies for data networking. In December, we released our new campus fabric offering. As a software upgrade to the existing Brocade ICX^® switch product family, Brocade Campus Fabric collapses access and aggregation network layers into a single logical device, combining the power of a “distributed chassis” design with the flexibility and cost-effectiveness of fixed form factor switches. In February, we released Brocade IP Fabric technology on the Brocade VDX^® switch family. Brocade IP Fabric delivers new levels of scalability for large-to-megascale data centers by leveraging a cloud-proven, standard BGP-based architecture. This new offering complements our existing VCS^® Fabric offering and allows us to address new customer types, use cases and application environments.

Brocade also delivered another highly differentiated NFV offering targeting the access edge for service providers with our release of a virtual customer premise solution known as virtual CPE. This open architecture allows operators to simplify connectivity and accelerate the creation of service chains for enterprise-class campus and branch connectivity.

We also expanded our software footprint in hyperscale clouds with the availability of our vADC solution now in three leading hyperscale cloud providers. As enterprise customers initiate application workloads in these fast-growing clouds, they can select Brocade software from these online marketplaces and activate it with the click of a button.

We continue to expand our presence in targeted areas that offer additional business opportunities for Brocade. For example, we were pleased to announce our partnership with Nutanix in which Brocade VDX switches with Brocade VCS fabric technology provide a scalable high-performance networking solution for Nutanix hyperconverged infrastructure solutions. Nutanix joins our existing hyperconverged partners, such as EMC and HDS, in bringing innovative solutions to this segment of the market.

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Brocade Q1 FY 2016 Earnings    2/17/2016

We are expanding our TAM to include new markets for Brocade where technology transitions are creating incremental revenue opportunities. For example, yesterday we announced a mobility platform and vision for building open, New IP networks that can support new services and business models for mobile network operators as 5G approaches. These innovative offerings are expected to open an incremental addressable market for Brocade and uniquely position us as a disrupter, as mobile operators enter the next wave of infrastructure investment. Brocade’s existing software investments in SDN and NFV, as well as its data center portfolio, are well suited to address mobile operators’ goals of virtualized, distributed, disaggregated, and programmable end-to-end infrastructure.

Brocade’s perspective on the future of mobile networks, including 4G and the realization of 5G, is rooted firmly in building networks that are open, software-defined, virtualized, and highly programmable. We have the solutions, architecture and partner ecosystem to help mobile network operators simplify their infrastructure and begin the transformation to 5G today. While our competitors are vying to protect billions of dollars of legacy, closed and proprietary hardware devices in the network, Brocade is well positioned to disrupt this model with our industry-leading SDN and NFV technologies and differentiated offerings of vEPC, mobile edge computing and network visibility. Our solutions are purpose-built for virtualized environments and ideally suited for emerging mobile services such as machine-to-machine, Internet of Things, enterprise private mobile services, and mobile virtual network operators.

In conjunction, we also announced collaboration with 14 technology partners, thus enabling mobile operators to accelerate the adoption of SDN, NFV, and mobile edge computing and transform their operations to achieve increased automation and service agility. We will be demonstrating these new offerings in our booth at Mobile World Congress, Feb. 22-25 in Barcelona, Spain. Our solutions will also be featured in demonstrations with more than a dozen partners, thus doubling our presence again this year at this influential industry event.

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Brocade Q1 FY 2016 Earnings    2/17/2016

In closing, our first quarter accomplishments highlight our continued execution against our business plan and strategy, with solid financial performance, strong profitability and expansion into targeted new markets.

Our SAN business continues to demonstrate resilience, in keeping with the strong growth in overall Fibre Channel storage array capacity, and we are cultivating new revenue streams across our IP Networking end markets.

As we move further into fiscal year 2016, I look forward to an exciting year of product and technology announcements in many of our key markets. We also expect to broaden our reach with incremental opportunities that complement our strong business foundation, and enhance our innovative roadmap in open, software-enabled New IP architectures.

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Brocade Q1 FY 2016 Earnings    2/17/2016

Prepared comments provided by Dan Fairfax, CFO

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Brocade Q1 FY 2016 Earnings    2/17/2016

Fiscal Q1 16 followed normal quarterly seasonal patterns with a sequential increase in SAN revenue and a sequential decrease in IP Networking revenue.

Q1 16 revenue of $574M was flat Yr./Yr. primarily driven by increased Global Services and IP Networking revenue offset by lower SAN sales. SAN product revenue was down 2% Yr./Yr. as the director revenue increase of 7% was offset by a decline in switch and embedded revenue of 8% and 7%, respectively. IP Networking product revenue was up 1% Yr./Yr. due to stronger switch and software sales, partially offset by lower router sales.

Non-GAAP gross margin was 68.8% in Q1 16, up 40 basis points year-over-year due primarily to a favorable product mix. Non-GAAP operating margin was 25.9% in Q1 16, down 260 basis points from Q1 15, primarily due to higher operating expenses associated with acquisition-related headcount.

Q1 16 non-GAAP diluted EPS was $0.29, up 6% year-over-year with $0.02 of the improvement coming from tax benefits related to the extension of the R&D tax credit. The R&D tax credit is now permanent and will become part of our ongoing annual tax rate.

Operating cash flow and adjusted free cash flow were above the forecasted ranges of $50-70M and $30-50M, respectively, as DSOs improved significantly from the prior quarter. DSOs were 28 days in Q1 16, which was an improvement from 36 days in Q4 15.

Inventory turns decreased slightly year-over-year.

From a total revenue perspective, including SAN and IP Networking, our channels to market have remained relatively stable over time. Total OEM revenue was 67%, flat year-over-year, with the balance coming from Channel and Direct routes to market.

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Brocade Q1 FY 2016 Earnings    2/17/2016

Revenue from our total SAN business, including hardware products and SAN-based support and services, in Q1 16 was $402M, down 1% from Q1 15 as overall product revenue was down 2% and global service revenue was up 2%.

Our SAN product revenue was $347M in the quarter, down 2% Yr./Yr. as director revenue was up 7% but offset by an 8% decline in switch revenue and a 7% decline in embedded revenue year-over-year.

SAN-based global services revenue was $55M, up 2% Yr./Yr.

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Brocade Q1 FY 2016 Earnings    2/17/2016

Revenue from our total IP Networking business, including hardware and IP-based support and services, was $173M, up 2% Yr./Yr. Geographically, the Yr./Yr. revenue improvement was across several regions with the Americas (excluding U.S. federal) up 5%, Asia Pacific up 27%, and Japan up 35%. This was offset by a revenue decline in EMEA of 17% and U.S. federal of 5%.

Q1 16 IP Networking product revenue was $134M, up 1% Yr./Yr. We experienced strong year-over-year growth in Ethernet switch sales, up 19%, while router sales were down 25%. The routing decline was primarily due to a lower volume of next-gen line card sales into service providers.

In an effort to make our Routing and Ethernet Switch revenue breakout more comparable to other vendors in the industry, we have removed the Other IP Networking category. The revenue formerly associated with the Other IP Networking category has been mapped into either Routing or Ethernet Switch.

IP-based Global Services revenue was $39M, up 5% Yr./Yr. due primarily to the incremental maintenance volume associated with the recently acquired virtual application delivery software.

We track our IP Networking business based on the identification of customer use cases. Although it is difficult to identify all end users and their specific network deployments due to our two-tier distribution channel, we provide estimates of the split of our IP Networking business. Our data center customers⁽¹⁾ represented approximately 53% of IP Networking revenue in Q1 16, compared with 53% in Q1 15 and 60% in Q4 15.

⁽¹⁾The estimated percentage of revenue coming from data center IP Networking customers may fluctuate quarter-to-quarter due to the timing of large data center customer transactions, minor changes to classification from improved visibility of actual customer deployments, as well as the seasonality of the public sector, including federal. Other use cases, such as enterprise campus and carrier networks (MAN/WAN) represent the balance of the business.

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Brocade Q1 FY 2016 Earnings    2/17/2016

Looking forward to Q2 16, we considered a number of factors, including the following, in setting our outlook:

• For Q2 16, we expect SAN product revenue to be down 7.0% to 10.5% Qtr./Qtr. as we typically see a seasonally weak fiscal Q2 in our SAN business.

• We expect our Q2 16 IP Networking product revenue to be up 3% to 9% Qtr./Qtr. as our IP Networking business is traditionally stronger in our fiscal Q2 versus Q1.

• We expect our Global Services revenue to be flat Qtr./Qtr.

• We expect Q2 16 non-GAAP gross margin to be between 67.0% to 67.5%, and non-GAAP operating margin to be between 22.0% to 23.5%, primarily reflecting the expected mix of SAN and IP revenues.

• Operating cash flow is expected to be in the range of $120M - $140M in fiscal Q2 16. We expect DSOs to increase from the Q1 16 level of 28 days.

• At the end of Q1 16, OEM SAN inventory declined to approximately 1.1 weeks of supply from 1.3 weeks of supply based on SAN business revenue. We expect inventory to be between one to two weeks in Q2 16.

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Brocade Q1 FY 2016 Earnings    2/17/2016

Prepared comments provided by Michael Iburg, Investor Relations

That concludes Brocade’s prepared comments. At 2:30 p.m. Pacific Time on February 17, Brocade will host a webcast conference call at www.brcd.com.

Thank you for your interest in Brocade.

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Brocade Q1 FY 2016 Earnings    2/17/2016

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Brocade Q1 FY 2016 Earnings    2/17/2016

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Brocade Q1 FY 2016 Earnings    2/17/2016

Additional Financial Information:

	Q1 15		Q4 15		Q1 16
GAAP product gross margin	69.2	%	68.5	%	70.1	%
Non-GAAP product gross margin	69.7	%	69.3	%	70.9	%
GAAP services gross margin	59.3	%	58.8	%	55.6	%
Non-GAAP services gross margin	61.4	%	60.7	%	57.6	%

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Brocade Q1 FY 2016 Earnings    2/17/2016

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Brocade Q1 FY 2016 Earnings    2/17/2016

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Brocade Q1 FY 2016 Earnings    2/17/2016

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