##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from            to
 Commission File Number 000-26689
 FOUNDRY NETWORKS, INC.
  Delaware
    
    77-0431154(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 4980 Great America Parkway
Santa Clara, CA 95054
(Address of principal executive offices, including zip code)
 (408) 207-1700
(Registrants telephone number, including area code)
 N/A
(Former name, former address and former fiscal year, if changed since last report)
 Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
(Check one):
 Large accelerated filerþ
    
    Accelerated filer
o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes o No þ




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##### 



FOUNDRY NETWORKS, INC.
 Table of Contents
 PagePART I  FINANCIAL INFORMATION
    
    
    3Item 1. Financial Statements
    
    
    3Condensed Consolidated Balance Sheets
    
    
    3Condensed Consolidated Statements of Income
    
    
    4Condensed Consolidated Statements of Cash Flows
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    24Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    31Item 4. Controls and Procedures
    
    
    31PART II  OTHER INFORMATION
    
    
    32Item 1. Legal Proceedings
    
    
    32Item 1A. Risk Factors
    
    
    32Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    44Item 3. Defaults Upon Senior Securities
    
    
    45Item 4. Submission of Matters to a Vote of Security Holders
    
    
    45Item 5. Other Information
    
    
    45Item 6. Exhibits
    
    
    45SIGNATURE
    
    
    46EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 FOUNDRY NETWORKS, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (in thousands, except per share amounts)
 June 30,
    
    
    December 31,2008
    
    
    2007(unaudited)
    
    
    (1)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    257,940
    
    
    $
    331,961Short-term investments
    
    
    590,906
    
    
    
    575,645Accounts receivable, net of allowances for doubtful accounts of
$2,196 and $2,107 and sales returns of $1,897 and $2,626 at June
30, 2008 and December 31, 2007, respectively
    
    
    112,362
    
    
    
    124,234Inventories
    
    
    49,531
    
    
    
    42,384Deferred tax assets
    
    
    45,828
    
    
    
    44,207Prepaid expenses and other assets
    
    
    14,294
    
    
    
    12,439Total current assets
    
    
    1,070,861
    
    
    
    1,130,870Property and equipment, net
    
    
    7,616
    
    
    
    9,658Investments
    
    
    101,273
    
    
    
    58,062Deferred tax assets
    
    
    39,284
    
    
    
    35,007Other assets
    
    
    5,697
    
    
    
    5,234Total assets
    
    $
    1,224,731
    
    
    $
    1,238,831LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    21,627
    
    
    $
    23,892Accrued payroll and related expenses
    
    
    40,753
    
    
    
    50,806Other accrued expenses
    
    
    12,441
    
    
    
    12,382Deferred revenue
    
    
    61,922
    
    
    
    52,981Total current liabilities
    
    
    136,743
    
    
    
    140,061Deferred revenue
    
    
    28,446
    
    
    
    27,786Income taxes payable
    
    
    12,833
    
    
    
    11,860Other long-term liabilities
    
    
    460
    
    
    
    475Total liabilities
    
    
    178,482
    
    
    
    180,182Commitments and contingenciesStockholders equity:Preferred stock, $0.0001 par value:Authorized - 5,000 shares at June 30, 2008 and December 31, 2007;
None issued and outstanding as of June 30, 2008 and December 31,
2007
    
    
    
    
    
    
    Common stock, $0.0001 par value:Authorized - 300,000 shares at June 30, 2008 and December 31, 2007:Issued and outstanding  144,870 and 148,700 shares at June 30,
2008 and December 31, 2007, respectively
    
    
    14
    
    
    
    15Additional paid-in capital
    
    
    867,049
    
    
    
    829,910Accumulated other comprehensive loss
    
    
    (6,981
    )
    
    
    (789
    )Retained earnings
    
    
    186,167
    
    
    
    229,513Total stockholders equity
    
    
    1,046,249
    
    
    
    1,058,649Total liabilities and stockholders equity
    
    $
    1,224,731
    
    
    $
    1,238,831
 
 (1)
    
    Derived from audited consolidated financial statements as of December 31, 2007.  3




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##### Table of Contents



FOUNDRY NETWORKS, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 (unaudited)

(in thousands, except per share amounts)
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net revenue:Product
    
    $
    134,843
    
    
    $
    120,784
    
    
    $
    260,705
    
    
    $
    236,002Service
    
    
    25,836
    
    
    
    22,456
    
    
    
    50,029
    
    
    
    43,051Total net revenue
    
    
    160,679
    
    
    
    143,240
    
    
    
    310,734
    
    
    
    279,053Cost of revenue:Product
    
    
    51,591
    
    
    
    51,695
    
    
    
    100,006
    
    
    
    102,832Service
    
    
    7,596
    
    
    
    5,444
    
    
    
    15,779
    
    
    
    10,910Total cost of revenue
    
    
    59,187
    
    
    
    57,139
    
    
    
    115,785
    
    
    
    113,742Gross margin
    
    
    101,492
    
    
    
    86,101
    
    
    
    194,949
    
    
    
    165,311Operating expenses:Research and development
    
    
    21,925
    
    
    
    17,853
    
    
    
    43,653
    
    
    
    39,103Sales and marketing
    
    
    46,391
    
    
    
    38,470
    
    
    
    93,527
    
    
    
    78,560General and administrative
    
    
    10,205
    
    
    
    11,771
    
    
    
    22,044
    
    
    
    22,704Other charges, net
    
    
    
    
    
    
    3,067
    
    
    
    
    
    
    
    5,600Total operating expenses
    
    
    78,521
    
    
    
    71,161
    
    
    
    159,224
    
    
    
    145,967Income from operations
    
    
    22,971
    
    
    
    14,940
    
    
    
    35,725
    
    
    
    19,344Interest and other income, net
    
    
    6,428
    
    
    
    10,514
    
    
    
    15,728
    
    
    
    20,897Income before provision for income taxes
    
    
    29,399
    
    
    
    25,454
    
    
    
    51,453
    
    
    
    40,241Provision for income taxes
    
    
    11,073
    
    
    
    9,822
    
    
    
    19,221
    
    
    
    15,518Net income
    
    $
    18,326
    
    
    $
    15,632
    
    
    $
    32,232
    
    
    $
    24,723Basic net income per share
    
    $
    0.13
    
    
    $
    0.11
    
    
    $
    0.22
    
    
    $
    0.17Weighted-average shares used in
computing basic net income per share
    
    
    145,092
    
    
    
    147,285
    
    
    
    146,163
    
    
    
    147,194Diluted net income per share
    
    $
    0.12
    
    
    $
    0.10
    
    
    $
    0.21
    
    
    $
    0.16Weighted-average shares used in
computing diluted net income per share
    
    
    149,059
    
    
    
    154,034
    
    
    
    150,219
    
    
    
    153,668
  4




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##### Table of Contents



FOUNDRY NETWORKS, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (unaudited)

(in thousands)
 Six Months Ended June 30,2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    32,232
    
    
    $
    24,723Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    5,129
    
    
    
    5,649Stock-based compensation expense
    
    
    25,159
    
    
    
    19,515Provision for doubtful accounts
    
    
    89
    
    
    
    (230
    )Provision for sales returns
    
    
    (729
    )
    
    
    (888
    )Inventory provisions
    
    
    4,274
    
    
    
    3,035Benefit for deferred income taxes
    
    
    (5,898
    )
    
    
    (5,500
    )Excess tax benefits from stock-based compensation
    
    
    (555
    )
    
    
    (934
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    12,513
    
    
    
    (12,718
    )Inventories
    
    
    (11,411
    )
    
    
    (10,665
    )Prepaid expenses and other assets
    
    
    (3,860
    )
    
    
    (6,290
    )Accounts payable
    
    
    (2,263
    )
    
    
    1,414Accrued payroll and related expenses
    
    
    (10,053
    )
    
    
    108Income taxes payable
    
    
    564
    
    
    
    6,641Other accrued expenses
    
    
    43
    
    
    
    287Deferred revenue
    
    
    9,600
    
    
    
    9,069Net cash provided by operating activities
    
    
    54,834
    
    
    
    33,216CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of available-for-sale investments
    
    
    (25,950
    )
    
    
    (21,725
    )Purchases of held-to-maturity investments
    
    
    (502,479
    )
    
    
    (376,324
    )Proceeds from sales of available-for-sale investments
    
    
    25,300
    
    
    
    37,700Proceeds from maturities of held-to-maturity investments
    
    
    438,634
    
    
    
    287,720Purchases of property and equipment, net
    
    
    (1,625
    )
    
    
    (4,093
    )Net cash used in investing activities
    
    
    (66,120
    )
    
    
    (76,722
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from issuances of common stock under stock plans, net of repurchases
    
    
    12,459
    
    
    
    4,486Repurchase and retirement of common stock
    
    
    (75,580
    )
    
    
    Excess tax benefits from stock-based compensation
    
    
    555
    
    
    
    934Net cash provided by (used in) financing activities
    
    
    (62,566
    )
    
    
    5,420Decrease in cash and cash equivalents
    
    
    (73,852
    )
    
    
    (38,086
    )Effect of exchange rate changes on cash
    
    
    (169
    )
    
    
    (121
    )Cash and cash equivalents, beginning of period
    
    
    331,961
    
    
    
    258,137Cash and cash equivalents, end of period
    
    $
    257,940
    
    
    $
    219,930SUPPLEMENTAL CASH FLOW INFORMATION:Cash paid for income taxes, net of refunds
    
    $
    27,131
    
    
    $
    18,229
  5




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##### Table of Contents



FOUNDRY NETWORKS, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (information for the three and six months ended June 30, 2008 and 2007 is unaudited)
 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Description of Business
  Basis of Presentation
   Principles of Consolidation
  Reclassifications
  Use of Estimates
  6




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Cash Equivalents and Investments
     Valuation of Investments
  Fair Value Measurement
  7




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
    
    Level 1Valuations based on quoted prices in active markets for identical assets or
liabilities that the Company has the ability to access. Valuation adjustments are not applied
to Level 1 instruments. Since valuations are based on quoted prices that are readily and
regularly available in an active market, valuation of these products does not entail a
significant degree of judgment. Foundrys cash equivalents and investments utilizing Level 1
inputs include U.S. Government Treasuries and money market funds.
 
    
    Level 2Valuations based on quoted prices in markets that are not considered to be active,
broker or dealer quotations, or alternative pricing sources with reasonable levels of price
transparency. Foundrys cash equivalents and investments utilizing Level 2 inputs include
government sponsored securities and municipal bonds.
 
    
    Level 3Valuations based on inputs that are unobservable and significant to the overall fair
value measurement. Investments utilizing Level 3 inputs are the Companys auction rate
securities that are not traded in active markets or are subject to transfer restrictions.
Valuations are performed to adjust for illiquidity and/or non-transferability, and such
adjustments are generally based on available market evidence. In the absence of such evidence,
managements best estimate is used.
   Concentrations
   Stock- Based Compensation
 Share-Based Payment
 8




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Valuation of Stock-Based Compensation
   Three Months Ended June 30, 2008
    
    Six Months Ended June 30, 2008Stock Option Plan
    
    Purchase Plan
    
    Stock Option Plan
    
    Purchase PlanRisk free interest rate
    
    
    2.9
    %
    
    
    3.4
    %
    
    
    2.4
    %
    
    
    4.0
    %Expected term (in years)
    
    3.6 years
    
    1.7 years
    
    3.3 years
    
    1.6 yearsDividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Volatility of common stock
    
    
    39
    %
    
    
    43
    %
    
    
    41
    %
    
    
    42
    %Weighted-average fair value
    
    $
    4.20
    
    
    $
    4.69
    
    
    $
    4.03
    
    
    $
    4.38
 Three Months Ended June 30, 2007
    
    Six Months Ended June 30, 2007Stock Option Plan
    
    Purchase Plan
    
    Stock Option Plan
    
    Purchase PlanRisk free interest rate
    
    
    4.7
    %
    
    
    5.0
    %
    
    
    4.7
    %
    
    
    4.9
    %Expected term (in years)
    
    4.0 years
    
    1.5 years
    
    3.8 years
    
    1.3 yearsDividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Volatility of common stock
    
    
    41
    %
    
    
    42
    %
    
    
    40
    %
    
    
    43
    %Weighted-average fair value
    
    $
    5.89
    
    
    $
    3.83
    
    
    $
    5.44
    
    
    $
    3.67
 Risk-Free Interest Rate.
 Expected Term.
 Expected Dividend.
 Expected Volatility.
 Estimated Forfeitures.
 9




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Computation of Per Share Amounts
  Revenue Recognition
 General. Revenue Recognition,
 Revenue Arrangements with Multiple Deliverables
 Product.
 Services.
 Accounting
for Separately Priced Extended Warranty and Product Maintenance Contracts.
 Returns.
 Segment and Geographic Information
  10




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##### Table of Contents



Income Taxes
 Accounting for Uncertainty in Income
Taxes  an interpretation of FASB Statement No. 109
 Recent Accounting Pronouncements
 Accounting for Nonrefundable Advance
Payments for Goods or Services Received for Use in Future Research and Development Activities
  The Fair Value Option
for Financial Assets and Financial Liabilities-including an amendment of FASB Statement No. 115
 11




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2. CASH EQUIVALENTS AND INVESTMENTS
  June 30, 2008Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueCash equivalents:Money market funds
    
    $
    152,643
    
    
    $
    
    
    
    $
    
    
    
    $
    152,643U.S. Treasuries and Government-sponsored enterprise securities
    
    
    69,948
    
    
    
    8
    
    
    
    (2
    )
    
    
    69,954Available-for-sale:Auction rate municipal bonds
    
    
    83,150
    
    
    
    
    
    
    
    (6,023
    )
    
    
    77,127Held-to-maturity:Municipal bonds
    
    
    20,392
    
    
    
    133
    
    
    
    (4
    )
    
    
    20,521U.S. Treasuries and Government-sponsored enterprise securities
    
    
    594,660
    
    
    
    528
    
    
    
    (347
    )
    
    
    594,841$
    920,793
    
    
    $
    669
    
    
    $
    (6,376
    )
    
    $
    915,086Cash equivalents
    
    $
    222,591
    
    
    $
    8
    
    
    $
    (2
    )
    
    $
    222,597Short-term investments
    
    
    590,906
    
    
    
    542
    
    
    
    (347
    )
    
    
    591,101Long-term investments
    
    
    107,296
    
    
    
    119
    
    
    
    (6,027
    )
    
    
    101,388$
    920,793
    
    
    $
    669
    
    
    $
    (6,376
    )
    
    $
    915,086
 December 31, 2007Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueCash equivalents:Money market funds
    
    $
    158,080
    
    
    $
    
    
    
    $
    
    
    
    $
    158,080Government-sponsored enterprise securities
    
    
    114,445
    
    
    
    29
    
    
    
    
    
    
    
    114,474Available-for-sale:Auction rate municipal bonds
    
    
    82,500
    
    
    
    
    
    
    
    
    
    
    
    82,500Held-to-maturity:Municipal bonds
    
    
    42,362
    
    
    
    133
    
    
    
    
    
    
    
    42,495Government-sponsored enterprise securities
    
    
    508,845
    
    
    
    551
    
    
    
    (9
    )
    
    
    509,387$
    906,232
    
    
    $
    713
    
    
    
    (9
    )
    
    $
    906,936Cash equivalents
    
    $
    272,525
    
    
    
    29
    
    
    
    
    
    
    $
    272,554Short-term investments
    
    
    575,645
    
    
    
    550
    
    
    
    (9
    )
    
    
    576,186Long-term investments
    
    
    58,062
    
    
    
    134
    
    
    
    
    
    
    
    58,196$
    906,232
    
    
    $
    713
    
    
    $
    (9
    )
    
    $
    906,936
 Municipal bonds.
 U.S. Treasuries and Government-sponsored enterprise securities (GSEs).
 Auction rate municipal bonds (auction rate securities).
 12




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The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments
 Loss Less Than 12 months
    
    
    Loss Greater Than 12 months
    
    
    TotalGross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    GrossUnrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    UnrealizedFair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    LossesAvailable-for-sale:Auction rate municipal bonds
    
    $
    74,627
    
    
    $
    (6,023
    )
    
    
    
    
    
    
    
    
    
    $
    74,627
    
    
    $
    (6,023
    )Held-to-maturity:Municipal Bonds
    
    
    1,506
    
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    1,506
    
    
    
    (4
    )U.S. Treasuries and GSEs
    
    
    293,354
    
    
    
    (349
    )
    
    
    
    
    
    
    
    
    
    
    293,354
    
    
    
    (349
    )$
    369,487
    
    
    $
    (6,376
    )
    
    $
    
    
    
    $
    
    
    
    $
    369,487
    
    
    $
    (6,376
    )
  3. FAIR VALUE DISCLOSURES
 Fair Value Measurements
  13




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Fair Value Measurements at Reporting Date UsingQuoted Prices InActive Markets
    
    
    Significant
    
    
    Significantfor Identical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    Inputs6/30/2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Cash equivalents:Money market funds
    
    $
    152,643
    
    
    $
    152,643
    
    
    $
    
    
    
    $
    U.S. Treasuries and GSEs
    
    
    69,954
    
    
    
    39,991
    
    
    
    29,963
    
    
    
    Available-for-sale:Auction rate municipal bonds
    
    
    77,127
    
    
    
    
    
    
    
    
    
    
    
    77,127Held-to-maturity:Municipal bonds
    
    
    20,521
    
    
    
    
    
    
    
    20,521
    
    
    
    U.S. Treasuries and GSEs
    
    
    594,841
    
    
    
    223,925
    
    
    
    370,916
    
    
    
    Total
    
    $
    915,086
    
    
    $
    416,559
    
    
    $
    421,400
    
    
    $
    77,127
  Fair Value Measurements UsingSignificant Unobservable Inputs (Level 3)Three Months Ended
    
    
    Six Months EndedJune 30, 2008
    
    
    June 30, 2008Beginning Balance
    
    $
    79,179
    
    
    $
    Total realized gains or (losses) included in net income
    
    
    
    
    
    
    Total unrealized losses included in other comprehensive income
    
    
    (2,052
    )
    
    
    (6,023
    )Purchases, sales and settlements, net
    
    
    
    
    
    
    Transfers in Level 3
    
    
    
    
    
    
    83,150Ending balance
    
    $
    77,127
    
    
    $
    77,127
  Three Months Ended
    

    Six Months EndedJune 30, 2008
    

    June 30, 2008Total gains included in earnings
    
    $
    

    $
    
    12Change in unrealized gains or (losses) relating to assets still held at the reporting date
    
    $
    

    $
    
    
 4. INVENTORIES
  June 30, 2008
    
    
    December 31, 2007Purchased parts
    
    $
    7,107
    
    
    $
    4,279Work-in-process
    
    
    20,480
    
    
    
    17,195Finished goods
    
    
    21,944
    
    
    
    20,910$
    49,531
    
    
    $
    42,384
  14




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##### Table of Contents



5. DEFERRED REVENUE
  June 30, 2008
    
    
    December 31, 2007Product
    
    $
    5,351
    
    
    $
    3,095Support
    
    
    85,017
    
    
    
    77,672Total
    
    $
    90,368
    
    
    $
    80,767Reported as:Current
    
    $
    61,922
    
    
    $
    52,981Non Current
    
    
    28,446
    
    
    
    27,786Total
    
    $
    90,368
    
    
    $
    80,767
  Deferred support revenue at December 31, 2007
    
    $
    77,672New support arrangements
    
    
    56,576Recognition of support revenue
    
    
    (49,231
    )Ending balance at June 30, 2008
    
    $
    85,017
 6. COMMITMENTS AND CONTINGENCIES
 Purchase Commitments with Suppliers and Third-Party Manufacturers
  Guarantees and Product Warranties
   15




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##### Table of Contents



Balance, December 31, 2007
    
    $
    2,251Liabilities accrued for warranties issued during the period
    
    
    588Warranty claims settled during the period
    
    
    (740
    )Changes in liabilities for pre-existing warranties during the period, including changes in estimates
    
    
    (412
    )Balance, June 30, 2008
    
    $
    1,687
  Litigation
 Intellectual Property Proceedings.
   16




---



##### Table of Contents



Securities Litigation. In re Foundry Networks, Inc. Initial Public Offering
Securities Litigation, related to In re Initial Public Offering
Securities Litigation,
 In re Initial Public Offering
Securities Litigation, 471 F.3d 24 (2d Cir. Dec. 5, 2006).
 In re Foundry Networks, Inc. Derivative Litigation
 17




---



##### Table of Contents



Patel v. Akin, et al Patel v. Akin, et al.
 Desai v. Johnson, et al McDonald v. Johnson, et al. Jackson v. Akin, et al. Edrington v. Johnson, Jr., et al. In re Foundry Networks, Inc.
Derivative Litigation, Edrington v. Johnson, Jr., et al
 Vanessa Simmonds v. Deutsche Bank AG, Merrrill Lynch & Co and JPMorgan
Chase & Co. Defendants, and Foundry Networks, Inc., Nominal Defendant
 Doug Edrington v. Bobby R. Johnson, Jr., et al
 18




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##### Table of Contents



United States Attorneys Office Subpoena for Production of Documents.
 General. Accounting for Contingencies,
 7. STOCKHOLDERS EQUITY
 Share Repurchase Program.
  Total Number
    
    
    Average Priceof Shares
    
    
    Paid per
    
    
    Amount ofSix Months Ended June 30, 2008
    
    Purchased
    
    
    Share
    
    
    RepurchasesCumulative balance at December 31, 2007
    
    
    4,381
    
    
    $
    18.93
    
    
    $
    82,930Repurchase of common stock
    
    
    5,640
    
    
    
    13.40
    
    
    
    75,580Cumulative balance at June 30, 2008
    
    
    10,021
    
    
    $
    15.82
    
    
    $
    158,510
  Other Repurchases of Common Stock.
 Stock-Based Compensation Plans.
  19




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##### Table of Contents



Weighted-Average
    
    RemainingOptions
    
    Exercise
    
    Contractual
    
    AggregateOutstanding
    
    Price
    
    Life (years)
    
    Intrinsic Value(in thousands)Balance, December 31, 2007
    
    
    30,528,237
    
    
    $
    16.38Granted
    
    
    1,604,250
    
    
    $
    12.81Exercised
    
    
    (457,774
    )
    
    $
    8.02Forfeited/expired
    
    
    (579,448
    )
    
    $
    19.92Balance, June 30, 2008
    
    
    31,095,265
    
    
    $
    16.25
    
    
    
    4.04
    
    
    $
    30,861Vested and expected to vest at June 30, 2008
    
    
    29,803,257
    
    
    $
    16.28
    
    
    
    4.03
    
    
    $
    30,645Exercisable at June 30, 2008
    
    
    23,440,864
    
    
    $
    16.46
    
    
    
    3.95
    
    
    $
    29,764
   Restricted Stock Awards.
 Restricted Stock
    
    
    Weighted AverageOutstanding
    
    
    Grant Date Fair Value(in thousands)Balance, December 31, 2007
    
    
    953
    
    
    $
    16.59Granted
    
    
    
    
    
    $
    Vested
    
    
    (315
    )
    
    $
    14.68Forfeited
    
    
    
    
    
    $
    Balance, June 30, 2008
    
    
    638
    
    
    $
    17.54
  20




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##### Table of Contents



Restricted Stock Units.
 RemainingContractual
    
    AggregateShares
    
    Life (years)
    
    Intrinsic Value(in thousands)
    
    
    
    
    
    (in thousands)Balance, December 31, 2007
    
    
    1,639Awarded
    
    
    9Released
    
    
    Forfeited/expired
    
    
    (46
    )Balance, June 30, 2008
    
    
    1,602
    
    
    
    1.19
    
    
    $
    18,935Vested and expected to vest at June 30, 2008
    
    
    1,379
    
    
    
    1.14
    
    
    $
    16,300Exercisable at June 30, 2008
    
    
    
    
    
    
    
    
    
    $
    
   Employee Stock Purchase Plan.
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Cost of revenue  Product
    
    $
    430
    
    
    $
    319
    
    
    $
    905
    
    
    $
    634Cost of revenue  Service
    
    
    752
    
    
    
    414
    
    
    
    1,722
    
    
    
    863Research and development
    
    
    3,837
    
    
    
    3,440
    
    
    
    8,717
    
    
    
    6,778Sales and marketing
    
    
    4,494
    
    
    
    3,902
    
    
    
    9,972
    
    
    
    7,597General and administrative
    
    
    1,645
    
    
    
    1,818
    
    
    
    3,843
    
    
    
    3,643Total
    
    $
    11,158
    
    
    $
    9,893
    
    
    $
    25,159
    
    
    $
    19,515
  21




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8. NET INCOME PER SHARE
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(in thousands, except per share amounts)Net income
    
    $
    18,326
    
    
    $
    15,632
    
    
    $
    32,232
    
    
    $
    24,723Basic:Weighted-average shares outstanding
    
    
    145,092
    
    
    
    147,285
    
    
    
    146,163
    
    
    
    147,194Basic EPS
    
    $
    0.13
    
    
    $
    0.11
    
    
    $
    0.22
    
    
    $
    0.17Diluted:Weighted-average shares outstanding
    
    
    145,092
    
    
    
    147,285
    
    
    
    146,163
    
    
    
    147,194Add: Weighted-average dilutive potential shares
    
    
    3,967
    
    
    
    6,749
    
    
    
    4,056
    
    
    
    6,474Weighted-average shares used in computing diluted EPS
    
    
    149,059
    
    
    
    154,034
    
    
    
    150,219
    
    
    
    153,668Diluted EPS
    
    $
    0.12
    
    
    $
    0.10
    
    
    $
    0.21
    
    
    $
    0.16
  9. COMPREHENSIVE INCOME
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income
    
    $
    18,326
    
    
    $
    15,632
    
    
    $
    32,232
    
    
    $
    24,723Other comprehensive income:Net unrealized loss on available-for-sale securities
    
    
    (2,052
    )
    
    
    
    
    
    
    (6,023
    )
    
    
    Foreign currency translation adjustments
    
    
    74
    
    
    
    (118
    )
    
    
    (169
    )
    
    
    (121
    )Total comprehensive income
    
    $
    16,348
    
    
    $
    15,514
    
    
    $
    26,040
    
    
    $
    24,602
 10. SEGMENT AND GEOGRAPHIC INFORMATION
   Three Months Ended June 30,
    
    Six Months Ended June 30,2008
    
    2007
    
    2008
    
    2007Americas
    
    
    68
    %
    
    
    69
    %
    
    
    66
    %
    
    
    68
    %EMEA
    
    
    21
    %
    
    
    17
    %
    
    
    21
    %
    
    
    16
    %Asia Pacific
    
    
    8
    %
    
    
    8
    %
    
    
    9
    %
    
    
    9
    %Japan
    
    
    3
    %
    
    
    6
    %
    
    
    4
    %
    
    
    7
    %
 22




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11. INCOME TAXES
        12. SUBSEQUENT EVENTS
 Brocade Acquisition
  23




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion and analysis of our financial condition and results of operations
should be read together with our condensed consolidated financial statements and related notes
appearing elsewhere in this Form 10-Q . This discussion and analysis contains forward-looking
statements that involve risks, uncertainties and assumptions, including our expectations that our
interest income will decline over the next several quarters, that our remaining cash, cash
equivalents, short term investments and cash generated from operations will satisfy our working
capital needs, capital expenditures, commitments and other liquidity requirements associated with
our operations through at least the next 12 months, regarding our intention to vigorously defend
ourselves in certain litigation, regarding our expectation that our operating expenses will
increase modestly during the third quarter and fiscal year ended 2008, and regarding the impact of
the recent auction market failures on our liquidity. Our actual results may differ materially from
those anticipated in these forward-looking statements as a result of many factors, including, but
not limited to, those discussed in Part II, Item 1A. Risk Factors. Our recent announcement of the
agreement for Brocade to acquire Foundry may intensify certain of these risks. Readers are
cautioned not to place undue reliance on these forward-looking statements, which reflect
managements opinions only as of the date hereof. We undertake no obligation to revise or publicly
release the results of any revision to these forward-looking statements. Readers should carefully
review the risk factors described in this document as well as in other documents we file from time
to time with the SEC. All public reports filed by us with the SEC are available free of charge on
our website at www.foundrynetworks.com or from the SEC at www.sec.gov as soon as practicable after
we electronically file such reports with the SEC.
 Recent Developments
   Overview
  24




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##### Table of Contents



Critical Accounting Policies and Use of Estimates
  Results of Operations
 Net Revenue
   Three Months Ended June 30,2008
    
    
    2007% of Net
    
    
    
    
    
    
    % of Net$
    
    
    Revenue
    
    
    $
    
    
    Revenue
    
    
    $ Change
    
    
    % ChangeNet revenue:Product
    
    $
    134,843
    
    
    
    84
    %
    
    $
    120,784
    
    
    
    84
    %
    
    $
    14,059
    
    
    
    12
    %Service
    
    
    25,836
    
    
    
    16
    %
    
    
    22,456
    
    
    
    16
    %
    
    
    3,380
    
    
    
    15
    %Total net revenue
    
    $
    160,679
    
    
    
    100
    %
    
    $
    143,240
    
    
    
    100
    %
    
    $
    17,439
    
    
    
    12
    %Net product revenue:Chassis
    
    $
    97,087
    
    
    
    72
    %
    
    $
    85,757
    
    
    
    71
    %
    
    $
    11,330
    
    
    
    13
    %Stackable
    
    
    37,756
    
    
    
    28
    %
    
    
    35,027
    
    
    
    29
    %
    
    
    2,729
    
    
    
    8
    %Total net product revenue
    
    $
    134,843
    
    
    
    100
    %
    
    $
    120,784
    
    
    
    100
    %
    
    $
    14,059
    
    
    
    12
    %
 Six Months Ended June 30,2008
    
    
    2007% of Net
    
    
    
    
    
    
    % of Net$
    
    
    Revenue
    
    
    $
    
    
    Revenue
    
    
    $ Change
    
    
    % ChangeNet revenue:Product
    
    $
    260,705
    
    
    
    84
    %
    
    $
    236,002
    
    
    
    85
    %
    
    $
    24,703
    
    
    
    10
    %Service
    
    
    50,029
    
    
    
    16
    %
    
    
    43,051
    
    
    
    15
    %
    
    
    6,978
    
    
    
    16
    %Total net revenue
    
    $
    310,734
    
    
    
    100
    %
    
    $
    279,053
    
    
    
    100
    %
    
    $
    31,681
    
    
    
    11
    %Net product revenue:Chassis
    
    $
    191,484
    
    
    
    73
    %
    
    $
    168,714
    
    
    
    71
    %
    
    $
    22,770
    
    
    
    13
    %Stackable
    
    
    69,221
    
    
    
    27
    %
    
    
    67,288
    
    
    
    29
    %
    
    
    1,933
    
    
    
    3
    %Total net product revenue
    
    $
    260,705
    
    
    
    100
    %
    
    $
    236,002
    
    
    
    100
    %
    
    $
    24,703
    
    
    
    10
    %
  25




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Three Months Ended June 30,
    
    Six Months Ended June 30,2008
    
    2007
    
    2008
    
    2007Americas
    
    
    68
    %
    
    
    69
    %
    
    
    66
    %
    
    
    68
    %EMEA
    
    
    21
    %
    
    
    17
    %
    
    
    21
    %
    
    
    16
    %Asia Pacific
    
    
    8
    %
    
    
    8
    %
    
    
    9
    %
    
    
    9
    %Japan
    
    
    3
    %
    
    
    6
    %
    
    
    4
    %
    
    
    7
    %
     Gross Margin
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Gross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    Gross$
    
    
    Margin %
    
    
    $
    
    
    Margin %
    
    
    $
    
    
    Margin %
    
    
    $
    
    
    Margin %Gross margin:Product
    
    $
    83,252
    
    
    
    62
    %
    
    $
    69,089
    
    
    
    57
    %
    
    $
    160,699
    
    
    
    62
    %
    
    $
    133,170
    
    
    
    56
    %Service
    
    
    18,240
    
    
    
    71
    %
    
    
    17,012
    
    
    
    76
    %
    
    
    34,250
    
    
    
    68
    %
    
    
    32,141
    
    
    
    75
    %Total gross margin
    
    $
    101,492
    
    
    
    63
    %
    
    $
    86,101
    
    
    
    60
    %
    
    $
    194,949
    
    
    
    63
    %
    
    $
    165,311
    
    
    
    59
    %
 26




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##### Table of Contents



Operating Expenses
  Three Months Ended June 30,
    
    
    
    
    
    Six Months Ended June 30,2008
    
    2007
    
    
    
    
    
    2008
    
    2007% of Net
    
    
    
    
    
    % of Net
    
    %
    
    
    
    
    
    % of Net
    
    
    
    
    
    % of Net
    
    %$
    
    Revenue
    
    $
    
    Revenue
    
    Change
    
    $
    
    Revenue
    
    $
    
    Revenue
    
    ChangeResearch and development
    
    $
    21,925
    
    
    
    14
    %
    
    $
    17,853
    
    
    
    12
    %
    
    
    23
    %
    
    $
    43,653
    
    
    
    14
    %
    
    $
    39,103
    
    
    
    14
    %
    
    
    12
    %Sales and marketing
    
    
    46,391
    
    
    
    29
    %
    
    
    38,470
    
    
    
    27
    %
    
    
    21
    %
    
    
    93,527
    
    
    
    30
    %
    
    
    78,560
    
    
    
    28
    %
    
    
    19
    %General and administrative
    
    
    10,205
    
    
    
    6
    %
    
    
    11,771
    
    
    
    8
    %
    
    
    (13
    %)
    
    
    22,044
    
    
    
    7
    %
    
    
    22,704
    
    
    
    8
    %
    
    
    (3
    %)Other charges, net
    
    
    
    
    
    
    
    
    
    
    3,067
    
    
    
    2
    %
    
    
    (100
    %)
    
    
    
    
    
    
    
    
    
    
    5,600
    
    
    
    2
    %
    
    
    (100
    %)
   27




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28




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##### Table of Contents



Interest and Other Income, Net
  Provision for Income Taxes
  Liquidity and Capital Resources
    29




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30




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Off-Balance Sheet Arrangements and Contractual Obligations
 Contractual Commitments
  Less Than
    
    
    1-3
    
    
    3-5
    
    
    More ThanTotal
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    5 YearsOperating leases of facilities and equipment
    
    $
    13,684
    
    
    $
    5,942
    
    
    $
    7,306
    
    
    $
    434
    
    
    $
    2Purchase commitments with contract manufacturers
    
    
    65,235
    
    
    
    65,235
    
    
    
    
    
    
    
    
    
    
    
    Total contractual cash obligations
    
    $
    78,919
    
    
    $
    71,177
    
    
    $
    7,306
    
    
    $
    434
    
    
    $
    2
   Off-Balance Sheet Arrangements
  Indemnifications
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
   
 Item 4. Controls and Procedures
 Limitations on Effectiveness of Controls.
 31




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##### Table of Contents



Evaluation of Disclosure Controls and Procedures.
 Changes in Internal Control over Financial Reporting.
 
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  Our business and results of operations may be affected by our announced acquisition by Brocade
Communication Systems, Inc.
  We may suffer additional consequences if the acquisition by Brocade were not to be completed.
  
    
    We would not realize the benefits we expect from becoming a part of a combined
company with Brocade, including the potentially enhanced financial and competitive
position;
    
    Activities relating to the acquisition and related uncertainties may divert our
managements attention from our day-to-day business and cause disruptions among our
employees and to our relationships with customers and business partners, thus
detracting from our ability to grow revenue and minimize costs and possibly leading
to a loss of revenue and market position that we may not be able to regain if the
transaction does not occur;
    
    The market price of our common stock could decline following an announcement that
the acquisition has been abandoned, to the extent that the current market price
reflects a market assumption that the acquisition will be completed;
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##### Table of Contents




    
    We could be required to pay Brocade a termination fee and provide reimbursement
to Brocade for certain costs incurred;
    
    We would remain liable for our costs related to the transaction, such as legal
and accounting fees and a portion of the investment banking fees;
    
    We may not be able to continue our present level of operations and therefore
would have to scale back our present level of business and consider additional
reductions in force; and
    
    We may not be able to take advantage of alternative business opportunities or
effectively respond to competitive pressures.
   Intense competition in the market for networking solutions could prevent us from maintaining or
increasing revenue and sustaining profitability.
    We must continue to introduce new products with superior performance and features in a timely
manner in order to sustain and increase our revenue, and if we fail to predict and respond to
emerging technological trends and customers changing needs, our operating results may suffer.
  33




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Weak economic and market conditions or geopolitical turmoil may adversely affect our revenue,
gross margins and expenses.
  Our gross margins and average selling prices of our products have decreased in the past and could
decrease as a result of competitive pressures and other factors.
   Our investments in auction rate securities are subject to risks which may cause losses and affect
the liquidity of these investments.
  34




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##### Table of Contents



We depend on large, recurring purchases from certain significant customers, and a loss,
cancellation or delay in purchases by these customers could negatively affect our revenue.
   
    
    our reseller agreements generally do not require substantial minimum purchases;
    
    our customers can stop purchasing and our resellers can stop marketing our products at
any time; and
    
    our reseller agreements generally are not exclusive and are for one-year terms, with no
obligation of the resellers to renew the agreements.
  The United States government is a significant customer and has been one key to our financial
success. However, government demand is unpredictable and there is no guarantee of future contract
awards.
  35




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We purchase several key components for our products from sole sources; if these components are not
available, our revenue may be adversely affected.
    We may be subject to litigation risks and intellectual property infringement claims that are
costly to defend and could limit our ability to use certain technologies in the future.
Additionally, we may be found to infringe on intellectual property rights of others.
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If we fail to protect our intellectual property, our business and ability to compete could suffer.
   The matters relating to our Special Committee investigation into our stock option granting
practices and the restatement of our financial statements have exposed us to civil litigation
claims, regulatory proceedings and government proceedings which could burden Foundry and have a
material adverse effect on us.
  Our reliance on third-party manufacturing vendors to manufacture our products may cause a delay in
our ability to fill orders which could cause us to lose revenue.
    37




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Our ability to increase our revenue depends on expanding our direct sales operations and reseller
distribution channels and providing excellent customer support.
   Our operations in international markets involve inherent risks that we may not be able to control.
As a result, our business may be harmed if we are unable to successfully address these risks.
  
    
    seasonal reductions in business activity;
    
    potential recessions in economies outside the United States;
    
    adverse fluctuations in currency exchange rates;
    
    difficulties in managing operations across disparate geographic areas;
    
    export restrictions;
    
    unexpected changes in regulatory requirements;
    
    higher costs of doing business in foreign countries;
    
    longer accounts receivable collection cycles;
    
    potential adverse tax consequences;
    
    difficulties associated with enforcing agreements through foreign legal systems;
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
    
    infringement claims on foreign patents, copyrights, or trademark rights;
    
    natural disasters and widespread medical epidemics;
    
    military conflict and terrorist activities; and
    
    political instability.
   Because our financial results are difficult to predict and may fluctuate significantly, we may not
meet quarterly financial expectations, which could cause our stock price to decline.
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We need additional qualified personnel to maintain and expand our business. If we are unable to
promptly attract and retain qualified personnel, our business may be harmed.
   Due to the lengthy sales cycles of some of our products, the timing of our revenue is difficult to
predict and may cause us to fail to meet our revenue expectations.
  We are required to expense equity compensation given to our employees, which has reduced our
reported earnings, will significantly impact our operating results in future periods and may
reduce our stock price and our ability to effectively utilize equity compensation to attract and
retain employees.
  If we do not adequately manage and evolve our financial reporting and managerial systems and
processes, our ability to manage and grow our business may be harmed.
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We had a material weakness in our internal control over financial reporting in the past, and we
cannot assure you that additional material weaknesses will not be identified in the future. If our
internal control over financial reporting or disclosure controls and procedures are not effective,
there may be errors in our financial statements that could require a restatement or our filings
may not be timely and investors may lose confidence in our reported financial information, which
could lead to a decline in our stock price.
     If the proposed merger with Brocade does not occur, we might engage in acquisitions that could
result in dilution for our stockholders, disrupt our operations, cause us to incur substantial
expenses and harm our business if we cannot successfully integrate the acquired business,
products, technologies or personnel.
  
    
    difficulties in the assimilation of products, operations, personnel and technologies of
the acquired companies;
    
    diversion of managements attention from other business concerns;
    
    disruptions to our operations, including potential difficulties in completing ongoing
projects in a timely manner;
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
    
    risks of entering geographic and business markets in which we have no or limited prior
experience;
    
    exposure to third party intellectual property infringement claims; and
    
    potential loss of key employees of acquired organizations.
  The timing of the adoption of industry standards may negatively affect widespread market
acceptance of our products.
  If our products do not interoperate with our customers networks, our sales may be delayed or
cancelled and our business could be harmed.
  If our products contain undetected software or hardware errors, we could incur significant
unexpected expenses and lost sales and be subject to product liability claims.
  
    
    negative customer reactions;
    
    product liability claims;
    
    negative publicity regarding us and our products;
    
    delays in or loss of market acceptance of our products;
    
    product returns;
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
    
    lost sales; and
    
    unexpected expenses to remedy defects or errors.
 We may incur liabilities that are not subject to maximum loss clauses.
  Our products may not continue to comply with the regulations governing their sale, which may harm
our business.
  Our stock price has been volatile historically, which may make it more difficult to sell shares
when needed at attractive prices.
  Anti-takeover provisions could make it more difficult for a third party to acquire us.
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Our operations could be significantly hindered by the occurrence of natural disasters, terrorist
acts or other catastrophic events.
  Increases in our provision for income taxes or adverse outcomes resulting from examination of our
income or other tax returns could adversely affect our results.
 Accounting for
Uncertainty in Income Taxes
 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  MaximumApproximate DollarTotal
    
    Value of SharesTotal Number
    
    Average Price
    
    Number of Shares
    
    That May Yet Beof Shares
    
    Paid per
    
    Purchased as Part of
    
    Purchased Under thePeriod
    
    Purchased (1)
    
    Share (1)
    
    Repurchase Program(2)
    
    Repurchase Program (2)April 1  30
    
    
    858,449
    
    
    $
    12.88
    
    
    
    810,300
    
    
    $
    146,535,499May 1  31
    
    
    413,808
    
    
    $
    12.78
    
    
    
    409,900
    
    
    $
    141,289,432June 1  30
    
    
    4,024
    
    
    $
    11.82
    
    
    
    
    
    
    $
    141,289,432Total
    
    
    1,276,281
    
    
    $
    12.84
    
    
    
    1,220,200
    
    
    $
    141,289,432
 
 (1)
    
    Includes 56,081 shares repurchased to satisfy tax withholding obligations that arise on the
vesting of restricted stock awards.(2)
    
    In July 2007, the Companys Board of Directors approved a share repurchase program
authorizing the Company to purchase up to $200 million of its common stock. In April 2008, the
Companys Board of Directors approved an increase to the size of the share repurchase program
of an additional $100 million. This approval expands the share repurchase authorization to
$300 million. During the three months ending June 30, 2008, the Company repurchased and
retired 1,220,200 shares of common stock at a weighted average price of $12.84 per share for
an aggregate purchase price of approximately $15.7 million including the related transaction fees. Since inception of the stock repurchase program, the Company repurchased and
retired 10,020,922 shares of its 44




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common stock at a weighted-average price of $15.82 per share for
an aggregate purchase price of $158.7 million including the related transaction fees. The
remaining authorized amount for stock repurchases under this program, including the expansion
amount announced in April 2008, was approximately $141.3 million and will expire on December 31,
2008. However, in light of our proposed acquisition of the Company by Brocade, we do not
currently anticipate buying back any additional shares under the share repurchase program. 
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
   Number of VotesName of Director Nominee
    
    For
    
    Against
    
    WithheldBobby R. Johnson, Jr.
    
    
    129,951,637
    
    
    
    2,086,554
    
    
    
    3,033,708Alfred J. Amoroso
    
    
    129,922,243
    
    
    
    2,120,350
    
    
    
    3,029,306C. Nicholas Keating
    
    
    129,930,500
    
    
    
    2,115,152
    
    
    
    3,026,247J. Steven Young
    
    
    129,906,559
    
    
    
    2,140,292
    
    
    
    3,025,048Alan L. Earhart
    
    
    129,984,173
    
    
    
    2,060,162
    
    
    
    3,027,564Celeste Volz Ford
    
    
    129,943,699
    
    
    
    2,088,057
    
    
    
    3,040,143
  Number of VotesFor
    
    
    Against
    
    
    AbstainRatification of appointment
    
    
    131,916,273
    
    
    
    121,309
    
    
    
    3,034,317
 
 Item 5. Other Information
  
 Item 6. Exhibits
 Number
    
    Description10.22
    
    Foundry Networks Inc. 2008 Executive Performance Incentive Plan (Filed as Exhibit 10.22
to registrants current report on Form 8-K on June 11, 2008 and incorporated herein by
reference).31.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the
Securities Exchange Act of 1934.31.2
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the
Securities Exchange Act of 1934.32.1
    
    Certification of Chief Executive Officer pursuant to Section 18 U.S.C. Section 1350.32.2
    
    Certification of Chief Financial Officer pursuant to Section 18 U.S.C. Section 1350.
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SIGNATURE
  Foundry Networks, Inc.(Registrant)By:
    
    /s/ Daniel W. FairfaxDaniel W. FairfaxVice President, Finance and Administration andChief Financial Officer(Principal Financial and Accounting Officer)
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Exhibit Index
 Number
    
    Description10.22
    
    Foundry Networks Inc. 2008 Executive Performance Incentive Plan (Filed as Exhibit 10.22 to
registrants current report on Form 8-K on June 11, 2008 and incorporated herein by
reference).31.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the
Securities Exchange Act of 1934.31.2
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the
Securities Exchange Act of 1934.32.1
    
    Certification of Chief Executive Officer pursuant to Section 18 U.S.C. Section 1350.32.2
    
    Certification of Chief Financial Officer pursuant to Section 18 U.S.C. Section 1350.
 47