Segment Information

12 Months Ended

Oct. 27, 2012

Segment Reporting [Abstract]

Segment Information

Segment Information

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”), or decision-making group, in deciding how to allocate resources and in assessing performance. Currently, the CODM is the Chief Executive Officer.

Brocade is organized into four operating segments, of which two are individually reportable segments: Storage Area Networking (“SAN”) Products, formerly referred to as Data Storage Products, and Global Services. The other two operating segments, Ethernet Switching & Internet Protocol (“IP”) Routing and Application Delivery Products (“ADP”), combine to form a third reportable segment: IP Networking Products, formerly referred to as Ethernet Products. These segments are organized principally by product category. The types of products and services from which each reportable segment derives its revenues are as follows:

• SAN Products include infrastructure products and solutions that assist customers in the development and delivery of storage and server consolidation, disaster recovery and data security, and in meeting compliance issues regarding data management. These products are used to build storage area networks and are generally used in conjunction with servers and storage subsystems, SAN interconnection components such as host bus adapters (“HBAs”), and server and storage management software applications and tools. Brocade’s family of Fibre Channel (“FC”) SAN backbones, directors, fabric and embedded switches provide interconnections, bandwidth and high-speed routing of data between servers and storage devices. Switches and directors support applications such as data backup, remote mirroring and high-availability clustering, as well as high-volume transaction processing applications such as enterprise resource planning and data warehousing. Brocade’s storage networking products also include HBAs, which connect host computers to a FC network. Additionally, Brocade offers a variety of fabric extension, switching and routing solutions;

• IP Networking Products include Open Systems Interconnection Reference Model (“OSI”) Layer 2 and Layer 3 switches and routers that are designed to connect users in an enterprise network, enabling network connectivity such as access to the Internet, network-based communications, and collaboration through unified messaging applications and mobility. Brocade also offers converged network products, and a portfolio of platforms designed for service provider environments as well as carrier Ethernet products. Additionally, the Company offers OSI Layer 4—7 solutions that are designed for application traffic management and server load balancing; and

• Global Services include break/fix maintenance, installation, consulting, network management and software maintenance and customer support revenue.

Financial decisions and the allocation of resources are based on the information from the Company’s internal management reporting system. At this point in time, the Company does not track all of its assets by operating segments. The majority of the Company’s assets as of October 27, 2012, October 29, 2011 and October 30, 2010 were attributable to its United States operations.

Summarized financial information by reportable segment for the years ended October 27, 2012, October 29, 2011 and October 30, 2010, based on the internal management reporting system, is as follows (in thousands):

	SAN Products		IP Networking Products		Global Services		Total
Fiscal Year Ended October 27, 2012
Net revenues	$	1,356,099	$	534,757	$	346,914	$	2,237,770
Cost of revenues	362,608		327,248		164,895		854,751
Gross margin	$	993,491	$	207,509	$	182,019	$	1,383,019
Fiscal Year Ended October 29, 2011
Net revenues	$	1,237,994	$	551,820	$	357,628	$	2,147,442
Cost of revenues	356,013		321,183		186,712		863,908
Gross margin	$	881,981	$	230,637	$	170,916	$	1,283,534
Fiscal Year Ended October 30, 2010
Net revenues	$	1,240,626	$	488,188	$	362,339	$	2,091,153
Cost of revenues	394,506		288,980		176,547		860,033
Gross margin	$	846,120	$	199,208	$	185,792	$	1,231,120

Revenues are attributed to geographic areas based on where the Company’s products are shipped. Geographic revenue and property and equipment information for the years ended October 27, 2012, October 29, 2011 and October 30, 2010 is presented below (in thousands):

	Fiscal Year Ended
	October 27, 2012		October 29, 2011		October 30, 2010
Net revenues:
United States	$	1,414,390	$	1,313,302	$	1,338,262
International
Europe, the Middle East and Africa (1)	493,979		502,999		482,707
Asia Pacific	186,244		212,636		173,243
Japan	99,887		75,542		58,914
Canada, Central and South America	43,270		42,963		38,027
Total international net revenues	823,380		834,140		752,891
Total net revenues	$	2,237,770	$	2,147,442	$	2,091,153

(1) Includes net revenues of $259.2 million, $257.5 million and $254.4 million for the years ended October 27, 2012, October 29, 2011 and October 30, 2010, respectively, relating to the Netherlands.

	Fiscal Year Ended
	October 27, 2012		October 29, 2011		October 30, 2010
Property and equipment, net:
United States	$	500,744	$	515,940	$	524,287
International	18,196		16,444		14,830
Total Property and equipment, net	$	518,940	$	532,384	$	539,117