Segment Information

12 Months Ended

Oct. 26, 2013

Segment Reporting [Abstract]

Segment Information

Segment Information

Operating segments are defined as components of an enterprise for 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 Company’s CODM is its Chief Executive Officer.

Brocade is organized into four operating segments: Storage Area Networking (“SAN”) Products, Global Services, Ethernet Switching & Internet Protocol (“IP”) Routing, and Application Delivery Products (“ADP”). SAN and Global Services are two individually reportable segments, and the other two operating segments, Ethernet Switching & IP Routing and ADP, combine to form a third reportable segment: IP Networking 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 26, 2013, October 27, 2012, and October 29, 2011, were attributable to its United States operations.

Summarized financial information by reportable segment for the years ended October 26, 2013, October 27, 2012, and October 29, 2011, based on the internal management reporting system, is as follows (in thousands):

	SAN Products		IP Networking Products		Global Services		Total
Fiscal Year Ended October 26, 2013
Net revenues	$	1,318,509	$	552,058	$	352,297	$	2,222,864
Cost of revenues	355,388		302,974		155,623		813,985
Gross margin	$	963,121	$	249,084	$	196,674	$	1,408,879
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

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 26, 2013, October 27, 2012, and October 29, 2011 is presented below (in thousands):

	Fiscal Year Ended
	October 26, 2013		October 27, 2012		October 29, 2011
Net revenues:
United States	$	1,351,242	$	1,414,390	$	1,313,302
International
Europe, the Middle East and Africa (1)	552,734		493,979		502,999
Asia Pacific	181,461		186,244		212,636
Japan	97,259		99,887		75,542
Canada, Central and South America	40,168		43,270		42,963
Total international net revenues	871,622		823,380		834,140
Total net revenues	$	2,222,864	$	2,237,770	$	2,147,442

⁽¹⁾  Includes net revenues of $339.1 million, $259.2 million and $257.5 million for the years ended October 26, 2013, October 27, 2012, and October 29, 2011, respectively, relating to the Netherlands.

	Fiscal Year Ended
	October 26, 2013		October 27, 2012		October 29, 2011
Property and equipment, net:
United States	$	457,622	$	500,744	$	515,940
International	15,318		18,196		16,444
Total property and equipment, net	$	472,940	$	518,940	$	532,384