Segment Information

9 Months Ended

Aug. 02, 2014

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. Financial decisions and the allocation of resources are based on the information from the Company’s internal management reporting system. Currently, the Company’s CODM is its Chief Executive Officer.

Prior to the second quarter of fiscal year 2014, Brocade was organized into four operating segments, and three individually reportable segments, summarized as follows:

Operating Segments	Individually Reportable Segments (1)
SAN Products	SAN Products
Global Services	Global Services
Ethernet Switching & IP Routing ADP	IP Networking Products (2)

⁽¹⁾  These reportable segments were organized principally by product category.

⁽²⁾  Ethernet Switching & IP Routing and ADP were combined to form the reportable segment: IP Networking Products.

In the second quarter of fiscal year 2014, Brocade changed its internal financial reporting, realigning it with the changes in Brocade’s strategic focus on key technology segments. As a result of this change, the number of the Company’s operating segments was reduced from four to three operating segments. Ethernet Switching & IP Routing and ADP business components were combined into the IP Networking Products operating segment, and separate discrete financial information is no longer available for either Ethernet Switching & IP Routing or ADP components. The reportable segments did not change as a result of this change in the Company’s internal financial reporting. Therefore, the restatement of previously reported segment information is not necessary.

At this time, the Company does not track all of its assets by operating segments. The majority of the Company’s assets as of August 2, 2014, were attributable to its U.S. operations.

Summarized financial information by reportable segment for the three and nine months ended August 2, 2014, and July 27, 2013, based on the internal management reporting system, is as follows (in thousands):

	SAN Products		IP Networking Products		Global Services		Total
Three months ended August 2, 2014
Net revenues	$	325,238	$	132,559	$	87,667	$	545,464
Cost of revenues	83,938		61,580		38,233		183,751
Gross margin	$	241,300	$	70,979	$	49,434	$	361,713
Three months ended July 27, 2013
Net revenues	$	314,087	$	133,906	$	88,558	$	536,551
Cost of revenues	85,611		74,830		37,908		198,349
Gross margin	$	228,476	$	59,076	$	50,650	$	338,202
Nine months ended August 2, 2014
Net revenues	$	1,001,858	$	373,424	$	271,627	$	1,646,909
Cost of revenues	261,393		180,023		116,818		558,234
Gross margin	$	740,465	$	193,401	$	154,809	$	1,088,675
Nine months ended July 27, 2013
Net revenues	$	994,909	$	407,077	$	262,078	$	1,664,064
Cost of revenues	270,461		228,954		118,410		617,825
Gross margin	$	724,448	$	178,123	$	143,668	$	1,046,239