Segment Information

9 Months Ended

Jul. 30, 2011

Segment Information

Segment Information

14. 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: Data Storage Products and Global Services; and the two other operating segments, Ethernet Switching & Internet Protocol ("IP") Routing and Application Delivery Products ("ADP"), combine to form a third reportable segment: 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:

• Data Storage Products includes infrastructure products and solutions including directors, switches, routers, fabric-based software applications, distance/extension products, as well as management applications and utilities to centralize data management. Data Storage Products also includes the server portfolio, which is comprised of host bus adapters ("HBAs"), mezzanine cards, as well as switch modules for bladed servers;

• Ethernet Products includes Open Systems Interconnection Reference Model ("OSI") Layer 2-3 switches and routers which enable efficient use of bandwidth-intensive network business applications and digital entertainment on both local area networks and wide area networks, converged network products, and OSI Layer 4-7 switches which allow enterprises and service providers to build highly available network infrastructures that efficiently direct the flow of traffic; and

• Global Services include break/fix maintenance, extended warranty, installation, consulting, network management, and related software maintenance and 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 July 30, 2011 were attributable to its United States operations.

Summarized financial information by reportable segment for the three and nine months ended July 30, 2011 and July 31, 2010, based on the internal management reporting system, is as follows (in thousands):

	Data Storage Products		Ethernet Products		Global Services		Total
Three months ended July 30, 2011
Net revenues	$	275,391	$	138,907	$	88,552	$	502,850
Cost of revenues		69,219		80,102		47,002		196,323
Gross margin	$	206,172	$	58,805	$	41,550	$	306,527
Three months ended July 31, 2010 (1)
Net revenues	$	293,380	$	122,061	$	88,811	$	504,252
Cost of revenues		95,613		79,779		43,439		218,831
Gross margin	$	197,767	$	42,282	$	45,372	$	285,421
Nine months ended July 30, 2011
Net revenues	$	935,129	$	393,692	$	268,148	$	1,596,969
Cost of revenues		267,522		230,490		142,939		640,951
Gross margin	$	667,607	$	163,202	$	125,209	$	956,018
Nine months ended July 31, 2010 (1)
Net revenues	$	926,576	$	345,631	$	270,316	$	1,542,523
Cost of revenues		297,908		204,303		132,467		634,678
Gross margin	$	628,668	$	141,328	$	137,849	$	907,845

(1) The three and nine months ended July 31, 2010 reflects the reclassification of SE costs from cost of revenue to sales and marketing expenses. See Note 1, "Basis of Presentation," of the Notes to Condensed Consolidated Financial Statements.