Segments (Notes)

9 Months Ended

Sep. 30, 2011

Segment Reporting [Abstract]

Segments [Text Block]

Segments

The Company’s chief operating decision maker (“CODM”) allocates resources and assesses performance based on financial information by the Company’s business groups. The Company’s operations are organized into two reportable segments: Infrastructure and Service Layer Technology ("SLT"). The Infrastructure segment consists of routing and switching products and services. Routing includes products and services from the E, M, MX, PTX, and T Series router families, and the network application platform, Junos Space. Switching primarily consists of products and services for EX Series and wireless local area network solutions, as well as, QFabric. The SLT segment includes SRX services and vGW virtual gateways, Firewall virtual private network systems and appliances, secure socket layer virtual private network appliances, the J Series router product family, intrusion detection and prevention appliances, wide area network optimization platforms, and Junos Pulse.

The primary financial measure used by the CODM in assessing performance of the segments is segment operating income, which includes certain cost of revenues, research and development (“R&D”) expenses, sales and marketing expenses, and general and administrative (“G&A”) expenses. The CODM does not allocate certain miscellaneous expenses to its segments even though such expenses are included in the Company’s management operating income.

For arrangements with both Infrastructure and SLT products and services, revenue is attributed to the segment based on the underlying purchase order, contract, or sell-through report. Direct costs and operating expenses, such as standard costs, R&D, and product marketing expenses, are generally applied to each segment. Indirect costs, such as manufacturing overhead and other cost of revenues, are allocated based on standard costs. Indirect operating expenses, such as sales, marketing, business development, and G&A expenses are generally allocated to each segment based on factors including headcount, usage, and revenue. The CODM does not allocate share-based compensation, amortization of purchased intangible assets, restructuring and impairment charges, gains or losses on equity investments, other net income and expense, income taxes, or certain other charges to the segments.

The following table summarizes financial information for each segment used by the CODM (in millions):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
Net revenues:
Infrastructure:
Routers	$	703.0		$	642.6		$	2,213.6		$	1,872.1
Switches	131.5			101.5			359.8			271.0
Total Infrastructure	834.5			744.1			2,573.4			2,143.1
SLT	271.3			268.3			754.6			760.2
Total net revenues	1,105.8			1,012.4			3,328.0			2,903.3
Segment operating income:
Infrastructure	154.6			179.9			573.8			537.6
SLT	66.6			64.6			135.4			152.3
Total segment operating income	221.2			244.5			709.2			689.9
Amortization of purchased intangible assets (1)	(6.7		)	(2.4		)	(20.2		)	(5.0		)
Share-based compensation expense	(60.5		)	(44.4		)	(169.6		)	(129.6		)
Share-based payroll tax expense	(0.2		)	(0.5		)	(9.2		)	(3.8		)
Restructuring	(16.8		)	(0.2		)	(15.6		)	(8.6		)
Acquisition-related and other charges (2)	—			(1.5		)	(9.3		)	(2.1		)
Total operating income	137.0			195.5			485.3			540.8
Other (expense) income, net	(15.9		)	0.2			(36.1		)	5.7
Income before income taxes and noncontrolling interest	$	121.1		$	195.7		$	449.2		$	546.5

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(1) Amount includes amortization expense of purchased intangible assets in operating expenses and in cost of revenues.

(2) Amount includes acquisition-related costs in operating expenses and in cost of revenues.

Depreciation expense allocated to the Infrastructure segment was $28.7 million and $81.3 million in the three and nine months ended September 30, 2011, respectively, and $27.8 million and $78.9 million in three and nine months ended September 30, 2010, respectively. Depreciation expense allocated to the SLT segment was $8.0 million and $24.5 million in the three and nine months ended September 30, 2011, respectively, and $9.4 million and $28.5 million in the three and nine months ended September 30, 2010, respectively.

The Company attributes revenues to geographic region based on the customer’s ship-to location. The following table shows net revenues by geographic region (in millions):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2011		2010		2011		2010
Americas:
United States	$	502.3	$	481.2	$	1,552.3	$	1,368.0
Other	54.2		51.6		164.6		147.4
Total Americas	556.5		532.8		1,716.9		1,515.4
Europe, Middle East, and Africa	311.3		275.9		940.2		829.5
Asia Pacific	238.0		203.7		670.9		558.4
Total	$	1,105.8	$	1,012.4	$	3,328.0	$	2,903.3

During the three and nine months ended September 30, 2011, no single customer accounted for 10% or more of net revenues. During the three months ended September 30, 2010, no single customer accounted for 10% or more of net revenues, and during the nine months ended September 30, 2010, Verizon accounted for 10.0% of net revenues.

The Company tracks assets by physical location. The majority of the Company’s assets, excluding cash and cash equivalents and investments, as of September 30, 2011, and December 31, 2010, were attributable to U.S. operations. As of September 30, 2011, and December 31, 2010, gross property and equipment held in the U.S., as a percentage of total property and equipment, was approximately 80%. Although management reviews asset information on a corporate level and allocates depreciation expense by segment, the CODM does not review asset information on a segment basis.