Adobe 2003 Annual Report Download - page 93

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to believe the customer’s ability to pay is not probable, due to country risk or credit risk, we will not
recognize the revenue. We will revert to recognizing the revenue on a cash basis, assuming all other criteria
for revenue recognition has been met. For discussion of significant customers as of November 28, 2003, see
Note 16.
We derive a significant portion of our OEM PostScript and Other licensing revenue from a small
number of OEM partners. Our OEM partners on occasion seek to renegotiate their royalty arrangements.
We evaluate these requests on a case-by-case basis. If an agreement is not reached, a customer may decide
to pursue other options, which could result in lower licensing revenue for us.
Note 16. Industry Segment, Geographic Information, and Significant Customers
At the beginning of fiscal 2003, we realigned our business segments to reflect the way we manage our
business. We have four reportable segments that offer different product lines: Digital Imaging and Video,
Creative Professional, ePaper (renamed Intelligent Documents beginning fiscal 2004), and OEM PostScript
and Other. The Digital Imaging and Video segment provides users with software for creating, editing,
enhancing and sharing digital images and photographs, digital video and animations. The Creative
Professional segment provides software for professional page layout, professional Web page layout,
graphic and illustration creation, technical document publishing and business publishing. The ePaper
segment provides electronic document distribution software that allows users to create, enhance, annotate
and securely send Adobe PDF files that can be shared, viewed, navigated and printed exactly as intended
on a broad range of hardware and software platforms. In addition, this segment provides server-based
solutions for enterprises and government agencies in the areas of document generation, document
collaboration and document process management. The OEM PostScript and Other segment includes
printing technology used to create and print simple or visually rich documents with precision.
The accounting policies of the operating segments are the same as those described in Note 1. With the
exception of goodwill, we do not identify or allocate our assets by operating segment. See Note 5 for the
allocation of goodwill to our reportable segments.
Our results for fiscal years 2003, 2002 and 2001 are reported by operating segments below:
Digital
Imaging and
Video
Creative
Professional ePaper
OEM
PostScript
and Other Total
Fiscal 2003
Revenue............................................. $ 392,442 $ 368,549 $ 444,056 $ 89,702 $ 1,294,749
Cost of revenue.................................. 33,501 20,818 33,501 5,202 93,022
Gross profit........................................ $ 358,941 $ 347,731 $ 410,555 $ 84,500 $ 1,201,727
Gross profit as a percentage of
revenues ............................................ 92% 94% 92% 94% 93%
Fiscal 2002
Revenue............................................. $ 411,929 $ 351,268 $ 312,544 $ 89,047 $ 1,164,788
Cost of revenue.................................. 30,073 43,761 24,682 5,772 104,288
Gross profit........................................ $ 381,856 $ 307,507 $ 287,862 $ 83,275 $ 1,060,500
Gross profit as a percentage of
revenues ............................................ 93% 88% 92% 94% 91%
Fiscal 2001
Revenue ............................................. $ 439,734 $ 393,309 $ 291,886 $ 104,791 $ 1,229,720
Cost of revenue.................................. 26,563 33,827 15,835 5,226 81,451
Gross profit........................................ $ 413,171 $ 359,482 $ 276,051 $ 99,565 $ 1,148,269
Gross profit as a percentage of
revenues ............................................ 94% 91% 95% 95% 93%