Adobe 2002 Annual Report Download - page 59

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28
Adobe Content Server, eBooks, and PressReady. The ePaper Solutions segment includes Adobe Acrobat software
and other Acrobat related technologies, Document Server, Form Server, Output Server, and Workflow Server. The
OEM Postscript and Other segment includes printing technology to create and print simple or visually rich
documents with precision.
Beginning in the first quarter of fiscal year 2003, we realigned our business segments to reflect the recent
change in the way we manage our business. The former Graphics segment has been renamed the Digital Imaging
and Video segment. The former Cross-media Publishing segment has been renamed the Creative Professional
segment and includes two products that were formerly included in our Graphics segment, Adobe Illustrator and
Adobe Graphics Server (formerly called Adobe AlterCast). There were no changes to our ePaper and OEM
Postscript and Other segments. The management discussion and analysis that follows is based on our segment
reporting that was in effect throughout fiscal 2002. For more information on both our old and new segment
reporting, please refer to Note 17 of our Notes to Consolidated Financial Statements.
Products
Fiscal 2002 Revenue Compared to Fiscal 2001 Revenue
During fiscal 2002, our products revenue decreased 6%, or $76.6 million, compared to fiscal 2001, primarily
due to continued economic weakness in Asia, Europe, and the U.S., as well as declines in revenue from our
Graphics, Cross-media Publishing, and OEM PostScript and Other segments, for reasons explained below.
Revenue from our Graphics segment decreased 7%, or $40.4 million, from $543.4 million in fiscal 2001 to
$503.0 million in fiscal 2002. The annual decrease in revenue in our Graphics segment was primarily due to a 13%
year-over-year decline in our illustration software revenue, due to product lifecycle timing and the continued
economic impact on creative professional customers, who are the main end-user market for this software. We also
experienced a 3% overall decline in our digital imaging software revenue, which includes the Adobe Photoshop,
Adobe Photoshop Elements, and Adobe PhotoDeluxe products. We believe the decline in digital imaging software is
due to a combination of the economic weakness across the world, the impact of lower marketing spending by
corporations resulting in a reduced number of creative professional customers, and the trend of our customers
migrating towards the purchasing of Adobe Collection products as opposed to individual products. In addition, we
experienced a 15% year-over-year decline in our digital video software licensing, which is made up of our Adobe
Premiere, Adobe After Effects, and our Adobe Digital Video Collection products, due to product lifecycle timing
and the economic impact on the digital video software market.
Revenue from our Cross-media Publishing segment decreased 10%, or $29.4 million, from $289.6 million in
fiscal 2001 to $260.2 million in fiscal 2002. The annual decrease in revenue from our Cross-media Publishing
segment during fiscal 2002 compared to fiscal 2001 was due to multiple factors. In the Web publishing segment, we
experienced a 35% decline in revenue from our Web-focused products: Adobe GoLive and the Adobe Web
Collection. We attribute this decline to weakness in the Web publishing segment and less sales and marketing
emphasis. In addition, we experienced a 23% year-over-year decline in our business publishing revenue, which is
derived from our PageMaker and Adobe Publishing Collection products. We attribute this decline to the weaker
global economy in 2002 when compared to 2001, the adoption of our Adobe Design Collection product (especially
by creative professionals) instead of the Adobe Publishing Collection product, and less sales and marketing
emphasis. Finally, we experienced a 29% year-over-year decline in type and technical publishing products, which
includes our Adobe FrameMaker product, due to overall economic weakness in the geographic markets in which
these products are used.
The decrease in revenue from these Cross-media products in fiscal 2002 compared to fiscal 2001 was partially
offset by a 42% increase in revenue in our professional layout publishing products, which includes revenue from our
InDesign, Adobe Design Collection, and Adobe Creative Suites products. We attribute this revenue increase to
increased marketing activities and growing customer demand.
Revenue from our OEM PostScript and Other segment decreased 15%, or $15.8 million, from $104.8 million in
fiscal 2001 to $89.0 million in fiscal 2002, due to the following factors: continued weakness in the print business,
lower average selling prices generating less royalties from certain OEM customers, and smaller OEM customers
transferring to clone PostScript technologies. Revenue from this segment has declined over the last few years and
we expect this trend to continue, but if it significantly exceeds our expectations, it may harm our future results.