Adobe 2002 Annual Report Download - page 60

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29
The decrease in revenue from the above-mentioned segments in fiscal 2002 compared to fiscal 2001 was
partially offset by an increase of $9.0 million, or 3%, in our ePaper Solutions segment. This segment increased from
$291.9 million in fiscal 2001 to $300.9 million in fiscal 2002, primarily due to a 5% increase in Acrobat revenue in
the U.S. and an increase in revenue of $21.5 million from our newly-acquired Accelio business.
Fiscal 2001 Revenue Compared to Fiscal 2000 Revenue
During fiscal 2001, our overall product revenue decreased 3%, or $36.7 million, compared to fiscal 2000,
primarily due to adverse economic conditions, especially in the U.S., and a decline in revenue from our Graphics,
Cross-media Publishing, and OEM PostScript and Other segments for the reasons explained below.
Revenue from our Graphics segment decreased 10%, or $58.7 million, from $602.1 million in fiscal 2000 to
$543.4 million in fiscal 2001. We attribute this decrease in Graphics segment revenue primarily to severe economic
pressure on the creative professional and consumer markets, as well as product lifecycle timing and the decline in
spending on Web-focused software tools. As a result of these factors, we experienced an 11% decrease in our digital
imaging software revenue and a 17% decrease in our illustration software revenue when comparing fiscal 2001 to
fiscal 2000.
The declines in our fiscal 2001 Graphics business were partially offset by a 14% year-over-year revenue
increase in our digital video software products. Growth in our digital video software revenue was driven by new
updates of our products in fiscal 2001.
Revenue from our Cross-media Publishing segment decreased 11%, or $35.6 million, from $325.2 million in
fiscal 2000 to $289.6 million in fiscal 2001. The largest factors contributing to the Cross-media Publishing segment
revenue decline were a 25% year-over-year decline in our Web publishing software revenue due to weakness in the
Web layout and Web animation products market, a 23% year-over-year decline in type and technical publishing
products due to product lifecycle timing and overall economic weakness in the geographic markets in which these
products are used, and a 19% decline in our business publishing software revenue due to the adoption of our Adobe
Design Collection product (especially by creative professionals) instead of our Adobe Publishing
Collection product.
The declines in our fiscal 2001 Cross-media Publishing segment were partially offset by a 55% year-over-year
revenue increase from our professional page layout publishing products due to increased marketing and promotional
activities for these products throughout the year.
Revenue from our OEM PostScript and Other segment decreased 20%, or $26.7 million, from $131.5 million in
fiscal 2000 to $104.8 million in fiscal 2001, due to the following factors: continued weakness in the print business,
renegotiated pricing with certain OEM customers, and the outsourcing of certain OEM accounts to a third party
solution provider.
The decrease in revenue from the above mentioned segments in fiscal 2001 compared to fiscal 2000 was
partially offset by an increase of 41%, or $84.3 million, in our ePaper Solutions segment, as it increased from $207.6
million in fiscal 2000 to $291.9 million in fiscal 2001, due to the release of our Acrobat 5.0 product in the second
quarter of fiscal 2001, as well as the continuing movement from paper-based processes to electronic workflows by
enterprises and government agencies which contributed to broader adoption of our ePaper products.
Services and Support
Services and support is composed of professional services (such as consulting services and training) and
support (such as maintenance and technical support) primarily related to the products we acquired from Accelio.
Professional services revenue is recognized using the percentage of completion method and is measured monthly
based primarily on input measures, such as on hours incurred to date compared to total estimated hours to complete,
with consideration given to output measures, such as contract milestones, when applicable. Our professional services
revenue depends in large part on our software license revenue from the products that we acquired from Accelio. A
significant portion of our support revenue is composed of our extended Enterprise Maintenance and Support
offerings, which entitles customers to receive product upgrades and enhancements during the term of the
maintenance and support period, which is typically one year. Our support revenue depends on both our software
license revenue and renewals of our maintenance agreements. Our support revenue also includes support for our