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61
During fiscal 2010, the U.S. dollar strengthened against both the Euro and British pound causing revenue in EMEA measured
in average U.S. Dollar equivalents to decrease as compared to fiscal 2009. Revenue in Japanese Yen was favorably impacted as
the U.S. Dollar weakened against this currency as compared to fiscal 2009. Other currencies in Asia, specifically the Australian
Dollar also strengthened against the U.S. Dollar resulting in a favorable impact to revenue during fiscal 2010. We had no comparable
impact to revenue from the Australian Dollar during fiscal 2009. During fiscal 2010, our EMEA and Japanese Yen currency hedging
programs resulted in hedging gains as noted above.
See Note 19 of our Notes to Consolidated Financial Statements for further geographic information.
Product Backlog
The actual amount of product backlog at any particular time may not be a meaningful indicator of future business prospects.
Shippable backlog is comprised of unfulfilled orders, excluding those associated with new product releases, those pending credit
review and those not shipped due to the application of our global inventory policy. Our shippable backlog at the end of the fourth
quarter of fiscal 2010 was approximately 5% of fourth quarter fiscal 2010 revenue. We had minimal shippable backlog at the end
of the fourth quarter of fiscal 2011. We expect that our shippable backlog will be insignificant in future periods.
Cost of Revenue (dollars in millions)
Product
Percentage of total revenue
Subscription
Percentage of total revenue
Services and support
Percentage of total revenue
Total cost of revenue
Fiscal
2011
$ 125.7
3%
194.0
5%
118.2
3%
$ 437.9
Fiscal
2010
$ 127.5
3%
195.6
5%
80.4
2%
$ 403.5
Fiscal
2009
$ 180.6
6%
48.3
2%
67.8
2%
$ 296.7
% Change
2011-2010
(1)%
(1)%
47 %
9 %
% Change
2010-2009
(29)%
*
19 %
36 %
_________________________________________
(*) Percentage is greater than 100%.
Product
Cost of product revenue includes product packaging, third-party royalties, excess and obsolete inventory, amortization
related to localization costs, purchased intangibles and acquired rights to use technology and the costs associated with the
manufacturing of our products.
Cost of product revenue decreased due to the following:
Amortization of purchased intangibles
Royalty cost
Localization costs related to our product launches
Cost of sales
Various individually insignificant items
Total change
% Change
2011-2010
6 %
(3)
—
—
(4)
(1)%
% Change
2010-2009
(23)%
(5)
(7)
4
2
(29)%
Amortization of purchased intangibles increased during fiscal 2011 as compared to fiscal 2010, primarily due to amortization
expense associated with intangible assets purchased through recent acquisitions. Amortization of purchased intangibles decreased
during fiscal 2010 as compared to fiscal 2009 due to a decrease in amortization of $80.0 million associated with certain intangible
assets purchased through the Macromedia acquisition which were fully amortized during fiscal 2009.
Royalty costs decreased during fiscal 2011 as compared to fiscal 2010 and decreased during fiscal 2010 as compared to
fiscal 2009, primarily due to a decrease in obligations to certain key vendors.
The decrease in localization costs during fiscal 2010 as compared to fiscal 2009 was primarily due to capitalized localization
costs associated with CS4 products becoming fully amortized at the end of fiscal 2009, offset in part by new localization costs
incurred as a result of the launch of CS5 products during fiscal 2010.
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