· Hardware, software and service revenue increased by 28.5%, 18.1% and 3.9%,
respectively, compared to fiscal year 2011. We believe these changes were
primarily due to an improvement in demand from our clients as a result of a
modest improvement in global economic conditions in fiscal year 2012.
· The increase in hardware revenue was primarily due to increased sales of our
Workstation products and several large computer equipment sales to our retail
clients compared to fiscal year 2011.
· The increase in software revenue primarily reflects increased sales in our
hotel and retail software products. This increase was partially offset by
software revenue from a major Simphony rollout by a large customer in fiscal
· The increase in service revenue also reflects the continued expansion of our
customer base and new products and services offerings including hosting and
software-as-a-service. Cost of Sales The following table provides information regarding our cost of sales in fiscal years 2012 and 2011: Fiscal Year Ended June 30, 2012 2011 Cost % of Related Cost % of Related (in thousands) of Sales Revenue of Sales Revenue Hardware
$ 152,24264.0 % $ 126,66763.7 % Software 20,779 14.6 % 21,200 16.7 % Service 319,900 44.0 % 299,923 44.0 %
Total Cost of Sales
$ 492,92144.5 % $ 447,790
For fiscal year 2012, cost of sales as a percent of revenue increased 0.1% to 44.5% compared to 44.4% in fiscal year 2011. Hardware cost of sales as a percent of related revenue increased primarily as a result of unfavorable product mix between
MICROShardware products sales and third party hardware sales including several large OEM and computer equipment hardware sales in fiscal year 2012 that had lower than average margin. This increase was partially offset by lower freight costs and write down of inventory as a percent of revenue compared to fiscal year 2011. Software cost of sales as a percent of related revenue decreased primarily due to lower software amortization expense (included in software cost of sales) both in amount and as a percent of revenue as compared to fiscal year 2011. The lower amortization expense reflects the fact that some of our retail capitalized software products became fully amortized in fiscal years 2011 and 2012. Service cost of sales as a percent of related revenue was 44.0% for both fiscal years 2012 and 2011. The foreign currency exchange rate fluctuations decreased our total cost of sales for fiscal year 2012 by approximately $3.4 millioncompared to fiscal year 2011. 39
Selling, General and Administrative ("SG&A") Expenses
For fiscal year 2012, SG&A expenses as a percent of revenue decreased 0.3% to 28.2% compared to 28.5% in fiscal year 2012 due to our ability to continue to reduce certain of our costs. Although the SG&A expenses as a percent of revenue decreased, the dollar amount of SG&A expenses increased by approximately
$24.9 millioncompared to fiscal year 2011, primarily due to an increase in total compensation expenses of approximately $23.4 million, principally reflecting new associates who joined our company as a result of acquisitions in fiscal years 2012 and 2011. Foreign currency exchange rate fluctuations decreased overall SG&A expenses by approximately $2.7 million.