Adobe Systems Reports Fourth Quarter and Fiscal 2001 Results; Adobe Acrobat Business Grows 41 Percent in Fiscal 2001.Business Editors/Technology Writers SAN JOSE San Jose, city, United States San Jose (sănəzā`, săn hōzā`), city (1990 pop. 782,248), seat of Santa Clara co., W central Calif.; founded 1777, inc. 1850. , Calif.--(BUSINESS WIRE)--Dec. 13, 2001 Adobe Systems Adobe Systems Incorporated (pronounced a-DOE-bee IPA: /əˈdoʊbiː/) (NASDAQ: ADBE) (LSE: ABS) is an American computer software company headquartered in San Jose, California, USA. Incorporated (Nasdaq:ADBE ADBE Adobe Systems, Inc. (stock symbol) ) today reported financial results for its fourth quarter and fiscal year ended November November: see month. 30, 2001. For the fourth quarter of fiscal 2001 Adobe adobe (ədō`bē): see rammed earth. adobe Handmade sun-dried bricks formed from a mixture of heavy clay and straw found in arid regions. achieved revenue of $264.5 million, compared to $355.2 million reported for the fourth quarter of fiscal 2000 and $292.1 million reported in the third quarter of fiscal 2001. In fiscal 2001, Adobe achieved revenue of $1.230 billion, compared to $1.266 billion in fiscal 2000. "Despite ongoing weakness in the global economy, Adobe continues to generate outstanding profit margins. In fiscal 2001, Adobe delivered a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: of 33 percent for the year," said Bruce Bruce, Scottish royal family descended from an 11th-century Norman duke, Robert de Brus. He aided William I in his conquest of England (1066) and was given lands in England. R. Chizen, president and chief executive officer of Adobe. During the fiscal year, Adobe achieved 41 percent annual growth in its Adobe(R) Acrobat Document exchange software from Adobe that allows documents to be displayed and printed the same on every computer. The Acrobat system created the Portable Document Format (PDF), which is widely used in commercial printing and on the Web. See PDF. (R) business. Commenting on Adobe's future growth opportunities, Chizen added, "Adobe is driving the transformation from paper-based processes to electronic workflows." Pro forma diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the fourth quarter of fiscal 2001, which excludes restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and other charges, amortization of goodwill and purchased intangibles Property that is a "right" such as a patent, Copyright, or trademark, or one that is lacking physical existence, such as good will. , and investment gains and losses, were $0.20. Net income, which includes non-operating gains and losses, was $34.3 million for the fourth quarter of fiscal 2001, compared to $79.2 million reported in the fourth quarter of fiscal 2000, and $40.3 million in the third quarter of fiscal 2001. Annual net income was $205.6 million in fiscal 2001, compared to $287.8 million in fiscal 2000. Including non-operating gains and losses, diluted earnings per share for the fourth quarter of fiscal 2001 were $0.14 based on 243.4 million weighted average shares. This compares with diluted earnings per share of $0.31 reported in the fourth quarter of fiscal 2000, based on 257.3 million weighted average shares, and diluted earnings per share of $0.16 reported in the third quarter of fiscal 2001, based on 248.6 million weighted average shares. Excluding restructuring and other charges, the amortization of goodwill and purchased intangibles, and acquired in-process research and development, Adobe's pro forma operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. was $67.9 million in the fourth quarter of fiscal 2001, compared to $127.5 million in the fourth quarter of fiscal 2000 and $96.4 million in the third quarter of fiscal 2001. As a percent of revenue, pro forma operating profit for the fourth quarter was 25.7 percent, compared to 35.9 percent in the fourth quarter of fiscal 2000 and 33 percent in the third quarter of fiscal 2001. During the fourth quarter, Adobe implemented a restructuring that resulted in a worldwide reduction in force of 247 employees. A restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $12.1 million was taken in the fourth quarter as part of this program for employee severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when and related benefits. For the first quarter of fiscal 2002, the Company also announced that it is targeting revenue of $265 million to $280 million, a gross margin of 92 to 93 percent, and an operating margin of between 25 to 28 percent. As a percent of revenue, Adobe said it is targeting expenses by category as follows: Research & Development - approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 20 to 21 percent Sales & Marketing - approximately 34 to 35 percent General & Administrative - approximately 10 to 11 percent In addition, Adobe is targeting its share count range to be between 245 and 246 million shares in the first quarter of fiscal 2002. The Company also is targeting other income to be approximately $4 million in the first quarter, and a tax rate of 32 percent. These targets lead to a pro forma earnings pro forma earnings Income not necessarily calculated in accordance with generally accepted accounting principles. For example, a company might report pro forma earnings that exclude depreciation expense and nonrecurring expenses such as restructuring costs. per share target range in Q1 fiscal 2002 of $0.20 to $0.22 per share. For fiscal 2002, the Company also stated that its economic assumptions, and annual revenue and operating targets remain unchanged from October October: see month. 30, 2001. The Adobe Board of Directors declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. this quarter's cash dividend of $0.0125 per share, payable on January January: see month. 17, 2002 to stockholders of record as of January 3, 2002. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve risks and uncertainties that could cause actual results to differ materially. Factors that might cause or contribute to such differences include, but are not limited to: adverse changes in general economic conditions in any of the major countries in which the Company does business, including the recent slow-down affecting the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , Japan, and potentially other geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. areas; continuing adverse economic impact of the recent national tragedy on September September: see month. 11, 2001; delays in shipment of our new products and major new versions of existing products; corporate reductions in marketing expenditures which may result in lower demand for professional content creation and layout products; lack of market acceptance of new products and upgrades; introduction of new products by major competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. ; weakness in demand for application software and printers; lack of growth in worldwide personal computer and printer sales and downward sales price adjustments; renegotiation of royalty Compensation for the use of property, usually copyrighted works, patented inventions, or natural resources, expressed as a percentage of receipts from using the property or as a payment for each unit produced. arrangements; consolidation in the OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and printer business; ongoing weakness in our printer business due to product transitions; industry transitions to new business and information delivery models; and market risk associated with our equity investments. For further discussion of the risks and uncertainties, individuals should refer to the Company's SEC filings, including the 2000 annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and quarterly reports on Form 10-Q Form 10-Q See 10-Q. filed by the Company in 2001. About Adobe Systems Incorporated Founded in 1982, Adobe Systems Incorporated (www.adobe.com) builds award-winning Adj. 1. award-winning - having received awards; "this award-winning bridge spans a distance of five miles" software solutions for network publishing, including Web, ePaper, print, video, wireless and broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). applications. Its graphic design, imaging, dynamic media and authoring tools enable customers to create, manage and deliver visually-rich, reliable content. Headquartered in San Jose, Calif., Adobe is the second-largest PC software company in the U.S., with annual revenues exceeding $1.2 billion. Adobe, the Adobe logo, and Acrobat are either registered trademarks or trademarks of Adobe Systems Incorporated in the United States and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. other countries. All other trademarks are the property of their respective owners.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three Months Ended Twelve Months Ended
(Unaudited) (Unaudited) (Audited) (Audited)
Nov. 30 Dec. 1 Nov. 30 Dec. 1
2001 2000 2001 2000
--------- --------- ---------- ----------
Revenue $ 264,540 $ 355,194 $1,229,720 $1,266,378
Direct costs 19,035 22,261 81,451 87,255
--------- --------- --------- ----------
Gross profit 245,505 332,933 1,148,269 1,179,123
--------- --------- --------- ----------
Operating expenses:
Research and development 54,649 60,270 224,122 240,212
Sales and marketing 94,831 113,174 403,720 401,188
General and
administrative 28,151 31,947 115,626 116,528
Restructuring and
other charges 12,063 -- 12,063 5,629
Amortization of goodwill
and purchased
intangibles 3,550 3,380 14,281 7,013
Acquired in-process
research & development -- 470 -- 470
--------- --------- --------- ---------
Total operating expenses 193,244 209,241 769,812 771,040
--------- --------- -------- ---------
Operating income 52,261 123,692 378,457 408,083
--------- --------- -------- ---------
Nonoperating income, net:
Investment gain (loss) (5,898) (7,417) (93,414) 14,345
Interest and other
income 4,815 6,510 21,888 21,311
--------- --------- -------- ---------
Total nonoperating
income (loss), net (1,083) (907) (71,526) 35,656
--------- --------- -------- ---------
Income before income
taxes 51,178 122,785 306,931 443,739
Provision for income
taxes 16,889 43,589 101,287 155,931
--------- --------- ---------- ----------
Net income $ 34,289 $ 79,196 $ 205,644 $ 287,808
========= ========= ========= ==========
Basic net income per
share $ .15 $ .33 $ .86 $ 1.21
========= ========= ========= =========
Shares used in
computing basic net
income per share 236,361 239,640 238,461 238,292
========= ========= ========= =========
Diluted net income per
share $ .14 $ .31 $ .83 $ 1.13
========= ========= ========= =========
Shares used in
computing diluted
net income per share 243,411 257,294 249,145 255,774
========= ========= ========= =========
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
(Audited) (Audited)
November 30 December 1
2001 2000
----------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 218,662 $ 236,866
Short-term investments 362,951 442,987
Trade receivables 124,106 140,514
Other receivables 18,299 19,599
Deferred income taxes 22,726 23,460
Other current assets 20,620 14,486
---------- ----------
Total current assets 767,364 877,912
Property and equipment 80,993 64,268
Other assets 70,672 127,236
Deferred income taxes, long-term 11,594 --
---------- ----------
Total assets $ 930,623 $1,069,416
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade and other payables $ 30,891 $ 40,280
Accrued liabilities 119,258 181,861
Accrued restructuring charges 9,573 --
Income taxes payable 132,228 74,768
Deferred revenue 21,701 17,696
----------- -----------
Total current liabilities 313,651 314,605
----------- -----------
Deferred income taxes -- 2,267
----------- -----------
Stockholders' equity:
Common stock, $0.0001 par
value, and additional
paid-in capital 625,386 530,801
Retained earnings 1,366,205 1,172,504
Accumulated other
comprehensive income (loss) 3,918 (698)
Treasury stock at cost, net
of reissuances (1,378,537) (950,063)
----------- -----------
Total stockholders' equity 616,972 752,544
----------- -----------
Total liabilities and
stockholders' equity $ 930,623 $ 1,069,416
=========== ===========
PRO FORMA RESULTS
(In thousands, except per share data)
The following table shows the Company's pro forma results reconciled
to the Generally Accepted Accounting Principles ("GAAP") Consolidated
Statements of Income table included on page 4 of this release. The
Company's pro forma results do not include unusual or non-recurring
events or transactions, amortization of goodwill and purchased
intangibles, or gains and losses on investments in equity securities.
Three Months Ended Twelve Months Ended
Nov. 30 Dec. 1 Nov. 30 Dec. 1
2001 2000 2001 2000
-------- -------- --------- --------
GAAP income before income
taxes $ 51,178 $ 122,785 $ 306,931 $ 443,739
Restructuring and other
charges 12,063 -- 12,063 5,629
Amortization of goodwill
and purchased
intangibles 3,550 3,380 14,281 7,013
Acquired in-process
research and development -- 470 -- 470
One time gain from sale
of assets -- -- -- (2,718)
Investment gain/loss 5,898 7,417 93,414 (14,345)
--------- --------- --------- ---------
Pro forma income before
income taxes 72,689 134,052 426,689 439,788
Income tax provision 23,987 47,588 140,807 154,542
--------- --------- --------- ---------
Pro forma net income 48,702 86,464 285,882 285,246
--------- --------- --------- ---------
Basic pro forma net
income per share $ .21 $ .36 $ 1.20 $ 1.20
========= ========= ========= =========
Shares used in computing
basic net income per
share 236,361 239,640 238,461 238,292
========= ========= ========= =========
Diluted pro forma net
income per share $ .20 $ .34 $ 1.15 $ 1.12
========= ========= ========= =========
Shares used in computing
diluted net income per
share 243,411 257,294 249,145 255,774
========= ========= ========= =========
The above results do not reflect GAAP, but are supplied to provide a
meaningful operating comparison to results for the same period the
prior year.
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