Adobe Systems Reports Fourth Quarter and Fiscal 2002 Results; Company Achieves 11 Percent Year-Over-Year Quarterly Revenue Growth.Business Editors/High-Tech 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. 12, 2002 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) ), the leader in network publishing, today reported financial results for its fourth quarter and fiscal year ended November November: see month. 29, 2002. For the fourth quarter of fiscal 2002 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 $294.7 million, which compares to $264.5 million reported for the fourth quarter of fiscal 2001 and $284.9 million reported in the third quarter of fiscal 2002. "We are pleased with our return to year-over-year quarterly revenue growth," 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. "We are also excited about our strong product roadmap A roadmap may refer to:
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 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 2002, which does not include 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 and impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. 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 $0.25. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). diluted earnings per share for the fourth quarter of fiscal 2002 were $0.17, based on 238.4 million weighted average shares. This compares with diluted earnings per share of $0.14 reported in the fourth quarter of fiscal 2001, based on 243.4 million weighted average shares, and diluted earnings per share of $0.19 reported in the third quarter of fiscal 2002, based on 243.4 million weighted average shares. GAAP net income was $40.1 million for the fourth quarter of fiscal 2002, compared to $34.3 million reported in the fourth quarter of fiscal 2001, and $47.2 million in the third quarter of fiscal 2002. Pro forma net income, which excludes restructuring and other charges, amortization and impairment of goodwill and purchased intangibles, and investment gains and losses, was $59.1 million for the fourth quarter of fiscal 2002, compared to $48.7 million in the fourth quarter of fiscal 2001, and $52.5 million in the third quarter of fiscal 2002. As a percent of revenue, 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. for the fourth quarter was 28.4 percent, compared to 25.7 percent in the fourth quarter of fiscal 2001 and 25.6 percent in the third quarter of fiscal 2002. In fiscal 2002, Adobe achieved revenue of $1.165 billion, compared to $1.230 billion in fiscal 2001. Annual GAAP net income was $191.4 million in fiscal 2002, compared to $205.6 million in fiscal 2001. For the first quarter of fiscal 2003, the Company announced that it is targeting revenue at $275 million to $290 million, with a gross margin of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 91 percent. As a percent of revenue, Adobe is targeting Q1 fiscal 2003 expenses as follows: -- Research & Development - approximately 22 to 23 percent -- Sales & Marketing - approximately 33 to 34 percent -- General & Administrative - approximately 10 percent This results in a pro forma operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: target of approximately 25 to 26 percent in the first quarter of fiscal 2003. The Company's full-year fiscal 2003 pro forma operating margin target range remains approximately 28 percent, as the Company discussed during its financial analyst meeting on October October: see month. 28, 2002. For its share count, Adobe is targeting between 238 and 240 million shares in the first quarter of fiscal 2003. The Company also is targeting other income to be approximately $2 million to $3 million, and a tax rate of 30 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 of $0.21 to $0.23 in the quarter. 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. 23, 2003 to stockholders of record as of January 9, 2003. Forward Looking Statements Disclosure This press release contains forward looking statements, including those related to revenue, earnings per share, and profitability, which 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; delays in shipment of our new products and major new versions of existing products; lack of market demand or acceptance of new products and upgrades; integration of acquisitions; 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, personal computers and printers; downward sales price adjustments; renegotiation of royalty/licensing arrangements; intellectual property disputes and litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. ; industry transitions to new business models; changes in accounting rules; and market risk associated with our equity investments. For further discussion of these and other risks and uncertainties, individuals should refer to the Company's SEC filings, including the 2001 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 in 2002. The Company does not undertake an obligation to update forward looking statements. About Adobe Systems Incorporated Founded in 1982, Adobe Systems Incorporated (www.adobe.com), the leader in network publishing, offers a comprehensive line of software for enterprise and creative professional customers. Its products enable customers to create, manage and deliver visually rich, compelling and reliable content. Based in San Jose, Calif., Adobe is one of the world's largest software companies The Forbes Global 2000 includes the following list of the world's largest software companies. Relative rank Global rank Name Country Sales ($bil) Profits ($bil) Assets ($bil) Market Value ($bil) 1 54 Microsoft United States . Adobe and the Adobe logo are either registered trademarks or trademarks of Adobe Systems Incorporated in 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. 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
Nov. 29 Nov. 30 Nov. 29 Nov. 30
2002 2001 2002 2001
(Unaudited) (Unaudited) (Audited) (Audited)
Revenue:
Products $ 288,514 $ 264,540 $1,153,169 $1,229,720
Services and
support 6,140 -- 11,619 --
----------- ----------- ----------- -----------
Total revenue 294,654 264,540 1,164,788 1,229,720
Cost of revenue:
Products 23,550 19,035 96,853 81,451
Services and
support 2,972 -- 7,435 --
----------- ----------- ----------- -----------
Total cost of
revenue 26,522 19,035 104,288 81,451
----------- ----------- ----------- -----------
Gross profit 268,132 245,505 1,060,500 1,148,269
----------- ----------- ----------- -----------
Operating
expenses:
Research and
development 64,181 54,649 246,082 224,122
Sales and
marketing 93,314 94,831 380,367 403,720
General and
admini-
strative 26,820 28,151 108,134 115,626
Restructuring
and other
charges 10,543 12,063 12,148 12,063
Acquired
in-process
research and
development -- -- 5,769 --
Amortization
and impairment
of goodwill
and purchased
intangibles 10,350 3,550 20,973 14,281
----------- ----------- ----------- -----------
Total operating
expenses 205,208 193,244 773,473 769,812
----------- ----------- ----------- -----------
Operating income 62,924 52,261 287,027 378,457
----------- ----------- ----------- -----------
Nonoperating
income, net:
Investment
loss (3,792) (5,898) (17,185) (93,414)
Interest and
other income 3,042 4,815 14,847 21,888
----------- ----------- ----------- -----------
Total
nonoperating
loss, net (750) (1,083) (2,338) (71,526)
----------- ----------- ----------- -----------
Income before
income taxes 62,174 51,178 284,689 306,931
Provision for
income taxes 22,085 16,889 93,290 101,287
----------- ----------- ----------- -----------
Net income $ 40,089 $ 34,289 $ 191,399 $ 205,644
=========== =========== =========== ===========
Basic net income
per share $ .17 $ .15 $ .81 $ .86
=========== =========== =========== ===========
Shares used in
computing basic
net income
per share 233,838 236,361 236,834 238,461
=========== =========== =========== ===========
Diluted net
income
per share $ .17 $ .14 $ .79 $ .83
=========== =========== =========== ===========
Shares used in
computing
diluted
net income
per share 238,407 243,411 243,119 249,145
=========== =========== =========== ===========
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
November 29 November 30
2002 2001
ASSETS
Current assets:
Cash and cash equivalents $ 183,684 $ 218,662
Short-term investments 434,053 362,951
Receivables 116,506 124,106
Other receivables 30,367 18,299
Deferred income taxes 31,530 22,726
Other current assets 18,032 20,620
----------- -----------
Total current assets 814,172 767,364
Property and equipment 71,090 77,611
Goodwill and other intangible assets, net 99,772 36,402
Other assets 42,126 37,652
Deferred income taxes, long-term 24,450 11,594
----------- -----------
Total assets $1,051,610 $ 930,623
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade and other payables $ 37,765 $ 30,891
Accrued expenses 135,028 128,831
Income taxes payable 173,311 132,228
Deferred revenue 31,185 21,701
----------- -----------
Total current liabilities 377,289 313,651
----------- -----------
Stockholders' equity:
Common stock, $0.0001 par value, and
additional paid-in capital 739,849 625,386
Retained earnings 1,545,776 1,366,205
Accumulated other comprehensive
income (loss) (3,950) 3,918
Treasury stock at cost,
net of reissuances (1,607,354) (1,378,537)
----------- -----------
Total stockholders' equity 674,321 616,972
----------- -----------
Total liabilities and
stockholders' equity $1,051,610 $ 930,623
=========== ===========
Condensed Consolidated Statements Of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended
November 29, November 30,
2002 2001
Cash flows from operating activities:
Net income $ 40,089 $ 34,289
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 17,115 14,190
Stock compensation expense 997 14,103
Deferred income taxes (1,001) 8,592
Provision for losses on receivables 1,101 527
Tax benefit from employee stock plans 2,246 2,784
Loss on impairment of property, plant,
and equipment and goodwill 7,630 --
Loss on equity and cost
method investments 2,725 1,612
Gain on sale of equity securities -- (558)
Loss on other-than-temporary declines
of equity securities 1,067 4,317
Changes in operating assets
and liabilities:
Receivables 24,611 25,367
Other current assets 5,575 5,155
Trade and other payables 4,897 141
Accrued expenses 5,996 (2,323)
Accrued restructuring 1,642 9,573
Income taxes payable 17,359 8,488
Deferred revenue 3,870 2,354
----------- -----------
Net cash provided by operating activities 135,919 128,611
----------- -----------
Cash flows from investing activities:
Purchases of short-term investments (129,272) (148,838)
Maturities and sales of short-term
investments 188,724 69,062
Acquisitions of property and equipment (11,310) (8,826)
Purchases of long-term investments (5,511) (2,759)
Additions to other assets (3,197) (2,754)
Proceeds from the sale of
equity securities -- 386
----------- -----------
Net cash provided by (used for)
investing activities 39,434 (93,729)
----------- -----------
Cash flows from financing activities:
Purchase of treasury stock (134,938) (100,892)
Proceeds from exercise of stock options
and sale of stock 4,772 (4,606)
Payment of dividends (2,954) (2,981)
----------- -----------
Net cash used for financing activities (133,120) (108,479)
----------- -----------
Effect of foreign currency exchange rates
on cash and cash equivalents 97 (560)
----------- -----------
Net increase (decrease) in cash
and cash equivalents 42,330 (74,157)
Cash and cash equivalents at
beginning of period 141,354 292,819
----------- -----------
Cash and cash equivalents at end of period $ 183,684 $ 218,662
Pro Forma Results
(In thousands, except per share data)
(Unaudited)
The following table shows the Company's pro forma results
reconciled to the Generally Accepted Accounting Principles ("GAAP")
Condensed Consolidated Statements of Income table included on page 4
of this release. The Company's pro forma results do not include
restructuring and other charges, acquired in-process research and
development, amortization and impairment of goodwill and purchased
intangibles, or gains and losses on investments in equity securities.
Three Months Ended Twelve Months Ended
Nov. 29 Nov. 30 Nov. 29 Nov. 30
2002 2001 2002 2001
----------- ----------- ----------- -----------
Income before
income taxes $ 62,174 $ 51,178 $ 284,689 $ 306,931
Restructuring
and other
charges 10,543 12,063 12,148 12,063
Acquired
in-process
research and
development -- -- 5,769 --
Amortization
and impairment
of goodwill
and purchased
intangibles 10,350 3,550 20,973 14,281
Investment loss 3,792 5,898 17,185 93,414
----------- ----------- ----------- -----------
Pro forma income
before income
taxes 86,859 72,689 340,764 426,689
Income tax
provision 27,795 23,987 109,044 140,807
----------- ----------- ----------- -----------
Pro forma net
income 59,064 48,702 231,720 285,882
----------- ----------- ----------- -----------
Basic pro forma
net income
per share $ .25 $ .21 $ .98 $ 1.20
=========== =========== =========== ===========
Shares used in
computing basic
net income
per share 233,838 236,361 236,834 238,461
=========== =========== =========== ===========
Diluted
pro forma
net income
per share $ .25 $ .20 $ .95 $ 1.15
=========== =========== =========== ===========
Shares used in
computing
diluted
net income
per share 238,407 243,411 243,119 249,145
=========== =========== =========== ===========
The above results do not reflect GAAP, but are supplied to provide
an alternative measure of our operating results.
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