Adobe Systems Reports Record Revenue in First Quarter of Fiscal 2005; Intelligent Documents Business Grows 42 Percent Year-Over-Year; Company Announces Two-For-One Stock Split.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. -- 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 strong financial results for its first quarter ended March 4, 2005. In the first quarter of fiscal 2005, 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 record revenue of $472.9 million, compared to $423.3 million reported for the first quarter of fiscal 2004, and $429.5 million reported in the fourth quarter of fiscal 2004. Adobe's first quarter revenue target range, revised upward on February February: see month. 1, 2005, was $450 to $470 million. "The explosive explosive, substance that undergoes decomposition or combustion with great rapidity, evolving much heat and producing a large volume of gas. The reaction products fill a much greater volume than that occupied by the original material and exert an enormous pressure, growth of digital content continues to drive demand for Adobe solutions across all of our customer segments," 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, chief executive officer. "This demand is particularly evident in our Intelligent Documents business, where we see increasing adoption of Adobe PDF-based document workflows in organizations and governments worldwide. Based on our strong performance in Q1, and a planned major product launch this quarter, we are increasing our financial targets for fiscal 2005." GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). 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 first quarter of fiscal 2005 were $0.60. Non-GAAP diluted earnings per share, which excludes the net tax impact of the planned repatriation Repatriation The process of converting a foreign currency into the currency of one's own country. Notes: If you are American, converting British Pounds back to U.S. dollars is an example of repatriation. of certain foreign earnings, and investment gains and losses from the Company's venture program, were $0.53. Adobe's revised GAAP and non-GAAP first quarter earnings target range was $0.47 to $0.51 per share. GAAP net income was $151.9 million for the first quarter of fiscal 2005, compared to $123.0 million reported in the first quarter of fiscal 2004, and $113.5 million in the fourth quarter of fiscal 2004. Non-GAAP net income, which excludes, as applicable, the net tax impact of the planned repatriation of certain foreign earnings, and investment gains and losses, was $133.8 million for the first quarter of fiscal 2005, compared to $123.8 million in the first quarter of fiscal 2004, and $110.4 million in the fourth quarter of fiscal 2004. GAAP diluted earnings per share for the first quarter of fiscal 2005 were $0.60 based on 253.1 million weighted average shares. This compares with GAAP diluted earnings per share of $0.50 reported in the first quarter of fiscal 2004, based on 246.1 million weighted average shares, and GAAP diluted earnings per share of $0.45 reported in the fourth quarter of fiscal 2004, based on 250.3 million weighted average shares. Adobe's GAAP and non-GAAP operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. was $170.7 million in the first quarter of fiscal 2005, compared to $163.3 million in the first quarter of fiscal 2004 and $146.4 million in the fourth quarter of fiscal 2004. As a percent of revenue, GAAP and non-GAAP operating income in the first quarter of fiscal 2005 was 36.1 percent, compared to 38.6 percent in the first quarter of fiscal 2004 and 34.1 percent in the fourth quarter of fiscal 2004. Board of Directors Approves Two-For-One Stock Split Adobe also announced today that its Board of Directors has approved a two-for-one stock split, to be effected in the form of a stock dividend. Stockholders of record at the close of business on May 2, 2005 will be issued one additional share of common stock for each share owned as of that date, with a payment date of May 23, 2005. Adobe has provided an FAQ (Frequently Asked Questions) A group of commonly asked questions about a subject along with the answers. Vendors often display them on their Web sites for use as troubleshooting guidelines. document for the stock split on its Website at http://www.adobe.com/ADBE. Adobe's Board also 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 April 12, 2005, to stockholders of record as of March 29, 2005. Adobe also indicated it will discontinue dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: its quarterly dividend after the April dividend payment. To continue the Company's goal of returning value to stockholders, the Company intends to utilize the cash used to pay the quarterly dividend for its ongoing stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. programs. Adobe Provides Second Quarter Financial Targets For the second quarter of fiscal 2005, Adobe announced it is targeting revenue of $475 to $495 million, a gross margin of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 94 percent, and GAAP and non-GAAP operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: ranges of approximately 35 to 37 percent. As a percent of revenue, Adobe is targeting second quarter expenses as follows: Research & Development -- approximately 18 to 19 percent Sales & Marketing -- approximately 30 to 31 percent General & Administrative -- approximately 9 percent In addition, Adobe is targeting its share count range to be between 256 and 257 million shares in the second quarter of fiscal 2005. The Company also is targeting other income in its second quarter to be approximately $6 to $7 million, and a tax rate of 25 percent. These targets lead to first quarter GAAP and non-GAAP earnings per share target ranges of $0.51 to $0.55. Adobe currently believes targeted non-GAAP earnings per share and non-GAAP operating margin results will not differ materially from targeted GAAP results. For fiscal year 2005, the Company also increased its revenue target to approximately $1.925 billion, with an operating margin target of approximately 36 percent (which does not include the effect of share-based compensation charges pursuant to SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 123R, which are not currently estimable es·ti·ma·ble adj. 1. Possible to estimate: estimable assets; an estimable distance. 2. Deserving of esteem; admirable: an estimable young professor. ). The prior target range for fiscal year 2005 revenue was approximately $1.85 to $1.9 billion, with an operating margin target range of approximately 34 to 35 percent. Forward Looking Statements Disclosure This press release contains forward looking statements, including those related to revenue, product releases, gross margin, operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , operating margin, other income, tax rate, share count and earnings per share, 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 or political conditions in any of the major countries in which Adobe does business, delays in development or shipment of the Company's new products or major new versions of existing products, introduction of new products by existing and new 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. , failure to successfully manage transitions to new business models or markets, failure to anticipate and develop new products in response to changes in demand for application software, computers and printers, 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. , changes to the Company's distribution channel, the impact of malicious Involving malice; characterized by wicked or mischievous motives or intentions. An act done maliciously is one that is wrongful and performed willfully or intentionally, and without legal justification. DESERTION, MALICIOUS. code, such as worms Worms (vôrms), city (1994 pop. 79,155), Rhineland-Palatinate, SW Germany, on the Rhine River. It is an industrial city and a leading wine trade center. and viruses, on the Company's computer network and applications, interruptions or terminations in the Company's relationships with turnkey See turnkey system. assemblers This is a list of assemblers. Hundreds of assemblers have been written; some notable examples are:
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 2005. The Company does not undertake an obligation to update forward looking statements. About Adobe Systems Incorporated Adobe is the world's leading provider of software solutions to create, manage and deliver high-impact, reliable digital content. For more information, visit www.adobe.com. (C) 2005 Adobe Systems Incorporated. All rights reserved. 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)
(Unaudited)
Three Months Ended
-------------------
March 4, March 5,
2005 2004
--------- ---------
Revenue:
Products $463,147 $415,752
Services and support 9,735 7,529
--------- ---------
Total revenue 472,882 423,281
--------- ---------
Total cost of revenue:
Products 21,855 20,444
Services and support 5,114 3,738
--------- ---------
Total cost of revenue 26,969 24,182
--------- ---------
Gross profit 445,913 399,099
Operating expenses:
Research and development 86,686 75,071
Sales and marketing 147,383 127,354
General and administrative 41,132 33,412
--------- ---------
Total operating expenses 275,201 235,837
--------- ---------
Operating income 170,712 163,262
Non-operating income (loss), net:
Investment loss (1,554) (1,031)
Interest and other income 7,627 4,032
--------- ---------
Total non-operating income 6,073 3,001
--------- ---------
Income before income taxes 176,785 166,263
Provision for income taxes 24,891 43,228
--------- ---------
Net income $151,894 $123,035
========= =========
Basic net income per share $0.62 $0.52
========= =========
Shares used in computing basic net income per share 243,130 238,384
========= =========
Diluted net income per share $0.60 $0.50
========= =========
Shares used computing diluted net income per share 253,091 246,087
========= =========
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
March 4, December 3,
2005 2004
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $336,525 $343,881
Short-term investments 1,130,578 969,340
Trade receivables 138,352 141,945
Other receivables 28,188 25,495
Deferred income taxes 37,924 51,751
Prepaid expenses and other current assets 28,372 18,617
----------- -----------
Total current assets 1,699,939 1,551,029
----------- -----------
Property and equipment, net 100,340 99,675
Goodwill 119,082 110,287
Purchased and other intangibles, net 17,814 15,513
Investment in lease receivable 126,800 126,800
Other assets 58,835 55,328
----------- -----------
Total assets $2,122,810 $1,958,632
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade and other payables $38,575 $43,192
Accrued expenses 196,567 202,762
Income taxes payable 191,959 145,913
Deferred revenue 57,087 59,541
----------- -----------
Total current liabilities 484,188 451,408
----------- -----------
Other long-term liabilities 5,058 4,838
Deferred income taxes, long-term 8,999 78,909
Stockholders' equity:
Common stock, $0.0001 par value 29,576 29,576
Additional paid-in-capital 1,228,927 1,164,643
Retained earnings 2,387,657 2,238,807
Accumulated other comprehensive loss (3,223) (2,289)
Treasury stock at cost, net of re-issuances (2,018,372) (2,007,260)
----------- -----------
Total stockholders' equity 1,624,565 1,423,477
----------- -----------
Total liabilities and stockholders' equity $2,122,810 $1,958,632
=========== ===========
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended
-------------------
March 4, March 5,
2005 2004
--------- ---------
Cash flows from operating activities:
Net income $151,894 $123,035
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 14,954 13,438
Stock compensation expense 76 184
Deferred income taxes (56,483) 23,110
Provision for (recovery of) losses on
receivables 137 (2,114)
Tax benefit from employee stock option plans 27,197 5,124
Net losses on sales and impairments of
investments 1,554 1,031
Changes in operating assets and liabilities:
Receivables 1,674 21,166
Other current assets (9,353) (4,281)
Trade and other payables (4,923) (1,839)
Accrued expenses (6,209) 17,589
Accrued restructuring charges (13) (587)
Income taxes payable 46,046 (8,121)
Deferred revenue (2,454) (2,274)
--------- ---------
Net cash provided by operating activities 164,097 185,461
--------- ---------
Cash flows from investing activities:
Purchases of short-term investments (374,609) (397,807)
Maturities of short-term investments 33,905 241,543
Sales of short-term investments 178,533 14,719
Acquisitions of property and equipment (11,512) (14,444)
Purchases of long-term investments and other
assets (9,931) (4,305)
Cash paid for acquisition, net (9,541) -
--------- ---------
Net cash used for investing activities (193,155) (160,294)
--------- ---------
Cash flows from financing activities:
Purchase of treasury stock (100,022) (55,607)
Proceeds from issuance of treasury stock 125,921 40,356
Payment of dividends (3,032) (2,986)
--------- ---------
Net cash used for financing activities 22,867 (18,237)
--------- ---------
Effect of foreign currency exchange rates on cash
and cash equivalents (1,165) 332
--------- ---------
Net increase (decrease) in cash and cash
equivalents (7,356) 7,262
Cash and cash equivalents at beginning of period 343,881 192,497
--------- ---------
Cash and cash equivalents at end of period $336,525 $199,759
========= =========
Non-GAAP Results
(In thousands, except per share data)
The following table shows Adobe's non-GAAP results reconciled to GAAP
results included in this release.
March 4, March 5, December 3,
2005 2004 2004
--------- --------- ---------
GAAP net income $151,894 $123,035 $113,501
Investment (gain) loss, net of tax 1,157 763 (3,077)
Net tax impact of foreign earnings
repatriation (19,297) - -
--------- --------- ---------
Non-GAAP net income $133,754 $123,798 $110,424
========= ========= =========
Diluted net income per share:
GAAP net income $0.60 $0.50 $0.45
Investment (gain) loss, net of tax 0.01 - (0.01)
Net tax impact of foreign earnings
repatriation (0.08) - -
--------- --------- ---------
Non-GAAP net income $0.53 $0.50 $0.44
========= ========= =========
Shares used computing diluted net income
per share 253,091 246,087 250,310
========= ========= =========
Adobe continues to provide all information required in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP, but it believes that evaluating its ongoing operating results may not be as useful if an investor is limited to reviewing only GAAP financial measures. Accordingly, Adobe uses non-GAAP financial information to evaluate its ongoing operations and for internal planning and forecasting purposes. Adobe's management does not itself, nor does it suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Adobe presents such non-GAAP financial measures in reporting its financial results to provide investors with an additional tool to evaluate Adobe's operating results in a manner that focuses on what Adobe believes to be its ongoing business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets . Adobe's management believes it is useful for itself and investors to review both GAAP information that includes the investment gains and losses and the net tax impact of the planned repatriation of certain foreign earnings discussed below, and the non-GAAP measures that exclude such information in order to assess the performance of Adobe's business and for planning and forecasting in subsequent periods. In accordance with GAAP, Adobe incurs investment gains and losses from its venture program. These charges are otherwise unrelated to Adobe's ongoing business operations and are excluded from its non-GAAP financial information. Also, in accordance with GAAP, Adobe included the net tax impact of the planned repatriation of certain foreign earnings. This tax impact is not indicative indicative: see mood. of Adobe's ongoing business operations and thus is excluded from its non-GAAP financial information. |
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