Adobe Reports Fourth Quarter and Fiscal 2009 Results
Company Sees Signs of Increased Demand
SAN JOSE, Calif.–(BUSINESS WIRE)– Adobe Systems Incorporated (Nasdaq:ADBE) today reported financial results for its fourth quarter and fiscal year ended Nov. 27, 2009.
In the fourth quarter of fiscal 2009, Adobe achieved revenue of $757.3 million, compared to $915.3 million reported for the fourth quarter of fiscal 2008 and $697.5 million reported in the third quarter of fiscal 2009. Fourth quarter fiscal 2009 results include the impact of the Company’s acquisition of Omniture, Inc.
“We experienced an improvement in customer demand for our products in Q4,” said Shantanu Narayen, president and CEO of Adobe. “We believe the investments we have made in the past year, and the new products we will deliver in the coming year, will drive top line growth as the economy improves.”
Fourth Quarter Fiscal 2009 GAAP Results
Included in Adobe’s fourth quarter results was revenue of $26.3 million as a result of the close of the acquisition of Omniture on Oct. 23, 2009. In accordance with business combination accounting guidelines, $8.3 million of Omniture deferred revenue was excluded from Adobe’s fourth quarter results and Adobe will not recognize this revenue going forward.
GAAP operating income was $153.6 million in the fourth quarter of fiscal 2009, compared to $273.2 million in the fourth quarter of fiscal 2008 and $167.6 million in the third quarter of fiscal 2009. As a percent of revenue, GAAP operating income in the fourth quarter of fiscal 2009 was 20.3 percent, compared to 29.8 percent in the fourth quarter of fiscal 2008 and 24.0 percent in the third quarter of fiscal 2009.
For the fourth quarter of fiscal 2009, GAAP net loss was $32.0 million, compared to net income of $245.9 million reported in the fourth quarter of fiscal 2008 and net income of $136.0 million in the third quarter of fiscal 2009.
GAAP diluted loss per share for the fourth quarter of fiscal 2009 was $0.06, based on 532.0 million weighted average shares. This compares with GAAP diluted earnings per share of $0.46 reported in the fourth quarter of fiscal 2008 based on 534.9 million weighted average shares, and GAAP diluted earnings per share of $0.26 reported in the third quarter of fiscal 2009 based on 531.8 million weighted average shares.
Fourth Quarter Fiscal 2009 Non-GAAP Results
Adobe’s non-GAAP operating income was $265.2 million in the fourth quarter of fiscal 2009, compared to $374.9 million in the fourth quarter of fiscal 2008 and $237.1 million in the third quarter of fiscal 2009. As a percent of revenue, non-GAAP operating income in the fourth quarter of fiscal 2009 was 35.0 percent, compared to 41.0 percent in the fourth quarter of fiscal 2008 and 34.0 percent in the third quarter of fiscal 2009.
Non-GAAP net income was $206.8 million for the fourth quarter of fiscal 2009, compared to $320.9 million in the fourth quarter of fiscal 2008 and $186.1 million in the third quarter of fiscal 2009.
Non-GAAP diluted earnings per share for the fourth quarter of fiscal 2009 were $0.39. This compares with non-GAAP diluted earnings per share of $0.60 reported in the fourth quarter of fiscal 2008 and non-GAAP diluted earnings per share of $0.35 reported in the third quarter of fiscal 2009.
Reconciliation between GAAP and non-GAAP results is provided at the end of this press release.
Fiscal Year 2009 Results
In fiscal year 2009, Adobe achieved revenue of $2.946 billion, compared to $3.580 billion in fiscal 2008. Adobe’s fiscal 2009 results include the impact of the Company’s acquisition of Omniture, Inc., which contributed revenue of $26.3 million in the fourth quarter. Excluded from Adobe’s fiscal 2009 results is Omniture deferred revenue of $8.3 million, pursuant to business combination accounting guidelines, as noted previously.
Adobe’s annual GAAP operating income in fiscal 2009 was $690.5 million, compared to $1.028 billion in fiscal 2008. GAAP operating margin was 23.4% in fiscal 2009, compared to 28.7% in fiscal 2008.
GAAP net income was $386.5 million in fiscal 2009, compared to $871.8 million in fiscal 2008. Adobe’s annual non-GAAP net income was $814.7 million in fiscal 2009, compared to $1.136 billion in fiscal 2008.
GAAP diluted earnings per share for fiscal 2009 were $0.73, compared to $1.59 in fiscal 2008. Non-GAAP diluted earnings per share for fiscal 2009 were $1.54, compared to $2.07 in fiscal 2008.
Reconciliation between GAAP and non-GAAP results is provided at the end of this press release.
First Quarter Fiscal 2010 Financial Targets
For the first quarter of fiscal 2010, Adobe is targeting revenue of $800 million to $850 million. This first quarter target range includes estimated revenue of approximately $78 million to $83 million from the Company’s Omniture Business Unit, and excludes an estimated $14.7 million in Omniture first quarter deferred revenue pursuant to business combination accounting guidelines, as noted previously.
Adobe’s first quarter operating margin is targeted to be 19 percent to 21 percent on a GAAP basis, and 30 percent to 32 percent on a non-GAAP basis. In addition, the Company is targeting its share count to be between 530 million and 532 million, and it is targeting non-operating other income to be a loss between $2 million and $4 million. Adobe’s GAAP and non-GAAP tax rate is expected to be approximately 24 percent.
These targets lead to a first quarter diluted earnings per share target range of $0.21 to $0.25 on a GAAP basis, and an earnings per share target range of $0.34 to $0.39 on a non-GAAP basis.
Reconciliation between these GAAP and non-GAAP financial targets is provided at the end of this press release.
Forward-Looking Statements Disclosure
This press release contains forward-looking statements, including those related to revenue, operating margin, non-operating income, tax rate, share count, earnings per share and business momentum, 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: the ongoing economic downturn and continued uncertainty in the financial markets and other adverse changes in general economic or political conditions in any of the major countries in which Adobe does business, failure to develop, market and distribute new products and services or upgrades or enhancements to existing products and services that meet customer requirements, failure to realize the anticipated benefits of past or future acquisitions, including our acquisition of Omniture, and difficulty in integrating such acquisitions, introduction of new products, services and business models by existing and new competitors, failure to successfully manage transitions to new business models and markets, difficulty in predicting revenue from new businesses, costs related to intellectual property acquisitions, disputes and litigation, inability to protect Adobe’s intellectual property from third-party infringers, or unauthorized use, disclosure or malicious attack, security vulnerabilities in our products and systems, interruptions or delays in services from, security or privacy breaches, or failure in data collection from third-party service providers that host or deliver services, failure to manage Adobe’s sales and distribution channels effectively, disruption of Adobe’s business due to catastrophic events, risks associated with international operations, fluctuations in foreign currency exchange rates, changes in, or interpretations of, accounting principles, impairment of Adobe’s goodwill or intangible assets, changes in, or interpretations of, tax rules and regulations, Adobe’s inability to attract and retain key personnel, impairment of Adobe’s investment portfolio due to deterioration of the capital markets, market risks associated with Adobe’s equity investments, and interruptions or terminations in Adobe’s relationships with turnkey assemblers. For further discussion of these and other risks and uncertainties, individuals should refer to Adobe’s SEC filings.
The financial information set forth in this press release reflects estimates based on information available at this time. These amounts could differ from actual reported amounts stated in Adobe’s Annual Report on Form 10-K for our fiscal year ended Nov. 27, 2009, which the Company expects to file in January 2010. Adobe does not undertake an obligation to update forward-looking statements.
About Adobe Systems Incorporated
Adobe revolutionizes how the world engages with ideas and information – anytime, anywhere and through any medium. For more information, visit www.adobe.com.
© 2009 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 and/or other countries. All other trademarks are the property of their respective owners.
Condensed Consolidated Statements of Income
(In thousands, except per share data; unaudited)
2009
2008
2009
2008
Condensed Consolidated Balance Sheets
(In thousands, except per share data; unaudited)
Trade receivables, net of allowances for doubtfulaccounts of $15,225 and $4,128, respectively
–
–
Treasury stock, at cost (78,177 and 74,723shares, respectively), net of reissuances
(2,823,914
)
(2,957,154
)
Condensed Consolidated Statements of Cash Flows
(In thousands; unaudited)
2009
2008
Adjustments to reconcile net (loss) income to net cash providedby operating activities:
Non-GAAP Results
(In thousands, except per share data)
The following tables show Adobe’s non-GAAP results reconciled to GAAP results included in this release.
November 27,
2009
November 28,
2008
August 28, 2009
November 27, 2009
November 28, 2008
–
–
–
–
Non-GAAP net income
–
–
–
–
–
–
–
$
0.39
$
0.60
$
0.35
$
1.54
$
2.07
Non-GAAP Results (continued)
(In thousands)
November 27,2009
November 28, 2008
August 28,2009
November 27,2009
November 28,2008
Stock-based and deferred compensation expense
Amortization of purchased intangibles, incomplete technology and technology license arrangements
2009
2008
2009
2008
–
Amortization of purchased intangibles, incomplete
technology and technology license arrangements
(36.6
)
First Quarter and Fiscal Year 2010 Non-GAAP Financial Targets
(In millions, except per share data)
The following tables show the Company’s first quarter and fiscal year2010 non-GAAP financial targets reconciled to GAAP financialtargets included in this release.
Fiscal 2010
Fiscal 2010
Adobe continues to provide all information required in accordance with GAAP, but believes 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. Adobe’s management believes it is useful for itself and investors to review, as applicable, both GAAP information that includes the stock-based and deferred compensation impact, restructuring charges, amortization of purchased intangibles, incomplete technology and technology license arrangements, the resolution of an income tax audit, investment gains and losses, and the related tax impact of all of these items, the income tax effect of the non-GAAP pre-tax adjustments from the provision for income taxes, 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. Whenever Adobe uses such a non-GAAP financial measure, it provides a reconciliation of the non-GAAP financial measure to the most closely applicable GAAP financial measure. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure as detailed above.