Adobe Reports Third Quarter Results: Earnings Fall, Sees More Weakness
Press release from the issuing company
SAN JOSE, Calif.- Sept. 19, 2001--Adobe Systems Incorporated today reported financial results for its third quarter ended August 31, 2001.
In the third quarter of fiscal 2001, Adobe achieved revenue of $292.1 million, compared to $328.9 million reported for the third quarter of fiscal 2000 and $344.1 million reported in the second quarter of fiscal 2001.
Pro forma diluted earnings per share for the third quarter of fiscal 2001, excluding non-operating gains and losses, were $0.28.
"While I am disappointed that we fell short of our original revenue target, it is clear that our strategy of investing in Adobe Acrobat products is paying off. Revenue in this segment grew 45 percent year-over-year,'' said Bruce R. Chizen, president and chief executive officer of Adobe. "We once again demonstrated our ability to control expenses and deliver solid bottom line results in a difficult environment where we do not see any near-term improvement.''
Net income, which includes non-operating gains and losses, was $40.3 million for the third quarter of fiscal 2001, compared to $78.3 million reported in the third quarter of fiscal 2000, and $61.3 million in the second quarter of fiscal 2001.
Including non-operating gains and losses, diluted earnings per share for the third quarter of fiscal 2001 were $0.16 based on 248.6 million weighted average shares. This compares with diluted earnings per share of $0.31 reported in the third quarter of fiscal 2000, based on 255.8 million weighted average shares, and diluted earnings per share of $0.25 reported in the second quarter of fiscal 2001, based on 250.1 million weighted average shares.
Excluding the amortization of goodwill, Adobe's operating profit was $96.4 million in the third quarter of fiscal 2001, compared to $107.1 million in the third quarter of fiscal 2000 and $121.5 million in the second quarter of fiscal 2001. As a percent of revenue, operating profit for the third quarter was 33 percent, compared to 32.6 percent in the third quarter of fiscal 2000 and 35.3 percent in the second quarter of fiscal 2001.
In summarizing its geographic performance in the third quarter, Adobe cited a significant decline in Japan revenue as the main reason for missing the targeted revenue.
"Assuming continued weak economic conditions in each of our major markets, we are targeting our Q4 fiscal 2001 revenue at $310-320 million. This has changed from our previous target primarily due to the recent significant weakness in Japan. It does not include any potential economic impact of the recent national tragedy on Q4 business,'' stated Murray J. Demo, senior vice president and chief financial officer of Adobe.
For the fourth quarter of fiscal 2001, the Company announced that it continues to target a gross margin of 93 percent and an operating margin of 31 percent. As a percent of revenue, Adobe continues to target expenses by category as follows:
Research & Development -- approximately 19 to 20 percent
Sales & Marketing -- approximately 33 to 34 percent
General & Administrative -- approximately 9 percent
In addition, Adobe is targeting its share count range to be between 246 and 248 million shares in fourth quarter of fiscal 2001. The Company also continues to target other income to be approximately $4 million in the fourth quarter, and a tax rate of 33 percent.
These targets lead to a pro forma earnings per share target range in Q4 fiscal 2001 of $0.27 to $0.28 per share.
The Adobe Board of Directors declared this quarter's cash dividend of $0.0125 per share, payable on October 9, 2001 to stockholders of record as of September 25, 2001.
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