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Adobe Reports Q2 Results, Profit Up 18% Amid Strong Acrobat Sales

Friday, June 13, 2003

Press release from the issuing company

SAN JOSE, Calif.---June 12, 2003-- Adobe reported financial results for its second quarter ended May 30, 2003 that came in at the high end of the Company's prior revenue and earnings per share target ranges. In the second quarter of fiscal 2003, Adobe achieved revenue of $320.1 million, compared to $317.4 million reported for the second quarter of fiscal 2002 and $296.9 million reported in the first quarter of fiscal 2003. Adobe's revised second quarter revenue target range was $305 to $320 million, up from its prior target range of $300 to $315 million. GAAP diluted earnings per share for the second quarter of fiscal 2003 were $0.27. Pro forma diluted earnings per share for the second quarter of fiscal 2003, which does not include an investment loss from the Company's venture program, were $0.28. Adobe's GAAP and pro forma second quarter earnings target range was $0.24 to $0.28 per share, up from its prior target range of $0.24 to $0.27. "The release of Acrobat 6.0 in Q2 helped drive record revenue in our ePaper business, and signals the beginning of a strong product cycle," said Bruce Chizen, president and CEO of Adobe Systems. "This month we're celebrating 10 years of Acrobat and PDF. From communicating business critical information across the enterprise to sharing photos with friends and family, Acrobat and PDF have clearly become synonymous with the reliable delivery of digital information." GAAP net income was $64.2 million for the second quarter of fiscal 2003, compared to $54.3 million reported in the second quarter of fiscal 2002, and $54.2 million in the first quarter of fiscal 2003. Pro forma net income, which does not, as applicable, include amortization of goodwill and purchased intangibles, restructuring and other charges, acquired in-process research and development, and investment losses, was $66.7 million for the second quarter of fiscal 2003, compared to $67.4 million in the second quarter of fiscal 2002, and $58.9 million in the first quarter of fiscal 2003. GAAP diluted earnings per share for the second quarter of fiscal 2003 were $0.27, based on 239.2 million weighted average shares. This compares with GAAP diluted earnings per share of $0.22 reported in the second quarter of fiscal 2002, based on 247.7 million weighted average shares, and GAAP diluted earnings per share of $0.23 reported in the first quarter of fiscal 2003, based on 235.3 million weighted average shares. Adobe's GAAP operating income was $91.5 million in the second quarter of fiscal 2003, compared to $90.8 million in the second quarter of fiscal 2002 and $80.5 million in the first quarter of fiscal 2003. As a percent of revenue, GAAP operating income for the second quarter was 28.6 percent, compared to 28.6 percent in the second quarter of fiscal 2002 and 27.1 percent in the first quarter of fiscal 2003. Adobe's pro forma operating income, which does not, as applicable, include the amortization of goodwill and purchased intangibles, restructuring and other charges, and acquired in-process research and development, was $91.5 million in the second quarter of fiscal 2003, compared to $96.4 million in the second quarter of fiscal 2002 and $80.5 million in the first quarter of fiscal 2003. As a percent of revenue, pro forma operating income for the second quarter was 28.6 percent, compared to 30.4 percent in the second quarter of fiscal 2002 and 27.1 percent in the first quarter of fiscal 2003. For the third quarter of fiscal 2003, the Company announced that it is targeting revenue at $300 to $315 million, a gross margin of 92 to 93 percent, and GAAP and pro forma operating margin ranges of 24 to 27 percent. As a percent of revenue, Adobe is targeting third quarter expenses as follows: Research & Development -- approximately 22 to 23 percent Sales & Marketing -- approximately 34 to 35 percent General & Administrative -- approximately 10 percent In addition, Adobe is targeting its share count range to be between 243 and 245 million shares in the third quarter of fiscal 2003. The Company also is targeting other income to be approximately $3 million, and a tax rate of 30 percent. These targets lead to GAAP and pro forma target ranges of $0.22 to $0.25 earnings per share in the quarter. For fiscal 2003 on an annual basis, the Company continues to target GAAP and pro forma operating margins of at least 28 percent. The Company currently believes that targeted pro forma earnings per share and pro forma operating margin results will not differ materially from targeted GAAP results. The Company also said that it plans to release several of its Creative Professional applications in the fourth quarter of the year. The Adobe Board of Directors declared this quarter's cash dividend of $0.0125 per share, payable on July 7, 2003 to stockholders of record as of June 23, 2003.

 

 

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