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Adobe Systems Reports Record Quarterly and Annual Revenue

Friday, December 17, 2004

Press release from the issuing company

SAN JOSE, Calif.--Dec. 16, 2004-- Adobe Systems Incorporated today reported strong financial results for its fourth quarter and fiscal year ended December 3, 2004. In the fourth quarter of fiscal 2004, Adobe achieved record revenue of $429.5 million, compared to $358.6 million reported for the fourth quarter of fiscal 2003 and $403.7 million reported in the third quarter of fiscal 2004. On a year-over-year basis, this represents 20 percent revenue growth. Adobe's fourth quarter revenue target range, revised upward on October 26, 2004, was $410 to $425 million. "Q4 was an outstanding finish to a remarkable year," said Bruce R. Chizen, president and chief executive officer. "The continued strength of Acrobat and our Creative Suite platform, combined with strong demand for our hobbyist offerings, resulted in record revenue for the quarter. We also achieved more than $100 million in revenue and 50% year-over-year growth in our Intelligent Documents server business during the year. "Based on the planned release of a succession of new products throughout fiscal 2005, as well as the large market opportunities in front of us, we are reaffirming our double-digit revenue growth target for fiscal 2005," Chizen said. GAAP diluted earnings per share for the fourth quarter of fiscal 2004 were $0.45. Non-GAAP diluted earnings per share, which does not include investment gains from the Company's venture program, were $0.44. Adobe's revised GAAP and non-GAAP fourth quarter earnings target range was $0.40 to $0.43 per share. GAAP net income was $113.5 million for the fourth quarter of fiscal 2004, compared to $83.3 million reported in the fourth quarter of fiscal 2003, and $104.5 million in the third quarter of fiscal 2004. On a year-over-year basis, GAAP net income grew 36 percent. Non-GAAP net income, which excludes, as applicable, a partial reversal of prior restructuring charges, and investment gains and losses, was $110.4 million for the fourth quarter of fiscal 2004, compared to $83.0 million in the fourth quarter of fiscal 2003, and $105.6 million in the third quarter of fiscal 2004. On a year-over-year basis, non-GAAP net income grew 33 percent. GAAP diluted earnings per share for the fourth quarter of fiscal 2004 were $0.45 based on 250.3 million weighted average shares. This compares with GAAP diluted earnings per share of $0.34 reported in the fourth quarter of fiscal 2003, based on 245.5 million weighted average shares, and GAAP diluted earnings per share of $0.42 reported in the third quarter of fiscal 2004, based on 247.1 million weighted average shares. Adobe's GAAP operating income was $146.4 million in the fourth quarter of fiscal 2004, compared to $115.3 million in the fourth quarter of fiscal 2003 and $140.3 million in the third quarter of fiscal 2004. As a percent of revenue, GAAP operating income in the fourth quarter of fiscal 2004 was 34.1 percent, compared to 32.1 percent in the fourth quarter of fiscal 2003 and 34.8 percent in the third quarter of fiscal 2004. Adobe's non-GAAP operating income, which excludes, as applicable, a partial reversal of prior restructuring charges, was $146.4 million in the fourth quarter of fiscal 2004, compared to $115.2 million in the fourth quarter of fiscal 2003 and $140.3 million in the third quarter of fiscal 2004. As a percent of revenue, non-GAAP operating income in the fourth quarter of fiscal 2004 was 34.1 percent, compared to 32.1 percent in the fourth quarter of fiscal 2003 and 34.8 percent in the third quarter of fiscal 2004. Adobe Reports Record Annual Revenue in Fiscal Year 2004 In fiscal 2004, Adobe achieved record revenue of $1.667 billion, compared to $1.295 billion in fiscal 2003. On a year-over-year basis, annual revenue grew 29 percent. Adobe's annual GAAP net income was $450.4 million in fiscal 2004, compared to $266.3 million in fiscal 2003. On a year-over-year basis, annual GAAP net income grew 69 percent. Adobe's annual non-GAAP net income, which does not, as applicable, include a partial reversal of restructuring charges, and investment gains and losses, was $448.5 million in fiscal 2004, compared to $275.0 million in fiscal 2003. On a year-over-year basis, annual non-GAAP net income grew 63 percent. GAAP diluted earnings per share for fiscal 2004 were $1.82. Non-GAAP diluted earnings per share for fiscal 2004, which does not include investment gains and losses, were $1.81. Adobe Provides First Quarter Financial Targets and Reaffirms Fiscal 2005 Targets For the first quarter of fiscal 2005, Adobe announced it is targeting revenue of $435 to $455 million, a gross margin of approximately 94 percent, and GAAP and non-GAAP operating margin ranges of approximately 34 to 35 percent. As a percent of revenue, Adobe is targeting first quarter expenses as follows: Research & Development - approximately 19 percent Sales & Marketing - approximately 31 to 32 percent General & Administrative - approximately 9 percent In addition, Adobe is targeting its share count range to be between 254 and 255 million shares in the first quarter of fiscal 2005. The Company also is targeting other income in its first quarter to be approximately $3.5 million, and a tax rate of 25 percent. These targets lead to first quarter GAAP and non-GAAP earnings per share target ranges of $0.45 to $0.48. 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 2005, the Company reaffirmed its full year target range of $1.85 to $1.9 billion in revenue, with an operating margin target range of approximately 34 to 35 percent. The Adobe Board of Directors declared this quarter's cash dividend of $0.0125 per share, payable on January 11, 2005, to stockholders of record as of December 28, 2004.

 

 

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