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Adobe Achieves 18% Revenue Growth in Q4

Friday, December 16, 2005

Press release from the issuing company

SAN JOSE, Calif.--Dec. 15, 2005-- Adobe Systems Incorporated today reported strong financial results for its fourth quarter and fiscal year ended December 2, 2005. In the fourth quarter of fiscal 2005, Adobe achieved record revenue of $510.4 million, compared to $429.5 million reported for the fourth quarter of fiscal 2004 and $487.0 million reported in the third quarter of fiscal 2005. On a year-over-year basis, this represents 19 percent revenue growth. Adobe's fourth quarter revenue target range was $490 to $510 million. "2005 was another remarkable year for Adobe," said Bruce R. Chizen, Adobe chief executive officer. "We grew our business 18 percent, generated record profits, and for the third consecutive year, achieved record revenue for the fourth quarter and year. At the same time, we completed our acquisition of Macromedia, which positions us for future growth by accelerating our strategy to provide a powerful engagement platform. Going forward, we will meet a wider set of customer needs and have a significantly greater opportunity to expand into new markets, particularly in the mobile and enterprise segments." GAAP diluted earnings per share for the fourth quarter of fiscal 2005 were $0.31. Non-GAAP diluted earnings per share, which excludes the net tax impact of the repatriation of certain foreign earnings and investment gains, were $0.30. GAAP net income was $156.3 million for the fourth quarter of fiscal 2005, compared to $113.5 million reported in the fourth quarter of fiscal 2004, and $144.9 million in the third quarter of fiscal 2005. Non-GAAP net income, which excludes, as applicable, the net tax impact of the repatriation of certain foreign earnings, and investment gains and losses, was $151.5 million for the fourth quarter of fiscal 2005, compared to $110.4 million in the fourth quarter of fiscal 2004, and $146.4 million in the third quarter of fiscal 2005. GAAP diluted earnings per share for the fourth quarter of fiscal 2005 were $0.31 based on 508.6 million weighted average shares. This compares with GAAP diluted earnings per share of $0.23 reported in the fourth quarter of fiscal 2004, based on 500.6 million weighted average shares, and GAAP diluted earnings per share of $0.29 reported in the third quarter of fiscal 2005, based on 507.8 million weighted average shares. Adobe's GAAP and non-GAAP operating income was $191.9 million in the fourth quarter of fiscal 2005, compared to $146.4 million in the fourth quarter of fiscal 2004 and $183.6 million in the third quarter of fiscal 2005. On a year-over-year basis, this represents 31 percent GAAP and non-GAAP operating income growth. As a percent of revenue, GAAP and non-GAAP operating income in the fourth quarter of fiscal 2005 was 37.6 percent, compared to 34.1 percent in the fourth quarter of fiscal 2004 and 37.7 percent in the third quarter of fiscal 2005. Adobe Reports Record Annual Revenue in Fiscal Year 2005 In fiscal year 2005, Adobe achieved record revenue of $1.966 billion, compared to $1.667 billion in fiscal 2004. On a year-over-year basis, annual revenue grew 18 percent. Adobe's annual GAAP net income was $602.8 million in fiscal 2005, compared to $450.4 million in fiscal 2004. On a year-over-year basis, annual GAAP net income grew 34 percent. Adobe's annual non-GAAP net income, which as applicable excludes the net tax impact of the repatriation of certain foreign earnings, and investment gains and losses, was $574.5 million in fiscal 2005, compared to $448.5 million in fiscal 2004. On a year-over-year basis, annual non-GAAP net income grew 28 percent. GAAP diluted earnings per share for fiscal 2005 were $1.19. Non-GAAP diluted earnings per share for fiscal 2005, which as applicable excludes the net tax impact of the repatriation of certain foreign earnings, and investment gains and losses, were $1.13. Adobe Provides First Quarter and Fiscal Year 2006 Financial Targets For the first quarter of fiscal 2006, Adobe announced it is targeting revenue of $630 million to $660 million. The Company also is targeting a GAAP operating margin of approximately 15 to 19 percent in the first quarter. On a non-GAAP basis, which excludes purchase accounting and restructuring charges related to the acquisition of Macromedia, and the stock-based compensation impact of SFAS 123R, the Company is targeting a first quarter operating margin of approximately 35 to 36 percent. In addition, Adobe is targeting its share count to be between 617 million and 619 million shares in the first quarter of fiscal 2006. The Company also is targeting other income in its first quarter to be approximately $11 million to $12 million, and a tax rate of 25 percent. These targets lead to a first quarter GAAP earnings per share target range of approximately $0.13 to $0.16. On a non-GAAP basis, which excludes purchase accounting and restructuring charges related to the acquisition of Macromedia, and the stock-based compensation impact of SFAS 123R, the Company is targeting earnings per share of approximately $0.28 to $0.30. For fiscal year 2006, Adobe announced it is targeting revenue of approximately $2.7 billion. The Company also is targeting a GAAP operating margin of approximately 20 to 23 percent, and a non-GAAP operating margin -- which excludes purchase accounting and restructuring charges, and the cost of stock-based compensation under SFAS 123R -- of approximately 36 to 37 percent. Adobe stated it expects its tax rate for fiscal year 2006 to be approximately 25 percent. Based on the Company's financial targets, it expects its GAAP earnings per share for the year to be approximately $0.74 to $0.82. On a non-GAAP basis, it expects earnings per share to be approximately $1.26 to $1.30.

 

 

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