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Adobe Systems Reports Record Revenue and Profit

Monday, March 22, 2004

Press release from the issuing company

SAN JOSE, Calif. — March 18, 2004 — Adobe Systems Incorporated today reported strong financial results for its first quarter ended March 5, 2004. In the first quarter of fiscal 2004, Adobe achieved record revenue of $423.3 million, compared to $296.9 million reported for the first quarter of fiscal 2003 and $358.6 million reported in the fourth quarter of fiscal 2003. On a year-over-year basis, this represents 43 percent growth. Adobe's first quarter revenue target range was $380 to $405 million. "Our outstanding quarter was driven by strong global revenue from the new Adobe Creative Suite and record revenue from our Intelligent Documents business. This highlights the increasing relevance of Adobe technology platforms to creative professionals and enterprises worldwide," said Bruce R. Chizen, president and chief executive officer of Adobe. "Given the impressive start in Q1, we have raised our fiscal 2004 financial targets." GAAP diluted earnings per share for the first quarter of fiscal 2004 were $0.50. Non-GAAP diluted earnings per share, which does not include an investment loss from the company's venture program, also were $0.50. Adobe's revised GAAP and non-GAAP first quarter earnings target range was $0.36 to $0.42 per share. GAAP net income was a record $123.0 million for the first quarter of fiscal 2004, compared to $54.2 million reported in the first quarter of fiscal 2003, and $83.3 million in the fourth quarter of fiscal 2003. On a year-over-year basis, GAAP net income grew 127 percent. Non-GAAP net income, which does not, as applicable, include a partial reversal of prior restructuring charges and investment gains and losses, was a record $123.8 million for the first quarter of fiscal 2004, compared to $58.9 million in the first quarter of fiscal 2003, and $83.0 million in the fourth quarter of fiscal 2003. On a year-over-year basis, non-GAAP net income grew 110 percent. GAAP diluted earnings per share for the first quarter of fiscal 2004 were $0.50 based on 246.1 million weighted average shares. This compares with GAAP diluted earnings per share of $0.23 reported in the first quarter of fiscal 2003, based on 235.3 million weighted average shares, and GAAP diluted earnings per share of $0.34 reported in the fourth quarter of fiscal 2003, based on 245.5 million weighted average shares. Adobe's GAAP operating income was $163.3 million in the first quarter of fiscal 2004, compared to $80.5 million in the first quarter of fiscal 2003 and $115.3 million in the fourth quarter of fiscal 2003. As a percent of revenue, GAAP operating income in the first quarter of fiscal 2004 was 38.6 percent, compared to 27.1 percent in the first quarter of fiscal 2003 and 32.1 percent in the fourth quarter of fiscal 2003. Adobe's non-GAAP operating income, which does not, as applicable, include a partial reversal of prior restructuring charges, was $163.3 million in the first quarter of fiscal 2004, compared to $80.5 million in the first quarter of fiscal 2003 and $115.2 million in the fourth quarter of fiscal 2003. As a percent of revenue, non-GAAP operating income for the first quarter of fiscal 2004 was 38.6 percent, compared to 27.1 percent in the first quarter of fiscal 2003 and 32.1 percent in the fourth quarter of fiscal 2003. Company Provides Second Quarter Financial Targets and Raises Fiscal Year 2004 Targets For the second quarter of fiscal 2004, the Company announced that it is targeting revenue of $365 to $385 million, a gross margin of approximately 93 to 94 percent, and GAAP and non-GAAP operating margin ranges of 30 to 33 percent. As a percent of revenue, Adobe is targeting second quarter expenses as follows: Research & Development - approximately 19 to 20 percent Sales & Marketing - approximately 32 to 34 percent General & Administrative - approximately 9 to 10 percent In addition, Adobe is targeting its share count range to be between 247 and 249 million shares in the second quarter of fiscal 2004. The Company also is targeting other income in its second quarter to be approximately $3 to $4 million, and a tax rate of 26 percent. These targets lead to second quarter GAAP and non-GAAP earnings per share target ranges of $0.33 to $0.39. For fiscal year 2004, Adobe increased its revenue target to a range of $1.475 to $1.5 billion. The Company also increased its annual operating margin target to a range of 31 to 32 percent, with a targeted GAAP and non-GAAP earnings per share range between $1.40 and $1.46. The Company's prior fiscal 2004 targets were revenue of approximately $1.425 billion, with an operating margin of approximately 30 percent. The Company currently believes targeted non-GAAP earnings per share and non-GAAP operating margin results will not differ materially from targeted GAAP results. The Adobe Board of Directors declared this quarter's cash dividend of $0.0125 per share, payable on April 13, 2004 to stockholders of record as of March 30, 2004.

 

 

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