Adobe Reports Third Quarter Results
 
SAN JOSE, Calif., Sep 15, 2009 -- Adobe Systems Incorporated (Nasdaq:ADBE) today announced financial results for its third quarter ended Aug. 28, 2009.

In the third quarter of fiscal 2009, Adobe achieved revenue of $697.5 million, compared to $887.3 million reported for the third quarter of fiscal 2008 and $704.7 million reported in the second quarter of fiscal 2009.

"We are pleased with the solid revenue and earnings results we were able to deliver in Q3," said Shantanu Narayen, president and CEO of Adobe. "Our focus remains on driving growth in our core businesses, as well as investing in promising new opportunities."

Third Quarter Fiscal 2009 GAAP Results

Adobe's GAAP diluted earnings per share for the third quarter of fiscal 2009 were $0.26, based on 531.8 million weighted average shares. This compares with GAAP diluted earnings per share of $0.35 reported in the third quarter of fiscal 2008 based on 541.3 million weighted average shares, and GAAP diluted earnings per share of $0.24 reported in the second quarter of fiscal 2009 based on 528.0 million weighted average shares.

GAAP operating income was $167.6 million in the third quarter of fiscal 2009, compared to $219.5 million in the third quarter of fiscal 2008 and $161.4 million in the second quarter of fiscal 2009. As a percent of revenue, GAAP operating income in the third quarter of fiscal 2009 was 24.0 percent, compared to 24.7 percent in the third quarter of fiscal 2008 and 22.9 percent in the second quarter of fiscal 2009.

GAAP net income was $136.0 million for the third quarter of fiscal 2009, compared to $191.6 million reported in the third quarter of fiscal 2008 and $126.1 million in the second quarter of fiscal 2009.

Third Quarter Fiscal 2009 Non-GAAP Results

Non-GAAP diluted earnings per share for the third quarter of fiscal 2009 were $0.35. This compares with non-GAAP diluted earnings per share of $0.50 reported in the third quarter of fiscal 2008 and non-GAAP diluted earnings per share of $0.35 reported in the second quarter of fiscal 2009.

Adobe's non-GAAP operating income was $237.1 million in the third quarter of fiscal 2009, compared to $351.9 million in the third quarter of fiscal 2008 and $237.7 million in the second quarter of fiscal 2009. As a percent of revenue, non-GAAP operating income in the third quarter of fiscal 2009 was 34.0 percent, compared to 39.7 percent in the third quarter of fiscal 2008 and 33.7 percent in the second quarter of fiscal 2009.

Non-GAAP net income was $186.1 million for the third quarter of fiscal 2009, compared to $269.1 million in the third quarter of fiscal 2008 and $185.0 million in the second quarter of fiscal 2009.

Reconciliation between GAAP and non-GAAP results is provided at the end of this press release.

Fourth Quarter Fiscal 2009 Financial Targets

For the fourth quarter of fiscal 2009, Adobe is targeting revenue of $690 million to $740 million, an operating margin of 23 percent to 27 percent on a GAAP basis, and 33 percent to 36 percent on a non-GAAP basis.

In addition, Adobe is targeting its share count to be between 530 million and 532 million. The Company also is targeting non-operating income to be between $1 million and $3 million. Adobe's GAAP tax rate is expected to be approximately 23 percent and the non-GAAP tax rate is expected to be approximately 23.5 percent.

These targets lead to a fourth quarter diluted earnings per share target range of $0.23 to $0.29 on a GAAP basis, and an earnings per share target range of $0.33 to $0.39 on a non-GAAP basis.

Reconciliation between GAAP and non-GAAP financial targets is provided at the end of this press release.

The fourth quarter financial targets do not include the impact of Adobe's acquisition of Omniture announced today, which is expected to close in the fourth quarter of Adobe's 2009 fiscal year.

Forward-Looking Statements Disclosure

This press release contains forward-looking statements, including those related to revenue, operating margin, non-operating income, tax rate, share count, earnings per share and business momentum, which involve risks and uncertainties that could cause actual results to differ materially. Factors that might cause or contribute to such differences include, but are not limited to: adverse changes in general economic or political conditions in any of the major countries in which Adobe does business, failure to develop, market and distribute new products or upgrades to existing products that meet customer requirements, introduction of new products and business models by existing and new competitors, failure to successfully manage transitions to new business models and markets, difficulty in predicting revenue from new businesses, costs related to intellectual property acquisitions, disputes and litigation, inability to protect Adobe's intellectual property from third-party infringers, or unauthorized use, disclosure or malicious attack, failure to realize the anticipated benefits of past or future acquisitions and difficulty in integrating such acquisitions, failure to manage Adobe's sales and distribution channels effectively, disruption of Adobe's business due to catastrophic events, risks associated with international operations, fluctuations in foreign currency exchange rates, changes in, or interpretations of, accounting principles, impairment of Adobe's goodwill or intangible assets, changes in, or interpretations of, tax rules and regulations, Adobe's inability to attract and retain key personnel, impairment of Adobe's investment portfolio due to deterioration of the capital markets, market risks associated with Adobe's equity investments, and interruptions or terminations in Adobe's relationships with turnkey assemblers. For further discussion of these and other risks and uncertainties, individuals should refer to Adobe's SEC filings.

The financial information set forth in this press release reflects estimates based on information available at this time. These amounts could differ from actual reported amounts stated in Adobe's Quarterly Report on Form 10-Q for our quarter ended Aug. 28, 2009, which the Company expects to file in October 2009. Adobe does not undertake an obligation to update forward-looking statements.

Adobe continues to provide all information required in accordance with GAAP, but believes evaluating its ongoing operating results may not be as useful if an investor is limited to reviewing only GAAP financial measures. Accordingly, Adobe uses non-GAAP financial information to evaluate its ongoing operations and for internal planning and forecasting purposes. Adobe's management does not itself, nor does it suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Adobe presents such non-GAAP financial measures in reporting its financial results to provide investors with an additional tool to evaluate Adobe's operating results in a manner that focuses on what Adobe believes to be its ongoing business operations. Adobe's management believes it is useful for itself and investors to review, as applicable, both GAAP information that includes the stock-based and deferred compensation impact, restructuring charges, amortization of purchased intangibles and technology license arrangements, the resolution of an income tax audit, investment gains and losses, and the related tax impact of all of these items, the income tax effect of the non-GAAP pre-tax adjustments from the provision for income taxes, and the non-GAAP measures that exclude such information in order to assess the performance of Adobe's business and for planning and forecasting in subsequent periods. Whenever Adobe uses such a non-GAAP financial measure, it provides a reconciliation of the non-GAAP financial measure to the most closely applicable GAAP financial measure. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure as detailed above.