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Adobe Systems Inc – ‘8-K’ for 3/19/13 – ‘EX-99.1’

On:  Tuesday, 3/19/13, at 4:02pm ET   ·   For:  3/19/13   ·   Accession #:  796343-13-30   ·   File #:  0-15175

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  As Of                Filer                Filing    For·On·As Docs:Size

 3/19/13  Adobe Systems Inc                 8-K:2,5,9   3/19/13    2:278K

Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Current Report                                      HTML     28K 
 2: EX-99.1     Miscellaneous Exhibit                               HTML    101K

EX-99.1   —   Miscellaneous Exhibit

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  ADBE EX 99.1 Q113  

Exhibit 99.1
Investor Relations Contact
Mike Saviage
Adobe Systems Incorporated
408-536-4416
ir@adobe.com
Public Relations Contact
Jodi Sorensen
Adobe Systems Incorporated
408-536-2084
jsorensen@adobe.com



FOR IMMEDIATE RELEASE
Adobe Reports Strong Q1 Results
Adobe Creative Cloud Adoption Accelerates and Adobe Marketing Cloud Achieves 20 Percent Annual Revenue Growth
SAN JOSE, Calif. - March 19, 2013 - Adobe Systems Incorporated (Nasdaq:ADBE) today reported financial results for its first quarter of fiscal year 2013 ended March 1, 2013.
Adobe® achieved revenue of $1.008 billion, exceeding its targeted range of $950 million to $1 billion. During the quarter, the Company continued to accelerate adoption of Adobe Creative Cloud™ as it migrates to a subscription model in its Digital Media business. Adobe also achieved strong revenue growth with Adobe Marketing Cloud solutions in its Digital Marketing business.
First Quarter Financial Highlights
•
Diluted earnings per share were $0.13 on a GAAP-basis, and $0.35 on a non-GAAP basis.
•
Operating income was $98.2 million and net income was $65.1 million on a GAAP basis. Operating income was $240.7 million and net income was $177.9 million on a non-GAAP basis.
•
Cash flow from operations was $322.0 million.
•
Deferred revenue grew by $80.5 million to a record $700.0 million.
•
Adobe ended Q1 with 479 thousand paid Creative Cloud members, an increase of 153 thousand when compared to the number of members as of the end of Q4 fiscal year 2012.
•
Adobe Marketing Cloud achieved quarterly revenue of $215.4 million, which represents 20 percent year-over-year growth.
A reconciliation between GAAP and non-GAAP results is provided at the end of this press release.
Executive Quotes
“Creative Cloud is quickly becoming mainstream, with the overwhelming majority of Creative purchases on Adobe.com now being Creative Cloud subscriptions,” said Shantanu Narayen, president and chief executive officer, Adobe. “With Adobe Marketing Cloud, we are the partner of choice for Chief Marketing Officers as we help our customers migrate their businesses online.”
“Adoption of Creative Cloud accelerated and we achieved strong Digital Marketing revenue and bookings growth in Q1,” said Mark Garrett, executive vice president and chief financial officer, Adobe. “We're building a stronger, more predictable recurring revenue model which will drive higher long-term growth.”







Adobe to Webcast Earnings Conference Call
Adobe will webcast its first quarter fiscal year 2013 earnings conference call today at 2:00 p.m. Pacific Time from its investor relations website: www.adobe.com/ADBE. A copy of Adobe management's prepared remarks, including financial targets and conference call slides, has been posted to Adobe's investor relations website in advance of the conference call for reference.
A reconciliation between GAAP and non-GAAP financial targets is also provided on the website.
Forward-Looking Statements Disclosure
This press release contains forward-looking statements, including those related to the transition of our business as we migrate to a subscription model, adoption of Creative Cloud, increases in recurring revenue and long-term revenue growth, 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: failure to develop, market and distribute products and services that meet customer requirements, introduction of new products and business models by competitors, failure to successfully manage transitions to new business models and markets, including our increased emphasis on a cloud and subscription strategy, fluctuations in subscription renewal or upgrade rates, continued uncertainty in economic conditions and the financial markets, difficulty in predicting revenue from new businesses and the potential impact on our financial results from changes in our business models, and failure to realize the anticipated benefits of past or future acquisitions.
For a discussion of these and other risks and uncertainties, please refer to Adobe's Annual Report on Form 10-K for the fiscal year ended Nov. 30, 2012.
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 March 1, 2013, which Adobe expects to file in March 2013.
Adobe assumes no obligation to, and does not currently intend to, update these forward-looking statements.
About Adobe Systems Incorporated
Adobe is changing the world through digital experiences. For more information, visit www.adobe.com.
###
© 2013 Adobe Systems Incorporated. All rights reserved. Adobe, the Adobe logo, Adobe Creative Cloud and Adobe Marketing Cloud are either registered trademarks or trademarks of Adobe Systems Incorporated in the United States and/or other countries. All other trademarks are the property of their respective owners.





2


Condensed Consolidated Statements of Income
(In thousands, except per share data; unaudited)
 
Three Months Ended
 
March 1,
2013
 
March 2,
2012
Revenue:
 
 
 
Products
$
675,789

 
$
808,521

Subscription
224,266

 
146,230

Services and support
107,818

 
90,469

Total revenue
1,007,873

 
1,045,220

 
 
 
 
Cost of revenue:
 
 
 
Products
51,982

 
25,668

Subscription
62,580

 
48,780

Services and support
42,122

 
33,817

Total cost of revenue
156,684

 
108,265

 
 
 
 
Gross profit
851,189

 
936,955

 
 
 
 
Operating expenses:
 
 
 
Research and development
209,638

 
177,728

Sales and marketing
398,033

 
358,963

General and administrative
132,853

 
102,681

Restructuring charges
2

 
(2,825
)
Amortization of purchased intangibles
12,439

 
11,429

Total operating expenses
752,965

 
647,976

 
 
 
 
Operating income
98,224

 
288,979

 
 
 
 
Non-operating income (expense):
 
 
 
Interest and other income (expense), net
1,246

 
(2,785
)
Interest expense
(16,834
)
 
(16,838
)
Investment gains (losses), net
848

 
1,021

Total non-operating income (expense), net
(14,740
)
 
(18,602
)
Income before income taxes
83,484

 
270,377

Provision for income taxes
18,367

 
85,168

Net income
$
65,117

 
$
185,209

Basic net income per share
$
0.13

 
$
0.37

Shares used to compute basic net income per share
498,607

 
494,016

Diluted net income per share
$
0.13

 
$
0.37

Shares used to compute diluted net income per share
507,840

 
500,378


3


Condensed Consolidated Balance Sheets
(In thousands, except par value; unaudited)
 
March 1,
2013
 
November 30,
2012
ASSETS
 
 
 
 
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
1,306,382

 
$
1,425,052

Short-term investments
2,354,307

 
2,113,301

Trade receivables, net of allowances for doubtful accounts of $12,715 and $12,643
     respectively
485,801

 
617,233

Deferred income taxes
64,930

 
59,537

Prepaid expenses and other current assets
161,663

 
116,237

Total current assets
4,373,083

 
4,331,360

 
 
 
 
Property and equipment, net
686,014

 
664,302

Goodwill
4,221,487

 
4,133,259

Purchased and other intangibles, net
580,568

 
545,036

Investment in lease receivable
207,239

 
207,239

Other assets
97,320

 
93,327

Total assets
$
10,165,711

 
$
9,974,523

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
 
 
 
Current liabilities:
 
 
 
Trade payables
$
72,725

 
$
49,759

Accrued expenses
505,465

 
590,140

Capital lease obligations
22,406

 
11,217

Accrued restructuring
6,767

 
9,287

Income taxes payable
11,126

 
49,886

Deferred revenue
645,834

 
561,463

Total current liabilities
1,264,323

 
1,271,752

 
 
 
 
Long-term liabilities:
 
 
 
Debt and capital lease obligations
1,509,003

 
1,496,938

Deferred revenue
54,197

 
58,102

Accrued restructuring
10,053

 
12,263

Income taxes payable
159,859

 
155,096

Deferred income taxes
292,770

 
265,106

Other liabilities
70,168

 
50,084

Total liabilities
3,360,373

 
3,309,341

 
 
 
 
Stockholders' equity:
 
 
 
Preferred stock, $0.0001 par value; 2,000 shares authorized
—

 
—

Common stock, $0.0001 par value
61

 
61

Additional paid-in-capital
3,116,471

 
3,038,665

Retained earnings
6,808,489

 
7,003,003

Accumulated other comprehensive income
40,110

 
30,712

Treasury stock, at cost (99,789 and 106,702 shares, respectively), net of re-issuances
(3,159,793
)
 
(3,407,259
)
Total stockholders' equity
6,805,338

 
6,665,182

Total liabilities and stockholders' equity
$
10,165,711

 
$
9,974,523


4


Condensed Consolidated Statements of Cash Flows
(In thousands; unaudited)
 
Three Months Ended
 
March 1,
2013
 
March 2,
2012
Cash flows from operating activities:
 
 
 
Net income
$
65,117

 
$
185,209

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation, amortization and accretion
76,752

 
69,861

Stock-based compensation expense
77,282

 
61,151

Unrealized investment (gains) losses
(418
)
 
(3,168
)
Changes in deferred revenue
79,514

 
16,739

Changes in other operating assets and liabilities
23,784

 
(15,429
)
Net cash provided by operating activities
322,031

 
314,363

 
 
 
 
Cash flows from investing activities:
 
 
 
Purchases, sales and maturities of short-term investments, net
(245,775
)
 
(32,418
)
Purchases of property and equipment
(60,190
)
 
(51,088
)
Purchases of long-term investments, intangibles and other assets, net of sales
(43,793
)
 
(1,017
)
Acquisitions, net of cash
(96,356
)
 
(353,184
)
Net cash used for investing activities
(446,114
)
 
(437,707
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Purchases of treasury stock
(100,000
)
 
(80,000
)
Re-issuance of treasury stock
88,566

 
13,366

Proceeds from debt and capital lease obligations
25,703

 
—

Repayment of debt and capital lease obligations
(2,507
)
 
(2,264
)
Debt issuance costs
(357
)
 
(2,297
)
Excess tax benefits from stock-based compensation
—

 
2,670

Net cash provided by (used for) financing activities
11,405

 
(68,525
)
Effect of exchange rate changes on cash and cash equivalents
(5,992
)
 
3,632

Net decrease in cash and cash equivalents
(118,670
)
 
(188,237
)
Cash and cash equivalents at beginning of period
1,425,052

 
989,500

Cash and cash equivalents at end of period
$
1,306,382

 
$
801,263


5


Non-GAAP Results
(In thousands, except per share data)
The following tables show Adobe's GAAP results reconciled to non-GAAP results included in this release.
 
Three Months Ended
 
March 1,
2013
 
March 2,
2012
 
November 30,
2012
Operating income:
 
 
 
 
 
 
 
 
 
 
 
GAAP operating income
$
98,224

 
$
288,979

 
$
307,765

Stock-based and deferred compensation expense
85,086

 
72,633

 
76,248

Restructuring charges
2

 
(2,825
)
 
(275
)
Amortization of purchased intangibles & technology license arrangements
57,377

 
27,864

 
30,912

Non-GAAP operating income
$
240,689

 
$
386,651

 
$
414,650

 
 
 
 
 
 
Net income:
 
 
 
 
 
 
 
 
 
 
 
GAAP net income
$
65,117

 
$
185,209

 
$
222,333

Stock-based and deferred compensation expense
85,086

 
72,633

 
76,248

Restructuring charges
2

 
(2,825
)
 
(275
)
Amortization of purchased intangibles & technology license arrangements
57,377

 
27,864

 
30,912

Investment (gains) losses
(848
)
 
(1,021
)
 
(351
)
Income tax adjustments
(28,840
)
 
2,647

 
(20,962
)
Non-GAAP net income
$
177,894

 
$
284,507

 
$
307,905

 
 
 
 
 
 
Diluted net income per share:
 
 
 
 
 
 
 
 
 
 
 
GAAP diluted net income per share
$
0.13

 
$
0.37

 
$
0.44

Stock-based and deferred compensation expense
0.17

 
0.15

 
0.15

Restructuring charges
—

 
(0.01
)
 
—

Amortization of purchased intangibles & technology license arrangements
0.11

 
0.06

 
0.06

Income tax adjustments
(0.06
)
 
—

 
(0.04
)
Non-GAAP diluted net income per share
$
0.35

 
$
0.57

 
$
0.61

 
 
 
 
 
 
Shares used in computing diluted net income per share
507,840

 
500,378

 
502,154


6


Non-GAAP Results (continued)


 
Three Months
Ended
 
March 1,
2013
Effective income tax rate:
 
 
 
GAAP effective income tax rate
22.0
 %
Stock-based and deferred compensation expense
(0.6
)
Amortization of purchased intangibles & technology license arrangements
(0.4
)
R&D tax benefit for carryover of 2012 tax benefit
0.5

One-time charge related to acquisition
(0.5
)
Non-GAAP effective income tax rate
21.0
 %




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 expenses, restructuring charges, amortization of purchased intangibles and prior activity in connection with technology license agreements, investment gains and losses and the related tax impact of all of these items, income tax adjustments, 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.


7

Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘8-K’ Filing    Date    Other Filings
Filed on / For Period End:3/19/13
3/1/1310-Q,  DEF 14A,  DEFA14A
11/30/1210-K,  5
3/2/1210-Q,  8-K
 List all Filings 
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