Here's the press release:
It appears that Adobe made this blow-out quarter by cutting costs and reducing overhead. On a modest increase in revenue, Adobe almost doubled gross margin. Just wait until Adobe revenues hit the sweet spot as expected the second half of this year. Expect many analyst upgrades as the visibility into the second half of the year is excellent and Adobe has already said what to expect next quarter--another upside surprise. IMO, we're going to 75 in the next 9 months. Hang on for the ride.
Doughboy.
Adobe Systems Reports Financial Results for First
Quarter of Fiscal 1999
PR Newswire - March 18, 1999 16:47
Results Exceed the First Call Consensus of Analysts' Estimates
SAN JOSE, Calif., March 18 /PRNewswire/ -- Adobe Systems Incorporated (Nasdaq: ADBE)
today reported its financial results for its first quarter of fiscal 1999 ended March 5, 1999.
For the first quarter, Adobe achieved revenue of $226.9 million, compared to $197.8 million
reported for the first quarter of fiscal 1998 and $246.7 million reported in the fourth quarter of fiscal
1998. Net income for the first quarter of fiscal 1999 was $38.3 million, compared to $26.7 million
reported in the same quarter of fiscal 1998 and $50.3 million in the fourth quarter of fiscal 1998.
Diluted earnings per share for the first quarter of fiscal 1999 were $0.60 based on 63.4 million
weighted average shares. This compares with diluted earnings per share of $0.38 reported in the
first quarter of fiscal 1998, based on 69.6 million weighted average shares and diluted earnings per
share of $0.78 reported in the fourth quarter of fiscal 1998, based on 64.2 million weighted average
shares.
Application products revenue for the first quarter of fiscal 1999 was $188.8 million, compared to
$156.0 million for the same quarter of fiscal 1998, and $207.7 million for the fourth quarter of fiscal
1998. This represents 25.9% year over year growth after deducting revenue from divested
businesses. Licensing revenue for the first quarter of fiscal 1999 was $38.1 million, compared to
$41.9 million in the same quarter of fiscal 1998 and $39.0 million in the fourth quarter of fiscal
1998.
"We are pleased with the results for the first quarter of fiscal 1999 and we see positive momentum
for the remainder of the year, with a strong product release cycle just ahead of us for web and
publishing solutions," said John E. Warnock, chairman and chief executive officer of Adobe.
"Revenue growth in the quarter was solid; management controls are in place, enabling us to
effectively deploy resources; and we continue to enhance our operating model. We remain
committed to an FY 1999 annual revenue growth rate of 15%, after divested businesses, with an
annual operating margin of 25%."
Warnock added that the results for second quarter of fiscal 1999 that ends June 4, 1999 may
exceed the current First Call consensus of analysts' earnings estimates of $0.55 per share. Based
upon preliminary analysis of the second quarter, earnings per share could be in the range of $0.62 -
$0.66, based upon 63.4 million weighted average shares.
The Adobe Board of Directors declared this quarter's cash dividend of $0.05 per share, payable on
April 14, 1999 to stockholders of record as of March 31, 1999.
This press release contains forward-looking statements that 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; delays in shipment of the Company's new products and major new
versions of existing products; lack of market acceptance of new products and upgrades;
introduction of new products by major competitors; ongoing weakness in the Company's printing
business due to product transitions; industry transitions to new business and information delivery
models; ongoing weakness in the Japanese economy; adverse economic conditions in any of the
major countries in which the Company does business, and Year 2000 issues. For further discussion
of the risks and uncertainties, readers should refer to the Company's SEC filings including the 1998
annual report on Form 10K and the quarterly reports on Form 10Q to be filed by the Company in
1999.
About Adobe Systems Incorporated
Founded in 1982, Adobe Systems is a leading provider of graphic design, publishing, and imaging
software for Web and print production, and the second largest desktop software company in the
world with annual revenues approaching $1 billion. The Company builds award-winning software
solutions for Web and graphic designers, professional publishers, document-intensive organizations,
business users, and consumers. Adobe's products enable customers to create, publish and deliver
visually-rich images and documents across all print and electronic media. Adobe's worldwide
headquarters are in San Jose, California and its web site is located at www.adobe.com.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three Months Ended
(Unaudited) (Unaudited)
March 5 February 27
1999 1998
Revenue:
Licensing $38,099 $41,851
Application products 188,803 155,962
Total revenue 226,902 197,813
Direct costs 22,499 27,805
Gross margin 204,403 170,008
Operating expenses:
Research and development 44,904 43,338
Sales and marketing 78,480 71,491
General and administrative 26,566 33,507
Total operating expenses 149,950 148,336
Operating income 54,453 21,672
Nonoperating income, net:
Investment gain (loss) (20) 12,462
Interest and other income 5,886 8,501
Total nonoperating income, net 5,866 20,963
Income before income taxes 60,319 42,635
Provision for income taxes 22,043 15,891
Net income $38,276 $26,744
Basic net income per share $.63 $.39
Shares used in computing basic
net income per share 60,973 67,762
Diluted net income per share $.60 $.38
Shares used in computing diluted
net income per share 63,384 69,585
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
Unaudited Audited
March 5 November 27
1999 1998
ASSETS
Current assets:
Cash and cash equivalents $79,486 $110,871
Short-term investments 183,751 161,676
Receivables 132,042 141,180
Other current assets 43,484 42,218
Total current assets 438,763 455,945
Property and equipment 93,562 93,887
Deferred income taxes 2,128 16,647
Other assets 238,053 200,852
Total assets $772,506 $767,331
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade and other payables $29,250 $48,681
Accrued expenses 125,782 117,539
Accrued restructuring charges 6,975 8,867
Income taxes payable 47,659 64,546
Deferred revenue 17,970 11,333
Total current liabilities 227,636 250,966
Stockholders' equity:
Common stock, $0.0001 par value, and
additional paid-in capital 315,370 306,859
Retained earnings 750,225 732,730
Accumulated other comprehensive income 16,830 (1,879)
Treasury stock at cost, net of reissuances (537,555) (521,345)
Total stockholders' equity 544,870 516,365
Total liabilities and stockholders' equity $772,506 $767,331
SOURCE Adobe Systems Incorporated
/CONTACT: analyst, Jim Stephens, VP Investor Relations, 408-536-4416, or
ir@adobe.com, or press, Wendy Strickman, Director, Public Relations,
408-536-4033, or wstrick@adobe.com, both of Adobe Systems Incorporated/
/Web site: adobe.com
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