10-KPeriod: FY1999

ADOBE INC. Annual Report, Year Ended Dec 3, 1999

Filed February 16, 2000For Securities:ADBE

Summary

Adobe Systems Incorporated reported strong revenue growth for the fiscal year ended December 3, 1999, with total revenue reaching $1.015 billion, a 13% increase from the previous year. This growth was primarily driven by robust performance in the Print Publishing and ePaper Solutions segments, which saw increases of 30% and over 100% respectively. The Web Publishing segment also contributed positively with an 11% revenue increase. The company's net income saw a significant jump to $237.8 million, a 126% increase from fiscal year 1998, reflecting improved operational efficiency and strong sales. Adobe continues to invest heavily in product development, with R&D expenses increasing by 5% to $197.5 million, underscoring its commitment to innovation in a rapidly evolving software market. The company also announced a two-for-one stock split, indicating confidence in its future performance. Despite the positive financial results, Adobe faces ongoing challenges, particularly in its OEM PostScript and Other segment, which experienced a 34% decline due to weakness in the monochrome laser printer market and the loss of key customer business. The company is also navigating a competitive landscape with rapid technological changes. Management is focused on strategic initiatives including investing in eBusiness, streamlining operations through restructuring programs, and managing its venture capital portfolio, which showed significant unrealized gains. Overall, Adobe is demonstrating strong growth and profitability, driven by its core software products, while actively managing its business for future expansion.

Key Highlights

  • 1Revenue increased by 13% to $1.015 billion for the fiscal year ended December 3, 1999.
  • 2Net income significantly grew by 126% to $237.8 million, indicating strong profitability.
  • 3Print Publishing segment revenue grew by 30%, and ePaper Solutions revenue more than doubled, demonstrating strong growth in key areas.
  • 4Research and development expenses increased by 5% to $197.5 million, highlighting continued investment in innovation.
  • 5The company announced a two-for-one stock split, signaling confidence in future growth.
  • 6The OEM PostScript and Other segment saw a significant decline of 34% due to market challenges.
  • 7Adobe completed restructuring programs aimed at improving competitive position and resource allocation.

Frequently Asked Questions

Adobe's revenue growth in fiscal year 1999 was primarily driven by strong performance in its Print Publishing segment (up 30%) and its ePaper Solutions segment, which more than doubled its revenue. The Web Publishing segment also contributed positively with an 11% increase. Key product launches and growing customer adoption of Adobe's core technologies, such as Acrobat and Photoshop, fueled this growth.

Adobe experienced a substantial increase in profitability. Net income rose by 126% from $105.1 million in fiscal year 1998 to $237.8 million in fiscal year 1999. This improvement was attributed to strong revenue growth, effective cost management, and significant gains from its investment portfolio.

Adobe highlighted several challenges, including intense competition and rapid technological changes in the software industry. Specifically, the OEM PostScript and Other segment faced a significant decline due to market weakness in monochrome laser printers and changes in customer contracts. The company also noted the potential impact of delays in new product shipments, lack of market acceptance for new products, and adverse changes in general economic conditions.

Adobe continues to invest in future growth through significant expenditures on research and development, which increased by 5% to $197.5 million in fiscal year 1999. The company is also strategically investing in new markets, particularly in eBusiness initiatives, and is actively managing its venture capital portfolio to identify and capitalize on emerging technologies and market opportunities.