10-KPeriod: FY2004

ADOBE INC. Annual Report, Year Ended Dec 3, 2004

Filed February 2, 2005For Securities:ADBE

Summary

Adobe Systems Inc. reported strong performance for the fiscal year ending December 3, 2004, with total revenues increasing by 29% year-over-year to $1.67 billion. This growth was primarily driven by the Creative Professional segment, which saw a 66% increase in revenue, largely due to the successful adoption of the Adobe Creative Suite. The Intelligent Documents segment also demonstrated robust growth, up 22%, fueled by strong performance in both desktop and server-based product lines, including the Acrobat family. The company's net income rose significantly to $450.4 million, a 69% increase from the prior year, with diluted earnings per share reaching $1.82. Adobe highlighted its strategic focus on delivering integrated technology platforms for creative professionals and enterprises, anticipating continued growth through new product releases and market penetration. The company maintained a healthy financial position with substantial cash reserves and a commitment to returning value to shareholders through stock repurchases and dividends.

Key Highlights

  • 1Total revenue for fiscal 2004 reached $1.67 billion, a 29% increase year-over-year, driven by strong product adoption.
  • 2The Creative Professional segment experienced robust revenue growth of 66%, largely attributed to the Adobe Creative Suite.
  • 3Intelligent Documents segment revenue grew 22%, supported by the continued success of Acrobat desktop products and server-based solutions.
  • 4Net income surged by 69% to $450.4 million, with diluted EPS at $1.82.
  • 5Adobe continued to invest heavily in R&D, with expenses increasing by 12% to $311.3 million, reflecting a commitment to innovation.
  • 6The company maintained a strong liquidity position, with cash, cash equivalents, and short-term investments totaling $1.31 billion at year-end.
  • 7Adobe actively repurchased shares, with approximately 11 million shares repurchased in fiscal 2004 under its ongoing dilution coverage program.

Frequently Asked Questions

Adobe's primary growth drivers in fiscal year 2004 were the strong performance of its Creative Professional segment, significantly boosted by the adoption of the Adobe Creative Suite, and the solid growth in its Intelligent Documents segment, propelled by the Acrobat product line and server-based solutions.

Adobe's profitability saw a substantial improvement in fiscal year 2004. Net income increased by 69% to $450.4 million, and diluted earnings per share rose to $1.82 from $1.10 in the previous year, reflecting effective cost management and strong revenue growth.

Adobe's strategy for future growth centers on delivering integrated technology platforms for creative professionals and enterprises. This includes continuing innovation in its core product lines, expanding its server-based solutions for businesses, and increasing market penetration in key vertical markets.

Adobe conducts business globally and is exposed to currency fluctuations, primarily with the Japanese yen and Euro. The company actively hedges a portion of its forecasted international revenue using forward and option contracts to mitigate the impact of adverse currency movements. Its operating expenses in foreign countries also help to naturally hedge some of this exposure.