10-KPeriod: FY2009

ADOBE INC. Annual Report, Year Ended Nov 27, 2009

Filed January 22, 2010For Securities:ADBE

Summary

Adobe Systems Incorporated's 2009 10-K filing reveals a company navigating a challenging economic landscape. Despite a significant year-over-year revenue decline of 18% in fiscal 2009, Adobe demonstrated resilience and strategic adaptation, notably with the acquisition of Omniture, Inc. for approximately $1.8 billion. This acquisition is expected to bolster Adobe's capabilities in Web analytics and online business optimization, creating a new reportable segment and driving future growth. The company's core Creative Solutions segment experienced an 18% revenue decrease due to the global recession impacting creative professionals. Similarly, Business Productivity Solutions saw a 19% decline, largely attributed to a slowdown in Acrobat product licensing. However, the Enterprise segment, driven by LiveCycle solutions, showed a more modest 7% decline, suggesting its critical business process automation tools were more insulated from the economic downturn. Adobe is actively managing its operational costs, as evidenced by restructuring plans aimed at aligning expenses with the fiscal 2010 operating plan. The company's liquidity remains strong, with a substantial cash, cash equivalents, and short-term investments balance of nearly $1.9 billion, supported by positive cash flows from operations, though partially offset by investing activities related to the Omniture acquisition and share repurchases.

Financial Highlights

54 data points
Beta

Revenue

$2.95B

89.9% Gross Margin

Net Income

$386.51M

13.1% Net Margin

EPS (Diluted)

$0.73

Total Assets

$7.28B

Cash & Equivalents

$999.49M

Free Cash Flow

$998.20M

Financial Statements
Beta
Revenue$2.95B
Cost of Revenue$296.73M
Gross Profit$2.65B
Operating Expenses$1.96B
Operating Income$690.51M
Interest Expense$3.41M
Net Income$386.51M
EPS (Basic)$0.74
EPS (Diluted)$0.73
Shares Outstanding (Basic)524.47M
Shares Outstanding (Diluted)530.61M

Key Highlights

  • 1Adobe completed the strategic acquisition of Omniture for approximately $1.8 billion in October 2009, creating a new Web analytics and online business optimization segment.
  • 2The company experienced an 18% year-over-year revenue decline in fiscal 2009, totaling $2.95 billion, primarily due to the global economic recession impacting customer spending.
  • 3The Creative Solutions segment, representing 58% of revenue, saw an 18% decline, while Business Productivity Solutions (including Acrobat) decreased by 23%.
  • 4The Enterprise segment, with its LiveCycle offerings, showed greater resilience, with revenue declining by only 7%, indicating the essential nature of these solutions for businesses.
  • 5Adobe's Platform segment revenue declined 22%, significantly impacted by the Open Screen Project's removal of certain Flash Lite licensing fees.
  • 6The company ended fiscal 2009 with a strong liquidity position, holding $1.9 billion in cash, cash equivalents, and short-term investments.
  • 7Adobe initiated restructuring plans in fiscal 2009 to align costs with its operating plan, impacting approximately 630 positions and resulting in restructuring charges.
  • 8Stock repurchases continued, with approximately 5.3 million shares repurchased in the last quarter of fiscal 2009.

Frequently Asked Questions

In fiscal year 2009, Adobe experienced an 18% decline in total revenue to $2.95 billion, reflecting the adverse impact of the global economic recession. Net income also significantly decreased to $386.5 million from $871.8 million in the prior year. The company's core Creative Solutions and Business Productivity Solutions segments were particularly affected by reduced customer spending.

The most significant strategic move was the acquisition of Omniture, Inc. for approximately $1.8 billion in October 2009. This acquisition aimed to strengthen Adobe's position in Web analytics and online business optimization, creating a new reportable segment. Additionally, Adobe initiated restructuring plans to manage costs in response to the economic climate.

The global recession had a broad impact across Adobe's segments. Creative Solutions revenue decreased by 18%, and Business Productivity Solutions revenue fell by 23%. The Platform segment saw a 22% decline due to factors like the Open Screen Project impacting Flash Lite licensing. The Enterprise segment showed more resilience with only a 7% revenue decrease, suggesting its business process solutions were less affected by the economic downturn.

Adobe maintained a strong liquidity position at the end of fiscal 2009, with cash, cash equivalents, and short-term investments totaling $1.9 billion. The company generated $1.1 billion in net cash from operating activities, which helped fund investing activities, including the Omniture acquisition, and financing activities, such as share repurchases and debt management.