What are the main reasons Adobe is presenting non-GAAP financial results?

Adobe is presenting non-GAAP results to provide supplemental information that management believes offers a clearer view of operational performance. These measures are used for internal decision-making, such as resource allocation and investment in R&D, and to facilitate comparisons with historical results and competitors. Key adjustments are made to exclude the impact of stock-based compensation, restructuring charges, and amortization of acquired intangible assets, which are significantly influenced by the Macromedia acquisition.

What specific items are excluded from Adobe's non-GAAP financial measures?

Adobe excludes several items, including the stock-based compensation impact of SFAS 123R, restructuring and other charges related to the Macromedia acquisition, amortization of purchased intangibles and incomplete technology, amortization of Macromedia deferred compensation, investment gains and losses, and various tax-related differences stemming from these items and specific tax benefits.

How does the Macromedia acquisition impact Adobe's financial reporting in this 8-K?

The Macromedia acquisition, completed in December 2005, has a significant impact. Many of the adjustments made to arrive at non-GAAP figures, such as restructuring charges and the amortization of purchased intangibles, are directly related to this acquisition. Adobe is also amortizing deferred compensation related to options assumed from Macromedia. These adjustments are intended to reflect the ongoing operational performance of the combined entity, distinct from acquisition-related costs.

Why does Adobe exclude stock-based compensation (SFAS 123R) from its non-GAAP measures?

Adobe excludes stock-based compensation under SFAS 123R primarily because it is a non-cash expense. The company believes that excluding this item provides a better understanding of operational performance and liquidity, as it is not an expense that typically requires cash settlement and management does not use it to assess the core profitability of the business. This also helps in comparing results with competitors who may account for stock compensation differently.

ADBE 8-K: Earnings & Results

Summary

This 8-K filing from Adobe Systems Incorporated on March 20, 2007, announces the company's financial results for its first fiscal quarter ended March 2, 2007. A key aspect of this report is Adobe's use of non-GAAP financial measures, which are presented alongside GAAP figures. The company believes these non-GAAP measures offer a more meaningful view of operational performance and aid in strategic decision-making, such as R&D investment and infrastructure funding. The primary driver for the exclusion of certain items from their non-GAAP reporting relates to the significant impact of the Macromedia acquisition completed in December 2005 and the adoption of SFAS 123R regarding stock-based compensation. Investors should pay close attention to the detailed explanations of excluded items, including stock-based compensation, restructuring charges, amortization of purchased intangibles, and tax-related adjustments, to understand the differences between GAAP and non-GAAP reporting and to fully assess Adobe's underlying business performance.

Key Highlights

1Adobe Systems reported its first fiscal quarter results for the period ending March 2, 2007.
2The company is providing non-GAAP financial results alongside GAAP figures.
3Non-GAAP measures exclude items such as stock-based compensation (SFAS 123R), restructuring charges, and amortization of purchased intangibles.
4These exclusions are largely attributed to the ongoing integration and financial impacts of the Macromedia acquisition.
5Adobe management uses non-GAAP measures for internal budgeting, resource allocation, and performance comparisons.
6The filing includes a detailed breakdown of items excluded from non-GAAP calculations and the rationale behind each exclusion.
7A press release dated March 20, 2007, containing the financial results and non-GAAP information, is furnished as Exhibit 99.1.

ADOBE INC. 8-K Report, Financial Results (Mar 20, 2007)

Summary

Key Highlights

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