Adobe 2001 Annual Report Download - page 32

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Factors That May Affect Future Results of Operations
We believe that in the future our results of operations could be affected by various factors, including:
• adverse changes in general economic conditions in any of the countries in which we do business,
including the recent slow-down affecting the U.S., Europe, Japan, and potentially other geographic
areas
• continuing adverse economic impact of the recent national tragedy on September 11, 2001
• delays in shipment of our new products and major new versions of existing products
• corporate reductions in marketing expenditures which may result in lower demand for professional
content creation and layout products
• lack of market acceptance of new products and upgrades
• introduction of new products by major competitors
• weakness in demand for application software and printers
• lack of growth in worldwide personal computer and printer sales and downward sales price
adjustments
• renegotiation of royalty arrangements
• consolidation in the OEM printer business
• ongoing weakness in our printing business due to product transitions
• industry transitions to new business and information delivery models
• market risks associated with our equity investments (as discussed later under ‘‘Quantitative and
Qualitative Disclosures about Market Risk’’)
On December 13, 2001, we stated that we are targeting our revenue for the first quarter of fiscal 2002
to be in the range of $265 to $280 million. On that day, we also stated the following operating model
targets for the first quarter of fiscal 2002: gross margin of 92-93%, pro forma operating profit margin of
25-28%, research and development expenses of 20-21% of revenue, sales and marketing expenses of
34-35% of revenue, and general and administrative expenses of 10-11% of revenue. We further stated on
December 13, 2001, that we expect our share count to be between 245 to 246 million shares, which
collectively results in a pro forma earnings per share target range of $0.20 to $0.22, in the first quarter of
fiscal 2002. On January 31, 2002, we reiterated our revenue and earnings per share targets for the first
quarter of fiscal 2002 of $265 to $280 million and $0.20 to $0.22, respectively. The reaffirmation of these
targets assumes that the third month of the quarter will be a typical seasonally strong February.
Also on December 13, 2001, we reiterated our annual revenue target of $1.3 billion, gross margin
target of 93%, and our pre-tax pro forma operating profit margin target of 28% for fiscal year 2002 and a
pro forma earnings per share target of approximately $1.03. Additionally, we have stated, the following
operating model targets for fiscal 2002: research and development expenses of 20-21% of revenue, sales
and marketing expenses of 34-35% of revenue, and general and administrative expenses of 9-10% of
revenue. We have stated an effective tax rate target of 32%. We have also previously stated that we are
targeting other income to be approximately $4.0 million per quarter. Due to the current interest rate
environment, however, we have stated a revised target for interest and other income of approximately
$3.0-$4.0 million per quarter in fiscal 2002.
On February 1, 2002, we announced a proposed agreement to acquire Accelio Corporation. Based on
an anticipated close date of March 2002, we are targeting incremental revenue associated with this
acquisition of approximately $30.0-$35.0 million. In addition, with the acquisition of Accelio, we have
lowered our gross margin target from 93% to 92%, and our pro forma operating profit margin target from
28% to 27%. Furthermore, we indicated that the acquisition would be dilutive to pro forma earnings per
32