Adobe 2003 Annual Report Download - page 41

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41
Income Tax Provision
Year Ended
November 28, 2003
% Change
2002 to 2003
Year Ended
November 29, 2002
% Change
2001 to 2002
Year Ended
November 30, 2001
Provision..................................... $ 114.1 22% $ 93.3 (8)% $ 101.3
Percentage of total revenues ... 9% 8% 8%
Effective tax rate..................... 30.0% 32.8% 33.0%
Our effective tax rate decreased in fiscal 2003 from fiscal 2002 and in fiscal 2002 from fiscal 2001, due to the
benefits associated with the structure of our international operations. Part of the tax rate decrease in fiscal 2002 was
offset by a tax rate increase, approximately 0.8%, due to the non-tax deductible goodwill impairment expense.
FACTORS THAT MAY AFFECT FUTURE PERFORMANCE
We believe that in the future our results of operations could be affected by various factors, including:
• general economic or political conditions in any of the major countries in which we do business
• delays in development or shipment of our new products or major new versions of existing products
• difficulties in transitions to new business models or markets in the enterprise, government, consumer and
creative professional markets
• introduction of new products by existing and new competitors, particularly Microsoft
• difficulties in implementing strategic alliances
• changes to our distribution channel
• inability to attract and retain key personnel
• lack of market acceptance of new products, upgrades and services
• changes in demand for application software, computers and printers
• intellectual property disputes and litigation
• industry transitions to new business models
• renegotiation or termination of royalty or intellectual property licensing arrangements
• changes in accounting rules, such as expensing of stock options
• unanticipated changes in tax rates
• market risks associated with our equity investments (as discussed later under “Quantitative and Qualitative
Disclosures about Market Risk”)
We periodically provide operating model targets for revenue, gross margin, operating expenses, operating
margin, other income, tax rate, share count and earnings per share. We use these targets to assist us in making
decisions about our allocation of resources and investments, not as predictions of future results. The targets reflect a
number of assumptions, including assumptions about:
• product pricing and demand
• economic and seasonal trends