Adobe 2007 Annual Report Download - page 36

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Due to the factors noted above, our future earnings and stock price may be subject to volatility, particularly on a
quarterly basis. Shortfalls in revenue or earnings or delays in the release of products or upgrades compared to analysts’ or
investors’ expectations have caused and could cause in the future an immediate and significant decline in the trading price of
our common stock. Additionally, we may not learn of such shortfalls or delays until late in or after the end of the fiscal
quarter, which could result in an even more immediate and greater decline in the trading price of our common stock. Finally,
we participate in a highly dynamic industry. In addition to factors specific to us, changes in analysts’ earnings estimates for
us or our industry, and factors affecting the corporate environment, our industry, or the securities markets in general, have
resulted, and may in the future result, in volatility of our common stock price.
We are subject to risks associated with international operations which may harm our business.
We generate over 50% of our total revenue from sales to customers outside of the Americas. Sales to these customers
subject us to a number of risks, including:
• foreign currency fluctuations;
• changes in government preferences for software procurement;
• international economic and political conditions;
• unexpected changes in, or impositions of, international legislative or regulatory requirements;
• failure of foreign laws to protect our intellectual property rights adequately;
• inadequate local infrastructure;
• delays resulting from difficulty in obtaining export licenses for certain technology, tariffs, quotas and other trade
barriers and restrictions;
• transportation delays;
• the burdens of complying with a variety of foreign laws, including more stringent consumer and data protection laws;
• and other factors beyond our control, including terrorism, war, natural disasters and diseases.
If sales to any of our customers outside of the Americas are delayed or cancelled because of any of the above factors,
our revenue may be negatively impacted.
In addition, approximately 41% of our employees are located outside the United States. This means we have exposure to
changes in foreign laws governing our relationships with our employees, including wage and hour laws and regulations, fair
labor standards, unemployment tax rates, workers’ compensation rates, citizenship requirements and payroll and other taxes,
which likely would have a direct impact on our operating costs. We also intend to expand our international operations and
international sales and marketing activities. Expansion in international markets has required and will continue to require
significant management attention and resources. Moreover, local laws and customs in many countries differ significantly
from those in the United States. We incur additional legal compliance costs associated with our international operations and
could become subject to legal penalties in foreign countries if we do not comply with local laws and regulations, which may
be substantially different from those in the United States. In many foreign countries, particularly in those with developing
economies, it is common to engage in business practices that are prohibited by United States regulations applicable to us such
as the Foreign Corrupt Practices Act. Although we implement policies and procedures designed to ensure compliance with
these laws, there can be no assurance that all of our employees, contractors and agents, as well as those companies to which
we outsource certain of our business operations, including those based in or from countries where practices which violate
such United States laws may be customary, will not take actions in violation of our policies. Any such violation, even if
prohibited by our policies, could have an adverse effect on our business.