Adobe 2009 Annual Report Download - page 42

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in the demand for our products and services and the implementation cycles for our new customers, the loss of a large
customer or our inability to increase sales to existing customers and attract new customers, quarterly variations in our or our
competitors’ results of operations, developments in our industry; unusual events such as significant acquisitions, divestitures
and litigation, general socio-economic, regulatory, political or market conditions and other factors, including factors
unrelated to our operating performance.
We are subject to risks associated with global operations which may harm our business.
We are a global business that generates over 50% of our total revenue from sales to customers outside of the Americas.
This subjects us to a number of risks, including:
• foreign currency fluctuations;
• changes in government preferences for software procurement;
• international economic, political and labor conditions;
• tax laws (including U.S. taxes on foreign subsidiaries);
• increased financial accounting and reporting burdens and complexities;
• unexpected changes in, or impositions of, legislative or regulatory requirements;
• failure of laws to protect our intellectual property rights adequately;
• inadequate local infrastructure and difficulties in managing and staffing international operations;
• delays resulting from difficulty in obtaining export licenses for certain technology, tariffs, quotas and other trade
barriers and restrictions;
• transportation delays;
• operating in locations with a higher incidence of corruption and fraudulent business practices; 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 42% of our employees are located outside the U.S. 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 continue expansion of 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. We may be unable to scale our infrastructure effectively, or as quickly as our
competitors, in these markets and our revenues may not increase to offset these expected increases in costs and operating
expenses, which would cause our results to suffer.
Moreover, as a global company, we are subject to varied and complex laws, regulations and customs domestically and
internationally. These laws and regulations relate to a number of aspects of our business, including trade protection, import
and export control, data and transaction processing security, records management, gift policies, employment and labor
relations laws, securities regulations and other regulatory requirements affecting trade and investment. The application of
these laws and regulations to our business is often unclear and may at times conflict. Compliance with these laws and
regulations may involve significant costs or require changes in our business practices that result in reduced revenue and
profitability. Non-compliance could also result in fines, damages, criminal sanctions against us, our officers, or our
employees, prohibitions on the conduct of our business, and damage to our reputation. We incur additional legal compliance