Adobe 2002 Annual Report Download - page 5

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Still,฀this฀past฀year฀many฀of฀our฀core฀customers฀
grappled฀with฀unfavorable฀business฀conditions฀and฀
market฀uncertainty.฀Design฀agencies,฀publishing฀
houses,฀and฀other฀creative฀organizations฀faced฀smaller฀
client฀budgets฀and฀reduced฀stafng,฀leading฀them฀to฀
decrease฀their฀spending฀on฀capital฀expenditures฀such฀
as฀new฀software.฀As฀a฀result฀of฀this฀reduced฀demand,฀
as฀well฀as฀an฀overall฀weakened฀global฀economy,฀our฀
diluted฀earnings฀per฀share฀for฀scal฀year฀2002฀
decreased฀by฀5%฀year฀over฀year฀from฀$0.83฀to฀$0.79,฀
and฀our฀operating฀prot฀decreased฀by฀24%฀year฀over฀
year.฀In฀this฀difcult฀economic฀climate,฀we฀concen-
trated฀on฀reinforcing฀our฀strong฀market฀positions฀
and฀preparing฀ourselves฀for฀the฀future฀with฀increased฀
research฀and฀development.
The฀results฀of฀our฀efforts฀will฀allow฀us฀to฀take฀advan-
tage฀of฀several฀culminating฀market฀trends.฀Cost-con-
scious฀enterprises฀are฀looking฀to฀nd฀greater฀return฀
on฀their฀existing฀technology฀investments,฀creative฀
professionals฀are฀looking฀for฀ways฀to฀save฀money฀and฀
improve฀efciency,฀and฀home฀and฀ofce฀users฀need฀
easy-to-use฀software฀to฀help฀them฀work฀with฀a฀new฀
generation฀of฀digital฀cameras฀and฀video฀cameras.฀
Adobe฀plans฀to฀roll฀out฀solutions฀that฀address฀each฀of฀
these฀trends,฀and฀we’ve฀realigned฀our฀organization฀
to฀more฀effectively฀deliver฀these฀solutions฀to฀an฀eager฀
customer฀base.฀
In฀addition฀to฀a฀strong฀product฀roadmap,฀we฀remain฀
protable,฀with฀a฀strong฀cash฀position฀achieved฀
through฀highly฀disciplined฀operational฀controls.฀Our฀
transparent฀reporting฀system฀gives฀us฀a฀24/7฀view฀into฀
worldwide฀operations,฀leading฀to฀greater฀efciencies฀
and฀reduced฀costs.฀Unusual฀among฀software฀compa-
nies,฀this฀nancial฀strength฀gives฀Adobe฀a฀competitive฀
advantage฀and฀long-term฀condence.฀With฀a฀com-
bination฀of฀powerful฀customer-facing฀solutions฀and฀
solid฀bottom-line฀nancials,฀we฀will฀strive฀to฀provide฀
strong฀market฀leadership฀and฀stockholder฀value฀as฀we฀
enter฀decade฀number฀three.฀
Financial฀overview
For฀scal฀year฀2002,฀we฀are฀reporting฀earnings฀of฀
$191.4฀million.฀This฀represents฀a฀7%฀decrease฀com-
pared฀with฀scal฀year฀2001.฀We฀made฀changes฀to฀our฀
reporting฀structure,฀moving฀some฀of฀our฀products฀
into฀new฀categories฀that฀more฀accurately฀reect฀their฀
usage฀by฀our฀customers.฀Adobe’s฀Creative฀Professional฀
revenue฀was฀$351.3฀million,฀an฀11%฀decrease฀over฀
scal฀year฀2001.฀Digital฀Imaging฀and฀Video฀revenue฀
was฀$411.9฀million,฀a฀6%฀decrease.฀Sales฀of฀Adobe฀
Acrobat฀software฀and฀related฀products฀pushed฀
Adobe฀ePaper®฀solutions฀application฀revenue฀from฀
$291.9฀million฀to฀$312.5฀million,฀an฀increase฀of฀
7%฀over฀scal฀year฀2001.฀Revenue฀from฀our฀OEM฀
PostScript฀and฀Other฀segment฀declined฀from฀
$104.8฀million฀to฀$89.0฀million,฀a฀decrease฀of฀15%.
During฀scal฀year฀2002,฀gross฀margins฀were฀91.0%,฀
compared฀to฀93.4%฀in฀scal฀2001.฀As฀a฀percentage฀
of฀revenue,฀research฀and฀development฀expenses฀were฀
21.1%,฀compared฀to฀18.2%฀in฀2001฀—฀a฀reection฀
of฀Adobe’s฀commitment฀to฀continue฀to฀invest฀in฀its฀
future.฀Sales฀and฀marketing฀expenses฀and฀general฀
and฀administrative฀expenses,฀as฀a฀percent฀of฀revenue,฀
were฀32.7%฀and฀9.3%฀respectively฀—฀essentially฀at฀
the฀same฀levels฀in฀2002฀when฀compared฀to฀2001.฀
Thanks฀to฀our฀ongoing฀nancial฀discipline,฀we฀once฀
again฀end฀the฀year฀in฀a฀solid฀nancial฀position,฀with฀
$617.7฀million฀in฀cash฀and฀cash฀equivalents.
Highlights฀and฀partners
Fiscal฀year฀2002฀was฀marked฀by฀several฀highlights.฀
Accelerating฀our฀reach฀into฀the฀enterprise฀was฀our฀
April฀acquisition฀of฀Accelio.฀The฀company’s฀electronic฀
forms฀offerings฀provide฀the฀foundation฀of฀our฀newest฀
ePaper฀solutions,฀and฀we฀anticipate฀that฀the฀acquired฀
expertise฀in฀selling฀into฀the฀enterprise฀should฀be฀a฀
major฀asset฀moving฀forward.฀We฀introduced฀several฀
server-based฀applications,฀including฀Adobe®฀
Document฀Server,฀which฀automates฀document฀