Adobe 2008 Annual Report Download - page 47

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47
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion (presented in millions, except where indicated) should be read in conjunction with our
consolidated financial statements and notes thereto.
In addition to historical information, this Annual Report on Form 10-K contains forward-looking statements, including
statements regarding product plans, future growth and market opportunities which involve risks and uncertainties that could
cause actual results to differ materially from these forward-looking statements. Factors that might cause or contribute to
such differences include, but are not limited to, those discussed in the section titled “Risk Factors” in Part 1, Item 1A of this
report. You should carefully review the risks described herein and in other documents we file from time to time with the SEC,
including the Quarterly Reports on Form 10-Q to be filed in fiscal 2009. When used in this report, the words “expects,”
“could,” “would,” “may,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “targets,” “estimates,” “looks for,”
“looks to” and similar expressions, as well as statements regarding our focus for the future, are generally intended to
identify forward-looking statements. You should not place undue reliance on these forward-looking statements, which speak
only as of the date of this Annual Report on Form 10-K. We undertake no obligation to publicly release any revisions to the
forward-looking statements or reflect events or circumstances after the date of this document.
BUSINESS OVERVIEW
Founded in 1982, Adobe Systems Incorporated is one of the largest and most diversified software companies in the
world. We offer a line of creative, business and mobile software and services used by creative professionals, designers,
knowledge workers, high-end consumers, OEM partners, developers and enterprises for creating, managing, delivering and
engaging with compelling content and experiences across multiple operating systems, devices and media. We distribute our
products through a network of distributors and dealers, VARs, systems integrators, ISVs and OEMs, direct to end users and
through our own Web site at www.adobe.com. We also license our technology to hardware manufacturers, software
developers and service providers, and we offer integrated software solutions to businesses of all sizes. We have operations in
the Americas, EMEA and Asia. Our software runs on personal computers with Microsoft Windows, Apple OS, Linux, UNIX
and various non-PC platforms, depending on the product.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
In preparing our consolidated financial statements in accordance with GAAP and pursuant to the rules and regulations of
the SEC, we make assumptions, judgments and estimates that affect the reported amounts of assets, liabilities, revenue and
expenses, and related disclosures of contingent assets and liabilities. We base our assumptions, judgments and estimates on
historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results could
differ materially from these estimates under different assumptions or conditions. On a regular basis, we evaluate our
assumptions, judgments and estimates. We also discuss our critical accounting policies and estimates with the Audit
Committee of the Board of Directors.
We believe that the assumptions, judgments and estimates involved in the accounting for revenue recognition,
stock-based compensation, goodwill impairment and income taxes have the greatest potential impact on our consolidated
financial statements. These areas are key components of our results of operations and are based on complex rules which
require us to make judgments and estimates, so we consider these to be our critical accounting policies. Historically, our
assumptions, judgments and estimates relative to our critical accounting policies have not differed materially from actual
results.
Revenue Recognition
We recognize revenue when all four revenue recognition criteria have been met: persuasive evidence of an arrangement
exists, we have delivered the product or performed the service, the fee is fixed or determinable and collection is probable.
Determining whether and when some of these criteria have been satisfied often involves assumptions and judgments that can
have a significant impact on the timing and amount of revenue we report. For example, for multiple element arrangements,
we must: (1) determine whether and when each element has been delivered; (2) determine whether undelivered products or