Adobe 2013 Annual Report Download - page 21

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Outside parties have in the past and may in the future attempt to fraudulently induce our employees or users of our products
to disclose sensitive information in order to gain access to our data or our customers' data. Unauthorized parties may also attempt
to gain physical access to one of our facilities in order to infiltrate our information systems. These actual and potential breaches
of our security measures and the accidental loss, inadvertent disclosure or unauthorized dissemination of proprietary information
or sensitive, personal or confidential data about us, our employees or our customers, including the potential loss or disclosure of
such information or data as a result of hacking, fraud, trickery or other forms of deception, could expose us, our employees, our
customers or the individuals affected to a risk of loss or misuse of this information, result in litigation and potential liability or
fines for us, governmental inquiry and oversight, damage our brand and reputation or otherwise harm our business.
Although these are industry-wide problems that affect computer systems and products across all platforms, they affect our
products in particular because cyber-attackers tend to focus their efforts on the most popular operating systems and programs, and
we expect them to continue to do so. Critical vulnerabilities may be identified in certain of our applications. These vulnerabilities
could cause such applications to crash and could potentially allow an attacker to take control of the affected system, which could
result in liability to us or limit our ability to conduct our business and deliver our products and services to customers. We devote
significant resources to address security vulnerabilities through engineering more secure products, enhancing security and reliability
features in our products and systems, code hardening, conducting rigorous penetration tests, deploying security updates to address
security vulnerabilities and improving our incident response time. The cost of these steps could reduce our operating margins, and
we may be unable to implement these measures quickly enough to prevent cyber-attackers from gaining unauthorized access into
our systems and products. Despite our preventative efforts, actual or perceived security vulnerabilities in our products and systems
may harm our reputation or lead to claims against us (and have in the past lead to such claims), and could lead some customers
to seek to return products, to stop using certain services, to reduce or delay future purchases of products or services, or to use
competing products or services. If we do not make the appropriate level of investment in our technology systems or if our systems
become out-of-date or obsolete and we are not able to deliver the quality of data security customers require, our business could
be adversely affected. Customers may also increase their expenditures on security measures designed to protect their existing
computer systems from attack, which could delay adoption of new technologies. Further, if we or our customers are subject to a
future attack, or our technology is utilized in a third-party attack, it may be necessary for us to take additional extraordinary
measures and make additional expenditures to take appropriate responsive and preventative steps. Any of these events could
adversely affect our revenues or margins. Moreover, delayed sales, lower margins or lost customers resulting from the disruptions
of cyber-attacks or preventative measures could adversely affect our financial results, stock price and reputation.
Uncertainty about current and future economic conditions and other adverse changes in general political conditions in any of the
major countries in which we do business could adversely affect our operating results.
As our business has grown, we have become increasingly subject to the risks arising from adverse changes in economic
and political conditions, both domestically and globally. Uncertainty about current and future economic and political conditions
on us, our customers, suppliers and partners, makes it difficult for us to forecast operating results and to make decisions about
future investments. If economic growth in the U.S., Europe or other countries slows, or if the U.S., Europe or other countries in
which we do business experience further economic recessions, many customers may delay or reduce technology purchases,
advertising spending or marketing spending. This could result in reductions in sales of our products and services, longer sales
cycles, slower adoption of new technologies and increased price competition. Additionally, we cannot yet predict how federal or
state spending cuts in the U.S. may affect our business, if at all. Our customers include government entities, including the U.S.
federal government, and if spending cuts impede the government's ability to purchase our products and solutions, our revenues
could decline. Deterioration in economic conditions in any of the countries in which we do business could also cause slower or
impaired collections on accounts receivable, which may adversely impact our liquidity and financial condition.
There could be a number of effects from a financial institution credit crisis on our business, which could include impaired
credit availability and financial stability of our customers, including our distribution partners and channels. A disruption in the
financial markets may also have an effect on our derivative counterparties and could also impair our banking partners on which
we rely for operating cash management. Any of these events would likely harm our business, results of operations and financial
condition.
Political instability in or around any of the major countries in which we do business would also likely harm our business,
results of operations and financial condition.
We may not realize the anticipated benefits of past or future acquisitions, and integration of these acquisitions may disrupt our
business and management.
We may not realize the anticipated benefits of an acquisition of a company, division, product or technology, each of which
involves numerous risks. These risks include:
• difficulty in integrating the operations and personnel of the acquired company;
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