Adobe 2013 Annual Report Download - page 24

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action. In addition, some countries are considering enacting laws that would expand the scope of privacy-related obligations
required of service providers, such as Adobe, that would require additional compliance expense and increased liability.
If we fail to process transactions effectively or fail to adequately protect against disputed or potential fraudulent activities, our
revenue and earnings may be harmed.
We process a significant volume of transactions on a daily basis in both our Digital Marketing and Digital Media businesses.
Due to the size and volume of transactions that we handle, effective processing systems and controls are essential, but even the
most sophisticated systems and processes may not be effective in preventing all errors. The systems supporting our business are
comprised of multiple technology platforms that may be difficult to scale. If we are unable to effectively manage these systems
and processes we may be unable to process customer data in an accurate, reliable and timely manner, which may harm our customer
relationships or results of operations.
Some of our lines of business rely on us or our third-party service providers to host and deliver services and data, and any
interruptions or delays in these hosted services, security or privacy breaches, or failures in data collection could expose us to
liability and harm our business and reputation.
Some of our lines of business and services, including our online store at adobe.com, Creative Cloud and other hosted Digital
Media offerings and our Adobe Marketing Cloud offerings, rely on services hosted and controlled directly by us or by third parties.
We do not have redundancy for all of our systems, many of our critical applications reside in only one of our data centers, and our
disaster recovery planning may not account for all eventualities. If our business relationship with a third-party provider of hosting
or content delivery services is negatively affected, or if one of our content delivery suppliers were to terminate their agreement
with us, we might not be unable to deliver the corresponding our hosted offerings to our customers, which could subject us to
reputational harm and cause us to lose customers and future business, reducing our revenues.
We hold large amounts of customer data, some of which is hosted in third-party facilities. A security incident at those
facilities or ours may compromise the confidentiality, integrity or availability of customer data. Unauthorized access to customer
data stored on our computers or networks may be obtained through break-ins, breach of our secure network by an unauthorized
party, employee theft or misuse, or other misconduct. It is also possible that unauthorized access to customer data may be obtained
through inadequate use of security controls by customers. While our products and services provide and support strong password
controls, IP restriction and account controls, their use is controlled by the customer. Accounts created with weak passwords could
allow cyber-attackers to gain access to customer data. Additionally, failure by customers to remove accounts of their own employees,
or granting of accounts by the customer in an uncontrolled manner, may allow for access by former or unauthorized customer
employees. If there were an inadvertent disclosure of personal information, or if a third party were to gain unauthorized access to
the personal information we possess on behalf of our customers, our operations could be disrupted, our reputation could be damaged
and we could be subject to claims or other liabilities. In addition, such perceived or actual unauthorized disclosure of the information
we collect or breach of our security could damage our reputation, result in the loss of customers and harm our business.
Because of the large amount of data that we collect and manage on behalf of our customers, it is possible that hardware or
software failures or errors in our systems (or those of our third-party service providers) could result in data loss or corruption or
cause the information that we collect to be incomplete or contain inaccuracies that our customers regard as significant. Furthermore,
our ability to collect and report data may be delayed or interrupted by a number of factors, including access to the internet, the
failure of our network or software systems, security breaches or significant variability in visitor traffic on customer websites. In
addition, computer viruses may harm our systems causing us to lose data, and the transmission of computer viruses could expose
us to litigation. We may also find, on occasion, that we cannot deliver data and reports to our customers in near real time because
of a number of factors, including significant spikes in customer activity on their websites or failures of our network or software.
If we supply inaccurate information or experience interruptions in our ability to capture, store and supply information in near real
time or at all, our reputation could be harmed and we could lose customers, or we could be found liable for damages or incur other
losses.
Failure to manage our sales and distribution channels and third-party customer service and technical support providers effectively
could result in a loss of revenue and harm to our business.
In fiscal 2013, revenue from Ingram Micro has declined to less than 10% of our net revenue, although it has remained as
our top customer. We have multiple non-exclusive, independently negotiated distribution agreements with Ingram Micro and its
subsidiaries covering our arrangements in specified countries and regions. Each of these contracts has an independent duration,
is independent of any other agreement (such as a master distribution agreement) and any termination of one agreement does not
affect the status of any of the other agreements. In fiscal 2013, no single agreement with Ingram Micro or any other distributor
was responsible for over 5% of our total net revenue. If any one of our agreements with Ingram Micro were terminated, we believe
we could make arrangements with new or existing distributors to distribute our products without a substantial disruption to our
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