Adobe 2014 Annual Report Download - page 28

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We have issued $1.5 billion of notes in a debt offering and may incur other debt in the future, which may adversely affect our
financial condition and future financial results.
We have $1.5 billion in senior unsecured notes outstanding. We also have a $1.0 billion revolving credit facility, which is
currently undrawn. This debt may adversely affect our financial condition and future financial results by, among other things:
• requiring the dedication of a portion of our expected cash from operations to service our indebtedness, thereby reducing
the amount of expected cash flow available for other purposes, including capital expenditures and acquisitions; and
• limiting our flexibility in planning for, or reacting to, changes in our business and our industry.
Our senior unsecured notes and revolving credit facility impose restrictions on us and require us to maintain compliance
with specified covenants. Our ability to comply with these covenants may be affected by events beyond our control. If we breach
any of the covenants and do not obtain a waiver from the lenders or noteholders, then, subject to applicable cure periods, any
outstanding indebtedness may be declared immediately due and payable.
In addition, changes by any rating agency to our credit rating may negatively impact the value and liquidity of both our
debt and equity securities, as well as the potential costs associated with a refinancing of our debt. Under certain circumstances, if
our credit ratings are downgraded or other negative action is taken, the interest rate payable by us under our revolving credit facility
could increase. Downgrades in our credit ratings could also restrict our ability to obtain additional financing in the future and could
affect the terms of any such financing.
Changes in, or interpretations of, accounting principles could have a significant impact on our financial position and results
of operations.
We prepare our Consolidated Financial Statements in accordance with accounting principles generally accepted in the United
States of America (“GAAP”). These principles are subject to interpretation by the SEC and various bodies formed to interpret and
create appropriate accounting principles. A change in these principles can have a significant effect on our reported results and may
even retroactively affect previously reported transactions. Additionally, the adoption of new or revised accounting principles may
require that we make significant changes to our systems, processes and controls.
For example, the U.S.-based Financial Accounting Standards Board (“FASB”) is currently working together with the
International Accounting Standards Board (“IASB”) on several projects to further align accounting principles and facilitate more
comparable financial reporting between companies who are required to follow GAAP under SEC regulations and those who are
required to follow International Financial Reporting Standards outside of the U.S. These efforts by the FASB and IASB may result
in different accounting principles under GAAP that may result in materially different financial results for us in areas including,
but not limited to, principles for recognizing revenue and lease accounting. Additionally, significant changes to GAAP resulting
from the FASB's and IASB's efforts may require that we change how we process, analyze and report financial information and
that we change financial reporting controls.
If our goodwill or amortizable intangible assets become impaired we could be required to record a significant charge to earnings.
Under GAAP, we review our goodwill and amortizable intangible assets for impairment when events or changes in
circumstances indicate the carrying value may not be recoverable. GAAP requires us to test for goodwill impairment at least
annually. Factors that may be considered a change in circumstances indicating that the carrying value of our goodwill or amortizable
intangible assets may not be recoverable include declines in stock price, market capitalization or cash flows and slower growth
rates in our industry. We could be required to record a significant charge to earnings in our financial statements during the period
in which any impairment of our goodwill or amortizable intangible assets were determined, negatively impacting our results of
operations.
Changes in, or interpretations of, tax rules and regulations may adversely affect our effective tax rates.
We are a United States-based multinational company subject to tax in multiple U.S. and foreign tax jurisdictions. A significant
portion of our foreign earnings for the current fiscal year were earned by our Irish subsidiaries. In addition to providing for U.S.
income taxes on earnings from the United States, we provide for U.S. income taxes on the earnings of foreign subsidiaries unless
the subsidiaries’ earnings are considered permanently reinvested outside the United States. While we do not anticipate changing
our intention regarding permanently reinvested earnings, if certain foreign earnings previously treated as permanently reinvested
are repatriated, the related U.S. tax liability may be reduced by any foreign income taxes paid on these earnings.
Our income tax expense has differed from the tax computed at the U.S. federal statutory income tax rate due primarily to
discrete items and to earnings considered as permanently reinvested in foreign operations. Unanticipated changes in our tax rates
could affect our future results of operations. Our future effective tax rates could be unfavorably affected by changes in the tax rates