Adobe 2015 Annual Report Download - page 28

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• failure of laws to protect our intellectual property rights adequately;
• inadequate local infrastructure and difficulties in managing and staffing international operations;
• delays resulting from difficulty in obtaining export licenses for certain technology, tariffs, quotas and other trade barriers;
• the imposition of governmental economic sanctions on countries in which we do business or where we plan to expand
our business;
• operating in locations with a higher incidence of corruption and fraudulent business practices; and
• other factors beyond our control, including terrorism, war, natural disasters and pandemics.
If sales to any of our customers outside of the Americas are delayed or canceled because of any of the above factors, our
revenue may decline.
In addition, approximately 53% of our employees are located outside the United States. Accordingly, we are exposed to
changes in laws governing our employee relationships in various U.S. and foreign jurisdictions, including laws and regulations
regarding wage and hour requirements, fair labor standards, employee data privacy, unemployment tax rates, workers’ compensation
rates, citizenship requirements and payroll and other taxes, which likely would have a direct impact on our operating costs. We
may continue to expand our international operations and international sales and marketing activities. Expansion in international
markets has required, and will continue to require, significant management attention and resources. We may be unable to scale
our infrastructure effectively or as quickly as our competitors in these markets, and our revenue may not increase to offset these
expected increases in costs and operating expenses, which would cause our results to suffer.
We have issued $1.9 billion of notes in debt offerings and may incur other debt in the future, which may adversely affect our
financial condition and future financial results.
We have $1.9 billion in senior unsecured notes outstanding. We also have a $1 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 flow 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 accounting principles, or interpretations thereof, 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 United States. 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