Adobe Reports Second Quarter Fiscal 2009 Results

SAN JOSE, Calif. — Adobe Systems Incorporated (Nasdaq:ADBE) announced financial results for its second quarter ended May 29, 2009.

In the second quarter of fiscal 2009, Adobe achieved revenue of $704.7 million, compared to $886.9 million reported for the second quarter of fiscal 2008 and $786.4 million reported in the first quarter of fiscal 2009.

“We are pleased with the solid profit margin and earnings results we were able to deliver in Q2,” said Shantanu Narayen, president and CEO of Adobe. “We continue to invest in our key business initiatives which will drive long-term revenue growth once the economy improves.”

Second Quarter Fiscal 2009 GAAP Results
Adobe’s GAAP diluted earnings per share for the second quarter of fiscal 2009 were $0.24, based on 528.0 million weighted average shares. This compares with GAAP diluted earnings per share of $0.40 reported in the second quarter of fiscal 2008 based on 542.4 million weighted average shares, and GAAP diluted earnings per share of $0.30 reported in the first quarter of fiscal 2009 based on 527.8 million weighted average shares.

GAAP operating income was $161.4 million in the second quarter of fiscal 2009, compared to $260.2 million in the second quarter of fiscal 2008 and $207.9 million in the first quarter of fiscal 2009. As a percent of revenue, GAAP operating income in the second quarter of fiscal 2009 was 22.9 percent, compared to 29.3 percent in the second quarter of fiscal 2008 and 26.4 percent in the first quarter of fiscal 2009.

GAAP net income was $126.1 million for the second quarter of fiscal 2009, compared to $214.9 million reported in the second quarter of fiscal 2008 and $156.4 million in the first quarter of fiscal 2009.

Second Quarter Fiscal 2009 Non-GAAP Results
Non-GAAP diluted earnings per share for the second quarter of fiscal 2009 were $0.35. This compares with non-GAAP diluted earnings per share of $0.50 reported in the second quarter of fiscal 2008 and non-GAAP diluted earnings per share of $0.45 reported in the first quarter of fiscal 2009.

Adobe’s non-GAAP operating income was $237.7 million in the second quarter of fiscal 2009, compared to $349.6 million in the second quarter of fiscal 2008 and $295.0 million in the first quarter of fiscal 2009. As a percent of revenue, non-GAAP operating income in the second quarter of fiscal 2009 was 33.7 percent, compared to 39.4 percent in the second quarter of fiscal 2008 and 37.5 percent in the first quarter of fiscal 2009.

Non-GAAP net income was $185.0 million for the second quarter of fiscal 2009, compared to $272.7 million in the second quarter of fiscal 2008 and $236.8 million in the first quarter of fiscal 2009.

Reconciliation between GAAP and non-GAAP results is provided at the end of this press release.

Third Quarter Fiscal 2009 Financial Targets
For the third quarter of fiscal 2009, Adobe is targeting Q3 revenue of $665 million to $715 million, an operating margin of 20.5 percent to 25.5 percent on a GAAP basis, and 31.0 percent to 35.0 percent on a non-GAAP basis.

In addition, Adobe is targeting its share count to be between 529 million and 531 million. The Company also is targeting non-operating income to be between $1 million and $3 million. Adobe’s GAAP tax rate is expected to be approximately 22.5 percent and the non-GAAP tax rate is expected to be approximately 23.5 percent.

These targets lead to a third quarter diluted earnings per share target range of $0.20 to $0.27 on a GAAP basis, and an earnings per share target range of $0.30 to $0.37 on a non-GAAP basis.

Reconciliation between GAAP and non-GAAP financial targets is provided at the end of this press release.

About Adobe Systems Incorporated
Adobe revolutionizes how the world engages with ideas and information – anytime, anywhere and through any medium. For more information, visit www.adobe.com.