Financial Review, Adobe Systems Annual Report1997
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bc idea reality Adobe Systems Incorporated Annual Report 1997 “What a good idea!” Letter to Our Stockholders 4 NASA’s Mars Pathfinder 5 It’s a comment that’s heard every day, Bosch Automation Technology 5 thousands of times, throughout the world. Glyphica 5 The idea that stands out, however, is Bobbie Coughlin, M.D. 5 the idea that’s remembered. And that’s Creative Professionals 7 where Adobe comes in. Adobe software John Benson 8 and technologies enable people to express Digital Clubhouse Network 9 their ideas exactly as they envision them, Second Story 10 in any media, with power and precision. The Enterprise 11 Adobe software is the tool people use to transform ideas into reality. Tata Donnelley, Ltd. 12 OPAC Consulting Engineers 13 In 1997, Adobe Systems helped more Cisco Systems, Inc. 14 people and businesses than ever make Knight-Ridder/Tribune Information Services 15 their ideas stand out—from stone carvers Homes and Offices 16 and storytellers to software companies Hearts United for Animals 17 and space scientists. The stories in this Paul Geller, D.D.S. 18 report are about good ideas made real. Thingz OZ 19 Schroeder’s Bakery 20 Financial Review 22 To Our Stockholders Adobe extends its leadership in graphics software solutions. In 1997, Adobe’s relationship with our key customer base, professional designers, Ideas can be powerful things. remained strong, while a new class of users increasingly turned to our applications for But only if you can make them compelling, express them clearly, and communicate the power to make ideas compelling. Customer research indicates that the number of them directly to those you want to affect. As technology transforms the way the world corporate users of Adobe graphics applications is increasing impressively. The result experiences information, people in businesses and homes everywhere face the same was outstanding sales. Application products revenue climbed 21 percent in 1997. Leveraging challenges in creating and distributing their ideas. our core An invasion of armies can be “How can I make my message stand out?” The growth of the Web fueled revenue from Adobe graphics applications. Indeed, “How can I get it to look just the way I want?” as Adobe continues to integrate and expand the Web capabilities of our product technologies resisted, but not an idea whose “Can I deliver it faster and more easily?” line, customers increasingly use our tools to create graphics and deliver documents time has come. Adobe provides solutions to these challenges: solutions that let everyone turn ideas for the Internet. — Victor Hugo into reality—exactly as envisioned. Adobe has continued to attract customers by tightly integrating its graphics products In 1997, Adobe’s objective was to deliver solutions and expand its customer base. into a virtual suite. For example, we’ve added consistent features, user interfaces, We accomplished this goal by attracting new users and meeting their needs with and functionality to Adobe® Photoshop,® Adobe Illustrator,® and Adobe PageMaker® integrated solutions and standards. We leveraged our core technologies to create new to form an online and print publishing solution that competitors with only a single products. And we invested in strengthening a foundation on which to build in 1998. product offering simply cannot match. Dollars in millions $912 $716 $196 26% $2.29 51% 100% $787 $590 $197 22% $1.71 39% $762 $579 $183 24% $1.80 $676 $519 $157 29% $1.26 29% Macintosh 50% Windows 97 97 97 97 97 97 96 96 96 96 96 96 95 95 95 95 95 94 94 94 94 94 95 Total revenue Application products revenue Licensing revenue Operating margin Earnings per share Application products revenue (excluding nonrecurring gains and charges) (excluding nonrecurring gains and charges) (Macintosh/Windows) 1997 was a record year for Adobe. We’re making our mark in the Windows® world. As we extended our reach to new markets, we maintained solid financial performance. Particularly notable was Adobe’s growth on the Windows platform. In 1996, Adobe In fiscal year 1997, Adobe achieved revenue growth of 16 percent and reported net made simultaneous cross-platform product releases a priority. In 1997, for the first income growth of 22 percent. Revenue reached a record $912 million, with reported time, revenue from Windows platform products exceeded that from the Macintosh net income also a record at $187 million. Revenue from application products was a platform. Windows products accounted for 51 percent of application products revenue record $716 million, compared with $590 million in fiscal 1996, while our licensing (excluding platform-independent and UNIX® products), with 49 percent going to revenue was level with 1996 figures. Macintosh products. On a year-over-year basis, application products revenue on the Extending Windows platform grew 64 percent. During 1997, Adobe declared cash dividends on its common stock totaling $0.20 per our reach to share, and repurchased more than 6 million shares of common stock, offsetting Shipments of Adobe Illustrator 7.0 in 1997 demonstrate the company’s success in new markets dilution from issuances under our employee stock option and stock purchase plans making graphics a priority for Windows users. Adobe Illustrator 7.0 became the best- and reducing the actual number of shares outstanding. Adobe’s overall financial selling cross-platform desktop illustration application in the U.S. Sales of Adobe position is strong, with cash, cash equivalents, and short-term investment balances Illustrator for Windows pushed Adobe’s cross-platform retail unit sales beyond 50 of $503 million and no long-term debt, as of our fiscal year-end on November 28,1997. percent of the entire U.S. desktop illustration software market for the rest of fiscal 1997. Adobe Systems Incorporated Annual Report 1997 www.adobe.com Our printing business faces challenges and opportunities. Adobe FrameMaker® 5.5, the new version of our publishing solution for complex, The past year was challenging for our printing technologies, the primary source mission-critical documents, enables digital workflows by allowing users to output to of our licensing revenue. We launched Adobe PostScript® 3,™ the next generation of PDF, HTML, SGML, or Adobe PostScript formats—all from a single source file. the world-standard printing technology primed to meet the needs of Internet-based, distributed printing environments. With IBM, we announced the first on-demand In addition, with Adobe Acrobat 3.0 software for converting virtually any computer- digital printing system based on Adobe PostScript Extreme,™ the IBM® InfoPrint 4000, generated file to PDF, the newly released Acrobat Capture® 2.0 software for bringing which prints at speeds exceeding 1,000 pages per minute. And products based on Adobe legacy paper documents into PDF, and PDF-based Adobe PostScript 3 printing PrintGear™—the architecture that dramatically improves the quality and performance of systems, enterprises can go from creation to output using PDF as a media-indepen- Serving customers’ low-cost printers for small offices, home offices, and workgroups—continue to garner dent digital master, dramatically reducing the chances for errors and delays. needs in a awards and acclaim. Adobe brings publishing power to homes and small businesses. distribute-then-print Adobe software is used Despite these accomplishments, revenue from the licensing of Adobe PostScript and It’s not only designers and users in enterprises who need power to make their ideas world worldwide by individuals, other printing technologies reached $196 million, effectively level with $197 million stand out. We have created flexible, easy-to-use products tailored especially for the in 1996. The year-to-year flatness is the result of a number of factors affecting our needs of new customers in homes and offices. Adobe PhotoDeluxe,® our photo-editing small businesses, and large original equipment manufacturer (OEM) customers, primarily in the Japanese and software that applies Adobe Photoshop technology for home use, has been one of organizations who want Macintosh markets. We continue to evaluate ways to better communicate the value of 1997’s major successes. Version 2.0, released this year, lets users customize the product to turn ideas into reality. Adobe PostScript and serve our customers’ needs in a distribute-then-print world. and enhance their skills by downloading free “Guided Activities” from Adobe’s Web site. NASA’s Mars Pathfinder Bosch Automation Technology Glyphica Bobbie Coughlin, M.D. The information-rich Mars Bosch Automation Technology, a division of Glyphica, a digital publishing Bobbie Coughlin, a Pathfinder Web site attracted Robert Bosch GMbH, Germany and one of the company, is restoring rare documents pediatrician and mother, millions of earthbound visitors world’s leading manufacturers of mechanical from the Olympic games using Adobe uses Adobe PhotoDeluxe daily during the summer 1997 components, uses Adobe Acrobat Acrobat Capture and Adobe Photoshop software for a variety of mission. NASA’s Jet Propulsion software for electronic document software. The texts and photographs, family projects. Whether Laboratory (JPL) used Adobe distribution. Bosch chose Adobe many dating back to the 1890s, are helping her children PageMill®, Adobe Photoshop, Enterprise Publishing Services then converted to Adobe PDF with incorporate pictures in and Adobe Acrobat® software (formerly Digidox Document Adobe Acrobat software and published their school reports or to rapidly provide images and Solutions), a subsidiary