Item 2.02. Results of Operations and Financial Condition.
On June 17, 2021, Adobe Inc. ("Adobe") issued a press release announcing
financial results for its second quarter fiscal year 2021 ended June 4, 2021. A
copy of this press release is furnished and attached hereto as Exhibit 99.1 and
is incorporated herein by reference.
The information in this report and the exhibit attached hereto are being
furnished and shall not be deemed filed for purposes of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), nor shall it be deemed
incorporated by reference in any filing under the Securities Act of 1933, as
amended, or the Exchange Act, except as shall be expressly stated by specific
reference in such filing.
The attached press release includes non-GAAP operating income, non-GAAP net
income, non-GAAP diluted net income per share (earnings per share) and non-GAAP
tax rate.
These non-GAAP measures are not in accordance with, or an alternative for,
generally accepted accounting principles and may be different from non-GAAP
measures used by other companies. In addition, these non-GAAP measures are not
based on any comprehensive set of accounting rules or principles. We believe
that non-GAAP measures have limitations in that they do not reflect all of the
amounts associated with our results of operations as determined in accordance
with GAAP and that these measures should only be used to evaluate our results of
operations in conjunction with the corresponding GAAP measures.
For our internal budgeting and resource allocation process, we use non-GAAP
financial measures which exclude: (A) stock-based and deferred compensation
expense; (B) amortization of intangibles; (C) investment gains and losses; (D)
income tax adjustments; and (E) the income tax effect of the non-GAAP pre-tax
adjustments from the provision for income taxes.
We use these non-GAAP financial measures in making operating decisions because
we believe the measures provide meaningful supplemental information regarding
our operational performance and give us a better understanding of how we should
invest in research and development and fund infrastructure and go-to-market
strategies. We use these measures to help us make budgeting decisions, for
example, as between product development expenses and research and development,
sales and marketing and general and administrative expenses and to facilitate
our internal comparisons to our historical operating results. In addition, we
believe these non-GAAP financial measures are useful because they allow for
greater transparency with respect to key metrics used by management in its
financial and operational decision-making. This allows institutional investors,
the analyst community and others to better understand and evaluate our operating
results and future prospects in the same manner as management and to compare
operating results across accounting periods and to those of our peer companies.
As described above, we exclude the following items from one or more of our
non-GAAP measures:
A.   Stock-based and deferred compensation expenses. Stock-based compensation
expense consists of charges for employee restricted stock units, performance
shares and employee stock purchases in accordance with current GAAP including
stock-based compensation expense associated with any unvested options and
restricted stock units assumed in connection with our acquisitions. We believe
that it is useful to investors to understand the impact of the application of
accounting standards pertaining to stock-based compensation to our operational
performance, liquidity and our ability to invest in research and development and
fund acquisitions and capital expenditures. Deferred compensation expense
consists of charges associated with movements in our deferred compensation plan
liability. Although stock-based compensation and deferred compensation expenses
constitute ongoing and recurring expenses, such expenses are excluded from
non-GAAP results because they are not expenses that typically require current
cash settlement by us and because such expenses are not used by us to assess the
core profitability of our business operations. We further believe these measures
are useful to investors in that they allow for greater transparency to certain
line items in our financial statements. In addition, excluding these items from
various non-GAAP measures facilitates comparisons to our competitors' operating
results.
B.   Amortization of intangibles. We recognize amortization expense of
intangibles in connection with our acquisitions. Intangibles include (i)
purchased technology, (ii) trademarks, (iii) customer contracts and
relationships, and (iv) other intangible assets. In accordance with GAAP, we
amortize the fair value of the intangibles based on the pattern in which we
expect the economic benefits of the intangibles will be consumed as revenue is
generated. Although the intangibles generate revenue for us, we exclude this
item because the expense is non-cash in nature and because we believe the
non-GAAP financial measures excluding this item provide meaningful supplemental
information regarding our operational performance, liquidity and our ability to
invest in research and development, fund acquisitions and capital expenditures.
In addition, excluding this item from various non-GAAP measures facilitates our
internal comparisons to our historical operating results and comparisons to our
competitors' operating results.
                                       2
--------------------------------------------------------------------------------

C.   Investment gains and losses. We recognize investment gains and losses
principally from realized gains or losses from the sale and exchange of
marketable equity investments, other-than-temporary declines in the value of
marketable and non-marketable equity securities, unrealized holding gains and
losses associated with our available-for-sale securities and deferred
compensation plan assets (classified as trading securities), gains and losses on
the sale of equity securities held indirectly through investment partnerships
and gains and losses associated with the recording of equity or cost method
investments to fair value upon obtaining control through a business combination,
as required by GAAP. We do not actively trade publicly held securities nor do we
rely on these securities positions for funding our ongoing operations. We
exclude investment gains and losses on these equity securities because these
items are unrelated to our ongoing business and operating results.
D.   Income tax adjustments. Our income tax expense is based on our GAAP taxable
income and actual tax rates in effect, which can differ significantly from the
non-GAAP tax rate applied to our non-GAAP financial results. In arriving at our
non-GAAP tax rate, certain non-recurring and period-specific income tax
adjustments, such as a one-time tax charge in connection with an acquisition,
resolution of certain income tax audits and any significant financial impacts
and certain indirect effects resulting from tax legislation or changes to our
trading structure are made to help us assess the core profitability of our
business operations. This non-GAAP tax rate could be subject to change for
several reasons, including significant changes in our geographic earnings mix or
fundamental tax law changes in major jurisdictions in which we operate. In
addition, excluding this item from various non-GAAP measures facilitates our
internal comparisons to our historical operating results.
E.   Income tax effect of the non-GAAP pre-tax adjustments from the provision
for income taxes. Excluding the income tax effect of the non-GAAP pre-tax
adjustments from the provision for income taxes assists investors in
understanding the tax provision associated with those adjustments and the
effective tax rate related to our ongoing operations.
We believe that non-GAAP measures have limitations in that they do not reflect
all of the amounts associated with our financial results as determined in
accordance with GAAP and that these measures should only be used to evaluate our
financial results in conjunction with the corresponding GAAP measures and that
is why we qualify the use of non-GAAP financial information in a statement when
non-GAAP information is presented.

                                       3
--------------------------------------------------------------------------------


Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit Number               Exhibit Description

99.1                           Press release issued on June 17, 2021 entitled "Adobe Reports
                             Outstanding Second Quarter Results"

104                          Cover Page Interactive Data File (the instance

document does not appear in


                             the Interactive Data File because its XBRL

tags are embedded within the


                             Inline XBRL document)



                                       4

--------------------------------------------------------------------------------

© Edgar Online, source Glimpses