Exhibit 99.1

Investor Relations Contact:
Mike Saviage
Adobe Systems Incorporated
408 536.4416
ir@adobe.com

Public Relations Contact:
Holly Campbell
Adobe Systems Incorporated
408 536.6401
campbell@adobe.com

Adobe Systems Reports Second Quarter Fiscal 2003 Results

Adobe® Acrobat® Release Drives 43 Percent Year-Over-Year Revenue Growth in ePaper Business

SAN JOSE, Calif. — June 12, 2003 (NASDAQ: ADBE) — Adobe Systems Incorporated, the leader in network publishing, today reported financial results for its second quarter ended May 30, 2003 that came in at the high end of the Company’s prior revenue and earnings per share target ranges.

In the second quarter of fiscal 2003, Adobe achieved revenue of $320.1 million, compared to $317.4 million reported for the second quarter of fiscal 2002 and $296.9 million reported in the first quarter of fiscal 2003. Adobe’s revised second quarter revenue target range was $305 to $320 million, up from its prior target range of $300 to $315 million.

GAAP diluted earnings per share for the second quarter of fiscal 2003 were $0.27. Pro forma diluted earnings per share for the second quarter of fiscal 2003, which does not include an investment loss from the Company’s venture program, were $0.28. Adobe’s GAAP and pro forma second quarter earnings target range was $0.24 to $0.28 per share, up from its prior target range of $0.24 to $0.27.

“The release of Acrobat 6.0 in Q2 helped drive record revenue in our ePaper business, and signals the beginning of a strong product cycle,” said Bruce Chizen, president and CEO of Adobe Systems. “This month we’re celebrating 10 years of Acrobat and PDF. From communicating business critical information across the enterprise to sharing photos with friends and family, Acrobat and PDF have clearly become synonymous with the reliable delivery of digital information.”

GAAP net income was $64.2 million for the second quarter of fiscal 2003, compared to $54.3 million reported in the second quarter of fiscal 2002, and $54.2 million in the first quarter of fiscal 2003.

Pro forma net income, which does not, as applicable, include amortization of goodwill and purchased intangibles, restructuring and other charges, acquired in-process research and development, and investment losses, was $66.7 million for the second quarter of fiscal 2003, compared to $67.4 million in the second quarter of fiscal 2002, and $58.9 million in the first quarter of fiscal 2003.

GAAP diluted earnings per share for the second quarter of fiscal 2003 were $0.27, based on 239.2 million weighted average shares. This compares with GAAP diluted earnings per share of $0.22 reported in the second quarter of fiscal 2002, based on 247.7 million weighted average shares, and GAAP diluted earnings per share of $0.23 reported in the first quarter of fiscal 2003, based on 235.3 million weighted average shares.

Adobe’s GAAP operating income was $91.5 million in the second quarter of fiscal 2003, compared to $90.8 million in the second quarter of fiscal 2002 and $80.5 million in the first quarter of fiscal 2003. As a percent of revenue, GAAP operating income for the second quarter was 28.6 percent, compared to 28.6 percent in the second quarter of fiscal 2002 and 27.1 percent in the first quarter of fiscal 2003.

Adobe’s pro forma operating income, which does not, as applicable, include the amortization of goodwill and purchased intangibles, restructuring and other charges, and acquired in-process research and development, was $91.5 million in the second quarter of fiscal 2003, compared to $96.4 million in the second quarter of fiscal 2002 and $80.5 million in the first quarter of fiscal 2003. As a percent of revenue, pro forma operating income for the second quarter was 28.6 percent, compared to 30.4 percent in the second quarter of fiscal 2002 and 27.1 percent in the first quarter of fiscal 2003.

For the third quarter of fiscal 2003, the Company announced that it is targeting revenue at $300 to $315 million, a gross margin of 92 to 93 percent, and GAAP and pro forma operating margin ranges of 24 to 27 percent.

As a percent of revenue, Adobe is targeting third quarter expenses as follows:

Research & Development — approximately 22 to 23 percent
Sales & Marketing — approximately 34 to 35 percent
General & Administrative — approximately 10 percent

In addition, Adobe is targeting its share count range to be between 243 and 245 million shares in the third quarter of fiscal 2003. The Company also is targeting other income to be approximately $3 million, and a tax rate of 30 percent. These targets lead to GAAP and pro forma target ranges of $0.22 to $0.25 earnings per share in the quarter.

For fiscal 2003 on an annual basis, the Company continues to target GAAP and pro forma operating margins of at least 28 percent.

The Company currently believes that targeted pro forma earnings per share and pro forma operating margin results will not differ materially from targeted GAAP results.

The Company also said that it plans to release several of its Creative Professional applications in the fourth quarter of the year.

The Adobe Board of Directors declared this quarter’s cash dividend of $0.0125 per share, payable on July 7, 2003 to stockholders of record as of June 23, 2003.

Forward Looking Statements Disclosure

This press release contains forward looking statements, including those related to revenue, earnings per share, and product releases, which involve risks and uncertainties that could cause actual results to differ materially. Factors that might cause or contribute to such differences include, but are not limited to: general economic or political conditions in any of the major countries in which we do business, introduction of new products by existing and new competitors, delays in development or shipment of our new products or major new versions of existing products, difficulties in transitions to new markets, including the enterprise, government, corporate business and consumer markets, changes to our distribution channel, inability to attract and retain key personnel, lack of market acceptance of new products and upgrades, changes in demand for application software, computers and printers, sales price adjustments, intellectual property disputes and litigation, the impact of SARS on our business and the economy, industry transitions to new business models, renegotiation or termination of royalty or intellectual property licensing arrangements, changes in accounting rules, and market risks associated with our equity investments. For further discussion of these and other risks and uncertainties, individuals should refer to the Company’s SEC filings, including the 2002 annual report on Form 10-K and quarterly reports on Form 10-Q filed in 2003. The Company does not undertake an obligation to update forward looking statements.

About Adobe Systems Incorporated

Founded in 1982, Adobe Systems Incorporated (www.adobe.com), the leader in network publishing, offers a comprehensive line of software for enterprise and creative professional customers. Its products enable customers to create, manage and deliver visually rich, compelling and reliable content. Based in San Jose, Calif., Adobe is one of the world’s largest software companies.

© 2003 Adobe Systems Incorporated. All rights reserved. Adobe, Acrobat and the Adobe logo are either registered trademarks or trademarks of Adobe Systems Incorporated in the United States and/or other countries. All other trademarks are the property of their respective owners.

Condensed Consolidated Statements of Income

(In thousands, except per share data)
(Unaudited)

	Three Months Ended						Six Months Ended
	May 30, 2003			May 31, 2002			May 30, 2003			May 31, 2002
Revenue:
Products	$	314,150		$	316,254		$	604,905		$	584,150
Services and support	5,996			1,105			12,136			1,105
Total revenue	320,146			317,359			617,041			585,255

Total cost of revenue:
Products	20,212			23,835			39,572			44,832
Services and support	3,144			1,298			6,146			1,298
Total cost of revenue	23,356			25,133			45,718			46,130

Gross profit	296,790			292,226			571,323			539,125

Operating Expenses:
Research and development	69,117			62,858			135,078			122,155
Sales and marketing	105,712			103,898			203,740			193,216
General and administrative	30,500			29,066			60,536			54,665
Restructuring and other charges	—			1,605			—			1,605
Acquired in-process research and development	—			410			—			5,769
Amortization of goodwill and purchased intangibles	—			3,541			—			7,082
Total operating expenses	205,329			201,378			399,354			384,492

Operating income	91,461			90,848			171,969			154,633

Non-operating income:
Investment loss	(3,566		)	(13,728		)	(10,258		)	(9,195		)
Interest and other income	3,885			2,735			7,534			7,664
Total non-operating income (loss)	319			(10,993		)	(2,724		)	(1,531		)

Income before income taxes	91,780			79,855			169,245			153,102
Provision for income taxes	27,534			25,554			50,774			48,993

Net income	$	64,246		$	54,301		$	118,471		$	104,109

Basic net income per share	$	0.28		$	0.23		$	0.51		$	0.44

Shares used in computing basic net income per share	232,124			238,202			231,649			237,369

Diluted net income per share	$	0.27		$	0.22		$	0.50		$	0.42

Shares used in computing diluted net income per share	239,237			247,687			237,420			246,358

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

	May 30, 2003			November 29, 2002
	(Unaudited)			(Audited)
ASSETS

Current assets:
Cash and cash equivalents	$	141,831		$	183,684
Short-term investments	640,791			434,053
Trade receivables	129,226			116,506
Other receivables	29,365			30,367
Deferred income taxes	20,297			31,530
Other current assets	24,535			18,032

Total current assets	986,045			814,172

Property and equipment, net	73,626			71,090
Goodwill and other intangibles, net	111,980			98,813
Other assets	42,357			43,085
Deferred income taxes, long-term	25,728			24,450

Total assets	$	1,239,736		$	1,051,610

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Trade and other payables	$	41,306		$	37,765
Accrued expenses	157,942			135,028
Income taxes payable	191,530			173,311
Deferred revenue	42,021			31,185

Total current liabilities	432,799			377,289

Stockholders’ equity:
Common stock, $0.0001 par value	29,576			29,576
Additional paid-in-capital	746,008			710,273
Retained earnings	1,658,434			1,545,776
Accumulated other comprehensive loss	(506		)	(3,950		)
Treasury stock, at cost, net of re-issuances	(1,626,575		)	(1,607,354		)

Total stockholders’ equity	806,937			674,321
Total liabilities and stockholders’ equity	$	1,239,736		$	1,051,610

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Three Months Ended
	May 30, 2003			May 31, 2002
Cash flows from operating activities:
Net income	$	64,246		$	54,301
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	12,065			15,722
Stock compensation expense	847			1,787
Deferred income taxes	2,033			(9,684		)
Provision for losses on receivables	821			922
Tax benefit from employee stock option plans	8,091			12,553
Acquired in process research and development	—			410
Loss on equity and cost method investments	3,626			5,172
Gains on sale of equity securities	(60		)	(259		)
Loss on other-than-temporary declines of equity securities	—			8,815
Changes in operating assets and liabilities:
Receivables	(473		)	12,071
Other current assets	(4,492		)	(2,195		)
Trade and other payables	7,115			(9,882		)
Accrued expenses	14,077			9,225
Accrued restructuring charges	(2,727		)	(2,978		)
Income taxes payable	13,328			12,969
Deferred revenue	9,537			(179		)

Net cash provided by operating activities	128,034			108,770

Cash flows from investing activities:
Purchases of short-term investments	(204,997		)	(470,119		)
Maturities and sales of short-term investments	77,075			393,049
Acquisitions of property and equipment	(11,811		)	(7,261		)
Purchases of long-term investments	(3,913		)	(6,983		)
Additions to other assets	(19,694		)	(3,326		)
Cash received net of cash paid for acquisition	—			7,345
Proceeds from sale of equity securities	537			705

Net cash used for investing activities	(162,803		)	(86,590		)

Cash flows from financing activities:
Purchase of treasury stock	(143		)	(36,271		)
Proceeds from issuance of treasury stock	36,231			26,576
Payment of dividends	(2,898		)	(2,972		)

Net cash provided by (used for) financing activities	33,190			(12,667		)
Effect of foreign currency exchange rates on cash and cash equivalents	1,313			1,039

Net increase (decrease) in cash and cash equivalents	(266		)	10,552

Cash and cash equivalents at beginning of period	142,097			220,700

Cash and cash equivalents at end of period	$	141,831		$	231,252

Pro Forma Results

(In thousands, except per share data)

The following table shows the Company’s pro forma results reconciled to the Generally Accepted Accounting Principles (“GAAP”) Condensed Consolidated Statements of Income table included on page 4 of this release. The Company’s pro forma results do not, as applicable, include restructuring and other charges, acquired in-process research and development, amortization of goodwill and purchased intangibles, or losses on investments in equity securities.

	Three Months Ended				Six Months Ended
	May 30, 2003		May 31, 2002		May 30, 2003		May 31, 2002

Income before income taxes	$	91,780	$	79,855	$	169,245	$	153,102
Restructuring and other charges	—		1,605		—		1,605
Acquired in-process research and development	—		410		—		5,769
Amortization of goodwill and purchased intangibles	—		3,541		—		7,082
Investment loss	3,566		13,728		10,258		9,195

Pro forma income before taxes	95,346		99,139		179,503		176,753
Provision for income taxes	28,604		31,724		53,851		56,561

Pro forma net income	$	66,742	$	67,415	$	125,652	$	120,192

Basic net income per share	$	0.29	$	0.28	$	0.54	$	0.51

Shares used in computing basic net income per share	232,124		238,202		231,649		237,369

Diluted net income per share	$	0.28	$	0.27	$	0.53	$	0.49

Shares used in computing diluted net income per share	239,237		247,687		237,420		246,358

The above results are supplied to provide meaningful supplemental information regarding Adobe’s core operating results because such information excludes amounts that are not necessarily related to its core operating results. Adobe uses this pro forma financial information in assessing the performance of the Company’s ongoing operations, and for planning and forecasting in future periods. This pro forma information should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

Delaware		0-15175	77-0019522
(State or other jurisdiction of incorporation)		(Commission File Number)	(I.R.S. Employer Identification No.)
	345 Park Avenue San Jose, California 95110-2704
(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (408) 536-6000

	ADOBE SYSTEMS INCORPORATED

Date: June 12, 2003	By:	/s/ MURRAY J. DEMO
		Murray J. Demo
		Senior Vice President and Chief
		Financial Officer

Exhibit No.		Description
99.1		Press release issued on June 12, 2003 entitled “Adobe Systems Reports Second Quarter Fiscal 2003 Results.”