<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
October 28, 1995
Date of Report (Date of earliest event reported)
ADOBE SYSTEMS INCORPORATED
(Exact name of registrant as specified in its charter)
California 033-6885 77-0019522
(State or Other (Commission File Number) (IRS Employer
Jurisdiction of Incorporation) Identification No.)
1585 Charleston Road
Mountain View, California 94043-1225
(Address of principal executive offices, including zip code)
(415) 961-4400
(Registrant's telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report)
<PAGE>
2
This Amendment No. 1 to the Registrant's Current Report on Form 8-K dated
October 28, 1995 (the "REPORT"), relates to the Registrant's completion of the
acquisition of Frame Technology Corporation, a corporation organized and
existing under the laws of the State of California ("FRAME"), by means of a
merger (the "MERGER") of J Acquisition Corporation, a corporation organized and
existing under the laws of the State of California and a wholly owned subsidiary
of the Registrant ("MERGER SUB"), with and into Frame, pursuant to the Agreement
and Plan of Merger and Reorganization, dated as of June 22, 1995 (the "MERGER
AGREEMENT"), among the Registrant, Merger Sub and Frame. The purpose of this
Amendment is to amend Item 7(b) to provide the required pro forma financial
information relating to the business combination between the Registrant and
Frame on October 28, 1995 which was impracticable to provide at the time the
Registrant filed this Report.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(b) PRO FORMA FINANCIAL INFORMATION.
PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
(UNAUDITED)
The following unaudited pro forma combined condensed financial
statements assume a business combination between Adobe and Frame accounted
for on a pooling of interests basis. The pro forma combined condensed
financial statements are based on the historical financial statements and
the notes thereto of Adobe and the supplemental consolidated financial
statements and the notes thereto of Frame, included or incorporated by
reference in the Registrant's Registration Statement on Form S-4, as
amended (Registration No. 033-62167), declared effective by the Securities
and Exchange Commission on September 21, 1995 under the Securities Act of
1933, as amended (the "REGISTRATION STATEMENT") and the condensed
consolidated balance sheet of Frame as of September 30, 1995 and the
condensed consolidated statements of income of Frame for the nine months ended
September 30, 1994 and 1995. The Adobe historical financial statement data
as of September 1, 1995 and for the nine months ended August 26, 1994 and
September 1, 1995 and the Frame historical financial statement data as of
September 30, 1995 and for the nine months ended September 30, 1994 and
1995 have been prepared on the same basis as the historical information
derived from audited financial statements and, in the opinion of management,
contain all adjustments, consisting only of normal recurring accruals,
necessary for the fair presentation of the results of operations for such
periods. The pro forma combined condensed consolidated balance sheet
combines Adobe's September 1, 1995 condensed consolidated balance sheet with
Frame's September 30, 1995 condensed consolidated balance sheet, giving
effect to the Merger as if it had occurred on September 1, 1995. The pro
forma combined condensed statements of income combine Adobe's historical
condensed consolidated statements of income for the three fiscal years ended
November 27, 1992, November 26, 1993 and November 25, 1994, respectively,
and the unaudited nine months ended August 26, 1994 and September 1,
1995 with the corresponding Frame condensed consolidated statements of
operations for each of the three fiscal years ended December 31, 1992, 1993
and 1994 and the unaudited nine months ended September 30, 1994 and 1995,
respectively giving effect to the Merger as if it had occurred on November 30,
1991.
On July 28, 1995, Frame acquired Mastersoft, a developer of file conversion,
viewing and document comparison software for original equipment manufacturers
and end users through a pooling of interests. Accordingly, Frame's historical
consolidated financial statements have been restated to include the results of
operations, financial position and cash flows of Mastersoft for all periods
presented.
The pro forma information is presented for illustrative purposes only and is
not necessarily indicative of the operating results or financial position that
would have occurred if the Merger had been consummated at the beginning of the
periods presented, nor is it necessarily indicative of future operating results
or financial position. The unaudited pro forma combined condensed financial
statements do not incorporate any benefits from cost savings or synergies of
operations of the combined company.
Adobe and Frame estimate that they will incur direct transaction costs of
approximately $11.5 million associated with the Merger which will be charged to
operations during the quarter ending December 1, 1995. In addition, it is
expected that following the Merger, Adobe will incur a restructuring charge to
operations, currently estimated to be between $15.0 million and $25.0 million in
the quarter ending December 1, 1995 to reflect costs associated with combining
the two companies. This amount is a preliminary estimate only and is therefore
subject to change. There can be no assurance that Adobe will not incur
additional charges in subsequent quarters to reflect costs associated with the
Merger or that management will be successful in their efforts to integrate the
operations of the two companies. The costs in connection with the Mastersoft
Acquisition are not anticipated to be significant.
These pro forma combined condensed financial statements should be read in
conjunction with the historical consolidated financial statements and the
related notes thereto of Adobe and the consolidated financial statements and
the notes thereto of Frame included or incorporated by reference in the
Registration Statement.
<PAGE>
3
PRO FORMA COMBINED CONDENSED BALANCE SHEET
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
ADOBE FRAME
SYSTEMS TECHNOLOGY ADOBE/ PRO FORMA
INCORPORATED CORPORATION FRAME COMBINED
SEPTEMBER 1, SEPTEMBER 30, PRO FORMA SEPTEMBER 1,
1995 1995 ADJUSTMENTS 1995
------------ ----------------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents... $108,817 $11,205 -- $120,022
Short-term investments...... 365,469 34,430 -- 399,899
Receivables................. 92,762 22,001 -- 114,763
Inventories................. 6,983 1,412 -- 8,395
Other current assets........ 9,912 4,674 -- 14,586
Deferred income taxes....... 19,675 -- $ 1,465(5) 21,140
------------ -------- ------------ ------------
Total current assets.......... 603,618 73,722 1,465 678,805
Property and equipment........ 43,531 8,450 -- 51,981
Other assets.................. 91,089 6,708 -- 97,797
Deferred income taxes......... 9,802 -- 1,940(3) 11,742
------------ -------- ------------ ------------
$748,040 $88,880 $ 3,405 $840,325
------------ -------- ------------ ------------
------------ -------- ------------ ------------
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Trade and other payables.... $ 21,916 $ 4,405 -- $ 26,321
Accrued expenses............ 82,699 10,223 -- 92,922
Accrued merger transaction
and restructuring costs.... -- -- $ 36,500 (3) 36,500
Income taxes payable........ 23,695 2,458 (7,310)(3) 18,843
Deferred revenue............ 8,573 8,095 16,668
------------ -------- ------------ ------------
Total current liabilities..... 136,883 25,181 29,190 191,254
------------ -------- ------------ ------------
Shareholders' equity:
Preferred stock............. -- -- -- --
Common stock................ 206,536 61,539 1,100 (5) 269,175
Retained earnings........... 407,872 2,320 365 (5) 383,307
(27,250)(3)
Unrealized gains on
investments................ 1,656 24 -- 1,680
Cumulative foreign currency
translation adjustments.... (4,907) (184) (5,091)
------------ -------- ------------ ------------
Total shareholders' equity.... 611,157 63,699 (25,785) 649,071
------------ -------- ------------ ------------
$748,040 $88,880 $ 3,405 $840,325
------------ -------- ------------ ------------
------------ -------- ------------ ------------
</TABLE>
SEE ACCOMPANYING NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS.
<PAGE>
4
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
ADOBE FRAME
SYSTEMS TECHNOLOGY PRO FORMA
INCORPORATED CORPORATION COMBINED
YEAR ENDED YEAR ENDED YEAR ENDED
NOVEMBER 27, DECEMBER 31, PRO FORMA NOVEMBER 27,
1992 1992 ADJUSTMENTS 1992
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue:
Licensing................... $152,701 -- -- $152,701
Application products........ 287,362 $79,968 -- 367,330
----------- ---------- ----- -----------
Total revenue........... 440,063 79,968 -- 520,031
Direct costs.................. 87,871 11,854 -- 99,725
----------- ---------- ----- -----------
Gross margin.................. 352,192 68,114 -- 420,306
----------- ---------- ----- -----------
Operating expenses:
Software development costs:
Research and
development.............. 65,181 14,862 -- 80,043
Amortization of
capitalized software
development costs 10,128 829 -- 10,957
Sales, marketing and
customer support........... 145,748 34,529 -- 180,277
General and
administrative............. 50,344 8,492 -- 58,836
Write-off of acquired in
process research and
development................ 6,325 -- -- 6,325
----------- ---------- ----- -----------
Total operating
expenses................ 277,726 58,712 -- 336,438
----------- ---------- ----- -----------
Operating income.............. 74,466 9,402 -- 83,868
Nonoperating income (expense):
Interest, investment and
other income............... 10,982 1,131 -- 12,113
Loss on real estate
partnership................ (6,000) -- -- (6,000)
----------- ---------- ----- -----------
Income before income taxes.... 79,448 10,533 -- 89,981
Income tax provision.......... 29,059 3,258 -- 32,317
----------- ---------- ----- -----------
Net income.................... $ 50,389 $ 7,275 -- $ 57,664
----------- ---------- ----- -----------
----------- ---------- ----- -----------
Net income per share.......... $ 0.82 $ 0.51 $ 0.84
----------- ---------- -----------
----------- ---------- -----------
Shares used in computing net
income per share............. 61,193 14,366 68,663
----------- ---------- -----------
----------- ---------- -----------
</TABLE>
SEE ACCOMPANYING NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS.
<PAGE>
5
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
ADOBE FRAME
SYSTEMS TECHNOLOGY PRO FORMA
INCORPORATED CORPORATION COMBINED
YEAR ENDED YEAR ENDED YEAR ENDED
NOVEMBER 26, DECEMBER 31, PRO FORMA NOVEMBER 26,
1993 1993 ADJUSTMENTS 1993
----------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
Revenue:
Licensing................... $146,176 -- -- $146,176
Application products........ 374,061 $ 59,866 -- 433,927
----------- ----------- ------------- -----------
Total revenue........... 520,237 59,866 -- 580,103
Direct costs.................. 96,638 11,154 -- 107,792
----------- ----------- ------------- -----------
Gross margin.................. 423,599 48,712 -- 472,311
----------- ----------- ------------- -----------
Operating expenses:
Software development costs:
Research and
development.............. 86,727 13,473 -- 100,200
Amortization of
capitalized software
development costs........ 10,208 290 -- 10,498
Sales, marketing and
customer support........... 170,945 36,001 -- 206,946
General and
administrative............. 59,203 6,845 -- 66,048
Write-off of acquired in
process research and
development................ 4,285 -- -- 4,285
Restructuring and other
charges.................... -- 25,800 -- 25,800
----------- ----------- ------------- -----------
Total operating
expenses................ 331,368 82,409 -- 413,777
----------- ----------- ------------- -----------
Operating income (loss)....... 92,231 (33,697) -- 58,534
Interest, investment and other
income....................... 12,829 995 -- 13,824
----------- ----------- ------------- -----------
Income (loss) before income
taxes........................ 105,060 (32,702) -- 72,358
Income tax provision
(benefit).................... 38,515 (310) $ (6,616)(5) 31,589
----------- ----------- ------------- -----------
Net income (loss)............. $ 66,545 $(32,392) $ 6,616 $ 40,769
----------- ----------- ------------- -----------
----------- ----------- ------------- -----------
Net income (loss) per share... $ 1.11 $ (2.21) $ 0.60
----------- ----------- -----------
----------- ----------- -----------
Shares used in computing net
income (loss) per share...... 60,144 14,644 68,252
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
SEE ACCOMPANYING NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS.
<PAGE>
6
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
ADOBE FRAME
SYSTEMS TECHNOLOGY PRO FORMA
INCORPORATED CORPORATION COMBINED
YEAR ENDED YEAR ENDED YEAR ENDED
NOVEMBER 25, DECEMBER 31, PRO FORMA NOVEMBER 25,
1994 1994 ADJUSTMENTS 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue:
Licensing................... $156,652 -- -- $156,652
Application products........ 441,120 $ 77,845 -- 518,965
----------- ----------- ----------- -----------
Total revenue (a)....... 597,772 77,845 -- 675,617
Direct costs.................. 111,810 10,213 -- 122,023
----------- ----------- ----------- -----------
Gross margin (a).............. 485,962 67,632 -- 553,594
----------- ----------- ----------- -----------
Operating expenses:
Software development costs:
Research and
development.............. 98,995 14,802 -- 113,797
Amortization of
capitalized software
development costs........ 13,316 1,013 -- 14,329
Sales, marketing and
customer support........... 200,993 33,778 -- 234,771
General and
administrative............. 54,021 6,510 -- 60,531
Write-off of acquired in
process research and
development................ 15,469 -- -- 15,469
Merger transaction and
restructuring costs (b).... 72,183 -- -- 72,183
----------- ----------- ----------- -----------
Total operating
expenses................ 454,977 56,103 -- 511,080
----------- ----------- ----------- -----------
Operating income.............. 30,985 11,529 -- 42,514
Interest, investment and other
income....................... 9,012 1,420 -- 10,432
----------- ----------- ----------- -----------
Income before income taxes.... 39,997 12,949 -- 52,946
Income tax provision.......... 33,688 1,079 $ 2,297(5) 37,064
----------- ----------- ----------- -----------
Net income.................... $ 6,309 $ 11,870 $ (2,297) $ 15,882
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net income per share.......... $ 0.10 $ 0.70 $ 0.23
----------- ----------- -----------
----------- ----------- -----------
Shares used in computing net
income per share............. 61,620 16,851 70,383
----------- ----------- -----------
----------- ----------- -----------
<FN>
- ------------------------------
(a) In connection with the merger with Aldus, Adobe discontinued marketing two
products, FreeHand and PhotoStyler, which generated aggregate revenue and
gross margin of $53.2 million and $35.4 million, respectively, in 1994.
(b) Reflects incremental costs incurred in connection with the merger with
Aldus.
</TABLE>
SEE ACCOMPANYING NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS.
<PAGE>
7
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
ADOBE FRAME
SYSTEMS TECHNOLOGY PRO FORMA
INCORPORATED CORPORATION COMBINED
NINE MONTHS NINE MONTHS NINE MONTHS
ENDED ENDED ENDED
AUGUST 26, SEPTEMBER 30, PRO FORMA AUGUST 26,
1994 1994 ADJUSTMENTS 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue:
Licensing................... $115,713 -- -- $115,713
Application products........ 316,609 $ 55,646 -- 372,255
----------- ----------- ----------- -----------
Total revenue (a)....... 432,322 55,646 -- 487,968
Direct costs.................. 80,061 7,462 -- 87,523
----------- ----------- ----------- -----------
Gross margin (a).............. 352,261 48,184 -- 400,445
----------- ----------- ----------- -----------
Operating expenses:
Software development costs:
Research and
development.............. 69,537 10,656 -- 80,193
Amortization of
capitalized software
development costs........ 10,689 700 -- 11,389
Sales, marketing and
customer support........... 149,401 24,692 -- 174,093
General and
administrative............. 39,068 4,424 -- 43,492
Write-off of acquired in
process research and
development................ 3,045 -- -- 3,045
----------- ----------- ----------- -----------
Total operating
expenses................ 271,740 40,472 -- 312,212
----------- ----------- ----------- -----------
Operating income.............. 80,521 7,712 -- 88,233
Interest, investment and other
income....................... 5,625 942 -- 6,567
----------- ----------- ----------- -----------
Income before income taxes.... 86,146 8,654 -- 94,800
Income tax provision.......... 31,686 704 $ 2,325 (5) 34,715
----------- ----------- ----------- -----------
Net income.................... $ 54,460 $ 7,950 $ (2,325) $ 60,085
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net income per share.......... $ 0.88 $ 0.47 $ 0.85
----------- ----------- -----------
----------- ----------- -----------
Shares used in computing net
income per share............. 61,874 16,851 70,637
----------- ----------- -----------
----------- ----------- -----------
<FN>
- ------------------------------
(a) In connection with the merger with Aldus, Adobe discontinued marketing two
products, FreeHand and PhotoStyler, which generated aggregate revenue and
gross margin of $44.7 million and $29.2 million, respectively, during the
nine months ended August 26, 1994.
</TABLE>
SEE ACCOMPANYING NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS.
<PAGE>
8
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
ADOBE FRAME
SYSTEMS TECHNOLOGY PRO FORMA
INCORPORATED CORPORATION COMBINED
NINE MONTHS NINE MONTHS NINE MONTHS
ENDED ENDED ENDED
SEPTEMBER 1, SEPTEMBER 30, PRO FORMA SEPTEMBER 1,
1995 1995 ADJUSTMENTS 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue:
Licensing................... $136,486 -- -- $136,486
Application products........ 356,752 $ 74,357 -- 431,109
----------- ----------- ----------- -----------
Total revenue........... 493,238 74,357 -- 567,595
Direct costs.................. 89,267 9,998 -- 99,265
----------- ----------- ----------- -----------
Gross margin.................. 403,971 64,359 -- 468,330
----------- ----------- ----------- -----------
Operating expenses:
Software development costs:
Research and
development.............. 82,017 13,983 -- 96,000
Amortization of
capitalized software
development costs........ 7,084 1,549 -- 8,633
Sales, marketing and
customer support........... 144,970 29,171 -- 174,141
General and
administrative............. 35,062 5,465 -- 40,527
----------- ----------- ----------- -----------
Total operating
expenses................ 269,133 50,168 -- 319,301
----------- ----------- ----------- -----------
Operating income.............. 134,838 14,191 -- 149,029
Interest, investment and other
income....................... 19,028 1,623 -- 20,651
----------- ----------- ----------- -----------
Income before income taxes.... 153,866 15,814 -- 169,680
Income tax provision.......... 56,161 1,581 $ 3,954(5) 61,696
----------- ----------- ----------- -----------
Net income.................... $ 97,705 $ 14,233 $ (3,954) $107,984
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net income per share.......... $ 1.48 $ 0.79 $ 1.43
----------- ----------- -----------
----------- ----------- -----------
Shares used in computing net
income per share............. 66,032 17,909 75,345
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
SEE ACCOMPANYING NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS.
<PAGE>
9
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
NOTE 1. PERIODS COMBINED
The Adobe statements of income for each of the years in the three-year
period ended November 25, 1994 and the nine months ended August 26, 1994 and
September 1, 1995 have been combined with the Frame statements of operations for
each of the years in the three-year period ended December 31, 1994 and the
nine months ended September 30, 1994 and September 30, 1995.
The Adobe balance sheet as of September 1, 1995 has been combined with the
Frame balance sheet as of September 30, 1995.
On July 28, 1995, Frame acquired Mastersoft, a developer of file conversion,
viewing and document comparison software for original equipment manufacturers
and end users through a pooling of interests. Accordingly, Frame's historical
consolidated financial statements have been restated to include the results of
operations, financial position and cash flows of Mastersoft.
NOTE 2. PRO FORMA EARNINGS PER SHARE
The pro forma combined condensed statements of income for Adobe and Frame
have been prepared as if the Merger was completed at the beginning of the
periods presented. The pro forma combined net income per share is based on the
combined weighted average number of common and common equivalent shares of Adobe
Common Stock and Frame Common Stock for each period, based on the exchange ratio
of 0.52 shares of Adobe Common Stock for each share of Frame Common Stock.
NOTE 3. BASIS OF PRESENTATION
PRO FORMA BASIS OF PRESENTATION
The pro forma combined condensed financial statements reflect the issuance
of 8,489,087 shares of Adobe Common Stock in exchange for an aggregate of
16,325,167 shares of Frame Common Stock (outstanding as of September 30, 1995)
in connection with the Merger based on the exchange ratio of 0.52 shares of
Adobe Common Stock for every share of Frame Common Stock.
The following table provides the pro forma share issuances in connection
with the merger:
<TABLE>
<S> <C>
Frame Common Stock outstanding at September 30, 1995........... 16,325,167
Exchange Ratio................................................. 0.52:1.00
----------
Number of shares of Adobe Common Stock exchanged............... 8,489,087
Number of shares of Adobe Common Stock outstanding at
September 1, 1995.............................................. 63,819,199
----------
Number of shares of Adobe Common Stock outstanding after
completion of the Merger...................................... 72,308,286
----------
----------
</TABLE>
The actual number of shares of Adobe Common Stock issued at the
Effective Time, October 28, 1995, was 8,499,506, based on the number of
shares of Frame Common Stock outstanding at such time.
MERGER TRANSACTION AND RESTRUCTURING COSTS
Adobe and Frame estimate they will incur direct transaction costs of
approximately $11.5 million associated with the Merger, consisting of
transaction fees for investment bankers, attorneys, accountants, financial
printing and other related charges. These nonrecurring costs will be charged to
operations in the fiscal quarter in which the Merger is consummated.
In addition, it is expected that as a result of the Merger, the combined
company will incur restructuring costs currently estimated to be between $15.0
million and $25.0 million. The restructuring costs will include severance and
outplacement, and elimination of duplicate facilities, including cancellation of
leases.
<PAGE>
10
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3. BASIS OF PRESENTATION (CONTINUED)
The pro forma combined condensed balance sheet gives effect to such expenses
as if they had been incurred as of September 1, 1995, but the effects of these
costs have not been reflected in the pro forma combined condensed statements
of income.
The income tax effect of the merger transaction and restructuring costs has
also been reflected as a pro forma adjustment.
NOTE 4. CONFORMING ADJUSTMENTS
There have been no adjustments required to conform the accounting policies
of the combined company. Certain amounts for Frame have been reclassified to
conform with Adobe's financial statement presentation. There have been no
significant intercompany transactions.
NOTE 5. PROVISION FOR INCOME TAXES
Since Adobe plans to file consolidated tax returns which will include
Frame's operations subsequent to the Effective Time, pro forma adjustments were
made to reduce the valuation allowances previously provided by Frame in
connection with Frame's loss carryforward generated in 1993. Adobe has
determined that estimated combined future taxable income is sufficient to
conclude that it is more likely than not that the tax benefit of the loss
carryforwards will be realized.
Mastersoft was subject to Subchapter S of the Internal Revenue Code and,
accordingly, was not subject to income tax. Any additional pro forma income tax
provisions assuming that Mastersoft was not subject to Subchapter S would be
insignificant to the pro forma combined condensed statements of income.
<PAGE>
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ADOBE SYSTEMS INCORPORATED
Dated: November 24, 1995 By /s/ M. Bruce Nakao
-------------------------
M. Bruce Nakao
Senior Vice President,
Finance and Administration,
Chief Financial Officer,
Treasurer and Assistant
Secretary
