View of the Management

Adobe is going to continue its acquisition effort with smaller software companies. Most mergers are conducted using the pooling of interests method. Shares of common stock are issued in exchange for all the outstanding common stock of the merging companies.

Adobe also spins off some of its business into newly established company. For example, in January 1996, Adobe spun off its pre-press applications product business to a newly established Luminous Corporation. Adobe retains a minority equity interest and will maintains ownership of certain core technologies.

Adobe is going to count on its licensing revenue. The management believes that there are increases in the licensing revenue due to the continued acceptance of PostScript software, as well as to the diversification of the Company’s customer base across multiple platforms.