Bruce Chizen - CEO and Acting CFO Shantanu Narayen - President and COO Rich Rowley - VP and Corporate Controller Mike Saviage - VP of IR

Jay Vleeschhouwer - Merrill Lynch Steve Ashley - Robert W. Baird Tom Ernst - Deutsche Bank Rick Sherlund - Goldman Sachs Walter Pritchard - Cowen Adam Holt - JP Morgan Heather Bellini - UBS John McPeake - Prudential Brent Thill - Citigroup Philip Rueppel - Wachovia Securities Ross MacMillan - Jefferies Gene Munster - Piper Jaffray Sasa Zorovic - Oppenheimer Dan Cummins - Banc of America

Good day, everyone, and welcome to the Adobe Fourth Quarter and Fiscal Year 2006 Earnings Call. Today’s call is being recorded. At this time, I would like to turn the call over to Mr. Mike Saviage, Vice President of Investor Relations. Please go ahead, sir.

Good afternoon and thank you for joining us today. Joining me on the call are Bruce Chizen, our CEO and acting CFO; Shantanu Narayen, President and COO; and Rich Rowley, our new Vice President and Corporate Controller. In the call today, we will discuss Adobe’s fourth quarter and fiscal year 2006 financial results. By now, you should have a copy of our earnings press release, which crossed the wire approximately 45 minutes ago. If you need a copy of the press release, you can go to abode.com under the Company and press links to find an electronic copy. Before we get started, I want to emphasize that some of the information discussed in this call, particularly our revenue and operating level targets and our forward-looking product plans, is based on information as of today, December 14, 2006, and contains forward-looking statements that involve risk and uncertainty. Actual results may differ materially from those set forth in such statements. For discussion of these risks and uncertainties, you should review Adobe's SEC filings, including our annual report on Form 10-K for fiscal 2005 and our quarterly reports on Form 10-Q in fiscal 2006. During this call, we will discuss non-GAAP financial measures. The GAAP financial measures that correspond to non-GAAP financial measures, as well as the reconciliation between the two, are set forth in our press release issued today and are available on our website. Call participants are advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes. An archive of the call will be made available in Acrobat Connect on the Adobe's Investor Relations website for approximately 45 days, and is the property of Adobe Systems. The audio and archive may not be re-recorded or otherwise reproduced or distributed without prior written permission from Adobe Systems. I would now like to turn the call over to Bruce.

Thanks, Mike, and good afternoon. I'm pleased to announce that Adobe is reporting record quarterly and fiscal year revenue. Revenue in Q4 was $682.2 million, which was near the high end of our targeted range and represents 34% year-over-year growth. In addition to revenue from the Macromedia acquisition, driving our results in Q4 were the releases of Acrobat 8 and our new hobbyists products. The latest version of our Acrobat family of products, achieved record revenue in the quarter, and early feedback from customers has been overwhelmingly positive. The revenue in fiscal year 2006 was $2.575 billion, an increase of 31% over fiscal 2005. This was our fourth consecutive year of double digit revenue growth. Non-GAAP annual net income also grew by 31%, as a result of our strong revenue growth, combined with the operating margin leverage we achieved from the successful integration of Macromedia. Overall, fiscal 2006 was a great year with solid revenue in our core businesses and record revenue in strategic and growth businesses, such as InDesign, LiveCycle and our digital video products. We also demonstrated significant technology integration milestones as we folded Macromedia into Adobe. These accomplishments include delivering Flash video support in Production Studio, our suite of digital video products, as well as re-launching Macromedia Breeze as Acrobat Connect. Most importantly, however, we started executing against our strategy as a combined company, leveraging our assets and skills to deliver growth in fiscal 2007 and beyond. I'll now turn the call over to Rich.

Thanks Bruce. I first like to say I am happy to be with Adobe. Before I review our financial results, I would like to point out we are now providing combined year ago Adobe and Macromedia results for comparison purposes. As we have previously stated, Adobe and Macromedia reported their results on different fiscal quarters, which limits our ability to provide accurate comparisons. Therefore, today we will compare our fiscal 2006 results with pre-acquisition Adobe-only results in fiscal 2005. Similarly, we will compare Q4 fiscal 2006 financial results to our Q3 fiscal 2006 results, as well as with pre-acquisition Adobe-only results of Q4 in fiscal 2005. We also have the challenge of meaningfully comparing our fiscal 2006 results versus our fiscal 2005 results due to acquisition accounting and the implementation of stock-based compensation under FAS 123R. In my remarks, I will discuss non-GAAP financial results. Our non-GAAP results will exclude as applicable the following items. Amortization of purchased intangibles, amortization of Macromedia deferred compensation, restructuring charges related to the Macromedia acquisition, a charge for incomplete technology related to a small acquisition, FAS 123R stock-based compensation, investment gains and losses, tax differences due to the timing and deductibility of certain adjustments and the net tax impact of the repatriation of certain foreign earnings. A reconciliation between our GAAP and our non-GAAP results are provided in our press release issued today and are available on our website. I'll first comment on our fiscal year 2006 results. Adobe achieved record revenue of $2.575 billion in the year, compared to $1.966 billion in fiscal 2005. This represents 31% year-over-year revenue growth. Adobe's annual GAAP net income was $504.4 million in fiscal 2006 compared to $602.8 million in fiscal 2005. Adobe's annual non-GAAP net income was $752.5 million in fiscal 2006, compared to $575.1 million in fiscal 2005. GAAP operating profit in fiscal 2006 was $549.4 million, compared to $728.4 million in fiscal 2005. Non-GAAP operating profit in fiscal 2006 was $956.7 million, compared to $728.4 million in fiscal 2005. Our GAAP operating profit margin for the year was 21.3%, compared to 37% in fiscal 2005. Our non-GAAP operating profit margin was 37.1% in fiscal 2006, compared to 37% in fiscal 2005. GAAP diluted earnings per share in fiscal 2006 were $0.82, compared to $1.19 in fiscal 2005. Non-GAAP diluted earnings per share were $1.23 in fiscal 2006 compared to $1.13 in fiscal 2005. Now, I would like to discuss our Q4 fiscal 2006 results. For the fourth quarter of fiscal 2006, Adobe achieved revenue of $682.2 million. This compares to $510.4 million reported for the fourth quarter of fiscal 2005 and $602.2 million reported last quarter. GAAP net income for the fourth quarter of fiscal 2006 was $181.9 million, compared to $156.3 million reported in the fourth quarter of fiscal 2005 and $94.4 million last quarter. Non-GAAP net income was $197 million, compared to $151.5 million reported in the fourth quarter of fiscal 2005 and $171.5 million last quarter. GAAP diluted earnings per share for the fourth quarter of fiscal 2006 were $0.30 based on 602.2 million weighted average shares. This compares with GAAP diluted earnings per share of $0.31 reported in the fourth quarter of fiscal 2005 based on 508.6 million weighted average shares and GAAP diluted earnings per share of $0.16 reported last quarter based on 600.9 million weighted average shares. Non-GAAP diluted earnings per share for the fourth quarter of fiscal 2006 were $0.33. GAAP gross margin for the quarter was 88.3%, compared to 94% in the fourth quarter of fiscal 2005, and 88.5% last quarter. Non-GAAP gross margin was 93.7%. GAAP operating expenses for the fourth quarter of fiscal 2006 were $441.1 million. Non-GAAP operating expenses were $385.2 million. Regular employees at the end of the fourth quarter totaled 6,068 versus 5,879 at the end of the third quarter of fiscal 2006. The majority of the headcount increase from last quarter was in research and development. GAAP and non-GAAP expenses as a percent of revenue breakdown as follows. Research and development, GAAP 20.9%, non-GAAP 18.2%. Sales and marketing, GAAP 32.6%, non-GAAP 30.7%. G&A, GAAP 8.6%, non-GAAP 7.6%. GAAP operating income in the fourth quarter of fiscal 2006 was $161.5 million, or 23.7% of revenue. This compares to GAAP operating income of $191.9 million, or 37.6% of revenue in the fourth quarter of fiscal 2005, and $110 million, or 18.3% of revenue last quarter. Non-GAAP operating income in the fourth quarter of fiscal 2006 was $254 million, or 37.2% of revenue. This compares to non-GAAP operating income of $191.9 million, or 37.6% of revenue in the fourth quarter of fiscal 2005, and $207.2 million, or 34.4% of revenue last quarter. Other income for the fourth quarter of fiscal 2006 was $19.6 million. Adobe's GAAP effective tax rate for the fourth quarter of fiscal 2006 was 26%, and Adobe's non-GAAP effective tax rate was 28%. Our non-GAAP tax rate was higher than targeted due to the annual geographic mix of revenue. This affected our annual non-GAAP tax rate and an adjustment was necessary in our Q4 rate. I'll now discuss Adobe's revenue by business segment. Creative Solutions segment revenue was $359.9 million, compared to $328.1 million last quarter. This sequential increase was driven by our new hobbyist products and our Creative Suite products. Knowledge Worker segment revenue was $185.1 million, compared to $154.1 million last quarter. Our Acrobat desktop products achieved record revenue. Enterprise and Developer segment revenue was $52 million, compared to $49.4 million last quarter. Mobile and Device segment revenue was $12.1 million, compared to $9.1 million last quarter. Revenue in this segment continues to be impacted due to purchase accounting from the Macromedia acquisition. Other segment revenue was $73.1 million, compared to $61.5 million last quarter. Sequential growth in this segment was driven by revenue associated with monetization of our free client software downloads. Turning to our geographic segments, the results in Q4 fiscal 2006 on a percent of revenue basis, were as follows. The Americas 49%, Europe 32%, Asia 19%. We experienced solid demand across all of our major geographies. Our trade DSO in the fourth quarter of fiscal 2006 was 48 days. This compares to 31 days in Q4 fiscal 2005 and 43 days last quarter. Our DSO were higher in Q4 due to the launch of Acrobat 8 late in the quarter. In regard to our global channel inventory position, we ended the quarter within company policy. At the end of the fourth quarter of fiscal 2006, cash and short-term investments were $2.3 billion, compared to $2 billion at the end of the third quarter of fiscal 2006. In regard to share buyback, during the quarter, we repurchased 2.2 million shares at a cost of $81.8 million, as part of our share repurchase programs. This concludes my discussion on our financial results. I would now like to turn the call over to Shantanu.

Thanks, Rich. I'll spend the next few minutes reviewing highlights from our performance in Q4, starting first with Creative Solutions. Overall, our Creative business grew sequentially in Q4 over Q3 and was in line with our expectations. We also continue to be on track to deliver the next version of Creative Suite in Q2. Early response from beta customers to the next-generation products has been extremely positive. We are excited to announce that for the first time ever, we will deliver a public beta of the next generation of Photoshop. The beta version of Photoshop CS3 will be available on the Adobe Lab's website tomorrow morning and will allow current CS2 customers to try out some of its innovative new features and more easily transition to the latest hardware platforms, particularly Apple's new Intel-based systems. In our digital imaging business, Photoshop revenue remained steady in Q4, more than five quarters after the last version shipped. In fact, full units of Photoshop grew quarter-over-quarter and year-over-year when factoring in sales of Photoshop, Creative Suites, the bundles and Production Studio. In our Hobbyist segment, we achieved record revenue based on the new Photoshop Elements 5.0 and Premiere Elements 3.0 releases. These new releases have already received numerous accolades in the press, including the PC Magazine Editor’s Choice Award for Premier Elements. The Chicago Sun Times called Photoshop Elements, "The most valuable accessory to your digital camera." Our digital video business grew 39% year-over-year and we continue to be excited about the overall video opportunity. In addition to strong revenue growth, we continue to receive accolades in the industry. We recently won a Technical and Engineering Emmy Award for our Flash Video technology. This recognizes the inherent advantages of the Flash video format, which leverages the ubiquity of the Flash player to enable broadcasters and websites to deliver a seamless, branded experience to their viewers. In our Knowledge Worker Solutions business, we achieved record revenue with our Acrobat family of products based on the release of Acrobat version 8. Acrobat 8 enables business professionals to more effectively engage with the rich, high-value information in PDF documents and forms, and more reliably and securely drive their work to completion, leveraging the ubiquitous free Adobe Reader. Although it's early in the release cycle, revenue and units in the Acrobat 8 cycle has exceeded what we achieved with Acrobat 7 in the comparable timeframe. We have seen a healthy mix of new and upgrade revenue. In terms of mix, the ratio of Acrobat Professional to Acrobat Standard has actually grown in favor of Acrobat Professional thus far in the Acrobat 8 cycle. Concurrent with the release of Acrobat 8, we also launched the Acrobat Connect product line. Acrobat Connect is the first web conferencing and collaboration solution to offer always-on personal meeting rooms. Acrobat 8 and the free Adobe Reader now include a Start Meeting feature offering an immediate link into a Connect meeting room for real time collaboration. Acrobat Connect began shipping last week. In our Enterprise and Developer Solutions business, we achieved sequential and year-over-year revenue growth in Q4. Driving this performance was our LiveCycle Solutions business, which achieved record revenue in the quarter. Some wins in the government market include Japan's Ministry of Internal Affairs and Communications, which plans to migrate all of its paper-based census collection to a national eSolution for the entire country. The Catalan government in Spain responsible for more than 5 million citizens, which plans to use an Adobe form solution to migrate more than 500 paper-based processes to electronic work flows. Their goal is to reduce public expenses and increase the service levels for citizens, while also meeting Spanish and European objectives for eAdministration, such as accessibility, electronic archiving, and digital signature capabilities. In the State of Delaware, which has established PDF as a standard for all governments and all citizen and business facing forms within Delaware through its adoption of Adobe Reader Extension Server. More than 0.5 million business entities have their legal home in Delaware, including more than 50% of all US publicly traded companies and 60% of the Fortune 500. Delaware plans to quickly Reader-enable all corporate forms within the next 90 days allowing a large number of businesses throughout the world to fill out Reader-enabled PDF forms. LiveCycle wins in the commercial market include, the German Stock Exchange and Transaction Service provider, Deutsche Börse AG, which uses LiveCycle Reader Extensions and LiveCycle forms to standardize and optimize its forms management. Benelux banking firm, Fortis Bank N.V., which is using LiveCycle to convert archive and index all customer communication in PDF, a total of about 400,000 documents per month. And Chunghwa Telecom of Taiwan, the largest telco in Taiwan with 8 million subscribers, which is using an Adobe document solution to streamline and control internal processes by utilizing digital signatures, watermarks and other document controls. In total, the number of enterprise transactions in the quarter with licensing revenue greater than $50,000 for server products, including LiveCycle, Flex, Connect, Breeze and Flash Media Server was 104. In our Mobile and Device Solutions business, our momentum continued in terms of deployments with the distribution of our Flash Lite technology. Cumulatively, Flash Lite is now on more than 150 handset models, more than 250 device models, and more than 150 million devices have shipped. New deployments in addition to mobile handsets, include the Sony PlayStation 3 and the Nintendo Wii. The presence of our Flash Lite client on tens of millions of devices is helping Adobe to build out our content creation desktop solutions, as well as our server-based data delivery solutions. This momentum is helping to drive important customer and partner relationships. In October, we joined with Verizon Wireless and Qualcomm to announce the availability of Flash Lite technology via the Verizon Wireless network. Flash Lite for BREW facilitates Flash content to run on Verizon's Get It Now-enabled phones, and enables over-the-air distribution, giving customers the ability to purchase applications and automatically Flash-enable their phones. Reviewing news in our other business category. We had solid performance including a slight year-over-year growth in our PostScript business. We were pleased to see major OEM printing partners demonstrate the integration of the new Adobe PDF Print Engine into their printing systems. These partners include, Agfa Graphics, Dainippon Screen, FUJIFILM, Heidelberger and Kodak. We also made the new Adobe Reader 8 software available as a free download and it now offers the option to install the free Google toolbar. Finally, in early November we announced Adobe has contributed source code to the Mozilla foundation for the ActionScript Virtual Machine, which is our powerful standards-based scripting language engine in Flash Player. Mozilla will host a new open source project called Tamarind, to accelerate the development of the standards based approach for creating rich and engaging web applications. Industry response to this move is extremely positive and supports how we are working to bring the HTML and Flash developer communities together around the common language. This concludes my comments. I will now turn the call back over to Bruce.

Thanks Shantanu. Before I provide some closing comments, I'll discuss our fiscal year 2007 financial targets, as well as our targets for the first quarter of the year. For fiscal year 2007, we are targeting annual revenue of approximately 15%. We are also targeting a GAAP operating margin range of approximately 25 to 27%, and a non-GAAP operating margin range of approximately 37 to 38%. Our full-year financial targets include the following assumptions. We expect to ship new versions of our Creative products in English late in Q2, with the bulk of the major foreign language versions expected to ship in Q3. We expect overall revenue in Q3 to be substantially higher than revenue in Q2, because of the launch timing. Finally, we expect Q4 to be the highest revenue quarter of the fiscal year. Turning to Q1, we are targeting a revenue range of approximately $640 to $670 million. In addition, we are targeting a GAAP operating margin of approximately 19 to 21% on a non-GAAP basis, which excludes acquisition-related cost and stock-based compensation. We are targeting an operating margin range of 33 to 34%. We are targeting our first quarter share count to be approximately $609 to $611 million shares. For other income, we are targeting $20 to $22 million. For our GAAP and non-GAAP effective tax rates, we are targeting approximately a range of 26 to 28%. These target leads to a GAAP earnings per share target range in Q1 fiscal 2007 of $0.17 to $0.20 per share, and a non-GAAP earnings per share target range of $0.28 to $0.30 per share. I'd like to close with some thoughts on Adobe's future. Since the close of the Macromedia acquisition one year ago, Adobe has made significant progress integrating the two companies and leveraging our combined assets to provide solutions that truly redefine the way people engage with ideas and information. The overarching market trends that continue to drive our strategic vision remain the same. These trends include the explosion of digital content, the proliferation of non-PC Internet-connected devices, and finally the advent of Web 2.0, which ultimately will drive the next generation of rich Internet applications for a constantly connected world. All these trends are reinforcing the need for the kind of cross-operating system, cross-device platform Adobe is delivering based on our ubiquitous clients and our market-leading application solutions. All of which are based on a common set of industry standards. We believe this platform approach will drive continued growth in our Creative Professional and Knowledge Worker businesses, while accelerating our momentum in newer growth markets, which we are investing, including the enterprise digital video, mobile and web conferencing. We are excited about the future of Adobe. We look forward to sharing more details with you about our strategy and progress during the coming year. I'll now turn the call over to Mike.

Thanks, Bruce. Before we start Q&A, I'd like to go over a few logistical items. First, starting with Q1 of fiscal 2007, we've decided we will no longer provide a regular intra-quarter business update. Second, we are also announcing today that we're changing the date of our annual financial analyst meeting. The new date is Wednesday, March 28, and the location will be in New York City. We are moving the date to March 28, to coincide with a major customer event that week. An email invitation will be sent out later in February. We have posted several documents on our Investor Relations web page related to our earnings report today. They include today's earnings release, our updated investor data sheet and a table providing reconciliation for GAAP to non-GAAP financial data. To access these documents and other investor-related information, you can go to our website at www.adobe.com/adbe. For those who wish to listen to a playback of today's call, a web-based Acrobat Connect archive of the call will be available from the IR page on adobe.com later today. Alternatively, you can listen to a phone replay by calling 888-203-1112, with conference ID number 6079884. Again, the phone number is 888-203-1112, with conference ID number 6079884. International callers should dial 719-457-0820. The phone playback service will be available beginning at 4 p.m. Pacific Time today, and ending at 4 p.m. Pacific Time on Monday, December 18, 2006. We would now be happy to take your questions. Operator?

Thank you. Today's question-and-answer session will be conducted electronically. (Operator Instructions). Our first question comes from Jay Vleeschhouwer, Merrill Lynch. Jay Vleeschhouwer - Merrill Lynch: Thanks, good afternoon. Bruce, I would like to ask you about the product launch plans around CS in the spring. Specifically, it appears you are going to have multiple iterations of Creative Suite. We think, will you combine all the different bundles under the CS umbrella. The question is, would you expect to have more bundles, more segmentation than you had to date? And if so, could you talk about any issues that -- with respect to positioning or pricing or messaging around a increasingly discrete or segmented product line? And secondly, with respect to the Mac part of the business, to date it has been relatively weak as we know. You have commented on that in previous quarters. Is it fair to assume that with the new launches next year that we should see an equal and offsetting rebound in the Mac part of the business by comparison to the weakness we have seen thus far this year?

So, Jay, this is Shantanu. I will take that question. First, with respect to the product launch plan for the next version of Creative Suite 3, we are excited. We have been talking to a number of customers and we have got some really good feedback about rationalizing the various offerings. And it's clear to the Creative customers that, whether they be print professionals, whether they be web professionals, people doing video, as well as mobile, that they are excited about our ability to provide more of an integrated workflow, as well as some really innovative features. So, what you can expect from us when we announce CS3, is really taking into account all of that different feedback that we have got and better targeted products to meet the needs of all of those customers. We also hear increasingly from a number of the Creative professionals that they actually want the entire suite of products and are excited about our ability to bring them the entire suite of products in a particular offering. So, while we are not giving more specifics about the CS3 launch, we are excited it will start in Q2 as Bruce mentioned in his prepared remarks. And we will see the bulk of the products shipped in Q3. With the respect to the Mac, yes, we've certainly expect that as the entire suite of products becomes Mactel savvy and Mactel aware, that Mac customers who have held off moving to the Creative Suite will move to it. Frankly, I think getting Photoshop beta out there also enables a number of those customers to start out their transition with the beta version.

Some additional color, Jay, as it relates to the number of suites compared to the number of different bundle configurations we have today and something that we are not being specific on. But clearly moving away from bundles to more integrated suites is one of our objectives, and we will do that with the Creative Suite 3 launch. So as we entered this year, we had bundles like the video bundle and web bundle. You can imagine some of those bundles, the loosely connected shrink-wrap offerings turning into different -- in different configurations as an integrated solution. As it relates to Mactel, I think when you look at -- when our customers look at the performance of Photoshop CS3 running, even though it's in beta, running on a Mactel CPU, they will be extremely impressed with the performance enhancements, let alone all the new features that are in that product. I believe it's something like 44% quicker on a Mactel versus a previous G5 CPU. Jay Vleeschhouwer - Merrill Lynch: And just lastly for clarification, is there anything in your '07 outlook that encompasses a business or product effect from Apollo or is it still going to be in the development phase and market development phase throughout next year?

Well, we are really excited about Apollo and at Macs we've got tremendous feedback Jay. The '07 outlook does not take into account specific revenue associated with Apollo. Remember, however, that clearly anybody who starts to create the next generation of rich Internet applications using Flex and Flash, does with a path towards Apollo and clearly any acquisition or whether it's Flex Builder or Flex Data Services from Adobe is a good path towards Apollo. Jay Vleeschhouwer - Merrill Lynch: Thank you.

Our next question comes from Steve Ashley, Robert Baird. Steve Ashley - Robert W. Baird: Hi guys. I was wondering if you'd be able to give us a comment on the outlook in the first quarter for Acrobat revenues? And again, qualitatively should we expect those revenues to be up sequentially or down sequentially?

So, Steve, while it's still -- while it's still clearly early for this particular version, the initial results as we've said, have been really positive as well as customer reception and analyst review. With four weeks of shipment of Acrobat 8 in the quarter in Q4, we achieved record revenue. Since Q1 will be our first full quarter and we will have all the other localized languages available, we do expect a sequential increase in Q1 from Q4. And what we have seen in all prior versions is that, the quarter after the first full quarter of shipment, it declined slightly. But then, as always achieved a new plateau for quarterly revenue, and that's what we expect moving forward for Acrobat 8. Steve Ashley - Robert W. Baird: Perfect. And then I was wondering if we could get some more color on the hobbyist products. Just again, maybe sizing it as a percentage of total, is it now maybe greater than 5 or 10% of revenue? And I understand there was a seasonal element to that. And if you could talk about kind of the -- the kind of growth you might have seen year-over-year in those products?

Sure. So, the hobbyist business right now, which is Premiere Elements and Photoshop Elements, that's over a $100 million business for Adobe. And I think it's clearly being driven by what we are seeing, which is trends as people move to both, digital photography and increasingly video. I think the number -- amount of video that's being shared over the Internet is dramatically increasing and our products really enable us -- enable customers to effectively both edit, as well as share this digital content. So, Bruce has been talking about video publishing opportunity for quite a while now, and I think we are seeing with both broadband exploding, as well as digital cameras and the ability to use that technology on standard PCs, that more people are using video.

In terms of year-over-year growth, Steve, we don’t break that out, but it is up year-over-year and we continue to gain market share at least based on the [MPV] data that we have access to from our competitors. And we do continue to expect it to be a growth category for us. Steve Ashley - Robert W. Baird: And just lastly, in your revenue segments, the other revenue up nicely 72 million. You talked about monetizing some of your downloads. I’m assuming that's the Google relationship and others, how should we think about the sustainability of that revenue level we saw in the fourth quarter? And you said something that's going to spike up and down or kind of grow. Just again, how we might think about that? Thank you.

Well, there are two elements to that segment, Steve. The first is PostScript, which we said had a slight year-over-year increase. The second is, some of the monetization revenue that we're seeing from Google. The terms of that contract are confidential. So, we really can't share more at this point about the revenue that will be reported in that segment.

And keep in mind there is other products in there. There is quite a few products in that category, including some important products, while not major revenue producers, products like FrameMaker for a technical publishing used by many enterprises around the world, Captivate, which is used for eLearning. When you add it all up, it ends up being a nice piece of revenue for us. So, it will vary quarter-by-quarter. Steve Ashley - Robert W. Baird: Great, thank you.

Our next question will come from Tom Ernst, Deutsche Bank. Tom Ernst - Deutsche Bank: Good afternoon, gentlemen. Thanks for taking my call.

You're welcome, Tom. Tom Ernst - Deutsche Bank: Want a follow-up. You've talked in the past and we discussed a little a little here, the expectations of seeing some lift from the -- for the Mac-Intel customers and that’s clearly something we're looking forward to. I am wondering, particularly with the strong outlooks for next quarter on Creative Solutions, are you able to capture -- how painful do you think it's been recently and might that intensify a little bit? And, how did you get comfortable with the -- what looks like a very strong outlook ahead of the launch?

Well, specifically, Tom, with respect to our outlook for Q1, we are expecting Acrobat to be sequentially up. The enterprise business, we are expecting to be sequentially up. The Creative business and Creative Suite, we have been stating that we expect to see a sequential decline until the launch of CS3, and in Q1 we do expect a sequential decline in that business, as opposed to that business being up. Tom Ernst - Deutsche Bank: And do you have a -- I've recognized you have a good read into your channel. Do you have a way that you have been able to quantify that to get your own? Because it looks like just a modest sequential decline, which is a great news for us and I am wondering how -- how solidly you feel about that at this point.

Yes. Tom, that has been factored into the guidance that we provided. So, as Shantanu said, we do expect a decline. We do get sell-through data from our distributors and we do manage and watch the channel inventory very carefully and that does get audited by both our audit committee and the external auditors. So we feel good about our forecast. Now, clearly we are expecting that more users will hold off as we get closer to the actual launch of CS3, since we have been so public about it. Now, if that doesn’t happen, obviously we will be closer to the higher end of the range than the lower end of the range. So, all of that has been factored into the guidance that we are providing today. Tom Ernst - Deutsche Bank: Okay, perfect, thank you. One brief follow-up as well. It looks like some of the strength this quarter was also in Europe, with a little bit of super seasonal strength there. Anything in particular you saw that drove that stronger in Europe?

Well, keep in mind, we did have a some small amount of FX benefit in Europe. It was about $9 million that was offset by the FX exchange rate with the Yen, where we actually lost a few million. So that helped us a bit. But, if you look at as a percentage of our overall revenue and you compare that to a year ago, it's pretty consistent from region to region. In fact, we think that overall it's been a very solid market for us or a solid economies. But one thing that did benefit the US and benefited parts of Europe is that, the English version of Acrobat shipped a little bit earlier than the Japanese versions of Acrobat. Tom Ernst - Deutsche Bank: Thanks again.

We'll go next to Rick Sherlund, Goldman Sachs. Rick Sherlund - Goldman Sachs: Thanks. I wondered if you could just touch on the timing difference between Creative Suite for English and the other language versions. How much of a time differential would you expect there?

Rick, before I turn that question over to Shantanu, I want to congratulate you and wish you well on your retirement from Goldman Sachs. Rick Sherlund - Goldman Sachs: Thank you. Yes, correct, retirement from Goldman Sachs, but not retirement.

Rick, so we aren't breaking that out. Traditionally what we have done is after getting English out, a couple of weeks later we get French, German and Japanese versions out a little bit later after French and German. So, that's what we call our Tier 1 languages, and than the Tier 2 languages ship a little later. But as we get closer to the launch of CS3, we will be able to provide more color. Rick Sherlund - Goldman Sachs: It just seems like you are kind of fine tuning if you are saying, we'll get the English language out in Q2, but the other languages out in Q3. Just makes me a little nervous that, gee, if that’s we are only talking a couple of weeks, how confident are we that we are going to meet that window and actually get it out in the May quarter?

Well, at this point we are confident of our ability to ship CS2 in the second quarter of fiscal 2007. Clearly, as we were trying to provide some color into what the revenue would be for Q2 versus Q3, Bruce was trying to clarify that we would expect to see more revenue associated with the Creative Suites also in Q3.

Yes. We have a -- at this point in time, we have a lot of confidence in those dates. If you look at our history, track record, we've done a pretty good job of meeting our delivery dates on the major products. The other thing to keep in mind, we gave ourselves more time for this release to allow us to both, optimize and make sure we were compatible with the new operating systems and to also make sure that we could both add great new features, as well as integration features. So the amount of time between releases is approximately 24 months. So we feel very good about meeting that date. In fact, the reason we could make the PhotoShop CS3 Beta available is because how solid it is at this point in time. Rick Sherlund - Goldman Sachs: Okay. And should we expect margins to increase sequentially throughout the year along with the revenues?

Yes. We are not breaking those margins out per se, because we haven’t given specific. But that's a logical conclusion, as we've seen historically as our revenues increased, especially as they increased significantly through the years, we are not able to spend it quickly -- or as quickly and as wisely as we would want to. So, you can't expect the operating margins for the most part to continue to expand as we move through the years -- through the year. Rick Sherlund - Goldman Sachs: Thank you.

We'll now go to Walter Pritchard, Cowen. Walter Pritchard - Cowen: Great. Wondering if you could just -- Bruce, maybe on the headcount, looks like you've hired just about 200 people every quarter this year. Is that the level you feel like is the right level going forward? Is that sort of couched by your ability to integrate those people or do you think you are hiring above or below trend line in '06?

That's something that we are not commenting on. Keep in mind many of those people now work in lower cost geographies, so that needs to be factored into any analysis that you're doing. But, in terms of specific headcount growth, that's something that we're not commenting on. We will continue to watch our expenses carefully, and at the same time we want to make sure we are investing in the future, the bulk of our headcount additions continue to be in research and development. Walter Pritchard - Cowen: Okay. And then just relative to the first public beta that you're doing here. I mean, beyond I guess maybe the obvious point ahead, some adoption into earlier quarters as people become more comfortable, is there any other change in buying behavior you expect that to induce?

No. We are excited about the progress that we've been able to make and to enable our customers to really take advantage of the Photoshop Beta. Remember, that only current customers of CS2 can use the beta. So we think that in addition to getting a whole bunch of feedbacks, we also generate customer goodwill.

Yes, and just to clarify, we are not pulling revenue in. That beta does expire and anybody who want's to use CS3 Photoshop after, I believe, the May timeframe, has to go out and either upgrade from their current CS2 product or buy a new product. Walter Pritchard - Cowen: Understood. Yes, I guess, I’m just assuming more people would probably upgrade sooner knowing that they're comfortable with it.

What's interesting, Walter, is that when you look at the dynamics around that whole business, the amount of rich media creation that’s going on from both, aspiring Creative professionals who are at home or at work or people doing marketing within corporations or people doing marketing within the publishing houses or in graphic shops, they are trying to create and enhance more rich information than ever before across all different types of both media types and platforms. So you have to factor that dynamic into just the product upgrade. And we believe that dynamic, that variable will continue to drive our overall Creative's business well beyond just the release of Creative Suite 3. Walter Pritchard - Cowen: Great. And then just lastly, Bruce, any comment on how close you are on both the CFO slot and Head of Sales slot that you looking to fill here?

Yes. So, first of all in terms of CFO slot. I just want to make sure everybody understand how disappointed we're that Randy Furr is leaving the organization. It's something that we do not wanted, something our Board do not want to see. And I suspect there is probably a piece of Randy and potentially a large piece of Randy that even want to have to make that decision. So, I want to make sure that that was absolutely clear. We are aggressively looking for replacement. We want to make sure that we hire somebody of the caliber of Randy. We are seeing some attractive candidates, but we want to make sure it's the right person. Fortunately, we have a good team in place. We have had a good team in place and with the addition of Rich Rowley as Controller, we're enhancing that team. So, I am optimistic, but I want to make sure we get the right candidate in place.

On the sales side, what I expect to have somebody who heads our global field operations starting January 1. Walter Pritchard - Cowen: Great, thanks a lot guys.

Our next question comes from Adam Holt, JP Morgan. Adam Holt - JP Morgan: Good afternoon. You all had a particularly strong deferred revenue number, up about 30% sequentially. I wanted to get your sense for what the relative contributions were there between 7 -- Acrobat 7 activity in front of the 8 release in currency. And if it is, to the extent that there was a lot 7 buying, how do you see that rolling off the balance sheet into the P&L?

So a lot of that deferred revenue is the result of Acrobat 8 shipping late in the quarter and shipping a lot of it late in the quarter. And we do reserve or defer some revenue for the updates that could potentially go out for bug fixes and we typically reverse those out in the following quarter. Adam Holt - JP Morgan: Okay. And then just secondly, you all made changes to your licensing manager for Acrobat 8. I was wondering if you could talk about any impact that might have had on recognized revenue in the quarter and whether or not there is any lasting impact into the upcoming quarter from those changes?

Certainly, there is no issue in terms of recognizing our revenue. It did not change any behavior in any respect.

In terms of the specifics, Adam, what we have done is introduced in Acrobat 8 the ability for larger enterprises to be able to track the number of copies of Acrobat that they have installed and deployed within the enterprise, and that’s what was rolled out. There have been no technical issues with the rollout. We are working through some of the communication issues, but clearly it's something that -- as licensing has continued to grow with Acrobat and all of our other products, we want to enable enterprises to keep track of deployment within the enterprise. Adam Holt - JP Morgan: Just if I could, one final question on the mobile business, which saw a pretty nice sequential uptick as well. Should we be thinking about that number as a baseline looking forward? And can you talk a little about some of the key drivers for the nice sequential uptick in mobile business? Thanks.

There is a couple of dynamics that are going on in our mobile business that one needs to be aware of. First of all, we still are dealing with some purchase accounting issues, so next year we anticipate about $15 million of what would have been revenue for Macromedia, gets lost from a P&L perspective to methods in purchase accounting. The second thing to remember is that Macromedia had a number of large deals in which the customer and there were instructions in such a way where the customer prepaid for x number of devices and that will take us at least another year and possibly a bit longer for us to work through those prepayment advances to those devices shipping. So, I would not expect -- while we are not breaking out revenue by business segment in terms of targets for the year, I would not expect large increases through fiscal year '07 because of that. The other is, we have just begun to market and start getting adoption of the FlashCast server into the carrier market as we are doing with NTT DoCoMo. That will take us a couple of years for us to realize the revenue from that, because the time it takes in which to install, educate and get the ecosystem up and running does take us time. Adam Holt - JP Morgan: Great. Thank you.

Having said that, it's great to see the momentum we are having. NTT DoCoMo, which launched their i-channel service back in October, which is based on our FlashCast server, is generating on an average about $4 per user per month, and they now have 5 million of them. And our revenue model on the FlashCast server is either one based on number of subscribers or based on the amount of content they consume and we get a percentage of that consumption. So today, we could about DoCoMo. We look forward to announcing additional carriers as we move through next year. Adam Holt - JP Morgan: Great. Thank you.

Our next question comes from Heather Bellini, UBS. Heather Bellini - UBS: Hi. Thank you and congratulations, Bruce and Shantanu. I just wanted to ask you a question. If you could talk to us a little bit about how you expect the CS3 cycle to play out versus the cycle you saw with CS1 and CS2? And if you could give us a sense of why you feel that way? And also, I just wanted to confirm Shantanu, would the CS3 launch follow the similar product introduction that you normally do for your other products where you would drain inventory and replenish the channel all in the same quarter? Thank you.

Heather, first, with the CS3 cycle. We do believe that if you look at some of the conditions that CS3 is going to be introduced in, that the demand for that product we expected to be a fairly good. Firstly, there's the Mac-Tel transition. Secondly, there's Vista that is going to be come out, and in the past we've seen as people buy new hardware, they do also make software purchases. Third, is clearly there is a tremendous level of excitement associated with the fact that this will be the first major release of the products with both the Adobe and former Macromedia products offered, as Bruce said earlier, in an integrated suite. So, from the perspective of customer adoption, and we've been able both at Macs as well as with other early beta customers to get feedback, and the feedback has been really positive. So, we are excited about the prospects for CS3. With respect to the launch, yes, typically what we do is we try and make sure that after we announced the product that we have both done the prudent thing by making sure there isn’t too much excess inventory in the channel, and we are able to get enough product out there to satisfy end user demand. Heather Bellini - UBS: And can you give us a little bit more clarity in terms of how big you expect this to be, whether it's more similar to CS1 or CS2? I think that's a big question on the minds when people are modeling.

So, Heather, what we'll do is provide more color after we announce the products. I think, it's clear if you look at the dynamics that Shantanu just talked about, the pent-up demand, the 24-month cycle, the compatibility and/or optimization to operating systems, the integration with the Macromedia products, the added features, one would suspect that this should be the biggest release ever. The reality is, for Adobe this is the biggest release ever, and for the industry for desktop software this is probably the biggest release of all time. So, we are very optimistic, we're excited and we'll share much more with you when we actually announce the product. Heather Bellini - UBS: Great. Thank you very much.

Our next question comes from John McPeake, Prudential. John McPeake - Prudential: Hey guys. Nice quarter. I just have one question here. It's around the Flash opportunity for the company beyond this product cycle. I think, Bruce, you've talked about it as potentially a bigger opportunity than Acrobat over time. And I was hoping you could give us a little more color as to, how would FlashCast, Flex and maybe some of the runtimes you get from Apollo that that could be another leg here beyond the product cycle?

So, John, let me first take a stab at why we are excited about the Flash opportunity. Clearly, if you look at the ubiquity of the Flash player, it is on virtually every single desktop that’s out there. And with the statistics that we just gave with respect to mobile and alternate devices, we are seeing the same kind of adoption on alternate devices. In terms of monetizing the Flash player ubiquity, there are multiple opportunities for us in addition to the authoring application, which is clearly used to generate all that Flash content for the web. Flash Video, we are seeing increased use of Flash Video. If you go to abc.com or Disney, increasingly all the video that’s available on the web is through Flash Video, and we also think that over time, that’s going to be a large opportunity on mobile devices. If you look at web conferencing in real time collaboration, increasingly customers around the world want the ability to do real time collaboration and web conferencing. And the fact that there is both audio as well as video built into Flash, we think is a tremendous advantage for us. Rich Internet applications as the next generation of the web emerges and we find all the limitations that exist in today's web infrastructure and standards, Flash is again with everything we've done with Flex, as well as with MXML, which is the XML description language to create this next generation applications, we think they are uniquely positioned which should result in both opportunities for us on the tooling side, as well as on the server side, just like video also has resulted in opportunities on the streaming and server side. And all of this culminates in the opportunity associated with Apollo, which is, as we deliver the next generation client, leveraging everything we've done with PDF and Flash, we just think that a brand new set of applications will emerge as well that leverage this platform.

And we will continue to look for ways of monetizing the Flash clients in non-PC devices. For example, both the Sony PlayStation 3 and new Nintendo Wii, currently include the Flash player in which get a royalty on both. And, of course, we will continue to sell FlashCast like service to the carriers to take advantage of those non-PC devices. And ultimately, we will be able to do the same for both set-top device manufacturers and cable providers. John McPeake - Prudential: You see this as an accelerator to your growth in '08 without talking about guidance that far out?

We will touch much more on '08 and '09 in the future at the analyst meeting in March. John McPeake - Prudential: Okay. Thanks guys.

And our next question comes from Brent Thill, Citigroup. Brent Thill - Citigroup: Thanks. Just on Project Apollo. I think you have been unclear that the components -- some of the components like Flash and Flex already shipping. But how do we think about this is in terms of our release? Is this going to be partly embedded in CS3 or is this something that comes at a later point after CS3 in a broader stack for the development community?

I think, Brent, you will see a couple of things this year. Again, this year from revenue perspective, we don’t expect the revenue to come from Apollo per se. But the things that you might expect from Adobe this year is more of a public beta of an Apollo client runtime, which enables people to create new applications. We certainly started showing that with MAX, and we showed some really interesting applications like the eBay application that was built on top of Apollo. The other thing you've seen us do this year already to position Apollo for the next generation of web applications is to partner with Mozilla on the ActionScript VM engine, so that we can have both web developers, as well as Flash developers standardize on an open standard which will enable more cross-platform playback. With respect to CS3 in particular, we will continue to make sure that the interaction between the designer and developer workflow, which is something really important to this community, is enhanced. And again, for example, what we showed with the ability to take Illustrator content and take it into Flex Builder and vice versa showcases what we can do to enable those designers and developers to work collaboratively. So, you will see a lot of activity this year, but really Apollo, the big news will be when we do a public beta.

What you want to do is think of Apollo the same way or a similar way in which you think about the free Adobe Reader and the Flash Player, it's a client. What we do is, we have an opportunity to both, take existing applications and build new applications that take advantage of that unique environment and to sell tools to help others build unique applications the same way that we were able to leverage Reader with Acrobat and LiveCycle. The same way we've been able to leverage the Flash Player with applications like or servers like FlashCast, Flex, applications like Flash Authoring and so on. So, by having a client that takes our current clients to the next level and takes advantage of the current format, PDF and Swift, which is the flash format, we believe that opens up a wealth of opportunities well into the future. Brent Thill - Citigroup: Okay, just a quick follow-up on margin guidance. If that holds true, your margins would be roughly flat over the last three years. I think, it's -- considering the meaningful impact of the CS3 launch, how are you keeping these margins constrained? Where is this money flowing?

Well, as we indicated earlier, we do expect that over the year, you will see margin expansion in this quarter somewhere between 33 and 34 with an overall average of 37 to 38% for the year. What we want to do is make sure that we continue to invest in the many, many growth opportunities ahead of this company. We have had four years of double-digit growth. We anticipate yet another year of double-digit growth in '07, and we want to continue to feel that. So, while our operating margin might not be increasing at the rate that some of our shareholders would like, because our revenue growth continues to increase at a substantial rate, our overall earnings continue to be impressive. And that's the strategy that we prefer to take. Brent Thill - Citigroup: Thanks.

Our next question comes from Philip Rueppel, Wachovia Securities. Philip Rueppel - Wachovia Securities: Great, thank you. Regarding the public beta, could you -- do I understand correctly that there are no plans for other pieces of CS3 on the public beta side? And secondly, the decision to do one of these, was it driven by the desire more to have a broader testing audience or general audience or to give relief to the Mac customers that are really kind of dying to use the Mactel platform?

Sure. If the question was specifically about the PhotoShop CS3 Beta, it was really driven by our desire to get customers to really participate with some of the new innovative features that we are developing, as well as help them transition. There are some hardware and software transitions that are coming in the industry, both Mactel as well as Vista, and that's the reason for us to both generate goodwill, as well as get their help in making sure that transition is really seamless. There are no other announcements that we are making with respect to public betas at this time. Philip Rueppel - Wachovia Securities: Okay. And then given that public beta requires customers to be on CS3, do you anticipate any meaningful upgrade activity over the course of the next couple of months from folks that are still on older version CS1 or other versions of Photoshop?

Yes, we haven’t factored that as a variable in our guidance. Could there be some customers that are so anxious to get their hands on the CS3 Beta for Photoshop that will upgrade to Photoshop CS2 or CS2 from either CS1 or from standalone products? Yes, we just hadn’t factored that into our financials. Philip Rueppel - Wachovia Securities: Great. That's it for me. Thanks.

We'll now go to Ross MacMillan, Jefferies. Ross MacMillan - Jefferies: Yes. Thank you. I just wanted to go back onto Rick's question regarding both the timing of CS3 and the impact to revenues between Q2 and Q3. Is there any more color you can give us to help us understand the kind of magnitude of the uplift sequentially, if you will, into Q3 somehow to frame that just so we know what sort of size difference in absolute revenues we're talking about?

Yes. Certainly, we'd typically see a seasonal decline in Q3 given the way our quarters fall out, the fact that's a June, July, August quarter, and we have a lot of strength in Europe, as well as the US, where summer tend to fall off a bit. And we are not being specific in terms of the actual numbers, but because we will have a full quarter of shipment in Q3 of the English product and we intend to at least today ship the foreign language products, especially the major ones, French, German and Japanese, very early in the quarter, we do believe today that that will be a significant uptick Q3 over Q2. Ross MacMillan - Jefferies: Okay. Thank you. And maybe just one quick follow-up, and it's more a housekeeping. But I know for Q1 you are guiding to share count of 609 to 611. But you exited Q4 with 602 diluted shares. Can you just help me understand the magnitude of the uplift? Are you -- is that simply on some assumptions you have made or are you not going to buyback stock, or is there something else that is impacting that share count?

Yes. There is a number of variables that go into that calculation. We do have our normal stock buyback plan and how much stock we buy back in any given quarter certainly impacts that. The prices of stock impacts that and we certainly try to make our best guesstimate, but that’s difficult task to do. And then how much stock that gets sold as part of the employee stock option plan. Ross MacMillan - Jefferies: Great, thank you.

Our next question comes from Gene Munster, Piper Jaffray. Gene Munster- Piper Jaffray: Hey, good afternoon and congratulations. Quick question. It seems that the Creative segment was particularly strong in the November quarter, and was that because of the professional side of the Creative or was it the consumer side? And if was the pro, what logic would you put around strengths this late in the cycle?

So, Gene, firstly the Q4 numbers, we were at the higher end of our targets, both as a result of the hobbyist product having record revenue. But in addition to that, the CS decline was not as much as we had expected. As we had stated and we also did release a new version of the bundles with the new Acrobat product late in the quarter. But again -- and we had expected frankly between Q3 and Q4 the normal sequential uptick, because Q3 is a seasonally weak quarter for us in Europe. We do expect Q1 to be sequentially down, again an anticipation of CS3.

In terms of who is buying it because of the world in which we are living in, it’s a combination of both the professional as well as the aspiring professional. People want to express themselves when you look at the social expression side like YouTube, then MySpace and others, they want the best. And then you look at people who make a living creating content and creating website and doing video, many of them cannot wait until CS3, they would need the tool today to get their job done, which despite the fact that we are not optimized or not fully compatible with Mactel, people continue to buy the solution. Again, had we been compatible, we would have seen more revenue. We do think we are losing some, because we don’t have that compatibility and because we have already announced CS3 not formally, but certainly in venues like this. Gene Munster- Piper Jaffray: How is CS2 relative to expectations excluding the CS2 with Acrobat 8?

Well, again, we are not breaking all of that out, Gene. Overall, as I've said CS2, the Creative business segment was -- we were pleased with what we saw in the hobbyist products and the decline was less than expected. Gene Munster- Piper Jaffray: Great, thank you.

Operator, we will take two more questions. We are running tight on time.

Thank you. Our next question will come from Sasa Zorovic, Oppenheimer. Sasa Zorovic - Oppenheimer: Yes, thank you. Could you provide us please with a little bit more detail as to or the reason why you are going to be stopping to provide the intra-quarter update?

Yes. First of all, we are one of the few, Sasa, that actually provide an intra-quarter update. The only other large organization, I am aware of, I believe, is now Texas Instrument. We've gotten feedback from a number of our shareholders, especially the longer-term shareholders, that having an intra-quarter update has provided a degree of volatility that they believe hasn't really served us well and we have come to believe the same. So, we are going to come inline with just about everybody else and just do one earnings call a quarter instead of what was becoming two earnings calls a quarter. Sasa Zorovic - Oppenheimer: Okay. And then finally going back to one other things that you already mentioned, mainly, the impact of currency which was favorable in Europe, negative in Japan. But to quantify that, I think there was -- I guess, reading it quite really was a slight positive impact from currency?

Yes. So, if you look on a fiscal year, we actually lost $35 million in total due to unfavorable currency. So, for a fiscal year it was tough on us. Q4 was little bit better. We had a net gain of approximately $7 million. Sasa Zorovic - Oppenheimer: And on the bottom line?

That was in net gain and in the bottom line in terms of revenue, and then obviously there falls into expenses or profits. Sasa Zorovic - Oppenheimer: Okay. Thank you.

And our final question comes from Dan Cummins, Banc of America. Dan Cummins - Banc of America: Thanks. Relative to the other question that was asked about prosumer, are you assuming roughly 40% or it maybe a little bit better take rate from prosumer on CS3? I guess that would be consistent with the history over CS1 and CS2? And then, with respect to kind of Q2, Q3 revenue, if we took as much as 50 million, let's say, out of Q2 and put it in Q3, we would still be left flat Q-over-Q, Q3 into Q4. And I thought Bruce said that Q4 would definitely be -- was projected to be the highest revenue quarter in the year. So, I am wondering do we need to take out as much as, let's say, $50 or $75 million of revenue out of Q2 from the consensus?

First, with the respect to the first question on the prosumer, what we've said is that the Creative Suite, if you look at the installed base, that number of the people who have bought the Creative Suite are not what would traditionally be described as Creative professionals, but they are prosumers. In terms of the adoption of Creative Suite in the first few quarters, we would expect that the Creative professionals would move over and we would continue to see people who are prosumers, hobbyist, who are interested in digital content, continue to buy CS3. But the major push would be from Creative professionals early in the cycle.

In terms of the Q2, Q3, Q4 revenue split, so let me try to provide a little bit more color. I am not sure I'm going to help you fully here. So, Q4 is expected to be our strongest revenue quarter of the year. Q2 will be up significantly because of the launch of the English product, and keep in mind, our English product not only serves the North American market, which represents about 50% of our revenue, but there are other markets in Europe that are -- that use English language product like UK, as well as other regions like Australia. With that said, because we'll have a full quarter of shipment of the English product in Q3, and the French, German and Japanese products will ship early in that quarter and will be available for the majority of the quarter, we do expect a significant increase. And it is our intent at the March earnings call to provide you specifics on Q2 guidance, which will then help you with. Dan Cummins - Banc of America: Okay.

Yeah. One thing I just want to clarify is that, yes, we did have $7 million gain this quarter on FX. But we also had increases of expenses, because our expenses are also -- are penalized, because they end up being higher.

Well, this concludes our call today, and we thank everybody for joining us.

Thank you. Once again, ladies and gentlemen, that does conclude today's conference. You may now disconnect.