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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________
 
FORM 10-Q
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, 2019

 or
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                   to                   
 
Commission File Number: 0-15175
 
ADOBE INC.
(Exact name of registrant as specified in its charter)
________________________________
Delaware
(State or other jurisdiction of
incorporation or organization)
77-0019522
(I.R.S. Employer
Identification No.)

345 Park Avenue, San Jose, California 95110-2704
(Address of principal executive offices and zip code)

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

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Common Stock, $0.0001 par value per share
ADBE
The NASDAQ Stock Market LLC
(NASDAQ Global Select Market)
________________________________
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x  No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x  No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x
Accelerated filer o
Non-accelerated filer o
(Do not check if a smaller
reporting company)
Smaller reporting company o
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x
The number of shares outstanding of the registrant’s common stock as of June 21, 2019 was 485,438,762.
 



ADOBE INC.
FORM 10-Q
 
TABLE OF CONTENTS
 
 
 
Page No.

PART I—FINANCIAL INFORMATION
 
Item 1.

 

 

 

 

 

 

Item 2.

Item 3.

Item 4.
 
 
 
 

 PART II—OTHER INFORMATION
 
Item 1.

Item 1A.

Item 2.

Item 4.

Item 5.

Item 6.





 

2

Table of Contents

PART I—FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ADOBE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
 
May 31,
2019
 
November 30,
2018
 
(Unaudited)
 
(*)
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
2,082,910

 
$
1,642,775

Short-term investments
1,396,069

 
1,586,187

Trade receivables, net of allowances for doubtful accounts of $12,379 and $14,981, respectively
1,272,668

 
1,315,578

Prepaid expenses and other current assets
590,998

 
312,499

Total current assets
5,342,645

 
4,857,039

Property and equipment, net
1,205,020

 
1,075,072

Goodwill
10,697,874

 
10,581,048

Purchased and other intangibles, net
1,917,149

 
2,069,001

Other assets
503,221

 
186,522

Total assets
$
19,665,909

 
$
18,768,682

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 

 
 

Trade payables
$
169,101

 
$
186,258

Accrued expenses
1,314,998

 
1,163,185

Debt
3,145,668

 

Income taxes payable
45,778

 
35,709

Deferred revenue
3,011,552

 
2,915,974

Total current liabilities
7,687,097

 
4,301,126

Long-term liabilities:
 
 
 

Debt
987,938

 
4,124,800

Deferred revenue
122,522

 
137,630

Income taxes payable
637,733

 
644,101

Deferred income taxes
133,886

 
46,702

Other liabilities
165,040

 
152,209

Total liabilities
9,734,216

 
9,406,568

Stockholders’ equity:
 
 
 

Preferred stock, $0.0001 par value; 2,000 shares authorized, none issued

 

Common stock, $0.0001 par value; 900,000 shares authorized; 600,834 shares issued; 
486,273 and 487,663 shares outstanding, respectively
61

 
61

Additional paid-in-capital
6,050,800

 
5,685,337

Retained earnings
13,183,938

 
11,815,597

Accumulated other comprehensive income (loss)
(144,364
)
 
(148,130
)
Treasury stock, at cost (114,561 and 113,171 shares, respectively), net of reissuances
(9,158,742
)
 
(7,990,751
)
Total stockholders’ equity
9,931,693

 
9,362,114

Total liabilities and stockholders’ equity
$
19,665,909

 
$
18,768,682

_________________________________________ 
(*)
The condensed consolidated balance sheet as of November 30, 2018 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.
See accompanying notes to condensed consolidated financial statements.

3

Table of Contents

ADOBE INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
 
Three Months Ended
 
Six Months Ended
 
May 31,
2019
 
June 1,
2018
 
May 31,
2019
 
June 1,
2018
Revenue:
 
 
 
 
 
 
 
Subscription
$
2,456,097

 
$
1,923,131

 
$
4,761,064

 
$
3,716,489

Product
152,816

 
150,993

 
323,370

 
322,601

Services and support
135,367

 
121,236

 
260,792

 
235,217

Total revenue
2,744,280

 
2,195,360

 
5,345,226

 
4,274,307

 
Cost of revenue:
 
 
 
 
 
 
 
Subscription
296,476

 
186,355

 
584,507

 
351,040

Product
9,345

 
10,779

 
21,450

 
23,656

Services and support
101,667

 
84,210

 
198,817

 
165,550

Total cost of revenue
407,488

 
281,344

 
804,774

 
540,246

Gross profit
2,336,792

 
1,914,016

 
4,540,452

 
3,734,061

 
Operating expenses:
 
 
 
 
 
 
 
Research and development
475,958

 
374,128

 
940,595

 
722,897

Sales and marketing
848,927

 
646,215

 
1,630,445

 
1,227,172

General and administrative
219,334

 
178,040

 
435,443

 
348,480

Amortization of purchased intangibles
43,026

 
17,149

 
89,592

 
34,295

Total operating expenses
1,587,245

 
1,215,532

 
3,096,075

 
2,332,844

 Operating income
749,547

 
698,484

 
1,444,377

 
1,401,217

 
Non-operating income (expense):
 

 
 
 
 
 
 
Interest and other income (expense), net
2,558

 
11,599

 
6,824

 
28,271

Interest expense
(40,577
)
 
(20,363
)
 
(81,170
)
 
(40,262
)
Investment gains (losses), net
(756
)
 
1,079

 
43,075

 
4,075

Total non-operating income (expense), net
(38,775
)
 
(7,685
)
 
(31,271
)
 
(7,916
)
Income before income taxes
710,772

 
690,799

 
1,413,106

 
1,393,301

Provision for income taxes
78,179

 
27,632

 
106,272

 
147,058

Net income
$
632,593

 
$
663,167

 
$
1,306,834

 
$
1,246,243

Basic net income per share
$
1.30

 
$
1.35

 
$
2.68

 
$
2.53

Shares used to compute basic net income per share
487,535

 
491,914

 
487,795

 
491,993

Diluted net income per share
$
1.29

 
$
1.33

 
$
2.65

 
$
2.50

Shares used to compute diluted net income per share
492,212

 
498,252

 
493,200

 
499,166



  See accompanying notes to condensed consolidated financial statements.


4

Table of Contents

ADOBE INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
 
Three Months Ended
 
Six Months Ended
 
May 31,
2019
 
June 1,
2018
 
May 31,
2019
 
June 1,
2018
 
Increase/(Decrease)
 
Increase/(Decrease)
Net income
$
632,593

 
$
663,167

 
$
1,306,834

 
$
1,246,243

Other comprehensive income (loss), net of taxes:
 
 
 
 
 
 
 
Available-for-sale securities:
 
 
 
 
 
 
 
Unrealized gains / losses on available-for-sale securities
9,910

 
(1,721
)
 
22,312

 
(24,869
)
Reclassification adjustment for recognized gains / losses on available-for-sale securities
67

 
75

 
192

 
197

Net increase (decrease) from available-for-sale securities
9,977

 
(1,646
)
 
22,504

 
(24,672
)
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
Unrealized gains / losses on derivative instruments
16,765

 
31,104

 
8,308

 
29,767

Reclassification adjustment for recognized gains / losses on derivative instruments
(8,675
)
 
(37
)
 
(16,872
)
 
(2,177
)
Net increase (decrease) from derivatives designated as hedging instruments
8,090

 
31,067

 
(8,564
)
 
27,590

Foreign currency translation adjustments
(11,999
)
 
(48,712
)
 
(10,174
)
 
(20,327
)
Other comprehensive income (loss), net of taxes
6,068

 
(19,291
)
 
3,766

 
(17,409
)
Total comprehensive income, net of taxes
$
638,661

 
$
643,876

 
$
1,310,600

 
$
1,228,834




See accompanying notes to condensed consolidated financial statements.



5

Table of Contents

ADOBE INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
(Unaudited)
 
 
Three Months Ended May 31, 2019
 
 
  Common Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income (Loss)
 
 Treasury Stock
 
 
 
 
Shares
 
Amount
 
 
 
 
Shares
 
Amount
 
Total
Balances at March 1, 2019
 
600,834

 
$
61

 
$
5,857,440

 
$
12,579,311

 
$
(150,432
)
 
(112,330
)
 
$
(8,414,895
)
 
$
9,871,485

Net income
 

 

 

 
632,593

 

 

 

 
632,593

Other comprehensive income (losses), net of taxes
 

 

 

 

 
6,068

 

 

 
6,068

Re-issuance of treasury stock under stock compensation plans
 

 

 

 
(27,966
)
 

 
224

 
6,153

 
(21,813
)
Purchase of treasury stock
 

 

 

 

 

 
(2,455
)
 
(750,000
)
 
(750,000
)
Stock-based compensation
 

 

 
193,360

 

 

 

 

 
193,360

Balances at May 31, 2019
 
600,834

 
$
61

 
$
6,050,800

 
$
13,183,938

 
$
(144,364
)
 
(114,561
)
 
$
(9,158,742
)
 
$
9,931,693




 
 
Three Months Ended June 1, 2018
 
 
  Common Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income (Loss)
 
 Treasury Stock
 
 
 
 
Shares
 
Amount
 
 
 
 
Shares
 
Amount
 
Total
Balances at March 2, 2018
 
600,834

 
$
61

 
$
5,208,588

 
$
9,830,399

 
$
(109,939
)
 
(107,954
)
 
$
(6,295,081
)
 
$
8,634,028

Net income
 

 

 

 
663,167

 

 

 

 
663,167

Other comprehensive income (losses), net of taxes
 

 

 

 

 
(19,291
)
 

 

 
(19,291
)
Re-issuance of treasury stock under
stock compensation plans
 

 

 

 
(22,500
)
 

 
194

 
5,646

 
(16,854
)
Purchase of treasury stock
 

 

 

 

 

 
(2,639
)
 
(700,000
)
 
(700,000
)
Stock-based compensation
 

 

 
145,587

 

 

 

 

 
145,587

Value of shares in deferred compensation plan
 

 

 

 

 

 

 
(1,054
)
 
(1,054
)
Balances at June 1, 2018
 
600,834

 
$
61

 
$
5,354,175

 
$
10,471,066

 
$
(129,230
)
 
(110,399
)
 
$
(6,990,489
)
 
$
8,705,583







6

Table of Contents

ADOBE INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)
(In thousands)
(Unaudited)
 
 
Six Months Ended May 31, 2019
 
 
  Common Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income (Loss)
 
 Treasury Stock
 
 
 
 
Shares
 
Amount
 
 
 
 
Shares
 
Amount
 
Total
Balances at November 30, 2018
 
600,834

 
$
61

 
$
5,685,337

 
$
11,815,597

 
$
(148,130
)
 
(113,171
)
 
$
(7,990,751
)
 
$
9,362,114

Impacts of ASC 606 adoption
 

 

 

 
442,319

 

 

 

 
442,319

Net income
 

 

 

 
1,306,834

 

 

 

 
1,306,834

Other comprehensive income (losses), net of taxes
 

 

 

 

 
3,766

 

 

 
3,766

Re-issuance of treasury stock under
stock compensation plans
 

 

 
(8,008
)
 
(380,812
)
 

 
3,135

 
86,026

 
(302,794
)
Purchase of treasury stock
 

 

 

 

 

 
(4,525
)
 
(1,250,000
)
 
(1,250,000
)
Stock-based compensation
 

 

 
373,471

 

 

 

 

 
373,471

Value of shares in deferred compensation plan
 

 

 

 

 

 

 
(4,017
)
 
(4,017
)
Balances at May 31, 2019
 
600,834

 
$
61

 
$
6,050,800

 
$
13,183,938

 
$
(144,364
)
 
(114,561
)
 
$
(9,158,742
)
 
$
9,931,693




 
 
Six Months Ended June 1, 2018
 
 
  Common Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income (Loss)
 
 Treasury Stock
 
 
 
 
Shares
 
Amount
 
 
 
 
Shares
 
Amount
 
Total
Balances at December 1, 2017
 
600,834

 
$
61

 
$
5,082,195

 
$
9,573,870

 
$
(111,821
)
 
(109,572
)
 
$
(6,084,436
)
 
$
8,459,869

Net income
 

 

 

 
1,246,243

 

 

 

 
1,246,243

Other comprehensive income (losses), net of taxes
 

 

 

 

 
(17,409
)
 

 

 
(17,409
)
Re-issuance of treasury stock under
stock compensation plans
 

 

 
(9,133
)
 
(348,729
)
 

 
3,439

 
100,039

 
(257,823
)
Purchase of treasury stock
 

 

 

 

 

 
(4,266
)
 
(1,000,000
)
 
(1,000,000
)
Stock-based compensation
 

 

 
281,113

 

 

 

 

 
281,113

Value of shares in deferred compensation plan
 

 

 

 

 

 

 
(6,092
)
 
(6,092
)
Impacts of the U.S. Tax Cut and Jobs Act
 

 

 

 
(318
)
 

 

 

 
(318
)
Balances at June 1, 2018
 
600,834

 
$
61

 
$
5,354,175

 
$
10,471,066

 
$
(129,230
)
 
(110,399
)
 
$
(6,990,489
)
 
$
8,705,583




See accompanying notes to condensed consolidated financial statements.

7

Table of Contents

ADOBE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Six Months Ended
 
May 31,
2019
 
June 1,
2018
Cash flows from operating activities:
 
 
 
Net income
$
1,306,834

 
$
1,246,243

Adjustments to reconcile net income to net cash provided by operating activities:
 

 
 
Depreciation, amortization and accretion
290,508

 
152,882

Stock-based compensation
388,987

 
280,902

Deferred income taxes
(10,682
)
 
(400,069
)
Unrealized losses (gains) on investments, net
(39,978
)
 
(1,502
)
Other non-cash items
1,970

 
3,623

Changes in operating assets and liabilities, net of acquired assets and assumed liabilities:
 
 
 
Trade receivables, net
85,683

 
140,681

Prepaid expenses and other assets
(142,520
)
 
(106,612
)
Trade payables
(17,269
)
 
3,656

Accrued expenses
116,994

 
46,535

Income taxes payable
11,929

 
459,943

Deferred revenue
130,320

 
139,725

Net cash provided by operating activities
2,122,776

 
1,966,007

Cash flows from investing activities:
 

 
 

Purchases of short-term investments
(139,346
)
 
(412,746
)
Maturities of short-term investments
320,629

 
352,078

Proceeds from sales of short-term investments
29,473

 
200,458

Acquisitions, net of cash acquired
(99,817
)
 
(14,614
)
Purchases of property and equipment
(210,760
)
 
(140,458
)
Purchases of long-term investments, intangibles and other assets
(23,680
)
 
(13,698
)
Proceeds from sale of long-term investments and other assets
1,656

 
2,897

Net cash used for investing activities
(121,845
)
 
(26,083
)
Cash flows from financing activities:
 

 
 

Purchases of treasury stock
(1,250,000
)
 
(1,000,000
)
Proceeds from issuance of treasury stock
73,912

 
64,682

Taxes paid related to net share settlement of equity awards
(376,706
)
 
(322,505
)
Repayment of capital lease obligations
(3,219
)
 
(815
)
Net cash used for financing activities
(1,556,013
)
 
(1,258,638
)
Effect of foreign currency exchange rates on cash and cash equivalents
(4,783
)
 
628

Net increase in cash and cash equivalents
440,135

 
681,914

Cash and cash equivalents at beginning of period
1,642,775

 
2,306,072

Cash and cash equivalents at end of period
$
2,082,910

 
$
2,987,986

Supplemental disclosures:
 

 
 
Cash paid for income taxes, net of refunds
$
107,938

 
$
73,508

Cash paid for interest
$
78,006

 
$
37,503



See accompanying notes to condensed consolidated financial statements.

8

Table of Contents

ADOBE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
(Unaudited)

NOTE 1.  BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
We have prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Pursuant to these rules and regulations, we have condensed or omitted certain information and footnote disclosures we normally include in our annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In management’s opinion, we have made all adjustments (consisting only of normal, recurring adjustments, except as otherwise indicated) necessary to fairly present our financial position, results of operations and cash flows. Our interim period operating results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year. These financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the fiscal year ended November 30, 2018 on file with the SEC (our “Annual Report”).
Reclassifications
Certain immaterial prior year amounts have been reclassified to conform to current year presentation in the condensed consolidated statements of cash flows.
Recently Adopted Accounting Guidance
On May 28, 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, Topic 606, requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The new revenue standard replaces most existing revenue recognition guidance in GAAP and permits the use of either the full retrospective or modified retrospective transition method.
On December 1, 2018, the beginning of our fiscal year 2019, we adopted the requirements of the new revenue standard utilizing the modified retrospective method of transition. Prior period information has not been restated and continues to be reported under the accounting standard in effect for those periods. We applied the new revenue standard to contracts that were not completed as of the adoption date, consistent with the transition guidance. Further, adoption of the new revenue standard resulted in changes to our accounting policies for revenue recognition and sales commissions as detailed below.
We recognized the following cumulative effects of initially applying the new revenue standard as of December 1, 2018 (in thousands):
 
As of
November 30, 2018
 
ASC 606 Adoption Adjustments
 
As of
December 1, 2018
Assets
 
 
 
 
 
Trade receivables, net of allowances for doubtful accounts
$
1,315,578

 
$
43,028

 
$
1,358,606

Prepaid expenses and other current assets
312,499

 
186,220

 
498,719

Other assets
186,522

 
273,421

 
459,943

Liabilities and Stockholders’ Equity
 
 
 
 
 
Accrued expenses
1,163,185

 
30,358

 
1,193,543

Deferred revenue, current
2,915,974

 
(52,842
)
 
2,863,132

Deferred income taxes
46,702

 
82,834

 
129,536

Retained earnings
$
11,815,597

 
$
442,319

 
$
12,257,916




9

Table of Contents

ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Below is a summary of the adoption impacts of the new revenue standard:
We capitalized $413.2 million of contract acquisition costs comprised of sales and partner commission costs at adoption date (included in prepaid expenses and other current assets for the current portion and other assets for the long-term portion), with a corresponding adjustment to retained earnings. We are amortizing these costs over their respective expected period of benefit.
Revenue for certain contracts that were previously deferred would have been recognized in periods prior to adoption under the new standard. Upon adoption, we recorded the following adjustments to our beginning balances to reflect the amount of revenue that will no longer be recognized in future periods for such contracts: an increase in unbilled receivables (included in trade receivables, net) of $24.8 million, an increase in contract assets (included in prepaid expenses and other current assets for the current portion and other assets for the long-term portion) of $46.4 million and a decrease in deferred revenue of $52.8 million, with corresponding adjustments to retained earnings.
We recorded an increase to our opening deferred income tax liability of $82.8 million, with a corresponding adjustment to retained earnings, to record the tax effect of the above adjustments.
Further, we had other impacts to various accounts which resulted to an immaterial net reduction to our retained earnings.
Adoption of the new revenue standard impacted our condensed consolidated statement of income for three months ended May 31, 2019 as follows (in thousands, except per share amounts):
 
As reported
 
Adjustments
 
Balances without ASC 606 adoption impact
Revenue
 
 
 
 
 
Subscription
$
2,456,097

 
$
(6,444
)
 
$
2,449,653

Product
152,816

 
(19,148
)
 
133,668

Services and support
135,367

 
(304
)
 
135,063

Total revenue
2,744,280

 
(25,896
)
 
2,718,384

 Operating expenses
 
 
 
 
 
Sales and marketing
848,927

 
8,068

 
856,995

Provision for income taxes
78,179

 
(3,747
)
 
74,432

Net income
$
632,593

 
$
(30,370
)
 
$
602,223

Basic net income per share
$
1.30

 
$
(0.06
)
 
$
1.24

Diluted net income per share
$
1.29

 
$
(0.07
)
 
$
1.22


10

Table of Contents

ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Adoption of the new revenue standard impacted our condensed consolidated statement of income for six months ended May 31, 2019 as follows (in thousands, except per share amounts):
 
As reported
 
Adjustments
 
Balances without ASC 606 adoption impact
Revenue
 
 
 
 
 
Subscription
$
4,761,064

 
$
(4,237
)
 
$
4,756,827

Product
323,370

 
(42,028
)
 
281,342

Services and support
260,792

 
(1,075
)
 
259,717

Total revenue
5,345,226

 
(47,340
)
 
5,297,886

 Operating expenses
 
 
 
 
 
Sales and marketing
1,630,445

 
16,936

 
1,647,381

Provision for income taxes
106,272

 
(4,957
)
 
101,315

Net income
$
1,306,834

 
$
(59,423
)
 
$
1,247,411

Basic net income per share
$
2.68

 
$
(0.12
)
 
$
2.56

Diluted net income per share
$
2.65

 
$
(0.12
)
 
$
2.53


Adoption of the new revenue standard impacted our condensed consolidated balance sheets as of May 31, 2019 as follows (in thousands):
 
As reported
 
Adjustments
 
Balances without ASC 606 adoption impact
Assets
 
 
 
 
 
Trade receivables, net of allowances for doubtful accounts
$
1,272,668

 
$
(73,370
)
 
$
1,199,298

Prepaid expenses and other current assets
590,998

 
(190,282
)
 
400,716

Other assets
503,221

 
(306,265
)
 
196,956

Liabilities and Stockholders’ Equity
 
 
 
 
 
Accrued expenses
1,314,998

 
(36,444
)
 
1,278,554

Deferred revenue, current
3,011,552

 
58,244

 
3,069,796

Deferred revenue, long-term
122,522

 
(2,183
)
 
120,339

Deferred income taxes
133,886

 
(87,792
)
 
46,094

Retained earnings
$
13,183,938

 
$
(501,742
)
 
$
12,682,196



There was no net impact to our condensed consolidated statements of comprehensive income and cash flows from operating, financing or investing activities on the condensed consolidated cash flows resulting from the adoption of the new revenue standard other than the impact to reported net income as presented above. The impact to our condensed consolidated statement of stockholders’ equity was only to retained earnings, as presented above.