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ADOBE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
(Continued)
NOTE 10. EMPLOYEE STOCK PLANS (CONTINUED)
Employee Stock Purchase Plan
The Company’s Employee Stock Purchase Plan allows eligible employee participants to purchase
shares of the Company’s common stock at a discount through payroll deductions. For current offerings, the
plan consists of two-year offering periods with four six-month purchase periods in each offering period; in
September 1998, the Board of Directors reduced the offering periods of future offering periods to one year
with two six-month purchase periods in each offering period. Employees purchase shares at 85% of the
market value at either the beginning of the offering period or the end of the purchase period, whichever
price is lower. As of November 27, 1998, the Company had reserved 9,500,000 shares of its common stock
for issuance under this plan; and 5,253,030 shares remain available for future issuance, although 2,500,000
shares of such reserve were approved by the Board of Directors in September 1998 which are subject to the
approval of the Company’s stockholders at the next annual meeting.
The weighted-average fair value of the purchase rights granted in fiscal 1998, 1997, and 1996 was
$15.86, $16.36, and $14.01, respectively.
Pro forma fair value disclosures
The Company accounts for its employee stock plans, consisting of fixed stock option plans, an
employee stock purchase plan, and a performance and restricted stock plan, using the intrinsic value
method. The following table sets forth the pro forma amounts of net income and net income per share that
would have resulted if the Company accounted for its employee stock plans under the fair value
recognition provisions of SFAS No. 123, ‘‘Accounting for Stock-Based Compensation.’’
Years Ended
November 27 November 28 November 29
1998 1997 1996
Net income:
As reported ..................................... $105,144 $186,837 $153,277
Pro forma ...................................... $ 54,435 $161,790 $144,368
Net income per share:
As reported:
Basic ........................................ $ 1.58 $ 2.60 $ 2.12
Diluted ...................................... $ 1.55 $ 2.52 $ 2.04
Pro forma:
Basic ........................................ $ 0.82 $ 2.25 $ 1.99
Diluted ...................................... $ 0.82 $ 2.21 $ 1.93
For purposes of computing pro forma net income, the fair value of each option grant, restricted stock
grant, and Employee Stock Purchase Plan purchase right is estimated on the date of grant using the Black-
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