Adobe 1998 Annual Report Download - page 63

ADOBE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
(Continued)
NOTE 11. STOCKHOLDERS’ EQUITY (CONTINUED)
stock option and purchase plans. The difference between the average repurchase price of the treasury
shares and the average price at which the shares are reissued is treated as an adjustment to Retained
Earnings.
Prior to the Company’s reincorporation in the State of Delaware in May 1997, the shares purchased
were returned to the status of authorized and unissued as required by California law. The 5,175,851 shares
purchased in fiscal 1997 at a cost of $238.7 million subsequent to the Company’s reincorporation are
presented as treasury stock in the Stockholders’ Equity section of the balance sheet.
Put warrants
To facilitate the Company’s stock repurchase programs, the Company sold put warrants in a series of
private placements in fiscal 1998 and 1997. Each put warrant entitles the holder to sell one share of
Adobe’s common stock to the Company at a specified price. Approximately 4.0 million and 4.6 million put
warrants were written in fiscal 1998 and 1997, respectively. At November 27, 1998, approximately 836,000
put warrants were outstanding that expire on various dates through February 1999 with an average exercise
price of $30.30 per share.
In addition, in fiscal 1998 and 1997, the Company purchased call options that entitle the Company to
buy 1.6 million and 2.3 million shares, respectively, of its common stock. At November 27, 1998,
approximately 583,000 call options were outstanding that expire on various dates through February 1999
with an average exercise price of $32.24 per share.
As part of the Company’s current stock repurchase programs, the Company may, from time to time,
enter into additional put warrant and call option arrangements. Under these arrangements, the Company,
at its option, can settle with physical delivery or net shares equal to the difference between the exercise
price and the value of the option as determined by the contract. In the future, the Company may consider
other methods to acquire the Company’s stock including direct purchases, open market purchases,
accelerated stock purchase programs, and other potential methods.
Venture stock dividend program
In March 1997, the Company established the venture stock dividend program under which the
Company may, from time to time, distribute as a dividend-in-kind shares of its equity holdings in investee
companies to Adobe stockholders. In fiscal 1997, the Company dividended one share of Netscape common
stock for each 100 shares of Adobe common stock held by stockholders of record on July 31, 1997. An
equivalent cash dividend was paid for holdings of less than 2,500 Adobe shares and for fractional Netscape
shares. Also on December 1, 1997, the Company dividended one share of Siebel common stock for each
300 shares of Adobe common stock held by stockholders of record on October 31, 1997. An equivalent
cash dividend was paid for holdings of less than 7,500 Adobe shares and for fractional Siebel shares. The
declaration of future dividends under this program is within the discretion of the Board of Directors of the
Company and will depend upon business conditions, the Company’s results of operations and financial
condition, and other factors.
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