Adobe 2000 Annual Report Download - page 71

NOTE 12. NET INCOME PER SHARE
Basic net income per share is computed using the weighted average number of common
shares outstanding for the period, excluding unvested restricted stock. Diluted net
income per share is based upon the weighted average common shares outstanding for the
period plus dilutive common equivalent shares, including unvested restricted common
stock, stock options using the treasury stock method, and put warrants using the reverse
treasury stock method.
DECEMBER 1 DECEMBER 3 NOVEMBER 27
YEARS ENDED (In thousands except per share data) 2000 1999 1998
Net income $ 287,808 $ 237,751 $ 105,144
Shares used to compute basic net income per share
(weighted average shares outstanding during the
period, excluding unvested restricted stock) 238,292 241,572 265,732
Dilutive common equivalent shares:
Unvested restricted stock 930 1,130 240
Stock options
16,539 15,636 5,924
Put warrants 13 72 —
Shares used to compute diluted net income per share 255,774 258,410 271,896
Basic net income per share $ 1.21 $ 0.98 $ 0.40
Diluted net income per share $ 1.13 $ 0.92 $ 0.39
For the years ended December 1, 2000; December 3, 1999; and November 27, 1998,
options to purchase approximately 12.1 million, 7.2 million, and 0.4 million shares,
respectively, of common stock with exercise prices greater than the average fair market
value of our stock for the period of $56.63, $39.75, and $19.78, respectively, were not
included in the calculation because the effect would have been antidilutive.
NOTE 13. COMMITMENTS AND CONTINGENCIES
Lease Commitments We lease certain of our facilities and some of our equipment under
noncancelable operating lease arrangements that expire at various dates through 2014.
Rent expense for these leases aggregated $25.6 million, $29.4 million, and $22.1 million
during fiscal 2000, 1999, and 1998, respectively. As of December 1, 2000, future minimum
lease payments under noncancelable operating leases, net of sublease income, are as fol-
lows: 2001—$23.6 million; 2002—$22.1 million; 2003—$20.3 million; 2004—$19.1
million; 2005—$8.6 million; and $14.1 million thereafter.
Included in the future minimum lease payments are the following amounts, net of antici-
pated sublease income, for leased facilities vacated in connection with the restructuring
plans implemented in fiscal 1999 and the third quarter of fiscal 1998: 2001—$2.5 million;
2002—$3.8 million; 2003—$4.9 million; 2004—$4.8 million; 2005—$4.7 million; and $0.5
million thereafter.
In August 1999, we entered into an operating lease agreement for two corporate headquar-
ters office facilities in San Jose, California. The lease is for a period of five years and is
subject to standard covenants including financial ratios. We have an option to purchase
the buildings at any time during the term for an amount equal to the total investment of
the lessor. At the end of the lease term, we may exercise the purchase option or, with the
mutual agreement of the lessor, renew the term of the lease. In addition to these possibili-
ties, at the end of the term, we may elect to have the buildings sold to an unrelated third
party. In such case, we are obligated to use our best efforts to arrange for such a sale and
are obligated to pay the lessor the difference between the total investment in the buildings
and the net sales proceeds, provided, however, that in no event would we be required to
pay more than a maximum guaranteed residual amount as set forth in the lease. In the
event we default during the term of the lease, the lessor could require us to purchase the
buildings for an amount equal to our option price. As of December 1, 2000, we were in
compliance with all financial covenants.