Adobe 2001 Annual Report Download - page 28

Download and view the complete annual report

Please find page 28 of the 2001 Adobe annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 105

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105

Restructuring and Other Charges
2001 Change 2000 Change 1999
Restructuring and other charges .......... $12.1 114% $5.6 (76)% $23.0
Percentage of total revenue ............. 1.0% 0.4% 2.3%
In the fourth quarter of fiscal 2001, we implemented a restructuring plan to realign our workforce to
our future strategic goals and to align our resources with our fiscal year 2002 revenue targets. We believe
this restructuring will enable us to increase our investment in digital imaging, digital video, and ePaper-
based businesses in fiscal 2002. As part of the restructuring program, we implemented a reduction in force
of 247 positions, affecting organizations throughout the company. The reductions came predominantly
from sales and marketing and in our North American operations, and as of November 30, 2001, the
majority of these terminations were completed. The total restructuring and other charges was
$12.1 million, which was all related to severance and related charges associated with the reduction in force.
Of the $12.1 million in charges, $9.6 million remained accrued at November 30, 2001. The majority of
these severance payments will be paid in early 2002. For more information, see Note 7 of our Notes to
Consolidated Financial Statements.
In fiscal 2000, restructuring and other charges consisted of $6.3 million of other charges relating to the
disposal of certain equipment and one-time litigation related expenses, and a credit of $0.7 million related
to the fiscal 1999 and fiscal 1998 restructuring programs.
The $0.7 million credit was recorded in the first quarter of fiscal 2000, as we revised our estimates of
the total costs associated with the fiscal 1999 and 1998 restructuring programs. The credit primarily
reflected lower than estimated severance and related charges attributable to employees whose positions
were eliminated as a result of the restructurings but who were able to find alternative employment within
Adobe. The remaining credit was due to lower than expected charges related to vacating leased facilities.
(For detailed information, see Note 7 of our Notes to Consolidated Financial Statements).
During fiscal 1999 we implemented two different restructuring programs. These separate restructuring
programs were directly focused on improving our competitive position as well as enhancing Adobe’s
allocation of resources.
The two fiscal 1999 restructuring programs resulted in total charges of approximately $19.7 million,
which included severance and related charges associated with the reduction in force and charges for
vacating leased facilities. During fiscal 1999, we revised our estimate of the total costs associated with the
restructuring programs implemented during the year, resulting in an adjustment to the restructuring
accrual of approximately $3.2 million. The adjustment was due to lower than estimated severance and
related charges attributable to employees whose positions were eliminated as a result of the restructurings
but who were able to find alternative employment within Adobe, and lower than expected charges related
to vacating leased facilities. In addition, we recorded adjustments during fiscal 1999 related to prior year
restructuring programs in the amount of $1.9 million. The $1.9 million adjustment was primarily due to
both our success in terminating a lease agreement earlier than the contract term specified and the
expiration of other lease termination costs for two facilities.
Other charges recorded in fiscal 1999 of $8.4 million included $2.0 million associated with the
cancellation of a contract and $2.2 million for accelerated depreciation related to the adjustment of the
useful life of certain assets as a result of decisions made by management as part of the restructuring
program. Additionally, we incurred a nonrecurring compensation charge totaling $2.6 million for a
terminated employee and incurred consulting fees of $1.6 million to assist in the restructuring of our
operations.
As of November 30, 2001 no obligations existed related to the fiscal 1999 and 1998 restructuring
programs.
28