Adobe 2001 Annual Report Download - page 42

We expect to continue our investing activities, including expenditures for computer systems for
research and development, sales and marketing, product support, and administrative staff. Furthermore,
cash reserves may be used to purchase treasury stock and strategically acquire companies, products, or
technologies.
Adobe’s Board of Directors approved two separate two-for-one stock splits in the form of stock
dividends of our common stock to stockholders effected October 24, 2000 and October 26, 1999. All share
and per share amounts referred to in the consolidated financial statements have been adjusted to reflect
these stock splits.
We have paid cash dividends on our common stock each quarter since the second quarter of 1988.
Adobe’s Board of Directors declared a cash dividend on our common stock of $0.0125 per common share
for each of the four quarters in fiscal 2001, 2000, and 1999. The declaration of future dividends, whether in
cash or in-kind, is within the discretion of Adobe’s Board of Directors and will depend on business
conditions, our results of operations and financial condition, and other factors.
Stock Repurchase Program I—On-going Dilution Coverage
To facilitate our stock repurchase program, which is designed to minimize dilution from employee
stock plans, we sold put warrants to independent third parties in fiscal 2001, 2000, and 1999. Each put
warrant entitles the holder to sell one share of Adobe’s common stock to Adobe at a specified price for
cash or stock at Adobe’s option. Approximately 5.6 million, 7.0 million, and 10.3 million put warrants were
written in fiscal 2001, 2000, and 1999, respectively. At November 30, 2001, approximately 3.8 million put
warrants were outstanding that expire through July 2002, with an average exercise price of $22.28 per
share, resulting in a total potential cash outlay of approximately $84.0 million in fiscal 2002 if all puts
warrants are exercised.
In addition, in fiscal 2001, 2000, and 1999, we purchased call options from independent third parties
that entitled us to buy 3.9 million, 4.2 million, and 4.9 million shares, respectively, of our common stock on
certain dates at specified prices. At November 30, 2001, approximately 2.6 million call options were
outstanding that expire on various dates through July 2002 with an average exercise price of $24.09 per
share, resulting in a total potential cash outlay of approximately $63.3 million in fiscal 2002 if all calls
options are exercised.
Currently, all put warrants have a corresponding call option with an identical expiry date.
Consequently, either the call option or put warrant, but not both, will be exercised.
We repurchased approximately 5.9 million, 7.2 million, and 22.4 million shares in fiscal 2001, 2000,
and 1999, respectively, at a cost of $319.9 million, $255.5 million, and $448.7 million, respectively.
Stock Repurchase Program II—Additional Authorization above Dilution Coverage
In September 1997, Adobe’s Board of Directors authorized, subject to certain business and market
conditions, the purchase of up to 60.0 million shares of our common stock over a two-year period. This
program was completed in the first quarter of fiscal 1999. Under this program, we repurchased
approximately 3.3 million shares in fiscal 1999 at a cost of $30.5 million.
In April 1999, the Board authorized a 5.0 million share repurchase program, which allows us to
purchase shares in the open market and enter into contracts to repurchase shares during future quarters by
selling put warrants and buying call options. During fiscal 2001, approximately 4.9 million put warrants
were written and 3.5 million call options were purchased at prices ranging from $32.60 to $39.58. As of
November 30, 2001, there were no put warrants or options outstanding in this program. During fiscal 2001,
we repurchased approximately 4.7 million shares at a cost of $165.2 million. We did not repurchase any
shares under this program in fiscal 2000.
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