Adobe 2003 Annual Report Download - page 80

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Note 7. Accrued Expenses
Accrued expenses consisted of the following:
November 28,
2003
November 29,
2002
Accrued compensation and benefits .....................................................
.
$ 65,870 $ 54,117
Sales and marketing allowances...........................................................
.
14,169 7,371
Accrued restructuring...........................................................................
.
1,132 10,975
Other ....................................................................................................
.
78,838 62,565
Total accrued expenses.....................................................................
.
$ 160,009 $ 135,028
Note 8. Restructuring and Other Charges
In fiscal 2002, we implemented two restructuring plans. The first plan, implemented in the second
quarter of fiscal 2002, was to eliminate 39 redundant sales and marketing positions held by Adobe
employees worldwide as a result of the acquisition of Accelio. The restructuring included severance and
related charges associated with the reduction in force and the cost of vacating a leased facility. Total
restructuring and other charges were $1.6 million and the majority of these payments were paid in the
second quarter of fiscal 2002. This restructuring plan was completed during the second quarter of fiscal
2003 and there was no balance remaining in accrued restructuring.
The second plan was implemented in the fourth quarter of fiscal 2002 and was designed to eliminate
239 engineering, sales and marketing and general and administrative positions worldwide in order to
realign our resources for our future business plans. These plans include adding resources to support our
ePaper enterprise business in fiscal 2003. We incurred a restructuring charge of $11.1 million, which
included severance and related charges and charges related to the closure of a facility. During fiscal 2003,
we revised our estimate of certain costs associated with this restructuring program. The excess accrual was
reversed to restructuring and other charges on our consolidated statement of income. This restructuring plan
was completed during the fourth quarter of fiscal 2003 and there was no balance remaining in accrued
restructuring.
A summary of restructuring activities, for both plans, is as follows:
Balance at
November 29, 2002
Cash
Payments Adjustments
Balance at
November 28, 2003
Severance and related charges ............... $ 3,817 $ (3,386) $ (431) $ ―
Facilities................................................. 980 (867) (113) ―
Total $ 4,797 $ (4,253) $ (544) $ ―
In connection with our acquisition of Accelio in the second quarter of fiscal 2002, we recognized
liabilities associated with a worldwide reduction in force of Accelio employees, transaction costs, costs
related to closing redundant facilities and terminating contracts and other exit costs associated with the
acquisition. During fiscal 2003, we revised our estimate of certain costs associated with our acquisition of
Accelio to reflect the nature of our remaining liabilities. An excess accrual of $0.6 million was reversed as
a reduction to goodwill and an additional $0.3 million was reversed to operating expenses. As of November
28, 2003, $1.1 million remained accrued and comprised transaction, facilities and other exit costs.
Transaction costs primarily relate to the liquidation of Accelio’s subsidiaries and are expected to be paid
through fiscal 2004. Facility costs relate to leases we assumed upon acquisition of Accelio and terminate
through September 2006. Other exit costs relate to specifically identified contingent liabilities which will
be paid through fiscal 2004.