Adobe 2009 Annual Report Download - page 62

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62
General and Administrative
Fiscal
2009
% Change
2009 to 2008
Fiscal
2008
% Change
2008 to 2007
Fiscal
2007
Expenses ............................
$
298.7
(11
)%
$
337.3
23
%
$
275.0
Percentage of total revenue ............
10
%
9
%
9
%
General and administrative expenses consist primarily of compensation and benefit expenses, travel expenses and
related facilities costs for our finance, facilities, human resources, legal, information services and executive personnel.
General and administrative expenses also include outside legal and accounting fees, provision for bad debts, expenses
associated with computer equipment and software used in the administration of the business, charitable contributions and
various forms of insurance.
General and administrative expenses decreased due to the following:
% Change
2009 to 2008
% Change
2008 to 2007
Allocation of costs associated with acquired rights to use technology ..........
(5
)%
6
%
Compensation and related benefits associated with headcount growth ..........
2
4
Compensation associated with incentive compensation and stock-based
compensation ......................................................
(8
)
2
Charitable contributions ...............................................
(3
)
4
Professional and consulting fees ........................................
1
2
Provision for bad debt .................................................
—
2
Depreciation and amortization ..........................................
1
1
Various individually insignificant items ..................................
1
2
Total change ......................................................
(11
)%
23
%
The decrease in allocation of costs associated with acquired rights to use technology in fiscal 2009 as compared to fiscal
2008 primarily relates to the historical use of licensing rights associated with certain technology licensing arrangements
entered into in fiscal 2008 that did not recur in fiscal 2009. Allocation of costs associated with acquired rights to use
technology increased in fiscal 2008 as compared to fiscal 2007 primarily due to the fact that we entered into certain
technology licensing arrangements totaling $100.4 million and $60.0 million during fiscal 2008 and fiscal 2007, respectively.
Of this cost, an estimated $56.4 million and $44.8 million during fiscal 2008 and fiscal 2007, respectively, was related to
future licensing rights and has been capitalized and will be amortized on a straight-line basis over the estimated useful lives
up to fifteen years. Of the remaining costs, we estimated that approximately $27.2 million and $15.2 million during fiscal
2008 and fiscal 2007, respectively, was related to historical use of licensing rights which was expensed as cost of sales and
the residual of $16.8 million for fiscal 2008 was expensed as general and administrative costs. In connection with these
licensing arrangements, we have the ability to acquire additional rights to use technology in the future.
Charitable contributions represent funding of the Adobe Foundation which is a private foundation created to leverage
human, technological and financial resources to drive social change and improve the communities in which we live and work.
The decrease in charitable contributions during fiscal 2009 as compared to fiscal 2008 and increase in fiscal 2008 as
compared to fiscal 2007 reflects a change in the timing of contributions to the Adobe Foundation.
Restructuring Charges
Fiscal
2009
% Change
2009 to 2008
Fiscal
2008
% Change
2008 to 2007
Fiscal
2007
Expenses ............................
$
41.3
29
%
$
32.1
*
%
$
0.6
Percentage of total revenue ............
1
%
1
%
*
%
_________________________________________
* Percentage is not meaningful.
Fiscal 2009 Restructuring Charges
On November 10, 2009, we initiated a restructuring plan to appropriately align our costs in connection with our fiscal
2010 operating plan impacting up to approximately 630 full-time positions worldwide. In connection with this restructuring
plan, in the fourth quarter of fiscal 2009, we recorded restructuring charges of approximately $25.5 million related to ongoing