Adobe 2009 Annual Report Download - page 88

Download and view the complete annual report

Please find page 88 of the 2009 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 139

  • 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
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139

ADOBE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
88
as SiteCatalyst, Omniture SearchCenter, Omniture Discover, Omniture Genesis, and HBX product names. Non-compete
agreements include agreements with key Omniture employees that preclude them from competing against Omniture for a
period of two years. With the exception of contract backlog, we expect to amortize the fair value of these intangible assets on
a straight-line basis over their respective estimated useful lives.
In-process research and development—In-process research and development (“IPR&D”) was expensed to amortization
of purchased intangibles and incomplete technology in our Consolidated Statements of Income upon acquisition as it
represents incomplete Omniture research and development projects that had not reached technological feasibility and had no
alternative future use as of the date of the acquisition. Technological feasibility is established when an enterprise has
completed all planning, designing, coding, and testing activities that are necessary to establish that a product can be produced
to meet its design specifications including functions, features, and technical performance requirements. The estimated fair
value of $4.6 million was determined by estimating the net cash flows expected to be generated from the project and
discounting the net cash flows to their present value.
Goodwill—Approximately $1.3 billion has been allocated to goodwill. Goodwill represents the excess of the purchase price
over the fair value of the underlying acquired net tangible and intangible assets. The factors that contributed to the recognition of
goodwill included securing buyer-specific synergies that increase revenue and profits and are not otherwise available to a
marketplace participant, acquiring a talented workforce, and cost savings opportunities. The preliminary goodwill recorded in
connection with Omniture has been allocated to the Omniture and Creative Solutions reportable segments of $1.1 billion and
$0.2 billion, respectively, based on expected revenue and cost synergies to be gained as a result of the acquisition.
Restructuring—$10.9 million in restructuring related primarily to costs for severance and associated benefits,
outplacement services, and cost of redundant facilities. See Note 11 for further details of the amounts accrued during 2009.
Taxes—As part of our accounting for the Omniture acquisition, a portion of the overall purchase price was allocated to
goodwill and acquired intangible assets. Amortization expense associated with acquired intangible assets is not deductible for
tax purposes. Thus, approximately $174.4 million, included in the net tangible assets, was established as a deferred tax
liability for the future amortization of the intangible assets.
Any impairment charges made in the future associated with goodwill will not be tax deductible and will result in an
increased effective income tax rate in the quarter the impairment is recorded.
Pro Forma Results
The financial information in the table below summarizes the combined results of operations of Adobe and Omniture, on
a pro forma basis, as though the companies had been combined as of the beginning of the periods presented. The pro forma
financial information is presented for informational purposes only and is not indicative of the results of operations that would
have been achieved if the acquisition had taken place on November 29, 2008 and December 1, 2007 or of results that may
occur in the future.
The following pro forma financial information for fiscal 2009 and 2008 combines the historical results for Adobe for the
years ended November 27, 2009 and November 28, 2008 and the historical results of Omniture for the period January 1, 2009
through October 23, 2009 and the year ended December 31, 2008 (in thousands):
2009 2008
Net revenues ...........................................................
$
3,168,731
$
3,835,799
Net income .............................................................
$
308,904
$
742,749
Basic net income per share ................................................
$
0.59
$
1.38
Shares used in computing basic net income per share ..........................
524,470
539,373
Diluted net income per share ..............................................
$
0.58
$
1.35
Shares used in computing diluted net income per share .........................
531,293
549,883