Adobe 2010 Annual Report Download - page 69

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69
General and administrative expenses increased (decreased) due to the following:
% Change
2010-2009
% Change
2009-2008
Compensation associated with incentive compensation and stock-based compensation ......
15
%
(8
)%
Allocation of costs associated with acquired rights to use technology .................................
—
(5
)
Compensation and related benefits associated with headcount growth ................................
5
2
Charitable contributions ........................................................................................................
—
(3
)
Professional and consulting fees ...........................................................................................
4
1
Depreciation and amortization ..............................................................................................
3
1
Various individually insignificant items ...............................................................................
1
1
Total change ......................................................................................................................
28
%
(11
)%
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 primarily due to the fact that we entered into certain technology licensing arrangements
totaling $100.4 million. Of this cost, an estimated $56.4 million 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 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 reflects a change in the timing of
contributions to the Adobe Foundation.
Professional and consulting fees increased during fiscal 2010 as compared to fiscal 2009 primarily due to increase in
information technology services to support our business.
Restructuring Charges
Fiscal 2009 Restructuring Plan
On November 10, 2009, in order to appropriately align our costs in connection with our fiscal 2010 operating plan, we
initiated a restructuring plan consisting of reductions of 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 termination benefits for the elimination of approximately 340 of these full-time positions
worldwide. The restructuring activities related to this program affect only those employees and facilities that were associated
with Adobe prior to the acquisition of Omniture on October 23, 2009.
During fiscal 2010, we continued to implement restructuring activities under this plan. We vacated approximately
50,000 square feet of sales and or research and development facilities in Australia, Canada, Denmark and the U.S. We
accrued $7.0 million for the fair value of our future contractual obligations under these operating leases using our credit-
adjusted risk-free interest rate, estimated at approximately 7% as of the date we ceased to use the leased properties. This
amount is net of the fair value of future estimated sublease income of approximately $7.1 million. We also recorded charges
of $18.4 million in termination benefits for the elimination of substantially all of the remaining full-time positions expected
to be terminated worldwide. We also recorded net adjustments of approximately $2.2 million to reflect net decreases in
previously recorded estimates for termination benefits and facilities-related liabilities in addition to minor adjustments for
fluctuations related to foreign currency translation.
Fiscal 2008 Restructuring Plan
In the fourth quarter of fiscal 2008, we initiated a restructuring program, consisting of reductions in workforce of
approximately 560 full-time positions globally and the consolidation of facilities, in order to reduce our operating costs and
focus our resources on key strategic priorities. In connection with this restructuring program, we recorded restructuring
charges totaling $29.2 million related to ongoing termination benefits for the elimination of approximately 460 of the 560
full-time positions globally.