Adobe 2012 Annual Report Download - page 114

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114
Subsequent to November 30, 2012, as part of our $2.0 billion stock repurchase program, we entered into a structured stock
repurchase agreement with a large financial institution whereupon we provided them with a prepayment of $100.0 million. This
amount will be classified as treasury stock on our Consolidated Balance Sheets. Upon completion of the $100.0 million stock
repurchase agreement, $1.8 billion remains under our current authority.
NOTE 14. NET INCOME PER SHARE
Basic net income per share is computed using the weighted average number of common shares outstanding for the period,
excluding unvested restricted stock. Diluted net income per share is based upon the weighted average common shares outstanding
for the period plus dilutive potential common shares, including unvested restricted stock and stock options using the treasury stock
method.
The following table sets forth the computation of basic and diluted net income per share for fiscal 2012, 2011 and 2010
(in thousands, except per share data):
2012 2011 2010
Net income................................................................................................................ $ 832,775 $ 832,847 $ 774,680
Shares used to compute basic net income per share................................................. 494,731 497,469 519,045
Dilutive potential common shares:
Unvested restricted stock and performance share awards...................................... 7,624 4,214 3,170
Stock options.......................................................................................................... 366 2,238 3,609
Shares used to compute diluted net income per share.............................................. 502,721 503,921 525,824
Basic net income per share ....................................................................................... $ 1.68 $ 1.67 $ 1.49
Diluted net income per share.................................................................................... $ 1.66 $ 1.65 $ 1.47
For fiscal 2012, 2011 and 2010 options to purchase approximately 19.4 million, 27.1 million and 22.4 million shares,
respectively, of common stock with exercise prices greater than the annual average fair market value of our stock of $31.98, $30.27
and $31.82, respectively, were not included in the calculation because the effect would have been anti-dilutive.
NOTE 15. COMMITMENTS AND CONTINGENCIES
Lease Commitments
We lease certain of our facilities and some of our equipment under non-cancellable operating lease arrangements that
expire at various dates through 2028. We also have one land lease that expires in 2091. Rent expense includes base contractual
rent and variable costs such as building expenses, utilities, taxes, insurance and equipment rental. Rent expense and sublease
income for these leases for fiscal 2010 through fiscal 2012 were as follows (in thousands):
2012 2011 2010
Rent expense............................................................................................................ $ 105,809 $ 111,574 $ 109,114
Less: sublease income ............................................................................................. 2,330 3,211 3,929
Net rent expense .................................................................................................... $ 103,479 $ 108,363 $ 105,185
We occupy three office buildings in San Jose, California where our corporate headquarters are located. We reference these
office buildings as the Almaden Tower and the East and West Towers.
The lease agreements for the East and West Towers and the Almaden Tower are effective through August 2014 and March
2017, respectively. We are the investors in the lease receivables related to these leases for the East and West Towers and the
Almaden Tower in the amount of $126.8 million and $80.4 million, respectively, which is recorded as investment in lease
receivables on our Consolidated Balance Sheets. As of November 30, 2012, the carrying value of the lease receivables related to
the towers approximated fair value. Under the agreement for the East and West Towers and the agreement for the Almaden Tower,
we have the option to purchase the buildings at any time during the lease term for approximately $143.2 million and $103.6
million, respectively. The residual value guarantees under the East and West Towers and the Almaden Tower obligations are
Table of Contents
ADOBE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)