Adobe 1999 Annual Report Download - page 33

LIQUIDITY AND CAPITAL RESOURCES
1999 Change 1998 Change 1997
Cash, cash equivalents, and short-term investments ...... $498.7 83% $272.5 (46)% $503.0
Working capital ................................ $355.4 73% $205.0 (55)% $454.3
Stockholders’ equity ............................. $512.2 (0.8)% $516.4 (28)% $715.4
Our cash, cash equivalents, and short-term investments consist principally of money market mutual
funds, municipal bonds, and United States government agency securities. All of our cash equivalents and
short-term investments are classified as available-for-sale under the provisions of SFAS 115, ‘‘Accounting
for Certain Investments in Debt and Equity Securities.’’ The securities are carried at fair value with the
unrealized gains and losses, net of tax, included in accumulated other comprehensive income, which is
reflected as a separate component of stockholders’ equity.
Our cash, cash equivalents, and short-term investments increased $226.2 million, or 83%, in fiscal
1999, primarily due to cash generated from operations of $334.2 million, proceeds from the issuance of
treasury stock related to the exercise of stock options under our stock option plans and sale of stock under
the Employee Stock Purchase Plan of $142.9 million, and the release of restricted funds totaling
$130.3 million associated with the refinancing of our corporate headquarters lease agreement. Other
sources of cash include the proceeds from the sale of equity securities and the sale of a building in the
amount of $63.9 million and $40.6 million, respectively. In addition, short-term investments increased due
to a reclassification of $46.7 million of investments classified as long-term to short-term as well as
mark-to-market adjustments totaling $81.2 million.
These factors were partially offset by the purchase of treasury stock in the amount of $479.2 million,
capital expenditures of $42.2 million, the purchase of other assets for $43.5 million, the purchase of the
assets of GoLive Systems and Attitude Software for $36.9 million, and the payment of dividends totaling
$12.2 million.
We expect to continue our investing activities, including expenditures for computer systems for
research and development, sales and marketing, product support, and administrative staff. Furthermore,
cash reserves may be used to purchase treasury stock and acquire software companies, products, or
technologies that are complementary to our business.
In September 1997, Adobe’s Board of Directors authorized, subject to certain business and market
conditions, the purchase of up to 30.0 million shares of our common stock over a two-year period. We
repurchased approximately 1.7 million shares in the first quarter of fiscal 1999, 20.3 million shares in fiscal
1998, and 8.0 million shares in fiscal 1997, at a cost of $30.5 million, $362.4 million, and $188.6 million,
respectively. This program was completed during the first quarter of fiscal 1999.
In April 1999, Adobe’s Board of Directors authorized, subject to certain business and market
conditions, the purchase of up to an additional 5.0 million shares of our common stock over a two-year
period. This new stock repurchase program was in addition to an existing program whereby we have been
authorized to repurchase shares to offset issuances under employee stock option and stock purchase plans.
No purchases have been made under the 5.0 million share repurchase program.
Under our existing plan to repurchase shares to offset issuances under employee stock plans, we
repurchased approximately 11.2 million, 0.7 million, and 4.6 million shares in fiscal 1999, 1998, and 1997,
respectively, at a cost of $448.7 million, $16.8 million, and $87.0 million, respectively.
We have paid cash dividends on our common stock each quarter since the second quarter of 1988.
Adobe’s Board of Directors declared a cash dividend on our common stock of $0.025 per common share
for each of the four quarters in fiscal 1999, 1998, and 1997. On December 1, 1997, we dividended one share
of Siebel common stock for each 600 shares of Adobe common stock held by stockholders of record on
October 31, 1997. An equivalent cash dividend was paid for holdings of less than 15,000 Adobe shares and
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