Adobe 2000 Annual Report Download - page 34

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Sales and marketing expenses increased $13.0 million, or 4%, in fiscal 1999 compared to
fiscal 1998 as a result of higher incentive compensation, advertising, promotional, and
trade show expenses. The increase was partially offset by cost reduction initiatives related
to the restructuring program implemented during the third quarter of fiscal 1998 that
eliminated certain brand advertising campaigns and other marketing activities related to
a divested business.
We expect sales and marketing expenses to increase in absolute dollars in fiscal 2001 to
support investments in e-business and enhanced marketing activities. For the first quarter
of fiscal 2001, our sales and marketing expense target is approximately 34% of revenue.
For the remainder of fiscal 2001, we are targeting sales and marketing expenses to be
approximately 33% of revenue.
General and Administrative
2000 CHANGE 1999 CHANGE 1998
General and administrative $ 116.5 12% $ 103.6 (13)% $ 118.6
Percentage of total revenue 9.2% 10.2% 13.3%
General and administrative expenses consist principally of salaries and benefits, travel
expenses, and related facilities costs for the finance, human resources, legal, information
services, and executive personnel of Adobe. General and administrative expenses also
include outside legal and accounting fees, provision for bad debts, and expenses associated
with computer equipment and software used in the administration of the business.
General and administrative expenses increased $13.0 million, or 12%, in fiscal 2000 com-
pared to fiscal 1999, primarily due to higher salaries as a result of increased headcount,
and higher bad debt expense and legal fees. The increase was partially offset by decreases
in professional fees and depreciation expense.
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General and administrative expenses decreased $15.0 million, or 13%, in fiscal 1999
compared to fiscal 1998, reflecting the savings related to the restructuring programs
implemented in fiscal 1999 and 1998. Additionally, the decrease is attributable to
decreased legal fees and lower bad debt expense. These decreases were offset by an
increase in incentive compensation expense primarily associated with the improvement
in our financial performance in fiscal 1999 over the prior year and higher incentive com-
pensation targets.
We expect that general and administrative spending will slightly increase in absolute
dollars in fiscal 2001 to support ongoing administrative infrastructure needs. We have
targeted such expenditures to be approximately 9% of revenue in fiscal 2001.
Restructuring and Other Charges
2000 CHANGE 1999 CHANGE 1998
Restructuring and
other charges $ 5.6 (76)% $ 23.0 (40)% $ 38.2
Percentage of total revenue 0.4% 2.3% 4.3%
In fiscal 2000, restructuring and other charges consisted of $6.3 million of other charges
relating to the disposal of certain equipment and one-time litigation-related expenses, and
a credit of $0.7 million related to the fiscal 1999 and fiscal 1998 restructuring programs.
The $0.7 million credit was recorded in the first quarter of fiscal 2000, as we revised our
estimates of the total costs associated with the fiscal 1999 and 1998 restructuring programs.
The credit primarily reflected lower than estimated severance and related charges attribut-
able to employees whose positions were eliminated as a result of the restructurings
but who were able to find alternative employment within Adobe. The remaining credit was
due to lower than expected charges related to vacating leased facilities. (For detailed
information, see Note 7 of the Notes to Consolidated Financial Statements.)