Adobe 2000 Annual Report Download - page 35

During fiscal 1999 and 1998, we implemented three different Board-approved restructuring
programs. These separate restructuring programs were directly focused on improving our
competitive position as well as enhancing Adobe’s allocation of resources.
The two fiscal 1999 restructuring programs resulted in total charges of approximately
$19.7 million, which included severance and related charges associated with the reduction
in force and charges for vacating leased facilities. During fiscal 1999, we revised our esti-
mate of the total costs associated with the restructuring programs implemented during
the year, resulting in an adjustment to the restructuring accrual of approximately $3.2 mil-
lion. The adjustment was due to lower than estimated severance and related charges
attributable to employees whose positions were eliminated as a result of the restructurings
but who were able to find alternative employment within Adobe, and to lower than
expected charges related to vacating leased facilities. In addition, we recorded adjustments
during fiscal 1999 related to prior-year restructuring programs in the amount of $1.9 mil-
lion. The $1.9 million adjustment was primarily due to both our success in terminating a
lease agreement earlier than the contract term specified and the expiration of other lease
termination costs for two facilities.
Other charges recorded in fiscal 1999 of $8.4 million included $2.0 million associated with
the cancelation of a contract and $2.2 million for accelerated depreciation related to the
adjustment of the useful life of certain assets as a result of decisions made by management
as part of the restructuring program. Additionally, we incurred a nonrecurring compensa-
tion charge totaling $2.6 million for a terminated employee and incurred consulting fees
of $1.6 million to assist in the restructuring of our operations.
The 1998 restructuring program was implemented to refocus our product development
efforts and to eliminate management redundancies in the organization. In connection
with this restructuring program, we recorded $38.2 million in restructuring charges,
related to severance and related charges associated with the reduction in force, as well as
the divestiture of two business units, charges for vacating leased facilities, and the
cancelation of certain contracts.
As of December 1, 2000, no obligations existed related to the fiscal 1999 and 1998 restruc-
turing programs.
Acquired In-Process Research and Development
2000 CHANGE 1999 CHANGE 1998
Acquired in-process research
and development $ 0.5 (87)% $ 3.6 N/A $ —
Percentage of total revenue —% 0.4% —%
In fiscal 2000, we recorded $0.5 million of acquired in-process research and development
related to our acquisition of Glassbook, Inc. (“Glassbook”). The acquisition was
accounted for under the purchase method of accounting in accordance with Accounting
Principles Board Opinion No. 16 (“APB 16”). Based on an independent appraiser’s valua-
tion, $0.5 million of the total $28.0 million purchase price was allocated to in-process
research and development due to the state of the development and the uncertainty of the
technology and expensed upon acquisition.
Acquired in-process research and development of $3.6 million in fiscal 1999 is comprised
of $3.0 million and $0.6 million associated with the acquisitions of Attitude Software, LLC
(“Attitude Software”) and Photomerge Technology (“Photomerge”), respectively. The
following is a summary of the projects acquired in the acquisitions and the assumptions
used in determining the value of the in-process research and development costs.
During the fourth quarter of fiscal 1999, we acquired substantially all of the assets, con-
sisting of intellectual property, of Attitude Software. The acquisition was accounted for