Adobe 2000 Annual Report Download - page 70

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Options and restricted stock grants vest over several years, and new option and restricted
stock grants are generally made each year. Because of this, the pro forma amounts shown
above may not be representative of the pro forma effect on reported net income in future years.
NOTE 11. STOCKHOLDERS’ EQUITY
Stockholder Rights Plan Our Stockholder Rights Plan is intended to protect stockholders
from unfair or coercive takeover practices. In accordance with this plan, the Board of
Directors declared a dividend distribution of one common stock purchase right on each
outstanding share of our common stock held as of July 24, 1990 and on each share of
common stock issued by Adobe thereafter. In July 2000, the Stockholder Rights Plan was
amended to extend it for ten years so that each right entitles the holder to purchase one
unit of Series A Preferred Stock, which is equal to 1/1000 share of Series A Preferred
Stock, par value $0.0001 per share, at a price of $700 per unit. As adjusted for our 2000
stock split in the form of a dividend, each share of common stock now entitles the holder
to one-half of such a purchase right. Each whole right still entitles the registered holder to
purchase from Adobe a unit of preferred stock at $700. The rights become exercisable in
certain circumstances, including upon an entity acquiring or announcing the intention to
acquire beneficial ownership of 15% or more of our common stock without the approval
of the Board of Directors or upon us being acquired by any person in a merger or busi-
ness combination transaction. The rights are redeemable by Adobe prior to exercise at
$0.01 per right and expire on July 23, 2010.
Stock Repurchase Programs Under our existing plan to repurchase shares to offset issu-
ances under employee stock plans, we repurchased approximately 7.2 million, 22.4
million, and 1.4 million shares in fiscal 2000, 1999, and 1998, respectively, at a cost of
$255.5 million, $448.7 million, and $16.8 million, respectively.
In April 1999, our 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.
In September 1997, our Board of Directors authorized, subject to certain business and
market conditions, the purchase of up to 60.0 million shares of our common stock over a
two-year period. This program was completed during the first quarter of fiscal 1999. We
repurchased approximately 3.3 million shares in fiscal 1999, 40.7 million shares in fiscal
1998, and 16.0 million shares in fiscal 1997, at a cost of $30.5 million, $362.4 million, and
$188.6 million, respectively.
Put Warrants To facilitate our stock repurchase program, we sold put warrants in a series
of private placements in fiscal 2000, 1999, and 1998. Each put warrant entitles the holder
to sell one share of Adobe’s common stock to Adobe at a specified price. Approximately
8.6 million, 12.0 million, and 16.0 million put warrants were written in fiscal 2000, 1999,
and 1998, respectively. At December 1, 2000, approximately 2.9 million put warrants were
outstanding that expire on various dates through July 2001 and have exercise prices rang-
ing from $58.83 to $67.53 per share, with an average exercise price of $62.45 per share.
In addition, in fiscal 2000, 1999, and 1998, we purchased call options that entitle us to buy
5.1 million, 5.8 million, and 6.4 million shares, respectively, of our common stock. At
December 1, 2000, approximately 1.8 million call options were outstanding that expire on
various dates through July 2001 and have exercise prices ranging from $63.60 to $73.00
per share, with an average exercise price of $67.51 per share.
Our put and call option contracts provide that we, at our option, can settle with physical
delivery or net shares equal to the difference between the exercise price and the value of
the option as determined by the contract. In the future, we may consider other methods
to acquire our stock, including direct purchases, open market purchases, accelerated stock
purchase programs, and other potential methods.