Adobe 2002 Annual Report Download - page 63

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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 decreased $7.5 million, or 7%, in fiscal 2002 compared to fiscal 2001.
The 7% decrease was primarily made up of 3% from a decrease in contractor and professional fees, 3% from a
decrease in facility expenses due to lower rent expenses, and 3% from a decrease in compensation and related
benefits due to reduced headcount. These decreases were partially offset by a 2% increase from higher
depreciation expenses.
General and administrative expenses decreased $0.9 million, or 1%, in fiscal 2001 compared to fiscal 2000.
The 1% decrease was primarily made up of 5% from a decrease in bad debt expense related to enhanced global
credit evaluations, on-going risk mitigation efforts (such as letters of credit, guarantees, and credit insurance) in
Asia, and improved collections of our royalty accounts. This decrease was partially offset by a 2% increase from
higher legal fees due to litigation and a 2% increase from facility expenses due to higher utility costs.
Restructuring and Other Charges
2002 Change 2001 Change 2000
Restructuring and other charges .................. $ 12.1 1% $ 12.1 11
4
%$ 5.
6
Percentage of total revenue.......................... 1.0% 1.0% 0.4%
In the fourth quarter of fiscal 2002, we incurred a restructuring charge of $11.1 million, which included
severance and related charges and the closure of a facility. The related restructuring program eliminated 239
engineering, sales and marketing, and general and administrative positions worldwide in order to realign our
resources for our future business plans. These plans include adding resources to support our ePaper enterprise
business in fiscal 2003.
The restructuring program is expected to be completed in fiscal 2003. Of the $11.1 million in charges, $4.7
million remained accrued at November 29, 2002.
In the second quarter of fiscal 2002, we implemented a restructuring program to eliminate 39 redundant sales
and marketing positions, held by Adobe employees worldwide, as a result of the acquisition of Accelio. The
restructuring included severance and related charges associated with the reduction in force and the cost of vacating a
leased facility. Total restructuring charges were $1.6 million and the majority of these payments were paid in the
second quarter of fiscal 2002. Of the $1.6 million in charges, $.05 million remains accrued at November 29, 2002.
The remaining payments will be paid in the first quarter of fiscal 2003.
During the fourth quarter of fiscal 2002, we paid our remaining obligations under our 2001 restructuring
program. We also lowered our estimate of the total costs associated with the restructuring program, resulting in an
adjustment of approximately $0.6 million. The adjustment primarily reflected lower than estimated relocation and
severance expenses and related charges.
In the fourth quarter of fiscal 2001, we implemented a restructuring plan to realign our workforce to our future
strategic goals and to align our resources with our lower fiscal 2002 revenue targets due to adverse economic
conditions resulting in part from the events of September 11, 2001. This restructuring enabled us to increase our
investment in digital imaging, digital video, and ePaper-based businesses in fiscal 2002. As part of the restructuring
program, we implemented a reduction in force of 247 positions, affecting organizations throughout the company.
The reductions came predominantly from sales and marketing and in our North American operations, and as of
November 30, 2001, the majority of these terminations were completed. The restructuring charge in the fourth
quarter of fiscal 2001 was $12.1 million, all of which related to severance and related charges associated with the
reduction in force. As of November 29, 2002, there was no restructuring liability remaining for our fiscal year 2001
restructuring program. For more information, see Note 8 of our Notes to Consolidated Financial Statements.
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 attributable 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.