Adobe 2002 Annual Report Download - page 81

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Adobe’s Board of Directors approved a two-for-one stock split in the form of stock dividends of our common
stock to stockholders effected October 24, 2000. All share and per share amounts referred to in the consolidated
financial statements have been adjusted to reflect this stock split.
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 $0.0125 per common share for each of the four
quarters in fiscal 2002, 2001, and 2000. The declaration of future dividends, whether in cash or in-kind, is within the
discretion of Adobe’s Board of Directors and will depend on business conditions, our results of operations and
financial condition, and other factors.
Stock Repurchase Program I – On-going Dilution Coverage
To facilitate our stock repurchase program designed to minimize dilution from stock issuance primarily from
employee stock plans, we sold put warrants to independent third parties in fiscal 2002, 2001, and 2000. Each put
warrant entitles the holder to sell one share of Adobe’s common stock to Adobe at a specified price for cash or stock
at Adobe’s option. Approximately 7.5 million, 5.6 million, and 7.0 million put warrants were written in fiscal 2002,
2001, and 2000, respectively. At November 29, 2002, approximately 1.9 million put warrants were outstanding that
expire through December 2002, with an average exercise price of $26.71 per share, resulting in a total potential cash
outlay of approximately $50.5 million in fiscal 2003 if all puts warrants are exercised.
In addition, in fiscal 2002, 2001, and 2000, we purchased call options from independent third parties that
entitled us to buy 4.9 million, 3.9 million, and 4.2 million shares, respectively, of our common stock on certain dates
at specified prices. At November 29, 2002, approximately 1.2 million call options were outstanding that expire on
various dates through December 2002 with an average exercise price of $28.08 per share, resulting in a total
potential cash outlay of approximately $34.1 million in fiscal 2003 if all calls options are exercised.
Our put and call option contracts provide that, at our option, we 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.
We repurchased approximately 8.6 million, 5.9 million, and 7.2 million shares in fiscal 2002, 2001, and 2000,
respectively, at a cost of $255.0 million, $319.9 million, and $255.5 million, respectively. Subsequent to November
29, 2002, we repurchased 1.6 million shares at a cost of $45.1 million through the exercise of outstanding put
warrants and call options under this plan. As of December 18, 2002, no put warrants or call options remained
outstanding under this plan. The authorization to repurchase shares to cover on-going dilution is not subject to
expiration. However, this repurchase program is limited to covering net dilution from stock issuances. As of
November 29, 2002, 9.6 million shares remained authorized for repurchase, based on net stock issuances less
repurchases under this plan.
Stock Repurchase Program II – Additional Authorization above Dilution Coverage
In April 1999, the Board authorized a 5.0 million share repurchase program, which allowed us to purchase
shares in the open market and enter into contracts to repurchase shares during future quarters by selling put warrants
and buying call options. During fiscal 2001, approximately 4.9 million put warrants were written and 3.5 million call
options were purchased at prices ranging from $32.60 to $39.58. As of November 30, 2001, there were no put
warrants or options outstanding in this program. During fiscal 2001, we repurchased approximately 4.7 million
shares at a cost of $165.2 million. We did not repurchase any shares under this program in fiscal 2000. This program
expired in fiscal 2001.
In March 2001, subject to certain business and market conditions, our Board of Directors authorized the
purchase of up to an additional 5.0 million shares of our common stock over a two-year period. During fiscal year
2002, approximately 3.1 million put warrants were written and approximately 2.1 million call options were
purchased under this 5.0 million share repurchase program.
As of November 29, 2002, under our March 2001 5.0 million share program, approximately 3.0 million put
warrants were outstanding that expire through December 2002 with an average exercise price of $25.20 per share. In
addition, as of November 29, 2002, approximately 2.0 million call options were outstanding that expire at various
dates through December 2002 with an average price of $27.23 per share.
Our put and call option contracts provide that, at our option, we 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.