Adobe 2005 Annual Report Download - page 50

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Equity Compensation Plan Information
The following table gives information about our common stock that may be issued under our existing equity
compensation plans as of December 2, 2005:
Plan Category
Number of Securities
to Be Issued Upon
Exercise of
Outstanding Options
(a)
Weighted Average
Exercise Price of
Outstanding Options
(b)
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(Excluding Securities
Reflected in Column (a))
(c)
Equity compensation plans approved by
stockholders.............................................
.
65,251,284 $ 21.76 52,533,618 *
* Includes 5.5 million shares and 22.8 million shares, respectively, which are reserved for issuance under the 1994 Performance and
Restricted Stock Plan and the 1997 Employee Stock Purchase Plan as of December 2, 2005.
LIQUIDITY AND CAPITAL RESOURCES
Fiscal
2005
% Change
2005 to 2004
Fiscal
2004
% Change
2004 to 2003 Fiscal
2003
Cash, cash equivalents and
short-term investments ......... $ 1,700.8 30% $ 1,313.2 20% $ 1,096.5
Working capital......................... 1,528.2 38% 1,107.1 24% 892.5
Stockholders’ equity.................. $ 1,864.3 31% $ 1,423.5 29% $ 1,100.8
Our primary source of cash is receipts from revenue. The primary uses of cash are payroll (salaries, bonuses,
and benefits), general operating expenses (marketing, travel, office rent) and cost of product revenue. Another
source of cash is proceeds from the exercise of employee options and another use of cash is our stock repurchase
program, which is detailed below.
In fiscal 2005, we reclassified all auction rate securities and variable rate demand obligations to short-term
investments pursuant to an interpretation of Statement of Financial Accounting Standards No. 95 (“SFAS 95”),
“Statement of Cash Flows” relating to the definition of cash equivalents. This interpretation and subsequent
reclassification has resulted in a presentation of our consolidated balance sheet that may understate the true liquidity
of our fixed income portfolio. As of December 2, 2005, $158.2 million of the securities now classified as short-term
investments have structural features that allow us to sell the securities at par within 90 days and thus retain similar
liquidity characteristics as cash equivalents.
Cash provided by operating activities for fiscal 2005, of $730.4 million, primarily comprised net income, net of
non-cash related expenses. Working capital sources of cash were increases in accrued expenses, income taxes
payable and deferred revenue. Accrued expenses increased primarily due to compensation related costs and
marketing expenses. Income taxes payable increased as a result of higher current tax liabilities related to repatriation
of certain foreign earnings and overall increased taxable income. Deferred revenue increased primarily due to
increased maintenance and support obligations. Working capital uses of cash included increases in trade receivables
and other current assets. Our accounts receivable increased due to higher revenue during the period. As compared to
fiscal 2004, our days sales outstanding in trade receivables (“DSO”) was 31 days, one day higher than fiscal 2004.
Other current assets increased due to an increase in prepaid expenses primarily related to acquisition costs.
Cash provided by operating activities for fiscal 2004, of $683.7, million primarily comprised net income, net of
non-cash related expenses. Working capital sources of cash were increases in accrued expenses, deferred revenue
and a decrease in accounts receivable. Accrued expenses increased primarily due to compensation related costs.
Deferred revenue increased primarily due to increased maintenance and support obligations. Our accounts
receivable decreased due to increased levels of cash collections. Our trade DSO decreased from 37 days at
November 28, 2003 to 30 days at December 3, 2004. Working capital uses of cash included a decrease in income
taxes payable due to tax payments made for both agreed and disputed tax assessments.