Adobe 2005 Annual Report Download - page 94

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94
exchange. This fixed exchange ratio gives effect to the two-for-one stock split in the form of a stock
dividend paid on May 23, 2005 to the stockholders of Adobe. The $3.4 billion estimated purchase price for
the acquisition includes the estimated fair value of Adobe common stock issued, stock options and
restricted stock assumed, as well as estimated direct transaction costs. We derived this estimate using an
average market price per share of Adobe common stock of $29.43, which was based on an average of the
closing prices for a range of trading days (April 14, 2005 through April 20, 2005) around the announcement
date (April 18, 2005) of the proposed transaction.
In conjunction with the acquisition of Macromedia, on December 3, 2005, the Adobe board of
directors approved a restructuring plan to better align Adobe’s resources among its client and product
groups. We expect to incur restructuring charges in fiscal year 2006, primarily in the first quarter. These
restructuring expenses relate only to those employees and facilities that were associated with Adobe prior
to the acquisition of Macromedia on December 3, 2005. These expenses will be a charge to earnings in the
respective quarter in which they are incurred. We expect to incur additional restructuring expenses relating
to Macromedia’s operations. These costs will be included in the assumed liabilities of Macromedia as of
December 3, 2005 and will be recorded as part of the total acquisition purchase price of Macromedia.
In December 2005, we entered into additional structured stock repurchase agreements with large
financial institutions. Under these agreements, we provided the financial institutions with up-front
payments totaling $500.0 million. The financial institutions agreed to deliver to us, at certain intervals
during the contract term, a certain number of shares based on the volume weighted average price during
such intervals less a specified discount. The $500.0 million will be classified as treasury stock on our
balance sheet.