Adobe 2006 Annual Report Download - page 52

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52
General and Administrative
Fiscal
2006
% Change
2006 to 2005
Fiscal
2005
% Change
2005 to 2004 Fiscal
2004
Expenses.................................... $ 235.1 41% $ 166.7 21% $ 138.0
Percentage of total revenues .. 9% 8% 8%
General and administrative expenses consist of compensation and benefit expenses, travel expenses, and
related facilities costs for our finance, facilities, human resources, legal, information services and executive
personnel. General and administrative expenses also include outside legal and accounting fees, provision for bad
debts, expenses associated with computer equipment and software used in the administration of the business,
charitable contributions, and various forms of insurance.
General and administrative expenses fluctuated due to the following:
% Change
2006 to 2005
% Change
2005 to 2004
Increased compensation and related benefits associated with headcount
growth related to the Macromedia acquisition, higher incentive
compensation, amortization of deferred stock compensation related to
the acquisition of Macromedia and stock-based compensation costs as
a result of adopting SFAS 123R at the beginning of fiscal 2006 ..........
21%
—
Compensation and related benefits associated with headcount growth
and higher incentive compensation........................................................
—
9 %
Increased (decreased) legal fees................................................................ 6 (2)
Increased professional fees ....................................................................... — 6
Increased depreciation and amortization................................................... 5 3
Increased repairs and maintenance ........................................................... 4 2
Increased contractor fees .......................................................................... 4 —
Increased provision for bad debt............................................................... 1 —
Various individually insignificant items ................................................... — 3
Total change.......................................................................................... 41% 21 %
Restructuring and Other Charges
Fiscal
2006
% Change
2006 to 2005
Fiscal
2005
% Change
2005 to 2004 Fiscal
2004
Expenses.................................... $ 19.7 *% $ — —% $ —
Percentage of total revenues .. 1% — —
* Percentage is not meaningful.
In the first quarter of fiscal 2006, pursuant to Board of Directors’ approval, we implemented a restructuring
plan to eliminate 313 positions, held by Adobe employees worldwide and which impacted all functional areas.
The reduction in force was completed in fiscal 2006. The restructuring plan, which is estimated to be completed
in fiscal 2007, also includes costs related to the world-wide consolidation of facilities, the cancellation of certain
contracts and the write-off of fixed assets located at facilities that will be vacated. During fiscal 2006, the total
restructuring charges of $19.7 million included severance and related charges associated with the reduction in
force and costs related to the closure of duplicative facilities and the cancellation of certain contracts.
We did not incur any restructuring and other charges in fiscal 2005 and 2004.