Adobe 2006 Annual Report Download - page 55

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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 DSO was 31 days, one day higher than fiscal 2004.
Cash provided by operating activities for fiscal 2004, of $704.8, 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. Working capital uses of cash included a decrease
in income taxes payable due to tax payments made for both agreed and disputed tax assessments.
Net cash provided by investing activities in fiscal 2006 of $195.2 million increased from net cash used in
fiscal 2005 of $348.4 million due to the net cash acquired with Macromedia and due to the sale of our minority
equity investment in Atom Entertainment, Inc. These proceeds were partially offset by purchases of long term
investments and acquisitions of property, plant, and equipment as well as net purchases of short-term investments
in fiscal 2006.
Net cash used for investing activities in fiscal 2005 of $348.4 million decreased from net cash used in fiscal
2004 of $351.3 million because there was not an investment in a lease receivable (related to our corporate
headquarter office buildings) as there was in 2004. This was partially offset by higher net purchases of short-term
investments and payments for acquisition costs in fiscal 2005.
Net cash used for financing activities in fiscal 2006 of $774.7 million increased from net cash used in fiscal
2005 of $246.6 million primarily due to the purchases of treasury stock. Cash used during fiscal 2006 was
partially offset by the proceeds related to the issuance of the treasury stock from exercises of employee stock
options. Cash used for stock repurchases during fiscal 2006 increased from the prior year due to a higher average
cost per share, a higher number of shares being repurchased, and remaining prepayments related to stock
repurchase agreements (see section titled “Stock Repurchase Program – On-Going Dilution).
Net cash used for financing activities in fiscal 2005 of $246.6 million increased from cash used in fiscal 2004
of $224.5 million primarily due to a decrease in proceeds received from the re-issuance of treasury stock as a
result of a lower number of options being exercised.
We discontinued our quarterly cash dividend after the payment of the dividend for the first quarter of fiscal
2005. We intend to use the cash previously used to pay the quarterly dividend for our ongoing stock repurchase
programs. Under the terms of our lease agreements for our San Jose headquarters, we are not prohibited from
paying cash dividends unless an event of default occurs.
In fiscal 2006, we entered into various agreements with San Jose Water Corporation and certain of its
affiliates to acquire land and a building in downtown San Jose for $36.5 million. The building and certain parking
areas were used by the San Jose Water Company and will be leased back to San Jose Water Corporation until mid
2008. Additionally, the Board of Directors has approved a facilities expansion plan for our operations in India,
which may include the purchase of land and buildings. We are also in the process of extending our lease for the
Almaden Tower for a five year term with an additional five years at our option. We have received Board
approval to purchase a portion of the lease receivable of the lessor as we have done with the East and West
Towers. We expect a cash outlay of approximately $90 million when the transaction closes sometime during the
first quarter of fiscal 2007. We expect to continue our investing activities, including investments in short-term and
long-term investments and purchases of computer systems for research and development, sales and marketing,
product support, and administrative staff. Furthermore, cash reserves may be used to repurchase stock under our
stock repurchase programs and strategically acquire software companies, products or technologies that are
complementary to our business. In addition, we plan to invest approximately $100 million in venture capital over
the next three to five years in Companies leveraging our platform technologies.