Adobe 2006 Annual Report Download - page 93

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93
Macromedia Merger Restructuring Charges
A summary of preliminary restructuring activities follows:
Initial
Restructuring
Charges
Cash Payments Adjustments
Balance at
December 1,
2006
Termination Benefits.............
.
$ 26,608 $ (26,459) $ 853 $ 1,002
Cost of closing redundant
facilities..............................
.
32,083
(10,547)
7,398
28,934
Cost of contract termination..
.
3,969 (3,224) (699) 46
Other .....................................
.
2,500 (1,072) 16 1,444
Total $ 65,160 $ (41,302) $ 7,568 $ 31,426
We completed our acquisition of Macromedia on December 3, 2005. Pursuant to Emerging Issues Task
Force Issue No. 95-3, “Recognition of Liabilities in Connection with a Purchase Business Combination,”
all restructuring charges related to the Macromedia acquisition are recognized as a part of the purchase
price allocation, as discussed in Note 2 and have been accrued for as of December 1, 2006.
Accrued restructuring charges of $31.4 million at December 1, 2006 includes $9.8 million recorded in
accrued restructuring, current and $21.6 million, related to long-term facilities obligations, recorded in
accrued restructuring, non-current in the accompanying Condensed Consolidated Balance Sheets. We
expect to pay these liabilities through the third quarter of fiscal 2007.
Adobe Restructuring Charges
In connection with the worldwide restructuring plan, we recognized costs related to termination
benefits for former Adobe employees whose positions were eliminated and for the closure of Adobe
facilities. We also recognized costs related to the cancellation of certain contracts held by Adobe. In
addition, costs related to the write-off of fixed assets located at facilities that will no longer be used will be
recognized in the periods that the respective offices are vacated. We expect to pay these liabilities through
the first quarter of fiscal 2007.
A summary of exit costs follows:
Initial
Restructuring
Charges
Cash Payments Adjustments
Balance at
December 1,
2006
Termination Benefits ............
.
$ 18,879 $ (18,597) $ (103) $ 179
Cost of closing redundant
facilities..............................
.
—
(479)
946
467
Cost of contract termination..
.
105 (11) (94) —
Total $ 18,984 $ (19,087) $ 749 $ 646
Pursuant to FASB’s Statement of Financial Accounting Standards No. 146, “Accounting for Costs
Associated with Exit or Disposal Activities,” all facility related charges related to the pre-merger operations
are expensed and accrued for based upon the cease use date. As of December 1, 2006, accrued restructuring
charges of $0.6 million at December 1, 2006 includes $0.3 million recorded in accrued restructuring,
current and $0.3 million, related to long-term facilities obligations, recorded in accrued restructuring, non-
current in the accompanying Condensed Consolidated Balance Sheets.