Adobe 2008 Annual Report Download - page 105

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Legal Proceedings
In connection with our anti-piracy efforts, conducted both internally and through organizations such as the Business
Software Alliance, from time to time we undertake litigation against alleged copyright infringers. Such lawsuits may lead to
counter-claims alleging improper use of litigation or violation of other local laws. We believe we have valid defenses with
respect to such counter-claims; however, it is possible that our consolidated financial position, cash flows or results of
operations could be affected in any particular period by the resolution of one or more of these counter-claims.
From time to time, Adobe is subject to legal proceedings, claims and investigations in the ordinary course of business,
including claims of alleged infringement of third-party patents and other intellectual property rights, commercial,
employment and other matters. Adobe makes a provision for a liability when it is both probable that a liability has been
incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and
adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel and other information and events
pertaining to a particular case. Litigation is inherently unpredictable. However, we believe that we have valid defenses with
respect to the legal matters pending against Adobe. It is possible, nevertheless, that our consolidated financial position, cash
flows or results of operations could be negatively affected by an unfavorable resolution of one or more of such proceedings,
claims or investigations.
Note 16. Credit Agreement
In August 2007, we entered into the Amendment to our Credit Agreement dated February 2007 (the “Amendment”),
which increased the total senior unsecured revolving facility from $500.0 million to $1.0 billion. The Amendment also
permits us to request one-year extensions effective on each anniversary of the closing date of the original agreement, subject
to the majority consent of the lenders. We also retain an option to request an additional $500.0 million in commitments, for a
maximum aggregate facility of $1.5 billion.
In February 2008, we entered into the Second Amendment to the Credit Agreement dated February 26, 2008, which
extended the maturity date of the facility by one year to February 16, 2013. The facility would terminate at this date if no
additional extensions have been requested and granted. All other terms and conditions remain the same.
The facility contains a financial covenant requiring us not to exceed a certain maximum leverage ratio. At the
Company’s option, borrowings under the facility accrue interest based on either the LIBOR for one, two, three or six months,
or longer periods with bank consent, plus a margin according to a pricing grid tied to this financial covenant, or a base rate.
The margin is set at rates between 0.20% and 0.475%. Commitment fees are payable on the facility at rates between 0.05%
and 0.15% per year based on the same pricing grid. The facility is available to provide loans to us and certain of our
subsidiaries for general corporate purposes. As of November 28, 2008 and November 30, 2007, the amount outstanding
under this credit facility was $350.0 million and zero, respectively, which is included in long-term liabilities on our
consolidated balance sheet. As of November 28, 2008, we were in compliance with all of the covenants.