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57
Macromedia Restructuring Charges
We acquired Macromedia on December 3, 2005 and in the first quarter of fiscal 2006, pursuant to Board of Directors’
approval, implemented a restructuring plan to eliminate approximately 313 positions held by Adobe employees worldwide,
which impacted all functional areas. The reduction in force was completed in fiscal 2006. The restructuring plan also
included 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 have been vacated.
During fiscal 2008, we recorded charges of $2.9 million related to changes in estimates related to Macromedia facilities
restructuring charges due to changes in sub-lease income estimates. Additionally, we have a $13.1 million liability for
restructuring as of November 28, 2008 primarily associated with the Macromedia restructured facilities. We expect to pay
this liability through fiscal 2011.
See Note 9 of our Notes to Consolidated Financial Statements for further information regarding our restructuring
charges.
Amortization of Purchased Intangibles and Incomplete Technology
Fiscal
2008
% Change
2008 to 2007
Fiscal
2007
% Change
2007 to 2006
Fiscal
2006
Expenses ...........................
$
68.2
(6
)%
$
72.4
4
%
$
69.9
Percentage of total revenue ..........
2
%
2
%
3
%
As a result of our acquisition of Macromedia in fiscal 2006, we acquired purchased intangibles which are amortized
over their estimated useful lives of two to four years. In addition, during fiscal 2008 we completed one business combination
and during fiscal 2007, we completed two business combinations and one asset acquisition. We acquired purchased
intangibles through these acquisitions which are amortized over their estimated useful lives.
Amortization expense decreased during fiscal 2008 as compared to fiscal 2007, due to a decrease in amortization
expense associated with intangible assets purchased through the Macromedia acquisition. Additionally, included in the
amortization of purchased intangibles and incomplete technology for fiscal 2007 was $1.5 million related to the write-off of
in-process research and development from an acquisition that occurred during the second quarter of fiscal 2007.
Non-operating Income
Fiscal
2008
% Change
2008 to 2007
Fiscal
2007
% Change
2007 to 2006
Fiscal
2006
Interest and other income, net ...........
$
43.8
(47
)%
$
82.7
23
%
$
67.3
Percentage of total revenue ...........
1
%
3
%
3
%
Interest expense ......................
(10.0
)
*
(.2
)
100
%
(.1
)
Percentage of total revenue ...........
*
*
*
Investment gains and (losses), net .......
16.4
131
%
7.1
(88
)%
61.2
Percentage of total revenue ...........
*
*
2
%
Total non-operating income ..........
$ 50.2
(44
)
% $ 89.6
(30
)% $ 128.4
_________________________________________
* Percentage is not meaningful.
Interest and Other Income, net
Interest and other income, net, included interest earned on cash, cash equivalents and short-term fixed income
investments as well as foreign exchange gains and losses, including those from hedging revenue transactions primarily
denominated in Euro and Japanese Yen currencies.
Interest and other income, net, decreased during fiscal 2008 as compared to fiscal 2007 primarily as a result of lower
average invested balances due to cash used for our share repurchase programs, lower interest rates and increased hedging
costs. Additionally, during fiscal 2008, interest and other income, net included losses on fixed income investments associated