Adobe 2008 Annual Report Download - page 61

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In the fourth quarter of fiscal 2008, we initiated a restructuring program in order to reduce our operating costs and focus
our resources on key strategic priorities impacting a total of approximately 560 full-time positions globally. In connection
with this restructuring plan, we recorded restructuring charges totaling $29.2 million related to termination benefits for the
elimination of approximately 460 of these full-time positions globally. As of November 28, 2008, $0.4 million was paid. The
remaining accrual associated with these termination benefits is expected to be substantially paid during fiscal 2009. In fiscal
2009, we expect to record approximately $10.0 million to $13.0 million primarily related to the consolidation of leased
facilities and approximately $6.0 million to $7.0 million related to employee severance arrangements for the elimination of
approximately 100 of the remaining full-time positions globally. We expect to pay this facility related liability through fiscal
2013.
Our existing cash, cash equivalents and investment balances may decline during fiscal 2009 in the event of a further
weakening of the economy or changes in our planned cash outlay. However, based on our current business plan and revenue
prospects, we believe that our existing balances, our anticipated cash flows from operations and our available credit facility
will be sufficient to meet our working capital and operating resource expenditure requirements for the next twelve months.
During the third quarter of fiscal 2007, we also increased our existing $500.0 million credit facility to $1.0 billion. The
purpose of the credit facility is to provide backup liquidity for general corporate purposes including stock repurchases. Cash
from operations could be affected by various risks and uncertainties, including, but not limited to the risks detailed in Part I,
Item 1A titled “Risk Factors.” See Note 16 of our Notes to Consolidated Financial Statements for further information
regarding our credit agreement.
We use professional investment management firms to manage a large portion of our invested cash. External investment
firms managed, on average, 65% of our consolidated invested balances during the fourth quarter of fiscal 2008. Within the
U.S., the portfolio is invested primarily in money market funds for working capital purposes. Outside of the U.S., our fixed
income portfolio is primarily invested in U.S. Treasury securities.
Stock Repurchase Program I
To facilitate our stock repurchase program, designed to return value to our stockholders and minimize dilution from
stock issuances, we repurchase shares in the open market and also enter into structured repurchases with third parties.
Authorization to repurchase shares to cover on-going dilution is not subject to expiration. However, this repurchase
program is limited to covering net dilution from stock issuances and is subject to business conditions and cash flow
requirements as determined by our Board of Directors from time to time.
As part of this program, on April 17, 2005, the Board of Directors approved the use of an additional $1.0 billion for
stock repurchases commencing upon the close of the Macromedia acquisition. This additional $1.0 billion in stock
repurchases was completed by the third quarter of fiscal 2006.
During fiscal 2008 and 2007, we entered into several structured repurchase agreements with large financial institutions,
whereupon we provided the financial institutions with prepayments of $525.0 million and $1.1 billion, respectively. We
entered into these agreements in order to take advantage of repurchasing shares at a guaranteed discount to the Volume
Weighted Average Price (“VWAP”) of our common stock over a specified period of time. We only enter into such
transactions when the discount that we receive is higher than the foregone return on our cash prepayments to the financial
institutions. There were no explicit commissions or fees on these structured repurchases. Under the terms of the agreements,
there is no requirement for the financial institutions to return any portion of the prepayment to us.
The financial institutions agree to deliver shares to us at monthly intervals during the contract term. The parameters used
to calculate the number of shares deliverable are: the total notional amount of the contract, the number of trading days in the
contract, the number of trading days in the interval and the average VWAP of our stock during the interval less the agreed
upon discount. During fiscal 2008, we repurchased 22.4 million shares at an average price of $36.26 through structured
repurchase agreements which included prepayments from fiscal 2007. During fiscal 2007, we repurchased 22.0 million shares
at an average price of $40.04 through structured repurchase agreements which included prepayments from fiscal 2006.
During fiscal 2008, we also repurchased 3.6 million shares at an average price of $36.41 in open market transactions.