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ADOBE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
107
The expected term of ESPP shares is the average of the remaining purchase periods under each offering period. The
assumptions used to value employee stock purchase rights were as follows:
Fiscal Years
2009
2008
2007
Expected term (in years) .....................
0.5 – 2.0
0.5 – 2.0
0.5 – 2.0
Volatility ..................................
40 – 57
%
30 – 36
%
30 – 33
%
Risk-free interest rate ........................
0.27 – 1.05
%
2.12 – 3.29
%
4.79 – 5.11
%
We recognize the estimated compensation cost of restricted stock awards and restricted stock units, net of estimated
forfeitures, over the vesting term. The estimated compensation cost is based on the fair value of our common stock on the
date of grant.
We recognize the estimated compensation cost of performance shares, net of estimated forfeitures. The awards are
earned upon attainment of identified performance goals, some of which contain discretionary metrics. As such, these awards
are re-valued based on our traded stock price at the end of each reporting period. If the discretion is removed, the award will
be classified as a fixed equity award. The fair value of the awards will be based on the measurement date, which is the date
the award becomes fixed. The awards will be subsequently amortized over the remaining performance period.
Summary of Stock Options
Option activity under our stock option program for fiscal years 2009, 2008 and 2007 was as follows (shares in
thousands):
Outstanding Options
Number of
Shares
Weighted
Average
Exercise
Price
December 1, 2006 .....................................................
61,731
$
24.19
Granted ............................................................
10,084
40.36
Exercised ..........................................................
(21,368
)
21.18
Cancelled ..........................................................
(2,705
)
33.18
November 30, 2007 ....................................................
47,742
$
28.47
Granted ...........................................................
5,462
35.08
Exercised ..........................................................
(9,983
)
25.45
Cancelled ..........................................................
(2,517
)
35.34
November 28, 2008 ....................................................
40,704
$
29.67
Granted ...........................................................
5,758
22.90
Exercised ..........................................................
(7,560
)
17.15
Cancelled ..........................................................
(3,160
)
33.57
Increase due to acquisition ............................................
5,509
20.15
November 27, 2009 ....................................................
41,251
$
29.45
The weighted average fair values of options granted during fiscal 2009, 2008 and 2007 were $8.39, $10.32 and $12.37,
respectively.
The total intrinsic value of options exercised during fiscal 2009, 2008 and 2007 was $91.8 million, $142.4 million and
$463.6 million, respectively. The intrinsic value is calculated as the difference between the market value on the date of
exercise and the exercise price of the shares.