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ADOBE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
118
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 2010, we repurchased approximately 31.2 million shares at an average price of $29.19 through
structured repurchase agreements entered into during fiscal 2009 and fiscal 2010. During fiscal 2009, we repurchased
approximately 15.2 million shares at an average price per share of $27.89 through structured repurchase agreements entered
into during fiscal 2008 and fiscal 2009. 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 2008, we also repurchased 3.6 million shares at an average price of $36.41 in open market transactions.
For fiscal 2010, 2009 and 2008, the prepayments were classified as treasury stock on our Consolidated Balance Sheets at
the payment date, though only shares physically delivered to us by December 3, 2010, November 27, 2009 and November 28,
2008 were excluded from the computation of earnings per share. As of December 3, 2010 no prepayments remained under
the agreements. As of November 27, 2009, approximately $59.9 million of up-front payments remained under the
agreements.
Subsequent to December 3, 2010, as part of our $1.6 billion stock repurchase program, we entered into a structured
stock repurchase agreement with a large financial institution whereupon we provided them with a prepayment of $125.0
million. This amount will be classified as treasury stock on our Consolidated Balance Sheets. Upon completion of the $125.0
million stock repurchase agreement, $875.0 million remains under our time-constrained dollar-based authority. See Note 21
for further discussion of our stock repurchase program.
Stock Repurchase Program II
Under this stock repurchase program, we had authorization to repurchase an aggregate of 50.0 million shares of our
common stock. From the inception of the 50.0 million share authorization under this program, we provided prepayments of
$1.9 billion under structured share repurchase agreements to large financial institutions. During the third quarter of fiscal
2008, the remaining authorized number of shares were repurchased.
During fiscal 2008, we provided prepayments of $1.0 billion and repurchased 31.9 million shares under these structured
agreements at an average price of $37.15. During fiscal 2008, we also repurchased 0.5 million shares at an average price of
$39.79 in open market transactions.
NOTE 15. NET INCOME PER SHARE
Basic net income per share is computed using the weighted average number of common shares outstanding for the
period, excluding unvested restricted stock. Diluted net income per share is based upon the weighted average common shares
outstanding for the period plus dilutive potential common shares, including unvested restricted stock and stock options using
the treasury stock method.
The following table sets forth the computation of basic and diluted net income per share for fiscal 2010, 2009 and 2008
(in thousands, except per share data):
2010
2009
2008
Net income ..............................................................................................
$
774,680
$
386,508
$
871,814
Shares used to compute basic net income per share ................................
519,045
524,470
539,373
Dilutive potential common shares:
Unvested restricted stock and performance share awards ...................
3,170
2,130
1,107
Stock options .......................................................................................
3,609
4,010
8,073
Shares used to compute diluted net income per share .............................
525,824
530,610
548,553
Basic net income per share .....................................................................
$
1.49
$
0.74
$
1.62
Diluted net income per share ..................................................................
$
1.47
$
0.73
$
1.59
For fiscal 2010, 2009 and 2008, options to purchase approximately 22.4 million, 27.0 million and 16.5 million shares,
respectively, of common stock with exercise prices greater than the annual average fair market value of our stock of $31.82,
$27.30 and $37.07, respectively, were not included in the calculation because the effect would have been anti-dilutive.