Adobe 2010 Annual Report Download - page 70

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70
During fiscal 2009, we continued to implement restructuring activities under this program. We vacated approximately
89,000 square feet of research and development and sales facilities in the U.S., the United Kingdom and Canada. We accrued
$8.5 million for the fair value of our future contractual obligations under these operating leases using our credit-adjusted risk-
free interest rate, estimated at approximately 6% as of the date we ceased to use the leased properties. This amount is net of
the fair value of future estimated sublease income of approximately $4.4 million. We also recorded additional charges of $6.7
million for termination benefits for the elimination of substantially all of the remaining 100 full-time positions expected to be
terminated. We also recorded minor adjustments for fluctuations related to foreign currency translation.
Macromedia Restructuring Plan
We completed our acquisition of Macromedia on December 3, 2005. In connection with this acquisition, we initiated
plans to restructure both the pre-merger operations of Adobe and Macromedia to eliminate certain duplicative activities,
focus our resources on future growth opportunities and reduce our cost structure. In connection with the worldwide
restructuring plan, we recognized costs related to termination benefits for employee positions that were eliminated and for the
closure of duplicative facilities. 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.
See Note 11 of our Notes to Consolidated Financial Statements for further information regarding our restructuring
charges.
Amortization of Purchased Intangibles and Incomplete Technology
As a result of our acquisition of Omniture in fiscal 2009, we acquired purchased intangibles which are amortized over
their estimated useful lives of one to twelve years. In addition, 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. During fiscal 2009,
we completed one business combination, in addition to Omniture. In addition, during fiscal 2008 we completed one business
combination. We acquired purchased intangibles through these acquisitions which are amortized over their estimated useful
lives.
Amortization expense increased 1% during fiscal 2010 as compared to fiscal 2009, as a result of intangible assets
purchased through our acquisition of Omniture in the fourth quarter of fiscal 2009 offset by a decrease in amortization
expense associated with the intangible assets purchased through our Macromedia acquisition which were fully amortized at
the end of fiscal 2009.
Amortization expense increased 5% during fiscal 2009 as compared to fiscal 2008, primarily due to amortization
expense associated with intangibles assets purchased through the acquisition of Omniture in the fourth quarter of fiscal 2009.
Non-Operating Income (Expense), Net (dollars in millions)
Fiscal
2010
Fiscal
2009
Fiscal
2008
% Change
2010-2009
% Change
2009-2008
Interest and other income (expense), net ..........
13.1
31.4
43.8
(58
)%
(28
)%
Percentage of total revenue ..........................
*
1
%
1
%
Interest expense ................................................
(56.9
)
(3.4
)
(10.0
)
*
(66
)%
Percentage of total revenue ..........................
(2
)%
*
*
Investment gains (losses), net ..........................
(6.1
)
(17.0
)
16.4
(64
)%
(204
)%
Percentage of total revenue ..........................
*
(1
)%
*
Total non-operating income (expense), net ......
(49.9
)
11.0
50.2
(554
)%
(78
)%
_________________________________________
* Percentage is not meaningful.
Interest and Other Income (Expense), Net
Interest and other income (expense), net consists primarily of interest earned on cash, cash equivalents and short-term
fixed income investments. Interest and other income (expense), net also includes foreign exchange gains and losses,
including those from hedging revenue transactions primarily denominated in Euro and Yen currencies, and gains and losses
on fixed income investments.
Interest and other income (expense), net, decreased during fiscal 2010 as compared to fiscal 2009 primarily due to a
reduction in interest earned of $12.8 million resulting from lower average interest rates on our investments and $5.8 million
lower realized gains on our investments. During fiscal 2010, we also recorded a $20.8 million gain associated with a forward