Adobe 2011 Annual Report Download - page 112

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112
The following table sets forth the components of foreign currency translation adjustments for fiscal 2011, 2010 and 2009
(in thousands):
Beginning balance
Foreign currency translation adjustments
Income tax effect relating to translation adjustments for
undistributed foreign earnings
Ending balance
2011
$ 7,632
5,156
(2,208)
$ 10,580
2010
$ 10,640
(4,144)
1,136
$ 7,632
2009
$(431)
17,343
(6,272)
$ 10,640
Stock Repurchase Program
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 repurchase agreements with third-parties.
Authorization to repurchase shares to cover on-going dilution was not subject to expiration. However, this repurchase
program was limited to covering net dilution from stock issuances and was subject to business conditions and cash flow requirements
as determined by our Board of Directors from time to time.
During the third quarter of fiscal 2010, our Board of Directors approved an amendment to our stock repurchase program
authorized in April 2007 from a non-expiring share-based authority to a time-constrained dollar-based authority. As part of this
amendment, the Board of Directors granted authority to repurchase up to $1.6 billion in common stock through the end of fiscal
2012. This amended program did not affect the $250.0 million structured stock repurchase agreement entered into during March
2010. As of December 3, 2010, no prepayments remain under that agreement.
During fiscal 2011, 2010 and 2009, we entered into several structured repurchase agreements with large financial institutions,
whereupon we provided the financial institutions with prepayments totaling $695.0 million, $850.0 million and $350.0 million,
respectively. Of the $850.0 million of prepayments during fiscal 2010, $250.0 million was under the stock repurchase program
prior to the program amendment and the remaining $600.0 million was under the amended $1.6 billion time-constrained dollar-
based authority. We enter 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 2011, we repurchased approximately 21.8 million shares at an average price of $31.81 through structured
repurchase agreements entered into during fiscal 2011. 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.
For fiscal 2011, 2010 and 2009, 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 2, 2011, December 3, 2010 and November 27, 2009
were excluded from the computation of earnings per share. As of December 2, 2011 and December 3, 2010, no prepayments
remained under these agreements. As of November 27, 2009, approximately $59.9 million of prepayments remained under these
agreements.
Subsequent to December 2, 2011, 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 $80.0 million. This
amount will be classified as treasury stock on our Consolidated Balance Sheets. Upon completion of the $80.0 million stock
Table of Contents
ADOBE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)