Adobe 2013 Annual Report Download - page 53

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subsidiaries and subject to material repatriation tax effects. Our intent is to permanently reinvest a significant portion of our
earnings from foreign operations, and current plans do not anticipate that we will need funds generated from foreign operations
to fund our domestic operations. In the event funds from foreign operations are needed to fund operations in the United States and
if U.S. tax has not already been previously provided, we would provide for and pay additional U.S. taxes in connection with
repatriating these funds.
Cash from operations could also be affected by various risks and uncertainties, including, but not limited to the risks detailed
in Part I, Item 1A titled “Risk Factors”. 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.
As of November 29, 2013, the amount outstanding under our senior notes was $1.5 billion. On March 2, 2012, we entered
into a five-year $1.0 billion senior unsecured revolving credit agreement (the “Credit Agreement”), providing for loans to us and
certain of our subsidiaries. On March 1, 2013, we exercised our option under the Credit Agreement to extend the maturity date of
the Credit Agreement by one year to March 2, 2018. As of November 29, 2013, there were no outstanding borrowings under this
Credit Agreement and the entire $1.0 billion credit line remains available for borrowing.
We use professional investment management firms to manage a large portion of our invested cash. External investment
firms managed, on average, 77% of our consolidated invested balances during fiscal 2013. The fixed income portfolio is primarily
invested in corporate bonds and commercial paper, U.S. agency securities and U.S. Treasury securities, municipal securities and
foreign government securities.
In September 2013, we finalized the sale of the Waltham property assets for net proceeds of $24.3 million. The sale price,
net of costs to sell, approximated the carrying value of the assets at the time of sale. See Note 6 for further details regarding our
assets held for sale.
Stock Repurchase Program
We currently have authority granted by our Board of Directors to repurchase up to $2.0 billion in common stock through
the end of fiscal 2015. The new stock repurchase program approved by our Board of Directors is similar to our previous $1.6
billion stock repurchase program authorized by the Board of Directors in fiscal 2010.
During fiscal 2013, 2012 and 2011, we entered into several structured stock repurchase agreements with large financial
institutions, whereupon we provided them with prepayments totaling $1.1 billion, $405.0 million and $695.0 million, respectively.
The $1.1 billion prepayments during fiscal 2013 were under the $2.0 billion stock repurchase authority. Of the $405.0 million of
prepayments during fiscal 2012, $100.0 million were under the $2.0 billion stock repurchase program and the remaining $305.0
million were under our previous $1.6 billion stock repurchase authority. The $695.0 million of prepayments during fiscal 2011
were under the $1.6 billion stock repurchase 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 2013, we repurchased approximately 21.6 million shares at an average price of $46.47 through structured
repurchase agreements entered into during fiscal 2013 and fiscal 2012. During fiscal 2012, we repurchased approximately 11.5
million shares at an average price of $32.29 through structured repurchase agreements entered into during fiscal 2012. During
fiscal 2011, we repurchased approximately 21.8 million shares at an average price per share of $31.81 through structured repurchase
agreements entered into during fiscal 2011.
For fiscal 2013, 2012 and 2011, the prepayments were classified as treasury stock on our Consolidated Balance Sheets at
the payment date, though only shares physically delivered to us by November 29, 2013, November 30, 2012 and December 2,
2011 were excluded from the computation of earnings per share. As of November 29, 2013, $129.2 million of prepayments remained
under the agreement.
Subsequent to November 29, 2013, as part of our $2.0 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 $200.0 million. This
amount will be classified as treasury stock on our Consolidated Balance Sheets. Upon completion of the $200.0 million stock
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