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ADOBE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
82
NOTE 6. PROPERTY AND EQUIPMENT
Property and equipment, net consisted of the following as of November 28, 2014 and November 29, 2013 (in thousands):
2014 2013
Computers and equipment ............................................................................................ $ 855,218 $ 731,767
Furniture and fixtures.................................................................................................... 82,385 82,904
Server hardware under capital lease.............................................................................. 25,703 61,007
Capital projects in-progress .......................................................................................... 68,652 54,593
Leasehold improvements .............................................................................................. 240,506 235,859
Land .............................................................................................................................. 106,283 106,283
Buildings....................................................................................................................... 320,410 175,325
Total............................................................................................................................... 1,699,157 1,447,738
Less accumulated depreciation and amortization ......................................................... (914,034)(787,964)
Property and equipment, net....................................................................................... $ 785,123 $ 659,774
Depreciation and amortization expense of property and equipment for fiscal 2014, 2013 and 2012 was $144.2 million,
$144.7 million and $134.4 million, respectively.
In August 2014, we exercised our option to purchase the East and West Towers for a total purchase price of $143.2 million.
We capitalized the East and West Towers as property and equipment on our Consolidated Balance Sheets at $144.1 million, the
lesser of cost or fair value, which represented the total purchase price plus other direct costs associated with the purchase. These
buildings will be depreciated over their useful life of 40 years on a straight-line basis. See Note 15 for discussion of our option to
purchase the East and West Towers.
In May 2013, management approved a plan to sell land, building and other assets located in Waltham, Massachusetts (the
“Waltham property assets”) with a total carrying amount of $47.4 million. The decision to sell the Waltham property assets was
largely based upon lack of operational needs for a facility of this size, in combination with recent improvements in market conditions
for commercial real estate in the area. During May 2013, we began to actively market the Waltham property assets and we expected
to sell the property within one year from management’s approval of the plan and classified the Waltham property assets as held
for sale at $23.6 million representing their fair value, net of estimated costs to sell which was the lesser of the fair value less cost
to sell or carrying amount of the assets. The fair value, net of estimated cost to sell was measured with the assistance of third-party
valuation models which used inputs such as market comparable data for similar properties to be purchased by other operating and
investing entities and discounted cash flow techniques as part of the analysis. The fair value measurement was categorized as Level
3 as significant unobservable inputs were used in the valuation analysis. We ceased recognizing depreciation expense on the
Waltham property assets upon reclassification. As a result, we recorded a write-down of $23.8 million during fiscal 2013. These
charges are included in restructuring and other related charges in our Consolidated Statements of Income for fiscal 2013. In
September 2013, we finalized the sale of the Waltham property assets for net proceeds of $24.3 million which approximated the
carrying value of the assets at the time of sale.