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Table of Contents
ADOBE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
95
During fiscal 2015, 2014 and 2013, we entered into several structured stock repurchase agreements with large financial
institutions, whereupon we provided them with prepayments totaling $625.0 million, $600.0 million, and $1.1 billion, respectively.
Of the $625.0 million prepayments during fiscal 2015, $425.0 million was under the new $2 billion stock repurchase program and
the remaining $200.0 million was under the previous $2 billion authority. The $600.0 million and $1.1 billion prepayments during
fiscal 2014 and 2013 were under the previous $2 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 our
estimate of 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 2015, we repurchased approximately 8.1 million shares at an average price of $77.38 through structured
repurchase agreements entered into during fiscal 2015 and fiscal 2014. During fiscal 2014, we repurchased approximately 10.9
million shares at an average price of $63.48 through structured repurchase agreements entered into during fiscal 2014 and fiscal
2013. During fiscal 2013, we repurchased approximately 21.6 million shares at an average price per share of $46.47 through
structured repurchase agreements entered into during fiscal 2013 and fiscal 2012.
For fiscal 2015, 2014 and 2013, 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 27, 2015, November 28, 2014 and November 29,
2013 were excluded from the computation of earnings per share. As of November 27, 2015, $38.2 million of prepayments remained
under the agreement.
Subsequent to November 27, 2015, as part of our $2 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 $150 million. This
amount will be classified as treasury stock on our Consolidated Balance Sheets. Upon completion of the $150 million stock
repurchase agreement, $1.43 billion remains under our current authority.
NOTE 14. 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 2015, 2014 and 2013 (in
thousands, except per share data):
2015 2014 2013
Net income $ 629,551 $ 268,395 $ 289,985
Shares used to compute basic net income per share 498,764 497,867 501,372
Dilutive potential common shares:
Unvested restricted stock and performance share awards 7,389 8,586 8,736
Stock options 1,011 2,027 3,368
Shares used to compute diluted net income per share 507,164 508,480 513,476
Basic net income per share $ 1.26 $ 0.54 $ 0.58
Diluted net income per share $ 1.24 $ 0.53 $ 0.56