(Mark
One)
|
||
x
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
|
For
the fiscal year ended November 28, 2008
|
||
OR
|
||
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
Delaware
|
77-0019522
|
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
|
incorporation
or organization)
|
Identification
No.)
|
Title
of Each Class
|
Name
of Each Exchange on Which Registered
|
|
Common
Stock, $0.0001 par value per share
|
The
NASDAQ Stock Market LLC
(NASDAQ
Global Select Market)
|
Page
|
||||
PART I
|
||||
Item
1.
|
3
|
|||
Item
1A.
|
32
|
|||
Item
1B.
|
41
|
|||
Item
2.
|
41
|
|||
Item
3.
|
42
|
|||
Item
4.
|
43
|
|||
PART II
|
||||
Item
5.
|
43
|
|||
Item
6.
|
46
|
|||
Item
7.
|
47
|
|||
Item
7A.
|
64
|
|||
Item
8.
|
67
|
|||
Item
9.
|
114
|
|||
Item
9A.
|
114
|
|||
Item
9B.
|
115
|
|||
PART III
|
||||
Item
10.
|
115
|
|||
Item
11.
|
115
|
|||
Item
12.
|
115
|
|||
Item
13.
|
115
|
|||
Item
14.
|
115
|
|||
PART IV
|
||||
Item
15.
|
116
|
|||
117
|
||||
119
|
||||
120
|
|
·
|
Engage
their constituents with compelling experiences and intelligent
documents—providing them with the ability to act upon information or tasks
presented to them for improved and effective
collaboration;
|
|
·
|
Streamline
and accelerate document-based processes so more work gets
done;
|
|
·
|
Simplify
the creation and deployment of compelling, relevant and actionable
applications;
|
|
·
|
Augment
existing enterprise infrastructures to deliver the next level of
engagement with their stakeholders;
|
|
·
|
Implement
solutions which adhere to security and regulatory compliance
requirements;
|
|
·
|
Scale
these solutions needs regardless of the size of their constituent
populations; and
|
|
·
|
Leverage
Adobe Reader and Adobe Flash Platform to reach people inside and outside
of their organizations, and across all desktops and
devices.
|
2008
|
2007
|
2006
|
||||||
Ingram
Micro
|
18
|
%
|
21
|
%
|
24
|
%
|
||
Tech
Data
|
9
|
%
|
10
|
%
|
10
|
%
|
2008
|
2007
|
||||
Ingram
Micro
|
18
|
%
|
19
|
%
|
|
Tech
Data
|
8
|
%
|
10
|
%
|
Name
|
Age
|
Positions
|
||
Shantanu
Narayen
|
45
|
President
and Chief Executive Officer
|
||
Mark
Garrett
|
51
|
Executive
Vice President, Chief Financial Officer
|
||
Karen O. Cottle
|
59
|
Senior
Vice President, General Counsel and Corporate Secretary
|
||
Kevin
Lynch
|
42
|
Senior
Vice President, Chief Technology Officer
|
||
Johnny
Loiacono
|
47
|
Senior
Vice President, Creative Solutions Business Unit
|
||
Rob
Tarkoff
|
40
|
Senior
Vice President, Business Productivity Solutions
|
||
Matthew Thompson
|
50
|
Senior
Vice President, Worldwide Field Operations
|
||
Richard
T. Rowley
|
52
|
Vice
President, Principal Accounting
Officer
|
|
·
|
difficulty
in assimilating the operations and personnel of the acquired
company;
|
|
·
|
difficulty
in effectively integrating the acquired technologies or products with our
current products and technologies;
|
|
·
|
difficulty
in maintaining controls, procedures and policies during the transition and
integration;
|
|
·
|
disruption
of our ongoing business and distraction of our management and employees
from other opportunities and
challenges;
|
|
·
|
difficulty
integrating the acquired company’s accounting, management information,
human resources and other administrative
systems;
|
|
·
|
inability
to retain key technical and managerial personnel of the acquired
business;
|
|
·
|
inability
to retain key customers, distributors, vendors and other business partners
of the acquired business;
|
|
·
|
inability
to achieve the financial and strategic goals for the acquired and combined
businesses;
|
|
·
|
inability
to take advantage of anticipated tax benefits as a result of unforeseen
difficulties in our integration
activities;
|
|
·
|
incurring
acquisition-related costs or amortization costs for acquired intangible
assets that could impact our operating
results;
|
|
·
|
potential
impairment of our relationships with employees, customers, partners,
distributors or third-party providers of technology or
products;
|
|
·
|
potential
failure of the due diligence processes to identify significant problems,
liabilities or other shortcomings or challenges of an acquired company or
technology, including but not limited to, issues with the acquired
company’s intellectual property, product quality or product architecture,
revenue recognition or other accounting practices, employee, customer or
partner issues or legal and financial
contingencies;
|
|
·
|
exposure
to litigation or other claims in connection with, or inheritance of claims
or litigation risk as a result of, an acquisition, including but not
limited to, claims from terminated employees, customers, former
stockholders or other third
parties;
|
|
·
|
incurring
significant exit charges if products acquired in business combinations are
unsuccessful;
|
|
·
|
potential
inability to assert that internal controls over financial reporting are
effective;
|
|
·
|
potential
inability to obtain, or obtain in a timely manner, approvals from
governmental authorities, which could delay or prevent such acquisitions;
and
|
|
·
|
potential
delay in customer and distributor purchasing decisions due to uncertainty
about the direction of our product
offerings.
|
|
·
|
foreign
currency fluctuations;
|
|
·
|
changes
in government preferences for software
procurement;
|
|
·
|
international
economic, political and labor
conditions;
|
|
·
|
tax
laws (including U.S. taxes on foreign
subsidiaries);
|
|
·
|
unexpected
changes in, or impositions of, international legislative or regulatory
requirements;
|
|
·
|
failure
of foreign laws to protect our intellectual property rights
adequately;
|
|
·
|
inadequate
local infrastructure;
|
|
·
|
delays
resulting from difficulty in obtaining export licenses for certain
technology, tariffs, quotas and other trade barriers and
restrictions;
|
|
·
|
transportation
delays;
|
|
·
|
the
burdens of complying with a variety of foreign laws, including consumer
and data protection laws; and
|
|
·
|
other
factors beyond our control, including terrorism, war, natural disasters
and diseases.
|
|
·
|
software
revenue recognition;
|
|
·
|
accounting
for stock-based compensation;
|
|
·
|
accounting
for income taxes; and
|
|
·
|
accounting
for business combinations and related
goodwill.
|
Location
|
Approximate
Square
Footage
|
Use
|
|||||||
North
America:
|
|||||||||
345
Park Avenue
San
Jose, CA 95110, USA
|
378,000
|
Research,
product development, sales and marketing, and
administration
|
|||||||
321
Park Avenue
San
Jose, CA 95110, USA
|
321,000
|
Research,
product development, sales and marketing
|
|||||||
151
Almaden Boulevard
San
Jose, CA 95110, USA
|
267,000
|
Product
development, sales and administration
|
|||||||
601
and 625 Townsend
San
Francisco, CA 94103, USA
|
272,000
|
*
|
Research,
product development, sales, marketing and
administration
|
||||||
801
N. 34
th
Street-Waterfront
Seattle,
WA 98103, USA
|
182,000
|
Product
development, sales, technical support and
administration
|
|||||||
1-3
Riverside Center
275
Grove Street
Newton,
MA 02466, USA
|
81,000
|
**
|
Research,
product development, sales and marketing
|
||||||
333
Preston Street
Ottawa,
Ontario K1S 1N4
|
125,000
|
Research,
product development, sales, marketing and
administration
|
|||||||
India:
|
|||||||||
Adobe
Towers, 1-1A, Sector 25A
Noida,
U.P. 201301
|
191,000
|
Product
development
|
|||||||
Adobe
Towers, Plot #6, Sector 127
Expressway,
Noida, U.P. 201301
|
65,000
|
Product
development
|
|||||||
Salapuria
Infinity, 3rd Floor
#5,
Bannerghatta Road
Bangalore
560029
|
84,000
|
Research
and product development
|
|||||||
Japan:
|
|||||||||
Gate
City Ohsaki East Tower
1-11-2
Ohsaki, Shinagawa-ku
Tokyo
141-0032
|
57,000
|
Product
development, sales and
marketing
|
Location
|
Approximate
Square
Footage
|
Use
|
|||||
China: | |||||||
Block
A, SP Tower, 21
st
& 22
nd
Floor
Block
D, SP Tower, 10
th
Floor
Tsinghua
Science Park, Yard 1
Zhongguancun
Donglu, Haidian District
Beijing,
China
|
46,000
|
Research
and product development
|
|||||
Germany:
|
|||||||
Grobe
Elbstrable 27
Hamburg
22767
|
36,000
|
Research
and product development
|
|||||
Romania:
|
|||||||
26
Z Timisoara Blvd, Anchor Plaza
Lujerului,
Sector 6
Bucharest
|
22,000
|
***
|
Research
and product development
|
||||
UK:
|
|||||||
3
Roundwood Avenue
Stockley
Park, Uxbridge, UB11 1AY
|
22,000
|
Product
development, sales, marketing and
administration
|
*
|
The
total square footage is 346,000, of which we occupy 272,000 square feet,
or approximately 79% of this facility; 74,000 square feet is unoccupied
basement space.
|
**
|
The
total square footage is 348,000, of which we occupy 81,000 square feet, or
approximately 23% of this facility. The remaining square
footage is subleased.
|
***
|
The
total square footage is 44,000, of which we occupy 22,000 square feet, or
approximately 50% of this facility. The remaining square
footage is subleased.
|
Plan/Period
(1)
|
Shares
Repurchased
(2)
|
Average
Price
Per
Share
|
Maximum
Number
of
Shares that May
Yet
Be Purchased
Under
the Plan
|
||||||||||
Stock
Repurchase Program I
|
|||||||||||||
Beginning
shares available to be repurchased as of August 29, 2008
|
143,023,525 | (3) | |||||||||||
August
30—September 26, 2008
|
|||||||||||||
Structured
repurchases
|
1,019,649 | $ | 40.23 | ||||||||||
September
27—October 24, 2008
|
|||||||||||||
From
employees
(4)
|
29 | $ | 26.00 | ||||||||||
Structured
repurchases
|
1,023,240 | $ | 32.58 | ||||||||||
Open
market repurchases
|
2,802,943 | $ | 35.67 | ||||||||||
October
25—November 28, 2008
|
|||||||||||||
Structured
repurchases
|
1,340,051 | $ | 23.84 | ||||||||||
Adjustments
to repurchase authority for net dilution
|
— | (3,338,382 | ) | (5) | |||||||||
Total
shares repurchased
|
6,185,912 | (6,185,912 | ) | ||||||||||
Ending
shares available to be repurchased under Program I as of November 28,
2008
|
133,499,231 | (6) |
(1)
|
Stock
Repurchase Program I
In December 1997, our Board of Directors
authorized Stock Repurchase Program I which is not subject to expiration.
However, this repurchase program is limited to covering net dilution from
stock issuances and is subject to business conditions and cash flow
requirements as determined by our Board of Directors from time to
time.
|
(2)
|
All
shares were purchased as part of publicly announced
plans.
|
(3)
|
Additional
109.0 million shares were issued for the acquisition of Macromedia which
accounted for the majority of the repurchase authorization
.
|
(4)
|
The
repurchases from employees represent shares cancelled when surrendered in
lieu of cash payments for withholding taxes
due.
|
(5)
|
Adjustment
of authority to reflect changes in the dilution from outstanding shares
and options.
|
(6)
|
The
remaining authorization for the ongoing stock repurchase program is
determined by combining all stock issuances, net of any cancelled,
surrendered or exchanged shares less all stock repurchases under the
ongoing plan, beginning in the first quarter of fiscal
1998.
|
2004
|
2005
|
2006
|
2007
|
2008
|
||||||||||||||||
Adobe
Systems
|
$ | 152.59 | $ | 169.57 | $ | 190.81 | $ | 204.34 | $ | 112.30 | ||||||||||
S&P
500 Index
|
114.56 | 123.91 | 139.40 | 150.59 | 93.22 | |||||||||||||||
S&P
500 Software & Services Index
|
118.75 | 122.24 | 127.67 | 145.77 | 83.62 |
*
|
The
material in this report is not deemed “filed” with the SEC and is not to
be incorporated by reference into any of our filing under the Securities
Act of 1933 or the Securities Exchange Act of 1934, whether made before or
after the date hereof and irrespective of any general incorporation
language in any such filings.
|
Fiscal Years
|
||||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
Operations:
|
||||||||||||||||||||
Revenue
|
$ | 3,579,889 | $ | 3,157,881 | $ | 2,575,300 | $ | 1,966,321 | $ | 1,666,581 | ||||||||||
Gross
profit
|
3,217,259 | 2,803,187 | 2,282,843 | 1,853,743 | 1,562,203 | |||||||||||||||
Income
before income taxes
|
1,078,508 | 947,190 | 679,727 | 765,776 | 608,645 | |||||||||||||||
Net
income
(1)
|
871,814 | 723,807 | 505,809 | 602,839 | 450,398 | |||||||||||||||
Net
income per share
(1),
(2)
|
||||||||||||||||||||
Basic
|
1.62 | 1.24 | 0.85 | 1.23 | 0.94 | |||||||||||||||
Diluted
|
1.59 | 1.21 | 0.83 | 1.19 | 0.91 | |||||||||||||||
Cash
dividends declared per common share
|
— | — | — | 0.00625 | 0.025 | |||||||||||||||
Financial
position:
(3)
|
||||||||||||||||||||
Cash,
cash equivalents and short-term investments
|
2,019,202 | 1,993,854 | 2,280,879 | 1,700,834 | 1,313,221 | |||||||||||||||
Working
capital
|
1,972,504 | 1,720,441 | 2,208,688 | 1,528,915 | 1,107,458 | |||||||||||||||
Total
assets
|
5,821,598 | 5,713,679 | 5,962,548 | 2,440,315 | 1,958,632 | |||||||||||||||
Long-term
debt
|
350,000 | — | — | — | — | |||||||||||||||
Stockholders’
equity
|
$ | 4,410,354 | $ | 4,649,982 | $ | 5,151,876 | $ | 1,865,164 | $ | 1,423,477 | ||||||||||
Additional
data:
|
||||||||||||||||||||
Worldwide
employees
|
7,544 | 6,794 | 6,068 | 4,285 | 3,848 |
(1)
|
In
fiscal 2008, 2007 and 2006, net income and net income per share includes
the impact of SFAS 123R stock-based compensation charges as well as the
integration of Macromedia into our operations in fiscal 2006, neither of
which were present in fiscal years 2005 and prior.
See Notes 2 and 11 of our
Notes to Consolidated Financial Statements for information regarding our
Macromedia acquisition and stock-based compensation,
respectively.
|
(2)
|
On March 16, 2005, our Board of
Directors approved a two-for-one stock split, in the form of a stock
dividend, of our common stock payable on May 23, 2005 to stockholders
of record as of May 2, 2005. Per share data, for all periods
presented, have been adjusted to give effect to this stock
split.
|
(3)
|
Information
associated with our financial position is as of the Friday closest to
November 30 for the five fiscal periods through
2008.
|
Fiscal
2008
|
% Change
2008 to 2007
|
Fiscal
2007
|
% Change
2007 to 2006
|
Fiscal
2006
|
||||||||||||||||
Product
|
$ | 3,396.5 | 12 | % | $ | 3,019.5 | 22 | % | $ | 2,484.7 | ||||||||||
Percentage
of total revenue
|
95 | % | 96 | % | 96 | % | ||||||||||||||
Services
and support
|
183.4 | 33 | % | 138.4 | 53 | % | 90.6 | |||||||||||||
Percentage
of total revenue
|
5 | % | 4 | % | 4 | % | ||||||||||||||
Total
revenue
|
$ | 3,579.9 | 13 | % | $ | 3,157.9 | 23 | % | $ | 2,575.3 |
Fiscal
2008
|
% Change
2008 to 2007
|
Fiscal
2007
|
% Change
2007 to 2006
|
Fiscal
2006
|
||||||||||||||||
Creative
Solutions
|
$ | 2,072.8 | 9 | % | $ | 1,899.0 | 32 | % | $ | 1,438.0 | ||||||||||
Percentage
of total revenue
|
58 | % | 60 | % | 56 | % | ||||||||||||||
Knowledge
Worker
|
810.9 | 11 | % | 728.5 | 11 | % | 657.8 | |||||||||||||
Percentage
of total revenue
|
23 | % | 23 | % | 26 | % | ||||||||||||||
Enterprise
|
253.0 | 32 | % | 191.3 | 21 | % | 158.2 | |||||||||||||
Percentage
of total revenue
|
7 | % | 6 | % | 6 | % | ||||||||||||||
Mobile
and Device Solutions
|
113.1 | 115 | % | 52.5 | 40 | % | 37.5 | |||||||||||||
Percentage
of total revenue
|
3 | % | 2 | % | 1 | % | ||||||||||||||
Platform
|
118.5 | 46 | % | 80.9 | 19 | % | 68.1 | |||||||||||||
Percentage
of total revenue
|
3 | % | 3 | % | 3 | % | ||||||||||||||
Print
and Publishing
|
211.6 | 3 | % | 205.7 | (5 | )% | 215.7 | |||||||||||||
Percentage
of total revenue
|
6 | % | 6 | % | 8 | % | ||||||||||||||
Total
revenue
|
$ | 3,579.9 | 13 | % | $ | 3,157.9 | 23 | % | $ | 2,575.3 |
Fiscal
2008
|
% Change
2008 to 2007
|
Fiscal
2007
|
% Change
2007 to 2006
|
Fiscal
2006
|
||||||||||||||||
Americas
|
$ | 1,632.8 | 8 | % | $ | 1,508.9 | 19 | % | $ | 1,266.7 | ||||||||||
Percentage
of total revenue
|
46 | % | 48 | % | 49 | % | ||||||||||||||
EMEA
|
1,229.2 | 20 | % | 1,026.4 | 33 | % | 770.1 | |||||||||||||
Percentage
of total revenue
|
34 | % | 32 | % | 30 | % | ||||||||||||||
Asia
|
717.9 | 15 | % | 622.6 | 16 | % | 538.5 | |||||||||||||
Percentage
of total revenue
|
20 | % | 20 | % | 21 | % | ||||||||||||||
Total
revenue
|
$ | 3,579.9 | 13 | % | $ | 3,157.9 | 23 | % | $ | 2,575.3 |
Fiscal
2008
|
% Change
2008 to 2007
|
Fiscal
2007
|
% Change
2007 to 2006
|
Fiscal
2006
|
||||||||||||||||
Product
|
$ | 266.4 | (2 | )% | $ | 270.8 | 20 | % | $ | 226.5 | ||||||||||
Percentage
of total revenue
|
7 | % | 9 | % | 9 | % | ||||||||||||||
Services
and support
|
96.2 | 15 | % | 83.9 | 27 | % | 66.0 | |||||||||||||
Percentage
of total revenue
|
3 | % | 3 | % | 3 | % | ||||||||||||||
Total
cost of revenue
|
$ | 362.6 | 2 | % | $ | 354.7 | 21 | % | $ | 292.5 |
% Change
2008 to 2007
|
% Change
2007
to 2006
|
|||||||
Amortization
of acquired rights to use technology
|
6
|
%
|
8
|
%
|
||||
Royalties
for licensed technologies
|
3
|
7
|
||||||
Localization
costs related to our product launches
|
(1
|
)
|
10
|
|||||
Excess
and obsolete inventory
|
(1
|
)
|
3
|
|||||
Amortization
of purchased technology
|
(10
|
)
|
(11
|
)
|
||||
Various
individually insignificant items
|
1
|
3
|
||||||
Total
change
|
(2
|
)%
|
20
|
%
|
Fiscal
2008
|
% Change
2008 to 2007
|
Fiscal
2007
|
% Change
2007 to 2006
|
Fiscal
2006
|
||||||||||||||||
Expenses
|
$ | 662.1 | 8 | % | $ | 613.2 | 14 | % | $ | 539.7 | ||||||||||
Percentage
of total revenue
|
18 | % | 19 | % | 21 | % |
% Change
2008 to 2007
|
% Change
2007
to 2006
|
|||||||
Compensation
and related benefits associated with headcount growth
|
7
|
%
|
9
|
%
|
||||
Compensation
associated with incentive compensation and stock-based
compensation
|
—
|
5
|
||||||
Various
individually insignificant items
|
1
|
—
|
||||||
Total
change
|
8
|
%
|
14
|
%
|
Fiscal
2008
|
% Change
2008 to 2007
|
Fiscal
2007
|
% Change
2007
to 2006
|
Fiscal
2006
|
||||||||||||||||
Expenses
|
$ | 1,089.3 | 11 | % | $ | 984.4 | 14 | % | $ | 867.1 | ||||||||||
Percentage
of total revenue
|
30 | % | 31 | % | 34 | % |
% Change
2008 to 2007
|
% Change
2007 to 2006
|
|||||||
Compensation
and related benefits associated with headcount growth
|
5
|
%
|
3
|
%
|
||||
Marketing
spending related to product launches and overall marketing efforts to
further increase revenue
|
4
|
2
|
||||||
Compensation
associated with incentive compensation and stock-based
compensation
|
1
|
6
|
||||||
Various
individually insignificant items
|
1
|
3
|
||||||
Total
change
|
11
|
%
|
14
|
%
|
Fiscal
2008
|
% Change
2008
to 2007
|
Fiscal
2007
|
% Change
2007 to 2006
|
Fiscal
2006
|
||||||||||||||||
Expenses
|
$ | 337.3 | 23 | % | $ | 275.0 | 17 | % | $ | 234.6 | ||||||||||
Percentage
of total revenue
|
9 | % | 9 | % | 9 | % |
% Change
2008 to 2007
|
% Change
2007 to 2006
|
|||||||
Allocation
of costs associated with acquired rights to use technology
|
6
|
%
|
—
|
%
|
||||
Compensation
and related benefits associated with headcount growth
|
4
|
3
|
||||||
Charitable
contributions
|
4
|
—
|
||||||
Compensation
associated with incentive compensation and stock-based
compensation
|
2
|
8
|
||||||
Professional
and consulting fees
|
2
|
2
|
||||||
Provision
for bad debt
|
2
|
—
|
||||||
Depreciation
and amortization
|
1
|
2
|
||||||
Various
individually insignificant items
|
2
|
2
|
||||||
Total
change
|
23
|
%
|
17
|
%
|
Fiscal
2008
|
% Change
2008
to 2007
|
Fiscal
2007
|
% Change
2007 to 2006
|
Fiscal
2006
|
||||||||||||||||
Expenses
|
$ | 32.1 | * | $ | 0.6 | (97 | )% | $ | 20.3 | |||||||||||
Percentage
of total revenue
|
1 | % | * | 1 | % |
*
|
Percentage
is not meaningful.
|
Fiscal
2008
|
% Change
2008
to 2007
|
Fiscal
2007
|
% Change
2007 to 2006
|
Fiscal
2006
|
||||||||||||||||
Expenses
|
$ | 68.2 | (6 | )% | $ | 72.4 | 4 | % | $ | 69.9 | ||||||||||
Percentage
of total revenue
|
2 | % | 2 | % | 3 | % |
Fiscal
2008
|
% Change
2008
to 2007
|
Fiscal
2007
|
% Change
2007 to 2006
|
Fiscal
2006
|
||||||||||||||||
Interest
and other income, net
|
$ | 43.8 | (47 | )% | $ | 82.7 | 23 | % | $ | 67.3 | ||||||||||
Percentage
of total revenue
|
1 | % | 3 | % | 3 | % | ||||||||||||||
Interest
expense
|
(10.0 | ) | * | (.2 | ) | 100 | % | (.1 | ) | |||||||||||
Percentage
of total revenue
|
* | * | * | |||||||||||||||||
Investment
gains and (losses), net
|
16.4 | 131 | % | 7.1 | (88 | )% | 61.2 | |||||||||||||
Percentage
of total revenue
|
* | % | * | % | 2 | % | ||||||||||||||
Total
non-operating income
|
$ | 50.2 | (44 | )% | $ | 89.6 | (30 | )% | $ | 128.4 |
*
|
Percentage
is not meaningful.
|
2008
|
2007
|
2006
|
||||||||||
Net
gains (losses) related to our investments in Adobe Ventures and cost
method investments
|
$ | 15.9 | $ | 6.9 | $ | (6.5 | ) | |||||
Gains
from sale of equity investments
|
5.4 | 0.2 | 67.9 | |||||||||
Write-downs
due to other-than-temporary declines in value of our marketable equity
securities
|
(4.9 | ) | — | — | ||||||||
Losses
on stock warrants
|
— | — | (0.2 | ) | ||||||||
Total
investment gains and (losses), net
|
$ | 16.4 | $ | 7.1 | $ | 61.2 |
Fiscal
2008
|
% Change
2008 to 2007
|
Fiscal
2007
|
% Change
2007 to 2006
|
Fiscal
2006
|
||||||||||||||||
Provision
|
$ | 206.7 | (7 | )% | $ | 223.4 | 28 | % | $ | 173.9 | ||||||||||
Percentage
of total revenue
|
6 | % | 7 | % | 7 | % | ||||||||||||||
Effective
tax rate
|
19 | % | 24 | % | 26 | % |
Fiscal
2008
|
Fiscal
2007
|
|||||||
Cash,
cash equivalents and short-term investments
|
$ | 2,019.2 | $ | 1,993.9 | ||||
Working
capital
|
1,972.5 | 1,720.4 | ||||||
Stockholders’
equity
|
$ | 4,410.4 | $ | 4,650.0 |
Fiscal
2008
|
Fiscal
2007
|
Fiscal
2006
|
||||||||||
Net
cash provided by operating activities
|
$ | 1,280.7 | $ | 1,441.1 | $ | 900.0 | ||||||
Net
cash (used for) provided by investing activities
|
(304.7 | ) | 81.5 | 195.2 | ||||||||
Net
cash used for financing activities
|
(1,021.6 | ) | (1,350.4 | ) | (747.4 | ) | ||||||
Effect
of foreign currency exchange rates on cash and cash
equivalents
|
(14.4 | ) | 1.7 | 3.9 | ||||||||
Net
(decrease) increase in cash and cash equivalents
|
$ | (60.0 | ) | $ | 173.9 | $ | 351.7 |
Board Approval
|
Repurchases
|
2008
|
2007
|
2006
|
||||||||||||||||||||
Date
|
Under the Plan
|
Shares
|
Average
|
Shares
|
Average
|
Shares
|
Average
|
|||||||||||||||||
December 1997
|
From
employees
(1)
|
5 | $ | 34.89 | 39 | $ | 39.24 | 134 | $ | 37.10 | ||||||||||||||
Open
market
|
3,554 | 36.41 | — | — | 1,650 | 36.04 | ||||||||||||||||||
Structured
repurchases
(2)
|
22,418 | 36.26 | 22,012 | 40.04 | 36,792 | 34.00 | ||||||||||||||||||
April
2007
|
Structured
repurchases
(2)
|
31,859 | 37.15 | 17,684 | 40.50 | — | — | |||||||||||||||||
Open
market
|
456 | 39.79 | — | — | — | — | ||||||||||||||||||
Total
shares
|
58,292 | $ | 36.79 | 39,735 | $ | 40.25 | 38,576 | $ | 34.10 | |||||||||||||||
Total
cost
|
$ | 2,144,400 | $ | 1,599,214 | $ | 1,315,317 |
(1)
|
The
repurchases from employees represent shares cancelled when surrendered in
lieu of cash payments for the option exercise price or withholding taxes
due.
|
(2)
|
Stock
repurchase agreements executed with large financial institutions. See
“Stock Repurchase Program I” and “Stock Repurchase Program II”
above.
|
Total
|
Less than
1 year
|
1-3 years
|
3-5 years
|
Over
5
years
|
||||||||||||||||
Total
non-cancellable operating leases
|
$ | 229.2 | $ | 49.2 | $ | 60.9 | $ | 34.7 | $ | 84.4 | ||||||||||
Total
purchase commitments
|
145.9 | 111.1 | 15.7 | 4.6 | 14.5 | |||||||||||||||
Total
debt
|
350.0 | — | — | 350.0 | — | |||||||||||||||
Total
|
$ | 725.1 | $ | 160.3 | $ | 76.6 | $ | 389.3 | $ | 98.9 |
50 | % | 35 | % | 15 | % | |||||||
Marketable
equity securities
|
$ | (1.5 | ) | $ | (1.0 | ) | $ | (0.5 | ) |
Due
within one year
|
$ | 664.8 | ||
Due
within two years
|
271.8 | |||
Due
within three years
|
73.6 | |||
Due
after three years
|
119.5 | |||
Total
|
$ | 1,129.7 |
-150
BPS
|
-100
BPS
|
-50
BPS
|
Fair
Value 11/28/2008
|
+50
BPS
|
+100
BPS
|
+150
BPS
|
||||||||||||||||||
1,145.8
|
1,142.3 | 1,136.4 | 1,129.7 | 1,123.0 | 1,116.4 | 1,109.9 | ||||||||||||||||||
-150
BPS
|
-100
BPS
|
-50
BPS
|
Fair
Value 11/30/2007
|
+50
BPS
|
+100
BPS
|
+150
BPS
|
||||||||||||||||||
1,034.1
|
1,031.6 | 1,029.1 | 1,026.6 | 1,024.1 | 1,021.7 | 1,019.3 |
Page
|
||
68
|
||
69
|
||
70
|
||
71
|
||
72
|
||
113
|
November
28,
|
November 30,
|
|||||||
2008
|
2007
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 886,450 | $ | 946,422 | ||||
Short-term
investments
|
1,132,752 | 1,047,432 | ||||||
Trade
receivables, net of allowances for doubtful accounts of $4,128 and $4,398,
respectively
|
467,234 | 318,145 | ||||||
Deferred
income taxes
|
110,713 | 171,472 | ||||||
Prepaid
expenses and other assets
|
137,954 | 89,380 | ||||||
Total
current assets
|
2,735,103 | 2,572,851 | ||||||
Property
and equipment, net
|
313,037 | 289,758 | ||||||
Goodwill
|
2,134,730 | 2,148,102 | ||||||
Purchased
and other intangibles, net
|
214,960 | 367,644 | ||||||
Investment
in lease receivable
|
207,239 | 207,239 | ||||||
Other
assets
|
216,529 | 128,085 | ||||||
Total
assets
|
$ | 5,821,598 | $ | 5,713,679 | ||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Trade
payables
|
$ | 55,840 | $ | 41,724 | ||||
Accrued
expenses
|
399,969 | 408,579 | ||||||
Accrued
restructuring
|
35,690 | 3,731 | ||||||
Income
taxes payable
|
27,136 | 215,058 | ||||||
Deferred
revenue
|
243,964 | 183,318 | ||||||
Total
current liabilities
|
762,599 | 852,410 | ||||||
Long-term
liabilities:
|
||||||||
Debt
|
350,000 | — | ||||||
Deferred
revenue
|
31,356 | 25,950 | ||||||
Accrued
restructuring
|
6,214 | 13,987 | ||||||
Income
taxes payable
|
123,182 | — | ||||||
Deferred
income taxes
|
117,328 | 148,943 | ||||||
Other
liabilities
|
20,565 | 22,407 | ||||||
Total
liabilities
|
1,411,244 | 1,063,697 | ||||||
Commitments
and contingencies
|
||||||||
Stockholders’
equity:
|
||||||||
Preferred
stock, $0.0001 par value; 2,000 shares authorized; none
issued
|
— | — | ||||||
Common
stock, $0.0001 par value; 900,000 shares authorized; 600,834 shares
issued; 526,111 and 571,409 shares outstanding,
respectively
|
61 | 61 | ||||||
Additional
paid-in-capital
|
2,396,819 | 2,340,969 | ||||||
Retained
earnings
|
4,913,406 | 4,041,592 | ||||||
Accumulated
other comprehensive income
|
57,222 | 27,948 | ||||||
Treasury
stock, at cost (74,723 and 29,425 shares, respectively), net of
re-issuances
|
(2,957,154 | ) | (1,760,588 | ) | ||||
Total
stockholders’ equity
|
4,410,354 | 4,649,982 | ||||||
Total
liabilities and stockholders’ equity
|
$ | 5,821,598 | $ | 5,713,679 |
Years Ended
|
||||||||||||
November
28,
2008
|
November
30,
2007
|
December 1,
2006
|
||||||||||
Revenue:
|
||||||||||||
Products
|
$ | 3,396,542 | $ | 3,019,524 | $ | 2,484,710 | ||||||
Services
and support
|
183,347 | 138,357 | 90,590 | |||||||||
Total
revenue
|
3,579,889 | 3,157,881 | 2,575,300 | |||||||||
Total
cost of revenue:
|
||||||||||||
Products
|
266,389 | 270,818 | 226,506 | |||||||||
Services
and support
|
96,241 | 83,876 | 65,951 | |||||||||
Total
cost of revenue
|
362,630 | 354,694 | 292,457 | |||||||||
Gross
profit
|
3,217,259 | 2,803,187 | 2,282,843 | |||||||||
Operating
expenses:
|
||||||||||||
Research
and development
|
662,057 | 613,242 | 539,684 | |||||||||
Sales
and marketing
|
1,089,341 | 984,388 | 867,145 | |||||||||
General
and administrative
|
337,291 | 274,982 | 234,597 | |||||||||
Restructuring
charges
|
32,053 | 555 | 20,251 | |||||||||
Amortization
of purchased intangibles and incomplete technology
|
68,246 | 72,435 | 69,873 | |||||||||
Total
operating expenses
|
2,188,988 | 1,945,602 | 1,731,550 | |||||||||
Operating
income
|
1,028,271 | 857,585 | 551,293 | |||||||||
Non-operating
income (expense):
|
||||||||||||
Interest
and other income, net
|
43,847 | 82,724 | 67,283 | |||||||||
Interest
expense
|
(10,019 | ) | (253 | ) | (98 | ) | ||||||
Investment
gains and (losses), net
|
16,409 | 7,134 | 61,249 | |||||||||
Total
non-operating income, net
|
50,237 | 89,605 | 128,434 | |||||||||
Income
before income taxes
|
1,078,508 | 947,190 | 679,727 | |||||||||
Provision
for income taxes
|
206,694 | 223,383 | 173,918 | |||||||||
Net
income
|
$ | 871,814 | $ | 723,807 | $ | 505,809 | ||||||
Basic
net income per share
|
$ | 1.62 | $ | 1.24 | $ | 0.85 | ||||||
Shares
used in computing basic income per share
|
539,373 | 584,203 | 593,750 | |||||||||
Diluted
net income per share
|
$ | 1.59 | $ | 1.21 | $ | 0.83 | ||||||
Shares
used in computing diluted income per share
|
548,553 | 598,775 | 612,222 |
Common Stock
|
Additional
Paid-In
|
Retained
|
Accumulated
Other
Comprehensive
|
Treasury Stock
|
||||||||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Earnings
|
Income/(Loss)
|
Shares
|
Amount
|
Total
|
|||||||||||||||||||||||||
Balances
as of December 2, 2005
|
591,528 | $ | 60 | $ | 1,350,692 | $ | 2,838,560 | $ | (914 | ) | (102,799 | ) | $ | (2,324,072 | ) | $ | 1,864,326 | |||||||||||||||
Cumulative
effect of adjustments from the adoption of SAB No. 108, net of
taxes
|
— | — | 27,422 | (26,584 | ) | — | — | — | 838 | |||||||||||||||||||||||
Balances
as of December 2, 2005
|
591,528 | $ | 60 | $ | 1,378,114 | $ | 2,811,976 | $ | (914 | ) | (102,799 | ) | $ | (2,324,072 | ) | $ | 1,865,164 | |||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||||||
Net
income
|
— | — | — | 505,809 | — | — | — | 505,809 | ||||||||||||||||||||||||
Other
comprehensive income, net of taxes
|
— | — | — | — | 7,258 | — | — | 7,258 | ||||||||||||||||||||||||
Total
comprehensive income, net of taxes
|
— | — | — | — | — | — | — | 513,067 | ||||||||||||||||||||||||
Issuance
of common stock and re-issuance of treasury stock under stock compensation
plans
|
3,058 | — | (385,618 | ) | — | — | 24,972 | 895,430 | 509,812 | |||||||||||||||||||||||
Tax
benefit from employee stock option plans
|
— | — | 143,118 | — | — | — | — | 143,118 | ||||||||||||||||||||||||
Purchase
of treasury stock
|
— | — | — | — | — | (38,576 | ) | (1,364,412 | ) | (1,364,412 | ) | |||||||||||||||||||||
Stock-based
compensation
|
— | — | 170,534 | — | — | — | — | 170,534 | ||||||||||||||||||||||||
Issuance
of common stock, re-issuance of treasury stock and stock options
assumed for acquisition
|
6,248 | 1 | 1,145,462 | — | — | 102,795 | 2,169,130 | 3,314,593 | ||||||||||||||||||||||||
Balances
at December 1, 2006
|
600,834 | $ | 61 | $ | 2,451,610 | $ | 3,317,785 | $ | 6,344 | (13,608 | ) | $ | (623,924 | ) | $ | 5,151,876 | ||||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||||||
Net
income
|
— | — | — | 723,807 | — | — | — | 723,807 | ||||||||||||||||||||||||
Other
comprehensive income, net of taxes
|
— | — | — | — | 21,604 | — | — | 21,604 | ||||||||||||||||||||||||
Total
comprehensive income, net of taxes
|
— | — | — | — | — | — | — | 745,411 | ||||||||||||||||||||||||
Re-issuance
of treasury stock under stock compensation plans
|
— | — | (298,776 | ) | — | — | 23,918 | 814,863 | 516,087 | |||||||||||||||||||||||
Tax
benefit from employee stock option plans
|
— | — | 66,966 | — | — | — | — | 66,966 | ||||||||||||||||||||||||
Purchase
of treasury stock
|
— | — | — | — | — | (39,735 | ) | (1,951,527 | ) | (1,951,527 | ) | |||||||||||||||||||||
Stock-based
compensation
|
— | — | 149,987 | — | — | — | — | 149,987 | ||||||||||||||||||||||||
Adjustment
to the valuation of Macromedia assumed options
|
— | — | (28,818 | ) | — | — | — | — | (28,818 | ) | ||||||||||||||||||||||
Balances
at November 30, 2007
|
600,834 | $ | 61 | $ | 2,340,969 | $ | 4,041,592 | $ | 27,948 | (29,425 | ) | $ | (1,760,588 | ) | $ | 4,649,982 | ||||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||||||
Net
income
|
— | — | — | 871,814 | — | — | — | 871,814 | ||||||||||||||||||||||||
Other
comprehensive income, net of taxes
|
— | — | — | — | 29,274 | — | — | 29,274 | ||||||||||||||||||||||||
Total
comprehensive income, net of taxes
|
— | — | — | — | — | — | — | 901,088 | ||||||||||||||||||||||||
Re-issuance
of treasury stock under stock compensation plans
|
— | — | (206,984 | ) | — | — | 12,994 | 526,149 | 319,165 | |||||||||||||||||||||||
Tax
benefit from employee stock option plans
|
— | — | 90,360 | — | — | — | — | 90,360 | ||||||||||||||||||||||||
Purchase
of treasury stock
|
— | — | — | — | — | (58,292 | ) | (1,722,715 | ) | (1,722,715 | ) | |||||||||||||||||||||
Stock-based
compensation
|
— | — | 172,474 | — | — | — | — | 172,474 | ||||||||||||||||||||||||
Balances
at November 28, 2008
|
600,834 | $ | 61 | $ | 2,396,819 | $ | 4,913,406 | $ | 57,222 | (74,723 | ) | $ | (2,957,154 | ) | $ | 4,410,354 |
Years Ended
|
||||||||||||
November
28, 2008
|
November
30, 2007
|
December 1,
2006
|
||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
income
|
$ | 871,814 | $ | 723,807 | $ | 505,809 | ||||||
Adjustments
to reconcile net income to net cash provided by
operating activities:
|
||||||||||||
Depreciation,
amortization and accretion
|
270,269 | 315,464 | 307,822 | |||||||||
Stock-based
compensation
|
172,474 | 149,987 | 170,534 | |||||||||
Tax
benefit from employee stock option plans
|
90,360 | 55,074 | 143,118 | |||||||||
Deferred
income taxes
|
46,584 | 58,385 | (4,264 | ) | ||||||||
Other
non-cash items
|
4,784 | (176 | ) | 1,874 | ||||||||
Gains
on sales of investments, net of impairments
|
(17,377 | ) | (6,776 | ) | (63,593 | ) | ||||||
Excess
tax benefits from stock-based compensation
|
(31,983 | ) | (85,050 | ) | (107,524 | ) | ||||||
Changes
in operating assets and liabilities, net of acquired assets
and assumed liabilities:
|
||||||||||||
Trade
receivables
|
(153,386 | ) | 46,332 | (92,498 | ) | |||||||
Prepaid
expenses and other current assets
|
(5,584 | ) | 6,418 | (7,917 | ) | |||||||
Trade
payables
|
14,078 | 3,518 | 8,253 | |||||||||
Accrued
expenses
|
(13,904 | ) | 83,281 | (27,515 | ) | |||||||
Accrued
restructuring
|
24,330 | (13,796 | ) | (41,091 | ) | |||||||
Income
taxes payable
|
(57,656 | ) | 61,448 | 27,247 | ||||||||
Deferred
revenue
|
65,879 | 43,137 | 79,690 | |||||||||
Net
cash provided by operating activities
|
1,280,682 | 1,441,053 | 899,945 | |||||||||
Cash
flows from investing activities:
|
||||||||||||
Purchases
of short-term investments
|
(2,381,533 | ) | (2,503,147 | ) | (1,596,442 | ) | ||||||
Maturities
of short-term investments
|
1,568,874 | 516,839 | 357,775 | |||||||||
Proceeds
from sales of short-term investments
|
717,076 | 2,457,347 | 1,010,284 | |||||||||
Purchases
of property and equipment
|
(111,792 | ) | (132,075 | ) | (83,250 | ) | ||||||
Purchases
of long-term investments and other assets
|
(124,469 | ) | (111,939 | ) | (28,381 | ) | ||||||
Investment
in lease receivable
|
— | (80,439 | ) | — | ||||||||
Cash
received from acquisitions
|
674 | 1,676 | 492,758 | |||||||||
Cash
paid for acquisitions
|
(4,258 | ) | (77,204 | ) | (48,351 | ) | ||||||
Issuance
costs for credit facility
|
— | (856 | ) | — | ||||||||
Proceeds
from sale of other investments
|
30,747 | 11,342 | 90,793 | |||||||||
Net
cash (used for) provided by investing activities
|
(304,681 | ) | 81,544 | 195,186 | ||||||||
Cash
flows from financing activities:
|
||||||||||||
Purchase
of treasury stock
|
(1,722,715 | ) | (1,951,527 | ) | (1,364,412 | ) | ||||||
Proceeds
from issuance of treasury stock
|
319,165 | 516,087 | 509,506 | |||||||||
Excess
tax benefits from stock-based compensation
|
31,983 | 85,050 | 107,524 | |||||||||
Proceeds
from borrowings on credit facility
|
800,000 | — | — | |||||||||
Repayments
of borrowings on credit facility
|
(450,000 | ) | — | — | ||||||||
Net
cash used for financing activities
|
(1,021,567 | ) | (1,350,390 | ) | (747,382 | ) | ||||||
Effect
of foreign currency exchange rates on cash and cash
equivalents
|
(14,406 | ) | 1,715 | 3,933 | ||||||||
Net
(decrease) increase in cash and cash equivalents
|
(59,972 | ) | 173,922 | 351,682 | ||||||||
Cash
and cash equivalents at beginning of year
|
946,422 | 772,500 | 420,818 | |||||||||
Cash
and cash equivalents at end of year
|
$ | 886,450 | $ | 946,422 | $ | 772,500 | ||||||
Supplemental
disclosures:
|
||||||||||||
Cash
paid for interest
|
$ | 9,604 | $ | — | $ | — | ||||||
Cash
paid for income taxes, net of refunds
|
$ | 126,299 | $ | 55,236 | $ | 36,632 | ||||||
Non-cash
investing and financing activities:
|
||||||||||||
Common
and treasury stock issued and stock options assumed for
Macromedia
|
$ | — | $ | — | $ | 3,436,725 |
2008
|
2007
|
2006
|
||||||||||
Beginning
balance
|
$ | 4,398 | $ | 6,798 | $ | 5,376 | ||||||
Due
to acquisition
|
— | — | 2,105 | |||||||||
Charged
(credited) to operating expenses
|
4,414 | (1,367 | ) | 1,107 | ||||||||
Preference
claim, charged to operating expense
|
(2,000 | ) | — | — | ||||||||
Deductions(*)
|
(2,684 | ) | (1,033 | ) | (1,790 | ) | ||||||
Ending
balance
|
$ | 4,128 | $ | 4,398 | $ | 6,798 |
(*)
|
Deductions
related to the allowance for doubtful accounts represent amounts written
off against the allowance, less
recoveries.
|
Weighted
Average Useful Life (Years
)
|
|
Purchased
technology
|
4
|
Localization
|
1
|
Trademarks
|
5
|
Customer
contracts and relationships
|
6
|
Other
intangibles
|
3
|
|
·
|
Distributors
are allowed limited rights of return of products purchased during the
previous quarter. In addition, distributors are allowed to return products
that have reached the end of their lives and products that are being
replaced by new versions.
|
|
·
|
We
offer rebates to our distributors, resellers and/or end user customers.
The amount of revenue that is reduced for distributor and reseller rebates
is based on actual performance against objectives set forth by us for a
particular reporting period (volume, timely reporting, etc.). If mail-in
or other promotional rebates are offered, the amount of revenue reduced is
based on the dollar amount of the rebate, taking into consideration an
estimated redemption rate calculated using historical
trends.
|
|
·
|
From
time to time, we may offer price protection to our distributors that allow
for the right to a credit if we permanently reduce the price of a software
product. The amount of revenue that is reduced for price protection is
calculated as the difference between the old and new price of a software
product on inventory held by the distributor prior to the effective date
of the decrease.
|
2008
|
2007
|
2006
|
||||||||||
Beginning
balance
|
$ | 43,532 | $ | 55,526 | $ | 25,204 | ||||||
Amount
charged to revenue
|
153,129 | 156,761 | 97,566 | |||||||||
Actual
returns
|
(145,718 | ) | (168,755 | ) | (67,244 | ) | ||||||
Ending
balance
|
$ | 50,943 | $ | 43,532 | $ | 55,526 |
Value
of Adobe stock issued (109 million shares)
|
$ | 3,209,121 | ||
Fair
value of stock options assumed
|
227,604 | |||
Direct
transaction costs
|
29,060 | |||
Restructuring
costs
|
72,728 | |||
Total
purchase price
|
$ | 3,538,513 |
Amount
|
Estimated
Useful Life
|
|||||||
Net
tangible assets
|
$ | 713,164 | N/A | |||||
Identifiable
intangible assets:
|
||||||||
Acquired
product rights
|
365,500 |
4
years
|
||||||
Customer
contracts and relationships
|
183,800 |
6
years
|
||||||
Non-competition
agreements
|
500 |
2
years
|
||||||
Trademarks
|
130,700 |
5
years
|
||||||
Goodwill
|
1,993,898 | N/A | ||||||
Stock-based
compensation
|
150,951 |
2.18
years
†
|
||||||
Total
purchase price
|
$ | 3,538,513 |
†
|
Estimated
weighted-average remaining vesting period as of December 3,
2005.
|
Carrying
Value
|
Unrealized
Gains
|
Unrealized
Losses
|
Estimated
Fair Value
|
|||||||||||||
Classified
as current assets:
|
||||||||||||||||
Cash
|
$ | 117,681 | $ | — | $ | — | $ | 117,681 | ||||||||
Cash
equivalents:
|
||||||||||||||||
Money
market mutual funds
|
682,148 | — | — | 682,148 | ||||||||||||
Bank
time deposits
|
40,594 | — | — | 40,594 | ||||||||||||
United
States treasury notes
|
35,992 | 7 | — | 35,999 | ||||||||||||
Corporate
bonds
|
10,028 | — | — | 10,028 | ||||||||||||
Total
cash equivalents
|
768,762 | 7 | — | 768,769 | ||||||||||||
Total
cash and cash equivalents
|
886,443 | 7 | — | 886,450 | ||||||||||||
Short-term
investments:
|
||||||||||||||||
United
States treasury notes
|
863,772 | 14,384 | (1 | ) | 878,155 | |||||||||||
Corporate
bonds
|
109,415 | 219 | (997 | ) | 108,637 | |||||||||||
Obligations
of foreign governments
|
115,316 | 811 | (33 | ) | 116,094 | |||||||||||
Bonds
of government agencies
|
26,559 | 260 | — | 26,819 | ||||||||||||
Subtotal
|
1,115,062 | 15,674 | (1,031 | ) | 1,129,705 | |||||||||||
Other
marketable equity securities
|
2,773 | 274 | — | 3,047 | ||||||||||||
Total
short-term investments
|
1,117,835 | 15,948 | (1,031 | ) | 1,132,752 | |||||||||||
Total
cash, cash equivalents and short-term investments
|
$ | 2,004,278 | $ | 15,955 | $ | (1,031 | ) | $ | 2,019,202 |
Carrying
Value
|
Unrealized
Gains
|
Unrealized
Losses
|
Estimated
Fair Value
|
|||||||||||||
Classified
as current assets:
|
||||||||||||||||
Cash
|
$ | 111,702 | $ | — | $ | — | $ | 111,702 | ||||||||
Cash
equivalents:
|
||||||||||||||||
Money
market mutual funds
|
778,259 | — | — | 778,259 | ||||||||||||
Bank
time deposits
|
31,568 | — | — | 31,568 | ||||||||||||
United
States treasury notes
|
24,884 | 9 | — | 24,893 | ||||||||||||
Total
cash equivalents
|
834,711 | 9 | — | 834,720 | ||||||||||||
Total
cash and cash equivalents
|
946,413 | 9 | — | 946,422 | ||||||||||||
Short-term
investments:
|
||||||||||||||||
State
and municipal bonds
|
363,738 | — | — | 363,738 | ||||||||||||
United
States treasury notes
|
580,914 | 4,757 | — | 585,671 | ||||||||||||
Corporate
bonds
|
23,697 | — | — | 23,697 | ||||||||||||
Obligations
of foreign governments
|
34,760 | 204 | (3 | ) | 34,961 | |||||||||||
Bonds
of government agencies
|
18,501 | 21 | — | 18,522 | ||||||||||||
Subtotal
|
1,021,610 | 4,982 | (3 | ) | 1,026,589 | |||||||||||
Other
marketable equity securities
|
6,050 | 14,793 | — | 20,843 | ||||||||||||
Total
short-term investments
|
1,027,660 | 19,775 | (3 | ) | 1,047,432 | |||||||||||
Total
cash, cash equivalents and short-term investments
|
$ | 1,974,073 | $ | 19,784 | $ | (3 | ) | $ | 1,993,854 |
Less Than 12 Months
|
12 Months or More
|
Total
|
||||||||||||||||||||||
Fair Value
|
Gross
Unrealized
Losses
|
Fair Value
|
Gross
Unrealized
Losses
|
Fair Value
|
Gross
Unrealized
Losses
|
|||||||||||||||||||
United
States treasury notes
|
$ | 37,400 | $ | (1 | ) | $ | — | $ | — | $ | 37,400 | $ | (1 | ) | ||||||||||
Corporate
bonds
|
67,606 | (997 | ) | — | — | 67,606 | (997 | ) | ||||||||||||||||
Obligations
of foreign governments
|
28,033 | (33 | ) | — | — | 28,033 | (33 | ) | ||||||||||||||||
Total
|
$ | 133,039 | $ | (1,031 | ) | $ | — | $ | — | $ | 133,039 | $ | (1,031 | ) |
Cost
|
Estimated
Fair Value
|
|||||||
Due
within one year
|
$ | 660,921 | $ | 664,819 | ||||
Due
within two years
|
268,508 | 271,841 | ||||||
Due
within three years
|
72,187 | 73,547 | ||||||
Due
after three years
|
113,446 | 119,498 | ||||||
Total
|
$ | 1,115,062 | $ | 1,129,705 |
2008
|
2007
|
|||||||
Computers
and equipment
|
$ | 331,235 | $ | 264,732 | ||||
Furniture
and fixtures
|
56,253 | 55,594 | ||||||
Capital
projects in-progress
|
7,273 | 15,801 | ||||||
Leasehold
improvements
|
133,571 | 114,139 | ||||||
Land
|
74,835 | 67,905 | ||||||
Buildings
|
62,464 | 62,464 | ||||||
665,631 | 580,635 | |||||||
Less
accumulated depreciation and amortization.
|
(352,594 | ) | (290,877 | ) | ||||
Property
and equipment, net.
|
$ | 313,037 | $ | 289,758 |
2007
|
Acquisitions
|
Other
|
2008
|
|||||||||||||
Creative
Solutions
|
$ | 964,635 | $ | 3,586 | $ | (12,210 | ) | $ | 956,011 | |||||||
Knowledge
Worker
|
411,585 | — | (3,267 | ) | 408,318 | |||||||||||
Enterprise
|
298,490 | — | (451 | ) | 298,039 | |||||||||||
Mobile
and Device Solutions
|
211,882 | — | (461 | ) | 211,421 | |||||||||||
Platform
|
54,215 | — | (118 | ) | 54,097 | |||||||||||
Print
and Publishing
|
207,295 | — | (451 | ) | 206,844 | |||||||||||
Total
|
$ | 2,148,102 | $ | 3,586 | $ | (16,958 | ) | $ | 2,134,730 |
|
The
column “Other” above includes net reductions in goodwill of $9.6 million
related to deferred tax assets associated with our acquisition of Scene7
and $4.2 million related to the tax reserve associated with the
acquisition of Macromedia, offset in part by foreign currency changes and
other individually insignificant tax related
items.
|
2008
|
2007
|
|||||||
Creative
Solutions
|
$ | 107,526 | $ | 186,355 | ||||
Knowledge
Worker
|
48,851 | 73,767 | ||||||
Enterprise
|
13,146 | 29,046 | ||||||
Mobile
and Device Solutions
|
18,404 | 33,324 | ||||||
Platform
|
7,844 | 8,011 | ||||||
Print
and Publishing
|
19,189 | 37,141 | ||||||
Total
|
$ | 214,960 | $ | 367,644 |
Cost
|
Accumulated
Amortization
|
Net
|
||||||||||
Purchased
technology
|
$ | 411,408 | $ | (338,608 | ) | $ | 72,800 | |||||
Localization
|
$ | 23,751 | $ | (6,156 | ) | $ | 17,595 | |||||
Trademarks
|
130,925 | (78,181 | ) | 52,744 | ||||||||
Customer
contracts and relationships
|
198,891 | (127,520 | ) | 71,371 | ||||||||
Other
intangibles
|
800 | (350 | ) | 450 | ||||||||
Total
other intangible assets
|
$ | 354,367 | $ | (212,207 | ) | $ | 142,160 | |||||
Total
purchased and other intangible assets
|
$ | 765,775 | $ | (550,815 | ) | $ | 214,960 |
Cost
|
Accumulated
Amortization
|
Net
|
||||||||||
Purchased
technology
|
$ | 409,110 | $ | (250,721 | ) | $ | 158,389 | |||||
Localization
|
$ | 45,854 | $ | (27,676 | ) | $ | 18,178 | |||||
Trademarks
|
131,225 | (52,443 | ) | 78,782 | ||||||||
Customer
contracts and relationships
|
197,220 | (85,529 | ) | 111,691 | ||||||||
Other
intangibles
|
800 | (196 | ) | 604 | ||||||||
Total
other intangible assets
|
$ | 375,099 | $ | (165,844 | ) | $ | 209,255 | |||||
Total
purchased and other intangible assets
|
$ | 784,209 | $ | (416,565 | ) | $ | 367,644 |
Fiscal Year
|
Purchased
Technology
|
Other Intangible
Assets
|
||||||
2009
|
$ | 56,230 | $ | 79,371 | ||||
2010
|
8,244 | 48,685 | ||||||
2011
|
4,938 | 11,917 | ||||||
2012
|
3,388 | 1,009 | ||||||
2013
|
— | 789 | ||||||
Thereafter
|
— | 389 | ||||||
Total
expected amortization expense
|
$ | 72,800 | $ | 142,160 |
2008
|
2007
|
|||||||
Acquired
rights to use technology
|
$ | 90,643 | $ | 41,642 | ||||
Investments
|
76,589 | 52,830 | ||||||
Security
and other deposits
|
16,087 | 6,650 | ||||||
Prepaid
royalties
|
9,026 | 6,748 | ||||||
Deferred
compensation plan assets
|
7,560 | 3,145 | ||||||
Restricted
cash
|
7,361 | 7,367 | ||||||
Prepaid
land lease
|
3,185 | 3,224 | ||||||
Prepaid
rent
|
2,658 | 4,285 | ||||||
Other
|
3,420 | 2,194 | ||||||
Total
other assets
|
$ | 216,529 | $ | 128,085 |
2008
|
2007
|
|||||||
Accrued
compensation and benefits
|
$ | 177,760 | $ | 205,018 | ||||
Taxes
payable
|
21,760 | 24,579 | ||||||
Sales
and marketing allowances
|
28,127 | 21,231 | ||||||
Other
|
172,322 | 157,751 | ||||||
Total
accrued expenses
|
$ | 399,969 | $ | 408,579 |
2008
|
2007
|
2006
|
||||||||||
Current:
|
||||||||||||
United
States federal
|
$ | 24,179 | $ | 36,614 | $ | 12,419 | ||||||
Foreign
|
27,680 | 55,536 | 34,762 | |||||||||
State
and local
|
6,972 | 4,100 | 3,623 | |||||||||
Total
current
|
58,831 | 96,250 | 50,804 | |||||||||
Deferred:
|
||||||||||||
United
States federal
|
41,678 | 50,640 | (19,843 | ) | ||||||||
Foreign
|
(9,693 | ) | (13,480 | ) | 2,198 | |||||||
State
and local
|
25,518 | 23,007 | (5,383 | ) | ||||||||
Total
deferred
|
57,503 | 60,167 | (23,028 | ) | ||||||||
Tax
expense attributable to employee stock plans
|
90,360 | 66,966 | 146,142 | |||||||||
$ | 206,694 | $ | 223,383 | $ | 173,918 |
2008
|
2007
|
2006
|
||||||||||
Computed
“expected” tax expense
|
$ | 377,478 | $ | 331,516 | $ | 237,905 | ||||||
State
tax expense, net of federal benefit
|
12,700 | 8,938 | 8,768 | |||||||||
Tax-exempt
income
|
(342 | ) | (11,123 | ) | (12,637 | ) | ||||||
Tax
credits
|
(12,873 | ) | (23,341 | ) | (1,204 | ) | ||||||
Differences
between statutory rate and foreign effective tax rate
|
(132,470 | ) | (84,740 | ) | (61,067 | ) | ||||||
Change
in deferred tax asset valuation allowance
|
(1,105 | ) | 1,694 | (7,539 | ) | |||||||
FAS
123R stock compensation (net of tax deduction)
|
5,457 | 2,587 | 3,320 | |||||||||
Resolution
of U.S. income tax exam for fiscal 2001 - 2004 years
|
(20,712 | ) | — | — | ||||||||
Foreign
tax refund for fiscal 2000 - 2002
|
(16,351 | ) | — | — | ||||||||
Domestic
manufacturing deduction benefit
|
(6,300 | ) | (4,419 | ) | (1,400 | ) | ||||||
Other,
net
|
1,212 | 2,271 | 7,772 | |||||||||
$ | 206,694 | $ | 223,383 | $ | 173,918 |
2008
|
2007
|
|||||||
Deferred
tax assets:
|
||||||||
Acquired
technology
|
$ | 4,497 | $ | 7,603 | ||||
Reserves
and accruals
|
71,174 | 61,772 | ||||||
Deferred
revenue
|
46,200 | 38,663 | ||||||
Unrealized
losses on investments
|
10,350 | 18,756 | ||||||
FAS
123R stock compensation
|
50,329 | 40,682 | ||||||
Net
operating loss of acquired companies
|
7,621 | 66,677 | ||||||
Credits
|
19,130 | 44,866 | ||||||
Depreciation
and amortization
|
— | 1,213 | ||||||
Capitalized
expenses
|
5,688 | — | ||||||
Other
|
3,538 | 4,763 | ||||||
Total
gross deferred tax assets
|
218,527 | 284,995 | ||||||
Deferred
tax asset valuation allowance
|
(1,524 | ) | (2,629 | ) | ||||
Total
deferred tax assets
|
217,003 | 282,366 | ||||||
Deferred
tax liabilities:
|
||||||||
Depreciation
and amortization
|
(3,113 | ) | — | |||||
Undistributed
earnings of foreign subsidiaries
|
(167,760 | ) | (166,629 | ) | ||||
Acquired
intangible assets
|
(52,745 | ) | (93,208 | ) | ||||
Total
deferred tax liabilities
|
(223,618 | ) | (259,837 | ) | ||||
Net
deferred tax (liabilities) assets
|
$ | (6,615 | ) | $ | 22,529 |
Beginning
balance as of December 1, 2007
|
$ | 201,808 | ||
Gross
increases in unrecognized tax benefits – prior year tax
positions
|
14,009 | |||
Gross
increases in unrecognized tax benefits – current year tax
positions
|
11,350 | |||
Settlements
with taxing authorities
|
(81,213 | ) | ||
Lapse
of statute of limitations
|
(3,512 | ) | ||
Foreign
exchange gains and losses
|
(2,893 | ) | ||
Ending
balance as of November 28, 2008
|
$ | 139,549 |
November
30,
2007
|
Cash
Payments
|
Adjustments
|
November
28,
2008
|
Total
Costs
Incurred
To
Date
|
Total
Costs
Expected
To
Be
Incurred
|
|||||||||||||||||||
Termination
benefits
|
$ | — | $ | — | $ | — | $ | — | $ | 26,976 | $ | 26,976 | ||||||||||||
Cost
of closing redundant facilities
|
16,283 | (7,187 | ) | 3,072 | 12,168 | 30,148 | 42,316 | |||||||||||||||||
Cost
of contract termination
|
— | — | — | — | 3,238 | 3,238 | ||||||||||||||||||
Other
|
1,435 | (147 | ) | (311 | ) | 977 | 1,379 | 2,356 | ||||||||||||||||
Total
|
$ | 17,718 | $ | (7,334 | ) | $ | 2,761 | $ | 13,145 | $ | 61,741 | $ | 74,886 |
December
1,
2006
|
Cash
Payments
|
Adjustments
|
November
30, 2007
|
|||||||||||||
Termination
benefits
|
$ | 1,002 | $ | (370 | ) | $ | (632 | ) | $ | — | ||||||
Cost
of closing redundant facilities
|
28,934 | (12,052 | ) | (599 | ) | 16,283 | ||||||||||
Cost
of contract termination
|
46 | (8 | ) | (38 | ) | — | ||||||||||
Other
|
1,444 | 1 | (10 | ) | 1,435 | |||||||||||
Total
|
$ | 31,426 | $ | (12,429 | ) | $ | (1,279 | ) | $ | 17,718 |
Initial
Restructuring Charges
|
Cash
Payments
|
Adjustments
|
December
1, 2006
|
|||||||||||||
Termination
benefits
|
$ | 26,608 | $ | (26,459 | ) | $ | 853 | $ | 1,002 | |||||||
Cost
of closing redundant facilities
|
32,083 | (10,547 | ) | 7,398 | 28,934 | |||||||||||
Cost
of contract termination
|
3,969 | (3,224 | ) | (699 | ) | 46 | ||||||||||
Other
|
2,500 | (1,072 | ) | 16 | 1,444 | |||||||||||
Total
|
$ | 65,160 | $ | (41,302 | ) | $ | 7,568 | $ | 31,426 |
December
1, 2006
|
Cash
Payments
|
Adjustments
|
November
30, 2007
|
|||||||||||||
Termination
benefits
|
$ | 179 | $ | (37 | ) | $ | (142 | ) | $ | — | ||||||
Cost
of closing redundant facilities
|
467 | (387 | ) | (80 | ) | — | ||||||||||
Total
|
$ | 646 | $ | (424 | ) | $ | (222 | ) | $ | — |
Initial
Restructuring Charges
|
Cash
Payments
|
Adjustments
|
December
1, 2006
|
|||||||||||||
Termination
benefits
|
$ | 18,879 | $ | (18,597 | ) | $ | (103 | ) | $ | 179 | ||||||
Cost
of closing redundant facilities
|
— | (479 | ) | 946 | 467 | |||||||||||
Cost
of contract termination
|
105 | (11 | ) | (94 | ) | — | ||||||||||
Total
|
$ | 18,984 | $ | (19,087 | ) | $ | 749 | $ | 646 |
Fiscal Years
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Expected
term (in years)
|
2.3 – 4.7 | 3.5 – 4.8 | 3.7 | |||||||||
Volatility
|
32 – 60 | % | 30 – 39 | % | 30 – 37 | % | ||||||
Risk-free
interest rate
|
1.70 – 3.50 | % | 3.60 – 5.10 | % | 4.30 – 5.20 | % |
Fiscal Years
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Expected
term (in years)
|
0.5 – 2.0 | 0.5 – 2.0 | 1.3 | |||||||||
Volatility
|
30 – 36 | % | 30 – 33 | % | 30 – 35 | % | ||||||
Risk-free
interest rate
|
2.12 – 3.29 | % | 4.79 – 5.11 | % | 4.32 – 5.26 | % |
Outstanding Options
|
||||||||
Number of
Shares
|
Weighted
Average
Exercise
Price
|
|||||||
December
2, 2005
|
65,251 | $ | 21.76 | |||||
Granted
|
12,017 | 28.71 | ||||||
Exercised
|
(25,873 | ) | 17.73 | |||||
Cancelled
|
(4,807 | ) | 25.33 | |||||
Due
to acquisition
|
15,143 | — | ||||||
December
1, 2006
|
61,731 | $ | 24.19 | |||||
Granted
|
10,084 | 40.36 | ||||||
Exercised
|
(21,368 | ) | 21.18 | |||||
Cancelled
|
(2,705 | ) | 33.18 | |||||
November
30, 2007
|
47,742 | $ | 28.47 | |||||
Granted
|
5,462 | 35.08 | ||||||
Exercised
|
(9,983 | ) | 25.45 | |||||
Cancelled
|
(2,517 | ) | 35.34 | |||||
November
28, 2008
|
40,704 | $ | 29.67 |
Number
of Shares
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Life
|
Aggregate
Intrinsic Value* (millions)
|
||||||||||
As
of November 28, 2008
|
|||||||||||||
Shares
outstanding
|
40,704 | $ | 29.67 |
4.00
years
|
$ | 76.1 | |||||||
Shares
vested and expected to vest
|
38,975 | $ | 29.36 |
3.87
years
|
$ | 76.1 | |||||||
Shares
exercisable
|
28,034 | $ | 26.61 |
3.28
years
|
$ | 76.1 | |||||||
As
of November 30, 2007
|
|||||||||||||
Shares
outstanding
|
47,742 | $ | 28.47 |
4.36
years
|
$ | 654.2 | |||||||
Shares
vested and expected to vest
|
43,067 | $ | 27.68 |
4.19
years
|
$ | 623.8 | |||||||
Shares
exercisable
|
29,387 | $ | 23.77 |
3.38
years
|
$ | 539.8 | |||||||
As
of December 1, 2006
|
|||||||||||||
Shares
outstanding
|
61,731 | $ | 24.19 |
4.44
years
|
$ | 936.8 | |||||||
Shares
vested and expected to vest
|
58,713 | $ | 23.82 |
3.80
years
|
$ | 912.7 | |||||||
Shares
exercisable
|
38,944 | $ | 20.58 |
3.39
years
|
$ | 731.0 |
*
|
The
intrinsic value is calculated as the difference between the market value
as of end of the fiscal year and the exercise price of the shares. As
reported by the NASDAQ Global Select Market, the market values as of
November 28, 2008, November 30, 2007 and December 1, 2006 were $23.16,
$42.14 and $39.35, respectively.
|
2008
|
2007
|
2006
|
||||||||||
Options
granted to existing directors
|
250 | 250 | 200 | |||||||||
Exercise
price
|
$ | 37.09 | $ | 42.61 | $ | 35.95 | ||||||
Options
granted to new directors
|
— | — | 50 | |||||||||
Exercise
price
|
$ | — | $ | — | $ | 35.25 |
2008
|
2007
|
2006
|
||||||||||||||||||||||
Non-vested
Shares
|
Weighted
Average
Grant Date
Fair Value
|
Non-vested
Shares
|
Weighted
Average
Grant Date
Fair Value
|
Non-vested
Shares
|
Weighted
Average
Grant Date
Fair Value
|
|||||||||||||||||||
Beginning
balance
|
21 | $ | 36.41 | 501 | $ | 9.17 | 428 | $ | 6.68 | |||||||||||||||
Awarded
|
— | — | 5 | 40.03 | 9 | 39.47 | ||||||||||||||||||
Released
|
(15 | ) | 34.94 | (92 | ) | 29.32 | (302 | ) | 22.03 | |||||||||||||||
Forfeited
|
(2 | ) | 39.95 | (393 | ) | 4.77 | (48 | ) | 25.53 | |||||||||||||||
Due
to acquisition
|
— | — | — | — | 414 | 22.35 | ||||||||||||||||||
Ending
balance
|
4 | $ | 39.31 | 21 | $ | 36.41 | 501 | $ | 9.17 |
2008
|
2007
|
|||||||
Beginning
balance
|
1,701 | — | ||||||
Awarded
|
3,177 | 1,771 | ||||||
Released
|
(422 | ) | — | |||||
Forfeited
|
(195 | ) | (70 | ) | ||||
Ending
balance
|
4,261 | 1,701 |
Number
of Shares
|
Weighted
Average Remaining Contractual Life
|
Aggregate
Intrinsic Value* (millions)
|
|||||||
2008
|
|||||||||
Shares
outstanding
|
4,261 |
1.73
years
|
$ | 98.7 | |||||
Shares
vested and expected to vest
|
3,351 |
1.52
years
|
$ | 77.6 | |||||
2007
|
|||||||||
Shares
outstanding
|
1,701 |
1.88
years
|
$ | 71.7 | |||||
Shares
vested and expected to vest
|
1,309 |
1.65
years
|
$ | 55.2 |
*
|
The
intrinsic value is calculated as the market value as of end of the fiscal
year. As reported by the NASDAQ Global Select Market, the market
values as of November 28, 2008 and November 30, 2007 were $23.16 and
$42.14, respectively.
|
Shares
Granted
|
Maximum
Shares
Eligible
to
Receive
|
|||||||
Beginning
balance
|
— | — | ||||||
Awarded
|
941 | 1,883 | ||||||
Forfeited
|
(116 | ) | (232 | ) | ||||
Ending
balance
|
825 | 1,651 |
2008
|
||||
Beginning
balance
|
— | |||
Shares
achieved
|
993 | |||
Released
|
(480 | ) | ||
Forfeited
|
(130 | ) | ||
Ending
balance
|
383 |
Number
of Shares
|
Weighted
Average Remaining Contractual Life
|
Aggregate
Intrinsic Value* (millions)
|
|||||||
2008
|
|||||||||
Shares
outstanding
|
383 |
1.20
years
|
$ | 8.9 | |||||
Shares
vested and expected to vest
|
323 |
1.10
years
|
$ | 7.4 |
*
|
The
intrinsic value is calculated as the market value as of end of the fiscal
year. As reported by the NASDAQ Global Select Market, the market
value as of November 28, 2008 was
$23.16.
|
Income
Statement Classifications
|
||||||||||||||||||||
Cost
of Revenue –
Services
and Support
|
Research
and Development
|
Sales
and
Marketing
|
General
and Administrative
|
Total
|
||||||||||||||||
Option
Grants and Stock Purchase Rights
|
||||||||||||||||||||
Fiscal
2008*
|
$ | 3,728 | $ | 55,653 | $ | 41,326 | $ | 24,521 | $ | 125,228 | ||||||||||
Fiscal
2007
|
$ | 5,152 | $ | 58,579 | $ | 41,801 | $ | 24,467 | $ | 129,999 | ||||||||||
Fiscal
2006
|
$ | 8,180 | $ | 63,950 | $ | 66,792 | $ | 27,121 | $ | 166,043 | ||||||||||
Restricted
Stock
|
||||||||||||||||||||
Fiscal
2008*
|
$ | 570 | $ | 20,835 | $ | 17,928 | $ | 10,810 | $ | 50,143 | ||||||||||
Fiscal
2007
|
$ | 346 | $ | 9,518 | $ | 6,084 | $ | 4,040 | $ | 19,988 | ||||||||||
Fiscal
2006
|
$ | — | $ | 1,678 | $ | 1,500 | $ | 1,313 | $ | 4,491 |
*
|
During
fiscal 2008, we recorded $2.9 million associated with cash recoveries of
fringe benefit tax from employees in
India.
|
Retained
Earnings
|
$ | (26,584 | ) | |
Deferred
Income Taxes
|
838 | |||
Additional
Paid in Capital
|
$ | 27,422 |
Retained
Earnings
|
1998-2002
|
2003
|
2004
|
2005
|
Total
|
|||||||||||||||
Stock
compensation expense
|
$ | (21,800 | ) | $ | (10,420 | ) | $ | (2,959 | ) | $ | (230 | ) | $ | (35,409 | ) | |||||
Tax
effect
|
5,484 | 2,558 | 726 | 57 | 8,825 | |||||||||||||||
Total,
net of tax
|
$ | (16,316 | ) | $ | (7,862 | ) | $ | (2,233 | ) | $ | (173 | ) | $ | (26,584 | ) | |||||
Income
before taxes
|
$ | 1,577,480 | $ | 380,492 | $ | 608,645 | $ | 765,776 | ||||||||||||
Percent
of income before taxes
|
(1 | )% | (3 | )% | 0 | % | 0 | % |
2008
|
2007
|
2006
|
||||||||||
Beginning
balance
|
$ | 27,948 | $ | 6,344 | $ | (914 | ) | |||||
Derivative
instruments:
|
||||||||||||
Unrealized
gain (loss) on derivative instruments
|
28,471 | (6,046 | ) | 285 | ||||||||
Reclassification
adjustment for gains (losses) on derivative instruments recognized during
the period
|
13,248 | 5,510 | (5,035 | ) | ||||||||
Subtotal
derivative instruments
|
41,719 | (536 | ) | (4,750 | ) | |||||||
Available-for-sale
securities:
|
||||||||||||
Unrealized
(loss) gain on available-for-sale securities, net of taxes
|
(3,102 | ) | 14,570 | 7,210 | ||||||||
Reclassification
adjustment for gains on available-for-sale securities recognized during
the period
|
1,559 | 2,000 | 865 | |||||||||
Subtotal
available-for-sale securities
|
(1,543 | ) | 16,570 | 8,075 | ||||||||
Foreign
currency translation adjustments
|
(10,902 | ) | 5,570 | 3,933 | ||||||||
Other
comprehensive income
|
29,274 | 21,604 | 7,258 | |||||||||
Ending
balance
|
$ | 57,222 | $ | 27,948 | $ | 6,344 |
2008
|
2007
|
2006
|
||||||||||
Beginning
balance
|
$ | 10,471 | $ | 4,901 | $ | 968 | ||||||
Foreign
currency translation adjustments
|
(19,461 | ) | 9,269 | 3,933 | ||||||||
Income
tax effect relating to translation adjustments for undistributed foreign
earnings
|
8,559 | (3,699 | ) | — | ||||||||
Ending
balance
|
$ | (431 | ) | $ | 10,471 | $ | 4,901 |
2008
|
2007
|
2006
|
||||||||||
Net
income
|
$ | 871,814 | $ | 723,807 | $ | 505,809 | ||||||
Shares
used to compute basic net income per share
|
539,373 | 584,203 | 593,750 | |||||||||
Dilutive
potential common shares:
|
||||||||||||
Unvested
restricted stock
|
1,107 | 13 | 85 | |||||||||
Stock
options
|
8,073 | 14,559 | 18,387 | |||||||||
Shares
used to compute diluted net income per share
|
548,553 | 598,775 | 612,222 | |||||||||
Basic
net income per share
|
$ | 1.62 | $ | 1.24 | $ | 0.85 | ||||||
Diluted
net income per share
|
$ | 1.59 | $ | 1.21 | $ | 0.83 |
2008
|
2007
|
2006
|
||||||||||
Rent
expense
|
$ | 101,202 | $ | 90,553 | $ | 74,629 | ||||||
Less:
sublease income
|
11,421 | 9,406 | 3,556 | |||||||||
Net
rent expense
|
$ | 89,781 | $ | 81,147 | $ | 71,073 |
Fiscal Year
|
Future
Minimum
Lease
Payments
|
Future
Minimum
Sublease
Income
|
||||||
2009
|
$ | 49,207 | $ | 9,943 | ||||
2010
|
34,950 | 6,063 | ||||||
2011
|
25,996 | 1,154 | ||||||
2012
|
19,174 | 80 | ||||||
2013
|
15,498 | — | ||||||
Thereafter
|
84,334 | — | ||||||
Total
|
$ | 229,159 | $ | 17,240 |
Fair
Value Measurements at Reporting Date Using
|
||||||||||||||||
Quoted
Prices in
Active
Markets for
Identical
Assets
|
Significant
Other
Observable
Inputs
|
Significant
Unobservable
Inputs
|
||||||||||||||
Total
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
|||||||||||||
Assets:
|
||||||||||||||||
Money
market funds and overnight deposits
(1)
|
$ | 722,742 | $ | 722,742 | $ | — | $ | — | ||||||||
Fixed
income available-for-sale securities
(2)
|
1,175,732 | — | 1,175,732 | — | ||||||||||||
Equity
available-for-sale securities
(3)
|
3,047 | 3,047 | — | — | ||||||||||||
Investments
of limited partnership
(4)
|
39,004 | 251 | — | 38,753 | ||||||||||||
Foreign
currency derivatives
(5)
|
49,848 | — | 49,848 | — | ||||||||||||
Deferred
compensation plan assets
(6)
|
||||||||||||||||
Money
market funds
|
$ | 704 | $ | 704 | $ | — | $ | — | ||||||||
Equity
and fixed income mutual funds
|
6,856 | — | 6,856 | — | ||||||||||||
Subtotal
for deferred compensation plan assets
|
$ | 7,560 | $ | 704 | $ | 6,856 | $ | — | ||||||||
Total
|
$ | 1,997,933 | $ | 726,744 | $ | 1,232,436 | $ | 38,753 | ||||||||
Liabilities:
|
||||||||||||||||
Foreign
currency derivatives
(7)
|
1,739 | — | 1,739 | — | ||||||||||||
Total
|
$ | 1,739 | $ | — | $ | 1,739 | $ | — |
(1)
|
Included
in cash and cash equivalents on our consolidated balance
sheet.
|
(2)
|
Included
in either cash and cash equivalents or short-term investments on our
consolidated balance sheet.
|
(3)
|
Included
in short-term investments on our consolidated balance
sheet.
|
(4)
|
Included
in other assets on our consolidated balance
sheet.
|
(5)
|
Included
in prepaid expenses and other assets on our consolidated balance
sheet.
|
(6)
|
Included
in other assets on our consolidated balance
sheet.
|
(7)
|
Included
in accrued expenses on our consolidated balance
sheet.
|
2008
|
2007
|
2006
|
||||||||||
Net
gains (losses) related to our investments in Adobe Ventures and cost
method investments
|
$ | 15,853 | $ | 6,951 | $ | (6,487 | ) | |||||
Write-downs
due to other-than-temporary declines in value of our marketable equity
securities
|
(4,895 | ) | — | — | ||||||||
Losses
on stock warrants
|
(6 | ) | (21 | ) | (226 | ) | ||||||
Other
investment gains
|
5,457 | 204 | 67,962 | |||||||||
Total
investment gains and (losses), net
|
$ | 16,409 | $ | 7,134 | $ | 61,249 |
Accumulated
Other Comprehensive
Income
|
||||||||||||
Fiscal
Years
|
||||||||||||
Gain
on hedges of forecasted transactions:
|
2008
|
2007
|
2006
|
|||||||||
Net
unrealized gain remaining in other accumulated comprehensive income, net
of tax
|
$ | 41,750 | $ | 31 | $ | 567 |
Years Ended
|
||||||||||||||||||||||||
2008
|
2007
|
2006
|
||||||||||||||||||||||
Revenue
|
Other
Income
(Loss)
|
Revenue
|
Other
Income
(Loss)
|
Revenue
|
Other
Income
(Loss)
|
|||||||||||||||||||
Gain
(loss) on completed hedge transactions:
|
||||||||||||||||||||||||
Net
realized gain reclassified from other accumulated comprehensive income to
revenue
|
$ | 13,248 | $ | — | $ | 5,510 | $ | — | $ | 5,035 | $ | — | ||||||||||||
Net
realized loss from the cost of purchased options
|
— | (13,593 | ) | — | (12,875 | ) | — | (8,873 | ) | |||||||||||||||
(Loss)
gain on open hedge transactions:
|
||||||||||||||||||||||||
Net
unrealized (loss) gain from the time value on open cash flow hedge
transactions
|
— | (2,051 | ) | — | 765 | — | (3,913 | ) | ||||||||||||||||
$ | 13,248 | $ | (15,644 | ) | $ | 5,510 | $ | (12,110 | ) | $ | 5,035 | $ | (12,786 | ) |
2008
|
2007
|
2006
|
||||||||||
(Loss)
gain on foreign currency assets and liabilities:
|
||||||||||||
Net
realized (loss) gain recognized in other income
|
$ | (7,738 | ) | $ | 13,388 | $ | 11,046 | |||||
Net
unrealized gain (loss) recognized in other income related to instruments
outstanding
|
5,223 | (4,035 | ) | 4,721 | ||||||||
(2,515 | ) | 9,353 | 15,767 | |||||||||
(Loss)
gain on hedges of foreign currency assets and liabilities:
|
||||||||||||
Net
realized loss recognized in other income
|
(3,255 | ) | (8,394 | ) | (4,179 | ) | ||||||
Net
unrealized gain (loss) recognized in other income
|
3,920 | 1,887 | (6,879 | ) | ||||||||
665 | (6,507 | ) | (11,058 | ) | ||||||||
Net
(loss) gain recognized in other income
|
$ | (1,850 | ) | $ | 2,846 | $ | 4,709 |
2008
|
2007
|
2006
|
||||||||||
Interest
and other income, net:
|
||||||||||||
Interest
income
|
$ | 57,588 | $ | 92,794 | $ | 74,783 | ||||||
Foreign
exchange losses
|
(17,494 | ) | (9,264 | ) | (8,077 | ) | ||||||
Fixed
income investment gains and (losses), net
|
1,660 | (2,576 | ) | (1,098 | ) | |||||||
Other
|
2,093 | 1,770 | 1,675 | |||||||||
Interest
and other income, net
|
$ | 43,847 | $ | 82,724 | $ | 67,283 | ||||||
Interest
expense
|
$ | (10,019 | ) | $ | (253 | ) | $ | (98 | ) | |||
Investment
gains and (losses), net:
|
||||||||||||
Realized
investment gains
|
$ | 18,398 | $ | 9,308 | $ | 76,239 | ||||||
Unrealized
investment gains
|
7,803 | 5,265 | 3,352 | |||||||||
Realized
investment losses
|
(1,417 | ) | (2,236 | ) | (2,389 | ) | ||||||
Unrealized
investment losses
|
(8,375 | ) | (5,203 | ) | (15,953 | ) | ||||||
Investment
gains and (losses), net
|
$ | 16,409 | $ | 7,134 | $ | 61,249 | ||||||
Total
non-operating income, net
|
$ | 50,237 | $ | 89,605 | $ | 128,434 |
Creative
Solutions
|
Knowledge
Worker
|
Enterprise
|
Mobile and
Device
Solutions
|
Platform
|
Print
and Publishing
|
Total
|
||||||||||||||||||||||
Fiscal
2008
|
||||||||||||||||||||||||||||
Revenue
|
$ | 2,072,835 | $ | 810,883 | $ | 252,976 | $ | 113,071 | $ | 118,487 | $ | 211,637 | $ | 3,579,889 | ||||||||||||||
Cost
of revenue
|
160,560 | 53,282 | 75,539 | 24,069 | 20,275 | 28,905 | 362,630 | |||||||||||||||||||||
Gross
profit
|
$ | 1,912,275 | $ | 757,601 | $ | 177,437 | $ | 89,002 | $ | 98,212 | $ | 182,732 | $ | 3,217,259 | ||||||||||||||
Gross
profit as a percentage of revenue
|
92 | % | 93 | % | 70 | % | 79 | % | 83 | % | 86 | % | 90 | % | ||||||||||||||
Fiscal
2007
|
||||||||||||||||||||||||||||
Revenue
|
$ | 1,898,924 | $ | 728,528 | $ | 191,317 | $ | 52,510 | $ | 80,870 | $ | 205,732 | $ | 3,157,881 | ||||||||||||||
Cost
of revenue
|
147,161 | 57,683 | 68,932 | 31,274 | 12,813 | 36,831 | 354,694 | |||||||||||||||||||||
Gross
profit
|
$ | 1,751,763 | $ | 670,845 | $ | 122,385 | $ | 21,236 | $ | 68,057 | $ | 168,901 | $ | 2,803,187 | ||||||||||||||
Gross
profit as a percentage of revenue
|
92 | % | 92 | % | 64 | % | 40 | % | 84 | % | 82 | % | 89 | % | ||||||||||||||
Fiscal
2006
|
||||||||||||||||||||||||||||
Revenue
|
$ | 1,437,908 | $ | 657,813 | $ | 158,170 | $ | 37,505 | $ | 68,130 | $ | 215,774 | $ | 2,575,300 | ||||||||||||||
Cost
of revenue
|
138,437 | 36,992 | 53,933 | 22,185 | 14,029 | 26,881 | 292,457 | |||||||||||||||||||||
Gross
profit
|
$ | 1,299,471 | $ | 620,821 | $ | 104,237 | $ | 15,320 | $ | 54,101 | $ | 188,893 | $ | 2,282,843 | ||||||||||||||
Gross
profit as a percentage of revenue
|
90 | % | 94 | % | 66 | % | 41 | % | 79 | % | 88 | % | 89 | % |
Revenue
|
2008
|
2007
|
2006
|
|||||||||
Americas:
|
||||||||||||
United
States
|
$ | 1,473,319 | $ | 1,379,028 | $ | 1,157,708 | ||||||
Other
|
159,507 | 129,776 | 109,068 | |||||||||
Total
Americas
|
1,632,826 | 1,508,804 | 1,266,776 | |||||||||
EMEA
|
1,229,161 | 1,026,455 | 770,060 | |||||||||
Asia:
|
||||||||||||
Japan
|
450,799 | 407,344 | 354,029 | |||||||||
Other
|
267,103 | 215,278 | 184,435 | |||||||||
Total
Asia
|
717,902 | 622,622 | 538,464 | |||||||||
Total
revenue
|
$ | 3,579,889 | $ | 3,157,881 | $ | 2,575,300 |
Property and Equipment
|
2008
|
2007
|
||||||
Americas:
|
||||||||
United
States
|
$ | 252,434 | $ | 228,263 | ||||
Other
|
9,154 | 15,364 | ||||||
Total
Americas
|
261,588 | 243,627 | ||||||
EMEA
|
29,887 | 27,035 | ||||||
Asia:
|
||||||||
India
|
15,242 | 11,633 | ||||||
Other
|
6,320 | 7,463 | ||||||
Total
Asia
|
21,562 | 19,096 | ||||||
Total
property and equipment
|
$ | 313,037 | $ | 289,758 |
2008
|
2007
|
2006
|
||||||
Ingram
Micro
|
18
|
%
|
21
|
%
|
24
|
%
|
||
Tech
Data
|
9
|
%
|
10
|
%
|
10
|
%
|
2008
|
2007
|
||||
Ingram
Micro
|
18
|
%
|
19
|
%
|
|
Tech
Data
|
8
|
%
|
10
|
%
|
2008
|
||||||||||||||||
Quarter Ended
|
||||||||||||||||
February
29
|
May
30
|
August
29
|
November
28
|
|||||||||||||
Revenue
|
$ | 890,445 | $ | 886,886 | $ | 887,257 | $ | 915,301 | ||||||||
Gross
profit
|
807,970 | 804,020 | 776,406 | 828,863 | ||||||||||||
Income
before income taxes
|
295,644 | 278,006 | 228,514 | 276,344 | ||||||||||||
Net
income
|
219,379 | 214,910 | 191,608 | 245,917 | ||||||||||||
Basic
net income per share
|
0.39 | 0.40 | 0.36 | 0.47 | ||||||||||||
Diluted
net income per share
|
0.38 | 0.40 | 0.35 | 0.46 |
2007
|
||||||||||||||||
Quarter Ended
|
||||||||||||||||
March 2
|
June 1
|
August
31
|
November
30
|
|||||||||||||
Revenue
|
$ | 649,407 | $ | 745,577 | $ | 851,686 | $ | 911,211 | ||||||||
Gross
profit
|
577,144 | 654,363 | 759,065 | 812,615 | ||||||||||||
Income
before income taxes
|
174,402 | 205,116 | 276,995 | 290,677 | ||||||||||||
Net
income
|
143,851 | 152,505 | 205,243 | 222,208 | ||||||||||||
Basic
net income per share
|
0.24 | 0.26 | 0.35 | 0.39 | ||||||||||||
Diluted
net income per share
|
0.24 | 0.25 | 0.34 | 0.38 |
1.
|
Financial
Statements. See “Index to Consolidated Financial Statements” in
Part II, Item 8 of this Form 10-K.
|
2.
|
Exhibits. The
exhibits listed in the accompanying “Index to Exhibits” are filed or
incorporated by reference as part of this Form
10-K.
|
ADOBE
SYSTEMS INCORPORATED
|
||||
By:
|
/s/
Mark
Garrett
|
|||
Mark
Garrett,
Executive
Vice President and Chief Financial Officer (Principal Financial
Officer)
|
Signature
|
Title
|
Date
|
|||
/s/
John
E. Warnock
|
January
23, 2009
|
||||
John
E. Warnock
|
Chairman
of the Board of Directors
|
||||
/s/
Charles
M. Geschke
|
January
23, 2009
|
||||
Charles
M. Geschke
|
Chairman
of the Board of Directors
|
||||
/s/
Shantanu
Narayen
|
January
23, 2009
|
||||
Shantanu
Narayen
|
Director,
President and Chief Executive Officer
(Principal
Executive Officer)
|
||||
/s/
Mark
Garrett
|
January
23, 2009
|
||||
Mark
Garrett
|
Executive
Vice President and Chief Financial Officer (Principal Financial
Officer)
|
||||
/s/
Richard
T. Rowley
|
January
23, 2009
|
||||
Richard
T. Rowley
|
Vice
President and Principal Accounting Officer
|
||||
/s/
Edward
W. Barnholt
|
January
23, 2009
|
||||
Edward
W. Barnholt
|
Director
|
||||
/s/
Robert
K. Burgess
|
January
23, 2009
|
||||
Robert
K. Burgess
|
Director
|
||||
/s/
Michael
R. Cannon
|
January
23, 2009
|
||||
Michael
R. Cannon
|
Director
|
Signature
|
Title
|
Date
|
|||
/s/
James
E. Daley
|
January
23, 2009
|
||||
James
E. Daley
|
Director
|
||||
/s/
Carol
Mills
|
January
23, 2009
|
||||
Carol
Mills
|
Director
|
||||
/s/
Colleen
M. Pouliot
|
January
23, 2009
|
||||
Colleen
M. Pouliot
|
Director
|
||||
/s/
Daniel
L. Rosensweig
|
January
23, 2009
|
||||
Daniel
L. Rosensweig
|
Director
|
||||
/s/
Robert
Sedgewick
|
January
23, 2009
|
||||
Robert
Sedgewick
|
Director
|
||||
/s/
Delbert
W. Yocam
|
January
23, 2009
|
||||
Delbert
W. Yocam
|
Director
|
Exhibit
|
Incorporated
by Reference**
|
Filed
|
||||||||
Number
|
Exhibit
Description
|
Form
|
Date
|
Number
|
Herewith
|
|||||
3.1
|
Amended
and Restated Bylaws
|
8-K
|
1/13/09
|
3.1
|
||||||
3.2
|
Restated
Certificate of Incorporation of Adobe Systems Incorporated
|
10-Q
|
7/16/01
|
3.6
|
||||||
3.2.1
|
Certificate
of Correction of Restated Certificate of Incorporation of Adobe Systems
Incorporated
|
10-Q
|
4/11/03
|
3.6.1
|
||||||
3.3
|
Certificate
of Designation of Series A Preferred Stock of Adobe Systems
Incorporated
|
10-Q
|
7/08/03
|
3.3
|
||||||
4.1
|
Fourth
Amended and Restated Rights Agreement between Adobe Systems Incorporated
and Computershare Investor Services, LLC
|
8-K
|
7/03/00
|
1
|
||||||
4.1.1
|
Amendment
No. 1 to Fourth Amended and Restated Rights Agreement between Adobe
Systems Incorporated and Computershare Investor
Services, LLC
|
8-A/2G/A
|
5/23/03
|
7
|
||||||
10.1
|
1984
Stock Option Plan, as amended*
|
10-Q
|
7/02/93
|
10.1.6
|
||||||
10.2
|
Amended
1994 Performance and Restricted Stock Plan*
|
10-Q
|
4/4/08
|
10.2
|
||||||
10.3
|
Form
of Restricted Stock Agreement used in connection with the Amended 1994
Performance and Restricted Stock Plan*
|
X
|
||||||||
10.4
|
1994
Stock Option Plan, as amended*
|
S-8
|
5/30/97
|
10.40
|
||||||
10.5
|
1997
Employee Stock Purchase Plan, as amended*
|
10-K
|
1/24/08
|
10.5
|
||||||
Exhibit
|
Incorporated
by Reference**
|
Filed
|
||||||||
Number
|
Exhibit
Description
|
Form
|
Date
|
Number
|
Herewith
|
|||||
10.6
|
1996
Outside Directors Stock Option Plan, as amended*
|
10-Q
|
4/12/06
|
10.6
|
10.7
|
Forms
of Stock Option Agreements used in connection with the 1996 Outside
Directors Stock Option Plan*
|
S-8
|
6/16/00
|
4.8
|
||||||
10.8
|
1999
Nonstatutory Stock Option Plan, as amended*
|
S-8
|
10/29/01
|
4.6
|
||||||
10.9
|
1999
Equity Incentive Plan, as amended*
|
10-K
|
2/26/03
|
10.37
|
||||||
10.10
|
2003
Equity Incentive Plan, as amended and restated*
|
DEF 14A
|
2/27/08
|
Appendix A
|
||||||
10.11
|
Form
of Stock Option Agreement used in connection with the 2003 Equity
Incentive Plan*
|
10-Q
|
4/4/08
|
10.11
|
||||||
10.12
|
Form
of Indemnity Agreement*
|
10-Q
|
5/30/97
|
10.25.1
|
||||||
10.13
|
Forms
of Retention Agreement*
|
10-K
|
11/28/97
|
10.44
|
||||||
10.14
|
Second
Amended and Restated Master Lease of Land and Improvements by and between
SMBC Leasing and Finance, Inc. and Adobe Systems
Incorporated
|
10-Q
|
10/07/04
|
10.14
|
||||||
10.15
|
Lease
between Adobe Systems Incorporated and Selco Service Corporation, dated
March 26, 2007
|
8-K
|
3/28/07
|
10.1
|
||||||
10.16
|
Participation
Agreement among Adobe Systems Incorporated, Selco Service Corporation, et
al. dated March 26, 2007
|
8-K
|
3/28/07
|
10.2
|
Exhibit
|
Incorporated
by Reference**
|
Filed
|
||||||||
Number
|
Exhibit
Description
|
Form
|
Date
|
Number
|
Herewith
|
|||||
10.17
|
Lease
Agreement by and between Allaire Corporation and EOP Riverside
Project LLC dated November 23, 1999
|
10-K
|
3/30/00
|
10.23
|
||||||
10.18
|
First
Amendment to Lease Agreement by and between Allaire Corporation and EOP
Riverside Project LLC dated May 31, 2000
|
10-Q
|
8/14/00
|
10.3
|
10.19
|
Form
of Restricted Stock Unit Agreement used in connection with the Amended
1994 Performance and Restricted Stock Plan*
|
X
|
||||||||
10.20
|
Form
of Restricted Stock Unit Agreement used in connection with the 2003 Equity
Incentive Plan*
|
X
|
||||||||
10.21
|
Form
of Restricted Stock Agreement used in connection with the 2003 Equity
Incentive Plan*
|
10-Q
|
10/07/04
|
10.11
|
||||||
10.22
|
2008
Executive Officer Annual Incentive Plan*
|
8-K
|
1/30/08
|
10.4
|
||||||
10.23
|
2005
Equity Incentive Assumption Plan, as amended*
|
10-Q
|
4/4/08
|
10.23
|
||||||
10.24
|
Form
of Stock Option Agreement used in connection with the 2005 Equity
Incentive Assumption Plan*
|
10-Q
|
4/4/08
|
10.24
|
10.25
|
Allaire
Corporation 1997 Stock Incentive Plan*
|
S-8
|
03/27/01
|
4.06
|
||||||
10.26
|
Allaire
Corporation 1998 Stock Incentive Plan*
|
S-8
|
03/27/01
|
4.07
|
||||||
10.27
|
Allaire
Corporation 2000 Stock Incentive Plan*
|
S-8
|
03/27/01
|
4.08
|
Exhibit
|
Incorporated
by Reference**
|
Filed
|
||||||||
Number
|
Exhibit
Description
|
Form
|
Date
|
Number
|
Herewith
|
|||||
10.28
|
Andromedia, Inc.
1996 Stock Option Plan*
|
S-8
|
12/07/99
|
4.07
|
||||||
10.29
|
Andromedia, Inc.
1997 Stock Option Plan*
|
S-8
|
12/07/99
|
4.08
|
||||||
10.30
|
Andromedia, Inc.
1999 Stock Plan*
|
S-8
|
12/07/99
|
4.09
|
||||||
10.31
|
ESI
Software, Inc. 1996 Equity Incentive Plan*
|
S-8
|
10/18/99
|
4.08
|
||||||
10.32
|
eHelp
Corporation 1999 Equity Incentive Plan*
|
S-8
|
12/29/03
|
4.08
|
||||||
10.33
|
Blue
Sky Software Corporation 1996 Stock Option Plan*
|
S-8
|
12/29/03
|
4.07
|
10.34
|
Bright
Tiger Technologies, Inc. 1996 Stock Option Plan*
|
S-8
|
03/27/01
|
4.11
|
||||||
10.35
|
Live
Software, Inc. 1999 Stock Option/Stock Issuance Plan*
|
S-8
|
03/27/01
|
4.10
|
||||||
10.36
|
Macromedia, Inc.
1999 Stock Option Plan*
|
S-8
|
08/17/00
|
4.07
|
||||||
10.37
|
Macromedia, Inc.
1992 Equity Incentive Plan*
|
10-Q
|
08/03/01
|
10.01
|
||||||
10.38
|
Macromedia, Inc.
2002 Equity Incentive Plan*
|
S-8
|
08/10/05
|
4.08
|
||||||
10.39
|
Form
of Macromedia, Inc. Stock Option Agreement*
|
S-8
|
08/10/05
|
4.09
|
||||||
10.40
|
Middlesoft, Inc.
1999 Stock Option Plan*
|
S-8
|
08/17/00
|
4.09
|
||||||
10.41
|
Form
of Macromedia, Inc. Revised Non-Plan Stock Option
Agreement*
|
S-8
|
11/23/04
|
4.10
|
Exhibit
|
Incorporated
by Reference**
|
Filed
|
||||||||
Number
|
Exhibit
Description
|
Form
|
Date
|
Number
|
Herewith
|
|||||
10.42
|
Form
of Macromedia, Inc. Restricted Stock Purchase
Agreement*
|
10-Q
|
2/08/05
|
10.01
|
||||||
10.43
|
Adobe
Systems Incorporated Form of Performance Share Program pursuant to the
2003 Equity Incentive Plan*
|
8-K
|
1/30/08
|
10.1
|
||||||
10.44
|
Form
of Award Grant Notice and Performance Share Award Agreement used in
connection with grants under the Adobe Systems Incorporated 2008
Performance Share Program pursuant to the 2003 Equity Incentive
Plan*
|
8-K
|
1/30/08
|
10.2
|
||||||
10.45
|
2008
Award Calculation Methodology Exhibit A to the 2008 Performance Share
Program pursuant to the 2003 Equity Incentive Plan*
|
8-K
|
1/30/08
|
10.3
|
||||||
10.46
|
Adobe
Systems Incorporated Deferred Compensation Plan*
|
10-K
|
1/24/08
|
10.52
|
10.47
|
Adobe
Systems Incorporated 2007 Performance Share Program pursuant to the 2003
Equity Incentive Plan*
|
8-K
|
1/30/07
|
10.1
|
10.48
|
Form
of Award Grant Notice and Performance Share Award Agreement used in
connection with grants under the Adobe Systems Incorporated 2007
Performance Share Program pursuant to the 2003 Equity Incentive
Plan*
|
8-K
|
1/30/07
|
10.2
|
||||||
10.49
|
Adobe
Systems Incorporated 2007 Performance Share Program pursuant to the
Amended 1994 Performance and Restricted Stock Plan*
|
8-K
|
1/30/07
|
10.3
|
Exhibit
|
Incorporated
by Reference**
|
Filed
|
||||||||
Number
|
Exhibit
Description
|
Form
|
Date
|
Number
|
Herewith
|
|||||
10.50
|
Form
of Award Grant Notice and Performance Share Award Agreement used in
connection with grants under the Adobe Systems Incorporated 2007
Performance Share Program pursuant to the Amended 1994 Performance and
Restricted Stock Plan*
|
8-K
|
1/30/07
|
10.4
|
||||||
10.51
|
Adobe
Systems Incorporated Executive Cash Bonus Plan*
|
DEF 14A
|
2/24/06
|
Appendix B
|
||||||
10.52
|
First
Amendment to Retention Agreement between Adobe Systems Incorporated and
Shantanu Narayen, effective as of February 11, 2008*
|
8-K
|
2/13/08
|
10.1
|
||||||
10.53
|
Adobe
Systems Incorporated Executive Severance Plan in the Event of a Change of
Control*
|
8-K
|
2/13/08
|
10.2
|
||||||
10.54
|
Employment
offer letter between Adobe Systems Incorporated and Richard Rowley, dated
October 30, 2006*
|
8-K
|
11/16/06
|
10.1
|
||||||
10.55
|
Employment
offer letter between Adobe Systems Incorporated and Mark Garrett dated
January 5, 2007*
|
8-K
|
1/26/07
|
10.1
|
Exhibit
|
Incorporated
by Reference**
|
Filed
|
||||||||
Number
|
Exhibit
Description
|
Form
|
Date
|
Number
|
Herewith
|
|||||
10.56
|
Credit
Agreement, dated as of February 16, 2007, among Adobe Systems
Incorporated and Certain Subsidiaries as Borrowers; BNP Paribas, Keybank
National Association, and UBS Loan Finance LLC as Co-Documentation
Agents; JPMorgan Chase Bank, N.A. as Syndication Agent; Bank of America,
N.A. as Administrative Agent and Swing Line Lender; the Other Lenders
Party Thereto; and Banc of America Securities LLC and J.P. Morgan
Securities Inc. as Joint Lead Arrangers and Joint Book
Managers
|
8-K
|
8/16/07
|
10.1
|
10.57
|
Amendment
to Credit Agreement, dated as of August 13, 2007, among Adobe Systems
Incorporated, as Borrower; each Lender from time to time party to the
Credit Agreement; and Bank of America, N.A. as Administrative
Agent
|
8-K
|
8/16/07
|
10.2
|
||||||
10.58
|
Second
Amendment to Credit Agreement, dated as of February 26, 2008, among
Adobe Systems Incorporated, as Borrower; each Lender from time to time
party to the Credit Agreement; and Bank of America, N.A. as Administrative
Agent
|
8-K
|
2/29/08
|
10.1
|
||||||
10.59
|
Purchase
and Sale Agreement, by and between NP Normandy Overlook, LLC, as Seller
and Adobe Systems Incorporated as Buyer, effective as of May 12,
2008
|
8-K
|
5/15/08
|
10.1
|
Exhibit
|
Incorporated
by Reference**
|
Filed
|
||||||||
Number
|
Exhibit
Description
|
Form
|
Date
|
Number
|
Herewith
|
|||||
10.60
|
Form
of Director Annual Grant Stock Option Agreement used in connection with
the 2003 Equity Incentive Plan*
|
X
|
||||||||
10.61
|
Form
of Director Initial Grant Restricted Stock Unit Agreement in connection
with the 2003 Equity Incentive Plan*
|
X
|
||||||||
10.62
|
Form
of Director Annual Grant Restricted Stock Unit Agreement in connection
with the 2003 Equity Incentive Plan*
|
X
|
||||||||
10.63
|
Description
of 2009 Director Compensation*
|
X
|
||||||||
21
|
Subsidiaries
of the Registrant
|
X
|
||||||||
23.1
|
Consent
of Independent Registered Public Accounting Firm, KPMG LLP
|
X
|
31.1
|
Certification
of Chief Executive Officer, as required by Rule 13a-14(a) of the
Securities Exchange Act of 1934
|
X
|
||||||||
31.2
|
Certification
of Chief Financial Officer, as required by Rule 13a-14(a) of the
Securities Exchange Act of 1934
|
X
|
||||||||
32.1
|
Certification
of Chief Executive Officer, as required by Rule 13a-14(b) of the
Securities Exchange Act of 1934†
|
X
|
Exhibit
|
Incorporated
by Reference**
|
Filed
|
||||||||
Number
|
Exhibit
Description
|
Form
|
Date
|
Number
|
Herewith
|
|||||
32.2
|
Certification
of Chief Financial Officer, as required by Rule 13a-14(b) of the
Securities Exchange Act of 1934†
|
X
|
*
|
Compensatory
plan or arrangement.
|
**
|
References
to Exhibits 10.17 and 10.18 are to filings made by the Allaire
Corporation. References to Exhibits 10.25 through 10.42 are to
filings made by
Macromedia, Inc.
|
†
|
The
certifications attached as Exhibits 32.1 and 32.2 that accompany this
Annual Report on Form 10-K, are not deemed filed with the Securities
and Exchange Commission and are not to be incorporated by reference into
any filing of Adobe Systems Incorporated under the Securities Act of 1933,
as amended, or the Securities Exchange Act of 1934, as amended, whether
made before or after the date of this Form 10-K, irrespective of any
general incorporation language contained in such
filing.
|
ADOBE
SYSTEMS INCORPORATED
|
ESCROW
AGENT
|
By:
__________________________________
Shantanu
Narayen
Chief
Executive Officer
Adobe
Systems Incorporated
Address: 345
Park Avenue
San Jose, CA
95110-2704
|
By:
__________________________________
[Designee
of Corporate Secretary]
[Title]
Adobe
Systems Incorporated
Address: 345
Park Avenue
San Jose, CA
95110-2704
|
Participant:
|
%%FIRST_NAME%-%
%%LAST_NAME%-%
|
Date
of Grant:
|
%%OPTION_DATE,’Month
DD, YYYY’%-%
|
Vesting
Commencement Date:
|
%%VEST_BASE_DATE,’Month
DD, YYYY%-%
|
Number
of Restricted Stock Units:
|
%%TOTAL_SHARES_GRANTED%-%
|
Payment
for Stock:
|
Participant’s services
to the Company (to the greatest extent permitted by applicable
law)
|
Participant:
|
%%FIRST_NAME%-%
%%LAST_NAME%-%
|
Date
of Grant:
|
%%OPTION_DATE,’Month
DD, YYYY’%-%
|
Vesting
Commencement Date:
|
%%VEST_BASE_DATE,’Month
DD, YYYY%-%
|
Number
of Restricted Stock Units:
|
%%TOTAL_SHARES_GRANTED%-%
|
Payment
for Stock:
|
Participant’s services
to the Company (to the greatest extent permitted by applicable
law)
|
Vested Percentage
|
||
Prior
to Vesting Date
|
0
|
|
On
Vesting Date, provided the Participant’s Service has not terminated prior
to such date
|
100%
|
|
ADOBE
SYSTEMS INCORPORATED
|
|
By:
|
|
Shantanu
Narayen
|
|
Title:
|
Chief
Executive Officer
|
Address:
|
345
Park Avenue
|
San
Jose, CA 95110-2704
|
Participant: | %%FIRST_NAME%-% %%LAST_NAME%-% |
Date
of Grant:
|
%%OPTION_DATE,’Month
DD, YYYY’%-%
|
Vesting
Commencement Date:
|
%%VEST_BASE_DATE,’Month
DD, YYYY%-%
|
Number
of Restricted Stock Units:
|
%%TOTAL_SHARES_GRANTED%-%
|
Payment
for Stock:
|
Participant’s services
to the Company (to the greatest extent permitted by applicable
law)
|
Participant:
|
%%FIRST_NAME%-%
%%LAST_NAME%-%
|
Date
of Grant:
|
%%OPTION_DATE,’Month
DD, YYYY’%-%
|
Number
of Restricted Stock Units:
|
%%TOTAL_SHARES_GRANTED%-%
|
Payment
for Stock:
|
Participant’s services
to the Company (to the greatest extent permitted by applicable
law)
|
•
|
$50,000
annual fee
|
•
|
$50,000
annual fee for each Co-Chair
|
•
|
Audit
Committee – $20,000 annual fee
|
•
|
Executive
Compensation Committee – $15,000 annual
fee
|
•
|
Nominating
and Governance Committee – $7,500 annual
fee
|
•
|
Audit
Committee – $40,000 annual fee
|
•
|
Executive
Compensation Committee – $30,000 annual
fee
|
•
|
Nominating
and Governance Committee – $15,000 annual
fee
|
•
|
A
restricted stock unit award will be granted to each Director on the day he
or she joins the Board of Directors and shall have an aggregate value of
$450,000 (Note: Directors receiving an initial award will not be eligible
to receive an annual award until the second Annual Meeting of Stockholders
after joining the Board. Directors who first join the Board upon being
elected at an Annual Meeting of Stockholders will receive an annual award
at the next year’s Annual Meeting, as their second Annual
Meeting)
|
•
|
Target
grant value converted to restricted stock units is based on the average
stock price over the 30 calendar days ending on the day before the date of
grant
|
•
|
The
initial equity award will vest over a two-year period, 50% each year on
the anniversary of the grant date
|
•
|
An
annual equity award will be granted on the business day immediately
following the date of our Annual Meeting of Stockholders and shall have an
aggregate value of $210,000
|
•
|
Directors
may elect to receive their annual equity award in the form of 100% stock
options, 100% restricted stock units or 50% of
each
|
•
|
Annual
award elections must be made in accordance with the submission dates set
by Company, but in no event may the election be made after the beginning
of the fiscal year in which the equity grant will be made. If the Company
does not timely receive an equity grant election from any Director, the
equity award to that Director will automatically be granted in the form of
100% restricted stock units
|
•
|
Target
grant value converted to restricted stock units is based on the average
stock price over the 30 calendar days ending on the day before the date of
grant
|
•
|
Target
grant value converted to stock options is based on 3:1 conversion of
restricted stock units to stock
options
|
•
|
All
stock options will have a term of seven
years
|
•
|
The
annual equity award will vest 100% on the day immediately preceding the
date of our next Annual Meetings of
Stockholders
|
Subsidiary
Legal Name
|
Jurisdiction
of Incorporation/Formation
|
|
The
Americas:
|
||
Adobe
International LLC
|
Delaware
|
|
Adobe
Macromedia Software LLC
|
Delaware
|
|
Adobe
Systems Brasil Limitada
|
Brazil
|
|
Adobe
Systems Federal LLC
|
Delaware
|
|
Antepo,
Inc.
|
Delaware
|
|
Adobe
Systems Canada Inc.
|
Canada
|
|
Virtual
Ubiquity, Inc.
|
Massachusetts
|
|
Europe:
|
||
Adobe
Systems Benelux BV
|
The
Netherlands
|
|
Adobe
Systems Danmark ApS
|
Denmark
|
|
Adobe
Systems Direct Limited.
|
United
Kingdom
|
|
Adobe
Systems Engineering GmbH
|
Federal
Republic of Germany
|
|
Adobe
Systems Europe Limited.
|
United
Kingdom
|
|
Adobe
Systems France SAS
|
France
|
|
Adobe
Systems GmbH
|
Federal
Republic of Germany
|
|
Adobe
Systems (Schweiz) GmbH
|
Switzerland
|
|
Adobe
Systems Iberica SL
|
Spain
|
|
Adobe
Systems Italia SRL
|
Italy
|
|
Adobe
Systems Nordic AB
|
Sweden
|
|
Adobe
Systems Norge AS
|
Norway
|
|
Adobe
Systems Romania SRL
|
Romania
|
|
Adobe
Systems s.r.o.
|
Czech
Republic
|
|
Adobe
Software Trading Company Limited
|
Ireland
|
|
Adobe
Systems Software Ireland Limited
|
Ireland
|
|
Adobe
Systems Istanbul Yazilim Ticaret Limited Sirketi
|
Turkey
|
|
Frame
Technology International Limited
|
Ireland
|
|
Macromedia
Europe Limited
|
United
Kingdom
|
|
Macromedia
Ireland Limited
|
Ireland
|
|
Mobile
Innovation Limited.
|
United
Kingdom
|
|
Okyz
SAS
|
France
|
|
YaWah
ApS
|
Denmark
|
|
Africa:
|
||
Adobe
Systems South Africa (Proprietary) Limited
|
South
Africa
|
|
Asia:
|
||
Adobe
Systems Co. Ltd.
|
Japan
|
|
Adobe
Systems Hong Kong Limited
|
Hong
Kong
|
|
Adobe
Systems India Private Limited.
|
India
|
|
Adobe
Systems Korea Ltd.
|
Korea
|
|
Adobe
Systems Pte. Ltd.
|
Singapore
|
|
Adobe
Systems Pty. Ltd.
|
Australia
|
|
Adobe
Systems Software (Beijing) Co. Ltd.
|
China
|
|
Adobe
Systems New Zealand Limited.
|
New
Zealand
|
|
Macromedia
South Asia Pte. Ltd.
|
Singapore
|
1.
|
I
have reviewed this report on Form 10-K of Adobe Systems
Incorporated;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
|
(a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
(b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
(c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
(d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
(a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
(b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Dated:
January 23, 2009
|
/s/ SHANTANU
NARAYEN
|
Shantanu
Narayen
|
|
President
and Chief Executive
Officer
|
1.
|
I
have reviewed this report on Form 10-K of Adobe Systems
Incorporated;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
|
(a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
(b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
(c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
(d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
(a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
(b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Dated: January
23, 2009
|
/s/
Mark
Garrett
|
Mark
Garrett
|
|
Chief
Financial Officer
|
Dated:
January 23, 2009
|
/s/
SHANTANU NARAYEN
|
Shantanu
Narayen
|
|
President
and Chief Executive Officer
|
Dated:
January 23, 2009
|
/s/
Mark
Garrett
|
Mark
Garrett
|
|
Chief
Financial Officer
|