Adobe 2009 Annual Report Download - page 112

ADOBE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
112
Total stock-based compensation costs that have been included in our Consolidated Statements of Income for fiscal 2009,
2008 and 2007 were as follows (in thousands):
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 2009 ...................
$
1,906
$
45,535
$
38,790
$
24,595
$
110,826
Fiscal 2008 ...................
$
3,728
$
55,653
$
41,326
$
24,521
$
125,228
Fiscal 2007 ...................
$
5,152
$
58,579
$
41,801
$
24,467
$
129,999
Restricted Stock and Performance
Share Awards(*)
Fiscal 2009 ...................
$
639
$
27,931
$
19,818
$
9,274
$
57,662
Fiscal 2008 ...................
$
570
$
20,835
$
17,928
$
10,810
$
50,143
Fiscal 2007 ...................
$
346
$
9,518
$
6,084
$
4,040
$
19,988
_________________________________________
(*) During fiscal 2009 and 2008, we recorded $0.9 million and $2.9 million, respectively, associated with cash recoveries
of fringe benefit tax from employees in India.
NOTE 14. STOCKHOLDERS’ EQUITY
Stockholder Rights Plan
Our Stockholder Rights Plan is intended to protect stockholders from unfair or coercive takeover practices. In
accordance with this plan, the Board of Directors declared a dividend distribution of one common stock purchase right on
each outstanding share of our common stock held as of July 24, 1990 and on each share of common stock issued by Adobe
thereafter. In July 2000, the Stockholder Rights Plan was amended to extend it for ten years so that each right entitles the
holder to purchase one unit of Series A Preferred Stock, which is equal to 1/1000 share of Series A Preferred Stock, par value
$0.0001 per share, at a price of $700 per unit. As adjusted for our 2000 and 2005 stock splits each in the form of a dividend,
each share of common stock now entitles the holder to one-quarter of such a purchase right. Each whole right still entitles the
registered holder to purchase from Adobe a unit of preferred stock at $700. The rights become exercisable in certain
circumstances, including upon an entity’s acquiring or announcing the intention to acquire beneficial ownership of 15% or
more of our common stock without the approval of the Board of Directors or upon our being acquired by any person in a
merger or business combination transaction. The rights are redeemable by Adobe prior to exercise at $0.01 per right and
expire on July 23, 2010.
Stock Repurchase Program I
To facilitate our stock repurchase program, designed to return value to our stockholders and minimize dilution from
stock issuances, we repurchase shares in the open market and also enter into structured repurchases with third-parties.
Authorization to repurchase shares to cover on-going dilution 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.
During fiscal 2009, 2008 and 2007 we entered into several structured repurchase agreements with large financial
institutions, whereupon we provided the financial institutions with prepayments of $350.0 million, $525.0 million and $1.1
billion, respectively. We entered into these agreements in order to take advantage of repurchasing shares at a guaranteed
discount to the Volume Weighted Average Price (“VWAP”) of our common stock over a specified period of time. We only
enter into such transactions when the discount that we receive is higher than the foregone return on our cash prepayments to
the financial institutions. There were no explicit commissions or fees on these structured repurchases. Under the terms of the
agreements, there is no requirement for the financial institutions to return any portion of the prepayment to us.