x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT
OF 1934
|
|
For
the quarterly period ended May 29,
2009
|
|
or
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT
OF 1934
|
Delaware
(State
or other jurisdiction of
incorporation
or organization)
|
77-0019522
(I.R.S.
Employer
Identification
No.)
|
|
345
Park Avenue, San Jose, California
95110-2704
|
|
(Address
of principal executive offices and zip
code)
|
|
(408) 536-6000
|
|
(Registrant’s
telephone number, including area
code)
|
Large
accelerated filer x
|
Accelerated
filer o
|
Non-accelerated
filer o
(Do
not check if a smaller
reporting
company)
|
Smaller
reporting company o
|
Page
No.
|
|||
PART
I—FINANCIAL INFORMATION
|
|||
Item 1.
|
3
|
||
3
|
|||
4
|
|||
5
|
|||
6
|
|||
Item 2.
|
25
|
||
Item 3.
|
36
|
||
Item 4.
|
36
|
||
PART
II—OTHER INFORMATION
|
|||
Item 1.
|
36
|
||
Item 1A.
|
36
|
||
Item 2.
|
45
|
||
Item 4.
|
45
|
||
Item 5.
|
46
|
||
Item 6.
|
46
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||
55
|
|||
56
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May
29,
2009
|
November 28,
2008
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 1,226,780 | $ | 886,450 | ||||
Short-term
investments
|
1,437,405 | 1,132,752 | ||||||
Trade
receivables, net of allowances for doubtful accounts of $6,474
and $4,128, respectively
|
262,598 | 467,234 | ||||||
Deferred
income taxes
|
76,907 | 110,713 | ||||||
Prepaid
expenses and other current assets
|
84,079 | 137,954 | ||||||
Total
current assets
|
3,087,769 | 2,735,103 | ||||||
Property
and equipment, net
|
291,720 | 313,037 | ||||||
Goodwill
|
2,134,997 | 2,134,730 | ||||||
Purchased
and other intangibles, net
|
148,507 | 214,960 | ||||||
Investment
in lease receivable
|
207,239 | 207,239 | ||||||
Other
assets
|
193,513 | 216,529 | ||||||
Total
assets
|
$ | 6,063,745 | $ | 5,821,598 | ||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Trade
payables
|
$ | 42,258 | $ | 55,840 | ||||
Accrued
expenses
|
363,431 | 399,969 | ||||||
Accrued
restructuring
|
11,728 | 35,690 | ||||||
Income
taxes payable
|
11,024 | 27,136 | ||||||
Deferred
revenue
|
185,191 | 243,964 | ||||||
Total
current liabilities
|
613,632 | 762,599 | ||||||
Long-term
liabilities:
|
||||||||
Debt
|
350,000 | 350,000 | ||||||
Deferred
revenue
|
28,124 | 31,356 | ||||||
Accrued
restructuring
|
6,559 | 6,214 | ||||||
Income
taxes payable
|
137,240 | 123,182 | ||||||
Deferred
income taxes
|
104,490 | 117,328 | ||||||
Other
liabilities
|
22,659 | 20,565 | ||||||
Total
liabilities
|
1,262,704 | 1,411,244 | ||||||
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; 524,530 and 526,111 shares outstanding,
respectively
|
61 | 61 | ||||||
Additional
paid-in-capital
|
2,361,223 | 2,396,819 | ||||||
Retained
earnings
|
5,195,912 | 4,913,406 | ||||||
Accumulated
other comprehensive income
|
27,310 | 57,222 | ||||||
Treasury
stock, at cost (76,304 and 74,723 shares, respectively), net of
reissuances
|
(2,783,465 | ) | (2,957,154 | ) | ||||
Total
stockholders’ equity
|
4,801,041 | 4,410,354 | ||||||
Total
liabilities and stockholders’ equity
|
$ | 6,063,745 | $ | 5,821,598 |
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
May
29,
2009
|
May
30,
2008
|
May
29,
2009
|
May
30,
2008
|
|||||||||||||
Revenue:
|
||||||||||||||||
Products
|
$ | 660,055 | $ | 841,301 | $ | 1,402,254 | $ | 1,693,263 | ||||||||
Services
and support
|
44,618 | 45,585 | 88,809 | 84,068 | ||||||||||||
Total
revenue
|
704,673 | 886,886 | 1,491,063 | 1,777,331 | ||||||||||||
Cost
of revenue:
|
||||||||||||||||
Products
|
55,758 | 58,229 | 114,676 | 118,034 | ||||||||||||
Services
and support
|
16,250 | 24,637 | 34,685 | 47,307 | ||||||||||||
Total
cost of revenue
|
72,008 | 82,866 | 149,361 | 165,341 | ||||||||||||
Gross
profit
|
632,665 | 804,020 | 1,341,702 | 1,611,990 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Research
and development
|
138,470 | 170,300 | 288,387 | 338,785 | ||||||||||||
Sales
and marketing
|
243,209 | 279,365 | 492,700 | 541,960 | ||||||||||||
General
and administrative
|
70,818 | 77,078 | 144,869 | 160,007 | ||||||||||||
Restructuring
charges
|
3,531 | — | 15,801 | 1,431 | ||||||||||||
Amortization
of purchased intangibles
|
15,284 | 17,099 | 30,676 | 34,198 | ||||||||||||
Total
operating expenses
|
471,312 | 543,842 | 972,433 | 1,076,381 | ||||||||||||
Operating
income
|
161,353 | 260,178 | 369,269 | 535,609 | ||||||||||||
Non-operating
income (expense):
|
||||||||||||||||
Interest
and other income, net
|
4,802 | 12,150 | 18,086 | 25,440 | ||||||||||||
Interest
expense
|
(620 | ) | (3,828 | ) | (1,412 | ) | (5,637 | ) | ||||||||
Investment
gains (losses), net
|
(1,805 | ) | 9,506 | (19,051 | ) | 18,238 | ||||||||||
Total
non-operating income (expense), net
|
2,377 | 17,828 | (2,377 | ) | 38,041 | |||||||||||
Income
before income taxes
|
163,730 | 278,006 | 366,892 | 573,650 | ||||||||||||
Provision
for income taxes
|
37,659 | 63,096 | 84,386 | 139,361 | ||||||||||||
Net
income
|
$ | 126,071 | $ | 214,910 | $ | 282,506 | $ | 434,289 | ||||||||
Basic
net income per share
|
$ | 0.24 | $ | 0.40 | $ | 0.54 | $ | 0.79 | ||||||||
Shares
used in computing basic net income per share
|
524,159 | 533,391 | 527,324 | 547,996 | ||||||||||||
Diluted
net income per share
|
$ | 0.24 | $ | 0.40 | $ | 0.53 | $ | 0.78 | ||||||||
Shares
used in computing diluted net income per share
|
528,013 | 542,376 | 531,338 | 557,703 |
Six
Months Ended
|
||||||||
May
29,
2009
|
May
30,
2008
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
income
|
$ | 282,506 | $ | 434,289 | ||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Depreciation,
amortization and accretion
|
133,465 | 137,858 | ||||||
Stock-based
compensation
|
86,577 | 91,421 | ||||||
Deferred
income taxes
|
19,984 | 69,655 | ||||||
Unrealized
losses (gains) on investments
|
16,498 | (8,579 | ) | |||||
Retirements
of property and equipment
|
3,426 | 119 | ||||||
Tax
benefit from employee stock option plans
|
2,711 | 9,329 | ||||||
Provision
for losses on trade receivables
|
3,281 | (390 | ) | |||||
Other
non-cash items
|
1,066 | 3 | ||||||
Excess
tax benefits from stock-based compensation
|
(84 | ) | (9,329 | ) | ||||
Changes
in operating assets and liabilities, net of acquired assets and
liabilities:
|
||||||||
Trade
receivables
|
201,354 | (2,615 | ) | |||||
Prepaid
expenses and other current assets
|
13,210 | (5,673 | ) | |||||
Trade
payables
|
(13,582 | ) | (4,271 | ) | ||||
Accrued
expenses
|
(32,639 | ) | (9,774 | ) | ||||
Accrued
restructuring
|
(24,139 | ) | (2,048 | ) | ||||
Income
taxes payable
|
(4,357 | ) | 23,951 | |||||
Deferred
revenue
|
(62,005 | ) | 7,145 | |||||
Net
cash provided by operating activities
|
627,272 | 731,091 | ||||||
Cash
flows from investing activities:
|
||||||||
Purchases
of short-term investments
|
(782,362 | ) | (466,226 | ) | ||||
Maturities
of short-term investments
|
197,709 | 353,534 | ||||||
Proceeds
from sales of short-term investments
|
273,243 | 448,184 | ||||||
Purchases
of property and equipment
|
(26,228 | ) | (48,671 | ) | ||||
Purchases
of long-term investments and other assets
|
(16,580 | ) | (36,672 | ) | ||||
Proceeds
from sale of long-term investments
|
1,904 | 9,520 | ||||||
Other
|
3,000 | — | ||||||
Net
cash (used for) provided by investing activities
|
(349,314 | ) | 259,669 | |||||
Cash
flows from financing activities:
|
||||||||
Purchases
of treasury stock
|
(13 | ) | (1,300,183 | ) | ||||
Proceeds
from issuance of treasury stock
|
48,819 | 162,467 | ||||||
Excess
tax benefits from stock-based compensation
|
84 | 9,329 | ||||||
Proceeds
from borrowings under credit facility
|
— | 450,000 | ||||||
Repayments
of borrowings under credit facility
|
— | (100,000 | ) | |||||
Net
cash provided by (used for) financing activities
|
48,890 | (778,387 | ) | |||||
Effect
of foreign currency exchange rates on cash and cash
equivalents
|
13,482 | 3,658 | ||||||
Net
increase in cash and cash equivalents
|
340,330 | 216,031 | ||||||
Cash
and cash equivalents at beginning of period
|
886,450 | 946,422 | ||||||
Cash
and cash equivalents at end of period
|
$ | 1,226,780 | $ | 1,162,453 | ||||
Supplemental
disclosures:
|
||||||||
Cash
paid for income taxes, net of refunds
|
$ | 58,024 | $ | 35,001 | ||||
Cash
paid for interest
|
$ | 1,488 | $ | 5,394 |
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)
|
$ | 1,171,499 | $ | 1,171,499 | $ | — | $ | — | ||||||||
Fixed
income available-for-sale securities(2)
|
1,432,391 | — | 1,432,391 | — | ||||||||||||
Available-for-sale
equity securities(3)
|
5,014 | 5,014 | — | — | ||||||||||||
Investments
of limited partnership(4)
|
33,080 | — | — | 33,080 | ||||||||||||
Foreign
currency derivatives(5)
|
5,422 | — | 5,422 | — | ||||||||||||
Deferred
compensation plan assets(4)
|
||||||||||||||||
Money
market funds
|
764 | 764 | — | — | ||||||||||||
Equity
and fixed income mutual funds
|
8,966 | — | 8,966 | — | ||||||||||||
Subtotal
for deferred compensation plan assets
|
9,730 | 764 | 8,966 | — | ||||||||||||
Total
|
$ | 2,657,136 | $ | 1,177,277 | $ | 1,446,779 | $ | 33,080 | ||||||||
Liabilities:
|
||||||||||||||||
Foreign
currency derivatives(6)
|
$ | 3,477 | $ | — | $ | 3,477 | $ | — | ||||||||
Total
|
$ | 3,477 | $ | — | $ | 3,477 | $ | — |
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 | — | ||||||||||||
Available-for-sale
equity 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(4)
|
||||||||||||||||
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(6)
|
$ | 1,739 | $ | — | $ | 1,739 | $ | — | ||||||||
Total
|
$ | 1,739 | $ | — | $ | 1,739 | $ | — |
(1)
|
Included
in cash and cash equivalents on our condensed consolidated balance
sheets.
|
(2)
|
Included
in either cash and cash equivalents or short-term investments on our
condensed consolidated balance
sheets.
|
(3)
|
Included
in short-term investments on our condensed consolidated balance
sheets.
|
(4)
|
Included
in other assets on our condensed consolidated balance
sheets.
|
(5)
|
Included
in prepaid expenses and other current assets on our condensed consolidated
balance sheets.
|
(6)
|
Included
in accrued expenses on our condensed consolidated balance
sheets.
|
Balance
as of November 28, 2008
|
$ | 38,753 | ||
Purchases
and sales of investments, net
|
(436 | ) | ||
Unrealized
net investment losses included in earnings
|
(5,237 | ) | ||
Balance
as of May 29, 2009
|
$ | 33,080 |
Fair
Values of Derivative Instruments
|
||||||||||
Asset
Derivatives
|
Liability
Derivatives
|
|||||||||
Balance
Sheet Location
|
Fair
Value
|
Balance
Sheet Location
|
Fair
Value
|
|||||||
Derivatives
designated as hedging instruments:
|
||||||||||
Foreign exchange option contracts
(1)
|
Prepaid
expense
and
other
current
assets
|
$ | 3,680 |
Accrued
expenses
|
$ | — | ||||
Derivatives
not designated as hedging instruments:
|
||||||||||
Foreign exchange forward
contracts
|
Prepaid
expense and other
current
assets
|
1,742 |
Accrued
expenses
|
3,477 | ||||||
Total
derivatives
|
$ | 5,422 | $ | 3,477 |
(1)
|
Hedging
effectiveness expected to be recognized to income within the next twelve
months.
|
Three
Months
|
Six
Months
|
|||||||||||||||
Foreign
Exchange Option Contracts
|
Foreign
Exchange Forward Contracts
|
Foreign
Exchange Option Contracts
|
Foreign
Exchange Forward Contracts
|
|||||||||||||
Derivatives
in cash flow hedging relationships:
|
||||||||||||||||
Net
gain (loss) recognized in OCI (1)
|
$ | (8,737 | ) | $ | — | $ | (14,187 | ) | $ | — | ||||||
Net
gain (loss) reclassified from accumulated OCI into income (2)
|
$ | 5,913 | $ | — | $ | 26,389 | $ | — | ||||||||
Net gain (loss) recognized in
income (3)
|
$ | (7,416 | ) | $ | — | $ | (9,048 | ) | $ | — | ||||||
Derivatives
not designated as hedging relationships:
|
||||||||||||||||
Net gain (loss) recognized in
income (4)
|
$ | — | $ | (5,305 | ) | $ | — | $ | (8,550 | ) |
(1)
|
Net
change in the fair value of the effective portion classified in other
comprehensive income (“OCI”).
|
(2)
|
Effective
portion classified as revenue.
|
(3)
|
Ineffective
portion and amount excluded from effectiveness testing classified in
interest and other income, net.
|
(4)
|
Classified
in interest and other income, net.
|
Cost
|
Accumulated
Amortization
|
Net
|
||||||||||
Purchased
technology
|
$ | 405,829 | $ | (361,494 | ) | $ | 44,335 | |||||
Localization
|
$ | 26,682 | $ | (16,568 | ) | $ | 10,114 | |||||
Trademarks
|
130,925 | (91,353 | ) | 39,572 | ||||||||
Customer
contracts and relationships
|
196,597 | (142,421 | ) | 54,176 | ||||||||
Other
intangibles
|
800 | (490 | ) | 310 | ||||||||
Total
other intangible assets
|
$ | 355,004 | $ | (250,832 | ) | $ | 104,172 | |||||
Total
purchased and other intangible assets
|
$ | 760,833 | $ | (612,326 | ) | $ | 148,507 |
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 |
Fiscal year
|
|
Purchased
Technology
|
Other
Intangible
Assets
|
|||||||
Remainder
of 2009
|
$ | 27,653 | $ | 39,932 | ||||||
2010
|
8,301 | 50,136 | ||||||||
2011
|
4,994 | 11,917 | ||||||||
2012
|
3,387 | 1,009 | ||||||||
2013
|
— | 789 | ||||||||
Thereafter
|
— | 389 | ||||||||
Total
expected amortization expense
|
$ | 44,335 | $ | 104,172 |
2009
|
2008
|
|||||||
Acquired
rights to use technology
|
$ | 88,332 | $ | 90,643 | ||||
Investments
|
58,735 | 76,589 | ||||||
Security
and other deposits
|
16,058 | 16,087 | ||||||
Deferred
compensation plan assets
|
9,730 | 7,560 | ||||||
Prepaid
royalties
|
8,878 | 9,026 | ||||||
Restricted
cash
|
4,361 | 7,361 | ||||||
Prepaid
land lease
|
3,166 | 3,185 | ||||||
Prepaid
rent
|
1,845 | 2,658 | ||||||
Other
|
2,408 | 3,420 | ||||||
Total
other assets
|
$ | 193,513 | $ | 216,529 |
2009
|
2008
|
|||||||
Accrued
compensation and benefits
|
$ | 160,458 | $ | 177,760 | ||||
Taxes
payable
|
11,322 | 21,760 | ||||||
Sales
and marketing allowances
|
26,325 | 28,127 | ||||||
Other
|
165,326 | 172,322 | ||||||
Total
accrued expenses
|
$ | 363,431 | $ | 399,969 |
Three Months
|
Six Months
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Expected
life (in years)
|
3.0 – 3.8 | 3.5 – 4.7 | 3.0 – 3.8 | 2.3 – 4.7 | ||||||||||||
Volatility
|
48 – 55 | % | 32 – 39 | % | 48 – 57 | % | 32 – 39 | % | ||||||||
Risk
free interest rate
|
1.27 – 1.61 | % | 1.70 – 2.83 | % | 1.16 – 1.61 | % | 1.70 – 3.35 | % |
Three Months
|
Six Months
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Expected
life (in years)
|
0.5 – 2.0 | 0.5 – 2.0 | 0.5 – 2.0 | 0.5 – 2.0 | ||||||||||||
Volatility
|
49 – 57 | % | 30 – 31 | % | 49 – 57 | % | 30 – 31 | % | ||||||||
Risk
free interest rate
|
0.27 – 0.88 | % | 2.82 – 3.29 | % | 0.27 – 0.88 | % | 2.82 – 3.29 | % |
2009
|
2008
|
|||||||
Beginning
balance
|
40,704 | 47,742 | ||||||
Granted
|
4,745 | 5,462 | ||||||
Exercised
|
(2,393 | ) | (9,983 | ) | ||||
Cancelled
|
(2,253 | ) | (2,517 | ) | ||||
Ending
balance
|
40,803 | 40,704 |
Number
of
Shares
(thousands)
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Life
(years)
|
Aggregate
Intrinsic
Value*
(millions)
|
|||||||||||||
2009
|
||||||||||||||||
Options
outstanding
|
40,803 | $ | 29.20 | 4.01 | $ | 143.8 | ||||||||||
Options
vested and expected to vest
|
38,951 | $ | 29.19 | 3.92 | $ | 137.3 | ||||||||||
Options
exercisable
|
27,319 | $ | 28.19 | 3.23 | $ | 108.7 | ||||||||||
2008
|
||||||||||||||||
Options
outstanding
|
45,769 | $ | 29.47 | 4.31 | $ | 668.0 | ||||||||||
Options
vested and expected to vest
|
41,257 | $ | 28.74 | 4.14 | $ | 632.1 | ||||||||||
Options
exercisable
|
28,957 | $ | 25.49 | 3.41 | $ | 537.9 |
*
|
The
intrinsic value is calculated as the difference between the market value
as of the end of the fiscal period and the exercise price of the shares.
As reported by the NASDAQ Global Select Market, the market values as of
May 29, 2009 and May 30, 2008 were $28.18 and $44.06,
respectively.
|
2009
|
2008
|
|||||||
Beginning
balance
|
4,261 | 1,701 | ||||||
Awarded
|
3,108 | 3,177 | ||||||
Released
|
(889 | ) | (422 | ) | ||||
Forfeited
|
(208 | ) | (195 | ) | ||||
Ending
balance
|
6,272 | 4,261 |
Number
of
Shares
(thousands)
|
Weighted
Average
Remaining
Contractual
Life
(years)
|
Aggregate
Intrinsic
Value*
(millions)
|
||||||||||
2009
|
||||||||||||
Restricted
stock units outstanding
|
6,272 | 1.89 | $ | 176.8 | ||||||||
Restricted
stock units vested and expected to vest
|
4,805 | 1.72 | $ | 135.3 | ||||||||
Restricted
stock units vested and deferred
|
4 | — | $ | 0.1 | ||||||||
2008
|
||||||||||||
Restricted
stock units outstanding
|
3,891 | 2.10 | $ | 171.4 | ||||||||
Restricted
stock units vested and expected to vest
|
2,649 | 1.89 | $ | 116.7 |
*
|
The
intrinsic value is calculated as the market value as of the end of the
fiscal period. As reported by the NASDAQ Global Select Market, the market
values as of May 29, 2009 and May 30, 2008 were $28.18 and $44.06,
respectively.
|
Shares
Granted
|
Maximum
Shares
Eligible
to
Receive
|
|||||||
Beginning
balance
|
— | — | ||||||
Awarded
|
537 | 618 | ||||||
Forfeited
|
— | — | ||||||
Ending
balance
|
537 | 618 |
2009
|
2008
|
|||||||
Beginning
balance
|
383 | — | ||||||
Achieved
|
1,022 | 993 | ||||||
Released
|
(370 | ) | (480 | ) | ||||
Forfeited
|
(30 | ) | (130 | ) | ||||
Ending
balance
|
1,005 | 383 |
Number
of
Shares
(thousands)
|
Weighted
Average
Remaining
Contractual
Life
(years)
|
Aggregate
Intrinsic
Value*
(millions)
|
||||||||||
2009
|
||||||||||||
Performance
shares outstanding
|
1,005 | 1.53 | $ | 28.3 | ||||||||
Performance
shares vested and expected to vest
|
807 | 1.44 | $ | 22.7 | ||||||||
Performance
shares vested and deferred
|
3 | — | $ | — | ||||||||
2008
|
||||||||||||
Performance
shares units outstanding
|
480 | 1.65 | $ | 21.2 | ||||||||
Performance
shares vested and expected to vest
|
312 | 1.55 | $ | 13.7 | ||||||||
Performance
shares vested and deferred
|
1 | — | $ | — |
*
|
The
intrinsic value is calculated as the market value as of the end of the
fiscal period. As reported by the NASDAQ Global Select Market, the market
values as of May 29, 2009 and May 30, 2008 were $28.18 and $44.06,
respectively.
|
2009
|
2008
|
|||||||||||||||||
Income Statement
Classifications
|
|
Option
Grants
and
Stock
Purchase
Rights *
|
Restricted
Stock
and
Performance
Share
Awards
*
|
Option
Grants
and
Stock
Purchase
Rights
|
Restricted
Stock
and
Performance
Share
Awards
|
|||||||||||||
Cost
of revenue—services and support
|
$ | 1,249 | $ | 143 | $ | 975 | $ | 213 | ||||||||||
Research
and development
|
9,264 | 6,489 | 12,844 | 6,608 | ||||||||||||||
Sales
and marketing
|
9,714 | 4,598 | 10,218 | 6,647 | ||||||||||||||
General
and administrative
|
8,094 | 2,009 | 6,786 | 4,096 | ||||||||||||||
Total
|
$ | 28,321 | $ | 13,239 | $ | 30,823 | $ | 17,564 |
*
|
For
the three months ended May 29, 2009, we recorded $0.6 million associated
with cash recoveries of fringe benefit tax from employees in India. For
the three months ended May 30, 2008 there were no amounts associated with
cash recoveries of fringe benefit tax from employees in
India.
|
2009
|
2008
|
|||||||||||||||||
Income Statement
Classifications
|
|
Option
Grants
and
Stock
Purchase
Rights *
|
Restricted
Stock
and
Performance
Share
Awards
*
|
Option
Grants
and
Stock
Purchase
Rights
|
Restricted
Stock
and
Performance
Share
Awards
|
|||||||||||||
Cost
of revenue—services and support
|
$ | 1,158 | $ | 337 | $ | 1,779 | $ | 253 | ||||||||||
Research
and development
|
23,396 | 14,933 | 27,770 | 10,004 | ||||||||||||||
Sales
and marketing
|
18,581 | 9,835 | 21,125 | 10,188 | ||||||||||||||
General
and administrative
|
14,282 | 4,875 | 12,728 | 7,574 | ||||||||||||||
Total
|
$ | 57,417 | $ | 29,980 | $ | 63,402 | $ | 28,019 |
*
|
For
the six months ended May 29, 2009, we recorded $0.8 million associated
with cash recoveries of fringe benefit tax from employees in India. For
the six months ended May 30, 2008 there were no amounts associated with
cash recoveries of fringe benefit tax from employees in
India.
|
November
28,
2008
|
Costs
Incurred
|
Cash
Payments
|
Other
Adjustments
|
May
29,
2009
|
Total
Costs
Incurred
to
Date
|
Total
Costs
Expected
to
be
Incurred
|
||||||||||||||||||||||
Termination
benefits
|
$ | 28,759 | $ | 6,358 | $ | (32,592 | ) | $ | 479 | $ | 3,004 | $ | 36,044 | $ | 36,543 | |||||||||||||
Cost
of closing redundant facilities
|
— | 8,514 | (3,760 | ) | 589 | 5,343 | 9,103 | 9,612 | ||||||||||||||||||||
Total
|
$ | 28,759 | $ | 14,872 | $ | (36,352 | ) | $ | 1,068 | $ | 8,347 | $ | 45,147 | $ | 46,155 |
November
28,
2008
|
Cash
Payments
|
Other
Adjustments
|
May
29,
2009
|
Total
Costs
Incurred
to
Date
|
Total
Costs
Expected
to
be
Incurred
|
|||||||||||||||||||
Cost
of closing redundant facilities
|
$ | 12,168 | $ | (3,570 | ) | $ | 383 | $ | 8,981 | $ | 42,698 | $ | 42,698 | |||||||||||
Other
|
977 | (18 | ) | — | 959 | 2,357 | 2,357 | |||||||||||||||||
Total
|
$ | 13,145 | $ | (3,588 | ) | $ | 383 | $ | 9,940 | $ | 45,055 | $ | 45,055 |
Three Months
|
Six Months
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Net
income
|
$ | 126,071 | $ | 214,910 | $ | 282,506 | $ | 434,289 | ||||||||
Other
comprehensive income (loss):
|
||||||||||||||||
Unrealized
(losses) gains on derivative instruments
|
(8,737 | ) | 313 | (14,187 | ) | 282 | ||||||||||
Reclassification
adjustment for (gains) losses on derivative instruments recognized during
the period
|
(5,913 | ) | — | (26,389 | ) | — | ||||||||||
Unrealized
gains (losses) on available-for-sale securities
|
3,547 | (6,097 | ) | 1,578 | (9,176 | ) | ||||||||||
Reclassification
adjustment for (gains) losses on available-for-sale securities recognized
during the period
|
(1,267 | ) | 173 | (2,577 | ) | 173 | ||||||||||
Foreign
currency translation adjustments
|
14,585 | 696 | 11,663 | 2,074 | ||||||||||||
Other
comprehensive income (loss)
|
2,215 | (4,915 | ) | (29,912 | ) | (6,647 | ) | |||||||||
Total
other comprehensive income, net of taxes
|
$ | 128,286 | $ | 209,995 | $ | 252,594 | $ | 427,642 |
2009
|
2008
|
|||||||
Net
unrealized gains on derivative instruments
|
$ | 1,174 | $ | 41,750 | ||||
Net
unrealized gains on available-for-sale securities
|
14,908 | 15,907 | ||||||
Cumulative
foreign currency translation adjustments
|
11,228 | (435 | ) | |||||
Total
accumulated other comprehensive income, net of taxes
|
$ | 27,310 | $ | 57,222 |
Three Months
|
Six Months
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Net
income
|
$ | 126,071 | $ | 214,910 | $ | 282,506 | $ | 434,289 | ||||||||
Shares
used to compute basic net income per share
|
524,159 | 533,391 | 527,324 | 547,996 | ||||||||||||
Dilutive
potential common shares:
|
||||||||||||||||
Unvested
restricted stock and performance share awards
|
1,054 | 361 | 1,166 | 682 | ||||||||||||
Stock
options
|
2,800 | 8,624 | 2,848 | 9,025 | ||||||||||||
Shares
used to compute diluted net income per share
|
528,013 | 542,376 | 531,338 | 557,703 | ||||||||||||
Basic
net income per share
|
$ | 0.24 | $ | 0.40 | $ | 0.54 | $ | 0.79 | ||||||||
Diluted
net income per share
|
$ | 0.24 | $ | 0.40 | $ | 0.53 | $ | 0.78 |
Three Months
|
Six Months
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Interest
and other income, net:
|
||||||||||||||||
Interest
income
|
$ | 9,923 | $ | 13,192 | $ | 21,039 | $ | 30,703 | ||||||||
Foreign
exchange losses
|
(6,710 | ) | (1,234 | ) | (6,076 | ) | (5,934 | ) | ||||||||
Realized
gains (losses) on fixed income investment
|
1,265 | (200 | ) | 2,578 | (200 | ) | ||||||||||
Other,
net
|
324 | 392 | 545 | 871 | ||||||||||||
Interest
and other income, net
|
$ | 4,802 | $ | 12,150 | $ | 18,086 | $ | 25,440 | ||||||||
Interest
expense
|
$ | (620 | ) | $ | (3,828 | ) | $ | (1,412 | ) | $ | (5,637 | ) | ||||
Investment
gains (losses), net:
|
||||||||||||||||
Realized
investment gains
|
$ | 52 | $ | 10,040 | $ | 52 | $ | 15,437 | ||||||||
Unrealized
investment gains
|
2,186 | 1,044 | 1,377 | 4,958 | ||||||||||||
Realized
investment losses
|
(793 | ) | (254 | ) | (1,985 | ) | (637 | ) | ||||||||
Unrealized
investment losses
|
(3,250 | ) | (1,324 | ) | (18,495 | ) | (1,520 | ) | ||||||||
Investment
gains (losses), net
|
$ | (1,805 | ) | $ | 9,506 | $ | (19,051 | ) | $ | 18,238 | ||||||
Total
non-operating income (expense), net
|
$ | 2,377 | $ | 17,828 | $ | (2,377 | ) | $ | 38,041 |
(in
thousands)
|
Creative
Solutions
|
Knowledge
Worker
|
Enterprise
|
Platform*
|
Print
and
Publishing
|
Total
|
||||||||||||||||||
Three
months ended May 29, 2009
|
||||||||||||||||||||||||
Revenue
|
$ | 411,749 | $ | 156,023 | $ | 53,696 | $ | 36,819 | $ | 46,386 | $ | 704,673 | ||||||||||||
Cost
of revenue
|
39,572 | 10,297 | 11,877 | 5,418 | 4,844 | 72,008 | ||||||||||||||||||
Gross
profit
|
$ | 372,177 | $ | 145,726 | $ | 41,819 | $ | 31,401 | $ | 41,542 | $ | 632,665 | ||||||||||||
Gross
profit as a percentage of revenue
|
90 | % | 93 | % | 78 | % | 85 | % | 90 | % | 90 | % | ||||||||||||
Three
months ended May 30, 2008
|
||||||||||||||||||||||||
Revenue
|
$ | 527,244 | $ | 198,402 | $ | 54,356 | $ | 52,616 | $ | 54,268 | $ | 886,886 | ||||||||||||
Cost
of revenue
|
34,260 | 12,032 | 18,590 | 11,246 | 6,738 | 82,866 | ||||||||||||||||||
Gross
profit
|
$ | 492,984 | $ | 186,370 | $ | 35,766 | $ | 41,370 | $ | 47,530 | $ | 804,020 | ||||||||||||
Gross
profit as a percentage of revenue
|
94 | % | 94 | % | 66 | % | 79 | % | 88 | % | 91 | % |
*
|
Platform
revenue includes revenue related to our Mobile client products of $8.4
million and $22.2 million for the three months ended May 29, 2009 and May
30, 2008, respectively, or 23% and 42% of Platform revenues,
respectively.
|
(in
thousands)
|
Creative
Solutions
|
Knowledge
Worker
|
Enterprise
|
Platform*
|
Print
and
Publishing
|
Total
|
||||||||||||||||||
Six
months ended May 29, 2009
|
||||||||||||||||||||||||
Revenue
|
$ | 872,476 | $ | 319,153 | $ | 117,551 | $ | 89,118 | $ | 92,765 | $ | 1,491,063 | ||||||||||||
Cost
of revenue
|
82,322 | 20,218 | 25,218 | 11,474 | 10,129 | 149,361 | ||||||||||||||||||
Gross
profit
|
$ | 790,154 | $ | 298,935 | $ | 92,333 | $ | 77,644 | $ | 82,636 | $ | 1,341,702 | ||||||||||||
Gross
profit as a percentage of revenue
|
91 | % | 94 | % | 79 | % | 87 | % | 89 | % | 90 | % | ||||||||||||
Six
months ended May 30, 2008
|
||||||||||||||||||||||||
Revenue
|
$ | 1,070,719 | $ | 393,937 | $ | 108,520 | $ | 95,960 | $ | 108,195 | $ | 1,777,331 | ||||||||||||
Cost
of revenue
|
70,308 | 23,713 | 35,581 | 21,210 | 14,529 | 165,341 | ||||||||||||||||||
Gross
profit
|
$ | 1,000,411 | $ | 370,224 | $ | 72,939 | $ | 74,750 | $ | 93,666 | $ | 1,611,990 | ||||||||||||
Gross
profit as a percentage of revenue
|
93 | % | 94 | % | 67 | % | 78 | % | 87 | % | 91 | % |
*
|
Platform
revenue includes revenue related to our Mobile client products of $34.5
million and $37.4 million for the six months ended May 29, 2009 and May
30, 2008, respectively, or 39% of Platform revenues for both
periods.
|
Three Months
|
Percent
|
Six Months
|
Percent
|
|||||||||||||||||||||
2009
|
2008
|
Change
|
2009
|
2008
|
Change
|
|||||||||||||||||||
Product
|
$ | 660.1 | $ | 841.3 | (22 | )% | $ | 1,402.3 | $ | 1,693.2 | (17 | )% | ||||||||||||
Percentage
of total revenue
|
94 | % | 95 | % | 94 | % | 95 | % | ||||||||||||||||
Services
and support
|
44.6 | 45.6 | (2 | )% | 88.8 | 84.1 | 6 | % | ||||||||||||||||
Percentage
of total revenue
|
6 | % | 5 | % | 6 | % | 5 | % | ||||||||||||||||
Total
revenue
|
$ | 704.7 | $ | 886.9 | (21 | )% | $ | 1,491.1 | $ | 1,777.3 | (16 | )% |
Three Months
|
Percent
|
Six Months
|
Percent
|
|||||||||||||||||||||
2009
|
2008
|
Change
|
2009
|
2008
|
Change
|
|||||||||||||||||||
Creative
Solutions
|
$ | 411.7 | $ | 527.2 | (22 | )% | $ | 872.5 | $ | 1,070.7 | (19 | )% | ||||||||||||
Percentage
of total revenue
|
58 | % | 59 | % | 59 | % | 60 | % | ||||||||||||||||
Knowledge
Worker
|
156.0 | 198.4 | (21 | )% | 319.1 | 393.9 | (19 | )% | ||||||||||||||||
Percentage
of total revenue
|
22 | % | 23 | % | 21 | % | 22 | % | ||||||||||||||||
Enterprise
|
53.7 | 54.4 | (1 | )% | 117.6 | 108.5 | 8 | % | ||||||||||||||||
Percentage
of total revenue
|
8 | % | 6 | % | 8 | % | 6 | % | ||||||||||||||||
Platform
|
36.8 | 52.6 | (30 | )% | 89.1 | 96.0 | (7 | )% | ||||||||||||||||
Percentage
of total revenue
|
5 | % | 6 | % | 6 | % | 5 | % | ||||||||||||||||
Print
and Publishing
|
46.5 | 54.3 | (15 | )% | 92.8 | 108.2 | (14 | )% | ||||||||||||||||
Percentage
of total revenue
|
7 | % | 6 | % | 6 | % | 7 | % | ||||||||||||||||
Total
revenue
|
$ | 704.7 | $ | 886.9 | (21 | )% | $ | 1,491.1 | $ | 1,777.3 | (16 | )% |
Three Months
|
Percent
|
Six Months
|
Percent
|
|||||||||||||||||||||
2009
|
2008
|
Change
|
2009
|
2008
|
Change
|
|||||||||||||||||||
Americas
|
$ | 317.8 | $ | 383.8 | (17 | )% | $ | 643.9 | $ | 780.7 | (18 | )% | ||||||||||||
Percentage
of total revenue
|
45 | % | 43 | % | 43 | % | 44 | % | ||||||||||||||||
EMEA
|
215.2 | 294.6 | (27 | )% | 492.7 | 618.5 | (20 | )% | ||||||||||||||||
Percentage
of total revenue
|
31 | % | 33 | % | 33 | % | 35 | % | ||||||||||||||||
Asia
|
171.7 | 208.5 | (18 | )% | 354.5 | 378.1 | (6 | )% | ||||||||||||||||
Percentage
of total revenue
|
24 | % | 24 | % | 24 | % | 21 | % | ||||||||||||||||
Total
revenue
|
$ | 704.7 | $ | 886.9 | (21 | )% | $ | 1,491.1 | $ | 1,777.3 | (16 | )% |
Three Months
|
Percent
|
Six Months
|
Percent
|
|||||||||||||||||||||
2009
|
2008
|
Change
|
2009
|
2008
|
Change
|
|||||||||||||||||||
Product
|
$ | 55.8 | $ | 58.3 | (4 | )% | $ | 114.7 | $ | 118.0 | (3 | )% | ||||||||||||
Percentage
of total revenue
|
8 | % | 7 | % | 8 | % | 7 | % | ||||||||||||||||
Services
and support
|
16.2 | 24.6 | (34 | )% | 34.7 | 47.3 | (27 | )% | ||||||||||||||||
Percentage
of total revenue
|
2 | % | 3 | % | 2 | % | 3 | % | ||||||||||||||||
Total
cost of revenue
|
$ | 72.0 | $ | 82.9 | (13 | )% | $ | 149.4 | $ | 165.3 | (10 | )% |
Percent Change
2008 to 2009
QTD
|
Percent Change
2008 to 2009
YTD
|
|||||||
Hosted
services
|
6 | % | 6 | % | ||||
Royalty
cost
|
8 | 5 | ||||||
Excess
and obsolete inventory
|
1 | 3 | ||||||
Amortization
of acquired rights to use technology
|
3 | 3 | ||||||
Localization
costs related to our product launches
|
(4 | ) | (3 | ) | ||||
Amortization
of purchased intangibles
|
(13 | ) | (13 | ) | ||||
Various
individually insignificant items
|
(5 | ) | (4 | ) | ||||
Total
change
|
(4 | )% | (3 | )% |
Three Months
|
Percent
|
Six Months
|
Percent
|
|||||||||||||||||||||
2009
|
2008
|
Change
|
2009
|
2008
|
Change
|
|||||||||||||||||||
Expenses
|
$ | 138.5 | $ | 170.3 | (19 | )% | $ | 288.4 | $ | 338.8 | (15 | )% | ||||||||||||
Percentage
of total revenue
|
20 | % | 19 | % | 19 | % | 19 | % |
Percent Change
2008 to 2009
QTD
|
Percent Change
2008 to 2009
YTD
|
|||||||
Compensation
associated with incentive compensation and stock-based
compensation
|
(17 | )% | (11 | )% | ||||
Various
individually insignificant items
|
(2 | ) | (4 | ) | ||||
Total
change
|
(19 | )% | (15 | )% |
Three Months
|
Percent
|
Six Months
|
Percent
|
|||||||||||||||||||||
2009
|
2008
|
Change
|
2009
|
2008
|
Change
|
|||||||||||||||||||
Expenses
|
$ | 243.2 | $ | 279.4 | (13 | )% | $ | 492.7 | $ | 542.0 | (9 | )% | ||||||||||||
Percentage
of total revenue
|
35 | % | 32 | % | 33 | % | 30 | % |
Percent Change
2008 to 2009
QTD
|
Percent Change
2008 to 2009
YTD
|
|||||||
Marketing
spending related to product launches and overall marketing efforts to
further increase revenue
|
(1 | )% | 1 | % | ||||
Compensation
associated with incentive compensation and stock-based
compensation
|
(8 | ) | (7 | ) | ||||
Various
individually insignificant items
|
(4 | ) | (3 | ) | ||||
Total
change
|
(13 | )% | (9 | )% |
Three Months
|
Percent
|
Six Months
|
Percent
|
|||||||||||||||||||||
2009
|
2008
|
Change
|
2009
|
2008
|
Change
|
|||||||||||||||||||
Expenses
|
$ | 70.8 | $ | 77.1 | (8 | )% | $ | 144.9 | $ | 160.0 | (9 | )% | ||||||||||||
Percentage
of total revenue
|
10 | % | 9 | % | 10 | % | 9 | % |
Percent Change
2008 to 2009
QTD
|
Percent Change
2008 to 2009
YTD
|
|||||||
Provision
for bad debts
|
1 | % | 2 | % | ||||
Facilities
and telecommunication
|
(4 | ) | (2 | ) | ||||
Professional
and consulting fees
|
1 | 2 | ||||||
Compensation
associated with incentive compensation and stock-based
compensation
|
(9 | ) | (8 | ) | ||||
Charitable
contributions
|
(1 | ) | (7 | ) | ||||
Various
individually insignificant items
|
4 | 4 | ||||||
Total
change
|
(8 | )% | (9 | )% |
Three Months
|
Percent
|
Six Months
|
Percent
|
|||||||||||||||||||||
2009
|
2008
|
Change
|
2009
|
2008
|
Change
|
|||||||||||||||||||
Expenses
|
$ | 3.5 | $ |
—
|
* | $ | 15.8 | $ | 1.4 | * | ||||||||||||||
Percentage
of total revenue
|
* | * | 1 | % | * |
*
|
Percentage is not
meaningful.
|
Three Months
|
Percent
|
Six Months
|
Percent
|
|||||||||||||||||||||
2009
|
2008
|
Change
|
2009
|
2008
|
Change
|
|||||||||||||||||||
Expenses
|
$ | 15.3 | $ | 17.1 | (11 | )% | $ | 30.7 | $ | 34.2 | (10 | )% | ||||||||||||
Percentage
of total revenue
|
2 | % | 2 | % | 2 | % | 2 | % |
Three Months
|
Percent
|
Six Months
|
Percent
|
|||||||||||||||||||||
2009
|
2008
|
Change
|
2009
|
2008
|
Change
|
|||||||||||||||||||
Interest
and other income, net
|
$ | 4.8 | $ | 12.1 | (60 | )% | $ | 18.1 | $ | 25.4 | (29 | )% | ||||||||||||
Percentage
of total revenue
|
1 | % | 1 | % | 1 | % | 1 | % | ||||||||||||||||
Interest
expense
|
(0.6 | ) | (3.8 | ) | (84 | )% | (1.4 | ) | (5.6 | ) | (75 | )% | ||||||||||||
Percentage
of total revenue
|
* | * | * | * | ||||||||||||||||||||
Investment
gains (losses), net
|
(1.8 | ) | 9.5 | (119 | )% | (19.1 | ) | 18.2 | (205 | )% | ||||||||||||||
Percentage
of total revenue
|
* | 1 | % | (1 | )% | 1 | % | |||||||||||||||||
Total non-operating income
(expense), net
|
$ | 2.4 | $ | 17.8 | (87 | )% | $ | (2.4 | ) | $ | 38.0 | (106 | )% |
*
|
Percentage
is not meaningful.
|
Three Months
|
Percent
|
Six Months
|
Percent
|
|||||||||||||||||||||
2009
|
2008
|
Change
|
2009
|
2008
|
Change
|
|||||||||||||||||||
Provision
|
$ | 37.7 | $ | 63.1 | (40 | )% | $ | 84.4 | $ | 139.4 | (39 | )% | ||||||||||||
Percentage of total
revenue
|
5 | % | 7 | % | 6 | % | 8 | % | ||||||||||||||||
Effective tax
rate
|
23 | % | 23 | % | 23 | % | 24 | % |
(in
millions)
|
May
29,
2009
|
November 28,
2008
|
||||||
Cash,
cash equivalents and short-term investments
|
$ | 2,664.2 | $ | 2,019.2 | ||||
Working
capital
|
$ | 2,474.1 | $ | 1,972.5 | ||||
Stockholders’
equity
|
$ | 4,801.0 | $ | 4,410.4 |
May
29,
2009
|
May
30,
2008
|
|||||||
Net
cash provided by operating activities
|
$ | 627.3 | $ | 731.1 | ||||
Net
cash (used for) provided by investing activities
|
(349.3 | ) | 259.7 | |||||
Net
cash provided by (used for) financing activities
|
48.9 | (778.4 | ) | |||||
Effect
of foreign currency exchange rates on cash and cash
equivalents
|
13.4 | 3.6 | ||||||
Net
increase in cash and cash equivalents
|
$ | 340.3 | $ | 216.0 |
|
·
|
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
additional exposure to fluctuations in currency exchange
rates;
|
|
·
|
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.
|
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 February 27,
2009
|
128,950,039 | (3) | ||||||||||
February
28—March 27, 2009
|
||||||||||||
From
employees(4)
|
— | $ | — | |||||||||
Structured
repurchases
|
887,193 | $ | 22.20 | |||||||||
March
28—April 24, 2009
|
||||||||||||
From
employees(4)
|
— | $ | — | |||||||||
Structured
repurchases
|
— | $ | — | |||||||||
April
25—May 29, 2009
|
||||||||||||
From
employees(4)
|
36 | $ | 26.69 | |||||||||
Structured
repurchases
|
— | $ | — | |||||||||
Adjustments
to repurchase authority for net dilution
|
— | 1,614,737 | (5) | |||||||||
Total
shares repurchased
|
887,229 | (887,229 | ) | |||||||||
Ending
shares available to be repurchased under Program I as of May 29,
2009
|
129,677,547 | (6) | ||||||||||
(1)
|
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.
|
Name |
|
Votes
For
|
Votes
Against
|
Votes
Abstained
|
||||||||||
Robert
K. Burgess
|
439,973,284 | 12,731,474 | 704,604 | |||||||||||
Carol
Mills
|
439,716,679 | 12,975,743 | 716,940 | |||||||||||
Daniel
Rosensweig
|
446,394,210 | 6,434,992 | 580,160 | |||||||||||
Robert
Sedgewick
|
440,412,606 | 12,263,011 | 733,744 | |||||||||||
John
E. Warnock
|
439,977,398 | 12,793,335 | 638,629 |
For
|
305,817,775 | |||
Against
|
78,784,369 | |||
Abstain
|
857,447 | |||
Broker
non-votes
|
67,949,771 |
For
|
443,892,604 | |||
Against
|
9,038,643 | |||
Abstain
|
477,115 |
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
|
Exhibit
|
Incorporated
by Reference**
|
Filed
|
||||||||
Number
|
Exhibit
Description
|
Form
|
Date
|
Number
|
Herewith
|
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*
|
10-K
|
1/23/09
|
10.3
|
||||||
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
|
||||||
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
|
2/20/09
|
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*
|
X
|
||||||||
10.13
|
Forms
of Retention Agreement*
|
10-K
|
11/28/97
|
10.44
|
Exhibit
|
Incorporated
by Reference**
|
Filed
|
||||||||
Number
|
Exhibit
Description
|
Form
|
Date
|
Number
|
Herewith
|
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
|
||||||
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*
|
10-K
|
1/23/09
|
10.19
|
||||||
10.20
|
Form
of Restricted Stock Unit Agreement used in connection with the 2003 Equity
Incentive Plan*
|
10-K
|
1/23/09
|
10.20
|
||||||
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
|
Exhibit
|
Incorporated
by Reference**
|
Filed
|
||||||||
Number
|
Exhibit
Description
|
Form
|
Date
|
Number
|
Herewith
|
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
|
||||||
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
|
Exhibit
|
Incorporated
by Reference**
|
Filed
|
||||||||
Number
|
Exhibit
Description
|
Form
|
Date
|
Number
|
Herewith
|
10.41
|
Form
of Macromedia, Inc. Revised Non-Plan Stock Option
Agreement*
|
S-8
|
11/23/04
|
4.10
|
||||||
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
|
||||||
10.60
|
Form
of Director Annual Grant Stock Option Agreement used in connection with
the 2003 Equity Incentive Plan*
|
10-K
|
1/23/09
|
10.60
|
Exhibit
|
Incorporated
by Reference**
|
Filed
|
||||||||
Number
|
Exhibit
Description
|
Form
|
Date
|
Number
|
Herewith
|
10.61
|
Form
of Director Initial Grant Restricted Stock Unit Agreement in connection
with the 2003 Equity Incentive Plan*
|
10-K
|
1/23/09
|
10.61
|
||||||
10.62
|
Form
of Director Annual Grant Restricted Stock Unit Agreement in connection
with the 2003 Equity Incentive Plan*
|
10-K
|
1/23/09
|
10.62
|
||||||
10.63
|
Description
of 2009 Director Compensation*
|
10-K
|
1/23/09
|
10.63
|
||||||
10.64
|
2009
Performance Share Program Award Calculation Methodology*
|
8-K
|
1/29/09
|
10.3
|
||||||
10.65
|
2009
Executive Annual Incentive Plan*
|
8-K
|
1/29/09
|
10.4
|
||||||
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
|
||||||||
32.2
|
Certification
of Chief Financial Officer, as required by Rule 13a-14(b) of the
Securities Exchange Act of 1934†
|
X
|
||||||||
101.INS
|
XBRL
Instance††
|
X
|
||||||||
101.SCH
|
XBRL
Taxonomy Extension Schema††
|
X
|
||||||||
101.CAL
|
XBRL
Taxonomy Extension Calculation††
|
X
|
||||||||
101.LAB
|
XBRL
Taxonomy Extension Labels††
|
X
|
Exhibit
|
Incorporated
by Reference**
|
Filed
|
||||||||
Number
|
Exhibit
Description
|
Form
|
Date
|
Number
|
Herewith
|
101.PRE
|
XBRL
Taxonomy Extension Presentation††
|
X
|
||||||||
101.DEF
|
XBRL
Taxonomy Extension Definition††
|
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
Quarterly Report on Form 10-Q, 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-Q, irrespective of any general incorporation language
contained in such filing.
|
††
|
Furnished,
not filed.
|
ADOBE
SYSTEMS INCORPORATED
|
||
By
|
/s/ Mark
Garrett
|
|
Mark
Garrett
|
||
Executive
Vice President and
|
||
Chief
Financial Officer
|
||
(Principal
Financial Officer)
|