8-KFinancial EventsOther EventsExhibits & Filings

ADOBE INC. 8-K Report, Exit or Disposal Costs (Nov 8, 2011)

Filed November 8, 2011For Securities:ADBE

Summary

Adobe Systems Incorporated (ADBE) filed an 8-K on November 8, 2011, announcing a significant restructuring of its business operations. The company is re-aligning its strategies to focus on Digital Media and Digital Marketing, a move that will result in the elimination of approximately 750 full-time positions globally. This restructuring is expected to incur pre-tax charges ranging from $87 million to $94 million, with the majority anticipated to be recognized in the fourth fiscal quarter of 2011, ending December 2, 2011. These charges include costs for employee severance and the consolidation of leased facilities, with a substantial portion expected to result in cash expenditures. The company also issued two press releases, attached as exhibits, which further detail this strategic shift, reaffirming fourth-quarter revenue targets and outlining future growth strategies. Investors should monitor the impact of these restructuring charges on Adobe's near-term profitability and the effectiveness of its pivot towards digital offerings.

Key Highlights

  • 1Adobe is restructuring its business to focus on Digital Media and Digital Marketing strategies.
  • 2Approximately 750 full-time positions will be eliminated worldwide as part of the restructuring.
  • 3The company expects to incur pre-tax restructuring charges between $87 million and $94 million.
  • 4A significant portion, estimated at $73 million to $78 million, will be recognized in the fourth fiscal quarter of 2011.
  • 5Charges include approximately $17-$19 million for facility consolidation and $70-$75 million for employee severance.
  • 6The majority of restructuring activities are expected to be completed by the end of the first fiscal quarter of 2012.
  • 7The company reaffirmed its fourth-quarter FY2011 revenue target and announced plans to outline its growth strategy at an upcoming Financial Analyst Meeting.

Frequently Asked Questions

Adobe is restructuring to better align its resources and focus on its Digital Media and Digital Marketing strategies, indicating a shift in strategic priorities towards these growing areas.

Adobe expects to incur pre-tax restructuring charges totaling approximately $87 million to $94 million. A significant portion of these charges, estimated at $73 million to $78 million, will be recognized in the fourth fiscal quarter of 2011, with the remainder in the first fiscal quarter of 2012. These charges include costs for employee severance and facility consolidation.

The restructuring plan involves the elimination of approximately 750 full-time positions worldwide.

Adobe expects to complete the majority of the activities related to this restructuring plan by the end of the first quarter of fiscal year 2012.