Adobe 2000 Annual Report Download - page 37

During fiscal 2000, we recorded investment gains related to the sale of a portion of our
investment in Tumbleweed Communications Corp. (“Tumbleweed”) and Digimarc
Corporation for $10.4 million and $2.2 million, respectively. Additionally, we recorded
investment gains related to the mark-to-market valuation adjustment for AvantGo, Inc.
totaling $13.0 million and other net gains related to various other Adobe Ventures invest-
ments activities totaling approximately $15.0 million. These gains were partially offset by
investment losses related to the write-down of our investments in Engage, Inc.; eCircles,
Inc.; Salon.com; and Impresse Corporation, totaling approximately $26.3 million.
In fiscal 1999, we recorded a realized gain of $58.4 million related to the sale of our
investment in Vignette Corporation. We also recorded investment gains from mark-to-
market adjustments totaling $17.8 million, $10.4 million, and $7.0 million related to
investments in ESPS, Inc.; DigitalThink, Inc.; and Tumbleweed, respectively. These gains
were partially offset by an investment loss of $5.2 million related to the acquisition of
PointCast, Inc., a former investee of Adobe, by idealab!’s Launchpad Technologies, Inc.
(“idealab!”). In connection with the acquisition, we exchanged our shares of PointCast,
Inc. for approximately 542,000 shares of idealab! (which has since become InfoGate
Inc.). Additionally, we recorded a net gain totaling $0.5 million related to mark-to-
market adjustments of various other Adobe Ventures investments.
In fiscal 1998, we recorded a realized gain of $6.7 million related to our investment in
McQueen International Limited (“McQueen”), due to the acquisition of McQueen by
Sykes Enterprises, Incorporated, a publicly traded company. In addition, we liquidated our
investment in Siebel Systems, Incorporated (“Siebel”) through the distribution to our
stockholders of approximately 165,000 shares of Siebel common stock as a dividend-in-
kind and the sale of our remaining Siebel shares. A gain of approximately $5.7 million was
recognized on the transaction. The remaining net realized gain recorded in fiscal 1998
represents valuation adjustments related to our venture investments held by AIP.
We are uncertain of future investment gains or losses as they are primarily dependent
upon the operations of the underlying investee companies.
Interest and Other Income
2000 CHANGE 1999 CHANGE 1998
Interest and other income $ 21.3 (17)% $ 25.7 (6)% $ 27.4
Percentage of total revenue 1.7% 2.5% 3.1%
Interest and other income consists principally of interest earned on cash, cash equivalents,
and short-term investments, as well as foreign exchange transaction gains and losses and
realized gains or losses on the disposal of assets.
Interest and other income decreased $4.4 million, or 17%, in fiscal 2000 compared to fiscal
1999 as a result of more investments being made in tax-exempt securities, resulting in
lower interest income on a comparative pretax basis. In fiscal 2000, we also recorded for-
eign exchange transaction losses compared to foreign exchange transaction gains in fiscal
1999. In addition, other income was lower in fiscal 2000, as fiscal 1999 included a $5.7
million gain related to the sale of a corporate facility in Edinburgh, Scotland, in connec-
tion with the restructuring program announced in the second quarter of fiscal 1999.
The decrease in interest and other income in fiscal 1999 compared to fiscal 1998 was
primarily due to lower average cash and short-term investment balances, primarily as a
result of cash used for stock repurchases. In addition, during fiscal 1999 more invest-
ments were made in tax-exempt securities. The decrease in interest and other income in
fiscal 1999 was partially offset by a $5.7 million gain realized from the sale of a corporate
facility in Edinburgh, Scotland, in connection with the restructuring program announced
in the second quarter of fiscal 1999.