Adobe 2000 Annual Report Download - page 66

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NOTE 9. BENEFIT PLANS
Pretax Savings Plan In 1987, we adopted an Employee Investment Plan, qualified under
Section 401(k) of the Internal Revenue Code, which is a pretax savings plan covering
substantially all of our United States employees. Under the plan, eligible employees may
contribute up to 18% of their pretax salary, subject to certain limitations. In fiscal 2000,
we increased our matching contribution from 25% to 50% of the first 6% of employee
contributions. We contributed approximately $4.5 million, $2.2 million, and $2.4 million
in fiscal 2000, 1999, and 1998, respectively. We can terminate matching contributions at
our discretion.
Profit Sharing Plan We have a profit sharing plan that provides for profit sharing
payments to all eligible employees following each quarter in which we achieve at least
70% of our budgeted earnings for the quarter. Beginning in fiscal 2000, the percentage of
our budgeted earnings that we must achieve increased to 80%. The plan, as well as the
annual operating budget on which the plan is based, is approved by our Board of
Directors. We contributed approximately $21.4 million, $23.2 million, and $6.8 million to
the plan in fiscal 2000, 1999, and 1998, respectively.
Adobe Incentive Partners In March 1997, as part of our venture investing program, we
established an internal limited partnership, Adobe Incentive Partners, L.P. (“AIP”), which
allows certain of our executive officers to participate in cash or stock distributions from
Adobe’s venture investments. Adobe is both the general partner and a limited partner of
AIP. Other limited partners are executive officers and former executive officers of Adobe
who are or were involved in Adobe’s venture investing activities and whose participation
was deemed critical to the success of the program. No limited partnership interests were
granted in fiscal 2000.
Adobe’s Class A senior limited partnership interest includes both a liquidation preference
and a preference in recovery of the cost basis of each specific investment. The executives’
Class B junior limited partnership interest qualifies for partnership distributions only after
(a) Adobe has fully recovered the cost basis of our investment in the specific investee com-
pany for which a distribution is made, and (b) the participating executive has vested in his
or her distribution rights. The distribution rights generally vest on a monthly basis over
three years, such that the rights are 25% vested after one year, 50% vested after two years,
and fully vested at the end of three years. All existing partnership interests were fully vested
or ceased vesting. The limited partnership investments are restricted to investments in
companies that are private at the time of the establishment of AIP or when the investment
is made, whichever is later. Partnership interests may be allocated to designated officers
only while the investee company is still private. Class B interests may not exceed a maxi-
mum of 20% of the venture investments included in AIP.
Assets held by AIP include Adobe’s entire interests in Adobe Ventures L.P. and Adobe
Ventures II, L.P., as well as equity securities of certain privately held companies. At
December 1, 2000, the cost basis and recorded fair value of all investments included in
AIP were $60.3 million and $45.6 million, respectively. In fiscal 2000, AIP recorded net
income of $176.9 million. In fiscal 2000, the participating officers received aggregate
distributions of $27.7 million, consisting primarily of equity securities. The distribution
to the officers represents their vested portion of nonmarketable securities that become
marketable as a result of a public offering, as well as their vested portion of cash resulting
from investments that were liquidated by AIP. The participating officers receive quarterly
cash distributions as their partnership interests vest for investments that have been liquidated
by AIP. At December 1, 2000, the minority interest held by the participating officers was
$2.0 million and is included in accrued expenses on the Consolidated Balance Sheet.