Adobe 2001 Annual Report Download - page 66

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ADOBE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
Note 1. Significant Accounting Policies
Operations
Founded in 1982, Adobe Systems Incorporated (‘‘Adobe’’) builds award-winning software solutions for
Network Publishing, including Web, print, video, wireless and broadband applications. Its graphic design,
imaging, dynamic media and authoring tools enable customers to create, manage, and deliver visually-rich,
reliable content. We license our technology to major hardware manufacturers, software developers, and
service providers, and we offer integrated software solutions to businesses of all sizes. We distribute our
products through a network of distributors and dealers, value-added resellers (‘‘VARs’’), systems
integrators, and original equipment manufacturers (‘‘OEMs’’); direct to end users through Adobe call
centers; and through our own Web site at www.adobe.com. We have operations in the Americas; Europe,
Middle East, and Africa (‘‘EMEA’’); and Asia.
Fiscal Year
Our fiscal year is a 52/53-week year ending on the Friday closest to November 30.
Basis of Consolidation
The accompanying consolidated financial statements include those of Adobe and our subsidiaries,
after elimination of all intercompany accounts and transactions.
The accompanying consolidated financial statements also include those of Adobe Incentive Partners,
L.P. (‘‘AIP’’). AIP holds limited partnership interests in Adobe Ventures L.P. and Adobe Ventures II, L.P.,
which are accounted for using the equity method of accounting.
Use of Estimates
In the preparation of financial statements in conformity with accounting principles generally accepted
in the United States of America, we must make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent liabilities, at the date of the financial
statements, and reported amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Cash Equivalents and Short-term Investments
Cash equivalents consist of instruments with maturities of three months or less at the time of
purchase.
We classify all of our cash equivalents and short-term investments that are free of trading restrictions
or become free of trading restrictions within one year as ‘‘available-for-sale.’’ We carry these investments at
fair value, based on quoted market prices, and unrealized gains and losses, net of taxes, are included in
accumulated other comprehensive income, which is reflected as a separate component of stockholders’
equity. Realized gains and losses are recognized when realized on our consolidated statements of income.
We have a policy in place to review our equity holdings on a regular basis to evaluate whether or not each
security has experienced an other-than-temporary decline in fair value. Our policy includes, but is not
limited to, reviewing each of the companies’ cash position, earnings/revenue outlook, stock price
performance over the past six months, liquidity and management/ownership. If we believe that an
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