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ADOBE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
Note 1. Significant Accounting Policies (Continued)
Prior to our adoption of SFAS 133, we accounted for our derivatives under SFAS 52, ‘‘Foreign
Currency Translation.’’
Put Warrants and Call Options
We utilize put warrants and call options (‘‘puts and calls’’) to facilitate the repurchase of our common
stock. Our put and call option contracts provide that we, at our option, can settle with physical delivery or
net shares equal to the difference between the exercise price and the value of the option as determined by
the contract. Accordingly, these investments are initially measured at fair value and reported in
stockholders’ equity as additional paid-in-capital. Subsequent changes in fair value are not recognized. If
these instruments are settled through the payment or receipt of cash, additional paid-in-capital is adjusted.
Comprehensive Income
Statement of Financial Accounting Standards No. 130 (‘‘SFAS 130’’), ‘‘Reporting Comprehensive
Income,’’ establishes standards for the reporting and display of comprehensive income and its components
in the financial statements. Items of comprehensive income (loss) that we currently report are unrealized
gains and losses on marketable securities categorized as available-for-sale, foreign currency translation
adjustments, and gains and losses on derivative instruments qualifying as cash flow hedges, such as
(i) hedging a forecasted transaction, (ii) the variability of cash flows to be received or paid related to a
recognized asset or liability (‘‘cash flow hedge’’), or (iii) a foreign currency cash-flow hedge. We display
comprehensive income and its components on our Consolidated Statements of Stockholders’ Equity and
Other Comprehensive Income.
Recent Accounting Pronouncements
In July 2001, the Financial Accounting Standards Board (the ‘‘FASB’’) issued Statement of Financial
Accounting Standards No. 141 (‘‘SFAS 141’’), ‘‘Business Combinations.’’ This Statement requires all
business combinations to be accounted for using the purchase method of accounting and redefines
goodwill and other intangibles that should be recognized separate from goodwill. SFAS 141 is effective for
all business combinations initiated after June 30, 2001.
In July 2001, the FASB issued SFAS 142. This Statement requires that goodwill and other intangibles
with an indefinite useful life not be amortized, but be tested for impairment at least annually. SFAS 142 is
effective for fiscal years beginning after December 15, 2001; however, for new business combinations that
occur after June 30, 2001, SFAS 142 is effective for those transactions. We will adopt SFAS 142 beginning
in our fiscal year 2003. We are currently evaluating the impact of SFAS 142 on our financial statements and
related disclosures.
In June 2001, the FASB issued Statement of Financial Accounting Standards No. 143 (‘‘SFAS 143’’),
‘‘Accounting for Asset Retirement Obligations.’’ This Statement addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived assets and the associated
asset retirement costs. This Statement applies to legal obligations associated with the retirement of
long-lived assets that result from the acquisition, construction, development, or normal use of the asset. As
used in this Statement, a legal obligation results from existing law, statute, ordinance, written or oral
contract, or by legal construction of a contract under the doctrine of promissory estoppel. SFAS 143 is
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