Adobe 2001 Annual Report Download - page 92

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ADOBE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
Note 13. Commitments and Contingencies (Continued)
revenue. Royalty expense was approximately $14.1 million, $20.8 million, and $24.5 million in fiscal 2001,
2000, and 1999, respectively.
Adobe Ventures
We have commitments to the Adobe Venture limited partnerships. The following table shows the
capital commitments and the capital contributed as of November 30, 2001:
Capital Commitment Capital Contributed
Adobe Ventures L.P. ........................... $ 40,000,000 $40,475,757
Adobe Ventures II, L.P. ........................ $ 40,000,000 $36,947,363
Adobe Ventures III, L.P. ........................ $ 60,000,000 $56,162,222
Adobe Ventures IV, L.P. ........................ $100,000,000 $18,292,333
The capital commitment is the amount that Adobe has agreed to contribute to the Partnership. The
capital commitment amount is contributed over the term of each Partnership, which is ten years. We can
cease funding at any time after the earlier of: a) two years after the effective date of the Partnership or
b) the date on which the Company has made capital contributions to the Partnership in an amount in
excess of $10.0 million, $10.0 million, $20.0 million, and $33.0 million for Adobe Ventures L.P., Adobe
Ventures II, L.P., Adobe Ventures III, L.P., and Adobe Ventures IV, L.P., respectively.
In addition to these venture partnerships, we have direct investments in public and privately-held
companies. In total, as of November 30, 2001, we have invested $194.9 million through our venture
partnerships and direct investments. And as of November 30, 2001, net returns were $354.3 million,
including stock dividends and net gains in market value of investments.
Legal Actions
We are engaged in certain legal actions arising in the ordinary course of business. We believe that we
have adequate legal defenses and that the ultimate outcome of these actions will not have a material
adverse effect on our financial position and results of operations.
Note 14. Related Party Transactions
During fiscal 1999, we entered into two separate loan agreements with an executive officer to assist
with his relocation to San Jose, California. The first loan in the amount of $550,000, with an interest rate of
8.25% per annum, was repaid on December 31, 1999. The second loan, in the amount of $1.0 million, is
interest-free and is secured by his principal residence. Under the terms of the agreement, he is required to
repay this loan at $200,000 per year over the five years beginning December 2000. His second payment was
made in December 2001, leaving a balance of $600,000 as of January 25, 2002. The loan was amended in
November 2001 in connection with his resignation from the Company to include an agreement by the
Company that it would not exercise its right to accelerate the payment of unpaid principal because of his
termination of employment. The Company reserved the right to accelerate payment for any other reason
authorized by the agreement.
Also in connection with his resignation from his employment with us, which was effective
November 30, 2001, we entered into an agreement with him to: (i) pay him a lump sum equal to his total
92