Adobe 2001 Annual Report Download - page 94

Download and view the complete annual report

Please find page 94 of the 2001 Adobe annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 105

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105

ADOBE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
Note 15. Financial Instruments (Continued)
transaction does not occur, or it becomes probable that it will not occur, we reclassify the gain or loss on
the related cash flow hedge from accumulated other comprehensive income (loss) to interest and other
income (loss) on the consolidated statement of income at that time. For the fiscal year ended
November 30, 2001, there were no such net gains or losses recognized in other income relating to hedges of
forecasted transactions that did not occur.
The critical terms of the cash flow hedging instruments are the same as the underlying forecasted
transactions. The changes in fair value of the derivatives are intended to offset changes in the expected
cash flows from the forecasted transactions. We record any ineffective portion of the hedging instruments
in other income on the consolidated statement of income. The time value of purchased derivative
instruments is deemed to be ineffective and is recorded in other income over the life of the contract.
The following table depicts the activity for the fiscal year ended November 30, 2001.
Gain (Loss) on Hedges of Forecasted Transactions:
Balance Sheet Income Statement
As of Year ended
November 30, 2001 November 30, 2001
Other Comprehensive Other Income
Income Revenue (Loss)
Realized—Closed Transactions:
Realized net gain reclassified from other
comprehensive income to revenue ............. $ — $7,848 $ —
Realized net loss from ineffective portion of hedges
and time value degradation .................. — — (4,786)
Recognized but Unrealized—Open Transactions:
Unrealized gain remaining in other comprehensive
income ................................. 2,582 — —
Unrealized loss from ineffective portion of hedges and
time value degradation ...................... — — (730)
$2,582 $7,848 $(5,516)
As of November 30, 2001, $2.6 million in other comprehensive income represents the total intrinsic
value of our economic hedges on forecasted revenue.
During the fiscal year ended November 30, 2001, $7.8 million was recognized in revenue relating to
hedged transactions which occurred; total loss recognized in other income was $5.5 million, which
consisted of a $4.8 million realized net loss related to the cost of matured purchased options, and a
$0.7 million unrealized loss that was recognized for the ineffective portion relating to hedges for forecasted
transactions and the time value degradation of outstanding purchased options.
94