Adobe 2003 Annual Report Download - page 53

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53
As part of our limited partnership interests in Adobe Ventures, we have provided a general indemnification to
Granite Ventures, an independent venture capital firm and sole general partner of Adobe Ventures, for certain events
or occurrences while Granite Ventures is, or was serving, at our request in such capacity provided that Granite
Ventures acts in good faith on behalf of the partnerships. We are unable to develop an estimate of the maximum
potential amount of future payments that could potentially result from any hypothetical future claim, but believe the
risk of having to make any payments under this general indemnification to be remote.
Royalties
We have certain royalty commitments associated with the shipment and licensing of certain products. Royalty
expense is generally based on a dollar amount per unit shipped or a percentage of the underlying revenue. Royalty
expense, which was recorded under our cost of products revenue on our consolidated statements of income, was
approximately $14.5 million, $14.4 million and $14.1 million in fiscal 2003, 2002 and 2001, respectively.
Other Information
Consistent with Section 10A(i)(2) of the Securities Exchange Act of 1934 as added by Section 202 of the
Sarbanes-Oxley Act of 2002, we are responsible for listing the audit and non-audit services pre-approved in the
fourth quarter of 2003 by our Audit Committee to be performed by KPMG LLP, our external auditor. Each of the
permitted non-audit services has been pre-approved by the Audit Committee or the Audit Committee’s Chairman
pursuant to delegated authority by the Audit Committee, other than de minimus non-audit services for which the
pre-approval requirements are waived in accordance with the rules and regulations of the SEC. During the fourth
quarter of 2004, the Audit Committee pre-approved the following non-audit services anticipated to be performed by
KPMG LLP: 1) fiscal 2003 tax return services and 2) general tax consulting services.