Adobe 2004 Annual Report Download - page 41

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41
Non-operating Income (Loss)
Fiscal
2004
% Change
2004 to 2003
Fiscal
2003
% Change
2003 to 2002 Fiscal
2002
Investment gain (loss) ............... $ 2.5 *% $ (12.9) 25 % $ (17.2)
Percentage of total revenues.. *% (1)% (1)%
Interest and other income .......... 14.3 3% 13.9 (6)% 14.9
Percentage of total revenues.. 1% 1 % 1 %
Total non-operating income
(loss).....................................
$ 16.8
*%
$ 1.0
* %
$ (2.3)
* Percentage is not meaningful.
Investment Gain (Loss)
Investment gain (loss) consists of realized gains or losses from the sale of marketable equity investments, other-
than-temporary declines in the value of marketable and non-marketable equity securities, and gains and losses of
Adobe Ventures.
During fiscal 2004, net investment gain primarily comprised gains from the sales of our short-term investments
of $2.5 million.
During fiscal 2003, net investment losses included net losses related to our investments in Adobe Ventures and
our cost method investments totaling $12.0 million. This loss of $12.0 million was partially offset by gains of $3.1
million from the sale of our short-term investments. During fiscal 2003, investment losses also included write-downs
due to other-than-temporary declines in value of $4.0 million related to our short-term investments.
During fiscal 2002, investment losses consisted of net investment losses related to investments in Adobe
Ventures and our cost method investments totaling $13.1 million. We also recorded $11.3 million in losses related to
other-than-temporary write-downs of our short-term investments. These losses were partially offset by gains totaling
$7.2 million from the sale of our short-term investments.
We are uncertain of future investment gains or losses as they are primarily dependent upon market conditions
and the operations of the underlying investee companies.
Interest and Other Income
The largest component of interest and other income is interest earned on cash, cash equivalents and short-term
fixed income investments, but also includes gains and losses on the sale of fixed income investments, foreign
exchange transaction gains and losses, and interest expense.
Interest and other income increased in fiscal 2004 as compared to fiscal 2003 due to higher levels of cash during
fiscal 2004.
In fiscal 2003, interest decreased by $0.4 million due to the lower interest rate environment in fiscal 2003 as
compared to fiscal 2002. We also recognized $1.7 million less in realized gains on our fixed income portfolio. Those
decreases were partially offset by an increase of $1.1 million in other miscellaneous income.
Income Tax Provision
Fiscal
2004
% Change
2004 to 2003
Fiscal
2003
% Change
2003 to 2002 Fiscal
2002
Provision ................................... $ 158.2 39% $ 114.1 22% $ 93.3
Percentage of total revenues.. 10% 9% 8%
Effective tax rate ................... 26% 30.0% 32.8%