Adobe 2007 Annual Report Download - page 64

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64
The privately-held companies in which we invest, can still be considered in the start-up or development stages which are
inherently risky. The technologies or products these companies have under development are typically in the early stages and
may never materialize, which could result in a loss of a substantial part of our initial investment in these companies.
The following table represents the potential decrease in fair values of our marketable equity securities as of November
30, 2007, that are sensitive to changes in the stock market. Fair value deteriorations of 50%, 35% and 15% were selected for
illustrative purposes because none is more likely to occur than another.
50% 35% 15%
Marketable equity securities ............................. $(10.4) $ (7.3 ) $ (3.1 )
Fixed Income Investments
At November 30, 2007, we had debt securities classified as short-term investments of $1,026.6 million. Changes in
interest rates could adversely affect the market value of these investments. The table below separates these investments,
based on stated maturities, to show the approximate exposure to interest rates.
Due within one year.................................................. $ 808.3
Due within two years................................................. 194.8
Due within three years................................................ 23.5
Due after three years.................................................. —
Total............................................................... $ 1,026.6
A sensitivity analysis was performed on our investment portfolio as of November 30, 2007. This sensitivity analysis was
based on a modeling technique that measures the hypothetical market value changes that would result from a parallel shift in
the yield curve of plus 50, 100, or 150 basis points over six-month and twelve-month time horizons. The following table
represents the potential change in the value of our fixed income securities given an increase in interest rates of various
magnitudes.
0.5% 1.0% 1.5%
6 month horizon...................................... $ (0.5) $ (1.0 ) $ (1.5 )
12 month horizon..................................... $ 1.2 $ 2.3 $ 3.5
We limit our exposure to interest rate and credit risk by establishing and monitoring clear policies and guidelines for our
fixed income portfolios. Our investment policy limits the maximum weighted average duration of all invested funds to 2.5
years. The guidelines also establish credit quality standards, limits on exposure to any one security issue, limits on exposure
to any one issuer and limits on exposure to the type of instrument.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Consolidated Balance Sheets.......................................... 65
Consolidated Statements of Income.................................... 66
Consolidated Statements of Stockholders’ Equity and Comprehensive Income . 67
Consolidated Statements of Cash Flows................................. 68
Notes to Consolidated Financial Statements ............................. 69
Report of KPMG LLP, Independent Registered Public Accounting Firm...... 106