Adobe 2009 Annual Report Download - page 65

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65
Interest Expense
Interest expense for fiscal 2009 and 2008, primarily represents interest associated with our credit facility. The
outstanding balance as of November 27, 2009 was $1.0 billion. Interest due under the credit facility is paid upon expiration of
the London interbank offered rate (“LIBOR”) contract or at a minimum, quarterly. The decline in interest expense was
primarily due to lower interest rates.
Investment Gains (Losses), Net
Investment gains (losses), net, consists principally 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, unrealized
holding gains and losses associated with our deferred compensation plan assets (classified as trading securities), and gains
and losses of Adobe Ventures.
Investment gains and (losses), net fluctuated due to the following (in millions):
2009 2008 2007
Net gains (losses) related to our investments in Adobe Ventures
and cost method investments ............................ $ (16.7 )
$ 15.9 $ 6.9
Gains from sale of equity investments ........... — 5.4 0.2
Write-downs due to other-than-temporary declines in value of our
marketable equity securities ............................. (0.3 )
(4.9 ) —
Total investment gains (losses), net ....................... $ (17.0 ) $ 16.4 $ 7.1
During fiscal 2009, investment gains (losses), net decreased as compared to fiscal 2008 primarily due to net unrealized
losses related to our Adobe Ventures and direct investments.
During fiscal 2008, investment gains (losses), net increased as compared to fiscal 2007 due primarily to investment
gains from our direct and Adobe Ventures investments. Additionally, during fiscal 2008, we received cash and recognized a
gain resulting from the expiration of the escrow period related to the sale of our investment in Atom Entertainment, Inc. that
occurred during the fourth quarter of fiscal 2006.
Provision for Income Taxes (dollars in millions)
Fiscal
2009
% Change
2009 to 2008
Fiscal
2008
% Change
2008 to 2007
Fiscal
2007
Provision .......................... $ 315.0 52 % $ 206.7 (7 )% $ 223.4
Percentage of total revenue .......... 11 % 6 % 7 %
Effective tax rate .................. 45 % 19 % 24 %
Our effective tax rate increased approximately twenty-six percentage points during fiscal 2009 as compared to fiscal
2008. The increase was primarily due to a one-time charge that was related to our acquisition of Omniture. The charge was
the tax cost of inter-company transactions necessary to license certain Omniture assets to Adobe’s trading companies, so that
Omniture’s services can be offered to customers from Adobe companies.
Our effective tax rate decreased approximately five percentage points during fiscal 2008 as compared to fiscal 2007. The
decrease was primarily related to the completion in the third quarter of fiscal 2008 of a U.S. income tax examination covering
our fiscal years 2001 through 2004, a refund of foreign taxes from our fiscal years 2000 through 2002 following a foreign tax
court judgment and stronger international profits for fiscal 2008 offset in part by an increase due to the tax benefit for the
reinstatement of the research and development credit relating to fiscal 2006 in the first quarter of fiscal 2007.