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ADOBE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
80
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
Operations
Founded in 1982, Adobe Systems Incorporated is one of the largest and most diversified software companies in the
world. We offer a line of creative, business, Web and mobile software and services used by creative professionals, knowledge
workers, consumers, original equipment manufacturers (“OEMs”), developers and enterprises for creating, managing,
delivering, optimizing and engaging with compelling content and experiences across multiple operating systems, devices and
media. We distribute our products through a network of distributors, value-added resellers (“VARs”), systems integrators,
independent software vendors (“ISVs”) and OEMs, direct to end users and through our own Website at www.adobe.com. We
also license our technology to hardware manufacturers, software developers and service providers, and we offer integrated
software solutions to businesses of all sizes. We have operations in the Americas, Europe, Middle East and Africa (“EMEA”)
and Asia. Our software runs on personal computers with Microsoft Windows, Apple Mac OS, Linux, UNIX and various non-
PC platforms, depending on the product.
Basis of Presentation
The accompanying Consolidated Financial Statements include those of Adobe and its subsidiaries, after elimination of
all intercompany accounts and transactions. We have prepared the accompanying Consolidated Financial Statements in
accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the
rules and regulations of the Securities and Exchange Commission (“SEC”).
Use of Estimates
In preparation of consolidated financial statements and related disclosures in conformity with GAAP and pursuant to the
rules and regulations of the SEC, we must make estimates and judgments that affect the amounts reported in the
Consolidated Financial Statements and accompanying notes. Estimates are used for, but not limited to sales allowances and
programs, bad debts, stock-based compensation, allocation of purchase price allocations, excess inventory and purchase
commitments, restructuring costs, facilities lease losses, impairment of goodwill and intangible assets, litigation, income
taxes and investments. Actual results may differ materially from these estimates.
Fiscal Year
Our fiscal year is a 52- or 53-week year that ends on the Friday closest to November 30. Fiscal years 2009, 2008 and
2007 were all 52 weeks.
Reclassification
Certain prior year amounts have been reclassified to conform to current year presentation in the Consolidated Statements
of Cash Flows. The previously reported classifications of net cash provided by (used for) operating activities, investing
activities and financing activities for any period presented were not affected by these reclassifications.
Allowance for Doubtful Accounts
We maintain an allowance for doubtful accounts which reflects our best estimate of potentially uncollectible trade
receivables. We regularly review our trade receivables allowances by considering such factors as historical experience,
credit-worthiness, the age of the trade receivable balances and current economic conditions that may affect a customer’s
ability to pay and we specifically reserve for those deemed uncollectible.
(in thousands)
2009
2008
2007
Beginning balance ...................................
$
4,128
$
4,398
$
6,798
Increase due to acquisition ............................
9,421
—
—
Charged (credited) to operating expenses ................
2,841
4,414
(1,367
)
Preference claim, credited to operating expense ...........
(1,000
)
(2,000
)
—
Deductions(*) .......................................
(165
)
(2,684
)
(1,033
)
Ending balance
$
15,225
$
4,128
$
4,398
_________________________________________
(*) Deductions related to the allowance for doubtful accounts represent amounts written off against the allowance, less
recoveries.