Adobe 2009 Annual Report Download - page 98

Download and view the complete annual report

Please find page 98 of the 2009 Adobe annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 139

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139

ADOBE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
98
NOTE 8. OTHER ASSETS
Other assets as of November 27, 2009 and November 28, 2008 consisted of the following (in thousands):
2009
2008
Acquired rights to use technology ...............................................
84,313
$
90,643
Investments ..................................................................
63,526
76,589
Security and other deposits .....................................................
11,692
16,087
Prepaid royalties ..............................................................
12,059
9,026
Deferred compensation plan assets ...............................................
9,045
7,560
Restricted cash ...............................................................
4,650
7,361
Prepaid land lease ............................................................
3,209
3,185
Prepaid rent ..................................................................
1,377
2,658
Other .......................................................................
1,394
3,420
Other assets ...............................................................
191,265
$
216,529
Acquired rights to use technology purchased during fiscal 2009 and fiscal 2008 was $6.0 million and $100.4 million,
respectively. Of the cost for fiscal 2008, an estimated $56.4 million was related to future licensing rights and has been
capitalized and is being amortized on a straight-line basis over the estimated useful lives up to fifteen years. Of the remaining
costs for fiscal 2008, we estimated that $27.2 million was related to historical use of licensing rights which was expensed as
cost of sales and the residual of $16.8 million for fiscal 2008 was expensed as general and administrative costs. In connection
with these licensing arrangements, we have the ability to acquire additional rights to use technology in the future. See Note
17 for further information regarding our contractual commitments.
In general, acquired rights to use technology are amortized over their estimated useful lives of 3 to 15 years.
Included in investments are our indirect investments through our limited partnership interest in Adobe Ventures of
approximately $37.1 million and $39.0 million as of November 27, 2009 and November 28, 2008, respectively, which is
consolidated in accordance with the provisions for consolidating variable interest entities. The partnership is controlled by
Granite Ventures, an independent venture capital firm and sole general partner of Adobe Ventures. We are the primary
beneficiary of Adobe Ventures and bear virtually all of the risks and rewards related to our ownership. Our investment in
Adobe Ventures does not have a significant impact on our consolidated financial position, results of operations or cash flows.
Adobe Ventures carries its investments in equity securities at estimated fair value and investment gains and losses are
included in our Consolidated Statements of Income. Substantially all of the investments held by Adobe Ventures at
November 27, 2009 and November 28, 2008 are not publicly traded and, therefore, there is no established market for these
securities. In order to determine the fair value of these investments, we use the most recent round of financing involving new
non-strategic investors or estimates of current market value made by Granite Ventures. It is our policy to evaluate the fair
value of these investments held by Adobe Ventures, as well as our direct investments, on a regular basis. This evaluation
includes, but is not limited to, reviewing each company’s cash position, financing needs, earnings and revenue outlook,
operational performance, management and ownership changes and competition. In the case of privately-held companies, this
evaluation is based on information that we request from these companies. This information is not subject to the same
disclosure regulations as U.S. publicly traded companies and as such, the basis for these evaluations is subject to the timing
and the accuracy of the data received from these companies. See Note 4 for further information regarding Adobe Ventures.
Also included in investments are our direct investments in privately-held companies of approximately $26.4 million and
$37.6 million as of November 27, 2009 and November 28, 2008, respectively, which are accounted for based on the cost
method. We assess these investments for impairment in value as circumstances dictate. See Note 4 for further information
regarding our cost method investments.
We entered into a Purchase and Sale Agreement, effective May 12, 2008, for the acquisition of real property located in
Waltham, Massachusetts. We purchased the property upon completion of construction of an office building shell and core,
parking structure, and site improvements. The purchase price for the property was $44.7 million and closed on June 16, 2009.
We made an initial deposit of $7.0 million which was included in security and other deposits as of November 28, 2008 and
the remaining balance was paid at closing. This deposit was held in escrow until closing and then applied to the purchase
price.