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ADOBE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
99
The fair value of our financial assets and liabilities at November 27, 2009 was determined using the following inputs (in
thousands):
Fair Value Measurements at Reporting Date Using
Quoted Prices
in Active
Markets for
Identical Assets
Significant
Other
Observable
Inputs
Significant
Unobservable
Inputs
Total (Level 1) (Level 2) (Level 3)
Assets:
Cash equivalents:
Money market mutual funds ..........................
$
884,240
$
884,240
$
—
$
—
Time deposits .................................................
40,137
40,137
—
—
Short-term investments:
U.S. Treasury securities .................................
376,378
—
376,378
—
U.S. agency securities ....................................
59,720
—
59,720
—
Municipal securities .......................................
—
—
—
—
Corporate bonds .............................................
415,575
—
415,575
—
Foreign government securities .......................
48,286
—
48,286
—
Marketable equity securities ..........................
5,027
5,027
—
—
Prepaid expenses and other current assets:
Foreign currency derivatives .........................
4,307
—
4,307
—
Other assets:
Investments of limited partnership ................
37,121
—
—
37,121
Deferred compensation plan assets ................
9,045
717
8,328
—
Total assets ..............................................................
$
1,879,836
$
930,121
$
912,594
$
37,121
Liabilities:
Accrued expenses:
Foreign currency derivatives .........................
$
1,589
$
—
$
1,589
$
—
Total liabilities .........................................................
$
1,589
$
—
$
1,589
$
—
See Note 3 for further information regarding the fair value of our financial instruments.
Our fixed income available-for-sale securities consist of high quality, investment grade securities from diverse issuers
with a minimum credit rating of A- and a weighted average credit rating of AA+. We value these securities based on pricing
from pricing vendors, who may use quoted prices in active markets for identical assets (Level 1 inputs) or inputs other than
quoted prices that are observable either directly or indirectly (Level 2 inputs) in determining fair value. However, we classify
all of our fixed income available-for-sale securities as having Level 2 inputs. The valuation techniques used to measure the
fair value of our financial instruments having Level 2 inputs were derived from non-binding market consensus prices that are
corroborated by observable market data, quoted market prices for similar instruments, or pricing models, such as discounted
cash flow techniques. Our procedures include controls to ensure that appropriate fair values are recorded such as comparing
prices obtained from multiple independent sources.
The investments of limited partnership relate to our interest in Adobe Ventures IV L.P. (“Adobe Ventures”), which
were consolidated in our Consolidated Financial Statements. Our limited partnership interest in Adobe Ventures terminated
on September 30, 2010. The Level 3 investments consisted of investments in privately-held companies. These investments
were remeasured at fair value each period with any gains or losses recognized in investment gains (losses), net in our
Consolidated Statements of Income. There was no impact to OCI related to our Level 3 investments. We estimated fair value
of the Level 3 investments by considering available information such as pricing in recent rounds of financing, current cash
positions, earnings and cash flow forecasts, recent operational performance and any other readily available market data.
Subsequent to the termination of our limited partnership interest in Adobe Ventures, a portion of our investments were sold
and the remaining amount was transferred to our cost method investments and marketable equity securities.