Adobe 2012 Annual Report Download - page 68

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68
Non-Operating Income (Expense), Net (dollars in millions)
Fiscal
2012 Fiscal
2011 Fiscal
2010 % Change
2012-2011 % Change
2011-2010
Interest and other income (expense), net..................... $ (3.4) $ (3.0) $ 13.1 13 % (123)%
Percentage of total revenue....................................... * * *
Interest expense........................................................... (67.5) (67.0) (56.9) 1 % 18 %
Percentage of total revenue....................................... (2)% (2)% (1)%
Investment gains (losses), net ..................................... 9.5 5.9 (6.1) 61 % (197)%
Percentage of total revenue....................................... * * *
Total non-operating income (expense), net................. $ (61.4) $ (64.1) $ (49.9) (4)% 28 %
_________________________________________
(*) Percentage is not meaningful.
Interest and Other Income (Expense), Net
Interest and other income (expense), net consists primarily of interest earned on cash, cash equivalents and short-term fixed
income investments. Interest and other income (expense), net also includes foreign exchange gains and losses, including those
from hedging revenue transactions primarily denominated in Euro and Yen currencies, and gains and losses on fixed income
investments.
Interest and other income (expense), net increased in net expense in fiscal 2012 as compared to fiscal 2011 primarily due
to lower average interest rates on our investments.
Interest and other income (expense), net changed from net income in fiscal 2010 to net expense in fiscal 2011 primarily
due to a gain of $20.8 million recorded in fiscal 2010 associated with a forward contract purchased to hedge our economic exposure
related to our acquisition of Day that did not recur during fiscal 2011, as well as increased cash flow hedging costs in fiscal 2011.
The increase in net expense in fiscal 2011 was partially offset by increased interest income of $2.4 million due to higher average
interest rates on our investments.
Interest Expense
In February 2010, we issued $600.0 million of 3.25% senior notes due February 1, 2015 (the “2015 Notes”) and $900.0
million of 4.75% senior notes due February 1, 2020 (the “2020 Notes” and, together with the 2015 Notes, the “Notes”). On
February 1, 2010, we repaid the outstanding balance under our then existing $1.0 billion credit facility with a portion of the
proceeds from the Notes.
Interest expense remained relatively stable during fiscal 2012 as compared to fiscal 2011. The increase in interest expense
during fiscal 2011 as compared to fiscal 2010 was primarily due to interest associated with higher borrowings resulting from the
issuance of the Notes.
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 and unrealized holding gains and
losses associated with our deferred compensation plan assets (classified as trading securities) and gains and losses associated with
our direct and indirect investments in privately held companies.
Investment gains (losses), net fluctuated due to the following (in millions):
Fiscal
2012 Fiscal
2011 Fiscal
2010
Net gains (losses) related to our direct and indirect investments in privately
held companies ..................................................................................................... $(0.2) $ 5.3 $ (11.3)
Gains from sale of marketable equity securities....................................................... 8.2 0.8 4.0
Write-downs due to other-than-temporary declines in value of our
marketable equity securities.................................................................................. (0.1)(0.2) —
Net gains related to our trading securities ................................................................ 1.6 — 1.2
Total investment gains (losses), net.......................................................................... $ 9.5 $ 5.9 $ (6.1)
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