Adobe 1999 Annual Report Download - page 26

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25
Amortization of goodwill and purchased intangibles
1999 Change 1998 Change 1997
Amortization of goodwill and purchased
intangibles .......................... $4.8 (38)% $7.7 202% $2.6
Percentage of total revenue ............... 0.5% 0.9% 0.3%
Amortization of goodwill and purchased intangibles in fiscal 1999 primarily relates to the acquisition
of substantially all of the assets of GoLive Systems, Inc. and a related partnership (together ‘‘GoLive
Systems’’) in January 1999. (For further information, see Note 2 of the Notes to Consolidated Financial
Statements.)
In fiscal 1998, amortization of goodwill and purchased intangibles was higher than fiscal 1997 as a
result of acquisitions made in fiscal 1998 and remaining amortization related to the merger with Aldus in
fiscal 1994.
Nonoperating income
Investment gain
1999 Change 1998 Change 1997
Investment gain ..................... $88.9 493% $15.0 (56)% $34.3
Percentage of total revenue ............ 8.8% 1.7% 3.8%
Investment gain consists principally of realized gains or losses from direct investments as well as
mark-to-market valuation adjustments for investments held by Adobe Incentive Partners, L.P. (‘‘AIP’’).
In fiscal 1999, we recorded a realized gain of $58.4 million related to the sale of our investment in
Vignette Corporation. We also recorded investment gains from mark-to-market adjustments totaling
$17.8 million, $10.4 million, and $7.0 million related to investments in Electronic Submission Publishing
Systems, Inc.; DigitalThink, Inc.; and Tumbleweed Communications Corporation, respectively. These gains
were partially offset by an investment loss of $5.2 million related to the acquisition of PointCast, Inc., a
former investee of the Company, by idealab!’s Launchpad Technologies, Inc. (‘‘idealab!’’). In connection
with the acquisition, we exchanged our shares of PointCast, Inc. for approximately 542,000 shares of
idealab! (since then has become EntryPoint Inc.). Additionally, we recorded a net gain totaling $0.5 million
related to mark-to-market adjustments of various other Adobe venture investments.
In fiscal 1998, we recorded a realized gain of $6.7 million related to our investment in McQueen
International Limited (‘‘McQueen’’), due to the acquisition of McQueen by Sykes Enterprises, Incorpo-
rated (‘‘Sykes’’), a publicly traded company. In addition, we liquidated our investment in Siebel Systems,
Incorporated (‘‘Siebel’’) through the distribution to our stockholders of approximately 165,000 shares of
Siebel common stock as a dividend-in-kind and the sale of our remaining Siebel shares. A gain was
recognized on the transaction of approximately $5.7 million. The remaining net realized gain recorded in
fiscal 1998 represents valuation adjustments related to our venture investments held by AIP.
In fiscal 1997, the investment gain related primarily to the liquidation of our investment in Netscape
Communications Corporation (‘‘Netscape’’) through the distribution to its stockholders of 554,660 shares
of Netscape common stock as a dividend-in-kind and the sale of our remaining Netscape shares.
We are uncertain of future investment gains or losses as they are primarily dependent upon the
operations of the underlying investee companies.