Adobe 1999 Annual Report Download - page 53

Download and view the complete annual report

Please find page 53 of the 1999 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 90

  • 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

ADOBE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
(Continued)
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES (Continued)
separate component of stockholders’ equity. Certain other transaction gains or losses, which have not been
material, are reported in results of operations.
Property and equipment
Property and equipment are recorded at cost. Depreciation and amortization are calculated using the
straight-line method over the shorter of the estimated useful lives (thirty-five years for the building; two to
seven years for furniture and equipment) or lease terms (five to nine years for leasehold improvements) of
the respective assets.
Other assets
Purchased technology, goodwill, and certain other intangible assets are stated at cost less accumulated
amortization. Amortization is recorded utilizing the straight-line method over the estimated useful lives of
the respective assets, generally three to seven years. Capitalization of computer software development
costs, when material, begins upon the establishment of technological feasibility, which is generally the
completion of a working prototype that has been certified as having no critical bugs and is a release
candidate. To date, software development costs incurred between completion of a working prototype and
general availability of the related product have not been material.
Long-lived assets
The Company reviews property and equipment for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of
property and equipment is measured by comparison of its carrying amount to undiscounted future net cash
flows the property and equipment are expected to generate. If such assets are considered to be impaired,
the impairment to be recognized is measured by the amount by which the carrying amount of the property
and equipment exceeds its fair market value, as determined by discounted cash flows. The Company
assesses the recoverability of enterprise-level goodwill by determining whether the unamortized goodwill
balance can be recovered through undiscounted future results of the acquired operation. The amount of
enterprise-level goodwill impairment, if any, is measured based on projected discounted future results
using a discount rate reflecting the Company’s average cost of funds.
Employee stock plans
The Company accounts for its employee stock plans, which consist of fixed stock option plans, an
employee stock purchase plan, and a performance and restricted stock plan, using the intrinsic value
method.
Revenue recognition
Application products revenue is recognized upon shipment, provided collection is determined to be
probable and no significant obligations remain. The Company provides to application products customers
free telephone support, for which the expense is accrued, up to a maximum of 90 days beginning upon the
customer’s first call. The cost of telephone support is amortized as the obligation is fulfilled. Revenue from
52