Adobe 1999 Annual Report Download - page 60

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ADOBE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
(Continued)
59
NOTE 5. OTHER ASSETS (Continued)
included in investment income (loss). The stock of substantially all of the technology companies held by
the limited partnerships at December 3, 1999 is not publicly traded, and therefore, there is no established
market for these investments. As such, these investments are valued based on the most recent round of
financing involving new nonstrategic investors and estimates made by the general partner, a third party.
When investments held by the limited partnerships are publicly traded, the fair value of such investments is
based on quoted market prices, and mark-to-market adjustments are included in investment income.
The Company owns minority interests in certain technology companies totaling $10.6 million and
$14.0 million as of December 3, 1999 and November 27, 1998, respectively. Investments in equity securities
that are not publicly traded, or are restricted from trading for more than one year, are carried at the lower
of cost or market.
The Company’s portfolio of equity investments at December 3, 1999 had a cost basis of $67.5 million
and a fair market value of $75.8 million. (For further information, see Note 9.)
As of December 3, 1999, the Company did not have any restricted funds or pledged collateral. The
Company had deposited funds with a lessor as an interest-bearing security deposit totaling $64.3 million as
of November 27, 1998. In addition, as of November 27, 1998, the Company had pledged collateral with a
lessor comprised of money market mutual funds totaling $66.0 million.
As of December 3, 1999, intangibles and other assets consist primarily of goodwill in the amount of
$26.4 million, capitalized localization of $18.0 million, and other intangible assets of $8.9 million.
Amortization expense related to goodwill, purchased technology, capitalized localization, and other
intangible assets was $21.6 million and $20.4 million in fiscal 1999 and 1998, respectively.
NOTE 6. ACCRUED EXPENSES
Accrued expenses consisted of the following:
December 3 November 27
1999 1998
Accrued compensation and benefits .................. $ 65,957 $ 41,592
Sales and marketing allowances ..................... 9,990 13,439
Minority interest ................................ 17,737 1,525
Other ........................................ 57,218 60,983
$150,902 $117,539
NOTE 7. RESTRUCTURING AND OTHER CHARGES
During fiscal 1999 and 1998, the Company implemented three different Board-approved restructuring
programs. These unique restructuring programs were directly focused on improving the Company’s
competitive position as well as enhancing the Company’s allocation of resources. In addition to these three
restructurings, the Company also implemented restructuring programs in fiscal 1994 and 1995 related to
the Aldus Corporation (‘‘Aldus’’) and Frame Technology Corporation (‘‘Frame’’) acquisitions. As of