Adobe 2001 Annual Report Download - page 102

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ADOBE SYSTEMS INCORPORATED
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
Valuation and Qualifying Accounts which are Deducted in the
Balance Sheet from the Assets to which They Apply
Balance at Charged to Charged Balance at
Beginning Operating to End of
of Period Expenses Revenue Deductions* Period
Allowance for doubtful accounts:
Year Ended:
November 30, 2001 ................. $8,788 $ 1,435 $ — $ 124 $10,099
December 1, 2000 .................. $5,170 $ 7,140 $ — $3,522 $ 8,788
December 3, 1999 .................. $6,399 $(3,319) $2,090 $ — $ 5,170
*Deductions related to the allowance for doubtful accounts represent amounts written off against the allowance.
In fiscal 2001, the increase in the allowance for doubtful accounts was due to the overall deterioration
in the economic environment globally, resulting in higher estimated bad debt write-offs. The decreased
charge to operating expenses in fiscal 2001 as compared to the charge in fiscal 2000 reflects the results of
enhanced global credit evaluation, on-going risk mitigation efforts (e.g. letters of credit, guarantees, and
credit insurance) in Asia, and improved collections of our Royalty accounts.
In fiscal 2000, the charge to operating expenses related primarily to two separate bankruptcy filings,
one involving a U.S. and the other a European distributor, an insolvent royalty customer, and higher
potential bad debt expense as a result of higher accounts receivable balances at the end of fiscal 2000. The
deductions represent amounts written off against the allowance.
In fiscal 1999, the overall reserve decreased due to reduced credit risks, mainly in Asia. In addition, we
invoiced certain royalty customers whose accounts were deemed potentially uncollectible. Consequently,
we recorded an increase to the allowance for doubtful accounts and recorded a charge to revenue. As such
we did not recognize revenue associated with these accounts.
102