Adobe 2001 Annual Report Download - page 77

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ADOBE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
Note 5. Other Assets (Continued)
We have commitments to the Adobe Venture limited partnerships. The following table shows the
capital commitments and the capital contributed as of November 30, 2001:
Capital Commitment Capital Contributed
Adobe Ventures L.P. $ 40,000,000 $40,475,757
Adobe Ventures II, L.P. $ 40,000,000 $36,947,363
Adobe Ventures III, L.P. $ 60,000,000 $56,162,222
Adobe Ventures IV, L.P. $100,000,000 $18,292,333
The capital commitment is the amount that Adobe has agreed to contribute to the Partnership. The
capital commitment amount is contributed over the term of each Partnership, which is ten years. We can
cease funding at any time after the earlier of: a) two years after the effective date of the Partnership or
b) the date on which the Company has made capital contributions to the Partnership in an amount in
excess of $10.0 million, $10.0 million, $20.0 million, and $33.0 million for Adobe Ventures L.P., Adobe
Ventures II, L.P., Adobe Ventures III, L.P., and Adobe Ventures IV, L.P., respectively.
In addition to these venture partnerships, we have direct investments in public and privately-held
companies. In total, as of November 30, 2001, we have invested $194.9 million through our venture
partnerships and direct investments. As of November 30, 2001, net returns were $354.3 million, including
stock dividends and net gains in market value of investments.
The investments in Adobe Ventures are accounted for using the equity method of accounting, and
accordingly, the investments are adjusted to reflect our share of Adobe Ventures’ investment income (loss)
and dividend distributions. Adobe Ventures carry their investments in equity securities at estimated fair
market value and unrealized gains and losses are included in investment income (loss). The stock of a
number of technology investments held by the limited partnerships at November 30, 2001 are not publicly
traded, and, therefore, there is no established market for their securities. As such, the fair value of these
investments are determined by Granite Ventures using the most recent round of financing involving new
non-strategic investors or estimates made by Granite Ventures. We have a policy in place to review the fair
value of these investments held by Adobe Ventures on a regular basis to evaluate the carrying value of the
investments in these companies. This policy includes, but is not limited to, reviewing each of the
companies’ cash position, financing needs, earnings/revenue outlook, operational performance,
management/ownership changes, and competition. The evaluation process is based on information that we
request from these privately-held companies. This information is not subject to the same disclosure
regulations as U.S. public companies, and as such, the basis for these evaluations is subject to the timing
and the accuracy of the data received from these companies. If we believe that the carrying value of a
company is carried at an amount in excess of fair value, it is our policy to record a reserve in addition to
our equity method of accounting and the related writedown is recorded as an investment loss on our
consolidated statements of income.
We own minority interests in certain technology companies totaling $0.7 million and $3.8 million as of
November 30, 2001 and December 1, 2000, respectively.
As of November 30, 2001, our portfolio of investments included in Other Assets had an estimated fair
market value of $31.7 million.
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