Adobe 2001 Annual Report Download - page 82

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ADOBE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
Note 8. Income Taxes (Continued)
The tax effects of the temporary differences that give rise to significant portions of the deferred tax
assets and liabilities as of fiscal 2001 and 2000 are presented below:
November 30, December 1,
2001 2000
Deferred tax assets:
Acquired technology ........................... $12,980 $ 11,920
Reserves and deferred revenue ................... 28,738 29,625
Unrealized losses on investments .................. 1,886 —
Other ..................................... — 608
Total gross deferred tax assets .................. 43,604 42,153
Deferred tax asset valuation allowance ............ (525) (525)
Total deferred tax assets ...................... 43,079 41,628
Deferred tax liabilities:
Depreciation and amortization ................... (6,041) (5,164)
Unrealized gains on investments .................. — (14,379)
Other ..................................... (2,718) (892)
Total deferred tax liabilities .................... (8,759) (20,435)
Net deferred tax assets ........................... $34,320 $ 21,193
We provide United States income taxes on the earnings of foreign subsidiaries unless the subsidiaries’
earnings are considered permanently reinvested outside the United States.
For financial reporting purposes, a valuation allowance has been established for certain deferred
assets related to the writedown of investments. Management believes that it is more likely than not that the
results of future operations will generate sufficient taxable income to realize the net deferred tax assets.
Note 9. Benefit Plans
Pretax Savings Plan
In 1987, we adopted an Employee Investment Plan, qualified under Section 401(k) of the Internal
Revenue Code, which is a pretax savings plan covering substantially all of our United States employees.
Under the plan, eligible employees may contribute up to 18% of their pretax salary, subject to the Internal
Revenue Service annual contribution limits. In fiscal 2001, we matched 50% of the first 6% of the
employee’s contribution. We contributed approximately $5.8 million, $4.5 million, and $2.2 million in fiscal
2001, 2000, and 1999, respectively. We can terminate matching contributions at our discretion.
Profit Sharing Plan
We have a profit sharing plan that provides for profit sharing payments to all eligible employees
following each quarter in which we achieve at least 80% of our budgeted earnings for the quarter. The
plan, as well as the annual operating budget on which the plan is based, is approved by our Board of
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