Adobe 2002 Annual Report Download - page 114

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In November 2002, the FASB issued Interpretation No. 45 (“FIN No. 45”), “Guarantor’s Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” FIN No. 45
expands on the accounting guidance of Statements No. 5, 57, and 107 and incorporates without change the
provisions of FASB Interpretation No. 34, which is being superseded. FIN No. 45 will affect leasing transactions
involving residual guarantees, vendor and manufacturer guarantees, and tax and environmental indemnities. All such
guarantees will need to be disclosed in the notes to the financial statements starting with the period ending after
December 15, 2002. For guarantees issued after December 31, 2002, the fair value of the obligation must be
reported on the balance sheet. Existing guarantees will be grandfathered and will not be recognized on the balance
sheet. We are currently evaluating the impact of FIN No. 45 on our financial position and results of operations.
In January 2003, the FASB issued Interpretation No. 46 (“FIN No. 46”), “Consolidation of Variable Interest
Entities.” FIN No. 46 expands upon and strengthens existing accounting guidance that addresses when a company
should include in its financial statements the assets, liabilities and activities of another entity. A variable interest
entity is a corporation, partnership, trust, or any other legal structure used for business purposes that either (a) does
not have equity investors with voting rights or (b) has equity investors that do not provide sufficient financial
resources for the entity to support its activities. FIN No. 46 requires a variable interest entity to be consolidated by a
company if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or is
entitled to receive a majority of the entity's residual returns or both. The consolidation requirements of FIN No. 46
apply immediately to variable interest entities created after January 31, 2003. The consolidation requirements apply
to older entities in the first fiscal year or interim period beginning after June 15, 2003. Disclosure requirements
apply to any financial statements issued after January 31, 2003. The Company has considered the provisions of FIN
No. 46 and believes it will not be necessary to include in the Company's financial statements any assets, liabilities,
or activities of the entities holding the Company's corporate headquarters leases. The Company has provided certain
disclosures in other areas of this filing (see Note 6 and Note 14 of our Notes to Consolidated Financial Statements)
and will continue to evaluate the impact of FIN No. 46 on our financial statements and related disclosures.
Reclassifications
We made a reclassification on our fiscal 2001 presentation of assets on our consolidated balance sheet by
reclassifying $3.4 million of land from Property and Equipment to Other Assets, to conform to the fiscal 2002
presentation. This reclassification did not impact total assets in fiscal 2001.
We made a reclassification on our fiscal 2001 presentation of current assets and current liabilities on our
consolidated balance sheet by reclassifying $1.6 million of bad debt allowance from Net Trade Receivable to
Accrued Expenses, to conform to the fiscal 2002 presentation. This reclassification increased our total assets and
liabilities by $1.6 million.
Note 2. Acquisitions
On April 12, 2002, we acquired 100% of the outstanding common stock of Accelio Corporation (“Accelio”).
The results of Accelio’s operations have been included in our consolidated financial statements since that date.
Accelio was a provider of Web-enabled solutions that help customers manage business processes driven by
electronic forms. The acquisition of Accelio enhances Adobe’s ability to broaden our ePaper solution business by
combining Accelio’s electronic forms solutions with Adobe Acrobat and Adobe Portable Document Format (“PDF”)
technologies. Through this combination Adobe can now extend broader ePaper solutions to enterprise users in
Global 2000 businesses, governments and educational institutions to deliver greater value to our customers. The
aggregate purchase price was $70.2 million, which included the issuance of 1.8 million shares of common stock of
Adobe, valued at $68.4 million, and cash of $1.8 million. The value of the 1.8 million common shares issued was
determined based on the average market price of Adobe’s common shares over the 2-day period before the
measurement date, which was $37.71. The measurement date was the acquisition date due to the variability of the
number of shares issued in the acquisition.