Adobe 2002 Annual Report Download - page 123

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The tax effects of the temporary differences that give rise to significant portions of the deferred tax assets and
liabilities as of fiscal 2002 and 2001 are presented below:
November 29,
2002
November 30,
2001
Deferred tax assets:
Acquired technology ............................................................................................. $ 13,845 $ 12,98
0
Reserves and deferred revenue.............................................................................. 25,621 28,738
Unrealized losses on investments.......................................................................... 26,159 1,886
Credits ................................................................................................................... 1,500
—
Total gross deferred tax assets ........................................................................... 67,125 43,604
Deferred tax asset valuation allowance..............................................................
—
(525)
Total deferred tax assets .................................................................................... 67,125 43,079
Deferred tax liabilities:
Depreciation and amortization .............................................................................. (8,264) (6,041)
Other ..................................................................................................................... (2,881) (2,718)
Total deferred tax liabilities............................................................................... (11,145) (8,759)
Net deferred tax assets.............................................................................................. $ 55,98
0
$ 34,32
0
We provide United States income taxes on the earnings of foreign subsidiaries unless the subsidiaries’ earnings
are considered permanently reinvested outside the United States. To the extent that the foreign earnings previously
treated as permanently reinvested are repatriated, the related United States tax liability may be reduced by any
foreign income taxes paid on these earnings.
For financial reporting purposes, a valuation allowance had been established for certain deferred assets related
to the write-down of investments. The valuation allowance decreased $0.5 million during the year. 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.
At the end of fiscal 2002, the Company had state tax credit carryforwards of approximately $1.5 million that
can be carried forward indefinitely.
Below is a summary roll-forward schedule of the income tax payable accounts as of November 29, 2002 and
November 30, 2001:
November 29,
2002
November 30,
2001
Beginning balance ..................................................................................................... $ 132,22
8
$ 74,76
8
Plus: Current year liability......................................................................................... 76,94
6
73,195
Less: Payments and reclasses ................................................................................... (35,863) (15,735)
Ending balance .......................................................................................................... $ 173,311 $ 132,22
8
Note 10. 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 2002, we matched 50% of the first 6% of the employee’s contribution. We contributed
approximately $6.0 million, $5.8 million, and $4.5 million in fiscal 2002, 2001, and 2000, 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 Directors. We contributed approximately
$18.8 million, $11.6 million, and $21.7 million to the plan in fiscal 2002, 2001, and 2000, respectively.