Adobe 2002 Annual Report Download - page 51

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20
During fiscal years ended November 29, 2002, November 30, 2001 and December 1, 2000, our research and
development expenses, including costs related to contract development, were $246.1 million, $224.1 million, and
$240.2 million, respectively.
On April 12, 2002, we acquired 100% of the outstanding common stock of Accelio. Accelio was a provider of
Web-enabled solutions that helped customers manage business processes driven by electronic forms. The acquisition
of Accelio enhances our ability to broaden our ePaper solution business by combining Accelio’s electronic forms
solutions with Adobe Acrobat and PDF technologies. Through this combination we can now extend Acrobat
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.
In December 2001, we acquired Fotiva, Inc. (“Fotiva”). Substantially all of Fotiva’s assets were intellectual
property. Fotiva was a development stage software company that created solutions to help consumers manage, store,
enrich, and share digital photographs and other related personal media. In connection with the acquisition,
substantially all of the purchase price of $5.4 million cash was allocated to in-process research and development and
expensed at the time of acquisition due to the in-process state of the technology. At the date we acquired Fotiva, it
was estimated that 50% of the development effort had been completed and that the remaining 50% of the
development effort would take approximately eleven months to complete. The efforts required to complete the
development of the technology primarily include finalization of coding, internationalization, and extensive quality
assurance testing. We developed a new product, Adobe Photoshop Album, that we released in the first quarter of
fiscal 2003 using Fotiva's image management technology with our digital imaging and ePaper technologies.
During fiscal 2000, we acquired Glassbook, Inc. for a total consideration of approximately $28.0 million.
Based on an independent appraiser’s valuation, $0.5 million was allocated to in-process research and development
related to this acquisition. The ongoing project at Glassbook at the time of the purchase included the development of
the Glassbook Reader and the Glassbook Content Server products. We released new products that contained the
purchased technology in April 2001, with Acrobat eBook Reader 2.1 and Adobe Content Server 2.0.
PRODUCT PROTECTION
We regard our software as proprietary and protect it under the laws of copyrights, patents, trademarks, and
trade secrets. We protect the source code of our software programs as trade secrets, and make source code available
to third parties only under limited circumstances and specific security and confidentiality constraints.
Our products are generally licensed to end users on a “right to use” basis pursuant to a license that restricts the
use of the products to a designated number of printers or computers. We also rely on copyright laws and on “shrink
wrap” and electronic licenses that are not signed by the end user. Copyright protection may be unavailable under the
laws of certain countries, however, and the enforceability of “shrink wrap” and electronic licenses has not been
conclusively determined. We have obtained many patents and have registered numerous copyrights, trademarks,
domain names, and logos in the United States and foreign countries.
Policing unauthorized use of computer software is difficult, and software piracy is a persistent problem for the
software industry. This problem is particularly acute in international markets. We conduct vigorous anti-piracy
programs. However, our products generally do not currently contain copy protection or network copy-detection
features.
EMPLOYEES
As of January 24, 2003, we employed 3,341 people. We have not experienced work stoppages and believe our
employee relations are good. Competition in recruiting personnel in the software industry, especially highly skilled
engineers, is extremely intense. We believe our future success will depend in part on our continued ability to recruit
and retain highly skilled technical, management and marketing personnel.