Adobe 2002 Annual Report Download - page 65

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34
Nonoperating Income (Loss)
Investment Gain (Loss)
2002 Change 2001 Change 2000
Investment gain (loss).................................... $ (17.2) 82% $ (93.
4
) (751)% $ 14.3
Percentage of total revenue............................ (1.5)% (7.6)% 1.1%
Investment gain (loss) consists principally of realized gains or losses from the sale of marketable equity
investments, other-than-temporary declines in the value of marketable equity securities, and equity method gains
and losses of Adobe Ventures.
During fiscal 2002, investment losses consisted of other-than-temporary writedowns related to our marketable
equity securities in DigitalThink, Inc., Tumbleweed Communications Corp., Engage, Inc., Virage, Inc., Viewpoint
Corporation, AvantGo, Inc., and Salon Media Group, Inc. (formerly Salon.com) of $11.3 million. These losses were
partially offset by gains totaling $7.2 million from the sale of our marketable equity securities. We also recorded net
investment losses related to investments in Adobe Ventures and our cost method investments totaling $13.1 million.
As of November 29, 2002, our short-term investments included marketable equity securities of $14.1 million and
our long-term investments included investments in Adobe Ventures and other cost method investments of $35.6
million. These securities are inherently risky and we may experience further deterioration in fair value in the future.
During fiscal 2001, investment losses consisted of other-than-temporary writedowns related to our marketable
equity securities in Tumbleweed Communications Corp., Salon Media Group, Inc. (formerly Salon.com), Engage,
Inc., Liquent, Inc. (formerly ESPS, Inc.), AvantGo, Inc., Viewpoint Corporation, and Virage, Inc. of $53.1 million.
These losses were partially offset by gains totaling $19.5 million from the sale of our marketable equity securities.
We also recorded net investment losses related to investments in Adobe Ventures and our cost method investments
totaling $59.8 million. As of November 30, 2001, our short-term investments included marketable equity securities
of $37.8 million and our long-term investments included investments in Adobe Ventures and other cost method
investments of $31.7 million.
During fiscal 2000, we recorded investment gains related to the sale of a portion of our investment in
Tumbleweed Communications Corp. and Digimarc Corporation for $10.4 million and $2.2 million, respectively.
Additionally, we recorded investment gains totaling $13.0 million related to the mark-to-market valuation
adjustment for AvantGo, Inc. and other net gains totaling approximately $15.0 million related to various other
Adobe Ventures investments activities. These gains were partially offset by investment losses related to the
writedown of our investments in Engage, Inc.; Classmates Online, Inc. (formerly eCircles, Inc.); Salon Media
Group, Inc. (formerly Salon.com); and Impresse Corporation, totaling approximately $26.3 million.
We are uncertain of future investment gains or losses as they are primarily dependent upon the operations of
the underlying investee companies and market valuations.
Interest and Other Income
2002 Change 2001 Change 2000
Interest and other income................................. $ 14.
8
(32)% $ 21.9 3% $ 21.3
Percentage of total revenue.............................. 1.3% 1.8% 1.7%
Interest and other income consists principally of interest earned on cash, cash equivalents, and short-term
investments, gains and losses on the sale of fixed income investments, foreign exchange transaction gains and losses
and realized gains or losses on the disposal of assets.
Interest and other income decreased $7.1 million, or 32%, in fiscal 2002 compared to fiscal 2001 primarily due
to a decrease in interest income of $6.0 million due to lower interest rates and lower realized gains of $2.5 million
resulting from the sales of fixed income investments. The decreases in interest and other income in fiscal 2002
compared to fiscal 2001 were partially offset by a reduction in losses of $1.1 million related to the lowered cost of
purchased options used in foreign currency hedging.
Interest and other income increased $0.6 million, or 3%, in fiscal 2001 compared to fiscal 2000 primarily due to
realized gains of $5.9 million resulting from the sale of fixed income investments. Interest and other income also