Adobe 2003 Annual Report Download - page 39

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restructuring plan, resulting in an adjustment of approximately $0.6 million. The adjustment primarily reflected
lower than estimated relocation and severance expenses and related charges. This restructuring plan was completed
in the fourth quarter of fiscal 2002.
Acquired In-Process Research and Development
Year Ended
November 28, 2003
% Change
2002 to 2003
Year Ended
November 29, 2002
% Change
2001 to 2002
Year Ended
November 30, 2001
Expenses..................................... $ ― *% $ 5.8 *% $ ―
Percentage of total revenues ... ― *% ―
* Percentage is not meaningful.
On April 12, 2002, we acquired 100% of the outstanding common stock of Accelio. Accelio was a provider of
Web-enabled solutions that help customers manage business processes driven by electronic forms. We obtained an
independent appraiser’s valuation to determine the amounts allocated to purchased technology and in-process
research and development. The valuation analysis utilized the Income Approach that takes into consideration
discounted future cash flows. Based on this valuation $0.4 million was allocated to in-process research and
development, which was expensed as of the date of the acquisition due to the state of the development of certain
products and the uncertainty of the technology.
In December 2001, we acquired 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 combined with our digital imaging and ePaper technologies.
Amortization and Impairment of Goodwill and Purchased and Other Intangibles
Year Ended
November 28, 2003
% Change
2002 to 2003
Year Ended
November 29, 2002
% Change
2001 to 2002
Year Ended
November 30, 2001
Expenses..................................... $ ― *% $ 21.0 47% $ 14.3
Percentage of total revenues ... ― 2% 1%
* Percentage is not meaningful.
In accordance with Statement of Financial Accounting Standards No. 142 (“SFAS 142”), “Goodwill and Other
Intangible Assets,” goodwill and intangible assets with indefinite lives are no longer amortized. Instead, the
goodwill associated with past and any future acquisitions is reviewed annually for impairment. For further
information, see Notes 1 and 5 in our Notes to Consolidated Financial Statements. Intangible assets with definite
lives are still being amortized and are included in cost of product revenue.
During the second quarter of fiscal 2003, we assessed our goodwill for impairment. This assessment did not
result in an impairment of goodwill.
Amortization and impairment of goodwill and purchased and other intangibles increased in fiscal 2002
compared to fiscal 2001, primarily due to a goodwill impairment charge for the remaining book value of the
Glassbook acquisition. The impairment charge was determined based on discounted future cash flows.