Adobe 2003 Annual Report Download - page 40

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40
Non-operating Income (Loss)
Year Ended
November 28, 2003
% Change
2002 to 2003
Year Ended
November 29, 2002
% Change
2001 to 2002
Year Ended
November 30, 2001
Investment loss........................... $ (12.9) 25 % $ (17.2) 82 % $ (93.4)
Percentage of total revenues ... (1)% (1)% (8)%
Interest and other income ........... 13.9 (6)% 14.9 (32)% 21.9
Percentage of total revenues ... 1% 1% 2%
Total non-operating income
(
loss
)
...................................
$ 1.0
* %
$
(
2.3
)
97 %
$
(
71.5
)
* Percentage is not meaningful.
Investment Loss
Investment loss consists principally of realized gains or losses from the sale of marketable equity investments,
other-than-temporary declines in the value of marketable and non-marketable equity securities, and equity method
gains and losses of Adobe Ventures.
During fiscal 2003, net investment losses included net losses related to our investments in Adobe Ventures and
our cost method investments totaling $12.0 million. This loss of $12.0 million was partially offset by gains of $3.1
million from the sale of our marketable equity securities. During fiscal 2003, investment losses also included write-
downs due to other-than-temporary declines in value of $4.0 million related to our short-term investments in Salon
Media Group, Viewpoint Corporation and Virage, Inc.
During fiscal 2002, investment losses consisted of net investment losses related to investments in Adobe
Ventures and our cost method investments totaling $13.1 million. We also recorded other-than-temporary write-
downs 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. of $11.3 million.
These losses were partially offset by gains totaling $7.2 million from the sale of our marketable equity securities.
During fiscal 2001, investment losses consisted of other-than-temporary write-downs related to our marketable
equity securities in Tumbleweed Communications Corp., Salon Media Group, Inc., 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.
We are uncertain of future investment gains or losses as they are primarily dependent upon the operations of the
underlying companies and market valuations. These marketable equity securities are inherently risky investments
and we may experience further deterioration in fair value in the future.
Interest and Other Income
The largest component of interest and other income is interest earned on cash, cash equivalents and short-term
fixed income investments, but also includes gains and losses on the sale of fixed income investments, foreign
exchange transaction gains and losses, and interest expense.
While the average amount of our invested cash increased from $595.0 million in fiscal 2002 to $753.6 million
in fiscal 2003, our earned interest actually decreased by $0.4 million due to the lower interest rate environment. We
also recognized $1.7 million less in recognized gains on our fixed income portfolio. Those decreases were partially
offset by an increase of $1.1 million in other miscellaneous income.
Interest and other income decreased in fiscal 2002 compared to fiscal 2001 primarily due to a decrease in
interest income of $6.0 million as a result of lower interest rates and lower realized gains of $2.5 million from the
sales of fixed income investments. The decreases 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.