Adobe 2003 Annual Report Download - page 67

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67
ADOBE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
Note 1. Significant Accounting Policies
Operations
Founded in 1982, Adobe offers a line of software and services for consumers, creative professionals
and enterprises. Our products are market-leading digital imaging, design, and document technology
platforms which enable customers to create, manage and deliver visually rich, compelling and reliable
content. We distribute our products through a network of distributors and dealers, value-added resellers
(“VARs”), systems integrators, independent software vendors (“ISVs”) and original equipment
manufacturers (“OEMs”); direct to end users; and through our own Web site at www.adobe.com. We also
license our technology to major hardware manufacturers, software developers and service providers and we
offer integrated software solutions to businesses of all sizes. We have operations in the Americas; Europe,
Middle East and Africa (“EMEA”); and Asia. Our software runs on Microsoft Windows, Apple Macintosh,
Linux, UNIX and various non-personal computer platforms, depending on the product.
Fiscal Year
Our fiscal year is a 52/53-week year ending on the Friday closest to November 30. Our fiscal year
2004 will end December 3, 2004.
Basis of Consolidation
The accompanying consolidated financial statements include those of Adobe and our subsidiaries, after
elimination of all intercompany accounts and transactions.
Reclassification
Certain amounts in the prior fiscal year have been reclassified to conform to the presentation adopted
in the current fiscal year. Goodwill has been reclassified from goodwill and purchased and other intangibles
to goodwill in our condensed consolidated balance sheets.
Use of Estimates
In the preparation of financial statements in conformity with accounting principles generally accepted
in the United States of America, we must make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent liabilities, at the date of the balance sheet, and reported
amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.
Cash Equivalents and Short-term Investments
Cash equivalents consist of instruments with remaining maturities of three months or less at the time of
purchase.
We classify all of our cash equivalents and short-term investments that are free of trading restrictions
or become free of trading restrictions within one year as “available-for-sale.” We carry these investments at
fair value, based on quoted market prices. Unrealized gains and losses, net of taxes, are included in
accumulated other comprehensive income (loss), which is reflected as a separate component of
stockholders’ equity. Gains are recognized when realized in our consolidated statements of income. Losses
are recognized as realized or when we have determined that an other-than-temporary decline in fair value
has occurred.
It is our policy to review our marketable equity securities classified as short-term investments on a
regular basis to evaluate whether or not any security has experienced an other-than-temporary decline in
fair value. Our policy includes, but is not limited to, reviewing the cash position, earnings/revenue outlook,
stock price performance over the past six months, liquidity and management/ownership of each company