Adobe 2004 Annual Report Download - page 57

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57
horizons. The following table represents the potential decrease to the value of our fixed income securities given a
negative shift in the yield curve used in our sensitivity analysis.
0.5% 1.0% 1.5%
6 month horizon...........................
.
$ (2.5) $ (6.8) $ (10.1)
12 month horizon.........................
.
$ (1.9) $ (4.0) $ (5.8)
We limit our exposure to interest rate and credit risk by establishing and monitoring clear policies and
guidelines for our fixed income portfolios. At the present time, the maximum weighted average duration of all
portfolios is limited to 2.2 years. The guidelines also establish credit quality standards, limits on exposure to any one
security issue, limits on exposure to any one issuer and limits on exposure to the type of instrument. Due to limited
duration and credit risk criteria established in our guidelines we do not expect the exposure to interest rate risk and
credit risk to be material.
Privately Held Investments
We have direct investments, as well as indirect investments through Adobe Ventures, in several privately held
companies, many of which can still be considered in the start-up or development stages. These investments are
inherently risky, as the technologies or products these companies have under development are typically in the early
stages and may never materialize, and we could lose a substantial part of our initial investment in these companies.
It is our policy to review privately-held investments on a regular basis to evaluate the carrying amount and
economic viability of these companies. This policy includes, but is not limited to, reviewing each of the companies’
cash position, financing needs, earnings/revenue outlook, operational performance, management/ownership changes
and competition. The evaluation process is based on information that we request from these privately-held
companies. This information is not subject to the same disclosure regulations as U.S. publicly traded companies, and
as such, the basis for these evaluations is subject to the timing and the accuracy of the data received from these
companies.
See also Note 1 in our Notes to Consolidated Financial Statements.