Adobe 2004 Annual Report Download - page 68

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68
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, in both public and private sectors. 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,
VARs, systems integrators, ISVs and 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, EMEA and Asia. Our software runs on Microsoft Windows, Apple Macintosh,
Linux, UNIX and various non-personal computer platforms, depending on the product.
Basis of Presentation
The accompanying consolidated financial statements include those of Adobe and our subsidiaries, after
elimination of all intercompany accounts and transactions. Adobe has prepared the accompanying
consolidated financial statements in conformity with accounting principles generally accepted in the United
States of America. The financial information reflects all adjustments which are, in the opinion of
management, necessary to provide fair consolidated balance sheets, consolidated statements of income and
cash flows for the periods presented. Such adjustments are normal and recurring except as otherwise noted.
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 assets and 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.
Fiscal Year
Our fiscal year is a 52/53-week year ending on the Friday closest to November 30. Our fiscal 2004 was
a 53-week year. Our fiscal 2005 will be a 52-week year, ending December 2, 2005.
Reclassification
Certain amounts in fiscal 2003 and 2002 as reported on the Consolidated Statements of Stockholders’
Equity and Consolidated Statements of Cash Flows have been reclassified to conform to the current year
presentation.
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