Adobe 2009 Annual Report Download - page 96

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ADOBE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
96
The aggregate fair value of derivative instruments in net asset positions as of November 27, 2009 was $4.3 million. This
amount represents the maximum exposure to loss at the reporting date as a result of all of the counterparties failing to
perform as contracted. This exposure could be reduced by up to $1.6 million of liabilities included in master netting
arrangements with those same counterparties.
Credit risk in receivables is limited to OEMs, dealers and distributors of hardware and software products to the retail
market, and to customers to whom we license software directly. A credit review is completed for our new distributors, dealers
and OEMs. We also perform ongoing credit evaluations of our customers’ financial condition and require letters of credit or
other guarantees, whenever deemed necessary. The credit limit given to the customer is based on our risk assessment of their
ability to pay, country risk and other factors and is not contingent on the resale of the product or on the collection of
payments from their customers. We also purchase credit insurance to mitigate credit risk in some foreign markets where we
believe it is warranted. If we license our software to a customer where we have a reason to believe the customer’s ability to
pay is not probable, due to country risk or credit risk, we will not recognize the revenue. We will revert to recognizing the
revenue on a cash basis, assuming all other criteria for revenue recognition has been met. See Note 20 for information
regarding our significant customers.
We derive a significant portion of our OEM PostScript and Other licensing revenue from a small number of OEMs. Our
OEMs on occasion seek to renegotiate their royalty arrangements. We evaluate these requests on a case-by-case basis. If an
agreement is not reached, a customer may decide to pursue other options, which could result in lower licensing revenue for
us.
NOTE 6. PROPERTY AND EQUIPMENT
Property and equipment, net consisted of the following as of November 27, 2009 and November 28, 2008 (in
thousands):
2009
2008
Computers and equipment ............................................
$
409,595
$
331,235
Furniture and fixtures ................................................
62,786
56,253
Capital projects in-progress ...........................................
19,931
7,273
Leasehold improvements .............................................
152,200
133,571
Land ..............................................................
86,493
74,835
Buildings ..........................................................
99,845
62,464
Total ..............................................................
830,850
665,631
Less accumulated depreciation and amortization. .........................
(442,718
)
(352,594
)
Property and equipment, net. ........................................
$
388,132
$
313,037
Depreciation and amortization expense of property and equipment for fiscal 2009, 2008 and 2007 was $95.9 million,
$83.3 million and $73.2 million, respectively.
NOTE 7. GOODWILL AND PURCHASED AND OTHER INTANGIBLES
Goodwill by reportable segment, as of November 27, 2009 was as follows (in thousands):
2008 Acquisitions Other(*) 2009
Creative Solutions ..................................
$
956,011
$
253,463
$
1,126
$
1,210,600
Knowledge Worker .................................
408,318
—
2,255
410,573
Enterprise .........................................
298,039
—
(4,310
)
293,729
Platform ..........................................
265,518
—
(398
)
265,120
Print and Publishing ................................
206,844
—
(311
)
206,533
Omniture .........................................
—
1,108,034
—
1,108,034
Goodwill .......................................
$
2,134,730
$
1,361,497
$
(1,638
)
$
3,494,589
_________________________________________
(*) Includes net reductions in goodwill of $5.2 million for tax related obligations associated with our acquisitions of
Macromedia and Accelio in addition to a facility lease obligation adjustment of $1.7 million related to Macromedia,
offset in part by foreign currency translation adjustments and other individually insignificant tax items.