Adobe 2009 Annual Report Download - page 99

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ADOBE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
99
Other assets include the fair value, at inception, of the residual value guarantee associated with our leases on the
buildings we occupy as part of our corporate headquarters. The lease agreements for our corporate headquarters provide for
residual value guarantees. The fair value of a residual value guarantee in lease agreements entered into after December 31,
2002, must be recognized as a liability on our Consolidated Balance Sheets. As such, we recognized $5.2 million and $3.0
million in liabilities, related to the extended East and West Towers and Almaden Tower leases, respectively. These liabilities
are recorded in other long-term liabilities with the offsetting entry recorded as prepaid rent in other assets. The balance is
being amortized to the Consolidated Statements of Income over the life of the leases. As of November 27, 2009 and
November 28, 2008, the unamortized portion of the fair value of the residual value guarantees remaining in other long-term
liabilities and prepaid rent was $1.3 million and $2.6 million, respectively.
NOTE 9. ACCRUED EXPENSES
Accrued expenses as of November 27, 2009 and November 28, 2008 consisted of the following (in thousands):
2009
2008
Accrued compensation and benefits .......................................
$
164,352
$
177,760
Taxes payable ........................................................
11,879
21,760
Sales and marketing allowances ..........................................
32,774
28,127
Other ................................................................
210,641
172,322
Accrued expenses ...................................................
$
419,646
$
399,969
Other primarily includes general corporate accruals for corporate marketing programs, local and regional expenses, and
technical support. Other is also comprised of deferred rent related to office locations with rent escalations, accrued royalties,
foreign currency derivatives and accrued interest on the credit facility.
NOTE 10. INCOME TAXES
Income before income taxes includes income from foreign operations of $422.4 million, $740.3 million and $453.2
million for fiscal 2009, 2008 and 2007, respectively.
The provision for income taxes for fiscal 2009, 2008 and 2007 consisted of the following (in thousands):
2009
2008
2007
(*)
Current:
United States federal ........................................
$
152,840
$
24,179
$
36,614
Foreign ...................................................
36,794
27,680
55,536
State and local .............................................
25,427
6,972
4,100
Total current.................................................
215,061
58,831
96,250
Deferred:
United States federal ........................................
50,376
41,678
50,640
Foreign ...................................................
559
(9,693
)
(13,480
)
State and local .............................................
4,635
25,518
23,007
Total deferred ...............................................
55,570
57,503
60,167
Tax expense attributable to employee stock plans ..................
44,381
90,360
66,966
Provision for income taxes ...................................
$
315,012
$
206,694
$
223,383
_________________________________________
(*) Certain employee stock plan benefits in fiscal 2007 associated with the acquisition of Macromedia reduced goodwill.
See Note 7 for further information regarding our goodwill.