Adobe 2010 Annual Report Download - page 104

ADOBE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
104
NOTE 8. OTHER ASSETS
Other assets as of December 3, 2010 and November 27, 2009 consisted of the following (in thousands):
2010
2009
Acquired rights to use technology ........................................................................
$
71,521
$
84,313
Investments ...........................................................................................................
25,018
63,526
Security and other deposits ...................................................................................
11,266
11,692
Prepaid royalties ...................................................................................................
7,726
12,059
Debt issuance costs ...............................................................................................
9,574
—
Deferred compensation plan assets .......................................................................
11,071
9,045
Restricted cash ......................................................................................................
2,499
4,650
Prepaid land lease .................................................................................................
13,215
3,209
Prepaid rent ...........................................................................................................
787
1,377
Other(*) ..................................................................................................................
17,194
1,394
Other assets .......................................................................................................
$
169,871
$
191,265
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(*) Fiscal 2010 includes a tax asset of approximately $11 million related to an acquired entity.
In general, acquired rights to use technology are amortized over their estimated useful lives of 3 to 13 years.
Included in investments are our indirect investments through our limited partnership interest in Adobe Ventures of
approximately $37.1 million as of November 27, 2009. Our limited partnership interest in Adobe Ventures terminated on
September 30, 2010 and no additional investments were made. As of December 3, 2010, our investment balance was zero.
Adobe Ventures was consolidated in accordance with the provisions for consolidating variable interest entities as we
determined we had the power to direct the activities that most significantly impacted the entity’ s economic performance and
we had the obligation to absorb losses or the right to receive benefits through our limited partnership interest in Adobe
Ventures. The partnership was controlled by Granite Ventures, an independent venture capital firm and sole general partner
of Adobe Ventures. We were the primary beneficiary of Adobe Ventures and bore virtually all of the risks and rewards
related to our ownership. Our investment in Adobe Ventures did not have a significant impact on our consolidated financial
position, results of operations or cash flows.
The primary purpose of our limited partnership interest in Adobe Ventures was to invest in securities of private
companies which either operated in, or were expected to operate in, industries where technology and business model trends
were expected to have an impact on our core business. Our maximum capital commitment to Adobe Ventures was $104.6
million, of which approximately $96.3 million was invested.
Adobe Ventures carried its investments in equity securities at estimated fair value and investment gains and losses were
included in our Consolidated Statements of Income. Substantially all of the investments held by Adobe Ventures at
November 27, 2009 were not publicly traded and, therefore, there was no established market for these securities. In order to
determine the fair value of these investments, we used the most recent round of financing involving new non-strategic
investors or estimates of fair value made by Granite Ventures. We evaluated the fair value of these investments held by
Adobe Ventures on a regular basis. This evaluation included, but was not limited to, reviewing each company’ s cash position,
financing needs, earnings and revenue outlook, operational performance, management and ownership changes and
competition. In the case of privately-held companies, this evaluation was based on information that we requested from these
companies. This information was not subject to the same disclosure regulations as U.S. publicly traded companies and as
such, the basis for these evaluations were subject to the timing and the accuracy of the data received from these companies.
Also included in investments are our direct investments in privately-held companies of approximately $25.0 million and
$26.4 million as of December 3, 2010 and November 27, 2009, respectively, which are accounted for based on the cost
method. We assess these investments for impairment in value as circumstances dictate.
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