Adobe 2011 Annual Report Download - page 79

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NOTE 1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Operations
Founded in 1982, Adobe Systems Incorporated is one of the largest and most diversified software companies in the world.
We offer a line of software and services used by creative professionals, marketers, knowledge workers, application developers,
enterprises and consumers for creating, managing, delivering, measuring, optimizing and engaging with compelling content and
experiences across multiple operating systems, devices and media. We market and license our software directly to enterprise
customers through our sales force, and to end users through app stores and our own website at www.adobe.com. We also distribute
our products through a network of distributors, value-added resellers (“VARs”), systems integrators, independent software vendors
(“ISVs”), retailers and original equipment manufacturers (“OEMs”). In addition, we license our technology to hardware
manufacturers, software developers and service providers for use in their products and solutions. We offer some of our products
via a Software-as-a-Service (“SaaS”) model (also known as a hosted model or “cloud-based” model) as well as through term
subscription and pay- per-use models. Our software runs on personal computers (“PCs”) and server-based computers, as well as
on smartphones, tablets and other devices, depending on the product. We have operations in the Americas, Europe, Middle East
and Africa (“EMEA”) and Asia.
Basis of Presentation
The accompanying Consolidated Financial Statements include those of Adobe and its subsidiaries, after elimination of all
intercompany accounts and transactions. We have prepared the accompanying Consolidated Financial Statements in accordance
with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations
of the United States Securities and Exchange Commission (the “SEC”).
Use of Estimates
In preparing Consolidated financial statements and related disclosures in conformity with GAAP and pursuant to the rules
and regulations of the SEC, we must make estimates and judgments that affect the amounts reported in the Consolidated Financial
Statements and accompanying notes. Estimates are used for, but not limited to sales allowances and programs, bad debts, stock-
based compensation, determining the fair value of acquired assets and assumed liabilities, excess inventory and purchase
commitments, restructuring charges, facilities lease losses, impairment of goodwill and intangible assets, litigation, income taxes
and investments. Actual results may differ materially from these estimates.
Fiscal Year
Our fiscal year is a 52- or 53-week year that ends on the Friday closest to November 30. Fiscal 2011 and 2009 were 52-
week years compared with fiscal 2010 which was a 53-week year.
Reclassification
Certain immaterial prior year amounts have been reclassified to conform to current year presentation in the Consolidated
Statements of Cash Flows. In addition, Acquired rights to use technology was reclassified from Other Assets to Purchased and
other intangibles, net in the Consolidated Balance Sheets.
Significant Accounting Policies
Revenue Recognition
Our revenue is derived from the licensing of software products, associated software maintenance and support plans, custom
software development, non-software related hosting services, consulting services, training and technical support.
We recognize revenue when all four revenue recognition criteria have been met: persuasive evidence of an arrangement
exists, we have delivered the product or performed the service, the fee is fixed or determinable and collection is probable.
Determining whether and when some of these criteria have been satisfied often involves assumptions and judgments that can have
a significant impact on the timing and amount of revenue we report.
Table of Contents
ADOBE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS