Adobe Inc. (ADBE)

Goodwill is assigned to one or more reporting segments on the date of acquisition. Adobe reviews the goodwill for impairment annually during the second quarter of each fiscal year and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of any one of the reporting units below its respective carrying amount. In performing the goodwill impairment test, Adobe first performs a qualitative assessment, which requires that Adobe considers events or circumstances including macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, changes in management or key personnel, changes in strategy, changes in customers, changes in the composition or carrying amount of a reporting segment’s net assets and changes in the stock price. If, after assessing the totality of events or circumstances, Adobe determines that it is more likely than not that the fair values of the reporting segments are greater than the carrying amounts, then the quantitative goodwill impairment test is not performed.

If the qualitative assessment indicates that the quantitative analysis should be performed, Adobe then evaluates goodwill for impairment by comparing the fair value of each of the reporting segments to its carrying value, including the associated goodwill. To determine the fair values, Adobe uses the equal weighting of the market approach based on comparable publicly traded companies in similar lines of businesses and the income approach based on estimated discounted future cash flows. Adobe’s cash flow assumptions consider historical and forecasted revenue, operating costs and other relevant factors.

Adobe completed the annual goodwill impairment test in the second quarter of fiscal 2018. Adobe determined, after performing a qualitative review of each reporting segment, that it is more likely than not that the fair value of each of the reporting segments substantially exceeds the respective carrying amounts. Accordingly, there was no indication of impairment and the quantitative goodwill impairment test was not performed. Adobe did not identify any events or changes in circumstances since the performance of the annual goodwill impairment test that would require Adobe to perform another goodwill impairment test during the fiscal year.

Adobe amortizes intangible assets with finite lives over their estimated useful lives and review them for impairment whenever an impairment indicator exists. Adobe continually monitors events and changes in circumstances that could indicate carrying amounts of the long-lived assets, including the intangible assets may not be recoverable. When such events or changes in circumstances occur, Adobe assesses recoverability by determining whether the carrying value of such assets will be recovered through the undiscounted expected future cash flows. If the future undiscounted cash flows are less than the carrying amount of these assets, Adobe recognizes an impairment loss based on any excess of the carrying amount over the fair value of the assets. Adobe did not recognize any intangible asset impairment charges in fiscal 2018, 2017 or 2016.

During fiscal 2018, Adobe’s intangible assets were amortized over their estimated useful lives ranging from 1 to 14 years. Amortization is based on the pattern in which the economic benefits of the intangible asset will be consumed or on a straight-line basis when the consumption pattern is not apparent. The weighted average useful lives of Adobe’s intangible assets were as follows:

Source: 10-K (filing date: 2019-01-25).

Adobe Inc., Statement of Financial Position, Goodwill and Intangible Assets

USD $ in thousands

		Nov 30, 2018		Dec 1, 2017		Dec 2, 2016		Nov 27, 2015		Nov 28, 2014		Nov 29, 2013
	Purchased technology
	Customer contracts and relationships
	Trademarks
	Acquired rights to use technology
	Backlog
	Other intangibles
	Other intangible assets
	Purchased and other intangible assets, cost
	Accumulated amortization
	Purchased and other intangible assets, net
	Goodwill
	Goodwill and purchased and other intangibles

Based on: 10-K (filing date: 2019-01-25), 10-K (filing date: 2018-01-22), 10-K (filing date: 2017-01-20), 10-K (filing date: 2016-01-19), 10-K (filing date: 2015-01-20), 10-K (filing date: 2014-01-21).

Adobe Inc., adjustments to financial data

USD $ in thousands

		Nov 30, 2018	Dec 1, 2017	Dec 2, 2016	Nov 27, 2015	Nov 28, 2014	Nov 29, 2013
	Adjustment to Total Assets
	Total assets (as reported)
	Less: Goodwill
	Total assets (adjusted)
	Adjustment to Stockholders’ Equity
	Stockholders’ equity (as reported)
	Less: Goodwill
	Stockholders’ equity (adjusted)

Based on: 10-K (filing date: 2019-01-25), 10-K (filing date: 2018-01-22), 10-K (filing date: 2017-01-20), 10-K (filing date: 2016-01-19), 10-K (filing date: 2015-01-20), 10-K (filing date: 2014-01-21).

Adobe Inc., Financial Data: Reported vs. Adjusted

Adobe Inc., adjusted ratios

		Nov 30, 2018	Dec 1, 2017	Dec 2, 2016	Nov 27, 2015	Nov 28, 2014	Nov 29, 2013
	Total Asset Turnover
	Reported total asset turnover
	Adjusted total asset turnover
	Financial Leverage
	Reported financial leverage
	Adjusted financial leverage
	Return on Equity (ROE)
	Reported ROE
	Adjusted ROE
	Return on Assets (ROA)
	Reported ROA
	Adjusted ROA

Based on: 10-K (filing date: 2019-01-25), 10-K (filing date: 2018-01-22), 10-K (filing date: 2017-01-20), 10-K (filing date: 2016-01-19), 10-K (filing date: 2015-01-20), 10-K (filing date: 2014-01-21).

Adobe Inc., Ratios: Reported vs. Adjusted

		Nov 30, 2018	Dec 1, 2017	Dec 2, 2016	Nov 27, 2015	Nov 28, 2014	Nov 29, 2013
	As Reported
	Selected Financial Data (USD $ in thousands)
	Revenue
	Total assets
	Ratio
	Total asset turnover1
	Adjusted for Goodwill
	Selected Financial Data (USD $ in thousands)
	Revenue
	Adjusted total assets
	Ratio
	Adjusted total asset turnover2

Based on: 10-K (filing date: 2019-01-25), 10-K (filing date: 2018-01-22), 10-K (filing date: 2017-01-20), 10-K (filing date: 2016-01-19), 10-K (filing date: 2015-01-20), 10-K (filing date: 2014-01-21).

2018 Calculations

		Nov 30, 2018	Dec 1, 2017	Dec 2, 2016	Nov 27, 2015	Nov 28, 2014	Nov 29, 2013
	As Reported
	Selected Financial Data (USD $ in thousands)
	Total assets
	Stockholders’ equity
	Ratio
	Financial leverage1
	Adjusted for Goodwill
	Selected Financial Data (USD $ in thousands)
	Adjusted total assets
	Adjusted stockholders’ equity
	Ratio
	Adjusted financial leverage2

Based on: 10-K (filing date: 2019-01-25), 10-K (filing date: 2018-01-22), 10-K (filing date: 2017-01-20), 10-K (filing date: 2016-01-19), 10-K (filing date: 2015-01-20), 10-K (filing date: 2014-01-21).

2018 Calculations

		Nov 30, 2018	Dec 1, 2017	Dec 2, 2016	Nov 27, 2015	Nov 28, 2014	Nov 29, 2013
	As Reported
	Selected Financial Data (USD $ in thousands)
	Net income
	Stockholders’ equity
	Ratio
	ROE1
	Adjusted for Goodwill
	Selected Financial Data (USD $ in thousands)
	Net income
	Adjusted stockholders’ equity
	Ratio
	Adjusted ROE2

Based on: 10-K (filing date: 2019-01-25), 10-K (filing date: 2018-01-22), 10-K (filing date: 2017-01-20), 10-K (filing date: 2016-01-19), 10-K (filing date: 2015-01-20), 10-K (filing date: 2014-01-21).

2018 Calculations

		Nov 30, 2018	Dec 1, 2017	Dec 2, 2016	Nov 27, 2015	Nov 28, 2014	Nov 29, 2013
	As Reported
	Selected Financial Data (USD $ in thousands)
	Net income
	Total assets
	Ratio
	ROA1
	Adjusted for Goodwill
	Selected Financial Data (USD $ in thousands)
	Net income
	Adjusted total assets
	Ratio
	Adjusted ROA2

Based on: 10-K (filing date: 2019-01-25), 10-K (filing date: 2018-01-22), 10-K (filing date: 2017-01-20), 10-K (filing date: 2016-01-19), 10-K (filing date: 2015-01-20), 10-K (filing date: 2014-01-21).

2018 Calculations