Company Quick10K Filing
Adobe Systems
Price352.02 EPS6
Shares482 P/E57
MCap169,605 P/FCF38
Net Debt-39 EBIT3,197
TEV169,566 TEV/EBIT53
TTM 2020-02-28, in MM, except price, ratios
10-Q 2021-03-05 Filed 2021-03-31
10-K 2020-11-27 Filed 2021-01-15
10-Q 2020-08-28 Filed 2020-09-23
10-Q 2020-05-29 Filed 2020-06-24
10-Q 2020-02-28 Filed 2020-03-25
10-K 2019-11-29 Filed 2020-01-21
10-Q 2019-08-30 Filed 2019-09-26
10-Q 2019-05-31 Filed 2019-06-26
10-Q 2019-03-01 Filed 2019-03-27
10-K 2018-11-30 Filed 2019-01-25
10-Q 2018-08-31 Filed 2018-09-26
10-Q 2018-06-01 Filed 2018-06-27
10-Q 2018-03-02 Filed 2018-03-28
10-K 2017-12-01 Filed 2018-01-22
10-Q 2017-09-01 Filed 2017-09-27
10-Q 2017-06-02 Filed 2017-06-28
10-Q 2017-03-03 Filed 2017-03-29
10-K 2016-12-02 Filed 2017-01-20
10-Q 2016-09-02 Filed 2016-09-27
10-Q 2016-06-03 Filed 2016-06-29
10-Q 2016-03-04 Filed 2016-03-30
10-K 2015-11-27 Filed 2016-01-19
10-Q 2015-08-28 Filed 2015-09-23
10-Q 2015-05-29 Filed 2015-06-24
10-Q 2015-02-27 Filed 2015-03-25
10-K 2014-11-28 Filed 2015-01-20
10-Q 2014-08-29 Filed 2014-09-25
10-Q 2014-05-30 Filed 2014-06-25
10-Q 2014-02-28 Filed 2014-03-28
10-K 2013-11-29 Filed 2014-01-21
10-Q 2013-08-30 Filed 2013-10-03
10-Q 2013-05-31 Filed 2013-06-28
10-Q 2013-03-01 Filed 2013-03-28
10-K 2012-11-30 Filed 2013-01-22
10-Q 2012-08-31 Filed 2012-09-27
10-Q 2012-06-01 Filed 2012-06-27
10-Q 2012-03-02 Filed 2012-03-30
10-K 2011-12-02 Filed 2012-01-26
10-Q 2011-09-02 Filed 2011-10-07
10-Q 2011-06-03 Filed 2011-06-29
10-Q 2011-03-04 Filed 2011-04-08
10-K 2010-12-03 Filed 2011-01-27
10-Q 2010-09-03 Filed 2010-10-08
10-Q 2010-06-04 Filed 2010-07-02
10-Q 2010-03-05 Filed 2010-04-09
10-K 2009-11-27 Filed 2010-01-22
8-K 2021-01-25 Officers, Exhibits
8-K 2020-12-07 Earnings, Officers, Other Events, Exhibits
8-K 2020-10-20
8-K 2020-10-02
8-K 2020-09-15
8-K 2020-06-08
8-K 2020-04-06
8-K 2020-03-12
8-K 2020-02-03
8-K 2020-01-24
8-K 2020-01-22
8-K 2019-12-12
8-K 2019-09-17
8-K 2019-06-18
8-K 2019-04-11
8-K 2019-03-14
8-K 2019-01-24
8-K 2019-01-17
8-K 2018-12-13
8-K 2018-11-19
8-K 2018-10-31
8-K 2018-10-17
8-K 2018-10-08
8-K 2018-09-21
8-K 2018-09-13
8-K 2018-06-14
8-K 2018-05-15
8-K 2018-04-12
8-K 2018-04-04
8-K 2018-03-15
8-K 2018-01-24

ADBE 10Q Quarterly Report

Part I - Financial Information
Item 1. Condensed Consolidated Financial Statements
Note 1. Basis of Presentation and Summary of Significant Accounting Policies
Note 2. Revenue
Note 3. Acquisitions
Note 4. Cash, Cash Equivalents and Short - Term Investments
Note 5. Fair Value Measurements
Note 6. Derivative Financial Instruments
Note 7. Goodwill and Other Intangibles
Note 8. Accrued Expenses
Note 9. Stock - Based Compensation
Note 10. Accumulated Other Comprehensive Income (Loss)
Note 11. Stock Repurchase Program
Note 12. Net Income per Share
Note 13. Commitments and Contingencies
Note 14. Debt
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 adbeex311q121.htm
EX-31.2 adbeex312q121.htm
EX-32.1 adbeex321q121.htm
EX-32.2 adbeex322q121.htm

Adobe Systems Earnings 2021-03-05

Balance SheetIncome StatementCash Flow
25201510502011201420172021
Assets, Equity
3.02.41.81.20.60.02011201420172021
Rev, G Profit, Net Income
3.22.21.10.1-1.0-2.02011201420172021
Ops, Inv, Fin

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________
 
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 5, 2021
 or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                   to                   
 
Commission File Number: 0-15175
 
ADOBE INC.
(Exact name of registrant as specified in its charter)
________________________________
Delaware77-0019522
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)

345 Park Avenue, San Jose, California 95110-2704
(Address of principal executive offices and zip code)

(408536-6000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.0001 par value per shareADBENASDAQ
________________________________
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes   No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filer
(Do not check if a smaller reporting company)
Smaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes   No
As of March 26, 2021, 478.0 million shares of the registrant’s common stock, $0.0001 par value per share, were issued and outstanding.



ADOBE INC.
FORM 10-Q
 
TABLE OF CONTENTS
 
  Page No.

PART I—FINANCIAL INFORMATION
 
Item 1.

 

 



 

 

Item 2.

Item 3.

Item 4.
 

 PART II—OTHER INFORMATION
 
Item 1.

Item 1A.

Item 2.

Item 4.

Item 5.

Item 6.





 
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PART I—FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ADOBE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except par value)
 March 5,
2021
November 27,
2020
(Unaudited)(*)
ASSETS
Current assets:  
Cash and cash equivalents$3,452 $4,478 
Short-term investments1,511 1,514 
Trade receivables, net of allowances for doubtful accounts of $21 for both periods
1,520 1,398 
Prepaid expenses and other current assets901 756 
Total current assets7,384 8,146 
Property and equipment, net1,530 1,517 
Operating lease right-of-use assets, net477 487 
Goodwill11,845 10,742 
Other intangibles, net1,729 1,359 
Deferred income taxes1,262 1,370 
Other assets758 663 
Total assets$24,985 $24,284 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:  
Trade payables$254 $306 
Accrued expenses1,243 1,422 
Deferred revenue4,134 3,629 
Income taxes payable81 63 
Operating lease liabilities94 92 
Total current liabilities5,806 5,512 
Long-term liabilities: 
Debt4,119 4,117 
Deferred revenue151 130 
Income taxes payable540 529 
Deferred income taxes81 10 
Operating lease liabilities494 499 
Other liabilities248 223 
Total liabilities11,439 11,020 
Stockholders’ equity: 
Preferred stock, $0.0001 par value; 2 shares authorized; none issued
  
Common stock, $0.0001 par value; 900 shares authorized; 601 shares issued; 
479 shares outstanding for both periods
  
Additional paid-in-capital7,617 7,357 
Retained earnings20,521 19,611 
Accumulated other comprehensive income (loss)(141)(158)
Treasury stock, at cost (122 shares for both periods)
(14,451)(13,546)
Total stockholders’ equity13,546 13,264 
Total liabilities and stockholders’ equity$24,985 $24,284 
_________________________________________
(*)    The condensed consolidated balance sheet as of November 27, 2020 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.
See accompanying notes to condensed consolidated financial statements.
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ADOBE INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
(Unaudited)
 Three Months Ended
 March 5,
2021
February 28,
2020
Revenue: 
Subscription$3,584 $2,732 
Product155 143 
Services and other166 216 
Total revenue3,905 3,091 
 
Cost of revenue:
Subscription324 274 
Product10 7 
Services and other113 171 
Total cost of revenue447 452 
Gross profit3,458 2,639 
 
Operating expenses:
Research and development620 532 
Sales and marketing1,049 857 
General and administrative290 271 
Amortization of intangibles45 42 
Total operating expenses2,004 1,702 
 Operating income1,454 937 
 
Non-operating income (expense):
Interest expense(30)(33)
Investment gains (losses), net5 (3)
Other income (expense), net4 18 
Total non-operating income (expense), net(21)(18)
Income before income taxes1,433 919 
Provision for (benefit from) income taxes172 (36)
Net income$1,261 $955 
Basic net income per share$2.63 $1.98 
Shares used to compute basic net income per share479 482 
Diluted net income per share$2.61 $1.96 
Shares used to compute diluted net income per share483 488 


  See accompanying notes to condensed consolidated financial statements.

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ADOBE INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
(Unaudited)
Three Months Ended
 March 5,
2021
February 28,
2020
Increase/(Decrease)
Net income$1,261 $955 
Other comprehensive income (loss), net of taxes:
Available-for-sale securities:
Unrealized gains / losses on available-for-sale securities(3)4 
Derivatives designated as hedging instruments:
Unrealized gains / losses on derivative instruments
5 1 
Reclassification adjustment for realized gains / losses on derivative instruments12 (2)
Net increase (decrease) from derivatives designated as hedging instruments17 (1)
Foreign currency translation adjustments3 (4)
Other comprehensive income (loss), net of taxes17 (1)
Total comprehensive income, net of taxes$1,278 $954 


See accompanying notes to condensed consolidated financial statements.


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ADOBE INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In millions)
(Unaudited)
Three Months Ended March 5, 2021
 
  Common Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
 Treasury Stock 
 SharesAmountSharesAmountTotal
Balances at November 27, 2020
601 $ $7,357 $19,611 $(158)(122)$(13,546)$13,264 
Net income— — — 1,261 — — — 1,261 
Other comprehensive income (loss),
net of taxes
— — — — 17 — — 17 
Re-issuance of treasury stock under stock compensation plans
— —  (351)— 2 47 (304)
Repurchases of common stock— — — — — (2)(950)(950)
Stock-based compensation— — 260 — — — — 260 
Value of shares in deferred compensation plan
— — — — — — (2)(2)
Balances at March 5, 2021
601 $ $7,617 $20,521 $(141)(122)$(14,451)$13,546 



Three Months Ended February 28, 2020
 
  Common Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
 Treasury Stock 
 SharesAmountSharesAmountTotal
Balances at November 29, 2019
601 $ $6,504 $14,829 $(188)(118)$(10,615)$10,530 
Net income
— — — 955 — — — 955 
Other comprehensive income (loss),
net of taxes
— — — — (1)— — (1)
Re-issuance of treasury stock under stock compensation plans
— — (56)(394)— 2 72 (378)
Repurchases of common stock— — — — — (2)(850)(850)
Stock-based compensation— — 217 — — — — 217 
Value of shares in deferred compensation plan
— — — — — — (8)(8)
Balances at February 28, 2020
601 $ $6,665 $15,390 $(189)(118)$(11,401)$10,465 


See accompanying notes to condensed consolidated financial statements.
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ADOBE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
 Three Months Ended
 March 5,
2021
February 28,
2020
Cash flows from operating activities:  
Net income$1,261 $955 
Adjustments to reconcile net income to net cash provided by operating activities: 
Depreciation, amortization and accretion196 188 
Stock-based compensation260 217 
Reduction of operating lease right-of-use assets19 21 
Deferred income taxes117 (93)
Unrealized losses (gains) on investments, net 6 
Other non-cash items2 2 
Changes in operating assets and liabilities, net of acquired assets and assumed liabilities:
Trade receivables, net(82)145 
Prepaid expenses and other assets(242)(197)
Trade payables(59)55 
Accrued expenses and other liabilities(200)(98)
Income taxes payable29 10 
Deferred revenue471 114 
Net cash provided by operating activities1,772 1,325 
Cash flows from investing activities:  
Purchases of short-term investments(289)(213)
Maturities of short-term investments246 235 
Proceeds from sales of short-term investments39 26 
Acquisitions, net of cash acquired(1,470) 
Purchases of property and equipment(59)(94)
Purchases of long-term investments, intangibles and other assets(25)(2)
Net cash used for investing activities(1,558)(48)
Cash flows from financing activities:  
Repurchases of common stock(950)(850)
Proceeds from re-issuance of treasury stock87 88 
Taxes paid related to net share settlement of equity awards(391)(467)
Proceeds from issuance of debt 3,144 
Repayment of debt (3,150)
Other financing activities, net10 2 
Net cash used for financing activities(1,244)(1,233)
Effect of foreign currency exchange rates on cash and cash equivalents4 (6)
Net increase (decrease) in cash and cash equivalents(1,026)38 
Cash and cash equivalents at beginning of period4,478 2,650 
Cash and cash equivalents at end of period$3,452 $2,688 
Supplemental disclosures: 
Cash paid for income taxes, net of refunds$91 $45 
Cash paid for interest$50 $38 


See accompanying notes to condensed consolidated financial statements.
7

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ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1.  BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
We have prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Pursuant to these rules and regulations, we have condensed or omitted certain information and footnote disclosures we normally include in our annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In management’s opinion, we have made all adjustments (consisting only of normal, recurring adjustments, except as otherwise indicated) necessary to fairly present our financial position, results of operations and cash flows. Our interim period operating results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year. These financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the fiscal year ended November 27, 2020 on file with the SEC (our “Annual Report”).
Use of Estimates
In preparing the condensed 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 condensed consolidated financial statements and accompanying notes. 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. Our first quarter of fiscal 2021 financial results benefited from an extra week in the quarter due to our 52/53 week financial calendar whereby fiscal 2021 is a 53-week year compared with fiscal 2020 which was a 52-week year.
Reclassifications
In the fourth quarter of fiscal 2020, we moved our Advertising Cloud offerings from our Digital Experience segment into our new Publishing and Advertising segment, which combined our Advertising Cloud offerings with our previous Publishing segment. This realignment is consistent with how we manage our Digital Experience segment to better reflect the strategic shift related to Advertising Cloud and to align with our overall core value proposition of delivering on customer experience management. Further, we reclassified revenue and related cost of revenue of our Advertising Cloud offerings from subscription to services and other on our condensed consolidated statements of income. Financial information for all periods presented has been updated to reflect these reclassifications.
Significant Accounting Policies
There have been no material changes to our significant accounting policies as compared to the significant accounting policies described in our Annual Report.
Recently Adopted Accounting Guidance
On June 16, 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses (Topic 326). The FASB subsequently issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. These updates require the measurement and recognition of expected credit losses for financial assets held at amortized cost, which include our trade receivables and contract assets. The standard also requires that we recognize credit impairment losses related to our available-for-sale debt securities through an allowance for credit losses instead of a reduction in the cost basis. On November 28, 2020, the beginning of our fiscal year 2021, we adopted the accounting requirements of the updated standard utilizing the modified retrospective method of transition. The adoption of this standard did not have a material impact on our condensed consolidated financial statements and related disclosures.
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ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)
Recent Accounting Pronouncements Not Yet Effective
There have been no other recent accounting pronouncements or changes in accounting pronouncements during the three months ended March 5, 2021, as compared to the recent accounting pronouncements described in our Annual Report, that are of significance or potential significance to us.
NOTE 2.  REVENUE
Segment Information
Our segment results for the three months ended March 5, 2021 and February 28, 2020 were as follows:
(dollars in millions)Digital
Media
Digital
Experience
Publishing and
Advertising
Total
Three months ended March 5, 2021
Revenue$2,859 $934 $112 $3,905 
Cost of revenue98 319 30 447 
Gross profit$2,761 $615 $82 $3,458 
Gross profit as a percentage of revenue97 %66 %73 %89 %
Three months ended February 28, 2020
Revenue$2,169 $753 $169 $3,091 
Cost of revenue87 277 88 452 
Gross profit$2,082 $476 $81 $2,639 
Gross profit as a percentage of revenue96 %63 %48 %85 %
Revenue by geographic area for the three months ended March 5, 2021 and February 28, 2020 were as follows:
(in millions)20212020
Americas $2,224 $1,797 
EMEA1,052 817 
APAC629 477 
Total$3,905 $3,091 
Revenue by major offerings in our Digital Media reportable segment for the three months ended March 5, 2021 and February 28, 2020 were as follows:
(in millions)20212020
Creative Cloud$2,379 $1,818 
Document Cloud480 351 
Total$2,859 $2,169 
Subscription revenue by segment for the three months ended March 5, 2021 and February 28, 2020 were as follows:
(in millions)20212020
Digital Media $2,731 $2,058 
Digital Experience812 639 
Publishing and Advertising41 35 
Total$3,584 $2,732 
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ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)
Contract Balances
A receivable is recorded when an unconditional right to invoice and receive payment exists, such that only the passage of time is required before payment of consideration is due. Included in trade receivables on the condensed consolidated balance sheets are unbilled receivable balances which have not yet been invoiced, and are typically related to license revenue or services which are delivered prior to invoicing. As of March 5, 2021, the balance of trade receivables, net of allowances for doubtful accounts, was $1.52 billion, inclusive of unbilled receivables of $58 million. As of November 27, 2020, the balance of trade receivables, net of allowances for doubtful accounts, was $1.40 billion, inclusive of unbilled receivables of $84 million.
We maintain an allowance for doubtful accounts which reflects our best estimate of potentially uncollectible trade receivables and is based on both specific and general reserves. We maintain general reserves on a collective basis by considering factors such as historical experience, credit-worthiness, the age of the trade receivable balances, current economic conditions and a reasonable and supportable forecast of future economic conditions. As of March 5, 2021 and November 27, 2020, our allowance for doubtful accounts was $21 million for both periods.
A contract asset is recognized when a conditional right to consideration exists and transfer of control has occurred. Contract assets are included in prepaid expenses and other current assets for the current portion and other assets for the long-term portion on the condensed consolidated balance sheets. We regularly review contract asset balances for impairment, considering factors such as historical experience, credit-worthiness, age of the balance, current economic conditions and a reasonable and supportable forecast of future economic conditions. Contract asset impairments were not material for the three months ended March 5, 2021. Contract assets were $51 million and $81 million as of March 5, 2021 and November 27, 2020, respectively.
Deferred revenue primarily consists of billings or payments received in advance of revenue recognition from subscription services, including non-cancellable and non-refundable committed funds and refundable customer deposits. Deferred revenue is recognized as revenue when transfer of control to customers has occurred. As of March 5, 2021, the balance of deferred revenue was $4.29 billion, which includes $55 million of refundable customer deposits. Arrangements with some of our enterprise customers with non-cancellable and non-refundable committed funds provide options to either renew monthly on-premise term-based licenses or use some or all funds to purchase other Adobe products or services. Non-cancellable and non-refundable committed funds related to these agreements comprised approximately 6% of the total deferred revenue.
As of November 27, 2020, the balance of deferred revenue was $3.76 billion. During the three months ended March 5, 2021, approximately $1.71 billion of revenue was recognized that was included in the balance of deferred revenue as of November 27, 2020.
Transaction price allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and unbilled amounts that will be recognized as revenue in future periods. As of March 5, 2021, remaining performance obligations were approximately $11.61 billion. Non-cancellable and non-refundable funds related to some of our enterprise customer agreements referred to in the paragraph above comprised approximately 5% of the total remaining performance obligations. Approximately 74% of the remaining performance obligations, excluding the aforementioned enterprise customer agreements, are expected to be recognized over the next 12 months with the remainder recognized thereafter.
Incremental costs of obtaining a contract with a customer are capitalized if we expect the benefit of those costs to be longer than one year and primarily relate to sales commissions paid to our sales force personnel. Capitalized contract acquisition costs are included in prepaid expenses and other current assets for the current portion and other assets for the long-term portion on the condensed consolidated balance sheets. Capitalized contract acquisition costs were $568 million and $530 million as of March 5, 2021 and November 27, 2020, respectively.
As part of our revenue reserves, we record refund liabilities for amounts that may be subject to future refunds, which include sales returns reserves and customer rebates and credits. Refund liabilities are included in accrued expenses on the condensed consolidated balance sheets. Refund liabilities were $128 million and $127 million as of March 5, 2021 and November 27, 2020, respectively.
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ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)
NOTE 3.  ACQUISITIONS
On December 7, 2020, we completed the acquisition of Workfront, a privately held company that provides a workflow platform, for approximately $1.52 billion of cash consideration. During the first quarter of fiscal 2021, we began integrating Workfront into our Digital Experience reportable segment.
The table below represents the preliminary purchase price allocation to total identifiable intangible assets acquired and net liabilities assumed based on their respective estimated fair values as of December 7, 2020. The fair values assigned to assets acquired and liabilities assumed are based on management’s best estimates and assumptions as of the reporting date. Fair values associated with the net tax liabilities assumed and their related impact to goodwill were pending finalization as of the reporting date.
(in millions)AmountUseful Life (years)
Customer contracts and relationships$290 10
Purchased technology100 3
Backlog40 2
Trademarks30 5
Total identifiable intangible assets460 
Net liabilities assumed(41)N/A
Goodwill (1)
1,105 N/A
Total purchase price$1,524 
_________________________________________
(1)    Non-deductible for tax-purposes.
NOTE 4.  CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
Cash equivalents consist of highly liquid marketable debt securities with remaining maturities of three months or less at the date of purchase. We classify our investments in marketable debt securities as “available-for-sale.” We carry these investments at fair value, based on quoted market prices or other readily available market information. Unrealized gains and unrealized non-credit-related losses are included in accumulated other comprehensive income, net of taxes, in our condensed consolidated balance sheets. Unrealized credit-related losses are recorded to other income (expense), net in our condensed consolidated statements of income with a corresponding allowance for credit-related losses in our condensed consolidated balance sheets. Gains and losses are determined using the specific identification method and recognized when realized in our condensed consolidated statements of income.
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ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)
Cash, cash equivalents and short-term investments consisted of the following as of March 5, 2021:
(in millions)Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Estimated
Fair Value
Current assets:    
Cash$702 $ $ $702 
Cash equivalents:
Corporate debt securities25   25 
Money market mutual funds2,629   2,629 
Time deposits96   96 
Total cash equivalents2,750   2,750 
Total cash and cash equivalents3,452   3,452 
Short-term fixed income securities:
Asset-backed securities101   101 
Corporate debt securities1,378 6 (1)1,383 
Foreign government securities3   3 
Municipal securities24   24 
Total short-term investments1,506 6 (1)1,511 
Total cash, cash equivalents and short-term investments$4,958 $6 $(1)$4,963 
Cash, cash equivalents and short-term investments consisted of the following as of November 27, 2020:
(in millions)Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Estimated
Fair Value
Current assets:    
Cash$849 $ $ $849 
Cash equivalents:  
Corporate debt securities28   28 
Money market mutual funds3,483   3,483 
Time deposits118   118 
Total cash equivalents3,629   3,629 
Total cash and cash equivalents4,478   4,478 
Short-term fixed income securities: 
Asset-backed securities105 1  106 
Corporate debt securities1,378 8  1,386 
Foreign government securities3   3 
Municipal securities19   19 
Total short-term investments1,505 9  1,514 
Total cash, cash equivalents and short-term investments$5,983 $9 $ $5,992 

See Note 5 for further information regarding the fair value of our financial instruments.
12

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ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)
The following table summarizes the estimated fair value of short-term fixed income securities classified as short-term investments based on stated effective maturities as of March 5, 2021:
(in millions)Estimated
Fair Value
Due within one year$854 
Due between one and two years407 
Due between two and three years206 
Due after three years44 
Total$1,511 

We review our debt securities classified as short-term investments on a regular basis for impairment. For debt securities in unrealized loss positions, we determine whether any portion of the decline in fair value below the amortized cost basis is due to credit-related factors if we neither intend to sell nor anticipate that it is more likely than not that we will be required to sell prior to recovery of the amortized cost basis. We consider factors such as the extent to which the market value has been less than the cost, any noted failure of the issuer to make scheduled payments, changes to the rating of the security and other relevant credit-related factors in determining whether or not a credit loss exists. During the three months ended March 5, 2021, we did not recognize an allowance for credit-related losses on any of our investments.
NOTE 5.  FAIR VALUE MEASUREMENTS
Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis
The fair value of our financial assets and liabilities at March 5, 2021 was determined using the following inputs:
(in millions)Fair Value Measurements at Reporting Date Using
  Quoted Prices
in Active
Markets for
Identical Assets
Significant
Other
Observable
Inputs
Significant
Unobservable
Inputs
 Total(Level 1)(Level 2)(Level 3)
Assets:    
Cash equivalents:    
Corporate debt securities$25 $ $25 $ 
Money market mutual funds2,629 2,629   
Time deposits96 96   
Short-term investments:
Asset-backed securities101  101