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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 June 4, 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 June 25, 2021, 476.4 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.





 
2

PART I—FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ADOBE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except par value)
 June 4,
2021
November 27,
2020
(Unaudited)(*)
ASSETS
Current assets:  
Cash and cash equivalents$4,250 $4,478 
Short-term investments1,518 1,514 
Trade receivables, net of allowances for doubtful accounts of $19 and $21, respectively
1,477 1,398 
Prepaid expenses and other current assets833 756 
Total current assets8,078 8,146 
Property and equipment, net1,573 1,517 
Operating lease right-of-use assets, net458 487 
Goodwill11,859 10,742 
Other intangibles, net1,641 1,359 
Deferred income taxes1,168 1,370 
Other assets805 663 
Total assets$25,582 $24,284 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:  
Trade payables$312 $306 
Accrued expenses1,538 1,422 
Deferred revenue4,144 3,629 
Income taxes payable55 63 
Operating lease liabilities96 92 
Total current liabilities6,145 5,512 
Long-term liabilities: 
Debt4,120 4,117 
Deferred revenue139 130 
Income taxes payable510 529 
Deferred income taxes80 10 
Operating lease liabilities477 499 
Other liabilities259 223 
Total liabilities11,730 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; 
477 and 479 shares outstanding, respectively
  
Additional paid-in-capital7,877 7,357 
Retained earnings21,538 19,611 
Accumulated other comprehensive income (loss)(121)(158)
Treasury stock, at cost (124 and 122 shares, respectively)
(15,442)(13,546)
Total stockholders’ equity13,852 13,264 
Total liabilities and stockholders’ equity$25,582 $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.
3

ADOBE INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
(Unaudited)
 Three Months EndedSix Months Ended
 June 4,
2021
May 29,
2020
June 4,
2021
May 29,
2020
Revenue: 
Subscription$3,520 $2,831 $7,104 $5,563 
Product153 128 308 271 
Services and other162 169 328 385 
Total revenue3,835 3,128 7,740 6,219 
 
Cost of revenue:
Subscription328 269 652 543 
Product9 9 19 16 
Services and other107 137 220 308 
Total cost of revenue444 415 891 867 
Gross profit3,391 2,713 6,849 5,352 
 
Operating expenses:
Research and development612 532 1,232 1,064 
Sales and marketing1,073 901 2,122 1,758 
General and administrative256 224 546 495 
Amortization of intangibles44 40 89 82 
Total operating expenses1,985 1,697 3,989 3,399 
 Operating income1,406 1,016 2,860 1,953 
 
Non-operating income (expense):
Interest expense(28)(28)(58)(61)
Investment gains (losses), net8  13 (3)
Other income (expense), net 12 4 30 
Total non-operating income (expense), net(20)(16)(41)(34)
Income before income taxes1,386 1,000 2,819 1,919 
Provision for (benefit from) income taxes270 (100)442 (136)
Net income$1,116 $1,100 $2,377 $2,055 
Basic net income per share$2.34 $2.28 $4.97 $4.26 
Shares used to compute basic net income per share478 481 478 482 
Diluted net income per share$2.32 $2.27 $4.93 $4.23 
Shares used to compute diluted net income per share481 485 482 486 



4

ADOBE INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
(Unaudited)
Three Months EndedSix Months Ended
 June 4,
2021
May 29,
2020
June 4,
2021
May 29,
2020
Increase/(Decrease)Increase/(Decrease)
Net income$1,116 $1,100 $2,377 $2,055 
Other comprehensive income (loss), net of taxes:
Available-for-sale securities:
Unrealized gains / losses on available-for-sale securities 2 (3)6 
Derivatives designated as hedging instruments:
Unrealized gains / losses on derivative instruments
(15)1 (10)2 
Reclassification adjustment for realized gains / losses on derivative instruments12 (2)24 (4)
Net increase (decrease) from derivatives designated as hedging instruments(3)(1)14 (2)
Foreign currency translation adjustments23 (7)26 (11)
Other comprehensive income (loss), net of taxes20 (6)37 (7)
Total comprehensive income, net of taxes$1,136 $1,094 $2,414 $2,048 




5

ADOBE INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In millions)
(Unaudited)
Three Months Ended June 4, 2021
 
  Common Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
 Treasury Stock 
 SharesAmountSharesAmountTotal
Balances at March 5, 2021
601 $ $7,617 $20,521 $(141)(122)$(14,451)$13,546 
Net income— — — 1,116 — — — 1,116 
Other comprehensive income (loss),
net of taxes
— — — — 20 — — 20 
Re-issuance of treasury stock under stock compensation plans
— —  (99)—  10 (89)
Repurchases of common stock— — — — — (2)(1,000)(1,000)
Stock-based compensation— — 260 — — — — 260 
Value of shares in deferred compensation plan
— — — — — — (1)(1)
Balances at June 4, 2021
601 $ $7,877 $21,538 $(121)(124)$(15,442)$13,852 



Three Months Ended May 29, 2020
 
  Common Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
 Treasury Stock 
 SharesAmountSharesAmountTotal
Balances at February 28, 2020
601 $ $6,665 $15,390 $(189)(118)$(11,401)$10,465 
Net income
— — — 1,100 — — — 1,100 
Other comprehensive income (loss),
net of taxes
— — — — (6)— — (6)
Re-issuance of treasury stock under stock compensation plans
— —  (62)—  9 (53)
Repurchases of common stock— — — — — (3)(850)(850)
Stock-based compensation— — 227 — — — — 227 
Value of shares in deferred compensation plan
— — — — — — (2)(2)
Balances at May 29, 2020
601 $ $6,892 $16,428 $(195)(121)$(12,244)$10,881 

6

ADOBE INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In millions)
(Unaudited)
Six Months Ended June 4, 2021
   Common StockAdditional
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— — — 2,377 — — — 2,377 
Other comprehensive income (loss),
net of taxes
— — — — 37 — — 37 
Re-issuance of treasury stock under stock compensation plans
— —  (450)— 2 57 (393)
Repurchases of common stock— — — — — (4)(1,950)(1,950)
Stock-based compensation— — 520 — — — — 520 
Value of shares in deferred compensation plan
— — — — — — (3)(3)
Balances at June 4, 2021
601 $ $7,877 $21,538 $(121)(124)$(15,442)$13,852 



Six Months Ended May 29, 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
— — — 2,055 — — — 2,055 
Other comprehensive income (loss),
net of taxes
— — — — (7)— — (7)
Re-issuance of treasury stock under stock compensation plans
— — (56)(456)— 2 81 (431)
Repurchases of common stock— — — — — (5)(1,700)(1,700)
Stock-based compensation— — 444 — — — — 444 
Value of shares in deferred compensation plan
— — — — — — (10)(10)
Balances at May 29, 2020
601 $ $6,892 $16,428 $(195)(121)$(12,244)$10,881 


7

ADOBE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
 Six Months Ended
 June 4,
2021
May 29,
2020
Cash flows from operating activities:  
Net income$2,377 $2,055 
Adjustments to reconcile net income to net cash provided by operating activities: 
Depreciation, amortization and accretion390 376 
Stock-based compensation520 444 
Reduction of operating lease right-of-use assets33 42 
Deferred income taxes210 (265)
Unrealized losses (gains) on investments, net(7)5 
Other non-cash items5 16 
Changes in operating assets and liabilities, net of acquired assets and assumed liabilities:
Trade receivables, net(39)155 
Prepaid expenses and other assets(258)(303)
Trade payables(1)80 
Accrued expenses and other liabilities87 (58)
Income taxes payable(26)2 
Deferred revenue469 (40)
Net cash provided by operating activities3,760 2,509 
Cash flows from investing activities:  
Purchases of short-term investments(639)(263)
Maturities of short-term investments521 417 
Proceeds from sales of short-term investments104 70 
Acquisitions, net of cash acquired(1,470) 
Purchases of property and equipment(154)(190)
Purchases of long-term investments, intangibles and other assets(27)(6)
Proceeds from sale of long-term investments and other assets 4 
Net cash provided by (used for) investing activities(1,665)32 
Cash flows from financing activities:  
Repurchases of common stock(1,950)(1,700)
Proceeds from re-issuance of treasury stock87 89 
Taxes paid related to net share settlement of equity awards(480)(521)
Proceeds from issuance of debt 3,144 
Repayment of debt (3,150)
Other financing activities, net19 4 
Net cash used for financing activities(2,324)(2,134)
Effect of foreign currency exchange rates on cash and cash equivalents1 (13)
Net increase (decrease) in cash and cash equivalents(228)394 
Cash and cash equivalents at beginning of period4,478 2,650 
Cash and cash equivalents at end of period$4,250 $3,044 
Supplemental disclosures: 
Cash paid for income taxes, net of refunds$277 $116 
Cash paid for interest$50 $38 


8


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 financial results for the six months ended June 4, 2021 benefited from an extra week in the first quarter of fiscal 2021 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.
9


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 six months ended June 4, 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 June 4, 2021 and May 29, 2020 were as follows:
(dollars in millions)Digital
Media
Digital
Experience
Publishing and
Advertising
Total
Three months ended June 4, 2021
Revenue$2,787 $938 $110 $3,835 
Cost of revenue99 319 26 444 
Gross profit$2,688 $619 $84 $3,391 
Gross profit as a percentage of revenue96 %66 %76 %88 %
Three months ended May 29, 2020
Revenue$2,232 $774 $122 $3,128 
Cost of revenue84 275 56 415 
Gross profit$2,148 $499 $66 $2,713 
Gross profit as a percentage of revenue96 %64 %54 %87 %
Our segment results for the six months ended June 4, 2021 and May 29, 2020 were as follows:
(dollars in millions)Digital
Media
Digital
Experience
Publishing and
Advertising
Total
Six months ended June 4, 2021
Revenue$5,646 $1,872 $222 $7,740 
Cost of revenue197 638 56 891 
Gross profit$5,449 $1,234 $166 $6,849 
Gross profit as a percentage of revenue97 %66 %75 %88 %
Six months ended May 29, 2020
Revenue$4,401 $1,527 $291 $6,219 
Cost of revenue171 552 144 867 
Gross profit$4,230 $975 $147 $5,352 
Gross profit as a percentage of revenue96 %64 %51 %86 %
Revenue by geographic area for the three and six months ended June 4, 2021 and May 29, 2020 were as follows:
Three MonthsSix Months
(in millions)2021202020212020
Americas $2,185 $1,811 $4,409 $3,608 
EMEA1,026 825 2,078 1,642 
APAC624 492 1,253 969 
Total$3,835 $3,128 $7,740 $6,219 
10


ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)
Revenue by major offerings in our Digital Media reportable segment for the three and six months ended June 4, 2021 and May 29, 2020 were as follows:
Three MonthsSix Months
(in millions)2021202020212020
Creative Cloud$2,318 $1,872 $4,697 $3,690 
Document Cloud469 360 949 711 
Total$2,787 $2,232 $5,646 $4,401 
Subscription revenue by segment for the three and six months ended June 4, 2021 and May 29, 2020 were as follows:
Three MonthsSix Months
(in millions)2021202020212020
Digital Media $2,668 $2,135 $5,399 $4,193 
Digital Experience817 656 1,629 1,295 
Publishing and Advertising35 40 76 75 
Total$3,520 $2,831 $7,104 $5,563 
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 June 4, 2021, the balance of trade receivables, net of allowances for doubtful accounts, was $1.48 billion, inclusive of unbilled receivables of $100 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. The allowance for doubtful accounts was $19 million and $21 million as of June 4, 2021 and November 27, 2020, respectively.
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 six months ended June 4, 2021. Contract assets were $68 million and $81 million as of June 4, 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 June 4, 2021, the balance of deferred revenue was $4.28 billion, which includes $39 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 5% of the total deferred revenue.
As of November 27, 2020, the balance of deferred revenue was $3.76 billion. During the three and six months ended June 4, 2021, approximately $996 million and $2.70 billion of revenue, respectively, was recognized that was included in the balance of deferred revenue as of November 27, 2020.
11


ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)
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 June 4, 2021, remaining performance obligations were approximately $12.23 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 73% 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 $587 million and $530 million as of June 4, 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 $118 million and $127 million as of June 4, 2021 and November 27, 2020, respectively.
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
12


ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)
balance sheets. Gains and losses are determined using the specific identification method and recognized when realized in our condensed consolidated statements of income.
Cash, cash equivalents and short-term investments consisted of the following as of June 4, 2021:
(in millions)Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Estimated
Fair Value
Current assets:    
Cash$659 $ $ $659 
Cash equivalents:
Corporate debt securities14   14 
Money market mutual funds3,432   3,432 
Time deposits145   145 
Total cash equivalents3,591   3,591 
Total cash and cash equivalents4,250   4,250 
Short-term fixed income securities:
Asset-backed securities109   109 
Corporate debt securities1,379 6  1,385 
Municipal securities24   24