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Almost magic…

One of the neat tricks about accounting rules are that they allow companies to make all sorts of assumptions that can wind up making the numbers look better than they are. Take Adobe Systems (ADBE) , for example, which on Friday disclosed several changes to the way it expenses stock options. By lowering the assumptions it uses on such things as expected volatility, it was able to reduce its options expense, making its pro-forma numbers look better than they otherwise would. In its 10-Q, Adobe says it reported income of 28 cents for the third quarter ended Aug. 29. Expensing the options would have cut Adobe’s diluted net income by more than 50 percent to 12 cents a share. For the same quarter last year, when Adobe was using the higher assumptions, the company reported 20 cents a share, though the diluted number was a loss of 1 cent a share. Adobe’s not the first company to do this. Back in June, The Wall Street Journal noted that 23 other companies in the S&P 500 including Dell (DELL) and Oracle (ORCL) had already taken this step. One more interesting Adobe tidbit: the stock is up sharply year-to-date and several analysts have recently upgraded the stock. But over the weekend, Barron’s noted that insiders had recently sold shares worth $43.3 million.