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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
 
 
x
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
For the Quarterly Period Ended June 30, 2002
 
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 No. 000-22688
 
MACROMEDIA, INC.
(A Delaware Corporation)
 
I.R.S. Employer Identification No. 94-3155026
 
600 Townsend Street
San Francisco, California 94103
(415) 252-2000
 
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 x     No ¨
 
Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date: 59.8 million shares of Common Stock, $0.001 par value per common share, outstanding on July 22, 2002.
 

 


Table of Contents
MACROMEDIA, INC. AND SUBSIDIARIES
 
REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2002
 
INDEX
 
PART I.    FINANCIAL INFORMATION
    
    
Item 1.    
  
Financial Statements
    
            
3
            
4
            
5
            
6
    
Item 2.
     
15
    
Item 3.
     
32
PART II.    OTHER INFORMATION
    
    
Item 1.
     
35
    
Item 2.
     
36
    
Item 3.
     
36
    
Item 4.
     
36
    
Item 5.
     
36
    
Item 6.
     
37
       
38


Table of Contents
MACROMEDIA, INC. AND SUBSIDIARIES
 
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
 
      
June 30,
2002

      
March 31,
2002

 
ASSETS
                     
Current assets:
                     
Cash and cash equivalents
    
$
96,250
 
    
$
66,874
 
Short-term investments
    
 
72,952
 
    
 
95,097
 
      


    


Total cash, cash equivalents and short-term investments
    
 
169,202
 
    
 
161,971
 
Accounts receivable, net
    
 
38,304
 
    
 
24,181
 
Prepaid expenses and other current assets
    
 
27,268
 
    
 
30,545
 
      


    


Total current assets
    
 
234,774
 
    
 
216,697
 
Related party loans
    
 
8,409
 
    
 
8,305
 
Fixed assets, net
    
 
46,727
 
    
 
49,189
 
Intangible assets, net
    
 
223,215
 
    
 
226,579
 
Restricted cash
    
 
10,922
 
    
 
11,409
 
Other non-current assets
    
 
4,751
 
    
 
5,659
 
      


    


Total assets
    
$
528,798
 
    
$
517,838
 
      


    


LIABILITIES AND STOCKHOLDERS’ EQUITY
                     
Current liabilities:
                     
Accounts payable
    
$
7,039
 
    
$
6,719
 
Accrued liabilities
    
 
59,611
 
    
 
56,082
 
Accrued restructuring, current
    
 
10,789
 
    
 
12,224
 
Unearned revenues
    
 
29,716
 
    
 
24,791
 
      


    


Total current liabilities
    
 
107,155
 
    
 
99,816
 
Accrued restructuring, non-current
    
 
28,772
 
    
 
30,809
 
Other non-current liabilities
    
 
6,499
 
    
 
6,492
 
      


    


Total liabilities
    
 
142,426
 
    
 
137,117
 
      


    


Stockholders’ equity:
                     
Common stock and additional paid-in capital, par value $0.001 per common share; 200,000 shares authorized; 61,601 and 60,987 shares issued at June 30, 2002 and March 31, 2002, respectively
    
 
743,612
 
    
 
734,816
 
Treasury stock at cost; 1,818 common shares at June 30, 2002 and March 31, 2002
    
 
(33,649
)
    
 
(33,649
)
Deferred stock compensation
    
 
(182
)
    
 
(281
)
Accumulated other comprehensive loss
    
 
(1,418
)
    
 
(158
)
Accumulated deficit
    
 
  (321,991
)
    
 
  (320,007
)
      


    


Total stockholders’ equity
    
 
386,372
 
    
 
380,721
 
      


    


Total liabilities and stockholders’ equity
    
$
528,798
 
    
$
517,838
 
      


    


 
See accompanying notes to condensed consolidated financial statements.

3


Table of Contents
MACROMEDIA, INC. AND SUBSIDIARIES
 
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
 
      
Three Months Ended June 30,

 
      
2002

      
2001

 
Net revenues
    
$
83,689
 
    
$
88,743
 
Cost of revenues
    
 
10,506
 
    
 
11,137
 
      


    


Gross profit
    
 
73,183
 
    
 
77,606
 
      


    


Operating expenses:
                     
Sales and marketing
    
 
37,378
 
    
 
48,621
 
Research and development
    
 
26,372
 
    
 
29,946
 
General and administrative
    
 
10,613
 
    
 
12,736
 
Restructuring expenses
    
 
 
    
 
39,539
 
Amortization of intangible assets
    
 
3,364
 
    
 
29,065
 
      


    


Total operating expenses
    
 
77,727
 
    
 
159,907
 
      


    


Operating loss
    
 
(4,544
)
    
 
(82,301
)
      


    


Other income (expense):
                     
Interest income and other, net
    
 
1,148
 
    
 
2,826
 
Loss on investments
    
 
(803
)
    
 
(6,683
)
Loss on equity affiliate
    
 
 
    
 
(26,861
)
Litigation settlements
    
 
2,822
 
    
 
 
      


    


Total other income (expense)
    
 
3,167
 
    
 
(30,718
)
      


    


Loss before income taxes
    
 
(1,377
)
    
 
(113,019
)
Provision (benefit) for income taxes
    
 
607
 
    
 
(1,245
)
      


    


Net loss
    
$
      (1,984
)
    
$
  (111,774
)
      


    


Net loss per common share:
                     
Basic and diluted
    
$
(0.03
)
    
$
(1.94
)
Weighted average common shares outstanding used in calculating net loss per common share:
                     
Basic and diluted
    
 
59,550
 
    
 
57,522
 
 
 
See accompanying notes to condensed consolidated financial statements.

4


Table of Contents
MACROMEDIA, INC. AND SUBSIDIARIES
 
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 
      
Three Months Ended
June 30,

 
      
2002

      
2001

 
Cash flows from operating activities:
                     
Net loss
    
$
      (1,984
)
    
$
  (111,774
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
                     
Depreciation and amortization
    
 
7,974
 
    
 
41,801
 
Deferred income taxes
    
 
 
    
 
(2,198
)
Impairment of long-lived assets
    
 
 
    
 
13,062
 
Loss on investments
    
 
803
 
    
 
6,683
 
Loss on equity affiliate
    
 
 
    
 
26,861
 
Change in operating assets and liabilities:
                     
Accounts receivable, net
    
 
(14,123
)
    
 
7,358
 
Prepaid expenses and other current assets
    
 
3,742
 
    
 
1,853
 
Accrued liabilities and payables
    
 
2,558
 
    
 
(16,965
)
Accrued restructuring
    
 
(3,472
)
    
 
21,880
 
Unearned revenues
    
 
4,925
 
    
 
857
 
      


    


Net cash provided by (used in) operating activities
    
 
423
 
    
 
(10,582
)
      


    


Cash flows from investing activities:
                     
Capital expenditures
    
 
(2,342
)
    
 
(10,357
)
Purchases of available-for-sale short-term investments
    
 
(13,566
)
    
 
(26,057
)
Maturities and sales of available-for-sale short-term investments
    
 
35,536
 
    
 
35,917
 
Purchases of investments
    
 
 
    
 
(2,995
)
Release (deposits) of restricted cash
    
 
487
 
    
 
(2,207
)
Other, net
    
 
43
 
    
 
(785
)
      


    


Net cash provided by (used in) investing activities
    
 
20,158
 
    
 
(6,484
)
      


    


Cash flows from financing activities:
                     
Proceeds from issuance of common stock
    
 
8,795
 
    
 
3,113
 
      


    


Net cash provided by financing activities
    
 
8,795
 
    
 
3,113
 
      


    


Net increase (decrease) in cash and cash equivalents
    
 
29,376
 
    
 
(13,953
)
Cash and cash equivalents, beginning of period
    
 
66,874
 
    
 
116,507
 
      


    


Cash and cash equivalents, end of period
    
$
96,250
 
    
$
102,554
 
      


    


 
See accompanying notes to condensed consolidated financial statements.

5