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 December 31, 2003
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.
(Exact name of registrant as specified in its charter)
| Delaware | 94-3155026 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| 600 Townsend Street | ||
| San Francisco, California 94103 | ||
| Telephone: (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 by check mark whether the registrant is an accelerated filer as defined in Rule 12b-2 of the Act. 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: 69.1 million shares of Common Stock, $0.001 par value per common share, outstanding on January 26, 2004, including 1.8 million shares held in treasury.
MACROMEDIA, INC.
REPORT ON FORM 10-Q
FOR THE QUARTER ENDED DECEMBER 31, 2003
| PART I |
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| Item 1. |
Financial Statements |
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| Condensed Consolidated Balance Sheets at December 31, 2003 and March 31, 2003 |
3 | |||||
| 4 | ||||||
| Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2003 and 2002 |
5 | |||||
| 6 | ||||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
18 | ||||
| Item 3. |
41 | |||||
| Item 4. |
43 | |||||
| PART II |
||||||
| Item 1. |
43 | |||||
| Item 2. |
Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities |
43 | ||||
| Item 3. |
44 | |||||
| Item 4. |
44 | |||||
| Item 5. |
44 | |||||
| Item 6. |
44 | |||||
| 45 | ||||||
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
| December 31, 2003 |
March 31, 2003 |
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| ASSETS | ||||||||
| Current assets: |
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| Cash and cash equivalents |
$ | 85,523 | $ | 96,831 | ||||
| Short-term investments |
177,599 | 118,755 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $1,986 and $3,174 as of December 31, 2003 and March 31, 2003, respectively |
37,225 | 27,610 | ||||||
| Inventory |
776 | 1,216 | ||||||
| Restricted cash |
9,530 | — | ||||||
| Prepaid expenses and other current assets |
14,425 | 12,330 | ||||||
| Deferred income taxes |
10,314 | 10,314 | ||||||
| Total current assets |
335,392 | 267,056 | ||||||
| Property and equipment, net |
46,352 | 34,856 | ||||||
| Goodwill, net |
242,260 | 201,392 | ||||||
| Other intangible assets, net |
14,235 | 4,526 | ||||||
| Restricted cash, non-current |
15,358 | 11,412 | ||||||
| Other non-current assets |
10,168 | 8,181 | ||||||
| Total assets |
$ | 663,765 | $ | 527,423 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 4,875 | $ | 6,714 | ||||
| Accrued liabilities |
64,664 | 39,441 | ||||||
| Current income taxes payable |
10,869 | 10,294 | ||||||
| Accrued restructuring |
7,781 | 11,024 | ||||||
| Deferred revenues |
37,505 | 33,916 | ||||||
| Total current liabilities |
125,694 | 101,389 | ||||||
| Accrued restructuring, non-current |
13,131 | 20,064 | ||||||
| Other non-current liabilities |
6,360 | 6,440 | ||||||
| Total liabilities |
145,185 | 127,893 | ||||||
| Commitments and contingencies |
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| Stockholders’ equity: |
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| Preferred stock, par value $0.001 per preferred share: 5,000 shares authorized, no shares issued as of December 31, 2003 and March 31, 2003 |
— | — | ||||||
| Common stock, par value $0.001 per common share: 200,000 shares authorized, 68,950 and 62,965 shares issued as of December 31, 2003 and March 31, 2003, respectively |
69 | 63 | ||||||
| Treasury stock, at cost: 1,818 shares as of December 31, 2003 and March 31, 2003 |
(33,649 | ) | (33,649 | ) | ||||
| Additional paid-in capital |
844,165 | 751,134 | ||||||
| Accumulated other comprehensive income (loss) |
(378 | ) | 417 | |||||
| Accumulated deficit |
(291,627 | ) | (318,435 | ) | ||||
| Total stockholders’ equity |
518,580 | 399,530 | ||||||
| Total liabilities and stockholders’ equity |
$ | 663,765 | $ | 527,423 | ||||
See accompanying notes to condensed consolidated financial statements.
3
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
| Three Months Ended December 31, |
Nine Months Ended December 31, |
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| 2003 |
2002 |
2003 |
2002 |
|||||||||||||
| Net revenues |
$ | 94,845 | $ | 83,159 | $ | 267,780 | $ | 253,319 | ||||||||
| Cost of revenues: |
||||||||||||||||
| Cost of net revenues |
7,639 | 8,700 | 22,703 | 27,882 | ||||||||||||
| Amortization and impairment of acquired developed technology |
405 | 167 | 1,043 | 21,498 | ||||||||||||
| Total cost of revenues |
8,044 | 8,867 | 23,746 | 49,380 | ||||||||||||
| Gross profit |
86,801 | 74,292 | 244,034 | 203,939 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Sales and marketing |
41,101 | 36,046 | 113,975 | 108,916 | ||||||||||||
| Research and development |
21,316 | 20,967 | 67,898 | 71,013 | ||||||||||||
| General and administrative |
9,177 | 7,731 | 27,454 | 28,105 | ||||||||||||
| Amortization and impairment of intangible assets |
266 | 247 | 760 | 2,960 | ||||||||||||
| Write-off of acquired in-process technology |
2,010 | — | 2,010 | — | ||||||||||||
| Total operating expenses |
73,870 | 64,991 | 212,097 | 210,994 | ||||||||||||
| Operating income (loss) |
12,931 | 9,301 | 31,937 | (7,055 | ) | |||||||||||
| Other income (expense), net: |
||||||||||||||||
| Interest income |
939 | 1,021 | 2,671 | 3,259 | ||||||||||||
| Gain on investments and other, net |
82 | 1,602 | 927 | 852 | ||||||||||||
| Litigation settlements |
— | (2,500 | ) | — | 322 | |||||||||||
| Other, net |
(401 | ) | (72 | ) | (781 | ) | (423 | ) | ||||||||
| Total other income, net |
620 | 51 | 2,817 | 4,010 | ||||||||||||
| Income (loss) before income taxes |
13,551 | 9,352 | 34,754 | (3,045 | ) | |||||||||||
| Provision for income taxes |
3,293 | 1,065 | 7,946 | 2,315 | ||||||||||||
| Net income (loss) |
$ | 10,258 | $ | 8,287 | $ | 26,808 | $ | (5,360 | ) | |||||||
| Net income (loss) per common share: |
||||||||||||||||
| Basic |
$ | 0.16 | $ | 0.14 | $ | 0.42 | $ | (0.09 | ) | |||||||
| Diluted |
$ | 0.15 | $ | 0.14 | $ | 0.39 | $ | (0.09 | ) | |||||||
| Weighted average common shares outstanding used in calculating net income (loss) per common share: |
||||||||||||||||
| Basic |
64,910 | 60,330 | 63,270 | 59,980 | ||||||||||||
| Diluted |
70,430 | 61,370 | 68,760 | 59,980 | ||||||||||||
See accompanying notes to condensed consolidated financial statements.
4
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| Nine months ended December 31, |
||||||||
| 2003 |
2002 |
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| Cash flows from operating activities: |
||||||||
| Net income (loss) |
$ | 26,808 | $ | (5,360 | ) | |||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
13,721 | 21,042 | ||||||
| Impairment of long-lived assets, including intangible assets |
62 | 19,018 | ||||||
| Acquired in-process research and development |
2,010 | — | ||||||
| Gain on investments and other, net |
(927 | ) | (852 | ) | ||||
| Change in operating assets and liabilities, net of business combinations: |
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