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 September 30, 2004
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: 72.8 million shares of Common Stock, $0.001 par value per common share, outstanding on November 1, 2004 including 1.8 million shares held in treasury.
REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2004
INDEX
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
(Unaudited)
| September 30, 2004 |
March 31, 2004 |
|||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 69,507 | $ | 92,662 | ||||
| Short-term investments |
216,195 | 190,029 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $1,747 and $1,919 at September 30, 2004 and March 31, 2004, respectively |
53,333 | 38,210 | ||||||
| Restricted cash |
7,800 | 16,363 | ||||||
| Prepaid expenses and other current assets |
18,134 | 15,581 | ||||||
| Total current assets |
364,969 | 352,845 | ||||||
| Property and equipment, net |
85,778 | 45,512 | ||||||
| Goodwill, net |
235,847 | 237,839 | ||||||
| Intangible assets, net |
11,239 | 12,950 | ||||||
| Restricted cash, non-current |
5,520 | 7,022 | ||||||
| Deferred income taxes, non-current |
16,920 | 16,062 | ||||||
| Other assets |
8,890 | 9,658 | ||||||
| Total assets |
$ | 729,163 | $ | 681,888 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 5,726 | $ | 5,311 | ||||
| Accrued payroll and related liabilities |
16,988 | 17,634 | ||||||
| Accrued liabilities |
35,803 | 41,151 | ||||||
| Income taxes payable |
13,856 | 11,838 | ||||||
| Accrued restructuring |
5,692 | 6,934 | ||||||
| Deferred revenues |
36,411 | 32,215 | ||||||
| Total current liabilities |
114,476 | 115,083 | ||||||
| Other liabilities, non-current: |
||||||||
| Accrued restructuring |
9,027 | 11,657 | ||||||
| Deferred revenues |
6,867 | 5,173 | ||||||
| Other liabilities |
4,882 | 5,024 | ||||||
| Total liabilities |
135,252 | 136,937 | ||||||
| Commitment and contingencies |
||||||||
| Stockholders’ equity: |
||||||||
| Preferred stock, par value $0.001 per preferred share: 5,000 shares authorized, no shares issued and outstanding as of September 30, 2004 and March 31, 2004 |
— | — | ||||||
| Common stock, par value $0.001 per common share: 200,000 shares authorized, 71,550 and 70,069 shares issued as of September 30, 2004 and March 31, 2004, respectively |
72 | 70 | ||||||
| Treasury stock, at cost: 1,818 shares as of September 30, 2004 and March 31, 2004 |
(33,649 | ) | (33,649 | ) | ||||
| Additional paid-in capital |
875,823 | 855,073 | ||||||
| Accumulated other comprehensive income (loss) |
(829 | ) | 408 | |||||
| Accumulated deficit |
(247,506 | ) | (276,951 | ) | ||||
| Total stockholders’ equity |
593,911 | 544,951 | ||||||
| Total liabilities and stockholders’ equity |
$ | 729,163 | $ | 681,888 | ||||
See accompanying Notes to Condensed Consolidated Financial Statements.
3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
| Three Months Ended September 30, |
Six Months Ended September 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Net revenues |
$ | 107,924 | $ | 89,871 | $ | 211,478 | $ | 172,935 | ||||||||
| Cost of revenues: |
||||||||||||||||
| Cost of net revenues |
7,544 | 7,875 | 15,014 | 15,064 | ||||||||||||
| Amortization of acquired developed technology |
744 | 319 | 1,488 | 638 | ||||||||||||
| Total cost of revenues |
8,288 | 8,194 | 16,502 | 15,702 | ||||||||||||
| Gross profit |
99,636 | 81,677 | 194,976 | 157,233 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Sales and marketing |
44,845 | 38,198 | 88,853 | 72,874 | ||||||||||||
| Research and development |
25,240 | 23,282 | 48,855 | 46,582 | ||||||||||||
| General and administrative |
10,850 | 8,575 | 21,969 | 18,277 | ||||||||||||
| Amortization of intangible assets |
242 | 247 | 483 | 494 | ||||||||||||
| Total operating expenses |
81,177 | 70,302 | 160,160 | 138,227 | ||||||||||||
| Operating income |
18,459 | 11,375 | 34,816 | 19,006 | ||||||||||||
| Other income (expense): |
||||||||||||||||
| Interest income, net |
1,113 | 841 | 2,054 | 1,732 | ||||||||||||
| Gain on investments |
— | 780 | — | 845 | ||||||||||||
| Other, net |
(101 | ) | (206 | ) | (64 | ) | (380 | ) | ||||||||
| Total other income |
1,012 | 1,415 | 1,990 | 2,197 | ||||||||||||
| Income before income taxes |
19,471 | 12,790 | 36,806 | 21,203 | ||||||||||||
| Provision for income taxes |
(3,943 | ) | (2,970 | ) | (7,361 | ) | (4,653 | ) | ||||||||
| Net income |
$ | 15,528 | $ | 9,820 | $ | 29,445 | $ | 16,550 | ||||||||
| Net income per common share: |
||||||||||||||||
| Basic |
$ | 0.22 | $ | 0.16 | $ | 0.43 | $ | 0.27 | ||||||||
| Diluted |
$ | 0.21 | $ | 0.14 | $ | 0.40 | $ | 0.24 | ||||||||
| Weighted average common shares outstanding used in net income per common share calculation: |
||||||||||||||||
| Basic |
69,510 | 63,210 | 69,140 | 62,450 | ||||||||||||
| Diluted |
73,480 | 69,540 | 73,790 | 67,640 | ||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Six Months Ended September 30, |
||||||||
| 2004 |
2003 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 29,445 | $ | 16,550 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
9,411 | 9,481 | ||||||
| Gain on investments |
— | (845 | ) | |||||
| Changes in operating assets and liabilities, net of business combinations: |
||||||||
| Accounts receivable, net |
(15,123 | ) | (6,553 | ) | ||||
| Prepaid expenses and other assets |
(6,026 | ) | 802 | |||||
| Accounts payable and other liabilities |
7,581 | 2,676 | ||||||
| Accrued restructuring |
(3,872 | ) | (7,180 | ) | ||||
| Deferred revenues |
5,890 | (2,936 | ) | |||||
| Net cash provided by operating activities |
27,306 | 11,995 | ||||||
| Cash flows from investing activities: |
||||||||
| Purchases of property and equipment |
(43,682 | ) | (18,017 | ) | ||||
| Cash used in business combinations |
(11,769 | ) | — | |||||
| Decrease in restricted cash related to acquisitions and other, net |
10,065 | 2,340 | ||||||
| Purchases of available-for-sale short-term investments |
(111,784 | ) | (156,681 | ) | ||||
| Proceeds from sales and maturities of available-for-sale short-term investments |
82,991 | 97,421 | ||||||
| Other, net |
3,803 | (1,947 | ) | |||||
| Net cash used in investing activities |
(70,376 | ) | (76,884 | ) | ||||
| Cash flows from financing activities: |
||||||||
| Proceeds from issuance of common stock |
19,915 | |||||||