Exhibit 99.1
For More Information, Contact: | For Immediate Release |
Media Contact:
Eileen Stanley Conway
(415) 252-4035
estanley@macromedia.com
Investor Relations:
Michael Look
(415) 832-5995
mlook@macromedia.com
MACROMEDIA REPORTS FIRST QUARTER
FISCAL YEAR 2005 RESULTS
Revenues up 25% and net income more than doubles year-over-year
Macromedia, Inc. (Nasdaq: MACR) Summary Financial Results (in millions, except per share data) | Three Months June 30, | |||||
2004 | 2003 | |||||
Net Revenues | $ | 103.6 | $ | 83.1 | ||
Net income per diluted share - GAAP | $ | 0.19 | $ | 0.10 | ||
Net income per diluted share – pro forma | $ | 0.20 | $ | 0.11 |
San Francisco - July 28,2004- Macromedia (Nasdaq: MACR) today reported financial results for its fiscal first quarter ended June 30, 2004. Net revenues for the quarter were $103.6 million, a 25 percent increase compared to the $83.1 million reported for the same period last year.
Net income for the three months ended June 30, 2004 was $13.9 million, or $0.19 per diluted share, compared to $6.7 million, or $0.10 per diluted share, for the same quarter a year ago. Pro forma net income for the three months ended June 30, 2004 was $14.7 million, or $0.20 per diluted share, compared to $7.1 million, or $0.11 per diluted share, for the same quarter a year ago.
“This was a good solid quarter, made so by our continuing leadership in web design and our terrific growth in mobile and business solutions,” said Rob Burgess, chairman and CEO, Macromedia. “The internet is changing yet again as non-PC devices like phones, TV’s and other interesting machines play an increasingly important role in the networked world. Macromedia is well positioned and totally excited to help enable these experiences to be the best they can possibly be. We are looking forward to lighting up the new digital world.”
Business Outlook - Second Quarter Fiscal Year 2005
For the quarter ending September 30, 2004, Macromedia expects net revenues to be in the range of $103 to $108 million, with pro forma gross margins in the 91 to 93 percent range, and a pro forma operating profit margin between 16 and 18 percent. These forward looking statements are subject to risks and uncertainties discussed below and actual results may differ materially.
Pro Forma Results
Macromedia’s pro forma results for the three months ended June 30, 2004 and 2003, differ from corresponding results reported under Generally Accepted Accounting Principles (“GAAP”) in the U.S. due to adjustments for the following items reported in its consolidated results from operations:
Non-cash charges for:
• | The amortization of acquired developed technology and intangible assets. |
Cash gains:
• | Cash gains realized on an equity investment which had no carrying value due to write-downs recorded in a prior period. |
Pro forma results for the three months ended June 30, 2004 and 2003 reflect an assumed tax rate of 20 percent, reflecting U.S. federal and state income taxes and foreign taxes at rates other than U.S. statutory rates. See the attached reconciliation of GAAP and pro forma results.
Conference Call
Macromedia’s first quarter of fiscal year 2005 financial results will be discussed in a Macromedia Breeze presentation available at http://www.macromedia.com/MACR/. In addition, a teleconference is scheduled to begin at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time on Wednesday, July 28, 2004. After the conclusion of the teleconference, a replay of the conference call will be available on the Company’s website.
ABOUT MACROMEDIA
Experience matters. Macromedia is motivated by the belief that great experiences build great businesses. Our software empowers millions of business users, developers, and designers to create and deliver effective, compelling, and memorable experiences - on the Internet, on fixed media, on wireless, and on digital devices.
Cautionary Note About Forward Looking Statements
Matters discussed in this news release may be considered forward looking statements, including those under the heading “Business Outlook” that relate to expected future financial results which involve risks and uncertainties. Such risks and uncertainties include those related to customer acceptance of new products and services and new versions of existing products, the impact of competition, risks associated with integration of acquired products and technologies, the risk of adequately evolving our internal systems and processes in a dynamic business environment, the risk of delays in product development and release dates, new regulations and other government actions that may materially increase the cost of compliance and doing business, risks associated with participating in international markets (including, but not limited to, foreign policies, market instability, and regulations in the applicable foreign countries), the economic condition in the domestic and significant international markets in which the Company operates, dependence on the growth of the Internet, quarterly fluctuations of the operating results, the Company’s dependence on distributors, the risk of product returns, the risks associated with potential litigation and intellectual property ownership claims against the Company and others in the industry, volatility of the Company’s stock, and other risks detailed from time to time in the Company’s filings with the SEC, including without limitation, its annual report on Form 10-K, and its quarterly reports on Form 10-Q, as they may be updated or amended with future filings. The actual results the Company achieves may differ materially from any forward looking statements due to such risks and uncertainties.
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Copyright 2004 Macromedia, Inc. All rights reserved. Macromedia and the Macromedia logo are trademarks or registered trademarks of Macromedia, Inc., which may be registered in the United States and internationally. Other product or service names mentioned herein are the trademarks of their respective owners.
MACROMEDIA, INC.
Condensed Consolidated Statements of Income
Impact of Pro Forma Adjustments on Reported Net Income
(In thousands, except percentages and per share data)
(unaudited)
Three Months Ended June 30, 2004 | Three Months Ended June 30, 2003 | |||||||||||||||||||||||
GAAP | Adjustments | Pro Forma | GAAP | Adjustments | Pro Forma | |||||||||||||||||||
Net revenues | $ | 103,554 | $ | — | $ | 103,554 | $ | 83,064 | $ | — | $ | 83,064 | ||||||||||||
Cost of revenues: | ||||||||||||||||||||||||
Cost of net revenues | 7,470 | — | 7,470 | 7,189 | — | 7,189 | ||||||||||||||||||
Amortization of acquired developed technology | 744 | (744 | ) | — | 319 | (319 | ) | — | ||||||||||||||||
Total cost of revenues | 8,214 | (744 | ) | 7,470 | 7,508 | (319 | ) | 7,189 | ||||||||||||||||
Gross profit | 95,340 | 744 | 96,084 | 75,556 | 319 | 75,875 | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Sales and marketing | 44,008 | — | 44,008 | 34,676 | — | 34,676 | ||||||||||||||||||
Research and development | 23,615 | — | 23,615 | 23,300 | — | 23,300 | ||||||||||||||||||
General and administrative | 11,119 | — | 11,119 | 9,702 | — | 9,702 | ||||||||||||||||||
Amortization of intangible assets | 241 | (241 | ) | — | 247 | (247 | ) | — | ||||||||||||||||
Total operating expenses | 78,983 | (241 | ) | 78,742 | 67,925 | (247 | ) | 67,678 | ||||||||||||||||
Operating income | 16,357 | 985 | 17,342 | 7,631 | 566 | 8,197 | ||||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||
Interest income, net | 941 | — | 941 | 891 | — | 891 | ||||||||||||||||||
Gain on investments | — | — | — | 65 | (65 | ) (A) | — | |||||||||||||||||
Other, net | 37 | — | 37 | (174 | ) | — | (174 | ) | ||||||||||||||||
Total other income | 978 | — | 978 | 782 | (65 | ) | 717 | |||||||||||||||||
Income before income taxes | 17,335 | 985 | 18,320 | 8,413 | 501 | 8,914 | ||||||||||||||||||
Provision for income taxes | (3,418 | ) | (246 | ) (B) | (3,664 | ) | (1,683 | ) | (99 | ) (B) | (1,782 | ) | ||||||||||||
Net income | $ | 13,917 | $ | 739 | $ | 14,656 | $ | 6,730 | $ | 402 | $ | 7,132 | ||||||||||||
Net income per common share: | ||||||||||||||||||||||||
Basic | $ | 0.20 | $ | 0.11 | ||||||||||||||||||||
Diluted | $ | 0.19 | $ | 0.20 | $ | 0.10 | $ | 0.11 | ||||||||||||||||
Weighted average common shares outstanding used in net income per common share calculation: | ||||||||||||||||||||||||
Basic | 68,830 | 61,670 | ||||||||||||||||||||||
Diluted | 74,180 | 74,180 | 65,480 | 65,480 | ||||||||||||||||||||
Gross Margin | ||||||||||||||||||||||||
Gross profit as a percentage of net revenues | 92 | % | 93 | % | 91 | % | 91 | % | ||||||||||||||||
Selected operating expenses as a percentage of net revenues: | ||||||||||||||||||||||||
Sales and marketing | 42 | % | 42 | % | 42 | % | 42 | % | ||||||||||||||||
Research and development | 23 | % | 23 | % | 28 | % | 28 | % | ||||||||||||||||
General and administrative | 11 | % | 11 | % | 12 | % | 12 | % | ||||||||||||||||
Operating Margin: | ||||||||||||||||||||||||
Operating income as a percentage of net revenues | 16 | % | 17 | % | 9 | % | 10 | % |
Reclassifications
Historical amounts have been reclassified to reflect amortization of acquired developed technology as a component of cost of revenues.
Macromedia’s pro forma results for the three months ended June 30, 2004 and 2003 differ from results reported under Generally Accepted Accounting Principles in the U.S. due to adjustments for the amortization of acquired developed technology and intangible assets and the following items reported in its unaudited Condensed Consolidated Statements of Income:
(A) | A cash gain realized on an equity investment which had no carrying value due to write-downs recorded in a prior period. |
(B) | Pro forma results for the three months ended June 30, 2004 and 2003 reflect an assumed tax rate of 20 percent, reflecting U.S. federal and state income taxes and foreign taxes at rates other than U.S. statutory rates. |
MACROMEDIA, INC.
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
June 30, 2004 | March 31, 2004 | |||||
ASSETS | ||||||
Current assets: | ||||||
Cash, cash equivalents and short-term investments | $ | 268,397 | $ | 282,691 | ||
Accounts receivable, net | 46,099 | 38,210 | ||||
Restricted cash | 8,019 | 16,363 | ||||
Prepaid expenses and other current assets | 17,614 | 15,581 | ||||
Total current assets | 340,129 | 352,845 | ||||
Property and equipment, net | 82,704 | 45,512 | ||||
Goodwill and other intangible assets, net | 249,747 | 250,789 | ||||
Restricted cash, non-current | 7,022 | 7,022 | ||||
Deferred income taxes, non-current | 16,521 | 16,062 | ||||
Other assets | 8,462 | 9,658 | ||||
Total assets | $ | 704,585 | $ | 681,888 | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 5,764 | $ | 5,311 | ||
Accrued liabilities and income taxes payable | 63,064 | 70,623 | ||||
Accrued restructuring | 6,360 | 6,934 | ||||
Deferred revenues | 36,559 | 32,215 | ||||
Total current liabilities | 111,747 | 115,083 | ||||
Accrued restructuring, non-current | 10,175 | 11,657 | ||||
Deferred revenues, non-current | 5,662 | 5,173 | ||||
Other liabilities, non-current | 4,986 | 5,024 | ||||
Total liabilities | 132,570 | 136,937 | ||||
Total stockholders’ equity | 572,015 | 544,951 | ||||
Total liabilities and stockholders’ equity | $ | 704,585 | $ | 681,888 | ||
Selected Financial Data
(unaudited)
Three Months Ended June 30, | ||||||||
2004 | 2003 | |||||||
(In millions) | ||||||||
Selected Cash Flow Information: | ||||||||
Depreciation and amortization | $ | 3.6 | $ | 4.4 | ||||
Amortization of acquired developed technology and other intangible assets | $ | 1.0 | $ | 0.6 | ||||
Purchase of property and equipment | $ | (38.1 | ) | $ | (1.4 | ) | ||
Proceeds from exercise of stock options | $ | 13.8 | $ | 16.8 | ||||
Earnings before interest, taxes, depreciation and amortization: | ||||||||
Net income | $ | 13.9 | $ | 6.7 | ||||
Interest income | (0.9 | ) | (0.9 | ) | ||||
Tax expense | 3.4 | 1.7 | ||||||
Depreciation and amortization | 3.6 | 4.4 | ||||||
Amortization of acquired developed technology and other intangible assets | 1.0 | 0.6 | ||||||
EBITDA | $ | 21.0 | $ | 12.5 | ||||
Three Months Ended June 30, | % Change | ||||||||||
2004 | 2003 | ||||||||||
(In millions, except percentages) | |||||||||||
Net Revenues by Geography: | |||||||||||
North America | $ | 57.6 | $ | 46.2 | 25 | % | |||||
% of total net revenues | 56 | % | 56 | % | |||||||
Europe | 25.3 | 19.0 | 33 | % | |||||||
Asia Pacific and Other | 20.7 | 17.9 | 15 | % | |||||||
International | 46.0 | 36.9 | 25 | % | |||||||
% of total net revenues | 44 | % | 44 | % | |||||||
Net Revenues | $ | 103.6 | $ | 83.1 | 25 | % | |||||
Three Months Ended June 30, | |||||||||||||||
2004 | 2003 | % Change | |||||||||||||
$ | % | $ | % | ||||||||||||
(In millions, except percentages) | |||||||||||||||
Net Revenues by Market: | |||||||||||||||
Designer and Developer | $ | 85.0 | 82 | % | $ | 72.1 | 87 | % | 18 | % | |||||
Business User | 10.8 | 10 | % | 2.9 | 3 | % | 280 | % | |||||||
Consumer | 6.5 | 6 | % | 6.4 | 8 | % | 2 | % | |||||||
Other | 1.3 | 2 | % | 1.7 | 2 | % | (31 | %) | |||||||
Net Revenues | $ | 103.6 | 100 | % | $ | 83.1 | 100 | % | 25 | % | |||||