EXHIBIT 99.1
For More Information, Contact: | For Immediate Release |
Media Contact:
Steve Ballerini
(415) 252-2234
sballerini@macromedia.com
Investor Relations:
Michael Look
(415) 832-5995
mlook@macromedia.com
MACROMEDIA REPORTS SECOND QUARTER FISCAL YEAR 2005 RESULTS
Net income increases 58 percent as revenue grows 20 percent year-over-year
Macromedia, Inc. (Nasdaq: MACR) Summary Financial Results (in millions, except per share data) | Three Months Ended Sept. 30 | |||||
2004 | 2003 | |||||
Net revenues | $ | 107.9 | $ | 89.9 | ||
Net income per diluted share - GAAP | $ | 0.21 | $ | 0.14 | ||
Net income per diluted share – pro forma | $ | 0.22 | $ | 0.14 |
Download Q205 Financials - Excel file (TBD)
San Francisco, CA—October 20, 2004—Macromedia, Inc. (Nasdaq: MACR) today reported financial results for its fiscal second quarter ended September 30, 2004. Net revenues for the quarter were $107.9 million, a 20 percent increase compared to the $89.9 million reported for the same period last year.
Net income for the quarter ended September 30, 2004 was $15.5 million, or $0.21 per diluted share, compared to $9.8 million, or $0.14 per diluted share, for the same quarter a year ago. Pro forma net income for the quarter ended September 30, 2004 was $16.4 million, or $0.22 per diluted share, compared to $10.1 million, or $0.14 per diluted share, for the same quarter a year ago.
“What is driving our success is the work that our customers are doing, which has never been better,” said Rob Burgess, chairman and CEO, Macromedia. “The technology has evolved, the methodologies have matured, and people around the world are realizing that experiences really do matter.”
Business Outlook - Third Quarter Fiscal Year 2005
For the quarter ending December 31, 2004, Macromedia expects net revenues to be in the range of $105 to $110 million, with pro forma gross margins in the 92 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 and six months ended September 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 and six months ended September 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 second quarter of fiscal year 2005 financial results will be discussed in a Macromedia® Breeze™ presentation available athttp://www.macromedia.com/MACR/. In addition, a teleconference is scheduled to begin at 2 p.m. Pacific Time / 5 p.m. Eastern Time on Wednesday, October 20, 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 companies and their employees, products, and technologies, the risk of adequately evolving and operating our internal systems and processes in a dynamic business environment, the risk of delays in product development and release dates, the risk of not attracting and retaining key personnel, 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, exchange rate fluctuations, 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 Company’s operating results, the Company’s dependence on distributors and resellers, the risk of product returns, the challenges faced in protecting the Company’s intellectual property within and outside the U.S., 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.
* * *
Copyright 2004 Macromedia, Inc. All rights reserved. Macromedia, the Macromedia logo, and Macromedia Breeze 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 September 30, 2004 | Three Months Ended September 30, 2003 | |||||||||||||||||||||||
GAAP | Adjustments | Pro Forma | GAAP | Adjustments | Pro Forma | |||||||||||||||||||
Net revenues | $ | 107,924 | $ | — | $ | 107,924 | $ | 89,871 | $ | — | $ | 89,871 | ||||||||||||
Cost of revenues: | ||||||||||||||||||||||||
Cost of net revenues | 7,544 | — | 7,544 | 7,875 | — | 7,875 | ||||||||||||||||||
Amortization of acquired developed technology | 744 | (744 | ) | — | 319 | (319 | ) | — | ||||||||||||||||
Total cost of revenues | 8,288 | (744 | ) | 7,544 | 8,194 | (319 | ) | 7,875 | ||||||||||||||||
Gross profit | 99,636 | 744 | 100,380 | 81,677 | 319 | 81,996 | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Sales and marketing | 44,845 | — | 44,845 | 38,198 | — | 38,198 | ||||||||||||||||||
Research and development | 25,240 | — | 25,240 | 23,282 | — | 23,282 | ||||||||||||||||||
General and administrative | 10,850 | — | 10,850 | 8,575 | — | 8,575 | ||||||||||||||||||
Amortization of intangible assets | 242 | (242 | ) | — | 247 | (247 | ) | — | ||||||||||||||||
Total operating expenses | 81,177 | (242 | ) | 80,935 | 70,302 | (247 | ) | 70,055 | ||||||||||||||||
Operating income | 18,459 | 986 | 19,445 | 11,375 | 566 | 11,941 | ||||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||
Interest income, net | 1,113 | — | 1,113 | 841 | — | 841 | ||||||||||||||||||
Gain on investments | — | — | — | 780 | (780 | )(A) | — | |||||||||||||||||
Other, net | (101 | ) | — | (101 | ) | (206 | ) | — | (206 | ) | ||||||||||||||
Total other income | 1,012 | — | 1,012 | 1,415 | (780 | ) | 635 | |||||||||||||||||
Income before income taxes | 19,471 | 986 | 20,457 | 12,790 | (214 | ) | 12,576 | |||||||||||||||||
Provision for income taxes | (3,943 | ) | (148 | )(B) | (4,091 | ) | (2,970 | ) | 455 | (B) | (2,515 | ) | ||||||||||||
Net income | $ | 15,528 | $ | 838 | $ | 16,366 | $ | 9,820 | $ | 241 | $ | 10,061 | ||||||||||||
Net income per common share: | ||||||||||||||||||||||||
Basic | $ | 0.22 | $ | 0.16 | ||||||||||||||||||||
Diluted | $ | 0.21 | $ | 0.22 | $ | 0.14 | $ | 0.14 | ||||||||||||||||
Weighted average common shares outstanding used in net income per common share calculation: | ||||||||||||||||||||||||
Basic | 69,510 | 63,210 | ||||||||||||||||||||||
Diluted | 73,480 | 73,480 | 69,540 | 69,540 | ||||||||||||||||||||
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 | % | 43 | % | 43 | % | ||||||||||||||||
Research and development | 23 | % | 23 | % | 26 | % | 26 | % | ||||||||||||||||
General and administrative | 10 | % | 10 | % | 10 | % | 10 | % | ||||||||||||||||
Operating Margin: | ||||||||||||||||||||||||
Operating income as a percentage of net revenues | 17 | % | 18 | % | 13 | % | 13 | % |
Macromedia’s pro forma results for the three months ended September 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 equity investments which had no carrying value due to write-downs recorded in a prior period. |
(B) | Pro forma results for the three months ended September 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 Statements of Income
Impact of Pro Forma Adjustments on Reported Net Income
(In thousands, except percentages and per share data)
(unaudited)
Six Months Ended September 30, 2004 | Six Months Ended September 30, 2003 | |||||||||||||||||||||||
GAAP | Adjustments | Pro Forma | GAAP | Adjustments | Pro Forma | |||||||||||||||||||
Net revenues | $ | 211,478 | $ | — | $ | 211,478 | $ | 172,935 | $ | — | $ | 172,935 | ||||||||||||
Cost of revenues: | ||||||||||||||||||||||||
Cost of net revenues | 15,014 | — | 15,014 | 15,064 | — | 15,064 | ||||||||||||||||||
Amortization of acquired developed technology | 1,488 | (1,488 | ) | — | 638 | (638 | ) | — | ||||||||||||||||
Total cost of revenues | 16,502 | (1,488 | ) | 15,014 | 15,702 | (638 | ) | 15,064 | ||||||||||||||||
Gross profit | 194,976 | 1,488 | 196,464 | 157,233 | 638 | 157,871 | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Sales and marketing | 88,853 | — | 88,853 | 72,874 | — | 72,874 | ||||||||||||||||||
Research and development | 48,855 | — | 48,855 | 46,582 | — | 46,582 | ||||||||||||||||||
General and administrative | 21,969 | — | 21,969 | 18,277 | — | 18,277 | ||||||||||||||||||
Amortization of intangible assets | 483 | (483 | ) | — | 494 | (494 | ) | — | ||||||||||||||||
Total operating expenses | 160,160 | (483 | ) | 159,677 | 138,227 | (494 | ) | 137,733 | ||||||||||||||||
Operating income | 34,816 | 1,971 | 36,787 | 19,006 | 1,132 | 20,138 | ||||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||
Interest income, net | 2,054 | — | 2,054 | 1,732 | — | 1,732 | ||||||||||||||||||
Gain on investments | — | — | — | 845 | (845 | )(A) | — | |||||||||||||||||
Other, net | (64 | ) | — | (64 | ) | (380 | ) | — | (380 | ) | ||||||||||||||
Total other income | 1,990 | — | 1,990 | 2,197 | (845 | ) | 1,352 | |||||||||||||||||
Income before income taxes | 36,806 | 1,971 | 38,777 | 21,203 | 287 | 21,490 | ||||||||||||||||||
Provision for income taxes | (7,361 | ) | (394 | )(B) | (7,755 | ) | (4,653 | ) | 356 | (B) | (4,297 | ) | ||||||||||||
Net income | $ | 29,445 | $ | 1,577 | $ | 31,022 | $ | 16,550 | $ | 643 | $ | 17,193 | ||||||||||||
Net income per common share: | ||||||||||||||||||||||||
Basic | $ | 0.43 | $ | 0.27 | ||||||||||||||||||||
Diluted | $ | 0.40 | $ | 0.42 | $ | 0.24 | $ | 0.25 | ||||||||||||||||
Weighted average common shares outstanding used in net income per common share calculation: | ||||||||||||||||||||||||
Basic | 69,140 | 62,450 | ||||||||||||||||||||||
Diluted | 73,790 | 73,790 | 67,640 | 67,640 | ||||||||||||||||||||
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 | % | 27 | % | 27 | % | ||||||||||||||||
General and administrative | 10 | % | 10 | % | 11 | % | 11 | % | ||||||||||||||||
Operating Margin: | ||||||||||||||||||||||||
Operating income as a percentage of net revenues | 16 | % | 17 | % | 11 | % | 12 | % |
Macromedia’s pro forma results for the six months ended September 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 equity investments which had no carrying value due to write-downs recorded in a prior period. |
(B) | Pro forma results for the six months ended September 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)
September 30, 2004 | March 31, 2004 | |||||
ASSETS | ||||||
Current assets: | ||||||
Cash, cash equivalents and short-term investments | $ | 285,702 | $ | 282,691 | ||
Accounts receivable, net | 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 and other intangible assets, net | 247,086 | 250,789 | ||||
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 liabilities and income taxes payable | 66,647 | 70,623 | ||||
Accrued restructuring | 5,692 | 6,934 | ||||
Deferred revenues | 36,411 | 32,215 | ||||
Total current liabilities | 114,476 | 115,083 | ||||
Accrued restructuring, non-current | 9,027 | 11,657 | ||||
Deferred revenues, non-current | 6,867 | 5,173 | ||||
Other liabilities, non-current | 4,882 | 5,024 | ||||
Total liabilities | 135,252 | 136,937 | ||||
Total stockholders’ equity | 593,911 | 544,951 | ||||
Total liabilities and stockholders’ equity | $ | 729,163 | $ | 681,888 | ||
MACROMEDIA, INC. |
Selected Financial Data
(In millions, except percentages)
(unaudited)
Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
Selected Cash Flow Information: | ||||||||||||||||
Depreciation and amortization | $ | 3.8 | $ | 3.9 | $ | 7.4 | $ | 8.4 | ||||||||
Amortization of acquired developed technology and other intangible assets | $ | 1.0 | $ | 0.6 | $ | 2.0 | $ | 1.1 | ||||||||
Purchase of property and equipment | $ | (5.6 | ) | $ | (16.7 | ) | $ | (43.7 | ) | $ | (18.0 | ) | ||||
Proceeds from employee stock purchase and stock option plans | $ | 6.1 | $ | 22.5 | $ | 19.9 | $ | 39.3 | ||||||||
Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
Earnings before interest, taxes, depreciation and amortization: | ||||||||||||||||
Operating income | $ | 18.5 | $ | 11.4 | $ | 34.8 | $ | 19.0 | ||||||||
Depreciation and amortization | 3.8 | 3.9 | 7.4 | 8.4 | ||||||||||||
Amortization of acquired developed technology and other intangible assets | 1.0 | 0.6 | 2.0 | 1.1 | ||||||||||||
EBITDA | $ | 23.3 | $ | 15.9 | $ | 44.2 | $ | 28.5 | ||||||||
Three Months Ended September 30, | % Change | Six Months Ended September 30, | % Change | |||||||||||||||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||||||||||||||||
$ | % | $ | % | $ | % | $ | % | |||||||||||||||||||||||
Net Revenues by Geography: | ||||||||||||||||||||||||||||||
North America | $ | 62.0 | 57 | % | $ | 54.1 | 60 | % | 15 | % | $ | 119.6 | 57 | % | $ | 100.3 | 58 | % | 19 | % | ||||||||||
Europe | 22.9 | 21 | % | 21.2 | 24 | % | 8 | % | 48.2 | 23 | % | 40.1 | 23 | % | 20 | % | ||||||||||||||
Asia Pacific and Other | 23.0 | 22 | % | 14.6 | 16 | % | 57 | % | 43.7 | 20 | % | 32.5 | 19 | % | 34 | % | ||||||||||||||
International | 45.9 | 43 | % | 35.8 | 40 | % | 28 | % | 91.9 | 43 | % | 72.6 | 42 | % | 26 | % | ||||||||||||||
Net Revenues | $ | 107.9 | 100 | % | $ | 89.9 | 100 | % | 20 | % | $ | 211.5 | 100 | % | $ | 172.9 | 100 | % | 22 | % | ||||||||||
Three Months Ended September 30, | % Change | Six Months Ended September 30, | % Change | |||||||||||||||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||||||||||||||||
$ | % | $ | % | $ | % | $ | % | |||||||||||||||||||||||
Net Revenues by Market: | ||||||||||||||||||||||||||||||
Designer and Developer | $ | 86.6 | 80 | % | $ | 81.2 | 90 | % | 7 | % | $ | 171.6 | 81 | % | $ | 153.3 | 89 | % | 12 | % | ||||||||||
Business User | 11.4 | 11 | % | 4.7 | 5 | % | 144 | % | 22.3 | 11 | % | 7.5 | 4 | % | 195 | % | ||||||||||||||
Consumer | 8.1 | 8 | % | 2.0 | 2 | % | 304 | % | 14.7 | 7 | % | 8.4 | 5 | % | 74 | % | ||||||||||||||
Other | 1.8 | 1 | % | 2.0 | 3 | % | (7 | )% | 2.9 | 1 | % | 3.7 | 2 | % | (18 | )% | ||||||||||||||
Net Revenues | $ | 107.9 | 100 | % | $ | 89.9 | 100 | % | 20 | % | $ | 211.5 | 100 | % | $ | 172.9 | 100 | % | 22 | % | ||||||||||