-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AF/jiSPD20K/B1hJU1seXU8TaHvgnwC/Ztd8UAPbRmeU/xq0QD0Y2zsVguLPd790 9Lx5s0QovpVF9K3bt3yVwA== 0000950149-97-000361.txt : 19970222 0000950149-97-000361.hdr.sgml : 19970222 ACCESSION NUMBER: 0000950149-97-000361 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961230 FILED AS OF DATE: 19970214 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MACROMEDIA INC CENTRAL INDEX KEY: 0000913949 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 943155026 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-22688 FILM NUMBER: 97536033 BUSINESS ADDRESS: STREET 1: 600 TOWNSEND ST STREET 2: STE 310 W CITY: SAN FRANCISCO STATE: CA ZIP: 94103 BUSINESS PHONE: 4152522000 MAIL ADDRESS: STREET 1: 600 TOWNSEND ST STREET 2: STE 310W CITY: SAN FRANCISCO STATE: CA ZIP: 94103 10-Q 1 FORM 10-Q 1 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, 1996 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. 0-22688 MACROMEDIA, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 94-3155026 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 600 TOWNSEND STREET SAN FRANCISCO, CALIFORNIA 94103 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE) (415) 252-2000 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) 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 . --- --- As of January 31, 1997, there were outstanding 37,569,799 shares of the Registrant's Common Stock, par value $0.001 per share. 1 2 MACROMEDIA, INC. AND SUBSIDIARIES INDEX PART I - FINANCIAL INFORMATION Page - ------------------------------- ---- ITEM 1. FINANCIAL STATEMENTS Condensed Consolidated Balance Sheets December 31, 1996 and March 31, 1996 3 Condensed Consolidated Statements of Operations Three and Nine Months Ended December 31, 1996 and 1995 4 Condensed Consolidated Statements of Cash Flows Nine Months Ended December 31, 1996 and 1995 5 Notes to Condensed Consolidated Financial Statements 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 7 PART II - OTHER INFORMATION - --------------------------- ITEM 2. CHANGES IN SECURITIES 13 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 13 SIGNATURES 14 2 3 PART I - FINANCIAL INFORMATION ITEM I. FINANCIAL STATEMENTS MACROMEDIA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data)
December 31, March 31, 1996 1996 ------------ --------- ASSETS Current assets: Cash and cash equivalents $ 10,035 $ 28,829 Short-term investments 97,891 87,833 Accounts receivable, net 15,838 14,601 Inventory 3,307 1,568 Prepaid expenses and other current assets 4,556 4,275 Deferred tax assets, short-term 3,840 3,840 --------- --------- Total current assets 135,467 140,946 Property and equipment, net 28,990 12,219 Other long-term assets 4,012 1,122 Deferred tax assets, long-term 835 835 --------- --------- Total assets $ 169,304 $ 155,122 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 11,467 $ 11,364 Accrued liabilities 10,825 8,956 Unearned revenue 759 1,235 Other current liabilities 362 331 --------- --------- Total current liabilities 23,413 21,886 Long-term liabilities 20 55 --------- --------- Total liabilities 23,433 21,941 Stockholders' equity: Common stock, par value $0.001 per share; 80,000,000 shares authorized; 37,550,786 and 36,413,211 shares issued and outstanding at December 31, 1996 and March 31, 1996, respectively 38 36 Additional paid-in capital 133,111 129,591 Deferred compensation (337) (415) Retained earnings 13,059 3,969 --------- --------- Total stockholders' equity 145,871 133,181 --------- --------- Total liabilities and stockholders' equity $ 169,304 $ 155,122 ========= =========
See accompanying notes to condensed consolidated financial statements. 3 4 MACROMEDIA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data)
Three months ended Nine months ended December 31, December 31, --------------------- --------------------- 1996 1995 1996 1995 -------- -------- -------- -------- Revenues $ 28,104 $ 30,926 $ 94,139 $ 82,084 Cost of revenues 5,562 5,275 15,501 14,175 -------- -------- -------- -------- Gross profit 22,542 25,651 78,638 67,909 Operating expenses: Sales and marketing 16,240 10,103 40,778 28,694 Research and development 7,438 5,097 21,475 13,817 General and administrative 1,904 1,426 5,017 4,017 Merger 350 225 350 625 -------- -------- -------- -------- Total operating expenses 25,932 16,851 67,620 47,153 -------- -------- -------- -------- Operating (loss) income (3,390) 8,800 11,018 20,756 Other income (expenses), net 1,131 1,418 3,725 2,621 -------- -------- -------- -------- (Loss) Income before income taxes (2,259) 10,218 14,743 23,377 Provision for income taxes (100) (3,066) (5,372) (6,385) -------- -------- -------- -------- Net (loss) income ($ 2,359) $ 7,152 $ 9,371 $ 16,992 ======== ======== ======== ======== Net (loss) income per share ($ 0.06) $ 0.18 $ 0.23 $ 0.46 ======== ======== ======== ======== Weighted average common shares outstanding 37,475 39,653 41,214 37,174 ======== ======== ======== ========
See accompanying notes to condensed consolidated financial statements. 4 5 MACROMEDIA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
Nine months ended December 31, --------------------- 1996 1995 -------- -------- Cash flows from operating activities: Net income $ 9,371 $ 16,991 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 5,249 2,806 Compensation expense on stock options 78 0 Changes in operating assets and liabilities, net of effect of mergers: Accounts receivable, net (1,193) (1,501) Inventory (1,704) (458) Prepaid expenses and other current assets (281) (1,192) Accounts payable 87 3,713 Accrued liabilities 1,865 6,305 Unearned revenue (476) (1,363) Other current liabilities 19 (86) Other long-term liabilities (35) (68) -------- -------- Net cash provided by operating activities 12,980 25,147 -------- -------- Cash flows from investing activities: Capital expenditures (20,548) (6,772) Net purchase of short-term investments (10,058) (65,794) Other long-term assets (4,163) (830) -------- -------- Net cash used in investing activities (34,769) (73,396) -------- -------- Cash flows from financing activities: Proceeds from secondary offering of common stock, net 0 55,844 Proceeds from issuance of common stock 2,995 3,698 -------- -------- Net cash provided by financing activities 2,995 59,542 -------- -------- (Decrease)Increase in cash and cash equivalents (18,794) 11,293 Cash and cash equivalents, beginning of period 28,829 10,230 -------- -------- Cash and cash equivalents, end of period $ 10,035 $ 21,523 ======== ======== Supplemental disclosure of cash flow information: Interest paid during period $ -- $ 5 ======== ======== Income taxes paid $ 3,935 $ 584 ======== ========
See accompanying notes to condensed consolidated financial statements. 5 6 MACROMEDIA, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS BASIS OF PREPARATION The condensed consolidated financial statements at December 31, 1996 and for the three and nine months ended December 31, 1996 and 1995 are unaudited and reflect all adjustments (consisting only of normal recurring accruals) which are, in the opinion of management, necessary for a fair presentation of the Company's financial position and operating results for the interim periods. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with management's discussion and analysis of financial condition and results of operations, contained in the Company's annual report on Form 10-K for the fiscal year ended March 31, 1996. The results of operations for the three and nine months ended December 31, 1996 are not necessarily indicative of the results for the fiscal year ending March 31, 1997 or any other future periods. All net income per share and other amounts included in this document reflect the two-for-one stock split which occurred on October 16, 1995. 6 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Revenues. The Company derives revenues primarily from software sales to domestic and international distributors, value-added resellers, original equipment manufacturers, corporate accounts and registered users. To a lesser extent, revenues are also derived from training services and from contracts to provide maintenance to customers. The Company's principal products, from which it derives a substantial majority of its revenues are Authorware, Director, and FreeHand. The Company's third quarter fiscal 1997 revenues of $28.1 million represented a decrease of 9% from revenues of $30.9 million for the same period in fiscal 1996. This decrease resulted primarily from a decline in sales of stand alone units of Director which the Company believes may be attributable to anticipation of a new version due in the fourth quarter of fiscal 1997, a decline in Director Player technology revenue, an increase in the level of product returns and a change in the pricing strategy for the Authorware Interactive Studio. Late in the second quarter, the Company decreased the price of the Authorware Interactive Studio by 60% in an effort to expand the market for the product by making it more affordable for developers for corporate Intranets, but the resulting increase in units sold was not sufficient to fully offset the decrease in price. North America revenues of $15.9 million contributed 57% of total worldwide revenues in the third quarter of fiscal 1997, a decrease of 15% as compared to $18.7 million, or 60%, in the third quarter of fiscal 1996. International revenues were $12.2 million, which accounted for 43% of the Company's revenues in the third quarter of fiscal 1997, as compared to $12.2 million, or 40%, in the third quarter of fiscal 1996. Windows product revenues comprised 40% of total revenue for the third quarter of fiscal 1997, up 26% in absolute dollars from the third quarter of fiscal 1996. Macintosh product revenue comprised 60% of total revenue for the third quarter of fiscal 1997, down 10% in absolute dollars compared to the third quarter of fiscal 1996. Although Macintosh product sales increased in absolute dollars for the third quarter of fiscal 1997 as compared to the second quarter of fiscal 1997, this increase was driven by the release during the third quarter of a new version of FreeHand/FreeHand Graphics Studio (FGS), which was approximately 70% Macintosh and 30% Windows. Excluding FreeHand and FGS, Macintosh sales declined 33% from the second quarter of fiscal 1997. For the nine months ended December 31, 1996, revenues of $94.1 million represent an increase of 15% from revenues of $82.1 million for the same period in fiscal 1996 due primarily to an increase in unit sales of Director. North America revenues of $50.0 million contributed 53% of total worldwide revenues for the first nine months of fiscal 1997, representing an increase of 6% as compared to $47.4 million or 58%, for the first nine months of fiscal 1996. International revenues of $44.1 million accounted for 47% of the Company's revenues for the first nine months of fiscal 1997, representing an increase of 27% as compared to $34.7 million, or 42%, for the first nine months of fiscal 1996 due primarily to increased sales in Japan. Windows product revenues represented 45% of total revenue for the first nine months of fiscal 1997, compared to 35% for the same period in the prior year. 7 8 Cost of revenues. Cost of revenues for the three and nine months ended December 31, 1996 were 20% and 16% of revenues, respectively, compared to 17% for the same periods in fiscal 1996. This percentage increase was due primarily to lower sales volume and the greater proportion of lower margin products in the product mix. Sales and marketing. Sales and marketing expenses increased by $6.1 million, from $10.1 million in the third quarter of fiscal 1996 to $16.2 million in the third quarter of fiscal 1997 and increased as a percentage of revenues from 33% to 58%. Sales and marketing expenses for the nine months ended December 31, 1996 were $40.8 million, an increase of $12.1 million compared to the first nine months of fiscal 1996 and increased as a percentage of revenues from 35% to 43%. Expenses increased in absolute dollars in the fiscal 1997 periods due to increased headcount and related expenses, the timing of discretionary marketing expenses such as product launch costs, advertising and direct mail and marketing and promotional efforts associated with new product releases, increased travel and the recording of uncollectible accounts receivable. Expenses increased as a percentage of revenues due to lower sales levels, committed expenses and the recording of uncollectible accounts receivable. Research and development. Research and development expenses increased by $2.3 million from $5.1 million in the third quarter of fiscal 1996 to $7.4 million in the third quarter of fiscal 1997, and increased as a percentage of revenues from 16% to 26%. For the nine month period ended December 31, 1996, research and development expenses were $21.5 million, an increase of $7.7 million compared to the first nine months of fiscal 1996, and increased as a percentage of revenues from 17% to 23%. Expenses increased in absolute dollars in fiscal 1997 due to planned increases in headcount and higher outside service costs as a result of an increase in products under development. Expenses increased as a percentage of revenues due to lower sales levels. General and administrative. General and administrative expenses increased by $0.5 million, from $1.4 million in the third quarter of fiscal 1996 to $1.9 million in the third quarter of fiscal 1997, and increased as a percentage of revenue from 5% to 7%. For the nine months ended December 31, 1996, general and administrative expenses were $5.0 million, an increase of $1.0 million compared to the first nine months of fiscal 1996, but remained constant as a percentage of revenues at 5%. Expenses increased slightly in absolute dollars in fiscal 1997 due primarily to planned increases in headcount and costs associated with building the infrastructure required to support the growth of the Company. Expenses increased as a percentage of revenues due to lower sales levels. Merger. In fiscal 1997, a charge to earnings of $350,000 was recorded for the costs associated with the December 1996 acquisition of FutureWave Software. In fiscal 1996, charges to earnings of $400,000 and $225,000 were recorded for the costs associated with the August 1995 acquisition of Fauve Software, Inc. and the December 1995 acquisition of OSC, respectively. Each acquisition was accounted for as a pooling of interests. The Company's financial statements were not restated to reflect these acquisitions due to immateriality. Operating income(loss). Operating loss for the third quarter of fiscal 1997, including the merger charge of $350,000 was $3.4 million compared to operating income of $8.8 million in the third quarter of fiscal 1996. The operating loss resulted from the decline in sales 8 9 levels and the increase in operating expenses described above. Operating income for the nine months ended December 31, 1996 was $11.0 million, a decrease of $9.7 million compared to the same period in fiscal 1996, and a decrease as a percentage of revenues from 25% to 12% for the reasons mentioned above. Other income (expenses). Other income (expenses) decreased by $0.3 million from $1.4 million for the third quarter of fiscal 1996 to $1.1 million for the third quarter of fiscal 1997. The decrease was primarily due to lower interest income which resulted from the decrease in the average cash and short-term investments balance and foreign exchange losses on international sales. Other income (expenses) increased by $1.1 million from $2.6 million for the nine months ended December 31, 1995 to $3.7 million for the nine months ended December 31, 1996 primarily due to the increase in the average cash and short-term investments balance which resulted in an increase in interest income. Provision for income taxes. After using available net operating loss carryforwards, the Company's provision for income taxes for the first nine months of fiscal 1997 was $5.4 million as compared with $6.4 million for the first nine months of fiscal 1996. The Company's effective tax rate increased to 36% for the first nine months of fiscal 1997, as compared to 27% for the first nine months of fiscal 1996, primarily due to the fact that the Company anticipates that it will fully utilize its net operating loss carryforwards in fiscal 1997. The increase in the Company's effective tax rate is also partially due to an increased tax rate on sales to foreign customers. Net income(loss). The Company incurred a loss of $2.4 million in the third quarter of fiscal 1997, compared to net income of $7.2 million for the same quarter a year ago. Net loss per share was $0.06 compared to net income per share of $0.18 for the third quarter of fiscal 1996. Net income for the nine months ended December 31, 1996 was $9.4 million, a 45% decrease from net income of $17.0 million for the first nine months of fiscal 1996. Earnings per share decreased by 50% from $0.46 for the first nine months of fiscal 1996 to $0.23 for the same period in fiscal 1997. LIQUIDITY AND CAPITAL RESOURCES At December 31, 1996, the Company had cash, cash equivalents and short-term investments of $107.9 million. For the nine months ended December 31, 1996, cash provided by operating activities of $13.0 million was primarily attributable to net income. Cash used in investment activities of $34.8 million related primarily to $10.1 million in net short-term investment purchases, $7.0 million to purchase a parcel of land in Redwood Shores, California, and $13.6 million for capital equipment, primarily for computer systems to support the Company's infrastructure and engineering equipment. Cash provided by financing activities of $3.0 million was attributable to proceeds received from the issuance of common stock upon exercise of stock options. This resulted in a decrease of $8.7 million from the March 31, 1996 cash, cash equivalent, and short-term investment balances. Working capital decreased by $7.0 million from March 31, 1996 to $112.1 million at December 31, 1996. The Company anticipates capital expenditures of approximately $6.7 million for the remainder of fiscal 1997. In addition to cash, cash equivalents, and short-term investments, the Company has $15.0 million available under an unsecured revolving line of credit. The line of credit bears 9 10 interest at the bank's prime rate and expires on July 15, 1997. As of December 31, 1996, the Company had no borrowings outstanding. The Company believes that existing cash resources, available bank borrowings and cash generated from operations will be sufficient to meet the Company's cash and investment requirements through at least December 31, 1997. FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS Except for the historical information contained herein, the matters discussed in this Form 10-Q are forward looking statements that involve risks and uncertainties, including those related to management of growth, quarterly fluctuations of operating results, sales of Windows and Macintosh products, impact of competition, the developing multimedia, Internet and on-line services markets, and the other risks detailed below, and from time to time in the Company's other reports filed with the Securities and Exchange Commission. The actual results that the Company achieves may differ materially from any forward looking statements due to such risks and uncertainties. The Company's quarterly operating results may vary significantly depending on the timing of new product introductions and enhancements by the Company. As indicated above, results for the third quarter were significantly affected by the shipment of a new version of Freehand/FGS and by a decline in sales of Director in anticipation of a new version expected in the fourth quarter of fiscal 1997. If the Company does not ship the new version of Director as planned, the Company's results of operations would be materially adversely affected. The Company has in the past experienced delays in the development of new products and enhancement of existing products, and such delays may occur in the future. If the Company were unable, due to resource constraints or technological or other reasons, to develop and introduce such products in a timely manner, this inability could have a material adverse effect on the Company's results of operations. The Company's quarterly results of operations also may vary significantly depending on the timing of product introductions by competitors, changes in pricing, execution of technology licensing agreements and the volume and timing of orders received during the quarter, which are difficult to forecast. The future operating results of the Company may fluctuate as a result of these and other factors, including the Company's ability to continue to develop or acquire innovative products, its product and customer mix and the level of competition. The Company's results of operations may also be affected by seasonal trends. A significant portion of the Company's operating expenses is relatively fixed, and planned expenditures are based primarily on sales forecasts. As a result, if revenues do not meet the Company's forecasts, operating results may be materially adversely affected. A majority of the Company's revenues has been derived from its products for the Macintosh. Although sales of the Company's products for Windows accounted for approximately 45% of total revenue for the first nine months of fiscal 1997 and are expected to become an increasingly important component of the Company's revenues, the Company remains heavily dependent on the sale of products for the Macintosh platform. Apple has recently reported declining sales of its Macintosh computers, substantial losses and a substantial reduction in its workforce. A continuing leveling-off or decline in the sales rate of multimedia-capable Macintosh computers or shifts in mail-order or other distribution 10 11 mechanisms for Macintosh products could have a material adverse effect on the Company's results of operations. A substantial majority of the Company's revenues is derived from the sale of its products through a variety of distribution channels, including traditional software distributors, educational distributors, VARs, OEMs, hardware and software superstores, retail dealers, mail order, and direct sales. Domestically, the Company's products are sold primarily through distributors, VARs, and OEMs. Internationally, the Company's products are sold through distributors. The Company's resellers generally offer products of several different companies, including in some cases products that are competitive with the Company's products. There can be no assurance that the Company's resellers will continue to purchase the Company's products or provide them with adequate levels of support. In addition, the Company believes that certain distributors are reducing their inventory in the channel and returning unsold products to better manage their inventories. In addition, distributors are increasingly seeking to return unsold product, particularly when such products have been superseded by a new version or upgrade of a product. If the Company's distributors were to seek to return increasing amounts of products, such returns could have a material adverse effect on the Company's revenues and results of operations. The loss of, or a significant reduction in sales volume to, a significant reseller could have a material adverse effect on the Company's results of operations. Macromedia has grown in substantial part from combinations with other companies. In January 1995, Macromedia acquired Altsys Corporation, which developed the FreeHand graphic design and illustration product whose revenues prior to that date consisted primarily of royalties from Aldus Corporation, which had marketed FreeHand until January 1995, and revenues from Fontographer, software for creating and modifying fonts. In August 1995, the Company acquired Fauve Software, Inc., a developer of image editing software. In December 1995, the Company acquired OSC, a developer of digital audio production software. In March 1996, the Company acquired iband, Inc., a developer of Internet Web site development tools. In December 1996, the Company acquired FutureWave Software, a developer of Internet animation software. Except for FreeHand, none of the acquired products has accounted for a significant portion of the Company's revenues to date. There can be no assurance that sales of the Company's existing products will either continue at historical rates or increase, or that new products introduced by the Company, whether developed internally or acquired, will achieve market acceptance. The Company's historical rates of growth should not be taken as indicative of growth rates that can be expected in the future. The markets for the Company's products are highly competitive and characterized by pressure to reduce prices, incorporate new features, and accelerate the release of new product versions. For example, the decrease in price of the Authorware Interactive Studio in the second quarter of fiscal 1997 led to an increase in unit sales but resulted in a decrease in revenue as the unit increase was not sufficient to offset the price decrease. A number of companies currently offer products that compete directly or indirectly with one or more of the Company's products. These companies include Adobe Systems Incorporated ("Adobe"), Aimtech Corporation, Apple Computer, Inc., Asymetrix Corporation, Autodesk, Inc., Corel Corporation ("Corel"), Microsoft Corporation ('Microsoft") and Strata Incorporated. As the Company competes with larger competitors such as Adobe, Corel and Microsoft across a broader range of product lines and different platforms, the Company may face increasing competition from such companies. 11 12 The developing multimedia market, Internet and online services, and the personal computer industry in general are characterized by rapidly changing technology, resulting in short product life cycles and rapid price declines. The Company must continuously update its existing products to keep them current with changing technology and must develop new products to take advantage of new technologies that could render the Company's existing products obsolete. The Company's future prospects are highly dependent on its ability to increase functionality of existing products in a timely manner and to develop new products that address new technologies and achieve market acceptance. New products and enhancements must keep pace with competitive offerings, adapt to new platforms and emerging industry standards and provide additional functionality. There can be no assurance that the Company will be successful in these efforts. For the nine months ended December 31, 1996, the Company derived approximately 47% of its total revenues from international sales. The Company expects that international sales will continue to generate a significant percentage of its total revenues. The Company relies on distributors for sales of its products in foreign countries and, accordingly, is dependent on their ability to promote and support the Company's products, and in some cases, to translate them into foreign languages. International business is subject to a number of special risks, including foreign government regulation; general geopolitical risks such as political and economic instability, hostilities with neighboring countries and changes in diplomatic and trade relationships; more prevalent software piracy; unexpected changes in, or imposition of, regulatory requirements, tariffs, import and export restrictions and other barriers and restrictions; longer payment cycles, greater difficulty in accounts receivable collection, potentially adverse tax consequences, the burdens of complying with a variety of foreign laws; foreign currency risk; and other factors beyond the control of the Company. As of April 1, 1996, revenues generated through international sales in certain European countries are denominated in local currency, while expenses continue to be denominated in the local currency of the countries in which the Company has offices. As a result of this program, the Company has entered into hedging contracts to protect it from exchange rate fluctuations. As of December 31, 1996, the contracts outstanding totaled $1.8 million. These contracts are of a short-term duration and the fair value of such contracts equals the market value as of December 31, 1996. 12 13 PART II - OTHER INFORMATION ITEM 2. CHANGES IN SECURITIES Recent Sales of Unregistered Securities: On December 31, 1996, the Company entered into an Agreement and Plan of Reorganization with FutureWave Software, Inc. ("FutureWave") pursuant to which the Company issued 600,000 shares of its Common Stock to the shareholders of FutureWave in exchange for all of the capital stock of FutureWave. The issuance of shares of the Company's Common Stock to the shareholders of FutureWave was exempt from registration under the Securities Act of 1933, as amended (the "Securities Act"), in reliance on Section 4(2) of the Securities Act. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits The following exhibits are filed herewith: Exhibit Number Exhibit Title - ------- ------------- 11.01 - Statement regarding computation of per share earnings. 27.01 - Financial Data Schedule (b) Reports on Form 8-K The Company did not file a report on Form 8-K during the period ended December 31, 1996. 13 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MACROMEDIA, INC. (Registrant) Date: February 13, 1997 /s/ John C. Colligan -------------------------------------- John C. Colligan Chairman of the Board of Directors Date: February 13, 1997 /s/ Richard B. Wood -------------------------------------- Richard B. Wood Vice President of Operations, Chief Financial Officer, and Secretary 14 15 EXHIBIT DESCRIPTION PAGE NUMBER ----------- ---- ------- 11.01 Statement Regarding Computation of Per Share Earnings 15 27.01 Financial Data Schedule 16 15 EX-11.01 2 STATEMENT RE: COMPUTATAION OF PER SHARE EARNINGS 1 Exhibit 11.01 MACROMEDIA, INC. COMPUTATION OF NET INCOME (LOSS) PER SHARE (In thousands, except per share data)
Three Months Ended Nine Months Ended December 31, December 31, 1996 1995 1996 1995 ------- ------- ------- ------- Net income (loss) ($2,359) $ 7,152 $ 9,371 $16,992 ======= ======= ======= ======= Weighted average number of common shares outstanding 37,475 35,213 37,306 33,092 Number of common stock equivalents as a result of stock options outstanding -- 4,440 3,908 4,082 ------- ------- ------- ------- Total 37,475 39,653 41,214 37,174 ======= ======= ======= ======= Net income (loss) per common stock and common stock equivalent ($ 0.06) $ 0.18 $ 0.23 $ 0.46 ======= ======= ======= =======
All net income per share amounts and numbers of shares have been retroactively restated to reflect a two-for-one stock split which became effective October 16, 1995. 16 EX-27.01 3 FINANCIAL DATA SCHEDULE
5 U.S. DOLLARS 3-MOS MAR-31-1997 OCT-01-1996 DEC-31-1996 1 10,035 97,891 21,607 5,769 3,307 135,467 41,096 12,106 169,304 23,413 0 0 0 38 145,833 169,304 28,104 28,104 0 5,562 25,932 0 0 (2259) 100 (2359) 0 0 0 (2359) (0.06) (0.06)
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