EX-99.1 3 dex991.htm PRESS RELEASE DATED APRIL 30, 2003 Press Release dated April 30, 2003

 

Exhibit 99.1

 

Macromedia (Nasdaq: MACR)

Summary Financial Results

(in millions, except per share data and percentages)

 

    

Three Months
Ended Mar 31

     

Fiscal Year
Ending Mar 31

  
    

2003

   

2002

     

2003

   

2002

  

Net Revenues

   

$

83.6

   

$

76.3

 

   

$

336.9

   

$

326.5

 

EPS-GAAP

   

$

0.11

   

($

1.42

)

   

$

0.03

   

($

5.31

)

EPS-Pro Forma

   

$

0.13

   

($

0.10

)

   

$

0.40

   

($

0.48

)

 

Macromedia Reports Fourth Quarter and Fiscal Year 2003 Results

 

SAN FRANCISCO, Calif.—April 30, 2003—Macromedia (Nasdaq: MACR) today announced its fourth quarter and fiscal year 2003 financial results. Net revenues for the three months ended March 31, 2003 were $83.6 million, compared with net revenues of $76.3 million reported for the comparable period a year ago. Net income for the three months ended March 31, 2003 was $6.9 million, or $0.11 per diluted share, compared to a net loss of $83.4 million, or $1.42 per share, for the comparable quarter a year ago. Pro forma net income for the three months ended March 31, 2003 was $8.3 million, or $0.13 per diluted share, compared to a pro forma net loss of $6.1 million or $0.10 per share for the comparable quarter a year ago.

 

Net revenues for the fiscal year ended March 31, 2003 were $336.9 million, compared with net revenues of $326.5 million for the prior fiscal year. Net income for the twelve months ended March 31, 2003 was $1.6 million, or $0.03 per diluted share, compared to a net loss of $308.8 million, or $5.31 per share, for the prior fiscal year. Pro forma net income for fiscal year 2003 was $24.7 million, or $0.40 per diluted share, compared to a pro forma net loss of $28.1 million, or $0.48 per share, for the fiscal year 2002. See “Pro Forma Results” below for an explanation of pro forma adjustments.

 

“We made a lot of progress this year, returning to revenue growth and profitability while investing strongly in new products,” said Rob Burgess, chairman and CEO, Macromedia. “Our vision of radically improving the experience people have on the Internet is resonating with everyone. The coming year for us is all about execution as we launch more products and services than ever before.”

 

Business Initiatives Update

 

In the past quarter, Macromedia has made advances across its three major business initiatives: design/development software, information convenience software, and mobile and device software.

 

Design/Development Software

 

Macromedia Studio MX Plus, a special Windows edition that adds Macromedia Contribute, Macromedia FreeHand MX, and a DevNet Resource Kit Special Edition for the same price began shipping this quarter. Macromedia FreeHand MX was also introduced, which added the Macromedia MX interface, increased Mac OS X support, and Macromedia Flash integration. Macromedia Flash MX Data Connection Kit, released this quarter, includes Firefly components that jumpstart the development of rich Internet applications through pre-built connections to a range of data sources.

 

Macromedia DevNet is a new software subscription service. Developers and enterprises pay an annual fee for access to a comprehensive set of tools, servers, extensions, components, and other resources, some of which are available first to DevNet subscribers.

 

Information Convenience Software

 

The Macromedia Information Convenience product family provides solutions that enable non-technical professionals to create and deliver great information experiences without intricate technical training. Macromedia Breeze, the product family added with last quarter’s acquisition of Presedia, enables companies to deliver

presentation and training content online as Macromedia Flash content using Microsoft PowerPoint to author their content.

 

Macromedia also unveiled an entirely new product direction this quarter with Macromedia Central. Macromedia Central builds on Macromedia Flash Player to provide an application metaphor that brings Internet applications offline, combining the responsiveness of desktop applications with the flexibility of web applications. The product will be out this summer, and will provide a whole new way for Macromedia Flash developers to sell applications and content.

 

Macromedia Contribute, which shipped its first version in December, really established itself as a strong new product, moving more than 40,000 units since its launch.

 

Mobile and Device Software

 

During the quarter, Macromedia signed an agreement with Japanese mobile phone operator NTT DoCoMo, Inc. to bring Macromedia Flash support to i-mode, DoCoMo’s proprietary 2G/3G mobile Internet platform, in Japan. Macromedia also announced the availability of Macromedia Flash Player 6 for Pocket PC 2002 devices such as those from Casio, HP, and Toshiba this quarter. LeapFrog Enterprises, Inc. will be utilizing Macromedia Flash in one of the company’s new learning platforms, the Leapster portable learning system, scheduled for release in the fall.

 

Industry Awards

 

Macromedia products were recognized by a variety of organizations.

 

— Reader’s Choice Award, Macromedia Flash Communication Server MX, Streaming Media Magazine

 

— Best Up and Coming Streaming Company, Streaming Media Magazine

 

— Productivity Award, Business Integration and Data Tools, ColdFusion MX, 13th Annual Software Development Excellence and Productivity Awards

 

Business Outlook—First Quarter Fiscal Year 2004

 

For the quarter ending June 30, 2003, Macromedia expects net revenues to be in the range of $80 to $85 million, with gross margins in the 88 to 90 percent range, and operating profit margin between 5 and 10 percent. For the fiscal year ending March 31, 2004, the company expects net revenues to increase 10 to 20 percent from fiscal year 2003 results and expects operating profit margin to be between 10 and 20 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 twelve months ended March 31, 2003 and 2002, differ from corresponding results reported under U.S. GAAP due to adjustments for the following items reported in its consolidated results from operations:

 

  ·   Non-cash charges for:

 

  ·   The amortization of deferred stock compensation resulting from the issuance of stock options to employees at an exercise price below the fair-market value on the date of grant;

 

  ·   The amortization of acquired intangible assets;

 

  ·   Impairments and related write-downs of certain acquired intangible assets; and

 

  ·   The write-off of acquired in-process research and development associated with business combinations.

 

  ·   Costs and related expenditures associated with our fiscal year 2002 restructuring plan to deliver cost synergies associated with our March 2001 acquisition of Allaire Corporation.

 

  ·   Cash gains from non-marketable cost-basis investments.

 

  ·   Losses on non-marketable cost-basis and available-for-sale investments resulting from an other-than-temporary decline in the fair-market value of these investments.

 

  ·   Loss resulting from our equity investment in AtomShockwave in fiscal year 2002.

 

  ·   Net charges for certain litigation settlements.

 

  ·   Cash gain on the sale of acquired technology.

 

Pro forma results for the three and twelve months ended March 31, 2003 and 2002, 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.

 

Reclassifications

 

Historical net revenues and expenses have been reclassified to conform to the current year’s presentation. These reclassifications did not impact current or previously recorded net income. These reclassifications, which involved the presentation of shipping and handling fees billed and certain out-of-pocket expenses reimbursed by customers, will be more fully described in our report 10-K to be filed with the Securities and Exchange Commission.

 

Conference Call

 

Macromedia’s fourth quarter and fiscal year 2003 financial results teleconference and simultaneous webcast is scheduled to begin at 2:30 p.m. Pacific Time/ 5:30 p.m. Eastern Time on Wednesday, April 30, 2003. To access the live webcast, please visit http://www.macromedia.com/MACR/ at least 30 minutes prior to the start of the conference call to download any necessary audio or plug-in software. A replay of the conference call will be available on the company’s website. The conference call will also be broadcasted using our new product Breeze. The url for the presentation is http://www.macromedia.com/macromedia/ir/macr/quarter/conference_call.html.

 

About Macromedia

 

Experience matters. Macromedia (www.macromedia.com) 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 risk and uncertainties include those related to general adverse economic conditions in the markets in which we participate, customer acceptance of new products and services and new versions of existing products, the risk of adequately evolving our internal systems and processes in a dynamic business environment, new regulations and other legislative 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 risk of integrating newly acquired technologies and products, the impact of competition, the risk of delays in product development and release dates, 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 dependence on distributors and risks of product returns, risk associated with potential litigations, 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 for the fiscal year ended March 31, 2002, 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.

 

MACROMEDIA, INC.

Consolidated Statements of Operations

Impact of Pro Forma Adjustments on Reported Net Income (Loss)

(In thousands, except per share data)

(unaudited)

 

       
    

For the Three Months Ended

March 31, 2003

   

For the Three Months Ended

March 31, 2002

  
    

GAAP

     

Adjustments

     

Pro Forma

   

GAAP

     

Adjustments

     

Pro Forma

  

Net revenues

   

$

83,594

 

   

$

—  

 

   

$

83,594

   

$

76,282

 

   

$

—  

 

   

$

76,282

 

Cost of revenues

   

 

8,288

 

   

 

—  

 

   

 

8,288

   

 

10,638

 

   

 

(16

)(4)

   

 

10,622

 

    
  
  
  
  
  

Gross profit

   

 

75,306

 

   

 

—  

 

   

 

75,306

   

 

65,644

 

   

 

16

 

   

 

65,660

 

    
  
  
  
  
  

Operating expenses:

                                                    

Sales and marketing

   

 

36,381

 

   

 

—  

 

   

 

36,381

   

 

37,544

 

   

 

(171

)(4)

   

 

37,373

 

Research and development

   

 

21,372

 

   

 

—  

 

   

 

21,372

   

 

26,079

 

   

 

(173

)(4)

   

 

25,906

 

General and administrative

   

 

8,063

 

   

 

—  

 

   

 

8,063

   

 

10,913

 

   

 

(42

)(4)

   

 

10,871

 

Amortization of intangible assets

   

 

414

 

   

 

(414

)(1)

   

 

—  

   

 

28,489

 

   

 

(28,489

)(1)

   

 

—  

 

Acquired in-process R&D

   

 

357

 

   

 

(357

)(2)

   

 

—  

   

 

—  

 

   

 

—  

 

   

 

—  

 

Restructuring expenses

   

 

—  

 

   

 

—  

 

   

 

—  

   

 

42,281

 

   

 

(42,281

)(5)

   

 

—  

 

    
  
  
  
  
  

Total operating expenses

   

 

66,587

 

   

 

(771

)

   

 

65,816

   

 

145,306

 

   

 

(71,156

)

   

 

74,150

 

    
  
  
  
  
  

Operating income (loss)

   

 

8,719

 

   

 

771

 

   

 

9,490

   

 

(79,662

)

   

 

71,172

 

   

 

(8,490

)

Other income (expense):

                                                    

Interest income and other, net

   

 

846

 

   

 

—  

 

   

 

846

   

 

854

 

   

 

—  

 

   

 

854

 

Loss on non-marketable investments

   

 

—  

 

   

 

—  

 

   

 

—  

   

 

(595

)

   

 

595

(6)

   

 

—  

 

Litigation settlement

   

 

(1,500

)

   

 

1,500

(5)

   

 

—  

   

 

(2,900

)

   

 

2,900

(3)

   

 

—  

 

    
  
  
  
  
  

Total other income (expense)

   

 

(654

)

   

 

1,500

 

   

 

846

   

 

(2,641

)

   

 

3,495

 

   

 

854

 

    
  
  
  
  
  

Income (loss) before income taxes

   

 

8,065

 

   

 

2,271

 

   

 

10,336

   

 

(82,303

)

   

 

74,667

 

   

 

(7,636

)

Provision (benefit) for income taxes

   

 

1,133

 

   

 

934

(7)

   

 

2,067

   

 

1,111

 

   

 

(2,638

)(7)

   

 

(1,527

)

    
  
  
  
  
  

Net income (loss)

   

$

6,932

 

   

$

1,337

 

   

$

8,269

   

$

(83,414

)

   

$

77,305

 

   

$

(6,109

)

    
  
  
  
  
  

Net income (loss) per common share

                                                    

Basic

   

$

0.11

 

                   

$

(1.42

)

                  

Diluted

   

$

0.11

 

            

$

0.13

   

$

(1.42

)

            

$

(0.10

)

Weighted average common shares outstanding used for basic and diluted net income (loss) per common share

                                                    

Basic

   

 

60,760

 

                   

 

58,945

 

                  

Diluted

   

 

62,470

 

            

 

62,470

   

 

58,945

 

            

 

58,945

 

Macromedia’s pro forma results for the three months ended March 31, 2003 and 2002 differ from results reported under U.S. GAAP due to adjustments for the following items reported in its consolidated statements of operations:

 

(1)   The amortization of acquired intangible assets of $414 and $28,489 for the three months ended March 31, 2003 and 2002, respectively.
(2)   The write-off of acquired in-process research and development associated with business combinations of $357 for the three months ended March 31, 2003.
(3)   A litigation charge of $1,500 was recorded at March 31, 2003 related to a previously disclosed lawsuit. During the quarter ended March 31, 2002, the Company paid a $100 legal settlement and separately recorded a $2,800 charge for an unrelated court awarded settlement in a patent infringement case. Subsequently, the Company and the plaintiff entered into a settlement agreement whereby the claims of both parties were dismissed. As a result, the $2,800 charge and related accrued liability were reversed in the period ended June 30, 2002.
(4)   The amortization of non-cash stock compensation resulting from the issuance of stock options to employees at an exercise price below the fair-market value on the date of grant of $402 for the three months ended March 31, 2002.
(5)   Costs of $42,281 for the three months ended March 31, 2002, associated with the March 2001 acquisition of Allaire Corporation and our subsequent restructuring plan.
(6)   Loss on a non-marketable cost-basis investment resulting from an other-than-temporary decline in the fair-market value of this investment of $595 for the three months ended March 31, 2002.
(7)   Pro forma results for the three months ended March 31, 2003 and 2002 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.

Consolidated Statements of Operations

Impact of Pro Forma Adjustments on Reported Net Income (Loss)

(In thousands, except per share data)

(unaudited)

 

       
    

For the Fiscal Year Ended

March 31, 2003

   

For the Fiscal Year Ended

March 31, 2002

  
    

GAAP

     

Adjustments

     

Pro Forma

   

GAAP

     

Adjustments

     

Pro Forma

  

Net revenues

   

$

336,913

 

   

$

—  

 

   

$

336,913

   

$

326,498

 

   

$

—  

 

   

$

326,498

 

Cost of revenues

   

 

36,170

 

   

 

(45

)(1)

   

 

36,125

   

 

44,050

 

   

 

(62

)(1)

   

 

43,988

 

    
  
  
  
  
  

Gross profit

   

 

300,743

 

   

 

45

 

   

 

300,788

   

 

282,448

 

   

 

62

 

   

 

282,510

 

    
  
  
  
  
  

Operating expenses:

                                                    

Sales and marketing

   

 

145,297

 

   

 

(122

)(1)

   

 

145,175

   

 

170,851

 

   

 

(294

)(1)

   

 

170,557

 

Research and development

   

 

92,385

 

   

 

(89

)(1)

   

 

92,296

   

 

110,118

 

   

 

(265

)(1)

   

 

109,853

 

General and administrative

   

 

36,168

 

   

 

(26

)(1)

   

 

36,142

   

 

43,693

 

   

 

(68

)(1)

   

 

43,625

 

Amortization of intangible assets

   

 

7,556

 

   

 

(7,556

)(2)

   

 

—  

   

 

114,532

 

   

 

(114,532

)(2)

   

 

—  

 

Acquired in-process R&D

   

 

357

 

   

 

(357

)(3)

   

 

—  

   

 

—  

 

   

 

—  

 

   

 

—  

 

Restructuring expenses

   

 

—  

 

   

 

—  

 

   

 

—  

   

 

81,820

 

   

 

(81,820

)(8)

   

 

—  

 

Impairment of intangible assets

   

 

17,316

 

   

 

(17,316

)(4)

   

 

—  

   

 

—  

 

   

 

—  

 

   

 

—  

 

    
  
  
  
  
  

Total operating expenses

   

 

299,079

 

   

 

(25,466

)

   

 

273,613

   

 

521,014

 

   

 

(196,979

)

   

 

324,035

 

    
  
  
  
  
  

Operating income (loss)

   

 

1,664

 

   

 

25,511

 

   

 

27,175

   

 

(238,566

)

   

 

197,041

 

   

 

(41,525

)

Other income (expense):

                                                    

Interest income and other, net

   

 

3,682

 

   

 

—  

 

   

 

3,682

   

 

6,400

 

   

 

—  

 

   

 

6,400

 

Loss on non-marketable investments, net

   

 

(148

)

   

 

148

(5)

   

 

—  

   

 

(6,980

)

   

 

6,980

(5)

   

 

—  

 

Gain on sale of acquired technology

   

 

1,000

 

   

 

(1,000

)(6)

   

 

—  

   

 

—  

 

   

 

—  

 

   

 

—  

 

Loss on equity affiliate

   

 

—  

 

   

 

—  

 

   

 

—  

   

 

(36,016

)

   

 

36,016

(9)

   

 

—  

 

Litigation settlement

   

 

(1,178

)

   

 

1,178

(7)

   

 

—  

   

 

(31,402

)

   

 

31,402

(7)

   

 

—  

 

    
  
  
  
  
  

Total other income (expense)

   

 

3,356

 

   

 

326

 

   

 

3,682

   

 

(67,998

)

   

 

74,398

 

   

 

6,400

 

    
  
  
  
  
  

Income (loss) before income taxes

   

 

5,020

 

   

 

25,837

 

   

 

30,857

   

 

(306,564

)

   

 

271,439

 

   

 

(35,125

)

Provision (benefit) for income taxes

   

 

3,448

 

   

 

2,723

(10)

   

 

6,171

   

 

2,266

 

   

 

(9,291

)(10)

   

 

(7,025

)

    
  
  
  
  
  

Net income (loss)

   

$

1,572

 

   

$

23,114

 

   

$

24,686

   

$

(308,830

)

   

$

280,730

 

   

$

(28,100

)

    
  
  
  
  
  

Net income (loss) per common share

                                                    

Basic

   

$

0.03

 

                   

$

(5.31

)

                  

Diluted

   

$

0.03

 

            

$

0.40

   

$

(5.31

)

            

$

(0.48

)

Weighted average common shares outstanding used for basic and diluted net income (loss) per common share

                                                    

Basic

   

 

60,170

 

                   

 

58,190

 

                  

Diluted

   

 

61,190

 

            

 

61,190

   

 

58,190

 

            

 

58,190

 

Macromedia’s pro forma results for fiscal years 2003 and 2002 differ from results reported under U.S. GAAP due to adjustments for the following items reported in its consolidated statements of operations:

 

(1)   The amortization of non-cash stock compensation resulting from the issuance of stock options to employees at an exercise price below the fair-market value on the date of grant of $282 and $689 for fiscal years 2003 and 2002, respectively.
(2)   The amortization of acquired intangible assets of $7,556 and $114,532 for fiscal years 2003 and 2002, respectively.
(3)   The write-off of acquired in-process research and development associated with business combinations of $357 for fiscal year 2003.
(4)   Impairments and related write-downs of certain acquired intangible assets of $17,316 for fiscal year 2003.
(5)   Net losses on non-marketable cost-basis and available-for-sale investments of $148 and $6,980 for fiscal years 2003 and 2002, respectively, resulting from the other-than-temporary decline in the fair-market value of these investments, partially offset by cash gains from non-marketable investments.
(6)   Cash gain on the sale of acquired technology of $1,000 in fiscal year 2003.
(7)   Fiscal year 2002 included: $28,500 cash settlement for a previously disclosed class-action lawsuit; a $100 legal settlement; and a $2,800 charge for a court awarded settlement in a patent infringement case. Subsequently, the Company and the plaintiff in the patent infringement matter entered into a settlement agreement whereby the claims of both parties were dismissed. As a result, the $2,800 charge and related accrued liability were reversed in the period ended June 30, 2002. Fiscal year 2003 reflects: The $2,800 reversal noted above; a cash settlement of $2,500 in a previously disclosed legal matter; and a litigation charge of $1,500 was recorded at March 31, 2003 related to a previously disclosed lawsuit.
(8)   Costs of $81,820 for fiscal year 2002, associated with the March 2001 acquisition of Allaire Corporation and our subsequent restructuring plan.
(9)   Loss resulting from out equity investment in AtomShockwave of $36,016 for fiscal year 2002.
(10)   Pro forma results for fiscal years 2003 and 2002 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)

 

     
    

March 31, 2003

   

March 31, 2002

ASSETS

              

Current assets:

              

Cash, cash equivalents and short-term investments

   

$

215,586

   

$

161,971

Accounts receivable, net

   

 

27,610

   

 

24,181

Prepaid expenses and other current assets

   

 

13,546

   

 

20,691

Deferred income taxes

   

 

10,314

   

 

9,854

    
  

Total current assets

   

 

267,056

   

 

216,697

Property and equipment, net

   

 

34,856

   

 

49,189

Intangible assets, net

   

 

205,918

   

 

226,579

Other non-current assets

   

 

19,593

   

 

25,373

    
  

Total assets

   

$

527,423

   

$

517,838

    
  

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

              

Current liabilities:

              

Accounts payable

   

$

6,714

   

$

6,719

Accrued liabilities and income taxes payable

   

 

49,735

   

 

56,082

Accrued restructuring

   

 

11,024

   

 

12,224

Unearned revenues

   

 

33,916

   

 

24,791

    
  

Total current liabilities

   

 

101,389

   

 

99,816

Accrued restructuring, non-current

   

 

20,064

   

 

30,809

Other non-current liabilities

   

 

6,440

   

 

6,492

    
  

Total liabilities

   

 

127,893

   

 

137,117

    
  

Total stockholders’ equity

   

 

399,530

   

 

380,721

    
  

Total liabilities and stockholders’ equity

   

$

527,423

   

$

517,838