8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 24, 2005

MACROMEDIA, INC.

(Exact name of Registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation)

000-22688	94-3155026
(Commission File Number)	(IRS Employer Identification No.)
601 Townsend Street, San Francisco, California	94103
(Address of principal executive offices)	(Zip Code)

(415) 832-2000

(Registrant’s telephone number, including area code)

NOT APPLICABLE

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2)

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Items 2.02 Results of Operations and Financial Condition.

The following information, including the press release attached as an exhibit to this Form 8-K, is being furnished pursuant to Item 2.02, “Results of Operations and Financial Condition.”

The Company issued a press release on October 24, 2005 (the “Press Release”), announcing the Company’s results for the three and six months ended September 30, 2005. A copy of the Press Release is attached as Exhibit 99.1 to this Form 8-K.

The Form 8-K and the information furnished herein shall not be deemed filed with the SEC, nor shall it be deemed incorporated by reference in any filing with the SEC under the Securities Exchange Act of 1934 or the Securities Act of 1933, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.

Non-GAAP Financial Measures

As used herein, “GAAP” refers to generally accepted accounting principles in the United States.

In addition to the GAAP financial measures disclosed in the Press Release, the Company included certain non-GAAP financial measures within the meaning of Regulation G. The Company has consistently provided these financial measures in previous earnings releases and the Company’s management believes that these measures are important to investors and other interested persons, and that investors and such other persons benefit from having a consistent basis for comparison between quarters. The Company’s management also believes these non-GAAP financial measures to be a useful measure of its corporate performance by allowing it to isolate its financial results to certain core functions of its operations.

In compliance with Regulation G, for any non-GAAP financial measures disclosed in the Press Release, corresponding GAAP financial measures and reconciliations have been provided in the Company’s the Press Release.

Item 9.01 Financial Statements and Exhibits.

(a) Not applicable.

(b) Not applicable.

(c) Exhibits.

Exhibit No.	Description
99.1*	Registrant’s second fiscal quarter ended September 30, 2005 earnings release, issued October 24, 2005.

* Exhibit 99.1 is being furnished to the Securities and Exchange Commission (“SEC”) pursuant to Item 2.02 and shall not be deemed filed with the SEC, nor shall it be deemed incorporated by reference in any filing with the SEC under the Securities Exchange Act of 1934 or the Securities Act of 1933, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.

2

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 hereunto duly authorized.

	MACROMEDIA, INC.
Date: October 24, 2005	By:	/s/    ELIZABETH NELSON
		Elizabeth Nelson Executive Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description
99.1*	Registrant’s second fiscal quarter ended September 30, 2005 earnings release, issued October 24, 2005.

* Exhibit 99.1 is being furnished to the Securities and Exchange Commission (“SEC”) pursuant to Item 2.02 and shall not be deemed filed with the SEC, nor shall it be deemed incorporated by reference in any filing with the SEC under the Securities Exchange Act of 1934 or the Securities Act of 1933, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.

3

EX-99.1

Exhibit 99.1

For More Information, Contact:

For Immediate Release

Investor Relations: Macromedia

Michael Look

415 832 5995

mlook@macromedia.com

Public Relations:

Macromedia

Melissa Sheridan

415 832 2246

msheridan@macromedia.com

MACROMEDIA REPORTS SECOND QUARTER FISCAL YEAR 2006 RESULTS

Net income increases 41 percent on record revenues

	Three Months Ended September 30
	2005		2004
Summary Financial Results
Net revenues (millions)	$	127.9	$	107.9
Net income per diluted share – GAAP	$	0.25	$	0.20
Net income per diluted share – Non-GAAP	$	0.30	$	0.22

San Francisco, CA – October 24, 2005 – Macromedia, Inc. (Nasdaq: MACR) today reported financial results for its fiscal 2006 second quarter ended September 30, 2005, reporting the highest revenue and earnings in the Company’s history. Net revenues for the quarter were $127.9 million, an 18 percent increase compared to the $107.9 million reported for the same period last year.

GAAP net income for the fiscal second quarter was $20.3 million, or $0.25 per diluted share, compared to $14.5 million, or $0.20 per diluted share, for the same quarter a year ago. Non-GAAP net income for the fiscal second quarter was $24.9 million, or $0.30 per diluted share, compared to $15.8 million, or $0.22 per diluted share, for the same quarter a year ago. Non-GAAP results exclude expenses associated with the proposed Adobe merger and the tax effect of the planned

repatriation of foreign earnings partially offset by other tax items, as outlined in the attached consolidated statements and related reconciliations. Non-GAAP results also reflect an estimated annual tax rate of 20 percent, reflecting U.S. federal and state income taxes and foreign taxes at rates other than U.S. statutory rates.

“With the advancement of rich Internet application development, new mobile adoption on the Flash Platform, and the launch of Studio 8, this has been an outstanding quarter,” said Stephen Elop, CEO, Macromedia. “We are in the midst of one of the most profound changes in our industry. Developers and consumers alike continue to embrace the concept that great digital experiences matter, demonstrated by the more than 100 million people who have already downloaded Flash Player 8.”

Business Outlook – Third Quarter Fiscal Year 2006

For the quarter ending December 31, 2005, Macromedia expects net revenues to be in the range of $130 to $140 million, with gross margins in the 90 to 92 percent range and operating profit margin between 20 and 23 percent, excluding certain merger-related costs.

Conference Call

Macromedia’s second quarter fiscal year 2006 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 p.m. Pacific Time / 5 p.m. Eastern Time on Monday, October 24, 2005. 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 the pending merger with Adobe Systems Incorporated, customer acceptance of new products and services and new versions of existing products, the impact of competition, 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 fluctuation, and regulations in the applicable foreign countries), 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.

Non-GAAP Financial Measures

Macromedia prepares its financial statements in accordance with accounting principles generally accepted in the United States (GAAP) and adjusts some of its GAAP measures to create non-GAAP financial measures. For purposes of presenting our non-GAAP net income, we exclude certain merger-related costs and apply a non-GAAP annual tax rate of 20% reflecting our estimated tax expense on our core operations. Our non-GAAP financial measures may be considered in addition to, but are not to be used as a substitute for the GAAP information contained in our financial reporting. The non-GAAP

financial measures we use are likely to be different from, and not comparable to, non-GAAP financial measures used by other companies.

Macromedia’s management uses non-GAAP financial measures for its internal performance management and budgeting processes. Macromedia believes that the non-GAAP financial measures provide useful insight into the performance of the business by eliminating the impact of non-recurring and unusual items that are recorded under GAAP. The non-GAAP financial measures have limitations compared to GAAP measures because they exclude charges that often have a material impact on the Company’s GAAP operating expenses, net earnings and diluted earnings per share calculations. To compensate for these limitations, Macromedia’s management typically uses non-GAAP measures in conjunction with GAAP results.

Macromedia believes that presenting the non-GAAP results with an accompanying reconciliation to GAAP results provides investors with an additional tool for evaluating the ongoing performance of our business, without the influence of certain non-recurring expenses. Macromedia believes the non-GAAP financial measures may be useful to investors in helping them understand the financial condition of Macromedia by focusing on the performance of the Company’s core operations. The non-GAAP financial measures are presented by Macromedia to give investors further information about historical and expected results and increase their ability to compare financial information from period to period.

MACROMEDIA, INC. Condensed Consolidated Statements of Income Impact of Non-GAAP Adjustments on Reported Net Income (In thousands, except percentages and per share data) (unaudited)

	Three Months Ended September 30, 2005									Three Months Ended September 30, 2004
	GAAP			Adjustments			Non-GAAP			GAAP			Adjustments			Non-GAAP
Net revenues	$	127,884		$	—		$	127,884		$	107,924		$	—		$	107,924
Cost of revenues:
Cost of net revenues		9,868			—			9,868			7,538			—			7,538
Amortization of acquired developed technology		744						744			744						744
Total cost of revenues		10,612			—			10,612			8,282			—			8,282
Gross profit		117,272			—			117,272			99,642			—			99,642
Operating expenses:
Sales and marketing		48,742			—			48,742			44,733			—			44,733
Research and development		26,120			—			26,120			25,100			—			25,100
General and administrative		13,433			—			13,433			10,812			—			10,812
Amortization of intangible assets		188			—			188			—						—
Restructuring and other		1,435			—			1,435			242						242
Merger-related		3,003			(3,003	)(A)		—			—			—			—
Total operating expenses		92,921			(3,003	)		89,918			80,887			—			80,887
Operating income		24,351			3,003			27,354			18,755			—			18,755
Other income:
Interest income, net		3,487			—			3,487			1,113			—			1,113
Other, net		327			—			327			(102	)		—			(102	)
Total other income		3,814			—			3,814			1,011			—			1,011
Income before income taxes		28,165			3,003			31,168			19,766			—			19,766
Provision for income taxes		(7,830	)		1,596	(B)		(6,234	)		(5,300	)		1,347	(B)		(3,953	)
Net income	$	20,335		$	4,599		$	24,934		$	14,466		$	1,347		$	15,813
Net income per common share:
Basic	$	0.27								$	0.21
Diluted	$	0.25					$	0.30		$	0.20					$	0.22
Weighted average common shares outstanding used in net income per common share calculation:
Basic		76,000									69,510
Diluted		81,960						81,960			73,480						73,480
Gross Margin
Gross profit as a percentage of net revenues		92	%					92	%		92	%					92	%
Selected operating expenses as a percentage of net revenues:
Sales and marketing		38	%					38	%		41	%					41	%
Research and development		20	%					20	%		23	%					23	%
General and administrative		11	%					11	%		10	%					10	%
Operating Margin:
Operating income as a percentage of net revenues		19	%					21	%		17	%					17	%

The financial results include non-GAAP financial measures of operating expenses, operating income, income before income taxes, provision for income taxes, net income and diluted earnings per share. These non-GAAP financial measures exclude the following non-recurring items:

(A) Certain expenses related to our pending merger with Adobe Systems Incorporated which are comprised primarily of professional fees for legal services.

(B) For purposes of presenting our non-GAAP net income, we apply an annual income tax rate of 20% reflecting our estimated tax expense on our core operations.

This rate of 20% is less than the U.S. federal statutory rate of 35% due to taxes on foreign earnings at tax rates lower than the U.S. statutory rate and the expected benefits to be realized from deferred tax assets and net operating losses.

MACROMEDIA, INC. Condensed Consolidated Statements of Income Impact of Non-GAAP Adjustments on Reported Net Income (In thousands, except percentages and per share data) (unaudited)

	Six Months Ended September 30, 2005									Six Months Ended September 30, 2004
	GAAP			Adjustments			Non-GAAP			GAAP			Adjustments			Non-GAAP
Net revenues	$	244,705		$	—		$	244,705		$	211,478		$	—		$	211,478
Cost of revenues:
Cost of net revenues		17,831			—			17,831			15,012			—			15,012
Amortization of acquired developed technology		1,488						1,488			1,488						1,488
Total cost of revenues		19,319			—			19,319			16,500			—			16,500
Gross profit		225,386			—			225,386			194,978			—			194,978
Operating expenses:
Sales and marketing		97,735			—			97,735			88,825			—			88,825
Research and development		50,296			—			50,296			48,818			—			48,818
General and administrative		28,814			—			28,814			21,961			—			21,961
Amortization of intangible assets		376			—			376			483						483
Restructuring and other		1,435			—			1,435			—						—
Merger-related		7,254			(7,254	)(A)		—			—			—			—
Total operating expenses		185,910			(7,254	)		178,656			160,087			—			160,087
Operating income		39,476			7,254			46,730			34,891			—			34,891
Other income:
Interest income, net		6,183			—			6,183			2,054			—			2,054
Other, net		935			—			935			(64	)		—			(64	)
Total other income		7,118			—			7,118			1,990			—			1,990
Income before income taxes		46,594			7,254			53,848			36,881			—			36,881
Provision for income taxes		(11,038	)		268	(B)		(10,770	)		(9,453	)		2,077	(B)		(7,376	)
Net income	$	35,556		$	7,522		$	43,078		$	27,428		$	2,077		$	29,505
Net income per common share:
Basic	$	0.47								$	0.40
Diluted	$	0.43					$	0.52		$	0.37					$	0.40
Weighted average common shares outstanding used in net income per common share calculation:
Basic		75,960									69,140
Diluted		82,340						82,340			73,790						73,790
Gross Margin
Gross profit as a percentage of net revenues		92	%					92	%		92	%					92	%
Selected operating expenses as a percentage of net revenues:
Sales and marketing		40	%					40	%		42	%					42	%
Research and development		21	%					21	%		23	%					23	%
General and administrative		12	%					12	%		10	%					10	%
Operating Margin:
Operating income as a percentage of net revenues		16	%					19	%		16	%					16	%

The financial results include non-GAAP financial measures of operating expenses, operating income, income before income taxes, provision for income taxes, net income and diluted earnings per share. These non-GAAP financial measures exclude the following non-recurring items:

(A) Certain expenses related to our pending merger with Adobe Systems Incorporated which are comprised primarily of professional fees for legal and investment banking services.

(B) For purposes of presenting our non-GAAP net income, we apply an annual income tax rate of 20% reflecting our estimated tax expense on our core operations.

This rate of 20% is less than the U.S. federal statutory rate of 35% due to taxes on foreign earnings at tax rates lower than the U.S. statutory rate and the expected benefits to be realized from deferred tax assets and net operating losses.

MACROMEDIA, INC. Condensed Consolidated Balance Sheets (In thousands) (unaudited)

	September 30, 2005		March 31, 2005
ASSETS
Current assets:
Cash, cash equivalents and short-term investments	$	441,561	$	378,278
Accounts receivable, net		76,205		57,582
Prepaid expenses and other current assets		31,219		23,674
Total current assets		548,985		459,534
Property and equipment, net		106,453		109,509
Goodwill, purchased and other intangible assets, net		240,286		240,801
Deferred income taxes, non-current		23,891		22,272
Other assets		11,859		11,765
Total assets	$	931,474	$	843,881
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	5,105	$	5,355
Accrued liabilities and income taxes payable		86,881		83,070
Accrued restructuring		7,594		9,151
Deferred revenues		54,435		42,604
Total current liabilities		154,015		140,180
Accrued restructuring, non-current		18,695		20,171
Deferred revenues, non-current		9,996		9,413
Other liabilities, non-current		4,995		3,870
Total liabilities		187,701		173,634
Total stockholders’ equity		743,773		670,247
Total liabilities and stockholders’ equity	$	931,474	$	843,881

MACROMEDIA, INC. Selected Financial Data (In millions, except percentages) (unaudited)

	Three Months Ended September 30,				Six Months Ended September 30,
	2005		2004		2005		2004
Selected Cash Flow Information:
Depreciation and amortization	$	6.5	$	6.5	$	13.0	$	12.1
Purchase of property and equipment	$	2.3	$	5.6	$	9.4	$	43.7
Proceeds from employee stock purchase and stock option plans	$	17.4	$	6.1	$	32.5	$	19.9
	Three Months Ended September 30,				Six Months Ended September 30,
	2005		2004		2005		2004
Earnings before interest, taxes, depreciation and amortization - EBITDA:
GAAP operating income	$	24.4	$	18.8	$	39.5	$	34.9
Add: Depreciation and amortization		6.5		6.5		13.0		12.1
GAAP Basis EBITDA		30.9		25.3		52.5		47.0
Add: Merger-related expenses		3.0		—		7.3		—
Non-GAAP Basis EBITDA	$	33.9	$	25.3	$	59.8	$	47.0

We believe EBITDA provides useful information to investors because it is an indicator of the performance of our ongoing business operations, including our ability to fund future operating expenses, capital expenditures, acquisitions and other investments. While depreciation and amortization are considered operating expenses under U.S. Generally Accepted Accounting Principles (“GAAP”), they primarily represent non-cash current period allocations of costs associated with long-lived assets acquired in prior periods.

	Three Months Ended September 30,								% Change		Six Months Ended September 30,								% Change
	2005				2004						2005				2004
	$		%		$		%				$		%		$		%
Net Revenues by Geography:
North America	$	74.0	58	%	$	62.0	57	%	19	%	$	137.7	56	%	$	119.6	57	%	15	%
Europe		25.1	20	%		22.9	21	%	10	%		55.1	23	%		48.2	23	%	14	%
Asia Pacific and Other		28.8	22	%		23.0	22	%	25	%		51.9	21	%		43.7	20	%	19	%
International		53.9	42	%		45.9	43	%	17	%		107.0	44	%		91.9	43	%	16	%
Net Revenues	$	127.9	100	%	$	107.9	100	%	18	%	$	244.7	100	%	$	211.5	100	%	16	%
	Three Months Ended September 30,								% Change		Six Months Ended September 30,								% Change
	2005				2004						2005				2004
	$		%		$		%				$		%		$		%
Net Revenues by Market:
Designer and Developer	$	96.0	75	%	$	86.6	80	%	11	%	$	181.4	74	%	$	171.6	81	%	6	%
Business User		16.9	13	%		11.4	11	%	48	%		33.9	14	%		22.3	11	%	52	%
Consumer		13.1	10	%		8.1	8	%	61	%		26.1	11	%		14.7	7	%	78	%
Other		1.9	2	%		1.8	1	%	2	%		3.3	1	%		2.9	1	%	15	%
Net Revenues	$	127.9	100	%	$	107.9	100	%	18	%	$	244.7	100	%	$	211.5	100	%	16	%