<PAGE> 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.
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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
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PART I - FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
MACROMEDIA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
December 31, March 31,
1996 1996
------------ ---------
<S> <C> <C>
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
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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MACROMEDIA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Nine months ended
December 31, December 31,
--------------------- ---------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
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
======== ======== ======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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MACROMEDIA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Nine months ended
December 31,
---------------------
1996 1995
-------- --------
<S> <C> <C>
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
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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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.
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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.
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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
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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
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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
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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
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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.
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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.
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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
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EXHIBIT DESCRIPTION PAGE
NUMBER ----------- ----
-------
11.01 Statement Regarding Computation of Per Share Earnings 15
27.01 Financial Data Schedule 16
15
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Exhibit 11.01
MACROMEDIA, INC.
COMPUTATION OF NET INCOME (LOSS) PER SHARE
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31,
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
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
======= ======= ======= =======
</TABLE>
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
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
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