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Macromedia Reports Second Quarter Results


Macromedia announced that revenues for the second quarter ended September 30, 1996 were $31,025,000, an increase of 14 percent from $27,301,000 in the same period one year ago. Operating income for the quarter ended September 30, 1996 was $5,455,000, a decrease of 19 percent from $6,725,000 in the same period one year ago, including a one-time merger charge of $400,000 for the August 1995 acquisition of Fauve Software, Inc. Net income for the quarter was $4,610,000 or $0.12 per share, down 15 percent from the $5,417,000 or $0.15 per share earned in the second quarter of last year, including the one-time merger charge.

For the six months ended September 30, 1996, revenues totaled $66,035,000, up 29 percent from $51,158,000 reported in the same period one year ago. Operating income for the six months ended September 30, 1996, was $14,408,000, up 21 percent from the $11,956,000 reported for the same period one year ago, including a one-time merger charge of $400,000. Net income for the six months ended September 30, 1996, was $11,730,000 or $0.29 per share, up 19 percent from the $9,839,000 or $0.27 per share reported last year, including the one-time merger charge.

"During the second quarter, we were pleased to see continued demand for our Windows products, as well as the growing contribution from international sales," said Bud Colligan, Chairman of Macromedia. "Windows products accounted for 49% of overall sales during the quarter and were up 46% year to year. In the next quarter we will begin to benefit from sales of the new FreeHand Graphics Studio 7, containing the latest versions of FreeHand, Extreme 3D and xRes. All of these products have been optimized for both print and the Internet and leverage Macromedia's Shockwave franchise. With the FreeHand Graphics Studio shipping, we expect Macintosh sales to rebound in fiscal Q3," said Colligan.

New Product Announcements And Shipments

In September, over 6,000 people attended the Macromedia User Conference and Exhibition, where Macromedia announced the FreeHand Graphics Studio 7, powerful design tools for Internet, Shockwave and print publishing. The new Studio contains new FreeHand 7, new Macromedia xRes 3, new Extreme 3D 2 and Fontographer 4.1. The Studio features four seamlessly integrated, cross-platform 2D and 3D tools for creating designs that support powerful Internet graphics and standards such as Shockwave, transparent GIFs, progressive JPEG, VRML for 3D imaging and URL embedding for hotlinks. The FreeHand Graphics Studio is expected to begin shipping in November. In a related release, Macromedia announced that the FreeHand Graphics Studio 7 will deliver on the four pillars of the Macromedia Studios Architecture, previewed at last year's conference. Macromedia User Interface (MUI), Macromedia Open Architecture (MOA), Macromedia Exchange (MIX) and Macromedia Scripting (MCS) provide a fully integrated set of tools sharing a common user interface, extensible open architecture, rich media exchange and scriptability through Java. Also at the User Conference, Macromedia further established its leadership position in providing powerful, high-value solutions to the interactive information marketplace by announcing new pricing for the Authorware Interactive Studio.

In July, Macromedia announced and shipped the latest version of Shockwave, the Company's technology for expanding and optimizing digital media access on the Internet. Shockwave's new audio capabilities bring voice- to CD-quality streaming audio and up to 176:1 compression to the web for the first time. Also in July, Macromedia announced and made available AppletAce, the first Java application which allows designers and graphic artists to easily enhance their Web sites without HTML or Java programming.


At the Macromedia User Conference, Macromedia and Netscape Communications announced a comprehensive licensing and distribution agreement to advance the use of multimedia on the Internet. Netscape plans to incorporate both Macromedia's Shockwave plug-in and Fireworks, Macromedia's high performance, Java-based content API, into the Netscape Navigator client software product line. Also at the User Conference, Macromedia and Intel announced that Director would be the first multimedia and web authoring tool optimized for Intel's MMX technology. The announcement enables animation and multimedia playback performance up to 50% faster for both Director and Shockwave movies.

This quarter, Macromedia continued making partnerships that extend the reach of Shockwave. As of the end of September, more than 11 million downloads of Shockwave had occurred. Netscape Communications has licensed Shockwave to include with its Netscape Navigator Personal Edition, the top selling retail software package for consumers to access and browse the World Wide Web. In addition, CompuServe plans to distribute Shockwave through its WOW! consumer online service. Finally, @Home Network and Continental Cablevision have licensed Shockwave for distribution to its customers as part of its high speed cable modem network and service.

New President

In August, Macromedia announced that Rob Burgess was named President of the company, effective November 1, 1996. Mr. Burgess comes to Macromedia from Silicon Graphics, Inc. (SGI), where he was Senior Vice President. Prior to this most recent role, Mr. Burgess was President of Alias/Wavefront, a wholly-owned software subsidiary of SGI, and was previously President and CEO of Alias from 1992 to 1995, when it was an independent, publicly-traded company on the NASDAQ Stock Market. As President, Mr. Burgess will be responsible for the operating results of the company and will join the Board of Directors. Bud Colligan, formerly Chairman and President, will continue as Chairman and focus on strategy, corporate development and financial and industry relations.


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