NEWS
For Immediate Release
Media Inquiries:
Marty Coleman
marty_coleman@genmagic.com
+1 408-774 4420
Investor Inquiries:
Terese Callahan
terese_callahan@genmagic.com
+1 408 774 4288
General Magic's
Web Site
SUNNYVALE, Calif., August 14, 1996 -- General Magic, Inc. (NASDAQ:GMGC) today announced its operating results for the second quarter of fiscal year 1996. The Company's fundamental change in business strategy, signaled in early 1996, was implemented last June with a series of product releases focused on the Internet. The Company's repositioning resulted in higher costs for the second quarter related to product development, marketing and sales expenses. Management believes that the Company's shift to address the Internet provides the best growth opportunities for the Company, both on the server side (Tabriz(tm)) and on the client side (Magic Cap(r)).
For the three-month period ended June 30, 1996, the Company incurred a net loss of $11.6 million, or $0.45 per share, compared to a net loss of $6.5 million, or $0.26 per share, for the same period ended June 30, 1995, and $7.0 million, or $0.27 per share for the three-month period ended March 31, 1996. Revenue for the three-month period ended June 30, 1996 totaled $1.1 million compared to $1.9 million for the same three-month period last year and $2.8 million for the first quarter 1996. Revenue for the quarter ended June 30, 1996 was primarily related to customer specific engineering programs and maintenance and support services. The shortfall in revenue, primarily due to lower license fees, was a result of the Company's shift in product strategies to address the Internet.
Research and development expenses were $7.4 million for the three-month period ended June 30, 1996, compared to $4.9 million for the same three-month period last year and to $5.4 million last quarter. Research and development expenses increased approximately $2.0 million in the second quarter due primarily to outside services required to develop the Company's new Internet-focused products, Tabriz AgentWare(tm), Tabriz Agent Tools, Presto!Links(tm) and Presto!Mail(tm), and an agreement to assist one of the Company's Telescript(r) licensees with its deployment of a pilot service using Tabriz AgentWare. These development activities are also primarily responsible for the 52% increase in second quarter 1996 expenses from the same quarter in 1995.
Sales, general and administrative expenses were $5.4 million for the three-month period ended June 30, 1996, compared to $4.6 million for the same three-month period last year and to $4.2 million last quarter. The 29% increase in spending compared to last quarter is due primarily to the costs associated with the Company's new product launches in June. The net 17% increase over the prior year quarter reflects the Company's expanded sales and marketing presence in Japan and Europe.
In accordance with U.S. securities law, General Magic notes that this press release contains forward-looking statements. There are risks that may cause actual results to vary materially. These risks include, but are not limited to, reliance on key technical and management personnel and third party developers, establishment and success of key distribution channels, potential schedule changes, competitive pressures and emerging Internet standards. Additional risk factors are detailed in General Magic's 1995 Form 10-K and its first and second quarter 1996 Form 10-Qs filed with the Securities and Exchange Commission.
General Magic, Inc. was founded in 1990 and provides engaging, active Internet software for business professionals, developers, device manufacturers, service providers and enterprises. General Magic is headquartered in Sunnyvale, California, with offices in Paris and Tokyo. For more information on General Magic and its products, visit General Magic's Web site at http://www.genmagic.com/.
# # #
Tabriz, AgentWare, Presto!Links, Presto!Mail, Magic Cap and Telescript are trademarks of General Magic, Inc. and may be registered in certain jurisdictions.
GENERAL MAGIC, INC.
(A Development Stage Enterprise)
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
|
ASSETS |
June 30, 1996 |
Dec. 31, 1995 |
|---|---|---|
|
Current assets: |
(Unaudited) |
|
|
Cash and cash equivalents and short-term investments |
$90,105 |
$104,725 |
|
Receivables and prepaid expenses |
1,176 |
4,006 |
|
Total current assets |
91,281 |
108,731 |
|
Property and equipment, net |
6,619 |
6,692 |
|
Other assets |
1,915 |
443 |
|
|
|
|
|
|
$99,815 |
$115,866 |
|
| ||
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
| |
|
Current liabilities: |
|
|
|
Accounts payable, accrued expenses and current portion of capital lease obligations |
$8,796 |
$6,698 |
|
Deferred revenue |
1,256 |
1,614 |
|
|
|
|
|
Total current liabilities |
10,052 |
8,312 |
|
| ||
|
Deferred revenue, noncurrent |
13,927 |
15,760 |
|
Capital lease obligations, net of current portion and other long-term liabilities |
4,120 |
2,702 |
|
|
|
|
|
Total liabilities |
28,099 |
26,774 |
|
| ||
|
Stockholders' equity: |
|
|
|
Common stock and additional paid-in capital |
164,121 |
162,621 |
|
Unrealized gain (loss) on investments |
(28) |
170 |
|
Deficit accumulated during development stage |
(92,377) |
(73,699) |
|
Total stockholders' equity |
71,716 |
89,092 |
|
|
|
|
|
|
$99,815 |
$115,866 |
GENERAL MAGIC, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS - Unaudited
(In thousands, except per share amounts)
|
|
Three-Month Periods Ended June 30 |
Six-Month Periods Ended June 30 | ||
|---|---|---|---|---|
|
|
1996 |
1995 |
1996 |
1995 |
|
Revenue: |
|
|
|
|
|
Licensing revenue |
$ 375 |
$ 1,075 |
$ 1,804 |
$ 4,438 |
|
Other revenue |
739 |
807 |
2,118 |
1,627 |
|
Total revenue |
1,114 |
1,882 |
3,922 |
6,065 |
|
Costs and expenses: |
|
|
|
|
|
Cost of other revenue |
682 |
496 |
1,750 |
1,034 |
|
Research and development |
7,383 |
4,862 |
12,794 |
9,093 |
|
Sales, general, and administrative |
5,379 |
4,597 |
9,531 |
8,383 |
|
Total costs and expenses |
13,444 |
9,955 |
24,075 |
18,510 |
|
Loss from operations |
(12,330) |
(8,073) |
(20,153) |
(12,445) |
|
Net interest, other income and expense |
690 |
1,819 |
1,603 |
2,894 |
|
Loss before income taxes |
(11,640) |
(6,254) |
(18,550) |
(9,551) |
|
Income taxes |
7 |
206 |
128 |
556 |
|
Net loss |
$(11,647) |
$(6,460) |
$(18,678) |
$(10,107) |
|
Net loss per share |
$(0.45) |
$ (0.26) |
$(0.72) |
$ (0.43) |
|
Shares and share equivalents used in computing per share amounts |
26,001 |
25,034 |
25,953 |
23,409 |