General Magic Reports 1996 First Quarter Results; Net Loss Controlled Despite Lower Revenues
SUNNYVALE, Calif. — May 15, 1996 — General Magic, Inc. (Nasdaq: GMGC) today announced its operating results for the first quarter of fiscal year 1996. For the three-month period ended March 31, 1996, the Company incurred a net loss of $7.0 million, or $0.27 per share, compared to a net loss of $3.6 million, or $0.17 per share, for the three-month period ended March 31, 1995, and $5.4 million, or $0.21 per share for the three-month period ended December 31, 1995. Revenues for the three-month period ended March 31, 1996 totaled $2.8 million compared to $4.2 million for the same three-month period last year and to $4.9 million last quarter. Revenues during the first quarter 1996 were primarily related to fees from an existing licensee and customer specific engineering programs. The Company has recently directed its product offerings toward the Internet. This shift has had an adverse impact to first quarter 1996 revenues. Recognizing this, the Company has carefully controlled its Q1 expenses, managing spending so that the net loss for the quarter is slightly less than plan.
Cost of other revenue, which is related to revenue attributable to customer specific engineering projects and maintenance and support services, was $1.1 million for the three-month period ended March 31, 1996, compared to $0.5 million for the same three-month period last year and to $0.7 million last quarter. It consists primarily of personnel and equipment costs.
Research and development expenses were $5.4 million for the three-month period ended March 31, 1996, compared to $4.2 million for the same three-month period last year and to $5.5 million last quarter. While this represents a 28% increase from the prior year's first quarter due to continued investment in platform technologies, there was no increase from last quarter as headcount remained relatively flat and the Company has focused on cost containment.
Sales, general and administrative expenses were $4.2 million for the three-month period ended March 31, 1996, compared to $3.8 million for the same three-month period last year and to $5.0 million last quarter. This represents a 10% increase over the same period last year, reflecting the Company's expanded sales and marketing presence in Japan and Europe. The 18% decrease in spending compared to last quarter is due primarily to the costs incurred in the fourth quarter 1995 for the Company's first annual Developers' Conference. During the first quarter of 1996, no similar large event was staged.
General Magic, Incorporated was founded in May 1990 and has its headquarters in Sunnyvale, California. Its mission is to participate in the electronic marketplace by developing and licensing software to leading providers of communication products, network services and network applications. General Magic's World Wide Web address is http://www.genmagic.com/.
NOTE: Magic Cap and Telescript are registered trademarks of General Magic, Inc.
GENERAL MAGIC, INC.
(A Development Stage Enterprise)
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
March 31, December 31,
1996 1995
ASSETS (Unaudited)
Current assets:
Cash, cash equivalents and
short-term investments $ 99,443 $ 104,725
Receivables and prepaid expenses 1,944 4,006
Total current assets $ 101,387 108,731
Property and equipment, net 6,590 6,692
Other assets 443 443
$ 108,420 $ 115,866
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued expenses
and current portion of capital lease
obligations $ 5,077 $ 6,698
Deferred revenue 1,702 1,614
Total current liabilities 6,779 8,312
Capital lease obligations, net of current
portion, and other long-term liabilities 3,122 2,702
Deferred revenue, noncurrent 15,760 15,760
Total liabilities 25,661 26,774
Common stock and additional paid-in capital 163,402 162,621
Unrealized gain on investments 87 170
Deficit accumulated during development stage (80,730) (73,699)
Total stockholders' equity 82,759 89,092
$ 108,420 $ 115,866
GENERAL MAGIC, INC.
(A Development Stage Enterprise)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three-Month Periods Ended
March 31,
1996 1995
(Unaudited)
Revenue 2,808 4,183
Cost of revenue and operating expenses:
Cost of revenue 1,068 538
Research and development 5,411 4,231
Sales, general, and administrative 4,152 3,786
Total cost of revenue and operating expenses 10,631 8,555
Loss from operations (7,823) (4,372)
Net interest, other income and expense 913 1,075
Loss before income taxes (6,910) (3,297)
Income taxes 121 350
Net loss $ (7,031) $ (3,647)
Net loss per share $ (0.27) (0.17)
Shares and share equivalents used in computing
per share amounts 25,905 21,784
CONTACT:
Tom Hershenson, 408-774-4343, or [email protected]