General Magic Reports 1996 Third Quarter Results and Announces Reduction in Workforce
SUNNYVALE, Calif. — October 30, 1996 — General Magic, Inc. (NASDAQ:GMGC) today announced its operating results for the third quarter of fiscal year 1996. The company also announced that it has reduced its workforce from approximately 280 to approximately 200 regular and contract personnel.
For the quarter ended September 30, 1996, the Company incurred a net loss of $ 12.4 million, or $ 0.48 per share, compared to a net loss of $ 11.6 million, or $ 0.45 per share for the last quarter and $ 5.1 million, or $ 0.20 per share, for the same quarter in 1995. The net loss for the third quarter includes write-offs of in-process research and development and acquired technology previously capitalized totaling $ 1.5 million ($ 0.06 per share). Without this one-time charge the loss per share would have been $ 0.42 per share ($ 10.9 million) which is a $ 0.03 per share improvement over the second quarter of 1996.
Revenue for the quarter ended September 30, 1996 totaled $ 0.8 million compared to $ 1.1 million for the last quarter and $ 3.2 million for the same quarter in 1995. Revenue for the quarter ended September 30, 1996 was primarily related to customer specific engineering programs and maintenance and support services. The decline in revenue, was due primarily due to lower license fees resulting from the previously announced shift in strategies to employ Internet standards in the Company's products.
Research and development expenses, exclusive of the one-time charges mentioned above, were $ 5.5 million for the quarter ended September 30, 1996, compared to $ 7.4 million last quarter and $ 4.8 million for the same quarter in 1995. The decrease in expenses from the second to the third quarter of 1996 primarily reflects reduced outside research and development contract services and other expenses.
During the third quarter, the Company recognized a one-time charge of $ 1.3 million, reflecting the write-off of software technology previously capitalized as a part of software acquired in April, 1996 from Active Paper, Inc. In addition, the Company recorded a $ 200,000 charge for in-process research and development costs related to the acquisition of Conterra, Inc. in July, 1996.
The Company expects to record a charge related to the reduction in force, ranging from $ 2 to $ 4 million in the fourth quarter of 1996.
"This was not an easy decision," said Steve Markman, General Magic's president and chief executive officer, "however, we believe the reduction allows us to better focus on opportunities we see ahead, as well as conserve our nearly $ 80 million in cash."
"One such opportunity, for example, is our launch of Magic Cap for Windows 95 on October 7. This is an exciting new communications and information management tool which brings the Magic Cap software developed for hand held devices to the desktop for SOHO (small office/home office) users."
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 Columbia, South Carolina, Paris, France, and Tokyo, Japan. For more information on General Magic and its products, visit General Magic's Web site at http://www.genmagic.com/.
NOTE TO EDITORS: General Magic, Magic Cap, Telescript and Tabriz are registered trademarks of General Magic, Inc. Windows is a trademark of Microsoft Corporation. General Magic acknowledges the rights of the trademark owners for all trademarks referred to herein.
GENERAL MAGIC, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS – Unaudited
(In thousands, except per share amounts)
Three-Month Periods Nine-Month Periods
Ended Sept. 30 Ended Sept. 30
1996 1995 1996 1995
Revenue:
Licensing revenue $ 197 $ 2,669 $ 2,001 $ 7,107
Other revenue 557 558 2,675 2,185
Total revenue 754 3,227 4,676 9,292
Costs and expenses:
Cost of other revenue 463 357 2,213 1,391
Research and
development 5,520 4,754 18,314 13,847
Sales, general, and
administrative 6,309 4,675 15,840 13,058
Write-off of acquired
technology and in-process
research and
development 1,542 — 1,542 —
Total costs and
expenses 13,834 9,786 37,909 28,296
Loss from operations (13,080) (6,559) (33,233) (19,004)
Net interest, other
income and expense 663 1,591 2,266 4,485
Loss before income
taxes (12,417) (4,968) (30,967) (14,519)
Income taxes 3 100 131 656
Net loss $ (12,420) $ (5,068) $ (31,098) $ (15,175)
Net loss per share $ (0.48) $ (0.20) $ (1.20) $ (0.63)
Shares and share
equivalents used in
computing per share
amounts 26,144 25,310 26,017 24,044
GENERAL MAGIC, INC.
(A Development Stage Enterprise)
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
Sept. 30, Dec. 31,
1996 1995
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents and short-
term investments $ 79,640 $ 104,725
Receivables and prepaid expenses 2,055 4,006
Total current assets 81,695 108,731
Property and equipment, net 6,505 6,692
Other assets 439 443
$ 88,639 $ 115,866
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued expenses and
current portion of capital lease
obligations $ 9,622 $ 6,698
Deferred revenue 1,400 1,614
Total current liabilities 11,022 8,312
Deferred revenue, noncurrent 14,427 15,760
Capital lease obligations, net of
current portion and other long-term
liabilities 3,482 2,702
Total liabilities 28,931 26,774
Stockholders' equity:
Common stock and additional paid-in
capital 164,504 162,621
Unrealized gain (loss) on investments 1 170
Deficit accumulated during
development stage (104,797) (73,699)
Total stockholders' equity 59,708 89,092
$ 88,639 $ 115,866
CONTACT:
General Magic (for Media inquiries)
Marty Coleman, 408/774-4420
[email protected]
or
Morgen-Walke Associates, Inc. (for Investor inquiries)
Suzanne Craig, Lisa Laukkanen or Doug Sherk, 415/296-7383
or
Emily Dupree, Elissa Grabowski, 212/850-5698
http://www.genmagic.com/About/press.html