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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): March 8, 2000
GENERAL MAGIC, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 77-0250147
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(State or other jurisdiction of (Commission File Number) (I.R.S. Employer Identification
incorporation) Number)
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420 NORTH MARY AVENUE SUNNYVALE, CALIFORNIA 94086
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (408) 774-4000
Not applicable
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On March 8, 2000, General Magic, Inc., the Registrant, issued a press
release announcing its fourth quarter and year-end 1999 financial results. A
copy of the press release is filed as Exhibit 99.1 and incorporated herein by
reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. Not applicable.
(b) PRO FORMA FINANCIAL INFORMATION. Not applicable.
(c) EXHIBITS.
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Exhibit No. Description
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99.1 Press release of the Registrant, dated March 8,
1999, announcing operating results for
the fourth quarter and year ended December 31, 1999.
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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 hereunto duly authorized.
General Magic, Inc.
By: /s/ Mary E. Doyle
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March 9, 2000 Mary E. Doyle
General Counsel and Secretary
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EXHIBIT INDEX
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Exhibit No. Description
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99.1 Press release of the Registrant, dated March 8, 2000, announcing
operating results for the fourth quarter and year ended December 31, 1999.
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Exhibit 99.1
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Laura Crowley Christina Carrabino (General)
General Magic, Inc. Allison Parker (Investor)
1 + 408 774 4457 Scott Marx (Financial Media)
[email protected] Financial Relations Board
1 + 415 986 1591
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FOR IMMEDIATE RELEASE
GENERAL MAGIC ANNOUNCES FOURTH QUARTER & YEAR-END
1999 RESULTS
ONSTAR RELATIONSHIP STRENGTHENS THE COMPANY'S VOICE ASP MARKET POSITION
MYTALK SUBSCRIBER COUNT SURPASSES 700,000 USERS
SUNNYVALE, Calif. (March 8, 2000) - General Magic, Inc., (Nasdaq: GMGC), a
leading Voice Application Service Provider (ASP), today announced its operating
results for the fourth quarter and year ended December 31, 1999. Over the course
of the 1999 year the Company entered into several strategic partnerships with
companies such as Bell South Mobility, Excite@Home and OnStar, a division of
General Motors. These partnerships have helped to foster the growth of voice
applications and services.
Most recently, the Company announced a co-branded marketing agreement with
Juno Online Services, Inc. By partnering with Juno, General Magic has created a
channel to attract the millions of existing and new Juno customers to the myTalk
service.
"General Magic has made significant progress over the past year in
developing and focusing the Company as a Voice ASP. One of our competitive
advantages centers around our development of an intelligent, socially
engineered, human-like interface that creates a natural conversation between
people and information," said Steve Markman, chairman, chief executive officer
and president of General Magic. "Partnering with companies like OnStar validates
our technology and helps to further the adoption of our core technology by
businesses and consumers, which we expect to lead to long-term revenue growth."
More than 1.5 million customers are now hosted in General Magic's
state-of-the-art, 24x7 network operations facility, which is designed to manage
high volume telephony transactions.
FINANCIAL RESULTS
Revenue for the fourth quarter ended December 31, 1999, was $436 thousand,
an increase compared to $126 thousand in the fourth quarter of 1998. The Company
incurred a net loss of $10.9 million, or $0.55 per diluted share, in the fourth
quarter of 1999, an improvement compared to a net loss of $15.1 million or $0.50
per diluted share, in the fourth quarter of 1998. The net loss per share for the
fourth quarter of 1999 included a $12.0 million adjustment, or $0.29 per share
to accumulated deficit related to preferred stock issued during the period with
favorable conversion and redemption rights, dividends on preferred stock and
warrants, compared to a $1.0 million adjustment, or $0.04 per share in the same
period of 1998.
Revenue for the twelve months ended December 31, 1999, was $2.5 million,
compared to $2.3 million for the twelve months ended December 31, 1998. The
Company incurred a net loss of $47.6 million, or $1.56 per diluted share, for
the twelve months ended December 31, 1999, compared to a net loss of $38.9
million, or $2.09 per diluted share, for the twelve months ended December 31,
1998. The net loss per share for the twelve months of 1999 included a $13.6
million adjustment, or $0.34 per share to accumulated deficit related to
preferred stock issued during the period with favorable conversion and
redemption rights, dividends on preferred stock and warrants, compared to a
$22.9 million adjustment, or $0.78 per share in the same period of 1998.
Operating expense for the fourth quarter of 1999 was $12.0 million compared
to $15.3 million for the fourth quarter of 1998. Operating expenses for the
fourth quarter of 1998 included a $2.4 million non-cash charge related to the
disposition of the Company's handheld devices group. For the twelve months ended
December 31, 1999, the operating expense was $48.0 million, compared to $47.9
million for the same period in 1998.
Cash and short-term investments totaled $25.5 million, as of December 31,
1999, compared to $33.0 million as of December 30, 1998. As of December 31,
1999, there were 43.2 million shares of common stock outstanding.
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COMPANY UPDATE
During the 1999 year, General Magic announced a new organizational
structure that consists of two business units, the Internet Services Group and
the Custom Solutions Group. The Internet Services Group focuses on branded
services including myTalk and Portico. The Custom Solutions Group offers a
unique combination of custom application development, professional services and
a state-of-the-art, 24x7 network operations hosting environment designed to
manage high volume telephony transactions. In addition, the Company's Voice ASP
platform facilitates expansion of these custom applications with the eCommerce
and content services desired by customers.
In November 1999, the Custom Solutions Group announced a strategic
partnership with OnStar, a division of General Motors. The agreement entails the
licensing of General Magic's voice application technology to be used in the
OnStar Advisory System for mid-sized cars and trucks in the GM family. It is
expected that the OnStar service will be installed in nearly one million
vehicles by the end of 2000. OnStar paid General Magic $20.0 million related to
a preferred stock investment, technology agreement and license fee. The Company
expects to recognize $6.2 million in revenue through mid-2000 associated with
this transaction. Under the terms of the agreement, General Magic is also
expected to provide network hosting, professional services, application
maintenance and customized content. The agreement also provides for a royalty to
be paid to General Magic for automobile manufacturers, other than General
Motors, that use the OnStar virtual advisor system developed by the Company.
During the 1999 year, General Magic announced the launch of its new
product, myTalk. Since the product's initial launch, several new enhancements
have been added to the free myTalk service, including pager notification,
2-minute free long distance calling and voicemail. Subscribers can receive
voicemail messages and make quick, free calls anywhere in the United States. The
Company today announced that more than 700,000 members have now signed up for
the service.
"We are delighted with the success of the myTalk service," said Markman.
"This product appeals to the college market and relying largely on viral
marketing, we are adding thousands of new subscribers every day."
As announced in June of 1999, General Magic continues to provide and host
the Excite@Home voicemail service. Excite announced earlier this year that over
1 million Excite customers have registered for the voicemail service. Excite
recently integrated the voicemail and fax service into a unified messaging
service for the convenience of their users.
Bell South Mobility continues its trial in the Atlanta area of a customized
voice-application service provided by General Magic, announced during the third
quarter of 1999. Bell South has extended the trial through April.
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ABOUT GENERAL MAGIC
General Magic creates value for its customers through state-of-the-art voice
solutions. General Magic offers years of expertise in combining language,
personality, and logic, creating a natural conversation between people and
information.
As a voice application service provider (Voice ASP), General Magic serves
companies with high volumes of customer contacts who need cost-effective
solutions that maintain the trust and loyalty of their customers. For more
information about General Magic, visit the Company's Web site at
http://www.general magic.com.
General Magic notes that this press release contains forward-looking statements.
There are risks and uncertainties that may cause actual results to vary
materially. These risks and uncertainties include, but are not limited to, the
adequacy of the Company's financial resources to execute its business plan;
market acceptance of the Company's technologies and services; the Company's
ability to timely secure key customers for it's technologies and services; the
Company's ability to attract advertisers and sponsors and its ability to
generate revenues from advertising sales; the Company's ability to attract,
retain and motivate key technical, marketing and management personnel; the
capability of the Company's Network Operations Center to handle potential
increases in demand; the challenges inherent in the development, delivery and
implementation of complex technologies; the ability of the Company's third party
technology partners to timely develop, license or support technology necessary
to the Company's services; and the Company's ability to respond to competitive
developments. These and other risks are detailed in General Magic's Registration
Statement on Form S-3/A, filed on December 17, 1999, and will also be describes
in the Company's Form 10-K to be filed by March 30, 2000.
General Magic, magicTalk, myTalk, and Portico are trademarks of General Magic,
Inc. and may be registered in certain jurisdictions.
FINANCIAL TABLES ATTACHED
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GENERAL MAGIC, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
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DECEMBER 31,
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1999 1998
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ASSETS
Current assets:
Cash and cash equivalents (including restricted cash of $2,280 in 1998.... $ 23,045 $ 21,845
Short-term investments.................................................... 2,490 12,075
Other current assets...................................................... 767 1,700
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Total current assets.................................................. 26,302 35,620
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Property and equipment, net................................................. 11,869 7,507
Other assets................................................................ 3,534 4,171
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Total assets.......................................................... $ 41,705 $ 47,298
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LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
Accounts payable.......................................................... $ 2,780 $ 1,348
Accrued expenses.......................................................... 8,018 9,980
Current portion of long-term debt......................................... -- 2,333
Other current liabilities................................................. 5,895 54
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Total current liabilities............................................. 16,693 13,715
Deferred revenue............................................................ -- 2,000
Long-term debt.............................................................. -- 3,778
Other long-term liabilities................................................. 2,692 683
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Total liabilities..................................................... 19,385 20,176
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Commitments
Redeemable, convertible Series D preferred stock, $0.001 par value
Stated at involuntary liquidation preference
Authorized: 2 shares
Issued and outstanding: 1999 -- 1; 1998 -- None........................... 10,274 20,658
Redeemable, convertible Series C preferred stock, $0.001 par value
Stated at involuntary liquidation preference
Authorized: 3 shares
Issued and outstanding: 1999 -- none; 1998 -- 2........................... -- 20,658
Redeemable, convertible Series B preferred stock, $0.001 par value
Stated at involuntary liquidation preference
Authorized: 12 shares
Issued and outstanding: 1999 -- none; 1998 -- 6........................... -- 7,577
Stockholders' (deficit) equity:
Convertible Series A preferred stock, $0.001 par value
Liquidation preference: 1999 -- $4,500; 1998 -- $4,500
Authorized: 50 shares
Issued and outstanding: 1999 -- 50; 1998 -- 50 -- --
Preferred stock, $0.001 par value
Authorized: 435 shares
Issued and outstanding: 1999 -- 1; 1998 -- None........................... 2 --
Common stock, $0.001 par value
Authorized: 100,000 shares
Issued and outstanding: 1999 -- 43,202; 1998 -- 33,400.................... 43 33
Additional paid-in capital.................................................. 282,861 208,557
Deferred compensation -- --
Accumulated other comprehensive loss........................................ (3) --
Deficit accumulated during development stage................................ (270,654) (209,500)
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............................................................................ 12,249 (910)
Less treasury stock, at cost: 1999 -- 46; 1998 -- 46........................ (203) (203)
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Total stockholders' (deficit) equity.................................. 12,045 (1,113)
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............................................................................ $ 41,705 $ 47,298
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GENERAL MAGIC, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER DATA SHARE)
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PERIOD FROM
MAY 1, 1990
YEAR ENDED DECEMBER 31, (INCEPTION) TO
-------------------------------------- DECEMBER 31,
1999 1998 1997 1999
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Statement of operations data:
Licensing revenue........................... $ 1,563 $ 1,610 $ 2,454 $ 18,905
Service revenue............................. 914 -- -- 914
Other revenue............................... 7 676 1,002 9,419
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Total revenue........................... 2,484 2,286 3,456 28,324
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Costs and expenses:
Cost of service revenue..................... 195 482 928 6,283
Network operations.......................... 7,387 -- --
Research and development.................... 12,524 21,133 20,548 114,556
Selling, general and administrative......... 22,976 21,861 12,676 102,057
Write-off of acquired technology
and in-process research and development... -- 2,827 -- 4,369
Compensation expense associated
with DSI divestiture...................... -- 1,634 -- 1,634
Restructuring............................... -- -- -- 3,170
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Total costs and expenses................ 47,984 47,937 34,152 232,069
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Loss from operations.......................... (45,500) (45,651) (30,696) (203,745)
Other income, net............................. (2,052) 6,762 2,329 19,427
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Loss before income taxes...................... (47,552) (38,889) (28,367) (184,318)
Income taxes.................................. 23 19 17 2,307
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Net loss................................ (47,575) (38,908) (28,384) (186,625)
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Basic and diluted loss per share.............. $ (1.56) $ (2,09) $ (1.06)
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Shares used in computing per share amounts.... 39,098 29,630 26,778
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Net loss per share for the year ended December 31, 1999 includes the net loss
for the period and $13.6 million in adjustments to accumulated deficit related
to favorable conversion and redemption rights on preferred stock issued and
dividends on preferred stock during the period.
Net loss per share for the year ended December 31, 1998 includes the effect of
$22.9 million in adjustments to accumulated deficit related to issuances of
preferred stock with favorable conversion and redemption rights and dividends
on preferred stock during the period.
