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Laura Crowley Gina Tetreault
General Magic, Inc. General Magic, Inc.
1 + 408 774 4457 1+408 774 4420
[email protected]
FOR IMMEDIATE RELEASE
GENERAL MAGIC ANNOUNCES THIRD QUARTER 2000
RESULTS
COMPANY INCREASES REVENUE BY 186% OVER YEAR AGO PERIOD
Sunnyvale, CA, (November 1, 2000) - General Magic, Inc. (Nasdaq: GMGC),
a leading voice application service provider, today announced its operating
results for the third quarter ended September 30, 2000.
Revenue for the third quarter ended September 30, 2000, was $3.2
million, compared to $1.7 million in the third quarter of 1999. General Magic
incurred a net operating loss of $6 million, or $0.10 per diluted share, in the
third quarter of 2000, an improvement of 42% compared to a net operating loss of
$10.6 million, or $0.25 per diluted share, in the third quarter of 1999. The net
operating loss for the third quarter of 2000 included an $84 thousand non-cash
adjustment to accumulated deficit related to preferred stock issued during the
period with favorable conversion and redemption rights and dividends on
preferred stock. The net operating loss for the third quarter of 1999 included a
$708 thousand non-cash adjustment, or $0.02 per diluted share, to accumulated
deficit related to preferred stock issued during the period
-more-
<PAGE> 2
General Magic Report 3rd Quarter Results/-2
with favorable conversion and redemption rights and dividends on preferred
stock.
Revenue for the nine months ended September 30, 2000, was $8.0 million
compared to $2.0 million for the nine months ended September 30, 1999. General
Magic incurred a net operating loss of $34.9 million, or $0.65 per diluted
share, for the nine months ended September 30, 2000, an improvement of 9%
compared to a net operating loss of $38.2 million or $1.00 per diluted share for
the nine months ended September 30, 1999. The net operating loss for the nine
months ended September 30, 2000, included a $7.7 million non-cash adjustment, or
$0.14 per diluted share, to accumulated deficit related to dividends on
preferred stock, compared to a similar $1.6 million non-cash adjustment, or
$0.04 per diluted share, in the same period of 1999.
Operating expense for the third quarter of 2000 was $ 8.5 million
compared to $ 11.4 million for the third quarter of 1999. Operating expense for
the nine months ended September 30, 2000 was $ 35.1 million compared to $ 36.0
million for the nine months ending September 30, 1999.
Cash and short-term investments totaled $16.1 million as of September
30, 2000, compared to $24.6 million as of June 30, 2000. As of September 30,
2000, there were 61.2 million shares of common stock outstanding.
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General Magic Report 3rd Quarter Results/-3
"General Magic's third quarter results validate our strategy, our team's
execution, and General Magic's focus on evolving the market for voice
applications and services," said Steve Markman, president and chief executive
officer of General Magic. "Our strategy is simple, to provide businesses with a
superior voice solution that improves the quality of the relationship between
businesses and their customers."
Rose Marcario, the Company's Senior Vice President and Chief Financial
Officer added, "We believe that with the Company's previously announced equity
financing arrangement with Ladenburg Thalmann & Co. and its existing $25 million
equity line of credit, the Company will be able to finance the expected growth
and expansion of our business as needed by issuing shares when we believe that
market conditions are favorable."
In the third quarter of 2000 the Company recorded a loss of $1.1 million
related to its investment in Icras Inc., formerly known as DataRover Mobile
Systems, Inc.
General Magic has renegotiated its contract with Qwest Communications to
reduce the commitment for the balance of the contract to approximately $208
thousand. This new arrangement conforms with the Company's business-to-business
market strategy, and allows the Company flexibility to provide customers with
cost-effective hosting solutions.
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General Magic Report 3rd Quarter Results/-4
ABOUT GENERAL MAGIC
General Magic is a voice application service provider dedicated to delivering
customized voice applications, hosting, and professional services to leading
telecommunications, enterprise, and Internet companies. With its award-winning
VoiceXML-based magicTalk communications platform and years of experience,
General Magic offers the premier voice user interface that combines language,
personality, and logic, creating a conversation between people and information.
General Magic creates value for it's customers by building voice solutions that
strengthen customer relations, deliver value-added services, and provide access
to content anytime, anywhere. General Magic is headquartered in Sunnyvale,
California. For additional information about General Magic, visit the company's
web site at http://www.generalmagic.com.
General Magic notes that the forward-looking statements in this press release
involve known and unknown risks, uncertainties and other factors that may cause
industry trends, or actual results, performance or achievement to be materially
different from any future trends, results, performance or achievements expressed
or implied by these statements. These include, among others, risks and
uncertainties concerning 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 attract, retain and motivate key technical,
marketing and management personnel; the ability of the Company to establish and
maintain relationships with businesses that have high volume customer
interactions, and to establish alliances with companies that offer technology
solutions for such businesses; 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 and uncertainties are
detailed in General Magic's Quarterly Report on Form 10-Q filed with the
Securities and Exchange Commission on August 14, 2000.
General Magic and magicTalk are trademarks of General Magic, Inc., which may be
registered in some jurisdictions. Other trademarks are owned by their respective
companies.
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FINANCIAL TABLES ATTACHED
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GENERAL MAGIC, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 13,629 $ 23,045
Short-term investments 2,481 2,490
Other current assets 2,659 767
--------- ---------
Total current assets 18,769 26,302
--------- ---------
Property and equipment, net 10,098 11,869
Other assets 2,352 3,534
--------- ---------
Total assets $ 31,219 $ 41,705
========= =========
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
Accounts payable $ 1,689 $ 2,780
Accrued expenses 4,180 8,018
Deferred revenue and other current liabilities -- 5,895
--------- ---------
Total current liabilities 5,869 16,693
Other long-term liabilities 2,231 2,692
--------- ---------
Total liabilities 8,100 19,385
========= =========
Commitments
Redeemable, convertible Series D preferred stock, $0.001 par value
Stated at involuntary liquidation preference;
Authorized: 2 shares; issued and outstanding: 2000 -- 0; 1999 -- 1 2,000 10,274
Stockholders' equity:
Convertible preferred stock, $0.001 par value
Authorized: 55 shares; issued and outstanding: 2000 -- 55; 1999 -- 53 2 2
Preferred stock, $0.001 par value
Authorized: 427 shares; issued and outstanding: 2000 -- 0; 1999 -- 0 -- --
Common stock, $0.001 par value; authorized: 150,000 shares;
Issued and outstanding: 2000 - 61,157; 1999 -- 43,248 61 43
Additional paid-in capital 326,788 282,861
Accumulated other comprehensive loss (3) (3)
Deficit accumulated during development stage (305,526) (270,654)
--------- ---------
21,322 12,249
Less treasury stock, at cost: 2000 -- 46; 1999 -- 46 (203) (203)
--------- ---------
Total stockholders' equity 21,119 12,046
--------- ---------
$ 31,219 $ 41,705
========= =========
</TABLE>
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GENERAL MAGIC, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE-MONTH PERIODS ENDED NINE-MONTH PERIODS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------ ------------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue:
Service revenue $ 3,133 $ 210 $ 7,984 $ 511
Licensing revenue 50 1,503 57 1,537
-------- -------- -------- --------
Total revenue 3,183 1,713 8,041 2,048
-------- -------- -------- --------
Operating expenses:
Cost of service revenue 975 -- 3,505 --
Network operations 1,291 1,905 7,319 5,405
Research and development 1,817 2,863 4,809 9,612
Selling, general and administrative 2,792 5,321 14,616 17,502
Depreciation and amortization 1,588 1,320 4,596 3,438
Compensation expense associated with stock (7) -- 246 --
-------- -------- -------- --------
Total costs and expenses 8,456 11,409 35,091 35,957
-------- -------- -------- --------
Loss from operations (5,273) (9,696) (27,050) (33,909)
Total other income (expense), net (748) (205) (80) (2,715)
-------- -------- -------- --------
Loss before income taxes (6,021) (9,901) (27,130) (36,624)
Income taxes 6 1 32 23
-------- -------- -------- --------
Net loss (6,027) (9,902) (27,162) (36,647)
Dividends on preferred stock (84) (223) (339) (857)
Warrants issuance on Series D preferred stock -- -- -- (251)
Favorable conversion rights on
convertible Series F preferred stock -- (485) -- (485)
Beneficial conversion feature of Series
H preferred stock -- -- (7,366) --
Loss applicable to common stockholders $ (6,111) $(10,610) $(34,867) $(38,240)
======== ======== ======== ========
Basic and diluted loss per share $ (0.10) $ (0.25) $ (0.65) $ (1.00)
======== ======== ======== ========
Shares used in computing per share amounts 59,716 41,170 53,240 38,277
======== ======== ======== ========
</TABLE>
Net loss applicable to common shareholders for the three-month period ended
September 30, 2000 includes the net loss for the period and $84 thousand in
adjustments to accumulated deficit related to dividends on preferred stock
during the period. Net loss applicable to common shareholders for the
three-month period ended September 30, 1999 includes the net loss for the period
and $708 thousand in adjustments to accumulated deficit related to dividends on
preferred stock and issuances of preferred stock with favorable conversion and
redemption rights during the period.
Net loss applicable to common shareholders for the nine-month period ended
September 30, 2000 includes the net loss for the period and $7.7 million in
adjustments to accumulated deficit related to dividends on preferred stock and
issuances of preferred stock with favorable conversion and redemption rights
during the period. Net loss applicable to common shareholders for the nine-month
period ended September 30, 1999 includes the net loss for the period and $1.6
million in adjustments to accumulated deficit related to dividends on preferred
stock and issuances of preferred stock with favorable conversion and redemption
rights during the period.
