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Filed by Spyglass, Inc.
Pursuant to Rule 425 Under the Securities Act of 1933
And Deemed Filed Pursuant to Rule 14a-12
Under the Exchange Act of 1934
Subject Company: Spyglass, Inc.
Commission File No. 000-26074
THE FOLLOWING IS A PRESS RELEASE DISSEMINATED BY SPYGLASS, INC. ON APRIL 19,
2000
SPYGLASS REPORTS $9.1 MILLION REVENUE FOR SECOND QUARTER AND NET INCOME OF 74
CENTS PER SHARE, INCLUSIVE OF ONE-TIME TRANSACTIONS
QUARTERLY REVENUE INCREASES 50 PERCENT ON A COMPARABLE BASIS WITH PRIOR YEAR;
NET INCOME EXCLUDING NON-RECURRING ITEMS INCREASES TO 3 CENTS PER SHARE
Naperville, Ill. -- Wednesday, April 19, 2000 - Spyglass(R) Inc. (NASDAQ: SPYG)
today announced that its revenue for the second quarter ending March 31, 2000
was $9.1 million, an increase of 50 percent on a comparable basis, excluding
$1.4 million of prior year second quarter revenue associated with SurfWatch
Software, a business Spyglass sold in November 1999.
Spyglass reported second quarter earnings per share of 74 cents inclusive of an
after-tax gain of $14.3 million, or 72 cents per share, associated with the sale
of one-third of Spyglass' investment in JSB Software Technologies, PLC (EASDAQ:
JSBS). This compares to earnings of 1 cent per share in the corresponding prior
year period. On a comparable basis, Spyglass earnings per share improved to 3
cents in the second quarter of 2000, excluding non-recurring items, from a loss
of 4 cents in the second quarter of 1999, excluding the SurfWatch financial
results.
Spyglass ended the fiscal 2000 second quarter with $81.9 million cash and
short-term investments, excluding the investment in JSB, as compared to $29.3
million at the end of fiscal 1999. As of April 18, 2000, the remaining
investment in JSB held by Spyglass had a market value of $42.1 million.
"Spyglass' continued success in expanding our customer base, enhancing our
worldwide solutions delivery organization and developing market-leading Internet
technologies was paramount to achieving the second quarter financial
performance," said Douglas Colbeth, Spyglass chairman and chief executive
officer.
During the fiscal 2000 second quarter, Spyglass achieved a number of important
milestones including:
* Shipping SPYGLASS DEVICE MOSAIC 4.0, a breakthrough technology optimized
for next generation interactive television products, including televisions,
digital set-top boxes and chipsets. Enhancing the feature-set to support
ATVEF and the latest Internet standards, such as HTML 4.0,
ECMAScript/JAVAScript, Cascading Style Sheets, SSL and HTTP allows Spyglass
customers to leverage the rich Web content available today and deliver a
truly enhanced television experience.
* Licensing Spyglass Device Mosaic, Spyglass Device Mail and Spyglass
MicroServer technologies to SONY ELECTRONICS INC. for use on Sony's digital
cable set-top box. This agreement expands Spyglass' existing relationship
with Sony under a separate licensing and professional services agreement
announced April 1999.
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* Licensing Spyglass Prism and providing Spyglass Professional Services to
MYWAY.COM, a leading developer and distributor of custom portal
technologies and services. Spyglass Prism content delivery and
transformation platform allows MyWay.com to efficiently deliver content to
users of the MyWay.com portal, regardless of the users' browser or device
type.
* Establishing reseller channels for Spyglass Prism. MITSUI & CO. LTD. and
OPENBASE INC. will sell Spyglass Prism in the Japanese and Korean markets,
respectively. Teaming with these leading service providers will expand
Spyglass' presence overseas by providing localization and other
customer-support services.
* Establishing a new wholly-owned subsidiary in Japan, SPYGLASS K.K., to
allow Spyglass to develop and market applications closer to its customers
in Japan and other Asian markets.
* Launching SPYGLASSMOBILE.COM, a demonstration news and information portal
which showcases Spyglass Prism transformation technology, enabling Web
content for a variety of mobile devices.
Colbeth noted that Spyglass' pending merger agreement with OpenTV will create a
market leading software platform company for the delivery of interactive content
and applications to televisions and wireless devices. The OpenTV (NASDAQ: OPTV)
digital television software platform has been deployed by 25 satellite and cable
television operators worldwide to date and enjoys a leading market share,
currently deployed on over 6.1 million set-top boxes.
"Becoming an integral part of the OpenTV interactive software platform is a
critical step in our strategy to establish a pervasive applications and services
presence within the Internet infrastructure for television and mobile devices.
With the addition of Spyglass' comprehensive professional services capabilities,
OpenTV will have the capacity to accelerate the deployment of interactive
content and services by their customers," Colbeth added.
ABOUT SPYGLASS
Spyglass (NASDAQ: SPYG) is a leading provider of strategic Internet consulting,
software and professional services that enable content providers, service
operators and device manufacturers to capitalize on the potential of the
Internet. Market-leading companies using Spyglass solutions include GTE,
Microsoft, Motorola, NEC, Nokia, Sony, TeleCruz, Thomson Consumer Electronics,
WorldGate and Xerox. Spyglass is headquartered in Naperville, Ill. and has
regional offices in Lexington, Mass., Silicon Valley, Calif., and London, along
with a wholly owned subsidiary in Tokyo, Japan. Visit HTTP://WWW.SPYGLASS.COM
for more information.
Spyglass and the Spyglass logo are trademarks or registered trademarks of
Spyglass, Inc., in the United States and other countries. Mosaic is a trademark
of the University of Illinois. (Other technologies and brand names are
trademarks or registered trademarks of their respective companies.) This release
contains information about management's future expectations, plans and prospects
that constitute forward-looking statements for purposes of the safe harbor
provisions under The Private Securities Litigation Reform Act of 1995. Actual
results may differ materially from those indicated by these forward-looking
statements as a result of various important factors including failure of the
merger transaction with OpenTV to close due to the failure to obtain regulatory,
shareholder or other approvals, the risk that OpenTV and Spyglass (the "Combined
Company") businesses will not be integrated successfully and unanticipated costs
of such integration, failure of the Combined Company to retain and hire key
executives, technical personnel and other employees, failure of the Combined
Company to manage its growth, failure of the Combined Company to successfully
manage its changing relationship with customers, suppliers and strategic
solution center customers, consummation of binding agreements with prospective
business partners, competition,
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development of the marketplace, the timing of the execution and recognition of
revenues under new agreements, the ability to close and execute large multi-year
contracts, product development, technological change and other factors that are
discussed in the company's annual report on Form 10-K for the year ended
September 30, 1999 and other documents periodically filed with the SEC.
***
For a detailed discussion of the cautionary statements described above and other
cautionary statements, please refer to the proxy statement/prospectus to be
filed by Spyglass, Inc. and OpenTV Corp. as described below, as well as the
companies' filings with the Securities and Exchange Commission, especially in
Spyglass' annual report on Form 10-K for the year ended September 30, 1999 filed
December 22, 1999 and in OpenTV's Form F-1 Registration Statement filed on
November 19, 1999, as amended, and other documents periodically filed with the
Securities and Exchange Commission. Spyglass undertakes no obligation to update
or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
Spyglass, Inc. its officers and directors may be deemed to be participants in
the solicitation of proxies from Spyglass shareholders with respect to the
transactions contemplated by the merger agreement referenced in the foregoing
information. Information regarding such officers and directors is included in
Spyglass' annual report on Form 10-K for the year ended September 30, 1999 filed
with the SEC on December 22, 1999. This document is available free of charge at
the SEC website at www.sec.gov and from the Spyglass contact listed below.
THIS PRESS RELEASE IS BEING FILED PURSUANT TO RULE 425 UNDER THE SECURITIES ACT
OF 1933 AND DEEMED FILED PURSUANT TO RULE14A-12 UNDER THE EXCHANGE ACT OF 1934.
THIS PRESS RELEASE DOES NOT CONSTITUTE AN OFFER OF SALE OF SECURITIES.
SHAREHOLDERS OF SPYGLASS, INC. AND OTHER INVESTORS ARE URGED TO READ THE PROXY
STATEMENT/PROSPECTUS WHICH WILL BE INCLUDED IN THE REGISTRATION STATEMENT ON
FORM F-4 TO BE FILED BY OPENTV CORP. IN CONNECTION WITH THE MERGER BECAUSE IT
WILL CONTAIN IMPORTANT INFORMATION. AFTER SUCH DOCUMENT IS FILED, IT WILL BE
AVAILABLE FREE OF CHARGE ON THE SEC WEBSITE AT WWW.SEC.GOV AND FROM SPYGLASS,
INC. THROUGH THE CONTACTS LISTED BELOW.
Contact:
Amanda Ingalls, Spyglass, Inc. (Press)
1.630.245.6512 or [email protected]
Bruce Beerbower, Spyglass, Inc. (Investors/Analysts)
1.630.245.6656 or [email protected]
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SPYGLASS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, SIX MONTHS ENDED MARCH 31,
(In thousands, except per share amounts) 2000 1999 2000 1999
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net revenues:
Internet technology $ 3,326 $ 4,252 $ 6,637 $ 6,117
Service 5,754 3,167 10,656 7,074
------- -------- -------- --------
Total net revenues 9,080 7,419 17,293 13,191
Cost of revenues:
Internet technology 135 460 414 771
Service 3,799 1,979 7,117 3,877
------- -------- -------- --------
Total cost of revenues 3,934 2,439 7,531 4,648
------- -------- -------- --------
Gross profit 5,146 4,980 9,762 8,543
Operating expenses and other:
Sales and marketing 2,143 2,131 4,278 4,305
Research and development 1,290 1,824 2,872 3,645
General and administrative 1,681 1,285 3,776 2,863
Restructuring & other one-time charges 300 -- 1,159 --
------- -------- -------- --------
Total operating expenses and other 5,414 5,240 12,085 10,813
------- -------- -------- --------
Loss from operations (268) (260) (2,323) (2,270)
Gain on sale of Surfwatch -- -- 27,380 --
Gain on sale of JSB Marketable Securities 26,784 -- 26,784 --
Other income, net 908 369 1,436 686
------- -------- -------- --------
Income (loss) before income taxes 27,424 109 53,277 (1,584)
Income tax provision 12,811 -- 13,852 --
------- -------- -------- --------
Net income (loss) $14,613* $ 109 $ 39,425** $ (1,584)
======= ======== ======== ========
Net income (loss) per common share - basic $ 0.86* $ 0.01 $ 2.35** $ (0.10)
Net income (loss) per common share - diluted $ 0.74* $ 0.01 $ 2.05** $ (0.09)
Weighted average number of common
shares outstanding-basic 16,921 16,049 16,759 15,830
======= ======== ======== ========
Weighted average number of common
shares outstanding-diluted 19,818 17,403 19,245 17,476
======= ======== ======== ========
</TABLE>
* Includes an after-tax gain on the sale of JSB Marketable Securities of
$14,272, or $.72 per share - diluted
** Includes an after-tax gain on the sale of JSB Marketable Securities and
SurfWatch of $40,664, or $2.11 per share - diluted
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SPYGLASS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
MARCH 31, SEPTEMBER 30,
(In thousands, except share amounts) 2000 1999
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 65,224 $ 18,613
Short-term investments 16,645 10,735
Marketable securities - JSB 25,067 --
Accounts receivable, net of allowance for
doubtful accounts of $489 and $494, respectively 5,107 8,731
Unbilled accounts receivable 1,779 899
Prepaid expenses and other current assets 2,300 2,420
--------- --------
Total current assets 116,122 41,398
Properties and equipment, net 4,404 3,897
Investment in restricted securities - JSB 4,000 --
Other assets 447 478
--------- --------
TOTAL ASSETS $ 124,973 $ 45,773
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,663 $ 2,396
Royalties payable 299 397
Deferred revenues 1,664 1,477
Income taxes payable 114 --
Deferred income taxes 8,216 --
Accrued compensation and related benefits 1,773 1,680
Accrued expenses and other liabilities 1,016 249
--------- --------
Total current liabilities 15,745 6,199
Long-term deferred revenues 110 326
--------- --------
Total liabilities 15,855 6,525
--------- --------
Stockholders' equity:
Common stock, $.01 par value, 50,000,000 shares authorized,
17,215,171 and 16,581,731 shares issued and 17,205,273
and 16,504,517 shares outstanding, respectively 171 165
Additional paid-in capital 80,246 62,221
Retained earnings (deficit) 17,231 (22,194)
Accumulated other comprehensive income 12,851 --
Treasury stock at cost, 9,898 and 77,214 shares, respectively (55) (56)
Unamortized value of restricted stock issued (1,326) (888)
--------- --------
Total stockholders' equity 109,118 39,248
--------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 124,973 $ 45,773
========= ========
</TABLE>
