SANTA CLARA, Calif., March 30 /PRNewswire-FirstCall/ -- NeoMagic
Corporation (NASDAQ:NMGC), a leader and pioneer in developing and
delivering low-power solutions for multimedia-rich mobile phones
and handheld devices, today reported its fourth quarter and fiscal
year 2006 financial results. Total revenue for the fourth quarter
of fiscal 2006, ended January 31, 2006, was $104 thousand, compared
to total revenue of $8.6 million for the third quarter of fiscal
2006. Net loss for the fourth quarter of fiscal 2006 was $4.0
million, or a loss of $0.57 per share, compared to net income of
$779 thousand, or net income of $0.11 per share, in the third
quarter of fiscal 2006. The reduction of total revenue and the net
loss for the fourth quarter resulted from licensing revenue
declining from $8.5 million in the third quarter of fiscal year
2006 to zero in the fourth quarter of fiscal year 2006. In
addition, in the fourth quarter of fiscal year 2006 we recorded a
tax benefit of $2.9 million from the reversal of a tax reserve,
which was the result of the expiration of the statute of
limitations for tax returns filed by the Company's former
subsidiary in the Cayman Islands. Total revenue for the fiscal year
ended January 31, 2006 was $9.4 million compared to total revenue
of $2.5 million for the fiscal year ended January 31, 2005. Net
loss for fiscal year 2006 was $9.3 million, or a loss of $1.32 per
share, compared to a net loss of $28.2 million, or a loss of $4.33
per share, in fiscal year 2005. Cash, cash equivalents and
short-term investments increased from $25.0 million at January 31,
2005 to $26.7 million at January 31, 2006. "We are happy to report
the largest fiscal year revenue since 2001. Our fiscal 2006 results
also show a significant increase in total revenue and a significant
decrease in our net loss as compared to fiscal year 2005. This
improvement was primarily the result of our patent licensing
transaction with Sony as well as the sale of selected patents
during the first quarter of fiscal year 2006. We are also pleased
with the completion of our successful financing during December
2005. We believe that the Company is better positioned to address
the market opportunities we see in the mobile phone market,
particularly in the growing mobile digital TV market," said Douglas
Young, president and chief executive officer of NeoMagic.
Conference Call Highlights Topics to be covered on NeoMagic's
quarterly conference call include the following: -- NeoMagic is in
discussions with multiple companies with respect to licensing
NeoMagic's embedded DRAM patents. Management believes that the
Company's patent portfolio has the potential to generate
significant revenue for NeoMagic. -- The new NeoMobileTV product
should be available for customer sampling during the third quarter
of calendar year 2006. The NeoMobileTV product is targeted at all
global mobile TV standards, including ISDB-T, DVB-H, X-DMB and the
emerging standards in China. -- The Company's Microsoft WinCE 5.0
Board Support Package has been certified by Microsoft. -- At the
3GSM conference in Barcelona, the Company demonstrated digital
mobile TV solutions, fully functioning voice-over-IP and announced
the NeoMobileTV product and a GPS solution. -- NeoMagic continues
to work with a customer in Asia that plans to go into production
with a MiMagic 3-based product. The first production order is
expected in the second quarter of this calendar year. -- Neonode, a
Swedish mobile phone manufacturer, is currently focused on
completing development and ramping production for its next
generation products using the MiMagic 6+. As a result, NeoMagic
does not expect any significant orders to support Neonode's N1
product. Neonode's new, MiMagic 6+ based products are expected to
go into production during the second half of calendar year 2006. --
Management has very little visibility into the details for the ODM
program with a Top Five mobile phone OEM that was discussed last
quarter. To support this OEM customer, the ODM is currently
developing a new design with a lower bill of material cost that
uses the MiMagic 6+. -- One of NeoMagic's OEM customers in Japan
has finished a mobile digital TV phone with the MiMagic 6+ and has
completed successful field-testing of this phone. However, the
carrier has decided to delay production of this phone until early
2007. As a result, the carrier and manufacturer are currently
trying to cost reduce the phone and are going through a new bill of
material review. NeoMagic believes that it is well positioned to
have the MiMagic 6+ chip in the final production model. -- The
phone platform design win with a major Japanese wireless phone
operator is continuing to move forward. This phone platform would
use the MiMagic 6+. A platform design win can be very significant
for NeoMagic since it is the base design that can be used as the
template for multiple phone models. If this program moves forward,
we believe that orders would not begin before calendar year 2007.
-- Management expects to receive initial orders for the MiMagic 6+
within the next several weeks. -- NeoMagic continues using the
sales strategy of targeting both mobile phone carriers and mobile
phone manufacturers. The Company has recently had joint discussions
with multiple European phone carriers and one of its OEM customers.
Dial-in Information NeoMagic will hold its fourth quarter fiscal
2006 conference call to discuss the information contained in this
press release today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific
Time). The call can be accessed via the Internet at
http://www.neomagic.com/, "Investor Resources." The call can also
be accessed by dialing 866-206-7204 in the U.S. and 703-639-1114
internationally. There is no passcode. A replay of the call will be
available for seven days beginning on March 30th at 9 p.m. Eastern
Time (6 p.m. Pacific Time). The replay number is 888-266-2081 in
the U.S. and 703-925-2533 internationally. The passcode for the
replay is 848615. The webcast is also being distributed over CCBN's
Investor Distribution Network to both institutional and individual
investors. Individual investors can listen to the call through
CCBN's individual investor center at http://www.fulldisclosure.com/
or by visiting any of the investor sites in CCBN's Individual
Investor Network. Institutional investors can access the call via
CCBN's password-protected event management site, StreetEvents
(http://www.streetevents.com/). About NeoMagic NeoMagic Corporation
delivers semiconductor chips and software that provide mobile
solutions that enable new multimedia features for handheld devices.
These solutions offer low power consumption, small form-factor and
high performance processing. The Company demonstrated one of the
first solutions used for H.264 video decoding in a mobile digital
TV phone, and is developing and delivering solutions for
audio/video processing of the dominant mobile digital TV standards,
including ISDB-T, DMB, and DVB-H. For its complete system solution,
NeoMagic delivers a suite of middleware and sample applications for
imaging, video and audio functionality, and provides multiple
operating system ports with customized drivers for the MiMagic
product family. NeoMagic has a patent portfolio of over 25 patents
that cover NeoMagic's proprietary array processing technology,
embedded DRAM and other technology. Information on the company may
be found on the World Wide Web at http://www.neomagic.com/. This
press release contains forward-looking statements within the
meaning of the Securities Act of 1933 and the Securities Exchange
Act of 1934, including the Company's design wins, expected orders,
production timing, revenue opportunities and the Company's ongoing
patent licensing efforts. Our patent licensing activities involve
various risks and uncertainties, including, without limitation,
uncertainties as to the willingness of other companies to pay
material fees to license our intellectual property, the length and
uncertain outcome of licensing negotiations, the possibility that
litigation may be required to enforce patents, and the risks and
costs inherent in any patent litigation. These forward-looking
statements reflect current expectations. However, actual events and
results could vary significantly based on a variety of factors
including but not limited to customer acceptance of NeoMagic
products, the market acceptance of mobile phones developed and
marketed by customers that use the Company's products, customers'
plans to develop smart phones and feature phones, the acceptance of
advanced multimedia services such as H.264 television on mobile
phones, and the Company's ability to execute product and technology
development plans on schedule. There is no certainty that current
or future design wins will result in revenue for NeoMagic or that
customer forecasts will be accurate. Customers may cancel or delay
projects or customers may fail to achieve their expected sales
objectives due to competitive or other reasons. Additional risks
that could affect the Company's future operating results are more
fully described in the Company's most recent annual report, its
most recent quarterly report and other filings with the United
States Securities and Exchange Commission (SEC), and are available
online at http://www.sec.gov/. NeoMagic may, from time to time,
make additional written or oral forward- looking statements,
including statements contained in filings with the SEC and reports
to shareholders. NeoMagic does not undertake the obligation to
update any forward-looking statements that may be made by or on
behalf of the company. (Logo:
http://www.newscom.com/cgi-bin/prnh/20020802/NMGCLOGO ) NOTE:
NeoMagic, and the NeoMagic circle logo are registered trademarks,
and MiMagic is a trademark, of NeoMagic Corporation. All other
trademarks are the property of their respective owners. NeoMagic
disclaims any proprietary interest in the marks and names of
others. NEOMAGIC CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF
OPERATIONS (In thousands, except per share data) (Unaudited) Three
Months Ended Twelve Months Ended Jan. 31, Oct. 31, Jan. 31, Jan.
31, Jan. 31, 2006 2005 2005 2006 2005 Product revenue $104 $158
$222 $862 $2,466 Licensing revenue 0 8,490 0 8,490 0 Total revenue
104 8,648 222 9,352 2,466 Cost of product revenue 101 147 773 884
3,195 Cost of licensing revenue 0 2,861 0 2,861 0 Impairment of
certain licensed intellectual property 0 0 89 0 89 Total cost of
revenue 101 3,008 862 3,745 3,284 Gross profit (loss) 3 5,640 (640)
5,607 (818) Operating expenses: Research and development 3,193
2,980 4,332 12,403 18,208 Sales, general and administrative 2,049
1,767 1,784 6,916 7,447 Gain on sale of patents 0 0 0 (3,481) 0
Impairment of certain licensed intellectual property 0 0 1,437 0
1,437 Total operating expenses 5,242 4,747 7,553 15,838 27,092
Income (loss) from operations (5,239) 893 (8,193) (10,231) (27,910)
Interest income and other 238 192 97 724 415 Interest expense
(1,893) (256) (284) (2,569) (534) Income (loss) before income taxes
(6,894) 829 (8,380) (12,076) (28,029) Income tax provision
(benefit) (2,919) 50 177 (2,770) 196 Net income (loss) $(3,975)
$779 $(8,557) $(9,306) $(28,225) Basic net income (loss) per share
$(0.57) $0.12 $(1.29) $(1.32) $(4.33) Diluted net income (loss) per
share $(0.57) $0.11 $(1.29) $(1.32) $(4.33) Weighted average common
shares outstanding for basic 6,955 6,740 6,613 7,074 6,524 Weighted
average common shares outstanding for diluted 6,955 6,882 6,613
7,074 6,524 NEOMAGIC CORPORATION CONSOLIDATED CONDENSED BALANCE
SHEETS (In thousands) (Unaudited) January 31, October 31, January
31, 2006 2005 2005 ASSETS Current assets: Cash and cash equivalents
$26,695 $21,964 $8,944 Short-term investments 0 0 16,082 Accounts
receivable, net 9 62 12 Inventory 171 179 376 Other current assets
800 804 792 Total current assets 27,675 23,009 26,206 Property,
plant and equipment, net 2,368 2,639 3,835 Other assets 451 413 673
Total assets $30,494 $26,061 $30,714 LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities: Accounts payable $1,735 $1,507 $1,084
Compensation and related benefits 1,024 1,117 1,017 Income taxes
payable 1,059 3,985 3,851 Other accruals 264 66 126 Current portion
of capital lease obligations 1,525 1,408 1,602 Total current
liabilities 5,607 8,083 7,680 Capital lease obligations 624 1,244
2,004 Mandatorily redeemable preferred stock 0 3,387 2,971 Other
long-term liabilities 149 141 99 Registration Contingency 606 0 0
Stockholders' equity: Common stock 36 34 33 Additional
paid-in-capital 109,696 95,536 95,606 Deferred compensation (531)
(648) (1,280) Accumulated other comprehensive loss (2) 0 (14)
Accumulated deficit (85,691) (81,716) (76,385) Total stockholders'
equity 23,508 13,206 17,960 Total liabilities and stockholders'
equity $30,494 $26,061 $30,714
http://www.newscom.com/cgi-bin/prnh/20020802/NMGCLOGO
http://photoarchive.ap.org/ DATASOURCE: NeoMagic Corporation
CONTACT: Scott Sullinger, Chief Financial Officer of NeoMagic
Corporation, +1-408-486-3955 Web site: http://www.neomagic.com/
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