Liberate Announces Financial Results for Quarter Ended August 31,
2004 Conference Call October 12, 2004, at 2:00 p.m. Pacific Time
SAN MATEO, Calif., Oct. 12 /PRNewswire-FirstCall/ -- Liberate
Technologies (Pink Sheets: LBRT), a leading provider of software
for digital cable systems, announced financial results for its
first fiscal quarter ended August 31, 2004. Liberate's revenues for
its first fiscal quarter were $1.1 million, compared to $1.5
million for the same quarter of the prior fiscal year. The net loss
for the quarter was $12.3 million, or $0.12 per share, compared to
a loss of $12.6 million, or $0.12 per share, for the same quarter
of the prior fiscal year. The loss in the current year includes a
charge of $4.4 million for excess facilities related to the
Company's former headquarters in San Carlos, California. As of
August 31, 2004, Liberate had cash and cash equivalents of $210.0
million, a decrease of $5.9 million during the quarter. In addition
to cash and cash equivalents, the Company had $10.9 million in
restricted cash held as security for office leases. "We continue to
push ahead with our goals of restructuring the Company and growing
revenues," said David Lockwood, Chairman and CEO of Liberate. "We
are pleased with the commitments to our technology that have been
made by Cox, NTL and Telewest. While we are disappointed with the
dismissal of our bankruptcy case and have appealed the ruling, we
are making progress on our restructuring efforts. We are delighted
that the SEC staff has completed its investigation into the events
that led to the restatement of our financial statements and has
recommended no enforcement action against the Company. In addition,
during the quarter, we made progress toward resolving the
shareholder class-action litigation." Condensed Consolidated
Financial Statements - Basis of Presentation Because the Chapter 11
bankruptcy case was still pending as of August 31, 2004, we have
prepared the attached unaudited condensed consolidated financial
statements in accordance with the provisions of Statement of
Position 90-7, "Financial Reporting by Entities in Reorganization
under the Bankruptcy Code" ("SOP 90-7"), which does not
significantly change the application of accounting principles
generally accepted in the United States. However, it does require
that the financial statements for periods including and subsequent
to filing the Chapter 11 petition distinguish transactions and
events that are directly associated with the reorganization from
the ongoing operations of the business. Please see our report on
Form 10-Q for the quarter ended August 31, 2004 for additional
information regarding the application of SOP 90-7 to Liberate's
unaudited condensed consolidated financial statements. Conference
Call Liberate has scheduled a conference call on October 12, 2004,
at 2:00 p.m. Pacific Time. The call-in number is 800-266-1825. A
replay of the call will be available until October 19, 2004 on
either 402-977-9140 or 800-633-8284, reservation code 21210335. The
conference call can also be accessed via live webcast at Liberate's
website (http://www.liberate.com/) and will remain available for
replay. About Liberate Technologies Liberate Technologies is a
leading provider of software for digital cable systems. Based on
industry standards, Liberate's software enables cable operators to
run multiple services -- including High-Definition Television,
Video on Demand, and Personal Video Recorders -- on multiple
platforms. Headquartered in San Mateo, California, Liberate has
offices in Ontario, Canada, and the United Kingdom. NOTE: Liberate
and the Liberate design are registered trademarks of Liberate
Technologies. Other product names used in association with these
registered trademarks are trademarks of Liberate Technologies.
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995 Those statements above that involve expectations
or intentions (such as those related to the SEC staff's stated
intention to recommend no enforcement action against Liberate,
future business or financial performance, the outcome of pending
litigation and the Chapter 11 appeal, or anticipated corporate or
commercial activities) are forward-looking statements and are not
guarantees of future performance. Factors that could cause actual
results to differ materially from these forward-looking statements
include, but are not limited to, the following: future decisions by
the SEC or other governmental or regulatory bodies; uncertainty in
the market for interactive television services and dependence on a
limited number of cable network operators; business disruption
resulting from Liberate's restatement and related litigation;
necessary adjustments related to recent restructuring; and other
uncertainties related to litigation and the Chapter 11 appeal, and
other risks outlined in Liberate's filings with the Securities and
Exchange Commission. Liberate disclaims any intention or obligation
to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. CONTACT:
Greg Wood Chief Financial Officer Liberate Technologies
650-645-4003 LIBERATE TECHNOLOGIES (DEBTOR-IN-POSSESSION) CONDENSED
CONSOLIDATED BALANCE SHEETS (In thousands) Unaudited August 31, May
31, 2004 2004 Assets Current assets: Cash and cash equivalents
$209,971 $215,877 Accounts receivable, net 3,958 3,143 Prepaid
expenses and other current assets 1,696 1,817 Total current assets
215,625 220,837 Property and equipment, net 1,776 1,851 Deferred
costs related to warrants 2,687 3,583 Restricted cash 10,866 10,869
Other assets 147 268 Total assets $231,101 $237,408 Liabilities and
Stockholders' Equity Current liabilities: Accounts payable $1,649
$686 Accrued liabilities 4,459 3,234 Accrued payroll and related
expenses 379 370 Short-term borrowing from bank -- 608 Deferred
revenues 6,489 6,137 Total current liabilities 12,976 11,035
Long-term excess facilities charges 401 631 Total liabilities not
subject to compromise 13,377 11,666 Liabilities subject to
compromise 40,571 36,806 Total liabilities 53,948 48,472
Stockholders' equity: Common stock 1,057 1,055 Contributed and
paid-in-capital 1,502,992 1,503,113 Deferred stock-based
compensation (7,946) (8,453) Accumulated other comprehensive loss
(1,954) (2,112) Accumulated deficit (1,316,996) (1,304,667) Total
stockholders' equity 177,153 188,936 Total liabilities and
stockholders' equity $231,101 $237,408 LIBERATE TECHNOLOGIES
(DEBTOR-IN-POSSESSION) CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (In thousands, except per share data) Unaudited Three
months ended August 31, 2004 2003 Revenues: License and royalty
$219 $(924) Service 929 2,469 Total revenues 1,148 1,545 Cost of
revenues: License and royalty 16 151 Service 1,379 1,443 Total cost
of revenues 1,395 1,594 Gross margin (247) (49) Operating expenses:
Research and development 3,842 3,667 Sales and marketing 601 1,429
General and administrative 1,949 4,181 Amortization of deferred
costs related to warrants -- 804 Restructuring costs -- 480
Amortization and impairment of intangible assets -- 22 Amortization
of deferred stock-based compensation -- 10 Excess facilities
charges and related asset impairment 4,416 -- Total operating
expenses 10,808 10,593 Loss from operations (11,055) (10,642)
Reorganization items, net (1,731) -- Interest income, net 476 617
Other expense, net (61) (375) Loss from continuing operations
before income tax provision (12,371) (10,400) Income tax provision
38 103 Loss from continuing operations (12,409) (10,503) Loss from
discontinued operations -- (2,083) Gain on sale of discontinued
operations 80 -- Net loss $(12,329) $(12,586) Basic and diluted
loss per share: Continuing operations $(0.12) $(0.10) Discontinued
operations -- $(0.02) Basic and diluted net loss per share $(0.12)
$(0.12) Shares used in computing basic and diluted net loss per
share 105,623 104,006 LIBERATE TECHNOLOGIES (DEBTOR IN POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands,
except per share data) Unaudited Three months ended Aug. 31, May
31, Feb. 29, Nov. 30, 2004 2004 2004 2003 Revenues: License and
royalty $219 $1,412 $(54) $(697) Service 929 2,765 1,756 1,885
Total revenues 1,148 4,177 1,702 1,188 Cost of revenues: License
and royalty 16 32 206 208 Service 1,379 957 1,549 1,368 Total cost
of revenues 1,395 989 1,755 1,576 Gross margin (247) 3,188 (53)
(388) Operating expenses: Research and development 3,842 3,989
5,022 3,647 Sales and marketing 601 (129) 703 1,004 General and
administrative 1,949 939 3,667 4,479 Amortization of deferred costs
related to warrants -- -- -- 1,027 Restructuring costs -- (41) 86
881 Impairment of warrants -- -- -- 4,969 Excess facilities charges
and related asset impairment 4,416 3,429 -- 593 Total operating
expenses 10,808 8,187 9,478 16,600 Loss from operations (11,055)
(4,999) (9,531) (16,988) Reorganization items, net (1,731) (304) --
-- Interest income, net 476 513 504 573 Other income (expense), net
(61) (106) 1,184 (173) Loss from continuing operations before
income tax provision (12,371) (4,896) (7,843) (16,588) Income tax
provision (benefit) 38 157 (122) -- Loss from continuing operations
(12,409) (5,053) (7,721) (16,588) Loss from discontinued operations
-- -- -- (992) Gain on sale of discontinued operations 80 252 249
9,037 Net loss $(12,329) $(4,801) $(7,472) $(8,543) Basic and
diluted income (loss) per share: Continuing operations $(0.12)
$(0.05) $ (0.07) $(0.16) Discontinued operations, basic $-- $-- $--
$0.08 Discontinued operations, diluted $-- $-- $-- $0.07 Basic and
diluted net loss per share $(0.12) $(0.05) $ (0.07) $(0.08) Shares
used in computing basic net loss per share 105,623 105,495 105,204
104,515 DATASOURCE: Liberate Technologies CONTACT: Greg Wood, Chief
Financial Officer of Liberate Technologies, +1-650-645-4003, or Web
site: http://www.liberate.com/
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