Liberate Announces Financial Results for Quarter Ended November 30,
2004 Conference Call January 10, 2005, At 2:00 P.M. Pacific Time
SAN MATEO, Calif., Jan. 10 /PRNewswire-FirstCall/ -- Liberate
Technologies (Pink Sheets: LBRT), a leading provider of software
for digital cable systems, announced financial results for its
second fiscal quarter ended November 30, 2004. Liberate's revenues
for its second fiscal quarter were $0.6 million, compared to $1.2
million for the same quarter of the prior fiscal year. The net loss
for the quarter was $8.1 million, or $0.08 per share, compared to a
loss of $8.5 million, or $0.08 per share, for the same quarter of
the prior fiscal year. As of November 30, 2004, Liberate had cash
and cash equivalents of $208.0 million, a decrease of $2.0 million
during the quarter. In addition to cash and cash equivalents, the
Company had $10.7 million in restricted cash held as security for
office leases. During the quarter, Liberate collected $4.5 million
of non-refundable payments for contract fees and monthly
subscription fees from customers pursuant to its subscription
license agreements. Revenue under such agreements is being deferred
until future obligations for product delivery and product updates
have been met. Earlier today, Liberate announced it had reached
agreement to sell substantially all of the assets of its North
American business to Double C Technologies, LLC, a joint venture
majority owned and controlled by Comcast Corporation with a
minority investment by Cox Communications, Inc., for consideration
of approximately $82 million. The agreement will not become
effective until the dismissal of Liberate's bankruptcy appeal,
which Liberate has agreed to actively pursue. To that end, today
Liberate is filing a motion in the U.S. District Court for Northern
California to dismiss the appeal of its bankruptcy case dismissal.
The agreement is also subject to Liberate shareholder approval,
Hart-Scott-Rodino antitrust approval, and other customary closing
conditions. "Over the past two years, we have worked hard to
restructure the Company and resolve outstanding liabilities and
other uncertainties," said David Lockwood, Chairman and CEO of
Liberate. "Today's announcement of the purchase of our North
American business by industry leaders Comcast and Cox demonstrates
the strategic importance of the technology we have built and our
commitment to deliver value to shareholders." Conference Call
Liberate has scheduled a conference call on January 10, 2005, at
2:00 p.m. Pacific Time to discuss its second quarter fiscal 2005
financial results. The call-in number is 888-882-0142. A replay of
the call will be available until January 17, 2005 on either
402-977-9140 or 800-633-8284, reservation code 21226844. 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 interactive programming guides,
high-definition television, video on demand, personal video
recorders and games -- on multiple platforms. Headquartered in San
Mateo, California, Liberate has offices in Ontario, Canada, and the
United Kingdom. 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 announced asset sale and future business or financial
performance) are forward-looking statements, within the meaning of
the U.S. securities laws, that involve risks and uncertainties 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 governmental, regulatory or judicial bodies (including
with respect to the U.S. District Court for the Northern District
of California dismissal of the appeal of Liberate's bankruptcy
dismissal); uncertainty in the market for interactive television
services and dependence on a limited number of cable network
operators; business disruption resulting from the announcement of
the asset sale; uncertainties related to litigation; 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. LIBERATE
WILL FILE A PROXY STATEMENT AND OTHER RELEVANT DOCUMENTS CONCERNING
THE PROPOSED ASSET SALE WITH THE SECURITIES AND EXCHANGE
COMMISSION. INVESTORS ARE URGED TO READ THE PROXY STATEMENT WHEN IT
BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE
SEC BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ON THE PROPOSED
ASSET SALE. YOU WILL BE ABLE TO OBTAIN THE DOCUMENTS FILED WITH THE
SEC FREE OF CHARGE AT THE WEB SITE MAINTAINED BY THE SEC AT
WWW.SEC.GOV. IN ADDITION, YOU MAY OBTAIN DOCUMENTS FILED WITH THE
SEC BY LIBERATE FREE OF CHARGE BY REQUESTING THEM IN WRITING FROM
LIBERATE, 2655 CAMPUS DRIVE, SUITE 250, SAN MATEO, CA 04403,
ATTENTION: INVESTOR RELATIONS, OR BY TELEPHONE AT (650) 645-4000.
LIBERATE AND ITS DIRECTORS AND EXECUTIVE OFFICERS MAY BE DEEMED TO
BE PARTICIPANTS IN THE SOLICITATION OF PROXIES FROM LIBERATE'S
STOCKHOLDERS. A LIST OF THE NAMES OF THOSE DIRECTORS AND EXECUTIVE
OFFICERS AND DESCRIPTIONS OF THEIR INTERESTS IN LIBERATE IS
CONTAINED IN LIBERATE'S PROXY STATEMENT DATED SEPTEMBER 13, 2004,
WHICH IS FILED WITH THE SEC. STOCKHOLDERS MAY OBTAIN ADDITIONAL
INFORMATION ABOUT THE INTERESTS OF THE DIRECTORS AND EXECUTIVE
OFFICERS IN THIS TRANSACTION BY READING THE PROXY STATEMENT WHEN IT
BECOMES AVAILABLE. LIBERATE TECHNOLOGIES CONDENSED CONSOLIDATED
BALANCE SHEETS (In thousands) Unaudited November 30, May 31, 2004
2004 Assets Current assets: Cash and cash equivalents $207,987
$215,877 Accounts receivable, net 3,561 3,143 Prepaid expenses and
other current assets 1,552 1,817 Total current assets 213,100
220,837 Property and equipment, net 1,775 1,851 Deferred costs
related to warrants 1,791 3,583 Restricted cash 10,741 10,869 Other
assets 36 268 Total assets $227,443 $237,408 Liabilities and
Stockholders' Equity Current liabilities: Accounts payable $2,996
$3,102 Accrued liabilities 18,967 16,384 Accrued payroll and
related expenses 958 685 Short-term borrowing from bank -- 608
Deferred revenues 4,391 6,137 Total current liabilities 27,312
26,916 Long-term excess facilities charges 20,022 19,140 Long-term
deferred revenues 8,114 -- Other long-term liabilities 2,416 2,416
Total liabilities 57,864 48,472 Commitments and contingencies
Stockholders' equity: Common stock 1,057 1,055 Contributed and
paid-in-capital 1,502,994 1,503,113 Deferred stock-based
compensation (7,384) (8,453) Accumulated other comprehensive loss
(1,960) (2,112) Accumulated deficit (1,325,128) (1,304,667) Total
stockholders' equity 169,579 188,936 Total liabilities and
stockholders' equity $227,443 $237,408 LIBERATE TECHNOLOGIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands,
except per share data) Unaudited Three months ended Six months
ended Nov. 30, Nov. 30, Nov. 30, Nov. 30, 2004 2003 2004 2003
Revenues: License and royalty $(490) $(697) $(271) $(1,621) Service
1,122 1,885 2,051 4,354 Total revenues 632 1,188 1,780 2,733 Cost
of revenues: License and royalty 18 208 34 359 Service 893 1,368
2,272 2,811 Total cost of revenues 911 1,576 2,306 3,170 Gross loss
(279) (388) (526) (437) Operating expenses: Research and
development 3,757 3,647 7,599 7,314 Sales and marketing 703 1,004
1,304 2,433 General and administrative 3,057 4,479 6,808 8,660
Amortization of deferred costs related to warrants -- 1,027 --
1,831 Restructuring costs -- 881 -- 1,361 Amortization and
impairment of goodwill and intangible assets -- -- -- 22 Impairment
of deferred costs related to warrants -- 4,969 -- 4,969
Amortization of deferred stock-based compensation -- -- -- 10
Excess facilities charges and related asset impairment 1,206 593
5,622 593 Total operating expenses 8,723 16,600 21,333 27,193 Loss
from operations (9,002) (16,988) (21,859) (27,630) Interest income,
net 624 573 1,171 1,190 Other income (expense), net 343 (173) 282
(548) Loss from continuing operations before income tax provision
(8,035) (16,588) (20,406) (26,988) Income tax provision 97 -- 135
103 Loss from continuing operations (8,132) (16,588) (20,541)
(27,091) Loss from discontinued operations -- (992) -- (3,075) Gain
on sale of discontinued operations -- 9,037 80 9,037 Net loss
$(8,132) $(8,543) $(20,461) $(21,129) Basic and diluted income
(loss) per share: Continuing operations $(0.08) $(0.16) $(0.19)
$(0.26) Discontinued operations, basic $-- $0.08 $-- $0.06
Discontinued operations, diluted $-- $0.07 $-- $0.06 Basic and
diluted net loss per share $(0.08) $(0.08) $(0.19) $(0.20) Shares
used in computing basic and diluted net loss per share 105,742
104,515 105,683 104,248 Shares used in computing diluted net gain
per share from discontinued operations 105,742 108,304 105,683
108,395 LIBERATE TECHNOLOGIES CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (In thousands, except per share data) Unaudited Three
months ended Nov. 30 Aug. 31, May 31, Feb. 29, 2004 2004 2004 2004
Revenues: License and royalty $(490) $219 $1,412 $(54) Service
1,122 929 2,765 1,756 Total revenues 632 1,148 4,177 1,702 Cost of
revenues: License and royalty 18 16 32 206 Service 893 1,379 957
1,549 Total cost of revenues 911 1,395 989 1,755 Gross margin (279)
(247) 3,188 (53) Operating expenses: Research and development 3,757
3,842 3,989 5,022 Sales and marketing 703 601 (129) 703 General and
administrative 3,057 3,751 1,260 3,667 Amortization of deferred
costs related to warrants -- -- -- -- Restructuring costs -- --
(41) 86 Excess facilities charges and related asset impairment
1,206 4,416 3,429 -- Total operating expenses 8,723 12,610 8,508
9,478 Loss from operations (9,002) (12,857) (5,320) (9,531)
Interest income, net 624 547 530 504 Other income (expense), net
343 (61) (106) 1,184 Loss from continuing operations before income
tax provision (8,035) (12,371) (4,896) (7,843) Income tax provision
(benefit) 97 38 157 (122) Loss from continuing operations (8,132)
(12,409) (5,053) (7,721) Loss from discontinued operations -- -- --
-- Gain on sale of discontinued operations -- 80 252 249 Net loss
$(8,132) $(12,329) $(4,801) $(7,472) Basic and diluted income
(loss) per share: Continuing operations $(0.08) $(0.12) $(0.05)
$(0.07) Discontinued operations, basic $-- $-- $-- $-- Discontinued
operations, diluted $-- $-- $-- $-- Basic and diluted net loss per
share $(0.08) $(0.12) $(0.05) $(0.07) Shares used in computing
basic net loss per share 105,742 105,623 105,495 105,204 Contact:
Greg Wood Chief Financial Officer Liberate Technologies (650)
645-4003 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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