Liberate Announces Financial Results for Quarter Ended February 29,
2004 Company Considering Chapter 11 Filing to Resolve Outstanding
Liabilities SAN MATEO, Calif., April 14 /PRNewswire-FirstCall/ --
Liberate Technologies , a leading provider of software for digital
cable systems, announced financial results for its third fiscal
quarter ended February 29, 2004. (Logo:
http://www.newscom.com/cgi-bin/prnh/19990630/LIBERATE ) Liberate's
revenues for its third fiscal quarter were $1.7 million, compared
to $5.3 million for the same quarter of the prior fiscal year.
Before offsets for amortization of deferred costs related to
warrants, revenues were $2.6 million for the third quarter and $6.6
million for the same quarter of the prior fiscal year. The net loss
for the quarter was $7.5 million, or $0.07 per share, compared to a
loss of $26.1 million, or $0.25 per share, for the same quarter of
the prior fiscal year. As of February 29, 2004, Liberate had cash
and short-term investments of $222.3 million, a decrease of $9.0
million during the quarter. In addition to cash and short-term
investments, the Company had $10.9 million in restricted cash held
as security for office leases. The Company is considering filing
under Chapter 11 of the U.S. Bankruptcy Code to further strengthen
its financial position and significantly reduce its cost structure,
and emerge as a stronger company to deliver products and services
to its customers. The Company currently has a number of potential
liabilities and exposures, including those arising from leases on
excess facilities in San Carlos, California and in the United
Kingdom, claims from former employees, equipment leases,
outstanding contracts with certain vendors and licensees, and
pending shareholder and patent litigations. The Company is
continuing its efforts to reach consensual resolution of many of
these liabilities. However, if these liabilities cannot be
resolved, the Company is considering seeking the benefits of filing
under Chapter 11 to complete its restructuring. For example, the
Company believes that a Chapter 11 filing would allow the Company
to reduce substantially its lease obligations on excess office
space, as lease claims in bankruptcy for rejected leases are
limited to rent for the greater of 12 months or 15% of the balance
of the term not exceeding three years. The savings to the company
in connection with leases rejected in a Chapter 11 proceeding could
total approximately $38.0 million. In the event the Company
determines to move forward with a Chapter 11 filing, the Company
intends to file a proposed Plan of Reorganization that would pay
100% of all valid claims. The Company plans to seek prompt approval
of such Plan of Reorganization in order to emerge from Chapter 11
within a period of 4 to 6 months. In a Chapter 11 proceeding, the
Company would continue to execute on its business plan, including
continued compliance with active contracts with customers and
vendors, and service and support of its customers and their cable
subscribers. Given the Company's cash position, coupled with the
workforce and expense reductions implemented last year, the Company
expects to have ample working capital to operate its business in
usual course and continue to expand its business. At this time,
Liberate continues to evaluate restructuring alternatives, and has
not made a final decision on whether to pursue a Chapter 11
reorganization. "We will continue efforts, as part of our
restructuring plan, to resolve our outstanding liabilities.
However, if we cannot reach an appropriate resolution in the coming
weeks, we believe it may well be in the best interests of our
shareholders, employees and customers to proceed with a Chapter 11
filing," said David Lockwood, Chairman and CEO of Liberate.
"Regardless of a financial restructuring to reduce our liabilities,
we will continue to execute on our business plan, investing in the
development of our technology platform and delivering our products
and services to existing customers. In addition, we will continue
to aggressively market to new customers in order to grow revenues."
Conference Call Liberate has scheduled a conference call on April
14, 2004, at 2:00 p.m. Pacific Time. The call-in number is
888-265-4625. A replay of the call will be available until April
22, 2004 on either 402-977-9140 or 800-633-8284, reservation code
21189959. 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 relating to
possible filing under Chapter 11 of the U.S. Bankruptcy Code, the
time that a Chapter 11 case would take to complete, the result of a
Chapter 11 case, any savings or other effects arising from such a
filing, future business or financial performance, or anticipated
corporate or commercial activities) are forward-looking statements
and are not guarantees of future performance. Actual results may
vary materially due to the uncertain market for interactive
television services, 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, other uncertainties related to litigation
and the potential Chapter 11 filing, and other risks outlined in
Liberate's filings with the Securities and Exchange Commission.
CONTACT: Greg Wood Chief Financial Officer Liberate Technologies
650-645-4003 LIBERATE TECHNOLOGIES CONDENSED CONSOLIDATED BALANCE
SHEETS (In thousands) Unaudited Feb. 29, 2004 May 31, 2003 Assets
Current assets: Cash and cash equivalents $222,299 $261,689
Accounts receivable, net 3,835 3,310 Prepaid expenses and other
current assets 2,273 3,069 Assets of discontinued operations --
6,936 Total current assets 228,407 275,004 Property and equipment,
net 4,270 6,113 Intangible assets, net -- 22 Deferred costs related
to warrants 4,479 14,449 Restricted cash 10,876 9,249 Other assets
324 131 Total assets $248,356 $304,968 Liabilities and
Stockholders' Equity Current liabilities: Accounts payable $1,848
$1,888 Accrued liabilities 19,522 39,436 Accrued payroll and
related expenses 1,380 1,568 Deferred revenues 10,415 10,619
Liabilities of discontinued operations -- 5,375 Total current
liabilities 33,165 58,886 Long-term excess facilities charges
19,631 22,330 Other long-term liabilities 2,373 2,242 Total
liabilities 55,169 83,458 Stockholders' equity: Common stock 1,055
1,040 Contributed and paid-in-capital 1,501,597 1,490,125 Deferred
stock-based compensation (7,589) (194) Accumulated other
comprehensive income (loss) (2,011) 1,804 Accumulated deficit
(1,299,865) (1,271,265) Total stockholders' equity 193,187 221,510
Total liabilities and stockholders' equity $248,356 $304,968
LIBERATE TECHNOLOGIES CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (In thousands, except per share data) Unaudited Three
months ended Nine months ended Feb. 29 Feb. 28, Feb. 29, Feb. 28,
2004 2003 2004 2003 Revenues: License and royalty $(54) $2,077
$(1,675) $5,633 Service 1,756 3,250 6,110 14,692 Total revenues
1,702 5,327 4,435 20,325 Cost of revenues: License and royalty 206
257 565 1,101 Service 1,549 4,240 4,360 21,464 Total cost of
revenues 1,755 4,497 4,925 22,565 Gross margin (53) 830 (490)
(2,240) Operating expenses: Research and development 5,022 5,485
12,336 21,865 Sales and marketing 703 4,258 3,136 16,087 General
and administrative 3,667 5,858 12,327 14,905 Amortization of
deferred costs related to warrants -- 841 1,831 2,788 Restructuring
costs 86 4,412 1,447 6,470 Amortization and impairment of goodwill
and intangible assets -- 479 22 1,533 Impairment of warrants -- --
4,969 -- Amortization of deferred stock-based compensation -- 254
10 1,017 Excess facilities charges and related asset impairment --
(127) 593 16,376 Total operating expenses 9,478 21,460 36,671
81,041 Loss from operations (9,531) (20,630) (37,161) (83,281)
Interest income, net 504 1,441 1,694 5,919 Other income (expense),
net 1,184 (2,657) 636 (9,225) Loss from continuing operations
before income tax provision (7,843) (21,846) (34,831) (86,587)
Income tax provision (122) 238 (19) 1,043 Loss from continuing
operations (7,721) (22,084) (34,812) (87,630) Loss from
discontinued operations -- (3,999) (3,075) (10,088) Gain on sale of
discontinued operations 249 -- 9,286 -- Cumulative effect of a
change in accounting principle -- -- -- (209,289) Net loss $(7,472)
$(26,083) $(28,601) $(307,007) Basic and diluted income (loss) per
share: Continuing operations $(0.07) $(0.21) $(0.33) $(0.84)
Discontinued operations $-- $(0.04) $0.06 $(0.10) Cumulative effect
of a change in accounting principle $-- $-- $-- $(2.00) Basic and
diluted net loss per share $(0.07) $(0.25) $(0.27) $(2.93) Shares
used in computing basic net loss per share 105,204 104,006 104,573
104,667 http://www.newscom.com/cgi-bin/prnh/19990630/LIBERATE
http://photoarchive.ap.org/ DATASOURCE: Liberate Technologies
CONTACT: Greg Wood, Chief Financial Officer for Liberate
Technologies, +1-650-645-4003, or Web site:
http://www.liberate.com/
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