Liberate Announces Financial Results for Quarter Ended February 28, 2005

Liberate Announces Financial Results for Quarter Ended February 28, 2005 SAN MATEO, Calif., April 4 /PRNewswire-FirstCall/ -- Liberate Technologies (Pink Sheets: LBRT), a leading provider of software for digital cable systems, announced financial results for its third fiscal quarter ended February 28, 2005. Liberate's revenues for its third fiscal quarter were $0.1 million, compared to $1.7 million for the same quarter of the prior fiscal year. The net loss for the quarter was $7.9 million, or $0.07 per share, compared to a loss of $7.5 million, or $0.07 per share, for the same quarter of the prior fiscal year. As of February 28, 2005, Liberate had cash and cash equivalents of $194.4 million. In addition, the Company had $10.7 million in restricted cash held as security for office leases. During the quarter, Liberate paid $8.8 million, net of insurance proceeds of $5.0 million, to settle its restatement class action litigation. Last week, Liberate announced its Board of Directors had declared a one-time special dividend of $2.10 per common share. The special dividend is payable to the holders of record on April 4, 2005 upon the closing of the sale of Liberate's North America business to Double C Technologies, LLC. The Double C transaction is anticipated to close the week of April 4, 2005. As required by the NASD rules governing special dividends of this magnitude, the ex-dividend date will be set one business day after the payment date. After payment of the special dividend, the Registrant expects to have approximately $60 million in cash and cash equivalents on hand, including approximately $10.7 million of restricted cash. 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. 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 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; 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. Contact: Greg Wood Chief Financial Officer Liberate Technologies 650-645-4003 LIBERATE TECHNOLOGIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) Unaudited Feb. 28, 2005 May 31, 2004 Assets Current assets: Cash and cash equivalents $194,404 $215,877 Accounts receivable, net 1,950 3,143 Prepaid expenses and other current assets 1,183 1,642 Other receivables 4,487 175 Total current assets 202,024 220,837 Property and equipment, net 1,613 1,851 Deferred costs related to warrants 896 3,583 Restricted cash 10,747 10,869 Other assets -- 268 Total assets $215,280 $237,408 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $2,528 $3,102 Accrued liabilities 15,748 16,384 Accrued payroll and related expenses 719 685 Short-term borrowing from bank -- 608 Deferred revenues 4,369 6,137 Total current liabilities 23,364 26,916 Long-term excess facilities charges 18,214 19,140 Long-term deferred revenues 9,156 -- Other long-term liabilities 2,416 2,416 Total liabilities 53,150 48,472 Commitments and contingencies Stockholders' equity: Common stock 1,061 1,055 Contributed and paid-in-capital 1,502,811 1,503,113 Deferred stock-based compensation (6,780) (8,453) Accumulated other comprehensive loss (1,970) (2,112) Accumulated deficit (1,332,992) (1,304,667) Total stockholders' equity 162,130 188,936 Total liabilities and stockholders' equity $215,280 $237,408 LIBERATE TECHNOLOGIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) Unaudited Three months ended Nine months ended Feb. 28, Feb. 29, Feb. 28, Feb. 29, 2005 2004 2005 2004 Revenues: License and royalty $(612) $(54) $(883) $(1,675) Service 732 1,756 2,783 6,110 Total revenues 120 1,702 1,900 4,435 Cost of revenues: License and royalty 15 206 49 565 Service 444 1,549 2,716 4,360 Total cost of revenues 459 1,755 2,765 4,925 Gross loss (339) (53) (865) (490) Operating expenses: Research and development 4,508 5,022 12,107 12,336 Sales and marketing 388 703 1,692 3,136 General and administrative 3,113 3,667 9,921 12,327 Amortization of deferred costs related to warrants -- -- -- 1,831 Restructuring costs -- 86 -- 1,447 Amortization and impairment of goodwill and intangible assets -- -- -- 22 Impairment of deferred costs related to warrants -- -- -- 4,969 Amortization of deferred stock-based compensation -- -- -- 10 Excess facilities charges and related asset impairment 486 -- 6,108 593 Total operating expenses 8,495 9,478 29,828 36,671 Loss from operations (8,834) (9,531) (30,693) (37,161) Interest income, net 1,025 504 2,196 1,694 Other income (expense), net (37) 1,184 245 636 Loss from continuing operations before income tax provision (7,846) (7,843) (28,252) (34,831) Income tax provision (benefit) 18 (122) 153 (19) Loss from continuing operations (7,864) (7,721) (28,405) (34,812) Loss from discontinued operations -- -- -- (3,075) Gain on sale of discontinued operations -- 249 80 9,286 Net loss $(7,864) $(7,472) $(28,325) $(28,601) Basic and diluted income (loss) per share: Continuing operation, basic and diluted $(0.07) $(0.07) $(0.27) $(0.33) Discontinued operations, basic $-- $0.00 $0.00 $0.06 Discontinued operations, diluted $-- $0.00 $0.00 $0.06 Basic and diluted net loss per share $(0.07) $(0.07) $(0.27) $(0.27) Shares used in computing basic and diluted net loss per share 105,911 105,204 105,751 104,573 Shares used in computing diluted net gain per share from discontinued operations -- 110,476 109,015 109,117 DATASOURCE: Liberate Technologies CONTACT: Greg Wood, Chief Financial Officer of Liberate Technologies, +1-650-645-4003, or Web site: http://www.liberate.com/