Document:

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                         DISTRIBUTION SERVICE AGREEMENT

         This Distribution Service Agreement (the "Agreement") is made and
entered into and is effective as of the 10th day of October, 1999, by and
between The Pantry, Inc., a Delaware corporation ("Pantry") and Lil' Champ Food
Stores, Inc., a Florida corporation ("Lil' Champ) (Pantry and Lil' Champ are
hereinafter sometimes referred to collectively as the "Company") and McLANE
COMPANY, INC., a Texas corporation (hereinafter referred to as "McLane").

                                    RECITALS

         WHEREAS, Company is in the business of operating retail convenience
food stores; and

         WHEREAS, McLane is in the business of wholesale distribution of food
and non-food/general merchandise products throughout the United States of
America;

         NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants contained herein, the parties hereto agree as follows:

                                    ARTICLE I

                               SCOPE OF AGREEMENT

         1.1 Company Stores. For purposes of this Agreement, the term "stores"
means the owned or managed convenience food stores of Company. Should Company
build new or otherwise acquire additional stores after the date of this
Agreement, such additional stores shall be included within the definition of
stores.

         1.2 Franchisees and Licensees. During the term of this Agreement,
Company agrees to recommend McLane as the supplier to any franchisees and
licensees of Company, if any.

         1.3 Purchase of Products and Services. During the term of this
Agreement Company will purchase from McLane, and McLane will sell to Company,
all of Company's requirements of wholesale food and non-food/general merchandise
products customarily supplied by convenience food wholesalers; provided,
however, that the foregoing shall have no effect upon products purchased by
Company from other vendors for whom McLane is not an approved supplier for
existing and future branded fast food operations; and further, provided, that
Company may purchase (i) traditional DSD products from DSD (direct store
delivery) vendors, and (ii) all types of products currently being purchased from
other vendors other than full-line convenience food wholesalers (it being
understood that McLane may at any time propose for additional business). Such
products to be purchased from

* Selected portions have been deleted as confidential pursuant to Rule 24b-2.
Complete copies of the entire exhibit have been filed with the Securities and
Exchange Commission and marked "CONFIDENTIAL TREATMENT."

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McLane shall include those standard convenience food store items, including, but
not limited to, the following (the "Products"):

(a) Groceries, including coffee, tea, cereal, canned meats, condiments, juice,
baby food, canned and dry goods and eggs;

(b) Deli foods, including meats and salads, breakfast foods, nachos and bulk
sausage, franks, cheese and fish;

(c) Frozen foods, such as fruits, vegetables and juices;

(d) Frozen fast foods, such as burritos, pizza, pizza pieces, frozen sandwiches
and salads;

(e) Candy, snacks and popcorn;

(f) Cigarettes and tobacco products;

(g) Cold packaged meats, lunch meats and cheeses;

(h) Shortening, breading and kitchen supplies;

(i) Private or controlled label soft drinks and beverages;

(j) Post mix products;

(k) Store supply items, i.e., bags, wraps, fast food supplies (including
napkins, individual condiments and cleaners);

(l) Cooler items, i.e., cheese, biscuits, dips, cultured products, butter and
margarine;

(m) Health and beauty aids, hosiery, and film and flash; and,

(n) General merchandise items, including motor oil, other automotive products,
housewares, hardware, electrical supplies, baby supplies, sunglasses, lighters,
toys and pet supplies.

McLane, by and through its divisions and/or subsidiaries, shall supply and
deliver those products described hereinabove which are ordered by Company on a
weekly basis according to those prices outlined in the Billing Plans attached
hereto as Exhibit "A" and made a part hereof. The foregoing described product
categories and pricing plan may be adjusted as market conditions change, and
significant changes in fuel prices may also involve additional charges, all in
accordance with Article V hereof.

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McLane's right to propose coverage of other vendor/supplier sources would
require a competitive offer with the terms offered by vendors.

         1.4 Application of Agreement to Acquired Stores. This Agreement shall
apply to any convenience store chain or group of convenience stores directly or
indirectly acquired by the Company subsequent to the date of this Agreement
which store(s) are not then covered by an existing supply agreement. Should said
acquired store(s) be covered by an existing supply agreement, this Agreement
shall apply upon the expiration of the then existing supply agreement. The
Company is permitted to renegotiate with an existing supplier as the existing
service agreement expires and McLane has the option to match the terms offered
by existing supplier for such acquired stores.

The Company will be paid a service allowance for each acquired store or new
store pursuant to Section 3.2.

         1.5 Cost. All merchandise (whether purchased by McLane directly from a
manufacturer or from another source), other than cigarettes, shall be billed at
McLane's cost, plus applicable percentage markups for each UIN department as set
forth on the Billing Plan, plus any federal, state or local taxes where
prescribed by law (e.g. state tax on tobacco products). This total is then
reduced by promotional deals and allowances granted by manufacturers
specifically to retailers for the time period provided by the manufacturers
during their buy period. For purposes of this Agreement, McLane's cost shall
mean the manufacturer's current publicly quoted delivered cost based on the
buying bracket in which McLane normally buys that product for that particular
McLane division or subsidiary. Delivered cost includes freight expense from
manufacturers' shipping point to the appropriate McLane division or subsidiary
and provides sort and segregation of that product. Backhaul income generated by
McLane using its own or another authorized carrier, at McLane's expense, shall
be retained by McLane. This publicly quoted delivered cost will be without
regard to any cash discount or volume rebates allowed by the manufacturer to
McLane. McLane reserves the right to impute cash discounts of up to two percent
(2%) or any portion thereof which is not allowed by the manufacturer to McLane
and to do so based upon the delivered cost. For purposes of this Agreement the
term "manufacturer" means the person or entity that manufactures or causes
others to manufacture goods or products which are marketed under brands or
labels controlled by such person or entity.

         1.6 Favored Nations. McLane warrants that the net price of Products
based on a market basket approach, inclusive of all allowances, discounts and
rebates, paid by Company for Products delivered hereunder will be at least equal
to the net price paid by any other customer of McLane based upon any other
respective customers of McLane in the same geographic location and in the same
class of trade and similar volume.

         1.7 Obligations on Default/Termination. In the event this Agreement is
terminated as a result of a breach of and/or default in the terms and/or
conditions of this Agreement by

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Company or for any other reason, then Company shall pay McLane all of the
remaining unamortized portion of the Service Allowance described in Section 3.1
herein.

                                   ARTICLE II

                                 SUPPLY SERVICES

         2.1 Product Delivery. McLane, by and through its divisions and/or
subsidiaries, shall supply and deliver those Products described hereinabove
which are ordered by Company on a weekly basis except as otherwise agreed to by
the parties. Deliveries will be scheduled seven (7) days per week, twenty-four
(24) hours a day. Stores will not be required to accept delivery during hours
when such stores are closed, where city ordinance prohibits or when a delivery
would create a major business disruption. McLane delivery vehicles will be
allowed to park on either side of a Store permitting McLane's ramp to touch down
on Store's sidewalk. At no time will entry to Store or gas pumps be blocked by
McLane delivery vehicles. Deliveries should be conducted so as not to
unreasonably hinder parking at stores but delivery vehicles shall be entitled to
park so as to be able to lower the walkboard onto the sidewalk in front of a
store provided space is available when the delivery vehicle arrives.

     McLane will hold reviews every four (4) weeks with Company to analyze
McLane's order quality (i.e, over, short and damaged products) and on-time
deliveries. McLane agrees that it shall maintain a service level (i.e., the
ratio of products invoiced to products ordered) of not less than *%. In the
event McLane fails to maintain a level of order quality of *%, on-time
deliveries of *%, or a service level of at least *% over any eight (8)
consecutive week period, then Company shall notify McLane in writing setting
forth the details of any such failure. If McLane does not achieve the required
levels of order quality, during the immediately succeeding eight (8) week
period, then Company shall have the right to have all deliveries made *, as of
McLane's next reroute date.

         2.2 *

         2.3 Other Customers of McLane. This Agreement shall in no way act to
foreclose McLane from supplying and delivering products or services to any other
customer or entity.

         2.4 Twice Per Week Delivery. McLane will provide twice weekly delivery
to * percent (*%) of Company's stores. In the event the Company requires twice
weekly delivery to more than * percent (*%), Company will be assessed an
additional $* per week per store service charge. Should Company require twice
weekly delivery in more than * percent (*%) of its Stores, McLane and Company
will negotiate an appropriate fee for those additional deliveries.

* Selected portions have been deleted as confidential pursuant to Rule 24b-2.
Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."

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                                   ARTICLE III

                                  COMPENSATION

         3.1 Service Allowance. McLane agrees to pay to Company a Service
Allowance in the total amount of $* within ten (10) business days after the date
the last party executes this Agreement (the "Service Allowance") subject to
repayment by Company to McLane and to additional Service Allowance payments by
McLane to Company in accordance with Section 3.2 below.

..        The Service Allowance is based on $* per Store per year and shall
     be amortized over the term of this Agreement applying the straight-line
     method of amortization in accordance with generally accepted accounting
     principles. This Service Allowance shall be reduced by the amount of the
     unamortized service allowance paid by McLane in accordance with that one
     certain Distribution Service Agreement dated March 29, 1998 entered into by
     and between the Company and McLane, as the same may have been amended
     through the Effective Date (the "Prior Agreement"), which amount the
     Company and McLane agree is $*, making the Service Allowance payable to
     Company $*.

         3.2 Service Allowance Annual Adjustment. On each anniversary date of
this Agreement, the Service Allowance will be adjusted for net Store openings or
closings during the proceeding twelve (12) month period. In order to complete
its Store evaluations, the Company may close, during the term of this Agreement,
up to * (*) Stores with no penalty under this Agreement. The amount to be paid
by McLane to Company for new stores and the amount to be paid to McLane by
Company for closed stores shall be equal to the number of full months from
opening or closing (as applicable) through the end of the term of this Agreement
multiplied by $*. The amount will be paid to Company or paid by Company to
McLane (if closings exceed openings) within thirty (30) days following each
anniversary date of this Agreement. The administration and calculation will be
performed by McLane/Carolina, Inc. and the Vice President of Merchandising of
Company.

         3.3 Volume Incentive. Company shall be entitled to a volume incentive
program by which McLane will pay Company a volume rebate of *% on * purchases.
Payment will be made at the conclusion of each 4 week accounting period. The
volume incentive is expected to cause Company to increase purchases from McLane.

         3.4 Payment Terms for Products Purchased. Company shall cause payment
to be made by wire transfer to McLane for all Products purchased by the stores
not later than 12:00 Noon, Central Standard Time or, if applicable, Central
Daylight Savings Time, on the * following the week of delivery (for the purpose
of this Section 3.4, each week is considered to end on Friday).

     * Selected portions have been deleted as confidential pursuant to Rule
24b-2. Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."

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         For Illustration Purposes Only: For deliveries made during the week of
         October 16, 1998 through October 22, 1999, payment will be due and
         payable to McLane no later than 12:00 Noon, Central Standard Time, or,
         if applicable, Central Daylight Savings Time, on *.

         McLane understands that the Company may be unable to routinely comply
         with the terms as stated. Alternately the Company may require an
         additional * days beyond stated terms. As compensation for the
         extension of terms in addition to a difference in accounting reporting
         periods, the Company, upon request of McLane, shall make a deposit of
         funds with McLane in an amount of up to * days of sales which
         shall be maintained at all times. The deposit will be adjusted as
         necessary to reflect increases or decreases in sales volume. Company
         agrees to make an initial deposit of $* on or before December
         1, 1999.

         McLane will review the Company's payment history with McLane and
         average outstanding accounts receivable balance on or before May 31,
         2000 to determine if the Company's initial deposit should be increased.
         Upon any termination of this Agreement or upon any breach of this
         Agreement by the Company, McLane shall be entitled to offset the amount
         on deposit against any amounts due McLane by the Company.

         3.5 Tote and Canister Charges. McLane will charge Company $* for each
net tote left at a Store and credit the Company $* for each net tote picked up
from a Store. This net charge or credit will also apply to CO2 canisters at the
rate of $* per canister. In order not to negatively impact the Company's cash
flow, McLane will determine, from delivery documents for the week prior to the
Effective Date of this Agreement, the number of totes and CO2 canisters in the
Stores as of the Effective Date of this Agreement. The number of totes times $*
per tote and the number of canisters times $* per canister will be set up as a
receivable by McLane and a payable by the Company. At the conclusion of this
Agreement, these accounts will be reconciled by McLane and Company.

                                   ARTICLE IV

                              TERM AND TERMINATION

         4.1 Term. This Agreement shall commence and become effective on the
Effective Date hereof and, unless earlier terminated in accordance with terms of
this Agreement, will continue thereafter for a period of five (5) years from the
Effective Date. Upon termination of this Agreement, McLane and Company will each
fulfill their respective obligations hereunder with respect to all orders that
have been placed by Company and/or delivered by McLane prior to the effective
date of such termination.

* Selected portions have been deleted as confidential pursuant to Rule
24b-2. Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."
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         4.2 Service Commencement Date. The "Effective Date" means October 10,
1999, unless changed by mutual agreement of the parties.

         4.3 Termination. In the event Company fails to make payments for any
Products or services purchased from McLane at such time as payment is required
to be made by this Agreement ("Payment Default"), McLane will have the immediate
right to suspend performance of its obligations under this Agreement until such
time as the Payment Default is cured. In the event of a Payment Default, if such
default is not cured within twenty-four (24) hours after Company receives notice
of default from McLane, then this Agreement shall terminate and all amounts
outstanding to McLane, including, but not limited to, the remaining unamortized
portion of the Service Allowance, will be immediately due and payable. However,
nothing in this Agreement shall constitute a waiver of McLane's remedies under
applicable law.

Additionally, McLane may suspend performance of its obligations and/or terminate
this Agreement in the event of Insolvency of Pantry or Lil' Champ. In the event
of a termination, the Company shall immediately repay the unamortized portion of
the Service Allowance to McLane.

     The Company may terminate this Agreement (i) immediately on written notice
to McLane following a default by McLane with respect to the payment of any
amounts owed to the Company under the terms of this Agreement, which default has
remained uncured for five (5) days after McLane's receipt of written notice of
such default from Company, (ii) sixty (60) days following Company's written
notice to McLane that McLane is in a breach of its material obligations
hereunder, if such breach has not been cured within such sixty (60) day period,
(iii) immediately following the Insolvency of McLane, (iv) upon sixty (60) days
notice if McLane is found to be in violation of Section 2.1, (v) immediately,
following the violation of Section 6.4 by McLane or (vi) * If the Company
terminates this Agreement for one of the above enumerated reasons, then no fee
or other amount shall be due and payable by the Company to McLane in connection
with such termination.

For purposes of this Agreement,

         (A) "Insolvency" shall mean that, with respect to an entity, such
entity shall (i) make a general assignment for the benefit of creditors or an
agent authorized to liquidate its assets, (ii) become the subject of an "order
for relief" within the meaning of the United States Bankruptcy Code, and such
order is not stayed within sixty (60) days, (iii) file a petition in bankruptcy
or for reorganization, or effect a plan or other arrangement with creditors,
(iv) file an answer to a creditor's petition, admitting the material allegations
thereof, for involuntary bankruptcy or for reorganization or to effect a plan or
other arrangement with creditor, (v) apply to a court for the appointment of a
receiver or

* Selected portions have been deleted as confidential pursuant to Rule
24b-2. Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."

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custodian for substantially all of its assets or properties, with or without
consent, and such receiver is not discharged with sixty (60) days after
appointment or (vi) adopt a plan of complete liquidation of its assets; and

         (B) *

         4.4 Auditing. Company's authorized representative shall have the right
during normal business hours upon minimum of fourteen (14) days notice to
examine only those records applicable to Company's specific account in order to
verify cost and the cost plus margin. If such examination discloses an
overstatement of cost or the cost plus margin price, McLane shall reimburse
Company for the overcharge. If such examination discloses an understatement of
cost or the cost plus margin price, Company shall reimburse McLane for the
undercharge. If a pattern of overcharge is established, Company has the right to
terminate this Agreement. In order for a "pattern of overcharge" to be
established, Company must conclusively establish that during any twelve (12)
consecutive month period, the overstatements must be in excess of the
understatements by more than five percent (5%) of the total amount of the
Company's purchases from McLane in such twelve (12) month period.

                                    ARTICLE V

                                  RENEGOTIATION

         After the Effective Date, either party hereto shall have the right to
send a notice requesting renegotiation of this Agreement (a "Renegotiation
Notice") in the event of a change in the present circumstances which affect
product or delivery cost or if McLane's Products and services or prices to
Company are not competitive based on a total market basket approach with respect
to the Products and services to be provided by McLane to Company pursuant to
this Agreement. In addition, any comparison of prices and services shall only be
with a full-line distributor competitor of McLane. This Agreement shall continue
unchanged until the parties agree on any change(s) to be made, unless terminated
pursuant to the following terms and provisions of this Article. If the parties
do not agree to a change or changes within sixty (60) days after a Renegotiation
Notice is sent, the party sending the Renegotiation Notice shall have the right
to terminate this Agreement by sending a Notice of Termination to the other
party within three (3) days after the expiration of such sixty (60) day
renegotiation period, and in such event the termination shall become effective
sixty (60) days after the date of the other party's receipt of the Notice of
Termination. Neither party shall have any right to send more than one
Renegotiation Notice within any calendar year. Upon any termination of this
Agreement pursuant to this Article V, Company shall pay to McLane *% of the
unamortized portion of the Service Allowance

* Selected portions have been deleted as confidential pursuant to Rule
24b-2. Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."

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on the effective date of termination. After the fifth (5/th/) full year of this
Agreement the service allowance shall be earned and the so called straight line
amortization method terminated.

                                   ARTICLE VI

                                  MISCELLANEOUS

         6.1 Organization, Good Standing, Etc. Company hereby represents and
warrants to McLane that it is a corporation duly organized, validly existing and
in good standing under the laws of the state of its incorporation and has all
requisite power and authority, and all material licenses, permits and
certificates to own and operate its properties and assets and to carry on its
business. Company further represents and warrants that it is duly qualified to
do business and is in good standing as a foreign corporation in each other
jurisdiction in which the ownership or operation of its properties or assets or
the nature of its business requires such qualification.

         6.2 Assignment. This Agreement shall be binding upon, and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns, but may not be assigned by any party hereto without the prior written
consent of the other party; provided, however, that McLane shall be entitled to
perform its duties and obligations hereunder using one or more of its
subsidiaries or divisions.

         6.3 Notices. Any notice, request, consent, waiver or other
communication required or permitted hereunder shall be effective only if it is
in writing and delivered personally, by telecopy or by registered or certified
mail, postage prepaid, to the other party at the following address (or to such
other address as the parties shall provide to the other in writing):

         If to Company:

         President
         Lil' Champ Food Stores, Inc.
         P. O. Box 23180
         Jacksonville, Florida 32241-3180
         Telephone:  (904)  464-7200
         Telecopier: (904)  464-7234

         The Pantry, Inc.
         1801 Douglas Drive
         Sanford, North Carolina 27330
         ATTN:  President
         Telecopier:  (919) 774-3329

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         With a copy to:

         Freeman Spogli & Co. Incorporated
         11100 Santa Monica Boulevard
         Suite 1900
         Los Angeles, California 90025
         ATTN:  Mr. Peter J. Sodini

         If to McLane:

         President and CEO
         McLane Company, Inc.
         P. O. Box 6115
         Temple, Texas 76503-6115

         With a Copy to:

         General Counsel
         McLane Company, Inc.
         P. O. Box 6115
         Temple, Texas 76503-6115

         Telephone:  (817)  771-7573
         Telecopier: (817)  771-7515

Any such notice, request, consent, waiver or other communication will be deemed
to have been given and received as of the date personally delivered or
telecopied, or three (3) business days after being mailed as aforesaid.

         6.4 Confidentiality. McLane and Company each agree that all information
communicated to it by the other, whether before or after the Effective Date,
will be and was received in strict confidence, will be used only for purposes of
this Agreement and that no such information, including without limitation the
provisions of this Agreement, will be disclosed by the recipient party, its
agents or employees without the prior written consent of the other party, except
as may be necessary by reason of legal, accounting or regulatory requirements
beyond the reasonable control of the recipient party. The provision of this
paragraph will survive termination, for any reason, of this Agreement. No party
shall disclose the terms and conditions of this Agreement to any third party.

         6.5 Reporting. Company shall furnish McLane its current financial
statements prepared in accordance with generally accepted accounting principles
along with annual audited financial statements, 120 days from Company's fiscal
year end. Such financial statements shall be furnished annually and shall be
addressed to Credit Department, McLane Company, Inc., P. O. Box 6115, Temple,
Texas 76503-6115. The failure of

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Company to furnish such financial statements shall be grounds for termination of
this Agreement.

         6.6  Publicity. Neither McLane nor Company will issue or make, or cause
to have issued or made, any media release or public announcement concerning this
Agreement or the transactions contemplated hereby without the prior approval of
the other party, except as may be necessary by reason of legal, accounting or
regulatory requirements beyond the reasonable control of such party.

         6.7  Counterparts. This Agreement may be executed in one or more
counterparts for the convenience of the parties hereto, all of which together
shall constitute one and the same instrument.

         6.8  Severability. If any provision of this Agreement is declared or
found to be illegal, unenforceable or void by a court of competent jurisdiction,
then both parties will be relieved of all obligations arising under such
provision, but only to the extent that such provision is illegal, unenforceable
or void, it being the intent and agreement of the parties that this Agreement
will be deemed amended by modifying such provision to the extent necessary to
make it legal and enforceable. If the remainder of this Agreement is not
affected by such declaration or finding, then each provision not so affected
will be enforced to the extent permitted by law.

         6.9 Entire Agreement. Notwithstanding any provision or reference in
this Agreement to the contrary, this Agreement contains the entire understanding
of the parties relating to the subject matter contained herein and supersedes
all prior agreements and understanding, written or oral, relating to the subject
matter hereof including, without limitation, the Prior Agreement; provided,
however, that it is specifically understood and agreed that this Agreement in no
way supersedes, voids, revokes, modifies nor amends that one certain Promissory
Note dated February 1, 1999 in the original principal amount of $* executed by
Company payable to the order of McLane, which Promissory Note remains in full
force and effect and payable in accordance with its terms. This Agreement cannot
be modified, amended or terminated except in writing signed by the party against
whom enforcement is sought. No waiver of any of the provisions of this Agreement
shall be deemed, or shall constitute, the waiver of any other provision, whether
or not similar, nor shall any waiver constitute a continuing waiver. No waiver
shall be binding unless executed in writing by the party against whom an
assertion of waiver is made.

         6.10 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of North Carolina.

         6.11 Authority to Bind. Each person executing this Agreement warrants
that he or she has full and legal authority to execute this Agreement for and on
behalf of the respective corporations and to bind such corporations.

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         6.12 Turn of the Century. Company and McLane represent and warrant that
they will use all reasonable efforts to ensure software programs interface and
record, store, process, and present calendar dates correctly, including calendar
dates falling on or after January 1, 2000. A party shall not be liable to any
other party for any breach of this Agreement caused in whole or in part by such
other party's reasonable efforts not being successful.

         6.13 Limitation of Liability. Notwithstanding any provision or
reference in this Agreement to the contrary, in no event shall McLane be liable
to Company for any consequential, special, exemplary, incidental or punitive
damages, including lost profits or
business opportunities, or, losses attributable to or arising from overhead
allocations or general and administrative costs and expenses, or for the acts or
omissions of Company.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement, as
of the date first written above.

                                       LIL' CHAMP FOOD STORES, INC.

                                       BY:  /s/ William P. Flyg
                                           ------------------------------
                                       Its: Executive Vice President
                                            -----------------------------

                                       THE PANTRY, INC.

                                       BY:   /s/ William P. Flyg
                                           ------------------------------
                                       Its:  Vice President
                                           ------------------------------

                                       McLANE COMPANY, INC.

                                       BY:   /s/ William Grady Rosier
                                           ------------------------------
                                             WILLIAM GRADY ROSIER
                                             PRESIDENT AND CEO
                                             McLANE COMPANY, INC.

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                                   EXHIBIT "A"

Service Charge                     $* per store/per week

Label Fee                          $* Single Sell/$* Full Case/$* GMP

Repack Charge               $* per tube

..  Totes at $* and CO2 canisters at $* net adjustments at time of
   delivery

..  Fuel Surcharge reserved

..  Deals and allowances passed off invoice

..  Single Sell: Grocery mark up plus $* per unit

..  CATCHWEIGHT - *% on cost plus mark-up

$* per store average minimum GMP purchase for Full Service GMP program indexed
annually for inflation

$* per store average minimum GMP purchase for Limited Service GMP program
indexed annually for inflation

         The stores' product mix will be developed using the currently existing
items in each McLane Division inventory mix, including store use items;
provided, however, that McLane agrees to stock Company's proprietary or other
specialty items. Company agrees to review the stores' product mix each quarter
and replace slow moving items with an item reflecting greater unit sales within
the McLane Division. Slow moving items are defined as those items within each
respective McLane Division which do not meet the following McLane annual
inventory category turn standards which standards may be changed by McLane from
time to time:

         Category                                 Annual "Turns"
         Cigarettes                                  * turns
         Confection                                  * turns
         Snacks                                      * turns
         Perishable (meats/cheese)                   * turns
         Frozen                                      * turns
         Grocery Standard                            * turns
         Retail Beverages                            * turns
         Supplies (cups/lids)                        * turns
         Health & Beauty Care                        * turns
         General Merchandise                         * turns

* Selected portions have been deleted as confidential pursuant to Rule
24b-2. Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."

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     If a slow-moving item is a part of McLane's core item mix, McLane shall
dispose of all such items remaining in the stores after a * day mark down and
sell through at the store level, such mark down to be absorbed by the store and
not McLane. If the slow-moving item is a proprietary item of Company or other
specialty item stocked by McLane at Company's request, Company shall purchase
from McLane all such slow-moving items within * days after the end of the
quarter in which such item should be replaced at a cost equal to the cost McLane
paid for such item plus all customary and necessary handling costs and expenses.

         Additionally, it is understood and agreed that McLane shall make
available at each McLane division one national brand of bottled water and the
best selling regional brand of bottled water at the respective McLane division.
If any store desires a different brand of bottled water, it shall be entitled to
purchase it from another vendor.

* Selected portions have been deleted as confidential pursuant to Rule
24b-2. Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."

                                       14

<PAGE>

                                   EXHIBIT "A"

--------------------------------------------------------------------------------
UIN DEPT                 UIN DEPARTMENT DESCRIPTION           PERCENTAGE MARK-UP
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
GROCERY
--------------------------------------------------------------------------------
20601                    GROCERY                                *%
---------------------------------------------------------------------------
20602                    SOFT/SPORTS DRINKS                     *%
---------------------------------------------------------------------------
20603                    FOUNTAIN SYRUPS FIGAL/BIB              *%
---------------------------------------------------------------------------
20604                    JUICES                                 *%
---------------------------------------------------------------------------
20605                    DRINK POWDER/LIQ. FOUNTAIN             *%
---------------------------------------------------------------------------
20606                    COOKIES/CRACKERS                       *%
---------------------------------------------------------------------------
20608                    NUTS/SNACKS                            *%
---------------------------------------------------------------------------
20610                    AUTOMOTIVE/MOTOR OIL                   *%
---------------------------------------------------------------------------
20611                    NACHO CHIPS                            *%
---------------------------------------------------------------------------
20612                    COFFEE VENDING                         *%
---------------------------------------------------------------------------
20614                    BULK POPCORN/SUPPLIES                  *%
---------------------------------------------------------------------------
20618                    GROCERY (NORMAL GMP)                   *%
---------------------------------------------------------------------------
20620                    DISPOSABLE LIGHTERS                    *%
---------------------------------------------------------------------------
20721                    CUPS & LIDS                            *%
---------------------------------------------------------------------------
20722                    STORE SUPPLIES/RACKS                   *%
---------------------------------------------------------------------------
20723                    BAGS (PAPER, PLASTIC)                  *%
---------------------------------------------------------------------------
20925                    CANDY FULL CASE                        *%
---------------------------------------------------------------------------
20926                    CANDY/BAG                              *%
---------------------------------------------------------------------------
21030                    CANDY/COUNT GOODS                      *%
---------------------------------------------------------------------------
21235                    SMOKELESS TOBACCO/SNUFF                *%
---------------------------------------------------------------------------
21338                    TOBACCO CHEWING/SMOKING                *%
---------------------------------------------------------------------------
21339                    CIGARETTE PAPERS                       *%
---------------------------------------------------------------------------
21442                    TOBACCO CIGARS                         *%
---------------------------------------------------------------------------
21545                    FROZEN FOOD RETAIL                     *%
---------------------------------------------------------------------------
21546                    FROZEN FOOD BULK/P.PACK                *%
---------------------------------------------------------------------------
21547                    DELI MEAT/BULK/PPKFROZEN               *%
---------------------------------------------------------------------------
21548                    BAKERY FROZEN                          *%
---------------------------------------------------------------------------
21649                    FROZEN FAST FOOD MISC/DESSERTS         *%
---------------------------------------------------------------------------
21650                    FROZEN SANDWICHES                      *%
---------------------------------------------------------------------------

* Selected portions have been deleted as confidential pursuant to Rule
24b-2. Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."

                                       15

<PAGE>

                                    EXHIBIT A

--------------------------------------------------------------------------------
UIN DEPT.            UIN DEPARTMENT DESCRIPTION            PERCENTAGE MARK-UP
--------------------------------------------------------------------------------
GROCERY
--------------------------------------------------------------------------------
21651                FZN. FAST FOOD/PIZZA/BURRITO              *%
----------------------------------------------------------------------------
21652                ICE CREAM (TAKE HOME)                     *%
----------------------------------------------------------------------------
21653                FROZEN NOVELTIES RETAIL                   *%
----------------------------------------------------------------------------
21757                REFRIGERATED                              *%
----------------------------------------------------------------------------
21758                REFRIGERATED JUICE/SHAKES                 *%
----------------------------------------------------------------------------
21759                PACKAGED CHEESE                           *%
----------------------------------------------------------------------------
21760                REFRIGERATED BAKERY                       *%
----------------------------------------------------------------------------
21761                EGGS                                      *%
----------------------------------------------------------------------------
21762                FRESH PRODUCE                             *%
----------------------------------------------------------------------------
21865                FROZEN BEEF                               *%
----------------------------------------------------------------------------
21866                PROCESSED MEATS                           *%
----------------------------------------------------------------------------
21867                WAFER MEATS                               *%
----------------------------------------------------------------------------
21868                FRESH BOX BEEF                            *%
----------------------------------------------------------------------------
21869                FRESH POULTRY                             *%
----------------------------------------------------------------------------
21870                FRESH SEAFOOD                             *%
----------------------------------------------------------------------------
21871                DELI MEAT/BULK/PPK/COOLER                 *%
----------------------------------------------------------------------------
21872                DELI CHEESE/BULK/PPK                      *%
----------------------------------------------------------------------------
21873                DELI SALADS/BULK/PPK                      *%
----------------------------------------------------------------------------
21874                FROZEN POTATOES                           *%
----------------------------------------------------------------------------
21875                FROZEN POULTRY                            *%
----------------------------------------------------------------------------
21876                FROZEN PORK                               *%
----------------------------------------------------------------------------
21877                FRESH SALADS                              *%
----------------------------------------------------------------------------
21878                FRESH BULK VEGETABLES                     *%
----------------------------------------------------------------------------
21879                FRESH BULK FRUITS                         *%
----------------------------------------------------------------------------
21880                PRODUCE PREPACKAGED                       *%
----------------------------------------------------------------------------
21881                FROZEN SEAFOOD                            *%
----------------------------------------------------------------------------
                                                               *%
----------------------------------------------------------------------------

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
                  CATEGORY                       SELF           COST PLUS             FULL
                                                                LIMITED
---------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------
<S>                                          <C>               <C>               <C>
Grocery products serviced by the Route
Merchandiser (RMS)
---------------------------------------------------------------------------------------------
All refrigerated & Dry Grocery               N/A                  *%                  *%
---------------------------------------------------------------------------------------------
Candy & Meat Snacks                          N/A                  *%                  *%
---------------------------------------------------------------------------------------------
Tobacco Products                             N/A                  *%                  *%
---------------------------------------------------------------------------------------------
</TABLE>

* Selected portions have been deleted as confidential pursuant to Rule
24b-2. Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."

                                       16

<PAGE>

                                    EXHIBIT A

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
UIN DEPT.         UIN DEPARTMENT                 BILLING PLAN         PERCENTAGE            MARK-UPS
G.M.P.            DESCRIPTION
                                                --------------------------------------------------------
                                                FULL SERVICE         LIMITED SERVICE      SELF SERVICE
--------------------------------------------------------------------------------------------------------
<S>               <C>                            <C>                   <C>                    <C>
32002             HEALTH CARE                    *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32003             BEAUTY CARE                    *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32104             HAIR CARE                      *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32105             TOYS/GAMES/NOVELTIES           *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32106             SCHOOL/OFFICE PRODUCTS         *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32108             SCHOOL PAPER (ALL TYPES)       *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32110             CAPS/HATS                      *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32112             GLOVES                         *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32114             SOFT GOODS                     *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32115             BABY                           *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32116             HOSIERY                        *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32117             SHOE CARE                      *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32118             SUNGLASSES                     *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32120             MISC. GENERAL MERCHDISE        *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32122             PET SUPPLES                    *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32123             AUTO ACCESSORIES               *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32124             HOUSEHOLD                      *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32125             SEWING ACCESSORIES             *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32126             HARDWARE                       *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32127             ELECTRICAL                     *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32128O            LIGHT BULBS                    *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32130             FILM/TAPES                     *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32134             BATTERIES                      *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32136             SMOKING ACCESSORIES            *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32138             DISPOSABLE LIGHTERS            *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32140             LOGO LIGHTERS                  *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32142             ICE CHESTS                     *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32144             STORE SUPPLIES                 *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32146             CANDY/GMP                      *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32148             MEAT SNACKS                    *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32149             NUTS/SNACKS                    *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32150             SMOKELESS                      *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32151             CHEWING/ SMOKING               *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32153             CIGARS                         *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
32154             GMP/GRO PRODUCT MISC.          *%                    *%                     *%
--------------------------------------------------------------------------------------------------------
</TABLE>

*Selected portions have been deleted as confidential pursuant to Rule 24b-2.
Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."

                                       17

<PAGE>

                                    EXHIBIT A
                                   CIGARETTES

All cigarettes shall be billed at the then current manufacturer's list price
plus $* per carton plus all applicable taxes and fair trade mark-ups (current
invoice cost to the Company is set forth in the table below). The per carton
rebates set forth below shall be paid to the Company within * days after
the end of each McLane accounting period.

--------------------------------------------------------------------------------
STATE                   TYPE              INVOICE          REBATE     NET PRICE
                                          COST
--------------------------------------------------------------------------------
(2)FLORIDA              Branded           $*               $*         $*
--------------------------------------------------------------------------------
                        Generic           $*               $*         $*
--------------------------------------------------------------------------------
                        (2)Private Label  $*               $*         $*
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
(2)GEORGIA              Branded           $*               $*         $*
--------------------------------------------------------------------------------
                        Generic           $*               $*         $*
--------------------------------------------------------------------------------
                        (2)Private Label  $*               $*         $*
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
KENTUCKY                Branded           $*               $*         $*
--------------------------------------------------------------------------------
                        Generic           $*               $*         $*
--------------------------------------------------------------------------------
                        (2)Private Label  $*               $*         $*
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
NORTH CAROLINA          Branded           $*               $*         $*
--------------------------------------------------------------------------------
                        Generic           $*               $*         $*
--------------------------------------------------------------------------------
                        (2)Private Label  $*               $*         $*
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
SOUTH CAROLINA          Branded           $*               $*         $*
--------------------------------------------------------------------------------
                        Generic           $*               $*         $*
--------------------------------------------------------------------------------
                        (2)Private Label  $*               $*         $*
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
(3)INDIANA              Branded           $*               $*         $*
--------------------------------------------------------------------------------
                        Generic           $*               $*         $*
--------------------------------------------------------------------------------
                        (2)Private Label  $*               $*         $*
--------------------------------------------------------------------------------

*Selected portions have been deleted as confidential pursuant to Rule 24b-2.
Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."

                                       18

<PAGE>

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
  TENNESSEE           Branded             $*            $*             $*
--------------------------------------------------------------------------------
                      Generic             $*            $*             $*
--------------------------------------------------------------------------------
                      (2)Private Label    $*            $*             $*
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
(6)                   Branded             $*            $*             $*
VIRGINIA
--------------------------------------------------------------------------------
                      Generic             $*            $*             $*
--------------------------------------------------------------------------------
                      (2)Private Label    $*            $*             $*
--------------------------------------------------------------------------------

(1)    Cost subject to change due to, among other things, manufacturer price
       increase and increases in federal, state or local excise taxes. A
       reduction in the discount percentage to McLane Company would result in
       lower carton rebate. Local taxes not included in invoice cost shown.

(2)    All retail off-invoice allowances on your Private Label passed to The
       Pantry & Lil' Champ, Inc.

(3)    Designates Fair Trade State. Pricing established by state law. Rebates
       subject to proof of competitive offer by competition.

(4)    McLane shall offer Company one-half of the price protection provided to
       McLane by the manufacturer on future increases in the price of
       cigarettes.

(5)    *

(6)    Virginia Prices do not include municipal taxes and will be added to these
       prices, where applicable.

*Selected portions have been deleted as confidential pursuant to Rule 24b-2.
Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."

                                       19

<PAGE>

                         FIRST AMENDMENT TO DISTRIBUTION
                                SERVICE AGREEMENT

         THIS FIRST AMENDMENT TO DISTRIBUTION SERVICE AGREEMENT (the
"Amendment") is made and entered into effective as of the 28th day of June,
2001, by and between The Pantry, Inc., a Delaware corporation ("Pantry"), Lil'
Champ Food Stores, Inc., a Florida corporation ("Lil' Champ") (Pantry and Lil'
Champ being hereinafter sometimes referred to collectively as the "Company") and
McLane Company, Inc., a Texas corporation ("McLane").

                                    RECITALS

         WHEREAS, the Company and McLane entered into a Distribution Service
Agreement effective as of October 10, 1999 (the "Service Agreement"); and

         WHEREAS, the Company and McLane desire to amend the Service Agreement;

         NOW, THEREFORE, for and in consideration of the promises, covenants and
conditions contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and McLane
do hereby agree as follows:

         1.  Amendment of Section 3.4. Section 3.4 of the Service Agreement is
             hereby amended to read in its entirety as follows:

             3.4   Payment Terms for Products Purchased. Company shall cause
                   payment to be made by wire transfer or McLane initiated ACH
                   to McLane for all Products purchased by the stores not later
                   than 12:00 Noon, Central Standard Time or, if applicable,
                   Central Daylight Savings Time, * days from statement date, it
                   being understood and agreed that statement date will be each
                   Friday for all Products delivered from the immediately
                   preceding Saturday through such Friday statement date. Such
                   payments shall be in the full amount of the statement to
                   which they relate. Any amounts not paid when due shall bear
                   interest at the lesser of (i) eighteen percent(18%) per
                   annum, or (ii) the maximum rate allowed by applicable law.

             For Illustration Purposes Only. For deliveries made during the week
             of Saturday, July 14, 2001 through Friday, July 20, 2001, payment
             will be due McLane nor later than 12:00 Noon, Central Standard
             Time, or, if applicable, Central Daylight Savings Time, on *.

         2.  Applicability of Amendment to Section 3.4. The amendment to Section
             3.4 of the Service Agreement set forth in Section 1 of this
             Amendment

*Selected portions have been deleted as confidential pursuant to Rule 24b-2.
Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."

<PAGE>

                  shall apply to deliveries for the week of Saturday, July 14,
                  2001 through Friday, July 20, 2001, and all deliveries
                  thereafter during the term of the Service Agreement (i.e. the
                  first payment to McLane by the Company pursuant to the
                  amendment to Section 3.4 of the Service Agreement set forth in
                  Section 1 of this Amendment shall be due and payable no later
                  than 12:00 Noon, Central Standard time or, if applicable,
                  Central Daylight Savings Time, on *.

             3.   Return of Deposit. Provided the Company is not in default of
                  any of the terms and conditions of the Service Agreement,
                  including without limitation, the payment that will be due and
                  payable on * pursuant to the amendment to Section 3.4 of the
                  Service Agreement set forth in Section 1 of this Amendment,
                  in addition to any past due balances as a result of the
                  change in fiscal payment week (i.e. invoices dated July 12th
                  and 13th), McLane will refund to the Company, on or before
                  August 10, 2001, the amount of money the Company currently
                  has on deposit with McLane pursuant to Section 3.4 of the
                  Service Agreement, which the Company and McLane both
                  acknowledge and agree is * as of the date of this Amendment.

             4.   No other Modifications. Except as specifically modified by
                  this Amendment, all terms and conditions of the Service
                  Agreement shall remain fully applicable and in full force and
                  effect.

             IN WITNESS WHEREOF, the parties have executed this Agreement
effective as of the date first written above.

                                            LIL' CHAMP FOOD STORES, INC.

                                            By: /s/ Peter J. Sodini
                                               -------------------------------
                                            Printed Name: /s/ Peter J. Sodini
                                                          --------------------
                                            Title: Chief Executive Officer
                                                   ---------------------------

                                            THE PANTRY, INC.

                                            By: /s/ Peter J. Sodini
                                               -------------------------------
                                            Printed Name: /s/ Peter J. Sodini
                                                          --------------------
                                            Title: Chief Executive Officer
                                                   ---------------------------

                                            McLANE COMPANY, INC.

                                            By:  /s/ Terry McElroy
                                                ------------------------------
                                                  Terry McElroy
                                                  President, Grocery Operations

* Selected portions have been deleted as confidential pursuant to Rule 24b-2.
Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."

<PAGE>

               SECOND AMENDMENT TO DISTRIBUTION SERVICE AGREEMENT

         THIS SECOND AMENDMENT TO DISTRIBUTION SERVICE AGREEMENT (the
"Amendment") is made and entered into effective as of the 8th day of September,
2001, by and between The Pantry, Inc., a Delaware corporation ("Pantry"), Lil'
Champ Food Stores, Inc., a Florida corporation ("Lil Champ") (Pantry and Lil'
Champ being hereinafter sometimes referred to collectively as the "Company") and
McLane Company, Inc., a Texas corporation ("McLane").

                                    RECITALS

         WHEREAS, the Company and McLane entered into a Distribution Service
Agreement effective as of October 10, 1999 (the "Service Agreement"); and

         WHEREAS, the Company and McLane entered into a First Amendment to the
Service Agreement effective as of June 28, 2001 (the "First Amendment"); and

         WHEREAS, the Company and McLane desire to further amend the Service
Agreement;

         NOW, THEREFORE, for and in consideration of the promises, covenants and
conditions contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and McLane
do hereby agree as follows:

         1.    Amendment of Section 6.4. The following sentence is hereby added
               to Section 6.4 of the Service Agreement:

               Anything to the contrary in this Agreement notwithstanding,
               McLane is hereby expressly authorized to disclose to
               manufacturers of cigarette Products (or to such manufacturers'
               agents or representatives), the volume of purchases of such
               manufacturer's cigarette Products by the Company from McLane
               pursuant to this Agreement and all other information related
               thereto as McLane desires to so disclose.

         2.    Additional Rebate. The Company shall be entitled to an additional
               rebate of $* for each carton of cigarettes purchased by the
               Company from McLane after September 8th, 2001 for stores located
               in non-fair trade states.

         3.    No Other Modifications. Except as specifically modified by this
               Amendment, all terms and conditions of the Service Agreement, as
               amended by the First Amendment, shall remain fully applicable and
               in full force and effect.

* Selected portions have been deleted as confidential pursuant to Rule 24b-2.
Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."

<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Amendment effective
as of the date first written above.

                                         LIL' CHAMP FOOD STORES, INC.

                                         By: /s/ William P. Flyg
                                             --------------------------------
                                         Printed Name: William P. Flyg
                                                       ----------------------
                                         Title: Executive Vice President
                                                -----------------------------

                                         THE PANTRY, INC.

                                         By: /s/ William P. Flyg
                                             --------------------------------
                                         Printed Name: William P. Flyg
                                                       ----------------------
                                         Title: Vice President
                                                -----------------------------

                                         McLANE COMPANY, INC.

                                          By: /s/ Terry McElroy
                                              -------------------------------
                                                  Terry McElroy
                                                  President Grocery DistributionPrepared by R.R. Donnelley Financial -- Press Release dated August 8, 2002

  
 EXHIBIT 10.1 
  
 

 
  
 FOR IMMEDIATE RELEASE 
  

OPENTV REPORTS SECOND QUARTER 2002 FINANCIAL RESULTS 
  

	·
	 
	Revenue Down 38% Year-over-Year in a Challenging Business Climate 
 

  

	·
	 
	Applications Revenue Up 38% Year-over-Year Totaling 21% of Total Revenue 
 

  

	·
	 
	Over 27 Million Middleware Deployments as of June 30, 2002 
 

  
 MOUNTAIN VIEW, Calif., August 8, 2002 — OpenTV (NASDAQ and Euronext Amsterdam: OPTV), the world’s leading interactive television company, today announced its financial results for the
quarter ended June 30, 2002. 
  
 “The Company continues to increase its world-leading market position with
more than 27 million set-top boxes powered by OpenTV, in spite of current industry conditions that have slowed iTV technology and content deployment decisions significantly,” said OpenTV Chief Executive Officer James Ackerman. “However, in
light of the current business climate, we do not expect to see revenue growth in the second half of this year as we previously anticipated. As a result, we believe it is unlikely the Company will achieve pro-forma profitability in the fourth quarter
of 2002. Consequently, to further reduce operating expenses and preserve our strong cash position, the Company plans to institute a series of aggressive cost-cutting measures.” 
  
 Mr. Ackerman continued, “Despite a difficult business environment, we believe OpenTV is in a strong competitive position to take advantage of the emerging iTV
industry. As we continue to shift our strategy to a recurring revenue-based model, we believe the combination of our industry leadership position, breadth of technology and content offerings, strong balance sheet, and ongoing initiatives enhance the
Company’s opportunities for future growth.” 
  
 Consolidated Financial Results 
  
 For the quarter ended June 30, 2002, OpenTV’s revenue totaled $14.2 million compared to $22.8 million for the quarter ended June 30,
2001. The Company’s pro-forma1 operating expenses for the quarter ended June 30, 2002 totaled $32.0
million compared to $29.5 million for the quarter ended June 30, 2001. OpenTV’s pro-forma net loss was $16.4 million, or $0.23 per share, for the quarter ended June 30, 2002 compared to a pro-forma net loss of $4.1 million, or $0.06 per share,
for the quarter ended June 30, 2001. 
  
 On a reported basis, the Company’s net loss for the quarter ended June
30, 2002 totaled $30.8 million, or $0.43 per share, compared to a net loss of $120.2 million, or $1.82 per share, for the quarter ended June 30, 2001. Reported results for the quarter ended June 30, 2001 included $97.7 million, or $1.48 per share,
of goodwill amortization. 
  
 
1  Pro-forma results discussed herein exclude: restructuring costs; amortization of goodwill, other acquisition-related intangibles
and share-based compensation; losses on equity investments; and income tax expense. 
 

 As of June 30, 2002, OpenTV had cash, cash equivalents and marketable debt securities of $166.4 million compared to
$189.5 million as of December 31, 2001. 
  
 Core Platform Results 
  
 For the quarter ended June 30, 2002, the Company reported revenue of $11.2 million compared to $20.6 million for the quarter ended June 30, 2001. Pro-forma operating
expenses for the quarter ended June 30, 2002 totaled $16.3 million compared to $18.8 million for the quarter ended June 30, 2001. Pro-forma operating loss was $5.1 million for the quarter ended June 30, 2002 compared to a pro-forma operating profit
of $1.8 million for the quarter ended June 30, 2001. 
  
 Based on reports received to date, OpenTV has surpassed 27
million set-top box middleware deployments as of June 30, 2002, an increase of more than 1.6 million deployments from March 31, 2002 and a more than 50 percent increase from the 18.2 million cumulative deployments as of June 30, 2001. 

 
 Applications Platform Results 
  
 For the quarter ended June 30, 2002, the Company reported revenue of $3.0 million compared to $2.2 million for the quarter ended June 30, 2001. For the quarter ended June 30, 2002, OpenTV generated 21 percent of its total
revenue through its applications-related business activities. 
  
 Pro-forma operating expenses for the quarter ended
June 30, 2002 totaled $15.8 million compared to $10.7 million for the quarter ended June 30, 2001. Pro-forma operating loss was $12.8 million for the quarter ended June 30, 2002 compared to a pro-forma operating loss of $8.5 million for the quarter
ended June 30, 2001. 
  
 During the quarter, OpenTV continued to deploy new applications and interactive technologies
with its existing customer base, including BSkyB and EchoStar, which are expected to pave the way for generating new and recurring revenue streams. 
  
 Planned Cost-Cutting Initiatives 
  
 OpenTV’s board of directors has approved a
restructuring plan designed to eliminate more than $20 million annually from the Company’s expense base. This restructuring plan is subject to approval by Liberty Media Corporation in accordance with the Stock Purchase Agreement between MIH
Limited and Liberty Media Corporation dated May 8, 2002. Details of this plan are expected to be communicated during the course of the third quarter. 
  
 The Company’s second quarter 2002 financial results conference call will be Webcast live on the Investor Relations section of http://www.opentv.com at 2:00PM PDT on Thursday, August 8, 2002, and
will be available there through 5:00PM PDT on Friday, August 16, 2002. 
  
 About OpenTV 
  
 The world’s leading interactive television company, OpenTV powers more than 27 million set-top boxes worldwide. The Company provides
a comprehensive suite of iTV solutions including operating middleware, web browser software, interactive applications, content creation tools, professional support services, and strategic consulting. OpenTV is headquartered in Mountain View,
California, with regional offices throughout the United States, Europe and Asia/Pacific. For more information, please visit www.opentv.com. 
  
 This news release contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those contemplated herein, including statements
regarding OpenTV’s continued market leadership, strong balance sheet, competitive position, and initiatives for growth. Actual results can differ materially. Risks and uncertainties that could cause actual results to differ from such
forward-looking statements, or to which OpenTV’s business is otherwise subject, include, but are not limited to, whether current demand for interactive television will continue, the rate at which the interactive television market will expand or

 
 

 2 

 
contract, the risk that OpenTV will fail to successfully manage its changing relationships with customers, suppliers and other business partners, whether global economic conditions will affect
the business and operational decisions of OpenTV’s customers, suppliers and other business partners in a manner adverse to OpenTV, the level of applications deployed by network operator customers, and other factors that could affect the growth
of OpenTV’s recurring revenue, whether and to what extent OpenTV’s core platform will remain profitable, whether and to what extent OpenTV will be able to maintain its cash reserves, whether OpenTV will be able to successfully manage its
anticipated expenses, whether unanticipated expenses will arise that OpenTV may incur in future periods, the inability to sufficiently reduce expenses through restructuring actions to enhance future operating performance, the timely identification
and development of new products, applications and services, customer acceptance of those products, applications and services and the pricing thereof, the impact of competitive products, applications and services and the pricing of those products,
applications and services, the impact of technological constraints and changes in technology, the impact of governmental regulation, the impact on the business and strategy of the Company associated with the anticipated closing of the Liberty Media
Corporation/MIH Limited transaction, including the risk of delay or termination of such transaction, and other risk factors detailed in the documents filed from time to time by OpenTV Corp. with the Securities and Exchange Commission, including
those risk factors detailed in Item 3.D of OpenTV Corp.’s Annual Report on Form 20-F filed with the Securities and Exchange Commission on June 26, 2002. OpenTV undertakes no obligation to update or revise any such forward-looking statements,
whether as a result of new information, future events, or otherwise. 
  
 © 2002 OpenTV Corp. All rights reserved. OpenTV and the OpenTV logo are trademarks or registered trademarks of OpenTV, Inc. in the United States
and other countries. Static2358, Static and PlayJam are trademarks of Static2358 Limited or its affiliates in the United Kingdom and other countries. All other trademarks are the property of their respective owners. 
  
 All OpenTV products and services may not be available in all geographic areas. 
  
 # # # 
  
 
	 Contacts:
 	  	 Gary J. Fuges, CFA
 	  	 Matt Bell
 
	  	  	 Director, Investor Relations
 	  	 Vice President, Public Relations
 
	  	  	 OpenTV
 	  	 OpenTV
 
	  	  	 650-429-5531
 	  	 650-230-8137
 
	  	  	 gfuges@opentv.com
 	  	 mbell@opentv.com
 

 
 

 3 

  
 OPENTV CORP. 
 Unaudited Pro-Forma Consolidated Statements of Operations 
 (in thousands, except share and per share amounts) 

 
 Note:    The pro-forma supplemental financial information included herein is presented for
informational purposes only and should not be considered as a substitute for OpenTV’s financial information presented in accordance with generally accepted accounting principles. 
  
 
	  	 	 Three Months Ended June 30, 2002
 
	 	  	 Three Months Ended June 30, 2001
 
	 
	  	 	 Reported
 
	 	  	 Pro-Forma
 Entries
 
	 	 	 Pro-Forma
 
	 	  	 Reported
 
	 	  	 Pro-Forma
 Entries
 
	 	 	 Pro-Forma
 
	 
	 Revenues:
 	 	  	  	  	  	  	  	  	 	  	  	  	  	  	  	  	  	  	  	  	 	  	  	  
	 Royalties
 	 	 $
 	 4,056
 	  
 	  	 $
 	 —  
 	  
 	 	 $
 	 4,056
 	  
 	  	 $
 	 8,903
 	  
 	  	 $
 	 —  
 	  
 	 	 $
 	 8,903
 	  
 
	 Services and other
 	 	  
 	 6,879
 	  
 	  	  
 	 —  
 	  
 	 	  
 	 6,879
 	  
 	  	  
 	 10,939
 	  
 	  	  
 	 —  
 	  
 	 	  
 	 10,939
 	  
 
	 Channel fees
 	 	  
 	 2,491
 	  
 	  	  
 	 —  
 	  
 	 	  
 	 2,491
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 —  
 	  
 	 	  
 	 —  
 	  
 
	 License fees
 	 	  
 	 732
 	  
 	  	  
 	 —  
 	  
 	 	  
 	 732
 	  
 	  	  
 	 2,925
 	  
 	  	  
 	 —  
 	  
 	 	  
 	 2,925
 	  
 
	  	 	 
	 
	 
	  	 
	 
	 
	 	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	 	 
	 
	 

	 Total revenues
 	 	  
 	 14,158
 	  
 	  	  
 	 —  
 	  
 	 	  
 	 14,158
 	  
 	  	  
 	 22,767
 	  
 	  	  
 	 —  
 	  
 	 	  
 	 22,767
 	  
 
	  	 	 
	 
	 
	  	 
	 
	 
	 	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	 	 
	 
	 

	 Operating expenses:
 	 	  	  	  	  	  	  	  	 	  	  	  	  	  	  	  	  	  	  	  	 	  	  	  
	 Cost of services
 	 	  
 	 9,707
 	  
 	  	  
 	 —  
 	  
 	 	  
 	 9,707
 	  
 	  	  
 	 6,729
 	  
 	  	  
 	 —  
 	  
 	 	  
 	 6,729
 	  
 
	 Research and development
 	 	  
 	 7,666
 	  
 	  	  
 	 —  
 	  
 	 	  
 	 7,666
 	  
 	  	  
 	 9,784
 	  
 	  	  
 	 —  
 	  
 	 	  
 	 9,784
 	  
 
	 Sales and marketing
 	 	  
 	 8,363
 	  
 	  	  
 	 —  
 	  
 	 	  
 	 8,363
 	  
 	  	  
 	 8,727
 	  
 	  	  
 	 —  
 	  
 	 	  
 	 8,727
 	  
 
	 General and administrative
 	 	  
 	 6,291
 	  
 	  	  
 	 —  
 	  
 	 	  
 	 6,291
 	  
 	  	  
 	 4,229
 	  
 	  	  
 	 —  
 	  
 	 	  
 	 4,229
 	  
 
	 Amortization of goodwill
 	 	  
 	 —  
 	  
 	  	  
 	 —  
 	  
 	 	  
 	 —  
 	  
 	  	  
 	 97,692
 	  
 	  	  
 	 (97,692
 	 )
 	 	  
 	 —  
 	  
 
	 Amortization of acquisition-related intangibles
 	 	  
 	 4,947
 	  
 	  	  
 	 (4,947
 	 )
 	 	  
 	 —  
 	  
 	  	  
 	 5,270
 	  
 	  	  
 	 (5,270
 	 )
 	 	  
 	 —  
 	  
 
	 Amortization of share-based compensation
 	 	  
 	 1,078
 	  
 	  	  
 	 (1,078
 	 )
 	 	  
 	 —  
 	  
 	  	  
 	 3,193
 	  
 	  	  
 	 (3,193
 	 )
 	 	  
 	 —  
 	  
 
	  	 	 
	 
	 
	  	 
	 
	 
	 	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	 	 
	 
	 

	 Total operating expenses
 	 	  
 	 38,052
 	  
 	  	  
 	 (6,025
 	 )
 	 	  
 	 32,027
 	  
 	  	  
 	 135,624
 	  
 	  	  
 	 (106,155
 	 )
 	 	  
 	 29,469
 	  
 
	  	 	 
	 
	 
	  	 
	 
	 
	 	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	 	 
	 
	 

	 Loss from operations
 	 	  
 	 (23,894
 	 )
 	  	  
 	 6,025
 	  
 	 	  
 	 (17,869
 	 )
 	  	  
 	 (112,857
 	 )
 	  	  
 	 106,155
 	  
 	 	  
 	 (6,702
 	 )
 
	 Other income, net
 	 	  
 	 1,361
 	  
 	  	  
 	 —  
 	  
 	 	  
 	 1,361
 	  
 	  	  
 	 2,592
 	  
 	  	  
 	 —  
 	  
 	 	  
 	 2,592
 	  
 
	 Investment losses
 	 	  
 	 (8,000
 	 )
 	  	  
 	 8,000
 	  
 	 	  
 	 —  
 	  
 	  	  
 	 (16,842
 	 )
 	  	  
 	 16,842
 	  
 	 	  
 	 —  
 	  
 
	 Minority interest
 	 	  
 	 130
 	  
 	  	  
 	 —  
 	  
 	 	  
 	 130
 	  
 	  	  
 	 25
 	  
 	  	  
 	 —  
 	  
 	 	  
 	 25
 	  
 
	  	 	 
	 
	 
	  	 
	 
	 
	 	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	 	 
	 
	 

	 Loss before income taxes
 	 	  
 	 (30,403
 	 )
 	  	  
 	 14,025
 	  
 	 	  
 	 (16,378
 	 )
 	  	  
 	 (127,082
 	 )
 	  	  
 	 122,997
 	  
 	 	  
 	 (4,085
 	 )
 
	 Income tax expense
 	 	  
 	 (398
 	 )
 	  	  
 	 398
 	  
 	 	  
 	 —  
 	  
 	  	  
 	 6,907
 	  
 	  	  
 	 (6,907
 	 )
 	 	  
 	 —  
 	  
 
	  	 	 
	 
	 
	  	 
	 
	 
	 	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	 	 
	 
	 

	 Loss before effect of accounting change
 	 	  
 	 (30,801
 	 )
 	  	  
 	 14,423
 	  
 	 	  
 	 (16,378
 	 )
 	  	  
 	 (120,175
 	 )
 	  	  
 	 116,090
 	  
 	 	  
 	 (4,085
 	 )
 
	 Effect of accounting change, net of tax
 	 	  
 	 —  
 	  
 	  	  
 	 —  
 	  
 	 	  
 	 —  
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 —  
 	  
 	 	  
 	 —  
 	  
 
	  	 	 
	 
	 
	  	 
	 
	 
	 	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	 	 
	 
	 

	 Net loss
 	 	 $
 	 (30,801
 	 )
 	  	 $
 	 14,423
 	  
 	 	 $
 	 (16,378
 	 )
 	  	 $
 	 (120,175
 	 )
 	  	 $
 	 116,090
 	  
 	 	 $
 	 (4,085
 	 )
 
	  	 	 
	 
	 
	  	 
	 
	 
	 	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	 	 
	 
	 

	 Shares used in computing net loss per share, basic and diluted
 	 	  
 	 71,906,785
 	  
 	  	  	  	  	 	  
 	 71,906,785
 	  
 	  	  
 	 66,087,196
 	  
 	  	  	  	  	 	  
 	 66,087,196
 	  
 
	  	 	 
	 
	 
	  	  	  	  	 	 
	 
	 
	  	 
	 
	 
	  	  	  	  	 	 
	 
	 

	 Net loss per share, basic and diluted
 	 	  	  	  	  	  	  	  	 	  	  	  	  	  	  	  	  	  	  	  	 	  	  	  
	 Before effect of accounting change
 	 	 $
 	 (0.43
 	 )
 	  	  	  	  	 	 $
 	 (0.23
 	 )
 	  	 $
 	 (1.82
 	 )
 	  	  	  	  	 	 $
 	 (0.06
 	 )
 
	 Effect of accounting change, net of tax
 	 	  
 	 —  
 	  
 	  	  	  	  	 	  
 	 —  
 	  
 	  	  
 	 —  
 	  
 	  	  	  	  	 	  
 	 —  
 	  
 
	  	 	 
	 
	 
	  	  	  	  	 	 
	 
	 
	  	 
	 
	 
	  	  	  	  	 	 
	 
	 

	  	 	 $
 	 (0.43
 	 )
 	  	  	  	  	 	 $
 	 (0.23
 	 )
 	  	 $
 	 (1.82
 	 )
 	  	  	  	  	 	 $
 	 (0.06
 	 )
 
	  	 	 
	 
	 
	  	  	  	  	 	 
	 
	 
	  	 
	 
	 
	  	  	  	  	 	 
	 
	 

 
  
 Note: 

	1.
	 
	Pursuant to Statement of Financial Accounting Standards No. 142, an impairment loss on goodwill of $931 million, net of tax, was recorded as of January 1, 2002,
as an accounting change. In addition, goodwill is no longer amortized. 
 

 

 4 

  
 OPENTV CORP. 
 Unaudited Pro-Forma Consolidated Statements of Operations 
 (in thousands, except share and per share amounts) 

 
 Note:    The pro-forma supplemental financial information included herein is presented for
informational purposes only and should not be considered as a substitute for OpenTV’s financial information presented in accordance with generally accepted accounting principles. 
  
 
	  	  	 Six Months Ended June 30, 2002
 
	 	  	 Six Months Ended June 30, 2001
 
	 
	  	  	 Reported
 
	 	  	 Pro-Forma
 Entries
 
	 	  	 Pro-Forma
 
	 	  	 Reported
 
	 	  	 Pro-Forma
 Entries
 
	 	  	 Pro-Forma
 
	 
	 Revenues:
 	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  
	 Royalties
 	  	 $
 	 12,365
 	  
 	  	 $
 	 —  
 	  
 	  	 $
 	 12,365
 	  
 	  	 $
 	 19,033
 	  
 	  	 $
 	 —  
 	  
 	  	 $
 	 19,033
 	  
 
	 Services and other
 	  	  
 	 13,094
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 13,094
 	  
 	  	  
 	 19,629
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 19,629
 	  
 
	 Channel fees
 	  	  
 	 5,149
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 5,149
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 —  
 	  
 
	 License fees
 	  	  
 	 3,769
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 3,769
 	  
 	  	  
 	 6,482
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 6,482
 	  
 
	  	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 

	 Total revenues
 	  	  
 	 34,377
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 34,377
 	  
 	  	  
 	 45,144
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 45,144
 	  
 
	  	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 

	 Operating expenses:
 	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  
	 Cost of services
 	  	  
 	 18,002
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 18,002
 	  
 	  	  
 	 13,709
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 13,709
 	  
 
	 Research and development
 	  	  
 	 17,238
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 17,238
 	  
 	  	  
 	 19,624
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 19,624
 	  
 
	 Sales and marketing
 	  	  
 	 17,477
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 17,477
 	  
 	  	  
 	 25,617
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 25,617
 	  
 
	 General and administrative
 	  	  
 	 10,533
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 10,533
 	  
 	  	  
 	 8,596
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 8,596
 	  
 
	 Restructuring cost
 	  	  
 	 9,620
 	  
 	  	  
 	 (9,620
 	 )
 	  	  
 	 —  
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 —  
 	  
 
	 Amortization of goodwill
 	  	  
 	 —  
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 195,383
 	  
 	  	  
 	 (195,383
 	 )
 	  	  
 	 —  
 	  
 
	 Amortization of acquisition-related intangibles
 	  	  
 	 10,038
 	  
 	  	  
 	 (10,038
 	 )
 	  	  
 	 —  
 	  
 	  	  
 	 10,542
 	  
 	  	  
 	 (10,542
 	 )
 	  	  
 	 —  
 	  
 
	 Amortization of share-based compensation
 	  	  
 	 2,243
 	  
 	  	  
 	 (2,243
 	 )
 	  	  
 	 —  
 	  
 	  	  
 	 6,541
 	  
 	  	  
 	 (6,541
 	 )
 	  	  
 	 —  
 	  
 
	  	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 

	 Total operating expenses
 	  	  
 	 85,151
 	  
 	  	  
 	 (21,901
 	 )
 	  	  
 	 63,250
 	  
 	  	  
 	 280,012
 	  
 	  	  
 	 (212,466
 	 )
 	  	  
 	 67,546
 	  
 
	  	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 

	 Loss from operations
 	  	  
 	 (50,774
 	 )
 	  	  
 	 21,901
 	  
 	  	  
 	 (28,873
 	 )
 	  	  
 	 (234,868
 	 )
 	  	  
 	 212,466
 	  
 	  	  
 	 (22,402
 	 )
 
	 Other income, net
 	  	  
 	 2,775
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 2,775
 	  
 	  	  
 	 6,259
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 6,259
 	  
 
	 Investment losses
 	  	  
 	 (13,500
 	 )
 	  	  
 	 13,500
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 (29,014
 	 )
 	  	  
 	 29,014
 	  
 	  	  
 	 —  
 	  
 
	 Minority interest
 	  	  
 	 277
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 277
 	  
 	  	  
 	 96
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 96
 	  
 
	  	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 

	 Loss before income taxes
 	  	  
 	 (61,222
 	 )
 	  	  
 	 35,401
 	  
 	  	  
 	 (25,821
 	 )
 	  	  
 	 (257,527
 	 )
 	  	  
 	 241,480
 	  
 	  	  
 	 (16,047
 	 )
 
	 Income tax expense
 	  	  
 	 (717
 	 )
 	  	  
 	 717
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 6,412
 	  
 	  	  
 	 (6,412
 	 )
 	  	  
 	 —  
 	  
 
	  	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 

	 Loss before effect of accounting change
 	  	  
 	 (61,939
 	 )
 	  	  
 	 36,118
 	  
 	  	  
 	 (25,821
 	 )
 	  	  
 	 (251,115
 	 )
 	  	  
 	 235,068
 	  
 	  	  
 	 (16,047
 	 )
 
	 Effect of accounting change, net of tax
 	  	  
 	 (931,267
 	 )
 	  	  
 	 931,267
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 —  
 	  
 
	  	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 

	 Net loss
 	  	 $
 	 (993,206
 	 )
 	  	 $
 	 967,385
 	  
 	  	 $
 	 (25,821
 	 )
 	  	 $
 	 (251,115
 	 )
 	  	 $
 	 235,068
 	  
 	  	 $
 	 (16,047
 	 )
 
	  	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 

	 Shares used in computing net loss per share, basic and diluted
 	  	  
 	 71,580,350
 	  
 	  	  	  	  	  	  
 	 71,580,350
 	  
 	  	  
 	 65,917,059
 	  
 	  	  	  	  	  	  
 	 65,917,059
 	  
 
	  	  	 
	 
	 
	  	  	  	  	  	 
	 
	 
	  	 
	 
	 
	  	  	  	  	  	 
	 
	 

	 Net loss per share, basic and diluted
 	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  
	 Before effect of accounting change
 	  	 $
 	 (0.87
 	 )
 	  	  	  	  	  	 $
 	 (0.36
 	 )
 	  	 $
 	 (3.81
 	 )
 	  	  	  	  	  	 $
 	 (0.24
 	 )
 
	 Effect of accounting change, net of tax
 	  	  
 	 (13.01
 	 )
 	  	  	  	  	  	  
 	 —  
 	  
 	  	  
 	 —  
 	  
 	  	  	  	  	  	  
 	 —  
 	  
 
	  	  	 
	 
	 
	  	  	  	  	  	 
	 
	 
	  	 
	 
	 
	  	  	  	  	  	 
	 
	 

	  	  	 $
 	 (13.88
 	 )
 	  	  	  	  	  	 $
 	 (0.36
 	 )
 	  	 $
 	 (3.81
 	 )
 	  	  	  	  	  	 $
 	 (0.24
 	 )
 
	  	  	 
	 
	 
	  	  	  	  	  	 
	 
	 
	  	 
	 
	 
	  	  	  	  	  	 
	 
	 

 
  
 Notes: 

	1.
	 
	Pursuant to Statement of Financial Accounting Standards No. 142, an impairment loss on goodwill of $931 million, net of tax, was recorded as of January 1, 2002,
as an accounting change. In addition, goodwill is no longer amortized. 
 

	2.
	 
	Restructuring cost consisted of a workforce reduction of approximately 50 people, the closure of several offices and the write-off of fixed assets and lease
costs. 
 

 

 5 

  
 OPENTV CORP. 
 Unaudited Condensed Consolidated Statements of Operations 
 (in thousands, except share and per share amounts) 

 
 
	  	  	 Three Months Ended June 30,
 
	 	  	 Six Months Ended June 30,
 
	 
	  	  	 2002
 
	 	  	 2001
 
	 	  	 2002
 
	 	  	 2001
 
	 
	 Revenues:
 	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  
	 Royalties
 	  	 $
 	 4,056
 	  
 	  	 $
 	 8,903
 	  
 	  	 $
 	 12,365
 	  
 	  	 $
 	 19,033
 	  
 
	 Services and other
 	  	  
 	 6,879
 	  
 	  	  
 	 10,939
 	  
 	  	  
 	 13,094
 	  
 	  	  
 	 19,629
 	  
 
	 Channel fees
 	  	  
 	 2,491
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 5,149
 	  
 	  	  
 	 —  
 	  
 
	 License fees
 	  	  
 	 732
 	  
 	  	  
 	 2,925
 	  
 	  	  
 	 3,769
 	  
 	  	  
 	 6,482
 	  
 
	  	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 

	 Total revenues
 	  	  
 	 14,158
 	  
 	  	  
 	 22,767
 	  
 	  	  
 	 34,377
 	  
 	  	  
 	 45,144
 	  
 
	  	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 

	 Operating expenses:
 	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  
	 Cost of services
 	  	  
 	 9,707
 	  
 	  	  
 	 6,729
 	  
 	  	  
 	 18,002
 	  
 	  	  
 	 13,709
 	  
 
	 Research and development
 	  	  
 	 7,666
 	  
 	  	  
 	 9,784
 	  
 	  	  
 	 17,238
 	  
 	  	  
 	 19,624
 	  
 
	 Sales and marketing
 	  	  
 	 8,363
 	  
 	  	  
 	 8,727
 	  
 	  	  
 	 17,477
 	  
 	  	  
 	 25,617
 	  
 
	 General and administrative
 	  	  
 	 6,291
 	  
 	  	  
 	 4,229
 	  
 	  	  
 	 10,533
 	  
 	  	  
 	 8,596
 	  
 
	 Restructuring cost
 	  	  
 	 —  
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 9,620
 	  
 	  	  
 	 —  
 	  
 
	 Amortization of goodwill
 	  	  
 	 —  
 	  
 	  	  
 	 97,692
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 195,383
 	  
 
	 Amortization of acquisition-related intangibles
 	  	  
 	 4,947
 	  
 	  	  
 	 5,270
 	  
 	  	  
 	 10,038
 	  
 	  	  
 	 10,542
 	  
 
	 Amortization of share-based compensation
 	  	  
 	 1,078
 	  
 	  	  
 	 3,193
 	  
 	  	  
 	 2,243
 	  
 	  	  
 	 6,541
 	  
 
	  	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 

	 Total operating expenses
 	  	  
 	 38,052
 	  
 	  	  
 	 135,624
 	  
 	  	  
 	 85,151
 	  
 	  	  
 	 280,012
 	  
 
	  	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 

	 Loss from operations
 	  	  
 	 (23,894
 	 )
 	  	  
 	 (112,857
 	 )
 	  	  
 	 (50,774
 	 )
 	  	  
 	 (234,868
 	 )
 
	 Other income, net
 	  	  
 	 1,361
 	  
 	  	  
 	 2,592
 	  
 	  	  
 	 2,775
 	  
 	  	  
 	 6,259
 	  
 
	 Investment losses
 	  	  
 	 (8,000
 	 )
 	  	  
 	 (16,842
 	 )
 	  	  
 	 (13,500
 	 )
 	  	  
 	 (29,014
 	 )
 
	 Minority interest
 	  	  
 	 130
 	  
 	  	  
 	 25
 	  
 	  	  
 	 277
 	  
 	  	  
 	 96
 	  
 
	  	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 

	 Loss before income taxes
 	  	  
 	 (30,403
 	 )
 	  	  
 	 (127,082
 	 )
 	  	  
 	 (61,222
 	 )
 	  	  
 	 (257,527
 	 )
 
	 Income tax benefit (expense)
 	  	  
 	 (398
 	 )
 	  	  
 	 6,907
 	  
 	  	  
 	 (717
 	 )
 	  	  
 	 6,412
 	  
 
	  	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 

	 Loss before effect of accounting change
 	  	  
 	 (30,801
 	 )
 	  	  
 	 (120,175
 	 )
 	  	  
 	 (61,939
 	 )
 	  	  
 	 (251,115
 	 )
 
	 Effect of accounting change, net of tax
 	  	  
 	 —  
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 (931,267
 	 )
 	  	  
 	 —  
 	  
 
	  	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 

	 Net loss
 	  	 $
 	 (30,801
 	 )
 	  	 $
 	 (120,175
 	 )
 	  	 $
 	 (993,206
 	 )
 	  	 $
 	 (251,115
 	 )
 
	  	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 

	 Shares used in computing net loss per share, basic and diluted
 	  	  
 	 71,906,785
 	  
 	  	  
 	 66,087,196
 	  
 	  	  
 	 71,580,350
 	  
 	  	  
 	 65,917,059
 	  
 
	  	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 

	 Net loss per share, basic and diluted:
 	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  
	 Before effect of accounting change
 	  	 $
 	 (0.43
 	 )
 	  	 $
 	 (1.82
 	 )
 	  	 $
 	 (0.87
 	 )
 	  	 $
 	 (3.81
 	 )
 
	 Effect of accounting change, net of tax
 	  	  
 	 —  
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 (13.01
 	 )
 	  	  
 	 —  
 	  
 
	  	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 

	  	  	 $
 	 (0.43
 	 )
 	  	 $
 	 (1.82
 	 )
 	  	 $
 	 (13.88
 	 )
 	  	 $
 	 (3.81
 	 )
 
	  	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 

 
  
 Notes: 

	1.
	 
	Pursuant to Statement of Financial Accounting Standards No. 142, an impairment loss on goodwill of $931 million, net of tax, was recorded as of January 1, 2002,
as an accounting change. In addition, goodwill is no longer amortized. 
 

	2.
	 
	Restructuring cost consisted of a workforce reduction of approximately 50 people, the closure of several offices and the write-off of fixed assets and lease
costs. 
 

 

 6 

  
 OPENTV CORP. 
 Condensed Consolidated Balance Sheets 
 (in thousands) 
  
 
	  	  	 June 30,
 2002

	  	 December 31,
 2001
 

	  	  	 (unaudited)
 	  	  
	 Assets
 	  	  	  	  	  	  
	 Current assets:
 	  	  	  	  	  	  
	 Cash and cash equivalents
 	  	 $
 	 77,476
 	  	 $
 	 69,249
 
	 Short-term marketable debt securities
 	  	  
 	 23,357
 	  	  
 	 28,454
 
	 Accounts receivable, net
 	  	  
 	 13,548
 	  	  
 	 22,681
 
	 Due from MIH Limited entities
 	  	  
 	 2,048
 	  	  
 	 4,290
 
	 Prepaid expenses and other current assets
 	  	  
 	 6,513
 	  	  
 	 7,248
 
	  	  	 
	 
	  	 
	 

	 Total current assets
 	  	  
 	 122,942
 	  	  
 	 131,922
 
	 Long-term marketable debt securities
 	  	  
 	 65,601
 	  	  
 	 91,839
 
	 Property and equipment, net
 	  	  
 	 24,456
 	  	  
 	 24,981
 
	 Long-term private equity investments
 	  	  
 	 4,708
 	  	  
 	 15,208
 
	 Goodwill, net
 	  	  
 	 514,206
 	  	  
 	 1,435,712
 
	 Other intangibles, net
 	  	  
 	 47,437
 	  	  
 	 63,487
 
	 Other assets
 	  	  
 	 4,340
 	  	  
 	 4,465
 
	  	  	 
	 
	  	 
	 

	 Total assets
 	  	 $
 	 783,690
 	  	 $
 	 1,767,614
 
	  	  	 
	 
	  	 
	 

	 Liabilities and shareholders’ equity
 	  	  	  	  	  	  
	 Accounts payable
 	  	 $
 	 5,048
 	  	 $
 	 5,785
 
	 Accrued liabilities
 	  	  
 	 22,384
 	  	  
 	 19,467
 
	 Deferred revenue
 	  	  
 	 10,891
 	  	  
 	 10,825
 
	  	  	 
	 
	  	 
	 

	 Total liabilities
 	  	  
 	 38,323
 	  	  
 	 36,077
 
	 Minority interest
 	  	  
 	 1,488
 	  	  
 	 1,764
 
	 Total shareholders’ equity
 	  	  
 	 743,879
 	  	  
 	 1,729,773
 
	  	  	 
	 
	  	 
	 

	 Total liabilities, minority interest and shareholders’ equity
 	  	 $
 	 783,690
 	  	 $
 	 1,767,614
 
	  	  	 
	 
	  	 
	 

 
  
 Note: 

	1.
	 
	Pursuant to Statement of Financial Accounting Standards No. 142, an impairment loss on goodwill of $931 million, net of tax, was recorded as of January 1, 2002,
as an accounting change. 
 

 

 7 

  
 OPENTV CORP. 
 Unaudited Condensed Consolidated Statements of Cash Flow 
 (in thousands) 
  
 
	  	  	 Three Months Ended June 30,
 
	 	  	 Six Months Ended June 30,
 
	 
	  	  	 2002
 
	 	  	 2001
 
	 	  	 2002
 
	 	  	 2001
 
	 
	 Cash flows from operating activities:
 	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  
	 Net loss
 	  	 $
 	 (30,801
 	 )
 	  	 $
 	 (120,175
 	 )
 	  	 $
 	 (993,206
 	 )
 	  	 $
 	 (251,115
 	 )
 
	 Adjustments to reconcile net loss to net cash used in operating activities:
 	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  
	 Effect of accounting change, net of tax
 	  	  
 	 —  
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 931,267
 	  
 	  	  
 	 —  
 	  
 
	 Depreciation and amortization of property and equipment
 	  	  
 	 2,543
 	  
 	  	  
 	 1,522
 	  
 	  	  
 	 4,879
 	  
 	  	  
 	 2,843
 	  
 
	 Amortization of intangible assets and goodwill
 	  	  
 	 4,947
 	  
 	  	  
 	 102,962
 	  
 	  	  
 	 10,038
 	  
 	  	  
 	 205,925
 	  
 
	 Amortization of share-based compensation
 	  	  
 	 1,078
 	  
 	  	  
 	 3,193
 	  
 	  	  
 	 2,243
 	  
 	  	  
 	 6,541
 	  
 
	 Deferred income tax benefit
 	  	  
 	 —  
 	  
 	  	  
 	 (7,436
 	 )
 	  	  
 	 —  
 	  
 	  	  
 	 (7,274
 	 )
 
	 Provision for doubtful accounts
 	  	  
 	 1,931
 	  
 	  	  
 	 727
 	  
 	  	  
 	 2,038
 	  
 	  	  
 	 847
 	  
 
	 Non-cash restructuring costs
 	  	  
 	 —  
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 1,969
 	  
 	  	  
 	 —  
 	  
 
	 Investment losses
 	  	  
 	 8,000
 	  
 	  	  
 	 16,842
 	  
 	  	  
 	 13,500
 	  
 	  	  
 	 29,014
 	  
 
	 Minority interest
 	  	  
 	 (130
 	 )
 	  	  
 	 (25
 	 )
 	  	  
 	 (277
 	 )
 	  	  
 	 (96
 	 )
 
	 Changes in operating assets and liabilities
 	  	  
 	 5,038
 	  
 	  	  
 	 (4,626
 	 )
 	  	  
 	 12,118
 	  
 	  	  
 	 (7,010
 	 )
 
	  	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 

	 Net cash used in operating activities
 	  	  
 	 (7,394
 	 )
 	  	  
 	 (7,016
 	 )
 	  	  
 	 (15,431
 	 )
 	  	  
 	 (20,325
 	 )
 
	 Cash flows from investing activities:
 	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  
	 Purchase of property and equipment
 	  	  
 	 (2,727
 	 )
 	  	  
 	 (4,402
 	 )
 	  	  
 	 (6,257
 	 )
 	  	  
 	 (6,147
 	 )
 
	 Proceeds from sale of subsidiary
 	  	  
 	 —  
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 4,625
 	  
 
	 Cash for acquisition
 	  	  
 	 —  
 	  
 	  	  
 	 (4,301
 	 )
 	  	  
 	 —  
 	  
 	  	  
 	 (4,301
 	 )
 
	 Proceeds from sale of marketable equity securities
 	  	  
 	 —  
 	  
 	  	  
 	 7,158
 	  
 	  	  
 	 —  
 	  
 	  	  
 	 16,486
 	  
 
	 Increase in private equity investments
 	  	  
 	 —  
 	  
 	  	  
 	 (2,625
 	 )
 	  	  
 	 (3,000
 	 )
 	  	  
 	 (2,625
 	 )
 
	 Decrease (increase) in other assets
 	  	  
 	 (124
 	 )
 	  	  
 	 (450
 	 )
 	  	  
 	 400
 	  
 	  	  
 	 101
 	  
 
	  	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 

	 Net cash provided from (used in) investing activities
 	  	  
 	 (2,851
 	 )
 	  	  
 	 (4,620
 	 )
 	  	  
 	 (8,857
 	 )
 	  	  
 	 8,139
 	  
 
	 Cash flows from financing activities:
 	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  
	 Proceeds from issuance of Ordinary Shares
 	  	  
 	 482
 	  
 	  	  
 	 2,980
 	  
 	  	  
 	 924
 	  
 	  	  
 	 4,716
 	  
 
	  	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 

	 Net cash provided from financing activities
 	  	  
 	 482
 	  
 	  	  
 	 2,980
 	  
 	  	  
 	 924
 	  
 	  	  
 	 4,716
 	  
 
	 Effect of exchange rates on cash
 	  	  
 	 32
 	  
 	  	  
 	 (253
 	 )
 	  	  
 	 256
 	  
 	  	  
 	 (402
 	 )
 
	  	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 

	 Net decrease in cash and cash equivalents
 	  	  
 	 (9,731
 	 )
 	  	  
 	 (8,909
 	 )
 	  	  
 	 (23,108
 	 )
 	  	  
 	 (7,872
 	 )
 
	 Cash, cash equivalents and marketable debt securities at beginning of period
 	  	  
 	 176,165
 	  
 	  	  
 	 226,019
 	  
 	  	  
 	 189,542
 	  
 	  	  
 	 224,982
 	  
 
	  	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 

	 Cash, cash equivalents and marketable debt securities at end of period
 	  	 $
 	 166,434
 	  
 	  	 $
 	 217,110
 	  
 	  	 $
 	 166,434
 	  
 	  	 $
 	 217,110
 	  
 
	  	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 

 
 

 8 

  
 OPENTV CORP. 
 Unaudited Pro-Forma Platform Reporting 
 (in thousands) 
  
 Note:    The pro-forma supplemental financial information included herein is presented for informational purposes only and should not be
considered as a substitute for OpenTV’s financial information presented in accordance with generally accepted accounting principles. 
  
 
	 Three Months Ended June 30, 2002
 
	  	 Core Platform
 
	 	  	 Applications Platform
 
	 	  	 Total Company
 
	 
	 Revenues:
 	  	  	  	  	  	  	  	  	  	  	  	  
	 Royalties
 	  	 $
 	 4,056
 	  
 	  	 $
 	 —  
 	  
 	  	 $
 	 4,056
 	  
 
	 Services and other
 	  	  
 	 6,656
 	  
 	  	  
 	 223
 	  
 	  	  
 	 6,879
 	  
 
	 Channel fees
 	  	  
 	 —  
 	  
 	  	  
 	 2,491
 	  
 	  	  
 	 2,491
 	  
 
	 License fees
 	  	  
 	 463
 	  
 	  	  
 	 269
 	  
 	  	  
 	 732
 	  
 
	  	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 

	 Total revenues
 	  	  
 	 11,175
 	  
 	  	  
 	 2,983
 	  
 	  	  
 	 14,158
 	  
 
	 Operating expenses
 	  	  
 	 16,275
 	  
 	  	  
 	 15,752
 	  
 	  	  
 	 32,027
 	  
 
	  	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 

	 Operating profit (loss)
 	  	 $
 	 (5,100
 	 )
 	  	 $
 	 (12,769
 	 )
 	  	 $
 	 (17,869
 	 )
 
	  	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 

 
  
 
	 Three Months Ended June 30, 2001
 
	  	 Core Platform
 
	  	 Applications Platform
 
	 	    	 Total Company
 
	 
	 Revenues:
 	  	  	  	  	  	  	  	    	  	  	  
	 Royalties
 	  	 $
 	 8,903
 	  	 $
 	 —  
 	  
 	    	 $
 	 8,903
 	  
 
	 Services and other
 	  	  
 	 9,388
 	  	  
 	 1,551
 	  
 	    	  
 	 10,939
 	  
 
	 License fees
 	  	  
 	 2,320
 	  	  
 	 605
 	  
 	    	  
 	 2,925
 	  
 
	  	  	 
	 
	  	 
	 
	 
	    	 
	 
	 

	 Total revenues
 	  	  
 	 20,611
 	  	  
 	 2,156
 	  
 	    	  
 	 22,767
 	  
 
	 Operating expenses
 	  	  
 	 18,769
 	  	  
 	 10,700
 	  
 	    	  
 	 29,469
 	  
 
	  	  	 
	 
	  	 
	 
	 
	    	 
	 
	 

	 Operating profit (loss)
 	  	 $
 	 1,842
 	  	 $
 	 (8,544
 	 )
 	    	 $
 	 (6,702
 	 )
 
	  	  	 
	 
	  	 
	 
	 
	    	 
	 
	 

 
 

 9 

  
 OPENTV CORP. 
 Unaudited Pro-Forma Platform Reporting 
 (in thousands) 
  
 Note:    The pro-forma supplemental financial information included herein is presented for informational purposes only and should not be
considered as a substitute for OpenTV’s financial information presented in accordance with generally accepted accounting principles. 
  
 
	 Six Months Ended June 30, 2002
 
	  	 Core Platform
 
	 	  	 Applications Platform
 
	 	  	 Total Company
 
	 
	 Revenues:
 	  	  	  	  	  	  	  	  	  	  	  	  
	 Royalties
 	  	 $
 	 12,365
 	  
 	  	 $
 	 —  
 	  
 	  	 $
 	 12,365
 	  
 
	 Services and other
 	  	  
 	 12,308
 	  
 	  	  
 	 786
 	  
 	  	  
 	 13,094
 	  
 
	 Channel fees
 	  	  
 	 —  
 	  
 	  	  
 	 5,149
 	  
 	  	  
 	 5,149
 	  
 
	 License fees
 	  	  
 	 2,197
 	  
 	  	  
 	 1,572
 	  
 	  	  
 	 3,769
 	  
 
	  	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 

	 Total revenues
 	  	  
 	 26,870
 	  
 	  	  
 	 7,507
 	  
 	  	  
 	 34,377
 	  
 
	 Operating expenses
 	  	  
 	 33,305
 	  
 	  	  
 	 29,945
 	  
 	  	  
 	 63,250
 	  
 
	  	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 

	 Operating profit (loss)
 	  	 $
 	 (6,435
 	 )
 	  	 $
 	 (22,438
 	 )
 	  	 $
 	 (28,873
 	 )
 
	  	  	 
	 
	 
	  	 
	 
	 
	  	 
	 
	 

 
  
 
	 Six Months Ended June 30, 2001
 
	  	 Core Platform
 
	  	 Applications Platform
 
	 	  	 Total Company
 
	 
	 Revenues:
 	  	  	  	  	  	  	  	  	  	  	  
	 Royalties
 	  	 $
 	 19,033
 	  	 $
 	 —  
 	  
 	  	 $
 	 19,033
 	  
 
	 Services and other
 	  	  
 	 18,078
 	  	  
 	 1,551
 	  
 	  	  
 	 19,629
 	  
 
	 License fees
 	  	  
 	 4,838
 	  	  
 	 1,644
 	  
 	  	  
 	 6,482
 	  
 
	  	  	 
	 
	  	 
	 
	 
	  	 
	 
	 

	 Total revenues
 	  	  
 	 41,949
 	  	  
 	 3,195
 	  
 	  	  
 	 45,144
 	  
 
	 Operating expenses
 	  	  
 	 37,861
 	  	  
 	 29,685
 	  
 	  	  
 	 67,546
 	  
 
	  	  	 
	 
	  	 
	 
	 
	  	 
	 
	 

	 Operating profit (loss)
 	  	 $
 	 4,088
 	  	 $
 	 (26,490
 	 )
 	  	 $
 	 (22,402
 	 )
 
	  	  	 
	 
	  	 
	 
	 
	  	 
	 
	 

 
 

 10

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00041-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00041-of-00352.parquet"}]]