[0] Bitstream Inc. Reports Third Quarter Results.Business/Technology Editors CAMBRIDGE Cambridge, city, Canada Cambridge (kām`brĭj), city (1991 pop. 92,772), S Ont., Canada, on the Grand River, NW of Hamilton. It was formed in 1973 with the amalgamation of Galt, Hespeler, and Preston, all founded in the early 19th cent. , Mass.--(BUSINESS WIRE)--Nov. 8, 2000 Bitstream Inc. (Nasdaq:BITS) today reported that revenues increased by $173,000 or 9% from $1,869,000 during the three months ended September 30, 1999 to $2,042,000 for the three months ended September 30, 2000 excluding revenue from both periods for an existing long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. contract with Atex Media Solutions, Inc. ("Atex"). Revenues including Atex were $2,242,000 for three months ended September 30, 2000, a decrease of $447,000 or 17% compared to $2,689,000 for the three months ended September 30, 1999. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for the three months ended September 30, 2000 decreased $112,000 or 4% to $2,680,000 from $2,792,000 for the three months ended September 30, 1999. Selling and marketing expense and research and development (R&D) expense decreased $328,000 and $32,000 respectively, while general and administrative (G&A) expense increased $248,000 for the three months ended September 30, 2000 compared to the three months ended September 30, 1999. The decrease in selling and marketing expense was partially attributable to $107,000 in increased expenses incurred during the three months ended September 30, 1999 related to the launch of the Company's Mpower product. Marketing salaries, benefits, and related facility costs also decreased $166,000 due to a temporary decrease in headcount during the three months ended September 30, 2000. The increase in G&A expense includes an increase of $147,000 in bad debt expense, from the net recovery of $(15,000) for the three months ended September 30, 1999 to a net expense of $132,000 for the three months ended September 30, 2000. The increase in G&A expense also includes increases in professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. of $25,000 related to foreign tax filings and $36,000 related to the search for investment capital for the Pageflex subsidiary. The Company's net loss for the three months ended September 30, 2000 was $(612,000) compared to $(270,000) for the same period in 1999 primarily attributable to the decrease in revenues, which were partially offset by the decrease in operating expenses. At September 30, 2000, the Company had cash and cash equivalents on hand of $7,477,000, a decrease of $375,000 from the June 30, 2000 balance of $7,852,000. Basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. net loss per share was $(0.08) for the three months ended September 30, 2000, versus $(0.04) for the three months ended September 30, 1999. Bitstream is composed of three different businesses: (1) its type and technology business which generates revenues primarily from the license of font font or typeface or type family Assortment or set of type (alphanumeric characters used for printing), all of one coherent style. Before the advent of computers, fonts were expressed in cast metal that was used as a template for printing. rendering See render. (graphics, text) rendering - The conversion of a high-level object-based description into a graphical image for display. For example, ray-tracing takes a mathematical model of a three-dimensional object or scene and converts it into a bitmap image. software and fonts to the embedded Inserted into. See embedded system. and internet appliance Also called "information appliance," "smart appliance," and "Web appliance," it is a device specialized for accessing the Web and/or e-mail. Designed for ease of use, it plugs into a telephone jack or LAN connection for Internet hookup. markets; (2) myfonts.com, a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. that was formed in late 1999 as the first e-commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. site to aggregate fonts from multiple vendors on one easy-to-use Web site ("Myfonts.com"); and (3) Pageflex, a wholly-owned subsidiary that was formed in early 1999, to position the Company as a leader in on-demand marketing ("Pageflex"). The performance of each business segment is discussed in greater detail below: Type and Technology Results Type and technology revenues increased $197,000 or 14% from $1,413,000 for the three months ended September 30, 1999 to $1,610,000 for the three months ended September 30, 2000. Type and technology gross profit increased $248,000 or 21% from $1,168,000 for the three months ended September 30, 1999 to $1,416,000 for the three months ended September 30, 2000. The increase in gross profits for the quarter ended September 30, 2000 as compared to the quarter ended September 30, 1999 is primarily attributable to the increase in total revenues resulting from an increase in license and royalty revenues which have a relatively lower associated cost of sales percentage than consulting services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" . The increase in license and royalty revenues was offset by a decrease in consulting revenue which resulted from the completion of the development of typeface The design of a set of printed characters, such as Courier, Helvetica and Times Roman. The terms "typeface" and "font" are used interchangeably, but the typeface is the primary design, while the font is the particular implementation and variation of the typeface, such as bold or italics sensitive "Euro" currency symbols for customer specific fonts during 1999. Type and technology operating expenses increased $20,000 or 2% from $1,057,000 during the three months ended September 30, 1999 to $1,077,000 during the three months ended September 30, 2000 due to increases in G&A and R&D expenses of $136,000 and $67,000 respectively, partially offset by a decrease in selling and marketing expense of $183,000. The G&A expense increase included $92,000 of increased bad debt reserves. The decrease in selling and marketing expenses was primarily due to a decrease in marketing headcount during the quarter ended September 30, 2000. Income from operations for the type and technology business increased $228,000 or 205% from $111,000 for the three months ended September 30, 1999 to $339,000 for the three months ended September 30, 2000. The third quarter was the seventh successive quarter of profitability for the Company's type and technology business. "In the third quarter, the type and technology business increased its revenue by 14% and its operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. by 205% as compared to the three months ended September 30, 1999, while we continued to establish new relationships with leading set-top box The cable TV box that sits on "top" of the TV "set," although it is often located several feet away in an equipment rack. The set-top box descrambles the premium channels and provides a tuner for the higher cable numbers that very old TVs did not support. manufacturers, interactive TV developers and Internet technology developers such as TiVo, WebEx, NDS Group NDS Group plc is a DRM and conditional access firm. It is listed on the NASDAQ (symbol NNDS), but its major shareholder is News Corporation. The company is headquartered in West Drayton (near Heathrow), United Kingdom. The CEO of NDS is Abe Peled. and CCS (1) (Common Channel Signaling) A communications system in which one channel is used for signaling and different channels are used for voice/data transmission. Signaling System 7 (SS7) is a CCS system, also known as CCS7. See SS7. GmbH," said Anna M. Chagnon, President. "As the markets for digital set-top boxes, interactive TV services and Internet technology continue to grow, the need for text legibility leg·i·ble adj. 1. Possible to read or decipher: legible handwriting. 2. Plainly discernible; apparent: legible weaknesses in character and disposition. in memory constrained con·strain tr.v. con·strained, con·strain·ing, con·strains 1. To compel by physical, moral, or circumstantial force; oblige: felt constrained to object. See Synonyms at force. 2. environments will become even more important to our customers and potential customers. To meet this need, Bitstream offers its customers the powerful combination of Bitstream's most advanced font rasterizing rasterizing - rasterising engine, Font Fusion Bitstream Font Fusion is a small, fast, object-oriented font engine written in ANSI C capable of rendering high-quality text on any platform, any device, and at any resolution. The entire source code is portable, optimized, and executes independent of operating system and processor. , which has been specifically designed for wireless Internet devices, personal digital assistants, set-top boxes, embedded systems Embedded systems Computer systems that cannot be programmed by the user because they are preprogrammed for a specific task and are buried within the equipment they serve. , and Internet appliances, and a wide variety of fonts, including a core set of delta-hinted fonts, our stroke-based Asian fonts, which are perfect for memory constrained environments, and Latin and non-Latin fonts from Bitstream's extensive typeface library." Myfonts.com Results Myfonts.com, generated $21,000 in revenues, an increase of $12,000 or 150% from the quarter ended June 30, 2000, which was Myfonts.com's initial quarter of revenue generation. After eliminating inter-company sales of $13,000 and $6,000 from consolidated revenues for the three months ended September 30, 2000 and June 30, 2000, respectively, myfonts.com generated net revenues of $7,000 and $2,000, respectively. Operating expenses increased $20,000 or 25% from $81,000 for the three months ended September 30, 1999 to $101,000 for the three months ended September 30, 2000. This increase is primarily due to the addition of full-time technical personnel to maintain and upgrade the myfonts.com web site. Increased operating expenses also caused the net operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. for Myfonts.com to increase $16,000 from $(81,000) from the three months ended September 30, 1999 to $(97,000) for the three months ended September 30, 2000. "During the third quarter of 2000 Myfonts.com's revenue increased by 150% as compared to the second quarter of 2000," said Anna M. Chagnon. "While we are pleased with the increase in revenue from the site to date, we are continuing to expand our marketing efforts in order to meet more aggressive revenue growth targets in the fourth quarter and beyond. To help us meet these goals, we have also continued to build relationships with several major font foundries and we have entered into agreements which we hope will increase both the level of traffic on the site and the revenues generated from the site. In recognition of some of our earlier marketing efforts, we are also excited to have recently been named one of Softletter's `Ten Best Online Software Stores'." Pageflex Results Pageflex revenues decreased $31,000 or 7% from $456,000 during the three months ended September 30, 1999 to $425,000 for the three months ended September 30, 2000 excluding revenue from both periods for an existing long-term contract with Atex. Revenues including Atex decreased $651,000 or 51% from $1,276,000 for the three months ended September 30, 1999 to $625,000 for the three months ended September 30, 2000. Revenues from Persona persona /per·so·na/ (per-so´nah) [L.] in jungian psychology, the personality mask or facade presented by a person to the outside world, as opposed to the anima, the inner being. per·so·na n. , Pageflex's new desktop application designed to produce customized business documents, increased $86,000 or 506% from $17,000 during the three months ended June 30, 2000, its initial quarter of revenue generation, to $103,000 during the three months ended September 30, 2000. Revenues from Pageflex's Mpower on-demand marketing software decreased $134,000 from $456,000 during the three months ended September 30, 1999 to $322,000 during the three months ended September 30, 2000. Pageflex's operating expenses decreased $152,000 or 9%, from $1,654,000 for the three months ended September 30, 1999 to $1,502,000 for the three months ended September 30, 2000. This decrease is due to decreases in R&D and selling and marketing expenses of $101,000 and $149,000 respectively, partially offset by an increase in G&A expense of $98,000. This increase in G&A expense was primarily due to a $55,000 increase in bad debt reserves during the three months ended September 30, 2000, and $36,000 in professional services incurred in connection with seeking additional funding for Pageflex. The decrease in selling and marketing expense was primarily due to a decrease of $107,000 in costs associated with the launch of Mpower in 1999, which were not incurred in 2000. The decrease in R&D expense was primarily the result of a temporary decrease in employee related costs of $80,000 during the three months ended September 30, 2000 as compared to the three months ended September 30, 1999. Pageflex operating losses increased $466,000 or 102% from $(456,000) for the three months ended September 30, 1999 to $(922,000) for the three months ended September 30, 2000. Operating losses, excluding the revenues associated with the long-term Atex contract discussed above, would have been $(302,000) or $154,000 less than the operating losses for the three months ended September 30, 1999. "While we are excited by the success and future prospects of Persona, our variable content desktop publishing desktop publishing, system for producing printed materials that consists of a personal computer or computer workstation, a high-resolution printer (usually a laser printer), and a computer program that allows the user to select from a variety of type fonts and sizes, application designed for producing customized documents, we continue to look for ways to expand our indirect sales channel for all Pageflex products" said Charles Ying, Chief Executive Officer of Pageflex and Bitstream. "We focused our efforts during the third quarter on signing up several key resellers and distributors in Europe and Asia. These distributors, which include Burns & Scott, Konzept-IX, Pinnacle pinnacle (pĭn`ĭkəl), minor architectural motif of vertical tapering shape, usually crowning a pier, buttress, or gable. Although sometimes it appears in Renaissance design, as in the Certosa di Pavia, it is almost exclusively a medieval Graphics, Wifac and Visual Processing Visual processing is the sequence of steps that information takes as it flows from visual sensors to cognitive processing. The sensors may be zoological eyes or they may be cameras or sensor arrays that sense various portions of the electromagnetic spectrum. Japan, will be a key part of helping us achieve our future revenue growth for Pageflex. At the same time, we have continued the cost savings measures undertaken during the prior quarter to minimize the need for additional resources to fund Pageflex's growth." On Thursday, November 9, 2000 at 3:00 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. , Bitstream will host a conference call with the financial community to discuss its third quarter results. Interested participants should call 1-800-781-0003 (US and Canada only) or 617-225-2125 (outside US and Canada) no sooner than ten minutes before the call begins. This press release may contain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such statements are based on management's current expectations. Actual performance and results of operations may differ materially from those projected or suggested in the forward-looking statements due to certain risks and uncertainties, including, without limitation, market acceptance of the Company's products, competition and the timely introduction of new products. Additional information concerning certain risks and uncertainties that would cause actual results to differ materially from those projected or suggested in the forward-looking statements is contained in the Company's filings with the Securities and Exchange Commission, including Bitstream's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 1999. Bitstream, the Internet Font Technology Company Bitstream Inc. (Nasdaq:BITS) is the leading developer of font technology, digital fonts, and custom font designs for a wide variety of markets. Setting the standard for excellence in font technology, Bitstream holds numerous key patents that cover the creation of portable fonts for the Internet. Bitstream licenses its award-winning TrueDoc(R), WebFont(TM), and Font Fusion(TM) technologies to Web and application developers, and to manufacturers of Internet appliances, wireless devices, set-top boxes, embedded systems, printers, and personal digital assistants. Bitstream is headquartered in Cambridge, Massachusetts This article is about the city of Cambridge in Massachusetts. For the English university town, see Cambridge, England. For other places, see Cambridge (disambiguation). Cambridge, Massachusetts is a city in the Greater Boston area of Massachusetts, United States. . Find out more about Bitstream at http://www.bitstream.com. MyFonts.com MyFonts.com, Inc., a venture funded by Bitstream, Inc. and established as a wholly owned subsidiary in 1999, is a showcase of the world's fonts available from one easy-to-use Internet portal. It provides the largest collection of fonts ever assembled as·sem·ble v. as·sem·bled, as·sem·bling, as·sem·bles v.tr. 1. To bring or call together into a group or whole: assembled the jury. 2. for on-line delivery, and offers easy ways to find and purchase fonts on-line, unique typographic See typography. resources, and a forum for interacting with type experts. Visit www.myfonts.com for more information about MyFonts.com. Pageflex, Inc. Pageflex, Inc. (http://www.pageflexinc.com), develops, markets, and supports on-demand document composition solutions and related technology. Its products include Mpower, a variable data enterprise solution, and Persona, a variable data desktop publishing application. Both products use NuDoc(TM), Pageflex's XML-based composition engine. NuDoc technology uses flexible design templates incorporating "spring-loaded" text and image containers that dynamically adjust page layouts :For the Wikipedia policy about articles layout, see Wikipedia:Guide to layout. Page layout is the part of graphic design that deals in the arrangement and style treatment of elements (content) on a page. based on the sizes and shapes of the variable text and images that flow into them. Text and image containers resize Verb 1. resize - change the size of; make the size more appropriate size - make to a size; bring to a suitable size rescale - establish on a new scale and reposition to automatically maintain the design integrity of each document. Quark quark (kwôrk): see elementary particles. quark Any of a group of subatomic particles thought to be among the fundamental constituents of matter—more specifically, of protons and neutrons. and PageMaker documents can be ported via Adobe adobe (ədō`bē): see rammed earth. adobe Handmade sun-dried bricks formed from a mixture of heavy clay and straw found in arid regions. InDesign using Pageflex's DesignOut plug-in. Built on open standards Specifications for hardware and software that are developed by a standards organization or a consortium involved in supporting a standard. Available to the public for developing compliant products, open standards imply "open systems;" that an existing component in a system can be replaced , Pageflex products import data from any ODBC-compliant database and use XML XML in full Extensible Markup Language. Markup language developed to be a simplified and more structural version of SGML. It incorporates features of HTML (e.g., hypertext linking), but is designed to overcome some of HTML's limitations. as the data format between databases and page composition. The Company was established in 1999 as a wholly-owned subsidiary of Bitstream Inc. (NASDAQ: BITS, http://www.bitstream.com). Bitstream and TrueDoc are registered trademarks and WebFont Maker, T2K T2K Tempest 2000 (game; sequel to Tempest) T2K Time 2 Kill (gaming clan) and Font Fusion are trademarks of Bitstream Inc. Pageflex, Mpower and NuDoc are trademarks of Pageflex, Inc., a wholly owned subsidiary of Bitstream Inc. Myfonts.com is a trademark of Myfonts.com, Inc., a wholly owned subsidiary of Bitstream Inc. All other trademarks mentioned are for identification purposes only and may be trademarks of their respective owners.
Bitstream Inc.
Consolidated Statements of Operations
(In Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
Revenues
Software license $ 2,079 $ 2,179 $ 5,866 $ 5,507
Services 163 510 1,028 1,298
Total revenues 2,242 2,689 6,894 6,805
Cost of revenues 242 323 1,000 1,109
Gross profit 2,000 2,366 5,894 5,696
Operating expenses
Selling and
marketing 900 1,228 2,839 3,242
Research and
development 1,126 1,158 3,689 3,713
General
and administrative 654 406 1,791 1,185
Total operating
expenses 2,680 2,792 8,319 8,140
Loss from
operations (680) (426) (2,425) (2,444)
Other income
(expense):
Income (loss)
on investment
in DiamondSoft,
Inc (10) 18 1 11
Interest
income, net 117 150 355 502
Loss before
income taxes (573) (258) (2,069) (1,931)
Provision for
income taxes (39) (12) (171) (40)
Net loss $ (612) $ (270) $(2,240) $(1,971)
Basic and
diluted net
loss per
share $ (0.08) $ (0.04) $ (0.29) $ (0.27)
Basic and
diluted
weighted average
shares outstanding 7,811 7,289 7,726 7,209
Bitstream Inc.
Consolidated Balance Sheets
(In Thousands)
September 30, December 31, 1999
2000
(Unaudited)
ASSETS
Current assets:
Cash and cash
equivalents $ 7,477 $ 9,037
Accounts
receivable, net 2,643 2,184
Current portion
of long-term
accounts receivable,
net 1 4
Prepaid expenses
and other current
assets 95 297
Total current assets 10,216 11,522
Property and
equipment, net 642 763
Restricted cash 300 --
Long-term accounts
receivable, net 2 4
Goodwill, net 1,313 1,665
Investment in
DiamondSoft, Inc. 463 462
Other assets 138 187
2,216 2,318
Total assets $13,074 $14,603
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities
of capital
lease obligations $ 5 $ 27
Accounts payable 298 351
Income taxes payable 9 --
Accrued expenses 1,252 1,126
Deferred revenue 503 350
----- ---------------
Total current
liabilities 2,067 1,854
Long-term
deferred revenue 28 7
Total liabilities 2,095 1,861
Total stockholders'
equity 10,979 12,742
Total liabilities and
stockholders' equity $13,074 $14,603
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