BSQUARE Beats Expected Fourth Quarter Results.Business Editors BELLEVUE Bellevue (bĕl`vy  ).1 City (1990 pop. 30,982), Sarpy co., E Nebr., a suburb of Omaha, on the Missouri River; inc. 1855. , Wash.--(BUSINESS WIRE)--Jan. 30, 2003 BSQUARE Corporation (Nasdaq:BSQR) today announced revenue of $9.3 million for the fourth quarter ended December December: see month. 31, 2002, slightly above the range of $8 to $9 million previously projected by BSQUARE management. The company also announced that its net loss for the quarter was $11.1 million ($0.30 per share), including restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and related non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of $4.2 million announced on December 16, 2002. Excluding the restructuring and other non-cash charges, the company had a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net loss of $6.7 million ($0.18 per share), better than the range of $0.20 to $0.26 pro forma net loss previously projected by management. In the fourth quarter of 2001, the company reported revenue of $10.5 million, a net loss of $5.8 million ($0.17 per share) and a pro forma net loss of $2.9 million ($0.08 per share). For the year ended December 31, 2002, the company reported revenue of $37.5 million and a net loss of $73.5 million ($2.02 per share), including $44.0 million related to a change in accounting principle, restructuring, impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. and other non-cash charges. This compares to 2001 revenue of $61.9 million and a net loss of $10.3 million ($0.30 per share). "2002 was a challenging year for us," said president and chief executive officer Bill Baxter
William Robert Baxter (born November 3, 1946) is a former Australian politician and the current Victorian State President of The Nationals. . "The sluggish global economy forced a number of our customers to abandon abandon v. to intentionally and permanently give up, surrender, leave, desert, or relinquish all interest or ownership in property, a home or other premises, a right of way, and even a spouse, family, or children. or postpone post·pone tr.v. post·poned, post·pon·ing, post·pones 1. To delay until a future time; put off. See Synonyms at defer1. 2. To place after in importance; subordinate. major projects, and Microsoft (Microsoft Corporation, Redmond, WA, www.microsoft.com) The most successful and influential software company. Microsoft's software and Intel's hardware pioneered the PC and revolutionized the computer industry. continued to reduce our volume of work for them. These factors caused a fall-off in service revenue throughout the year. Beginning in the second quarter, however, we were able to partially offset the declines in service revenue with increasing sales of licenses for third-party products. Throughout the year we continued to adjust our business model and reduce our spending wherever possible. With the reductions in staff that we announced in December, we have taken steps necessary to focus squarely square·ly adv. 1. Mathematics At right angles: sawed the beam squarely. 2. In a square shape. 3. on core strengths that I believe will position us to meet our goals in being able to deliver sustained, profitable growth in the future," Baxter Bax´ter n. 1. A baker; originally, a female baker. said. "In 2003, BSQUARE remains firmly committed to our goal of becoming a one-stop shop One-Stop Shop A company or a location that offers a multitude of services to a client or a customer. The idea is to provide convenient and efficient service and also to create the opportunity for the company to sell more products to clients and customers. for smart device development," Baxter continued. Our skills are second to none in this area. We recognize that we must be selective in the range of development projects we undertake, and over the next several quarters we intend to focus more sharply on the immediate needs of our business partners and customers." "The growth of our customer base in 2002 was fueled primarily by our increased sales of third-party products, and the relationships we have built with those customers have opened new doors for the sale of our core products and services. Despite current economic conditions, many of those customers are proceeding with new product rollouts, and we believe that we are in the best position to win their business as they move forward," Baxter said. "Along with the strength of our new customer relationships, the renewed re·new v. re·newed, re·new·ing, re·news v.tr. 1. To make new or as if new again; restore: renewed the antique chair. 2. vigor VIGOR Internal medicine A clinical study–Vioxx GI Outcomes Report comparing a proprietary COX-2 inhibitor to standard NSAIDs of our relationships with our key partners provides solid growth opportunities for BSQUARE in 2003. And as a result of our increased licensing activity, those companies have raised their stake in promoting our products and services to their customers and other business partners. Over the next several quarters, we will attempt to leverage their efforts by coordinating co·or·di·nate n. 1. One that is equal in importance, rank, or degree. 2. coordinates A set of articles, as of clothing or luggage, designed to match or complement one other, as in style or color. 3. our sales and marketing programs with theirs." On the product front, Baxter said: "BSQUARE's focus on a few core products will not only lower our development costs, but also will allow us to concentrate our sales and marketing efforts on near-term near-term adj. Of, for, or involving a short period of time in the near future. revenue opportunities associated with those products. I am especially excited about the prospects for our Power Handheld handheld: see personal digital assistant. Reference Design, which is currently being evaluated by several wireless carriers and OEMs. With its low-cost, light-weight (jargon) light-weight - Opposite of heavy-weight; usually found in combining forms such as "light-weight process". configuration, retractable re·tract v. re·tract·ed, re·tract·ing, re·tracts v.tr. 1. To take back; disavow: refused to retract the statement. 2. keyboard A set of input keys on a terminal or computer. It includes the standard typewriter keys, several specialized keys and the features outlined below. See QWERTY keyboard, Dvorak keyboard, AZERTY keyboard and virtual keyboard. , full-screen functionality and powerful processing capabilities, we believe that our Power Handheld device represents a superior alternative to laptops and less powerful handheld devices." "As we focus on revenue growth over the next several quarters, we will continue to manage our balance sheet aggressively in order to preserve our cash position, which, including our short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments and restricted cash, stood at $35.4 million at year end. In addition, we will continue to refine our organization and tune our business model with the goal of returning to profitability during the third quarter of this year," Baxter said. For the first quarter of 2003, Baxter said the company has set a revenue target of $7.5 million to $8.5 million, with a net loss in the range of $0.11 to $0.16 per share, which would be an improvement over the company's pro forma net loss of $0.18 in the fourth quarter of 2002, and another step on the company's road to profitability. Conference Call Management will host the conference call today, Thursday Thursday: see week. , January January: see month. 30, 2003, at 2:00 PM Pacific Time. To access the call, please dial (706) 634-1118 and reference BSQUARE or confirmation # 7499329. The call may also be accessed by webcast at www.BSQUARE.com in the investor relations Investor relations The process by which the corporation communicates with its investors. section. A webcast replay will be available for seven days following the call. A telephonic replay of the call will be available later in the day: to access the replay, please dial (706) 645-9291; reference confirmation # 7499329. The telephonic replay will be available for three days following the call. About BSQUARE BSQUARE accelerates the development, deployment Installing, setting up, testing and running. This military term, which means the placement of troops and equipment in the field, is widely used with computers as an alternate to the word "implementation. and management of next generation smart devices and applications. The company's product and service suite includes Device Development Solutions, Wireless Solutions and Location-based Solutions. For nearly a decade, BSQUARE has provided more than 150 world-class world-class adj. 1. Ranking among the foremost in the world; of an international standard of excellence; of the highest order: a world-class figure skater. 2. manufacturers, integrators and service providers the necessary building blocks to design, develop and test innovative products quickly and cost effectively. BSQUARE offers its customers the deepest expertise in the latest hardware and software platforms and systems, providing critical engineering services that have resulted in the successful launch of hundreds of new products and applications. BSQUARE's new wireless product and service solutions help companies expand into new data-oriented mobile markets, increasing client revenue and reducing risk and support costs associated with product development. For more information, visit BSQUARE at www.BSQUARE.com or call 888-820-4500. BSQUARE is a registered trademark of BSQUARE Corporation. All other product and company names herein may be trademarks of their respective owners. This release contains 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 safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions 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, including statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc our sales, customer prospects, financial goals, revenue targets, profitability and projected financial results. The words "believe," "expect," "intend," "anticipate," variations of such words, and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. . Our forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict and could cause actual results to differ materially from those projected. Factors that could affect our actual results include a decline in the market for our products, technology licenses and services, a decline in the market for Windows-based or other smart devices or the failure of this market to develop as anticipated, adverse changes in macro-economic conditions, our ability to successfully implement, execute To run a program, which causes the computer to carry out its instructions. See executable code, instruction and EXE file. execute - execution and make adjustments in our business strategy, business model or product offerings to meet the needs of our current, new and potential customers, risks associated with the effects of our restructurings and our ability to successfully support our operations, competition and intellectual property risks. A more detailed description of certain factors that could affect actual results include, but are not limited to, those discussed in BSQUARE'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, 2001 in the section entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: "Risk Factors" and those discussed in BSQUARE's subsequent quarterly filings on Form 10-Q Form 10-Q See 10-Q. in the section entitled "Certain Factors That May Affect Future Results." Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. We undertake no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date of this release or to reflect the occurrence of unanticipated events.
BSQUARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
December December
31, 31,
2002 2001
------------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $11,041 $30,303
Restricted cash 5,940 -
Short-term investments 18,444 39,408
Accounts receivable, net 6,494 8,833
Income tax receivable 2,934 1,469
Deferred income tax asset - 5,792
Prepaid expenses and other current assets 1,966 2,840
------------------
Total current assets 46,819 88,645
Furniture, equipment and leasehold improvements, net 3,124 6,509
Investments 210 2,319
Goodwill, net - 15,815
Intangible assets, net 850 1,754
Deposits and other assets 2,566 624
------------------
Total assets $53,569 $115,666
==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,901 $435
Accrued compensation 3,079 3,570
Accrued restructuring costs 11,090 4,534
Accrued expenses 3,204 4,291
Deferred income taxes - 1,071
Deferred revenue 1,620 2,944
------------------
Total current liabilities 20,894 16,845
------------------
Shareholders' equity:
Preferred stock, no par value: authorized
10,000,000 shares; no shares issued and
outstanding - -
Common stock, no par value: authorized 50,000,000
shares, 36,968,128 shares issued and outstanding
as of December 31, 2002 and 34,875,585 shares
issued and outstanding as of December 31, 2001 117,163 111,459
Deferred stock option compensation (15) (121)
Cumulative foreign currency translation adjustment (325) (513)
Accumulated other comprehensive loss, net of tax - (1,367)
Accumulated deficit (84,148) (10,637)
------------------
Total shareholders' equity 32,675 98,821
------------------
Total liabilities and shareholders'
equity $53,569 $115,666
==================
BSQUARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Twelve Months
Ended Dec. 31, Ended Dec. 31,
------------------------------------
2002 2001 2002 2001
------------------------------------
(unaudited)
Revenue:
Service $2,468 $9,008 $18,028 $53,775
Product 6,816 1,491 19,478 8,077
------------------------------------
Total revenue 9,284 10,499 37,506 61,852
------------------------------------
Cost of revenue:
Service 3,356 6,515 16,847 30,556
Product 5,246 684 13,948 2,126
------------------------------------
Total cost of revenue 8,602 7,199 30,795 32,682
------------------------------------
Gross profit 682 3,300 6,711 29,170
------------------------------------
Operating expenses:
Research and development 3,902 3,998 16,692 12,761
Selling, general and
administrative 4,228 4,602 19,121 19,048
Acquired in-process research and
development - - 1,698 -
Amortization of intangible
assets 138 2,822 1,380 7,081
Impairment of goodwill - - 6,472 -
Restructuring and other related
charges 4,159 - 16,249 6,707
Amortization of deferred stock
compensation 33 38 109 193
------------------------------------
Total operating
expenses 12,460 11,460 61,721 45,790
------------------------------------
Loss from operations (11,778) (8,160) (55,010) (16,620)
Other income (expense), net:
Investment income, net 196 574 1,429 2,657
Other income (expense) 74 - (3,329) -
------------------------------------
Loss before income taxes and
cumulative effect of change in
accounting principle (11,508) (7,586) (56,910) (13,963)
Income taxes benefit (provision) 428 1,805 (1,696) 3,679
------------------------------------
Loss before cumulative effect of
change in accounting principle (11,080) (5,781) (58,606) (10,284)
Cumulative effect of accounting
change - - (14,932) -
------------------------------------
Net loss $(11,080) $(5,781)$(73,538)$(10,284)
====================================
Basic and diluted loss per share $(0.30) $(0.17) $(2.02) $(0.30)
====================================
Weighted average shares
outstanding used to compute
basic loss per share 36,912 34,672 36,413 34,314
====================================
Three Months Twelve Months
Ended Dec. 31, Ended Dec. 31,
------------------------------------
2002 2001 2002 2001
------------------------------------
(unaudited)
Reconciliation of net income
(loss) per diluted share from
operations to pro forma loss per diluted share:
Net income (loss) $(11,080) $(5,781)$(73,538)$(10,284)
Acquired in-process research and
development - - 1,698 -
Amortization of intangible
assets 138 2,822 1,380 7,081
Cumulative effect of accounting
change - - 14,932 -
Revaluation of investments 30 - 3,205 -
Impairment of goodwill - - 6,472 -
Restructuring and other related
charges 4,159 - 16,249 6,707
Amortization of deferred stock
option compensation 33 38 109 193
------------------------------------
Pro forma net income (loss) $(6,720) $(2,921)$(29,493) $3,697
====================================
Net income (loss) per diluted
share $(0.30) $(0.17) $(2.02) $(0.30)
Acquired in-process research and
development - - 0.04 -
Amortization of intangible
assets 0.01 0.09 0.04 0.21
Cumulative effect of accounting
change - - 0.41 -
Revaluation of investments - - 0.09 -
Impairment of goodwill - 0.18 -
Restructuring and other related
charges 0.11 - 0.45 0.19
Amortization of deferred stock
option compensation - - - 0.01
------------------------------------
Pro forma income (loss) per
diluted share $(0.18) $(0.08) $(0.81) $0.11
====================================
Weighted average shares
outstanding to compute pro forma
income (loss) per diluted share 36,912 34,672 36,413 34,314
====================================
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