BSQUARE Reports First 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)--April 24, 2003 BSQUARE Corporation (Nasdaq:BSQR) today announced its operating results for the first quarter of 2003. Revenue was $8.1 million for the quarter, within the company's previously announced expected range of $7.5 million to $8.5 million. In the first quarter of 2002, BSQUARE had revenue of $8.7 million, and in the fourth quarter of 2002 the company had revenue of $9.3 million. The company's net loss for the quarter was $6.6 million ($0.18 per share), which was outside management's previously announced expected range of $0.12 to $0.16 per share. The quarter's net loss compares to a $9.2 million ($0.26 per share) loss before cumulative effect of change in accounting principle in the same quarter of 2002, and a net loss of $11.1 million ($0.30 per share) in the fourth quarter of 2002. The first and the fourth quarters of 2002 included restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $2.2 million ($0.06 per share) and $4.2 million ($0.11 per share), respectively. In addition, the first quarter of 2002 included a charge of $1.7 million ($0.05 per share) for acquired in-process research and development costs. 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. said the company's somewhat lower revenue reflected the anticipated convergence convergence Mathematical property of infinite series, integrals on unbounded regions, and certain sequences of numbers. An infinite series is convergent if the sum of its terms is finite. of three factors. "During the quarter, seasonal weakness in demand for professional engineering services was compounded by the effects of the continued weak demand for technology products and services. And as a result of one unusually large customer order last December December: see month. , revenue from sales of third-party products during the first quarter of 2003 was also less than in the fourth quarter although significantly more than in earlier quarters of 2002. The rapid growth of BSQUARE's third-party product sales has made the company the largest distributor of 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. licenses in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . While this business carries relatively low margins, we continue to believe that it provides opportunities for sales of other products and services. "Continuing the positive trend which began in the third quarter of last year, we reduced our 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. significantly again this quarter. As we continue to focus on reducing research & development spending, rationalizing our product lines and tightening our cost controls, we expect to see further declines in operating expenses over the next two quarters," Baxter Bax´ter n. 1. A baker; originally, a female baker. said. The company expects customers to begin manufacturing devices based on its Power Handheld handheld: see personal digital assistant. Reference Design beginning in the third quarter of 2003. Baxter said he is encouraged by the number of prospective customers who have expressed interest in various forms of the product. The company is now in discussions with more than a dozen original equipment manufacturers and has begun providing units for evaluation over the next three months. NEC (NEC Corporation, Tokyo, www.nec.com, www.necus.com) An electronics conglomerate known in the U.S. for its monitors. In Japan, it had the lion's share of the PC market until the late 1990s (see PC 98). NEC was founded in Tokyo in 1899 as Nippon Electric Company, Ltd. Solutions (America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. ) has already contracted to purchase 25,000 licenses for the Power Handheld's software suite, citing the innovative user interface the software suite provides. For the second quarter of 2003, Baxter said the company expects an increase in service revenue. The volume of professional engineering services work in process has increased during the first month of the quarter, fueled by a number of new contracts -- including a sizable siz·a·ble also size·a·ble adj. Of considerable size; fairly large. siz  a·ble·ness n. project for Motorola (Motorola, Inc., Schaumburg, IL, www.motorola.com) A leading manufacturer of semiconductor devices, electronics, telecommunications and satellite systems. Founded in Chicago in 1928 by Paul V. . According to according toprep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Baxter, "These customers and others who have experienced BSQUARE's services in the past are returning for our help to reduce the time and cost of their device development efforts, and to get their products to market faster." In addition, BSQUARE now offers development solutions for AMD (Advanced Micro Devices, Inc., Sunnyvale, CA, www.amd.com) A major manufacturer of semiconductor devices including x86-compatible CPUs, embedded processors, flash memories, programmable logic devices and networking chips. Alchemy-based devices running Microsoft Windows See Windows. (operating system) Microsoft Windows - Microsoft's proprietary window system and user interface software released in 1985 to run on top of MS-DOS. Widely criticised for being too slow (hence "Windoze", "Microsloth Windows") on the machines available then. CE .NET so AMD customers can outsource outsource verb To assign specific work to a 3rd party for a specific length of time at an set price and service level Managed care To use outside labor to perform functions–billing and collections, accounting, janitorial services, ER work on both hardware and Windows CE (Windows Consumer Electronics) Microsoft's version of Windows for handheld devices and embedded systems that use x86, ARM, MIPS and SHx CPUs. Windows CE .NET superseded Windows CE 3.0. system software components to BSQUARE. Baxter said he expects the company's revenue for the second quarter of 2003 to be between $8 and $9 million, and a net loss in the range of $0.15 to $0.20 per share. According to BSQUARE CFO See Chief Financial Officer. Jim Ladd Jim Ladd (born January 17, 1948), an American disc jockey, radio producer and writer, is one of the few notable remaining freeform rock DJs in United States commercial radio. , at March 31, 2003, the company had $25.6 million in cash, restricted cash, cash equivalents and 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. Although BSQUARE used $9.8 million cash during the first quarter of 2003 for a combination of current operating needs and prior 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). costs, Ladd said the company currently expects to reduce its use of cash to $4 million to $5 million in the second quarter, including $1 million for liabilities related to previous restructurings, but reduced by $2.9 million from an expected refund TO REFUND. To pay back by the party who has received it, to the party who has paid it, money which ought not to have been paid. 2. On a deficiency of assets, executors and administrators cum testamento annexo, are entitled to have refunded to them legacies of prior years' income taxes. Conference Call Management will host a conference call today, Thursday Thursday: see week. , April 24, 2003, at 2:00 PM Pacific Time. To access the call, please dial 706/634-1118 and reference BSQUARE or confirmation # 9634951. 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 one year 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 # 9634951. The telephonic replay will be available for three days following the call. About BSQUARE BSQUARE accelerates the development, deployment 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 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, product manufacture, financial goals, revenue targets, cash usage 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 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. In addition, demand for our Power Handheld based devices is uncertain and will be affected by a variety of business and economic conditions, including customer-ordering patterns. Major health concerns, such as the possible spread of the SARS illness, could also adversely affect our manufacturing strategy and customer ordering patterns. 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, 2002 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." 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 amounts)
ASSETS March 31, Dec. 31,
2003 2002
----------- -----------
(unaudited)
Current assets:
Cash and cash equivalents $3,433 $11,041
Restricted cash 2,481 2,582
Short-term investments 16,329 18,444
Accounts receivable, net 7,177 6,494
Income taxes receivable 2,924 2,934
Prepaid expenses and other current assets 1,380 1,966
Deferred income taxes 28 28
----------- -----------
Total current assets 33,752 43,489
Furniture, equipment and leasehold
improvements, net 2,809 3,124
Restricted cash 3,358 3,358
Investments 132 210
Intangible assets, net 704 850
Deposits and other assets 2,489 2,566
----------- -----------
Total assets $43,244 $53,597
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,050 $1,942
Accrued compensation 1,458 3,079
Accrued restructuring costs, current
portion 3,682 5,659
Accrued expenses 3,167 3,204
Deferred income taxes 28 28
Deferred revenue 2,140 1,620
----------- -----------
Total current liabilities 12,525 15,532
Restructuring costs, net of current portion 4,582 5,431
----------- -----------
Total liabilities 17,107 20,963
Commitments and contingencies
Shareholders' equity:
Preferred stock, no par value: authorized
10,000,000 shares; no shares issued and
outstanding
Common stock, no par value: authorized
150,000,000 shares, issued and outstanding,
37,162,033 shares as of March 31, 2003 and
36,968,128 shares as of December 31, 2002 117,332 117,149
Deferred stock-based compensation (11) (15)
Accumulated other comprehensive loss (410) (325)
Accumulated deficit (90,774) (84,175)
----------- -----------
Total shareholders' equity 26,137 32,634
----------- -----------
Total liabilities and shareholders'
equity $43,244 $53,597
=========== ===========
BSQUARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended
March 31,
-------------------------
2003 2002
----------- -----------
Revenue: (unaudited)
Service $1,968 $6,007
Product 6,100 2,689
----------- -----------
Total revenue 8,068 8,696
Cost of revenue:
Service 2,418 4,384
Product 4,873 1,051
----------- -----------
Total cost of revenue 7,291 5,435
----------- -----------
Gross profit 777 3,261
Operating expenses:
Research and development 3,103 4,142
Selling, general and administrative 3,800 4,594
Acquired in-process research and
development -- 1,698
Amortization of intangible assets 146 421
Impairment of goodwill and other intangible
assets 435 --
Restructuring and other related charges -- 2,205
----------- -----------
Total operating expenses 7,484 13,060
----------- -----------
Loss from operations (6,707) (9,799)
Other income, net:
Investment income, net 108 535
----------- -----------
Loss before income taxes and cumulative
effect of change in accounting principle (6,599) (9,264)
Income tax benefit -- 29
----------- -----------
Loss before cumulative effect of change in
accounting principle (6,599) (9,235)
Cumulative effect of change in accounting
principle -- (14,932)
----------- -----------
Net loss $(6,599) $(24,167)
=========== ===========
Basic and diluted loss per share:
Loss before cumulative effect of change in
accounting principle $(0.18) $(0.26)
Cumulative effect of change in accounting
principle -- (0.42)
----------- -----------
Basic and diluted loss per share $(0.18) $(0.68)
=========== ===========
Shares used in calculation of loss per
share:
Basic and diluted 37,029 35,364
=========== ===========
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