BSQUARE Reports Fourth Quarter Results In Line With Revised Guidance.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. 24, 2002 In line with revised guidance issued on January January: see month. 8, 2002, BSQUARE Corporation (Nasdaq: BSQR) today reported fourth quarter 2001 revenue of $10.5 million with a cash-based loss of $(2.9) million, or $(0.08) per share, and a net loss of $(5.8) million, or $(0.17) per share. In the fourth quarter of 2000, the company reported revenue of $17.9 million with cash-based earnings of $2.5 million, or $0.07 per 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. share, and net income of $962,000, or $0.03 per diluted share. For the year ended December December: see month. 31, 2001, the company reported revenue of $61.9 million, compared to $63.5 million in 2000. Cash-based net income for 2001 was $1.4 million, or $0.04 per diluted share, compared to $8.8 million, or $0.25 per diluted share, in the prior year. The company reported a net loss of $(10.3) million, or $(0.30) per share, in 2001, compared to net income of $734,000, or $0.02 per share, in 2000. Continuing reduction in the level of services BSQUARE provides to 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. along with continued weakness in technology spending were primarily responsible for the revenue slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in the second half of 2001. Additionally, general economic weakness caused several customers to defer de·fer 1 v. de·ferred, de·fer·ring, de·fers v.tr. 1. To put off; postpone. 2. To postpone the induction of (one eligible for the military draft). v.intr. the start of new projects. These factors were partially offset by increased sales to original equipment manufacturers (OEMs) and a 28 percent increase in product revenue for the year. OEMs now represent 40 percent of BSQUARE's revenue compared to 31 percent in 2000. Product revenue reached $8.1 million, or 13 percent of total revenue, for 2001, compared to $6.3 million, or 10 percent of total revenue, for 2000. During the fourth quarter of 2001, revenue from Microsoft continued to decline as expected following revisions to the Microsoft Master Agreement in July July: see month. 2001. The percent of revenue from Microsoft totaled 40 percent for 2001 compared to 58 percent in the prior year and 39 percent in the fourth quarter of 2001 compared to 50 percent in the fourth quarter a year ago. "We are encouraged by the diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. of our revenue mix," said William Baxter William Baxter may refer to:
In order to bring expenses in line with the company's lowered revenue expectations, BSQUARE announced a 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). on January 8, 2002. "Given the prospect of a prolonged pro·long tr.v. pro·longed, pro·long·ing, pro·longs 1. To lengthen in duration; protract. 2. To lengthen in extent. economic slump Slump A temporary fall in performance, often describing consistently falling security prices for several weeks or months. and its likely impact on our ability to generate significant revenue growth in the near term, we took immediate action to reduce our expense run-rate," said Leila Kirske, CFO See Chief Financial Officer. . Following a 20 percent reduction in headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. , which included the closure of the company's Minnesota Minnesota, state, United States Minnesota (mĭn'ĭsō`tə), upper midwestern state of the United States. It is bordered by Lake Superior and Wisconsin (E), Iowa (S), South Dakota and North Dakota (W), and the Canadian provinces facility, Kirske said BSQUARE expects to realize annual savings of $8 - $10 million. "We are confident that our strong balance sheet -- with almost $70 million in cash and equivalents and no long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. -- will help us weather the 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. market weakness." At December 31, 2001 BSQUARE had $2.00 per share in cash and equivalents and a $2.83 per share book value. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Baxter Bax´ter n. 1. A baker; originally, a female baker. , BSQUARE remains well positioned in the growing smart device industry, with a comprehensive suite of industry-leading products and services and a renewed emphasis on selling those products into the market through direct and indirect channels. "Although the latter half of 2001 was difficult, we achieved many of the goals we set for the company during the year," Baxter said. "On the product development front, we reinforced our four-pronged Adj. 1. four-pronged - having four prongs divided - separated into parts or pieces; "opinions are divided" platform for smart devices through the advancement of our server solutions, device solutions, communications technologies Noun 1. communications technology - the activity of designing and constructing and maintaining communication systems engineering, technology - the practical application of science to commerce or industry and development tools. Equally important, we have refocused our marketing and sales efforts on expanding our international business, developing new OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and channels and winning major new accounts for our products and services. As a result, I believe we have positioned the company for success as the general economic climate improves and technology spending rebounds." "Along with our focus on generating new sources of revenue, we remain firmly committed to investing in research and development. In the fourth quarter of 2001, R&D expenses totaled $4.0 million, a 32 percent increase over the third quarter of 2001 due to the redeployment re·de·ploy tr.v. re·de·ployed, re·de·ploy·ing, re·de·ploys 1. To move (military forces) from one combat zone to another. 2. of engineers from the Microsoft account. Following our recent cost containment cost containment, n the features of a dental benefits program or of the administration of the program designed to reduce or eliminate certain charges to the plan. actions, we anticipate that R&D spending will return to pre-fourth quarter levels, still higher than the industry average as a percentage of revenue but at a level that we believe will enable us to achieve a return to profitability in the fourth quarter of 2002," Baxter said. Given the challenging business environment and expected further decline in revenue from Microsoft, the company has set a revenue target in the range of $9.0 million to $10.0 million for the first quarter of 2002, with an expected loss in the range of $(0.10) to $(0.15) per share. For the full year of 2002, management believes that revenue will be between $50 million to $60 million. Conference Call Management will host a conference call today, January 24, 2002, at 2:00 PM Pacific Standard Time. To access the call, please dial 706/634-1118 and reference BSQUARE or confirmation code 2851330. The call may also be accessed at www.BSQUARE.com in the investor relations Investor relations The process by which the corporation communicates with its investors. section. Telephonic and webcast replays of the call will be available later in the day. To access the telephonic replay, please dial 706/645-9291 and reference confirmation code 2851330. The telephonic replay will be available for three days following the call, and the webcast replay will be available for seven days following the call. About BSQUARE BSQUARE Corporation is a global leader in providing solutions for smart devices in consumer, enterprise, industrial, and automotive markets. As a leading Windows Embedded Inserted into. See embedded system. Partner of Microsoft, BSQUARE empowers the creation, connection, and management of Windows Embedded-powered smart devices through software, hardware, and service solutions. BSQUARE has an extensive product portfolio of software development and quality assurance tools, device and device management software and complete end-to-end end-to-end a pattern of anastomosis in which severed ends are matched and united, in contrast with other patterns such as end-to-side or side-to-side. Usually applied to anastomosis of the intestine. managed device solutions. BSQUARE provides critical engineering services including device development, quality assurance, and system integration as well as services for managing client devices deployed into the market. For more information, visit BSQUARE at www.bsquare.com or call 888/820-4500. BSQUARE is a registered trademark of BSQUARE Corporation. All names, product names, and tradenames are trademarks or registered trademarks of their respective holders. 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. relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc our sales that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. 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. . These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Factors that could affect BSQUARE's actual results include the effect of changing economic conditions, the ability to control costs and expenses, a decline in the market for Windows-based intelligent computing computing - computer devices or the failure of such market to develop as anticipated, the failure of BSQUARE to attract microprocessor microprocessor, integrated circuit containing the arithmetic, logic, and control circuitry required to interpret and execute instructions from a computer program. vendors and to secure contracts on sufficiently profitable terms, BSQUARE's ability to complete work under contract, 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 Quarterly Report on Form 10-Q Form 10-Q See 10-Q. , 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: " 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. BSQUARE undertakes 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)
Dec. 31, Dec. 31,
2001 2000
--------- ---------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 30,303 $ 39,566
Short-term investments 39,408 32,785
Accounts receivable, net 8,833 12,617
Income taxes receivable 4,014 1,814
Deferred income tax asset 2,176 1,945
Prepaid expenses and other
current assets 2,840 1,395
--------- ---------
Total current assets 87,574 90,122
Furniture, equipment and leasehold
improvements, net 6,509 5,640
Intangible assets, net 17,569 20,956
Investments 2,319 4,628
Deposits and other assets 624 916
--------- ---------
Total assets $ 114,595 $ 122,262
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 435 $ 725
Accrued expenses 12,395 9,185
Deferred revenue 2,944 3,652
--------- ---------
Total current liabilities 15,774 13,562
--------- ---------
Long-term debt -- 353
--------- ---------
Shareholders' equity:
Common stock 111,459 109,268
Deferred stock option compensation (121) (314)
Cumulative foreign currency
translation adjustment (513) (254)
Accumulated other comprehensive loss (1,367) --
Accumulated deficit (10,637) (353)
--------- ---------
Total shareholders' equity 98,821 108,347
--------- ---------
Total liabilities and
shareholders' equity $ 114,595 $ 122,262
========= =========
BSQUARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Year
Ended December 31, Ended December 31,
-------------------- --------------------
2001 2000 2001 2000
-------- -------- -------- --------
(unaudited)
Revenue:
Service $ 9,008 $ 15,766 $ 53,775 $ 57,196
Product 1,491 2,103 8,077 6,306
-------- -------- -------- --------
Total revenue 10,499 17,869 61,852 63,502
-------- -------- -------- --------
Cost of revenue:
Service 6,515 7,681 30,556 28,195
Product 684 544 2,126 1,591
-------- -------- -------- --------
Total cost of revenue 7,199 8,225 32,682 29,786
-------- -------- -------- --------
Gross profit 3,300 9,644 29,170 33,716
-------- -------- -------- --------
Operating expenses:
Research and development 3,998 2,596 12,761 9,259
Selling, general and
administrative 4,602 4,431 19,048 16,675
Acquired in-process
research and development -- -- -- 4,100
Amortization of
intangible assets 2,822 1,459 7,081 2,920
Restructuring charge -- -- 6,707 --
Amortization of
deferred stock option
compensation 38 107 193 554
-------- -------- -------- --------
Total operating
expenses 11,460 8,593 45,790 33,508
-------- -------- -------- --------
Income (loss) from
operations (8,160) 1,051 (16,620) 208
Other income (expense), net:
Investment income, net 574 621 2,657 3,282
Acquisition related
expenses -- -- -- (620)
-------- -------- -------- --------
Income before income
taxes (7,586) 1,672 (13,963) 2,870
Provision for income
taxes (1,805) 710 (3,679) 2,136
-------- -------- -------- --------
Net income (loss) $ (5,781) $ 962 $(10,284) $ 734
======== ======== ======== ========
Basic earnings (loss)
per share $ (0.17) $ 0.03 $ (0.30) $ 0.02
======== ======== ======== ========
Weighted average shares
outstanding used to
compute basic earnings
(loss) per share 34,672 33,847 34,314 33,275
======== ======== ======== ========
Diluted earnings (loss)
per share $ (0.17) $ 0.03 $ (0.30) $ 0.02
======== ======== ======== ========
Weighted average shares
outstanding used to
compute diluted earnings
(loss) per share 34,672 35,946 34,314 35,932
======== ======== ======== ========
Reconciliation of net
income (loss) per share
to cash-based
earnings per share:
Net income (loss) per
diluted share: $ (0.17) $ 0.03 $ (0.30) $ 0.02
Acquired in-process
research and development -- -- -- 0.11
Acquisition related
expenses, net of tax
effect -- -- -- 0.02
Amortization of
intangible assets 0.09 0.04 0.20 0.08
Restructuring charge -- -- 0.13 --
Amortization of
deferred stock option
compensation -- -- 0.01 0.02
-------- -------- -------- --------
Cash-based earnings per
share $ (0.08) $ 0.07 $ 0.04 $ 0.25
======== ======== ======== ========
Net income (loss) $ (5,781) $ 962 $(10,284) $ 734
Acquired in-process
research and
development -- -- -- 4,100
Acquisition related
expenses, net of tax
effect -- -- -- 515
Amortization of
intangible assets 2,822 1,459 7,081 2,920
Restructuring charge,
net of tax effect -- -- 4,360 --
Amortization of
deferred stock option
compensation 38 107 193 554
-------- -------- -------- --------
Cash-based net income $ (2,921) $ 2,528 $ 1,350 $ 8,823
======== ======== ======== ========
Weighted average shares
outstanding used to
compute cash-based
earnings per share 34,672 35,946 35,974 35,932
======== ======== ======== ========
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