BSQUARE Reports Second 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)--July 25, 2002 BSQUARE Corporation (Nasdaq:BSQR) today reported second quarter revenue and cash-based loss per share. Revenue for the quarter ended June June: see month. 30, 2002 was $9.5 million compared to $8.7 million in the prior quarter and $18.2 million in the second quarter of 2001. Product revenue of $4.4 million for the quarter approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. doubled from $2.3 million in the second quarter of 2001, reflecting an additional $2.5 million 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. licensing revenue from former customers of a competing vendor who exited the market during the quarter. The net loss for the second quarter of 2002 was $12.7 million ($0.35 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), compared to a net loss of $9.2 million ($0.26 per diluted share) in the prior quarter and net income of $461,000 ($.01 per diluted share) in the second quarter of 2001. The net loss included a charge of $2.2 million ($0.06 per share) for a tax provision related to a valuation allowance that was booked against the company's remaining net deferred tax assets. The cash-based loss for the second quarter of 2002 was $10.2 million ($0.28 per diluted share) compared to a cash-based loss of $4.9 million ($0.14 per share) in the first quarter of 2002 and cash-based earnings of $1.9 million ($0.05 per diluted share) in the second quarter a year ago. The cash-based loss also included a charge of $2.2 million ($0.06 per diluted share) for taxes as mentioned above. "During the quarter, BSQUARE continued to face challenging market conditions," said Bill Baxter
William Robert Baxter (born November 3, 1946) is a former Australian politician and the current Victorian State President of The Nationals. , president and chief executive officer of BSQUARE. "As we announced on July July: see month. 17, we are currently in the midst Adv. 1. in the midst - the middle or central part or point; "in the midst of the forest"; "could he walk out in the midst of his piece?" midmost of consolidating operations, realigning our business initiatives with our core strategies, and downsizing (1) Converting mainframe and mini-based systems to client/server LANs. (2) To reduce equipment and associated costs by switching to a less-expensive system. (jargon) downsizing the company to pre-IPO pre-IPO An offering of a company's shares prior to the firm's initial public offering. Investing in a pre-IPO tends to be very risky, in part because the planned IPO may never take place. levels. Given the likelihood that business conditions will remain difficult for the next few quarters, our goal is to bring our cost structure in line with current revenue levels and return to profitability as soon as possible without compromising the company's competitiveness or its ability to be innovative. Correspondingly, we will focus our resources on maintaining and expanding our technical expertise in three core areas: mobile device development, mobile device management and sophisticated integration of the hardware and software for smart devices." 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. , the company is taking steps to improve the effectiveness of its operations by strategically realigning its sales and engineering organizations, focusing only on major markets with the strongest growth potential. In the near term, he said the company plans to concentrate its sales and marketing efforts on leveraging recent wins. "Our success in capturing additional Microsoft licensing business during the quarter has enlarged our customer base and created new opportunities for the sale of other products and services into those accounts," added Baxter. "In addition, our SmartBuild Solution Suite is beginning to gain traction Traction Definition Traction is the use of a pulling force to treat muscle and skeleton disorders. Purpose Traction is usually applied to the arms and legs, the neck, the backbone, or the pelvis. with developers of wireless products and represents another opportunity for near-term near-term adj. Of, for, or involving a short period of time in the near future. growth. 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. selected SmartBuild to develop software components for its EVr-8401 Enhanced TV Enhanced TV (ETV) is one example of interactive TV. It is used in particular in reference to Two-Screen Solutions TV + PC services. Generally users of these ETV services have their TV and computer in the same room, and navigate their web browser to a particular program-specific Web Viewer A program that displays the contents of an electronic (digital) file. Viewers may be stand-alone programs or components within a larger program. They are widely used to display images downloaded from BBSs, online services and the Internet. , a handheld handheld: see personal digital assistant. , color, touch-screen touch-screen n (COMPUT) → touch-screen m inv; schermo sensibile device that connects wirelessly to any cable modem cable modem Modem used to convert analog data signals to digital form and vise versa, for transmission or receipt over cable television lines, especially for connecting to the Internet. . As one of the first devices being developed with 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, this product demonstrates the capabilities of BSQUARE's expertise through SmartBuild." Baxter pointed out that in the face of the operational challenges confronting it, the company remains financially sound, with over $53 million in cash and cash equivalents at quarter-end 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. . "I believe the company's solid balance sheet and the corrective actions A corrective action is a change implemented to address a weakness identified in a management system. Normally corrective actions are instigated in response to a customer complaint, abnormal levels if internal nonconformity, nonconformities identified during an internal audit or we have initiated this quarter will enable us to persevere per·se·vere intr.v. per·se·vered, per·se·ver·ing, per·se·veres To persist in or remain constant to a purpose, idea, or task in the face of obstacles or discouragement. through these difficult economic times," Baxter said. Baxter added that he expects revenue for the third quarter of 2002 to be essentially flat, in a range of $8.5 million to $10 million, with a cash-based loss between $0.19 and $0.24 per share. Conference Call Management will host the conference call today, Thursday Thursday: see week. , July 25, 2002, at 2:00 PM Pacific Daylight For other uses, see Daylight (disambiguation). Daylight or the light of day is the combination of all direct and indirect sunlight outdoors during the daytime (and perhaps twilight). Time. To access the call, please dial 706/634-1118 and reference BSQUARE or confirmation # 4785701. The call may also be accessed by web cast at www.BSQUARE.com in the investor relations Investor relations The process by which the corporation communicates with its investors. section. A web cast replay will be available for 7 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 # 4785701. 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 suites include 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. 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," "estimate," "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 adverse changes in BSQUARE's relationship with Microsoft, a decline in the market for Windows CE-based smart devices or the failure of such market to develop as anticipated, delays in product development by new and existing customers, risks associated with fixed-fee contracts, competition and intellectual property risks. A more detailed description of risk factors 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, except share amounts)
June 30, December 31,
2002 2001
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 25,894 $ 30,303
Short-term investments 27,628 39,408
Accounts receivable, net 7,986 8,833
Income tax receivable 2,455 1,469
Deferred income tax asset -- 5,792
Prepaid expenses and other
current assets 3,551 2,840
---------- ----------
Total current assets 67,514 88,645
Furniture, equipment and leasehold
improvements, net 6,948 6,509
Investments 1,874 2,319
Intangible assets, net 22,581 17,569
Deposits and other assets 882 624
---------- ----------
Total assets $ 99,799 $ 115,666
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,683 $ 435
Accrued compensation 3,374 3,570
Accrued restructuring costs 4,390 4,534
Accrued expenses 4,161 4,291
Deferred income taxes -- 1,071
Deferred revenue 2,111 2,944
--------- ----------
Total current
liabilities 15,719 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,
36,718,377 shares issued and outstanding as of June
30, 2002 and 34,875,585 shares issued and outstanding
as of December 31, 2001 117,266 111,459
Deferred stock option compensation (229) (121)
Cumulative foreign currency
translation adjustment (361) (513)
Accumulated other comprehensive
loss, net of tax -- (1,367)
Retained earnings (deficit) (32,596) (10,637)
--------- --------
Total shareholders'
equity 84,080 98,821
--------- --------
Total liabilities and
shareholders'
equity $ 99,799 $ 115,666
========= ==========
BSQUARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share amounts)
Three Months Six Months
Ended June 30, Ended June 30,
2002 2001 2002 2001
(unaudited)
Revenue:
Service $ 5,141 $ 15,901 $ 11,148 $ 32,434
Product 4,379 2,318 7,068 4,413
------- -------- -------- --------
Total revenue 9,520 18,219 18,216 36,847
------- -------- -------- --------
Cost of revenue:
Service 4,551 8,417 8,935 16,631
Product 3,169 415 4,220 816
------- -------- -------- --------
Total cost
of revenue 7,720 8,832 13,155 17,447
------- -------- -------- --------
Gross profit 1,800 9,387 5,061 19,400
------- -------- -------- --------
Operating expenses:
Research and
development 5,012 2,696 9,154 5,741
Selling, general
and administrative 5,309 5,434 9,866 10,081
Acquired in-process
research and
development -- -- 1,698 --
Amortization of
intangible assets 688 1,415 1,109 2,770
Restructuring charge -- -- 2,205 --
Amortization of deferred
stock option
compensation 23 48 60 117
------- -------- -------- --------
Total operating
expenses 11,032 9,593 24,092 18,709
------- -------- -------- --------
Income (loss)
from operations (9,232) (206) (19,031) 691
Other income (expense), net:
Investment income,
net 400 798 935 1,362
Other income
(expense) (1,759) -- (1,759) --
------- -------- -------- --------
-
Income (loss) before
income taxes (10,591) 592 (19,855) 2,053
Provision for income
taxes 2,153 131 2,124 762
------- -------- -------- --------
Net income
(loss) $ (12,744) $ 461 $ (21,979) $ 1,291
========= ======== ========== ========
Basic earnings (loss)
per share $ (0.35) $ 0.01 $ (0.61) $ 0.04
========= ======== ========== ========
Weighted average shares
outstanding used to
compute basic earnings
(loss) per share 36,572 34,190 35,972 34,097
========= ======== ========== ========
Diluted earnings (loss)
per share $ (0.35) $ 0.01 $ (0.61) $ 0.04
========= ======== ========== ========
Weighted average shares
outstanding used to
compute diluted earnings
(loss) per share 36,572 35,615 35,972 35,523
========= ======== ========== ========
Reconciliation of net income (loss) per share from operations to
cash-based earnings per share:
Net income (loss) per
diluted share $ (0.35) $ 0.01 $ (0.61) $ 0.04
Acquired in-process
research and
development -- -- 0.05 --
Amortization of
intangible assets 0.02 0.04 0.03 0.08
Revaluation of
investments 0.05 -- 0.05 --
Restructuring charge -- -- 0.06 --
Amortization of deferred
stock option compensation,
net of tax effect -- -- -- --
-------- -------- -------- -------
Cash-based earnings (loss)
per share $(0.28) $ 0.05 $ (0.42) $ 0.12
===== ===== ===== =====
Net income (loss) $(12,744) $ 461 $ (21,979) $ 1,291
Acquired in-process
research and
development -- -- 1,698 --
Amortization of
intangible assets 688 1,415 1,109 2,770
Revaluation of
investments 1,813 -- 1,813 --
Restructuring charge -- -- 2,205 --
Amortization of deferred
stock option compensation,
net of tax effect 23 48 60 117
-------- -------- -------- -------
Cash-based net
income (loss) $ (10,220) $ 1,924 $ (15,094) $ 4,178
========== ========= ========= ========
Weighted average shares
outstanding to compute
cash-based earnings
per share 36,572 35,615 35,972 35,523
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