Bitstream Inc. Reports First Quarter Results.Business/Technology Editors CAMBRIDGE, Mass.--(BUSINESS WIRE)--May 3, 2001 Bitstream Inc. (Nasdaq: BITS) today reported that the net loss for the three months ended March 31, 2001 increased $274,000 or 28% to $(1,258,000), compared to a net loss of $(984,000) for the three months ended March 31, 2000. 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 $(0.16) for the three months ended March 31, 2001 versus basic and diluted net loss per share of $(0.13) for the three months ended March 31, 2000. Despite this net loss, the Company minimized the cash used in operations during the quarter. As a result, its cash and cash equivalent balance decreased by only $225,000 to $6,924,000 at March 31, 2001 as compared to $7,149,000 at December 31, 2000. Included in the $225,000 of cash used during the quarter was $150,000 for an additional equity investment in DiamondSoft, Inc., a California corporation primarily engaged in the business of developing, marketing and distributing software tools to a variety of professional markets. The Company made its initial equity investment of $500,000 in DiamondSoft in March 1998. Revenues for the three months ended March 31, 2001 were $1,628,000 compared to $2,182,000 for the three months ended March 31, 2000, a decrease of $554,000 or 25%. This revenue shortfall Shortfall The amount by which the capital required to fulfill a financial obligation exceeds available capital. Notes: Shortfall risk is often combated with an efficient hedging strategy created by a fund, group, institution, or individual. was primarily due to a decrease in type and technology revenues. This decrease was a result of the softening softening /sof·ten·ing/ (sof´en-ing) malacia. softening a change of consistency, with loss of firmness or hardness. of the market for high technology products in general and increased concern over future economic conditions, which caused 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. development expenses until later in 2001. In addition, we changed our revenue model such that we charge lower upfront access fees and higher shipment royalties instead of larger upfront access fees and smaller shipment royalties. Although this resulted in lower revenue at time of contract signing, we expect to benefit from potentially larger royalties in future quarters. 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. and cost of revenues for the three months ended March 31, 2001 decreased $420,000 or 13% to $2,849,000 for the three months ended March 31, 2001 as compared to $3,269,000 for the three months ended March 31, 2000. This reduction was a result of management's overall decision to reduce expenses in an effort to minimize cash burn for the quarter due to concern over economic conditions during the quarter. Bitstream is composed of three different businesses: (1) its type and technology business whose primary revenues are 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 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 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 establish 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 The Company's type and technology business segment incurred an 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 the three months ended March 31, 2001 of $(147,000) versus an 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. for the three months ended March 31, 2000 of $ 290,000. This decrease was primarily a result of a decrease in revenue for the quarter offset by the decrease in operating expenses. Expenses, including cost of revenues, for the three months ended March 31, 2001 as compared to the three months ended March 31, 2000 decreased $152,000 or 11% from $1,418,000 to $1,266,000, respectively. Type and technology revenues for the three months ended March 31, 2001 were $1,119,000 compared to $1,708,000 for the three months ended March 31, 2000, a decrease of $589,000 or 34%. As mentioned above, this decrease was a result of the softening of the market for high technology products in general and increased concern over future economic conditions which resulted in customers deciding to defer expenses for future development until later in 2001. "During the first quarter of 2001, the type and technology business experienced a difficult quarter due to poor economic conditions affecting a number of our 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 customers, which resulted in weaker than anticipated demand for their products, especially in new and emerging markets," said Anna M. Chagnon, President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . "In response to this performance, the Company's management has taken, and will continue to take, proactive measures In antiterrorism, measures taken in the preventive stage of antiterrorism designed to harden targets and detect actions before they occur. to reduce our expenses overall and manage cash burn while we wait for these emerging markets to grow." MyFonts.com Results Revenue from the Company's MyFonts.com segment increased by 61% or $39,0000 to $103,000 as compared to $64,000 for the three months ended December 31, 2000, and by 7% or $7,000 as compared to $96,000 for the year ended December 31, 2000. Revenues attributable to this segment after the inter-company elimination of royalties due on the resale resale n. selling again, particularly at retail. In many states a "resale license" or "resale number" is required so that the state can monitor the collection of sales tax on retail sales. RESALE. of Bitstream products were $80,000 for the three months ended March 31, 2001. Loss from operations for the MyFonts.com business increased $42,000 or 39% to $(151,000) during the three months ended March 31, 2001 from $(109,000) during the three months ended March 31, 2000. Operating expenses for the three months ended March 31, 2001 increased $59,000 or 54% to $168,000 from $109,000 during the three months ended March 31, 2000. "We are excited that MyFonts.com's revenue for the first quarter of 2001 exceeded by 61% the revenue for MyFonts.com for Q4 2000 and by 7% the revenue for all of last year, its first year of operation," said Charles Ying, Chief Executive Officer. "In addition to growing MyFonts.com revenues through advertising and marketing promotions, we recently launched a new online store for Bitstream that uses MyFonts.com's e-commerce and search engine technology as the back-end programming for the site. As a result, MyFonts.com will receive the standard twenty percent (20%) fee for font sales on Bitstream's web site, which was previously being paid to a third party e-commerce company." Pageflex Results Pageflex's operating loss decreased by $345,000 or 27% to $(923,000) for the three months ended March 31, 2001, from $(1,268,000) for the three months ended March 31, 2000. Expenses, including cost of revenues, for the three months ended March 31, 2001 as compared to the three months ended March 31, 2000 decreased $390,000 or 22% from $1,742,000 to $1,352,000, respectively. The decrease in loss from operations was primarily due to the decrease in expenses. Revenues from licensing of Pageflex software increased by $61,000 or 32% to $249,000 for the three months ended March 31, 2001 as compared $188,000 for the three months ended March 31, 2000. Overall revenues from the Company's Pageflex business decreased $45,000 or 9% to $429,000 for the three months ended March 31, 2001 as compared to $474,000 for the three months ended March 31, 2000 primarily as a result of a decreased emphasis on consulting revenues, and specifically due to a license agreement entered into 1999, offset by the increase in license revenues. As a result of this decreased emphasis on consulting, Pageflex's gross margin increased 19% or $59,000 to $369,000 for the three months ended March 31, 2001 from $310,000 for the three months ended March 31, 2000. "During the first quarter, we continued to focus on growing license revenue for Pageflex by signing up a number of new subscription-based customers for Mpower," said Sang Lee, Vice President of Sales & Marketing for Pageflex. "In addition, we continued to focus on solidifying so·lid·i·fy v. so·lid·i·fied, so·lid·i·fy·ing, so·lid·i·fies v.tr. 1. To make solid, compact, or hard. 2. To make strong or united. v.intr. our distribution relationships with both Xerox Corporation (company) XEROX Corporation - http://xerox.com/. See also XEROX PARC, XEROX Network Services. and Electronics For Imaging, Inc. to serve as a catalyst for sales of Pageflex products in late 2001 and beyond." On Thursday, May 3, 2001, at 4:00 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 year-end results. Interested participants should call Please call 1-866-563-6300 (US and Canada only) or 303-563-6300 (outside US and Canada) and enter telemarketing telemarketing, the practice of selling goods or services to customers by means of the telephone or of surveying consumer preferences in telephone conversations. room number *6175208619* (Note: the star key must be pressed before and after the room number) no sooner than five minutes before the call begins. We will also be webcasting the call at http://bitstream.webex.com. If you are interested in joining the webcast, please go to http://bitstream.webex.com at the start of the call, click "Join a Meeting" and click on the Q1 2001 Earnings Release Conference Call. 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, 2000. Bitstream Inc. 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, WebFont, and 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. technologies to Web and application developers, and to manufacturers of Internet appliances, wireless devices, set-top boxes 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. , 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. , printers, and personal digital assistants. Pageflex, Inc. Pageflex, Inc. (www.pageflexinc.com), develops, markets, and supports on-demand document composition solutions and related technology. Its products include Mpower(TM), a variable data enterprise solution, and 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. (TM), a variable data 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. 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(TM) 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, www.bitstream.com). MyFonts.com MyFonts.com, Inc., a venture funded by Bitstream Inc. (NASDAQ: BITS) 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 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 font experts. For more information, visit http://www.myfonts.com, the Web site for finding, trying, and buying fonts on line. 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)
Three Months Ended
(Unaudited)
March 31,
2001 2000
Revenues
Software licenses $ 1,296 $ 1,743
Services 332 439
Total revenues 1,628 2,182
Cost of revenues
Software licenses 200 145
Services 84 257
Total cost of revenues 284 402
Gross profit 1,344 1,780
Operating expenses
Selling and marketing 825 980
Research and development 1,328 1,288
General and administrative 412 599
Total operating expenses 2,565 2,867
Loss from operations (1,221) (1,087)
Other income (expense):
Income (loss) on investment
in DiamondSoft, Inc. (75) 8
Other income, net 87 115
Loss before income Taxes (1,209) (964)
Provision for income taxes 49 20
Net loss $(1,258) $ (984)
Net loss per share:
Basic and diluted $ (0.16) $ (0.13)
Weighted average shares
outstanding:
Basic and diluted 7,947 7,590
Bitstream Inc.
Consolidated Balance Sheets
(In Thousands)
March 31, December 31,
2001 2000
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 6,924 $ 7,149
Accounts receivable, net 1,213 2,043
Prepaid expenses and other
current assets 204 198
Total current assets 8,341 9,390
Property and equipment, net 604 636
Restricted cash 300 300
Goodwill, net 1,078 1,196
Investment in DiamondSoft, Inc. 524 449
Other assets 175 136
------- -------
2,077 2,081
Total assets $11,022 $12,107
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 237 $ 261
Accrued expenses 1,314 1,287
Deferred revenue 558 471
Total current liabilities 2,109 2,019
Long-term deferred revenue 19 39
Total liabilities 2,128 2,058
Total stockholders' equity 8,894 10,049
Total liabilities and
Stockholders' equity $11,022 $12,107
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