Bitstream Inc. Reports Fourth Quarter and Annual 2004 Results.CAMBRIDGE Cambridge, city, Canada Cambridge (kām`brĭj), city (1991 pop. 92,772), S Ont., Canada, on the Grand River, NW of Hamilton. It was formed in 1973 with the amalgamation of Galt, Hespeler, and Preston, all founded in the early 19th cent. , Mass. -- As a result of an increase in quarterly revenue of $684,000 or 26% to $3,323,000, the Company's highest fourth quarter revenue level since 1997, the Company generated an operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. for the fourth quarter of $22,000 and achieved a $152,000 positive cash flow resulting in positive cash flow of $38,000 for the year ended December December: see month. 31, 2004 Bitstream The transmission, or flow, of binary data (bits). Inc. (Nasdaq: BITS) today reported that its total revenue increased $684,000 or 26% to $3,323,000 for the three months ended December 31, 2004 as compared to $2,639,000 for the three months ended December 31, 2003. Total revenue for the twelve months ended December 31, 2004 increased $1,906,000 or 20% to $11,632,000 as compared to $9,726,000 for the twelve months ended December 31, 2003. The Company generated a profit from operations of $22,000 for the three months ended December 31, 2004, an improvement of $256,000 as compared to a loss of $(234,000) for the three months ended December 31, 2003. The Company's 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 year ended December 31, 2004 decreased $1,032,000 or 58% to $(735,000) from $(1,767,000) for the year ended December 31, 2003. The Company's net income for the three months ended December 31, 2004 improved $269,000 to $40,000 as compared to a loss of $(229,000) for the three months ended December 31, 2003. The Company's net loss for the year ended December 31, 2004 decreased $590,000 or 49% to $(615,000) from $(1,205,000) for the year ended December 31, 2003. The Company's cash and cash equivalents at December 31, 2004 totaled $4,405,000, an increase of $152,000 from $4,253,000 at September September: see month. 30, 2004 and an increase of $38,000 from $4,367,000 at December 31, 2003. "Driven by increased market demand across all of our product lines, we achieved our highest fourth quarter and annual revenue levels since 1997 during 2004. We are very pleased with our performance for the quarter and year ended December 31, 2004 which resulted in a profit for the quarter and a significant reduction in our operating loss for the 2004 year of $1,032,000 or 58% to $(735,000) as compared to the year ended December 31, 2003." said Anna M. Chagnon, President and Chief Executive Officer. "The increase in revenue helped the Company to be cash flow positive for the quarter and the year ended December 31, 2004 while we continued to invest in the research and development of our technologies." FOURTH QUARTER 2004 HIGHLIGHTS AND OTHER RECENT DEVELOPMENTS --During the fourth quarter, approximately 8,500 new users downloaded and set up accounts for our ThunderHawk Thunderhawk may refer to:
Software that allows a computer user to find and view information on the Internet. The first text-based browser for the World Wide Web became available in 1991; Web use expanded rapidly after the release in 1993 of a browser called Mosaic, which used bringing the total number of ThunderHawk accounts established to more than 59,500 as of December 31, 2004. --During the fourth quarter of 2004, the Company licensed its 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. technology and fonts to approximately 43 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, including major manufacturers in each of the gaming software, digital television, and consumer electronics industries. These placements are a result of our focus on expanding our customer base and commercial applications for our font and font rendering See render. (graphics, text) rendering - The conversion of a high-level object-based description into a graphical image for display. For example, ray-tracing takes a mathematical model of a three-dimensional object or scene and converts it into a bitmap image. technologies to a wider variety of customers and commercial applications. --Over 18,000 users registered during the fourth quarter on the Company's font-related Web site bringing the total registered users as of December 31, 2004 to over 220,000. Over 45% of the orders placed on the Web site during the fourth quarter were submitted by users who had previously made purchases. --On October October: see month. 11, 2004, the Company announced at Graph Expo the release of Mpower 4.5, featuring integrated HTML HTML in full HyperText Markup Language Markup language derived from SGML that is used to prepare hypertext documents. Relatively easy for nonprogrammers to master, HTML is the language used for documents on the World Wide Web. output capabilities for personalized per·son·al·ize tr.v. per·son·al·ized, per·son·al·iz·ing, per·son·al·iz·es 1. To take (a general remark or characterization) in a personal manner. 2. To attribute human or personal qualities to; personify. email campaigns and personalized Web microsites. The fact that you can utilize one set of variable definitions for print, email, and microsites, makes this feature set especially powerful for coordinated print, email and Web direct marketing and cross-media publishing. --On October 18, 2004, the Company announced the launch of a custom Direct Marketing portal for a leading health education services provider, developed and hosted by DMM See multimeter. DMM - Digital Multimeter (www.thinkdmm.com), a leader in direct marketing services, and powered by Pageflex Storefront. The new portal enables staff at HMOs who have signed up for the service to order customized and personalized print materials to support their health education and marketing initiatives. --On October 19, 2004 the Company announced that in 2004 it had added over 5,000 new fonts and 30 new foundries to the growing collection available at its Web site www.myfonts MyFonts is a distributor of digital fonts, based in Cambridge, MA, selling fonts through the www.myfonts.com web site. It launched in September 1999 (during the ATypI conference in Boston), and started selling fonts in March 2000. .com. With the addition of these new fonts, MyFonts expanded its listings to over 36,000 fonts from over 150 font foundries worldwide. --On December 8, 2004, the Company announced that the U.S. Patent and Trademark Office had awarded a patent for Mpower's flexible template (1) A pre-designed document or data file formatted for common purposes such as a fax, invoice or business letter. If the document contains an automated process, such as a word processing macro or spreadsheet formula, then the programming is already written and embedded in the technology. This template technology enables a document layout to "flex," accommodating variable content within sophisticated designer-specified guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. . --On December 13, 2004, the Company announced an agreement with NexPress Solutions, Inc., a Kodak (company) Kodak - The photographic company responsible for Photo CD. http://kodak.com/. company, under which the Company's variable data publishing The introduction to this article provides insufficient context for those unfamiliar with the subject matter. Please help [ improve the introduction] to meet Wikipedia's layout standards. You can discuss the issue on the talk page. technology will be available to NexPress customers and prospects. --On January January: see month. 10, 2005, the Company announced an agreement with ICED (www.iced.net), the International Center for Entrepreneurial en·tre·pre·neur n. A person who organizes, operates, and assumes the risk for a business venture. [French, from Old French, from entreprendre, to undertake; see enterprise. Development, that will bring Pageflex Storefront, with its un-matched document customization and online ordering capabilities, to leading centers among its franchise network, which includes Kwik Kopy Printing, American Wholesale Thermographers, Copy Club, The Ink Well, Franklin's Printing, and Kwik Kopy Business Centers. --The Company announced that it had sold its 1,000,000th font from its font-related Web site on January 17, 2005. --On January 18, 2005, the Company announced the release of Pageflex Storefront 2.0, expanding the workflow The automatic routing of documents to the users responsible for working on them. Workflow is concerned with providing the information required to support each step of the business cycle. capabilities for online document customization storefronts with new features including enhanced user and group privilege definition, email notifications, automated au·to·mate v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. order processing, and user-controlled download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and pick-up of final output. 2005 OUTLOOK "During 2004, we remained focused on increasing revenue on a consolidated basis and we achieved our goals. We increased revenue by approximately $1,906,000 or 20% from the prior year and we achieved profitability in the fourth quarter of the year," said Anna M. Chagnon, President and Chief Executive Officer. "For 2005, our goals include continuing our year-over-year revenue growth trend, which was 15% for 2003 as compared to 2002 and 20% for 2004 as compared to 2003. For 2005, we hope to increase revenue by more than 20%. Through new customer acquisition and increased placements, we are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that we can continue to grow revenue across all of our product lines and that the increased revenue will fund our research and development efforts for our technologies. To achieve these goals and position the Company for future growth, we will be investing resources in additional consulting, sales, and marketing personnel throughout the year, as well as increasing our presence at key industry trade shows. We believe the near-term investment of these resources will result in greater revenue growth potential for the Company in 2005 and beyond." CONFERENCE CALL REMINDER Today, February 28, 2005, at 4:30 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 fourth quarter and annual 2004 results: --International Dial-in number: 703-639-1313 --Domestic Dial-in number: 866-793-1342 Call into the conference number 5-10 minutes prior to the start time. An operator will check your name and organization and ask you to wait until the call begins. If you have any difficulty connecting with the conference call number, please call Kristen Colpus at Bitstream: (617) 497-6222. A replay of the conference call will be available through March 10, 2005 (access code): 591453 --International Replay number: 703-925-2533 --Domestic Replay number: 888-266-2081 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, 2003. About Bitstream Bitstream Inc. (NASDAQ: BITS) is a software development company that makes communications compelling. Bitstream enables customers worldwide to render high-quality text, browse (1) To view the contents of a file or a group of files. Browser programs generally let you view data by scrolling through the documents or databases. In a database program, the browse mode often lets you edit the data. See Web browser. the Web on wireless devices, select from the largest collection of fonts online, and customize documents over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the . Its core competencies A core competency is something that a firm can do well and that meets the following three conditions specified by Hamel and Prahalad (1990):
Bitstream and MyFonts.com are registered trademarks, and Pageflex, the Bitstream logo and ThunderHawk are trademarks, of the Company. Other technologies and brand names are used for information only and remain trademarks or registered trademarks of their respective companies.
Bitstream Inc.
Consolidated Statements of Operations
(In Thousands, Except Per Share Data)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------- -------------------
2004 2003 2004 2003
--------- --------- --------- ---------
Revenue:
Software license $ 2,839 $ 2,282 $ 9,805 $ 8,487
Services 484 357 1,827 1,239
--------- --------- --------- ---------
Total revenue 3,323 2,639 11,632 9,726
Cost of revenue:
Software license 911 742 3,196 2,477
Services 232 144 829 540
--------- --------- --------- ---------
Total cost of revenue 1,143 886 4,025 3,017
--------- --------- --------- ---------
Gross profit 2,180 1,753 7,607 6,709
--------- --------- --------- ---------
Operating expenses:
Marketing and selling 679 598 2,644 2,653
Research and development 963 858 3,847 3,826
General and administrative 516 531 1,851 1,997
--------- --------- --------- ---------
Total operating expenses 2,158 1,987 8,342 8,476
--------- --------- --------- ---------
Operating profit (loss) 22 (234) (735) (1,767)
Other income:
Gain on investment in
DiamondSoft, Inc. --- --- 91 591
Other income, net 13 27 71 48
--------- --------- --------- ---------
Income (loss) before provision
for income taxes 35 (207) (573) (1,128)
Provision for (benefit from)
income taxes (5) 22 42 77
--------- --------- --------- ---------
Net income (loss) $ 40 $ (229)$ (615)$ (1,205)
========= ========= ========= =========
Basic and diluted net
earnings
(loss) per share $ 0.00 $ (0.03)$ (0.07)$ (0.14)
========= ========= ========= =========
Basic weighted average
shares outstanding 8,611 8,421 8,524 8,374
========= ========= ========= =========
Diluted weighted average
shares outstanding 9,073 8,421 8,524 8,374
========= ========= ========= =========
Bitstream Inc.
Consolidated Balance Sheets
(In Thousands)
December 31,
--------------------------
ASSETS 2004 2003
------------- ------------
Current assets:
Cash and cash equivalents $ 4,405 $ 4,367
Accounts receivable, net 962 1,016
Prepaid expenses and other current assets 233 61
------------ ------------
Total current assets 5,600 5,444
------------ ------------
Property and equipment, net 282 347
------------ ------------
Other assets:
Restricted cash 250 250
Goodwill 727 727
Intangible assets 174 243
------------ ------------
Total other assets 1,151 1,220
------------ ------------
Total assets $ 7,033 $ 7,011
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 278 $ 513
Accrued expenses 1,199 877
Deferred revenue 792 547
------------ ------------
Total current liabilities 2,269 1,937
------------ ------------
Long-term liabilities 200 135
------------ ------------
------------ ------------
Total liabilities 2,469 2,072
------------ ------------
Total stockholders' equity 4,564 4,939
------------ ------------
Total liabilities and stockholders' equity $ 7,033 $ 7,011
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