Bitstream Inc. Reports Q1 2002 Results.Business Editors CAMBRIDGE, Mass.--(BUSINESS WIRE)--May 8, 2002 Highlights include a $505,000 or 31.0% increase in revenue, and a $1,071,000 or 85.1% decrease in consolidated net loss, as compared to Q1 2001. Bitstream Inc. (Nasdaq: BITS) today reported that revenues for the three months ended March 31, 2002 were $2,133,000 compared to $1,628,000 for the three months ended March 31, 2001, an increase of $505,000 or 31.0%. 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. for the three months ended March 31, 2002 were $1,896,000, a decrease of $669,000 or 26.1% from $2,565,000 for the three months ended March 31, 2001 due primarily to decreases in expenses incurred by the Company's Pageflex business segment. The Company's loss from operations for the three months ended March 31, 2002 was $(178,000), representing a decrease of $1,043,000 or 85.4% from a $(1,221,000) loss for the three months ended March 31, 2001. The Company's net loss for the three months ended March 31, 2002 was $(187,000), representing a decrease of $1,071,000, or 85.1%, from a $(1,258,000) loss for the three months ended March 31, 2001. 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 were $(0.02) for the three months ended March 31, 2002, versus $(0.16) for the three months ended March 31, 2001. The Company's cash and cash equivalent balance at March 31, 2002 was $5,680,000, a decrease of $36,000 from the December 31, 2001 balance of $5,716,000. "Our first quarter results are indicative of our ongoing commitment to making Bitstream profitable on a consolidated basis this year," said Charles Ying, Chief Executive Officer. "Not only did revenue for our three business segments increase as compared to Q1 2001 by an aggregate of $505,000 or 31.0%, but we also decreased our operating expenses. Our efforts resulted in a $1,071,000 decrease in our consolidated net loss and a decrease of only $36,000 in cash and cash equivalents for the quarter." Bitstream is composed of three different businesses: (1) its type and technology business, whose primary revenues are generated from the licensing 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 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. software and fonts to the embedded Inserted into. See embedded system. , set-top box 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. , wireless device and information appliance See Internet appliance. (hardware) Information Appliance - (IA) A consumer device that performs only a few targeted tasks and is controlled by a simple touch-screen interface or push buttons on the device's enclosure. 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 e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. 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 dynamic page composition technologies ("Pageflex"). The performance of each business segment is discussed in greater detail below. Type and Technology Results Type and technology revenues for the three months ended March 31, 2002 increased $94,000 or 8.4% to $1,213,000 from $1,119,000 for the three months ended March 31, 2001. Operating expenses for the three months ended March 31, 2002 decreased $139,000 or 12.6% to $966,000 as compared to $1,105,000 for the three months ended March 31, 2001. Income from operations for the Company's type and technology business segment increased $278,000 or 190% to $131,000 for the three months ended March 31, 2002 as compared to a loss of $(147,000) for the three months ended March 31, 2001. "We are very pleased to report that the type and technology segment was profitable for the first quarter of 2002," 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. . "We are now well positioned to take advantage of new market opportunities for our type and technology products especially with the upcoming release of ThunderHawk(TM), our breakthrough browsing See browse. technology for the wireless Web." MyFonts.com Results MyFonts.com revenues for the three months ended March 31, 2002 increased $182,000 or 227.5% to $262,000 from $80,000 for the three months ended March 31, 2001. Revenues attributable to this segment before elimination of intercompany 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 for the three months ended March 31, 2002 increased $244,000 or 236.9% to $347,000 from $103,000 for the three months ended March 31, 2001. Operating expenses for the three months ended March 31, 2002 decreased $17,000 or 10.1% to $151,000 from $168,000 for the three months ended March 31, 2001. Loss from operations for the MyFonts.com business decreased $49,000 or 32.5% to $(102,000) for the three months ended March 31, 2002 as compared to $(151,000) for the three months ended March 31, 2001. "Revenue from MyFonts.com has exceeded our projections. During the first quarter of 2002, gross revenue for MyFonts.com exceeded $100,000 per month," said John Collins, Vice President and Chief Technology Officer. "We remain committed to growing revenues by increasing the number of fonts available from the site and increasing marketing activities. This strategy is consistent with our goal of decreasing net operating losses Net operating losses Losses that a firm can take advantage of to reduce taxes. and achieving segment profitability as soon as practicable practicable adj. when something can be done or performed. ." Pageflex Results Revenues from the Company's Pageflex business increased $229,000 or 53.4% to $658,000 for the three months ended March 31, 2002 as compared to $429,000 for the three months ended March 31, 2001. Operating expenses for the three months ended March 31, 2002 decreased $513,000 or 39.7% to $779,000 from $1,292,000 for the three months ended March 31, 2001. 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. decreased by $716,000 or 77.6% to $(207,000) for the three months ended March 31, 2002 from $(923,000) for the three months ended March 31, 2001. "Our commitment to growing the Pageflex business through sales of products rather than through non-recurring engineering Non-recurring engineering (NRE) refers to the one-time cost of researching, designing, and testing a new product. When budgeting for a project, NRE must be considered in order to analyze if a new product will be profitable. revenues is reflected in an increase in product sales of $297,000 or 153.1% to $491,000 for the three months ended March 31, 2002, from $194,000 for the same quarter last year," said Sang Lee, Vice President of Sales & Marketing for Pageflex. "On a quarter-by-quarter basis, Pageflex product revenues have steadily increased since the first quarter of 2001. Although our October 2001 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). of the Pageflex business allowed us to substantially reduce expenses, we remain committed to being the leader in dynamic composition technologies. As proof of this commitment, this quarter we plan to release our groundbreaking .EDIT(TM) technology, designed to enable companies to provide their customers with a sophisticated page layout :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. tool, including full-featured typography typography (tīpŏg`rəfē), the art of printing from movable type. The term typographer is today virtually synonymous with a master printer skilled in the techniques of type and paper stock selection, ornamentation, and composition. , using nothing more than a Web browser The program that serves as your front end to the Web on the Internet. In order to view a site, you type its address (URL) into the browser's Location field; for example, www.computerlanguage.com, and the home page of that site is downloaded to you. and an Internet connection." On Wednesday, May 8, 2002, at 2:00 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 first quarter results. Interested participants should call 1-800-283-1485 no sooner than five minutes before the call begins and ask the operator for the Bitstream Inc. earnings release 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, 2001. Bitstream Inc. Bitstream Inc. (Nasdaq:BITS) is the leading developer of font technology, digital fonts, and custom font designs. Bitstream licenses its award-winning TrueDoc(R) 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. (TM) technologies to Web and application developers, and to manufacturers of information appliances, wireless and handheld devices, set-top boxes, 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. , and printers. Setting the standard for excellence in font technology, Bitstream holds numerous key patents that cover the creation of portable fonts for the Internet. Building on this experience, Bitstream is currently developing ThunderHawk(TM), a full-featured browser browser 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 for the wireless Web. Pageflex, Inc. Pageflex, Inc. (www.pageflexinc.com) is a leading developer of dynamic page composition technologies for a wide variety of markets including Web-to-print, cross-media publishing, document customization and on-demand marketing. Pageflex licenses its award-winning products worldwide to Web-to-print companies, application service providers, customer relationship management (CRM (Customer Relationship Management) An integrated information system that is used to plan, schedule and control the presales and postsales activities in an organization. ) companies, and print service providers. The Company was established in 1999 as a wholly owned subsidiary of Bitstream Inc. MyFonts.com MyFonts.com, Inc., a venture funded by Bitstream Inc. 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 as·sem·ble v. as·sem·bled, as·sem·bling, as·sem·bles v.tr. 1. To bring or call together into a group or whole: assembled the jury. 2. 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 Font Fusion and ThunderHawk are trademarks of Bitstream Inc. Pageflex, Mpower, .EDIT 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
March 31,
2002 2001
Revenues
Software licenses $ 1,836 $ 1,296
Services 297 332
Total revenues 2,133 1,628
Cost of Revenues
Software licenses 312 200
Services 103 84
Total cost of revenues 415 284
Gross profit 1,718 1,344
Operating expenses
Selling and marketing 595 825
Research and development 959 1,328
General and administrative 342 412
Total operating expenses 1,896 2,565
Loss from operations (178) (1,221)
Other income (expense):
Loss on investment
in DiamondSoft, Inc. (1) (75)
Interest income, net 23 87
Loss before income Taxes (156) (1,209)
Provision for income taxes 31 49
Net loss $ (187) $(1,258)
Basic and diluted net loss per share $ (0.02) $ (0.16)
Basic and diluted weighted
average shares outstanding 8,305 7,949
Bitstream Inc.
Consolidated Balance Sheets
(In Thousands)
March 31, Dec. 31,
2002 2001
ASSETS
Current assets:
Cash and cash equivalents $5,680 $5,716
Accounts receivable, net 705 679
Prepaid expenses and other current assets 221 122
Total current assets 6,606 6,517
Property and equipment, net 396 473
Restricted cash 300 300
Goodwill, net 727 727
Investment in DiamondSoft, Inc. 598 599
Other assets 219 223
1,844 1,849
Total assets $8,846 $8,839
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 128 $ 93
Accrued expenses 1,159 1,126
Current portion of deferred revenue 728 610
Total current liabilities 2,015 1,829
Long-term deferred revenue 30 14
Total liabilities 2,045 1,843
Total stockholders' equity 6,801 6,996
Total liabilities and stockholders' equity $8,846 $8,839
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