Bitstream Inc. Reports Second Quarter 2002 Results.Business/Technology Editors 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.--(BUSINESS WIRE)--July 31, 2002 Highlights include a $342,000 or 18.3% increase in revenue, and a $656,000 or 69.1% decrease in consolidated net loss, as compared to Q2 2001. Bitstream The transmission, or flow, of binary data (bits). Inc. (Nasdaq: BITS) today reported that revenue for the three months ended June June: see month. 30, 2002 was $2,213,000 compared to $1,871,000 for the three months ended June 30, 2001, an increase of $342,000 or 18.3%. 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 June 30, 2002 were $1,942,000, a decrease of $475,000 or 19.7% from $2,417,000 for the three months ended June 30, 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 June 30, 2002 was $(316,000), representing a decrease of $590,000 or 65.1% from a $(906,000) loss for the three months ended June 30, 2001. The Company's net loss for the three months ended June 30, 2002 was $(293,000), representing a decrease of $656,000, or 69.1%, from a $(949,000) loss for the three months ended June 30, 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 $(0.04) for the three months ended June 30, 2002, versus $(0.12) for the three months ended June 30, 2001. The Company's cash and cash equivalent balance at June 30, 2002 was $5,412,000, a decrease of $268,000 from the March 31, 2002 balance of $5,680,000. "We are very pleased that despite the tough economy, the Company was able to increase consolidated revenue by $342,000 or 18.3% and decrease its consolidated net loss by $656,000 or 69.1% during this quarter as compared to the second quarter of last year," said Charles Charles, archduke of Austria Charles, 1771–1847, archduke of Austria; brother of Holy Roman Emperor Francis II. Despite his epilepsy, he was the ablest Austrian commander in the French Revolutionary and Napoleonic wars; however, he was handicapped by Ying, Chief Executive Officer. "By increasing revenue and reducing the Company's net loss, we have also been able to minimize our cash burn, which was $304,000 for the six months ended June 30, 2002." Bitstream is composed of three different businesses: (1) its type and technology business, whose primary revenue is 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 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, 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 revenue for the three months ended June 30, 2002 decreased $45,000 or 3.6% to $1,189,000 from $1,234,000 for the three months ended June 30, 2001. Cost of revenue increased $48,000 or 25.9% to $233,000 for the three months ended June 30, 2002 from $185,000 for the three months ended June 30, 2001. Cost of revenue increased during the quarter primarily because of an increase in royalties due to an increase in sales of products developed by third parties. Operating expenses for the three months ended June 30, 2002 decreased $90,000 or 8.3% to $996,000 as compared to $1,086,000 for the three months ended June 30, 2001. Loss from operations for the Company's type and technology business segment increased $3,000 or 8.1% to $(40,000) for the three months ended June 30, 2002 as compared to a loss of $(37,000) for the three months ended June 30, 2001. "During the second quarter, the type and technology segment continued to enter into new agreements for its premier font rendering technology, 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. , allowing it to continue to build its customer base and minimize the recent effect that the economy has had on the embedded, set-top box, wireless device and information appliance 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. . "We also received a very favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. response to our release of the end user version of ThunderHawk Thunderhawk may refer to:
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 or intranet Web pages, whether on the road or in the office. With access to intranet and Internet Web sites, a mobile workforce can make database inquiries, update inventories, order products and publications, communicate with clients in the field, and schedule services and repairs." MyFonts.com Results MyFonts.com revenue for the three months ended June 30, 2002 increased $218,000 or 192.9% to $331,000 from $113,000 for the three months ended June 30, 2001. Revenue 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 June 30, 2002 increased $245,000 or 145.8% to $413,000 from $168,000 for the three months ended June 30, 2001. Cost of revenue, which primarily represents royalties paid to non-related foundries whose products MyFonts.com resells, for the three months ended June 30, 2002 increased $184,000 or 214.0% to $270,000 from $86,000 for the three months ended June 30, 2001. Operating expenses for the three months ended June 30, 2002 decreased $47,000 or 23.9% to $150,000 from $197,000 for the three months ended June 30, 2001. Loss from operations for the MyFonts.com business decreased $81,000 or 47.6% to $(89,000) for the three months ended June 30, 2002 as compared to $(170,000) for the three months ended June 30, 2001. "We are delighted that second quarter revenue for MyFonts.com increased by over 192% resulting in a 47.6% decrease in 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 June 30, 2002 as compared to the three months ended June 30, 2001," said John Collins, Vice President and Chief Technology Officer. "Before elimination of intercompany royalties due on the resale of Bitstream products, MyFonts.com revenue also reached the milestone of exceeding $400,000 in revenue for the quarter as compared to $168,000 a year ago and achieved double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. quarterly growth for the eighth successive quarter." Pageflex Results Revenue from the Company's Pageflex business for the three months ended June 30, 2002 increased $169,000 or 32.3% to $693,000 from $524,000 for the three months ended June 30, 2001. Cost of revenue for the three months ended June 30, 2002 decreased $5,000 or 5.6% to $84,000 from $89,000 for the three months ended June 30, 2001. Operating expenses for the three months ended June 30, 2002 decreased $338,000 or 29.8% to $796,000 from $1,134,000 for the three months ended June 30, 2001. Operating loss decreased by $512,000 or 73.2% to $(187,000) for the three months ended June 30, 2002 from $(699,000) for the three months ended June 30, 2001. "We are very pleased with the 32.3% increase in revenue for the second quarter of 2002 as compared to the second quarter of 2001. This increase in revenue resulted from the continued adoption of Pageflex technologies and the corresponding growth in our customer base, which now includes a wide variety of corporations, including Web-to-print and application service providers, consumer products companies, advertising agencies and print service providers," said Charles Ying, Chief Executive Officer. "We are also pleased that our focus on profitability for this segment has led to a $512,000 or 73.2% decrease in this segment's operating loss as compared to the operating loss for the same quarter last year." On Wednesday Wednesday: see week. , July July: see month. 31, 2002, at 12:00 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 1-888-428-4472 (international callers please dial 612-333-4911) 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(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 has recently released an end user version of 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 Six Months Ended
June 30, June 30,
2002 2001 2002 2001
Revenue:
Software license $1,949 $1,673 $3,785 $2,969
Services 264 198 561 530
Total revenue 2,213 1,871 4,346 3,499
Cost of revenue:
Software license 496 268 808 468
Services 91 92 194 176
Total cost of revenue 587 360 1,002 644
Gross profit 1,626 1,511 3,344 2,855
Operating expenses
Selling and marketing 532 731 1,127 1,556
Research and development 991 1,265 1,950 2,593
General and administrative 419 421 761 833
Total operating expenses 1,942 2,417 3,838 4,982
Loss from operations (316) (906) (494) (2,127)
Other income (expense):
Income (loss) on investment
in DiamondSoft, Inc. 43 (76) 42 (151)
Interest income, net 19 64 42 151
Loss before income taxes (254) (918) (410) (2,127)
Provision for income taxes 39 31 70 80
Net loss $(293) $(949) $(480) $(2,207)
Basic and diluted net loss
per share $(0.04) $(0.12) $(0.06) $(0.28)
Basic and diluted weighted
average shares outstanding 8,313 8,030 8,309 7,990
Bitstream Inc.
Consolidated Balance Sheets
(In Thousands)
June 30, Dec. 31,
2002 2001
ASSETS
Current assets:
Cash and cash equivalents $5,412 $5,716
Accounts receivable, net 736 679
Prepaid expenses and other current assets 136 122
Total current assets 6,284 6,517
Property and equipment, net 367 473
Restricted cash 300 300
Goodwill, net 727 727
Investment in DiamondSoft, Inc. 641 599
Intangible assets 250 218
Other assets 6 5
1,924 1,849
Total assets $8,575 $8,839
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 286 $ 93
Accrued expenses 1,198 1,126
Current portion of deferred revenue 555 610
Total current liabilities 2,039 1,829
Long-term deferred revenue 17 14
Total liabilities 2,056 1,843
Total stockholders' equity 6,519 6,996
Total liabilities and stockholders' equity $8,575 $8,839
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