Bitstream Inc. Reports Second Quarter 2005 Results; Total revenue increased by $1,001,000 or 36% resulting in the highest quarterly revenue since the Company went public in 1996.CAMBRIDGE, Mass. -- Bitstream(R) Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : BITS) today reported that its total revenue increased $1,001,000 or 36% to $3,808,000 for the three months ended June 30, 2005 as compared to $2,807,000 for the three months ended June 30, 2004. The Company recorded net income of $6,000 for the three months ended June 30, 2005, a $166,000 improvement from the net loss of ($160,000) recorded for the three months ended June 30, 2004. The net income for the three months ended June 30, 2005 reflects the impact of $310,000 in legal costs incurred in connection with the Company's defense of a lawsuit lawsuit: see procedure; tort. filed by Monotype monotype, type set by the Monotype machine. See printing. monotype or monoprint In art printmaking, a technique prized because of its unique textural qualities. Imaging, which went to trial during the quarter and was subsequently won by the Company on all counts. Net Income for the three months ended June 30, 2005 would have been $316,000 without these non-recurring costs. The Company's cash and cash equivalents at June 30, 2005 totaled $4,230,000, an increase of $135,000 as compared to $4,095,000 at March 31, 2005. "Due to the growth in sales in all of our product lines as compared to the first quarter of 2005, we significantly exceeded our goal of increasing revenue by 20% allowing us to achieve our highest quarterly revenue level since the Company went public." said Anna M. Chagnon, President and Chief Executive Officer. "The increase in revenue helped the Company achieve profitability for the second quarter, notwithstanding the legal costs incurred in conjunction with winning on all counts the case brought by Monotype Imaging. To support our ongoing plan to grow revenue, we also continued to increase our investment in sales and marketing personnel and activities to drive revenue growth in future quarters while maintaining a significant level of investment in research and development activities for all of our technologies." SECOND QUARTER 2005 HIGHLIGHTS AND OTHER RECENT DEVELOPMENTS --On August 8, 2005 Bitstream announced that it joined the Symbian Platinum Program to support the growing market for data-enabled mobile phones, also known as smartphones, based on Symbian OS An open standard operating system for data-enabled mobile phones (smartphones) from Symbian Ltd., London (www.symbian.com). It supports Java, PC synchronization, Bluetooth local wireless access and GPRS packet-switched data. (TM). On August 1, 2005 Bitstream also announced that it integrated 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. (R) 3.0, the company's smallest, most advanced font rasterizing rasterizing - rasterising engine, and the fastest font engine on the market today, with Symbian OS(TM). Symbian develops and licenses Symbian OS, the operating system operating system (OS) Software that controls the operation of a computer, directs the input and output of data, keeps track of files, and controls the processing of computer programs. that powers today's most popular smartphones. --On July 21, 2005 Bitstream announced that Judge Amy J. St. Eve of the U.S. District Court for the Northern District of Illinois Illinois, river, United States Illinois, river, 273 mi (439 km) long, formed by the confluence of the Des Plaines and Kankakee rivers, NE Ill., and flowing SW to the Mississippi at Grafton, Ill. It is an important commercial and recreational waterway. Eastern Division ruled in favor of upon the side of; favorable to; for the advantage of. See also: favor Bitstream on all counts in the case of Monotype Imaging, Inc. (formerly Agfa Monotype Corporation
Monotype Imaging, Inc ) and International Typeface Corporation The International Typeface Corporation (ITC) is a type manufacturer founded in New York in 1970 by Aaron Burns, Herb Lubalin, and Edward Rondthaler. The company is one of the world's first foundries to have no history in metal cast types. v. Bitstream Inc. --On July 13, 2005 Bitstream announced that Pocket PC magazine nominated nom·i·nate tr.v. nom·i·nat·ed, nom·i·nat·ing, nom·i·nates 1. To propose by name as a candidate, especially for election. 2. To designate or appoint to an office, responsibility, or honor. ThunderHawk, the company's breakthrough wireless browsing See browse. technology, for the publication's Best Software of 2005 Awards. The awards, now in their fifth year, honor As a verb, to accept a bill of exchange, or to pay a note, check, or accepted bill, at maturity. To pay or to accept and pay, or, where a credit so engages, to purchase or discount a draft complying with the terms of the draft. companies that produce outstanding software for Windows Mobile The Windows platform from Microsoft for handheld devices, including PDAs, cellphones and Portable Media Centers. See Pocket PC, Pocket PC Phone Edition, Smartphone and Portable Media Center. Pocket PC and Smartphone A cellular telephone with information access. It provides digital voice service as well as any combination of e-mail, text messaging, pager, Web access, voice recognition, still and/or video camera, MP3, TV or video player and organizer (see PDA). users. --On June 28, 2005 Bitstream announced that it received certification of its GB18030 font, Bitstream Hei, from both the SLC (Subscriber Loop Carrier) Lucent's designation for its digital loop carrier (DLC) products. See digital loop carrier. See also 386SLC. (State Language Committee) and CITS/CESI (Committee on Information Technology Standards / China Electronics Standardization standardization In industry, the development and application of standards that make it possible to manufacture a large volume of interchangeable parts. Standardization may focus on engineering standards, such as properties of materials, fits and tolerances, and drafting Institute) allowing Bitstream to extend its font business into China. --On June 21, 2005 Bitstream announced the addition of full Java(TM) support to ThunderHawk 2.1 Pocket PC Edition. New Java capabilities enable subscribers to run powerful, interactive Web applets utilizing the company's award-winning 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 that provides enterprise clients and end users with a familiar, secure desktop browsing experience on mobile devices. --On June 20, 2005 Bitstream announced the release of version 2.0 of Bitstream Panorama, a small, portable line layout engine A layout engine, or rendering engine, is software that takes web content (such as HTML, XML, image files, etc.) and formatting information (such as CSS, XSL, etc.) and displays the formatted content on the screen. that enables developers to compose com·pose v. com·posed, com·pos·ing, com·pos·es v.tr. 1. To make up the constituent parts of; constitute or form: complex lines of text. The product features high-level APIs to lay out, position, substitute, and render characters in all international languages. This major release of Bitstream Panorama includes full support for Arabic, Hebrew, Indian and other complex language scripts --On June 13, 2005, the Company announced that its publishing product was successfully launched by e-Integrity (www.eintegrity-usa.com), the technology division of Integrity Graphics Inc., one of New England's premier graphics communications companies Communications Company is a communications unit of the United States Marine Corps. They are part of Combat Logistics Regiment 37 , 3rd Marine Logistics Group (3MLG) and III Marine Expeditionary Force (III MEF). The unit is based out of the Marine Corps Base Camp Smedley D. . --On June 7, 2005, the Company announced that four Pageflex customer case studies were included in the newly-released report PODi Best Practices in Digital Print. This highly acclaimed ac·claim v. ac·claimed, ac·claim·ing, ac·claims v.tr. 1. To praise enthusiastically and often publicly; applaud. See Synonyms at praise. 2. report showcases case studies in a broad range of vertical markets and business applications. Each of the four Pageflex customer case studies have been judged to contribute to PODi's best practices principles. Two of the four case studies were also judged finalists in the PODi Best Practices award competition, with one of these ultimately winning the best practices award. --On June 6, 2005, Bitstream announced the release of Font Fusion(R) 3.0, the company's smallest, most advanced font rasterizing engine, and the fastest font engine on the market today. This major release provides new support for font compression of all font formats --On May 24, 2005, Bitstream Inc. announced that BroadVision extended its agreement with Bitstream to license Bitstream 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. technology and over 100 fonts for BroadVision's self-service web applications. --On May 23, 2005, the Company announced that VirtuosoWorks licensed a set of high-quality fonts for use with NOTION(TM), its music composition and performance software. VirtuosoWorks selected the font set from Bitstream's typeface The design of a set of printed characters, such as Courier, Helvetica and Times Roman. The terms "typeface" and "font" are used interchangeably, but the typeface is the primary design, while the font is the particular implementation and variation of the typeface, such as bold or italics library. --On May 17, 2005, the Company announced the premier of Pageflex Storefront 2.5 at On Demand. Pageflex Storefront 2.5 is a major new release incorporating fully integrated 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. support, such as integrated pricing, purchasing, and shipping features. --On May 9, 2005, the Company announced that the U.S. Patent and Trademark Office awarded a patent for MyFonts' system for selecting and distributing fonts in conjunction with its e-commerce system. CONFERENCE CALL REMINDER Today, August 9, 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 second quarter 2005 results: --International Dial-in number: 1-703-639-1368 --Domestic Dial-in number: 1-866-814-8449 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 contact Bitstream at (617) 497-6222. A replay of the conference call will be available through August 19, 2005 (access code): 752022 --International Replay number: 1-703-925-2533 --Domestic Replay number: 1-888-266-2081 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, 2004. About Bitstream Bitstream(R) 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. 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 or servicemarks, 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 owners.
Bitstream Inc.
Consolidated Statements of Operations
(In Thousands, Except Per Share Data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -----------------
2005 2004 2005 2004
-------- -------- -------- ------
Revenue:
Software license $ 3,187 $ 2,357 $ 5,996 $4,641
Services 621 450 1,208 896
------------------------------- ------
Total revenue 3,808 2,807 7,204 5,537
Cost of revenue:
Software license 1,081 796 2,086 1,477
Services 285 195 601 375
------------------------------- ------
Total cost of revenue 1,366 991 2,687 1,852
------------------------------- ------
Gross profit 2,442 1,816 4,517 3,685
------------------------------- ------
Operating expenses:
Marketing and selling 772 682 1,441 1,375
Research and development 975 940 1,981 1,970
General and administrative 701 447 1,186 943
------------------------------- ------
Total operating expenses 2,448 2,069 4,608 4,288
------------------------------- ------
Loss from operations (6) (253) (91) (603)
Other income:
Income on investment in
DiamondSoft, Inc. --- 91 --- 91
Other income, net 12 15 26 43
------------------------------- ------
Income (loss)before
provision for income taxes 6 (147) (65) (469)
Provision for income taxes --- 13 1 36
------------------------------- ------
Net income (loss) $ 6 $ (160) $ (66) $ (505)
=============================== ======
Basic and diluted net income
(loss) per share $ 0.00 $ (0.02) $ (0.01) $(0.06)
=============================== ======
Basic weighted average shares
outstanding 8,650 8,483 8,644 8,466
=============================== ======
Diluted weighted average
shares outstanding 9,472 8,483 8,644 8,466
=============================== ======
Bitstream Inc.
Consolidated Balance Sheets
(In Thousands)
(unaudited)
June 30, Dec. 31,
ASSETS 2005 2004
--------- --------
Current assets:
Cash and cash equivalents $ 4,230 $ 4,405
Accounts receivable, net 1,747 962
Prepaid expenses and other current assets 180 233
-------- --------
Total current assets 6,157 5,600
-------- --------
Property and equipment, net 336 282
-------- --------
Other assets:
Restricted cash 250 250
Goodwill 727 727
Intangible assets 150 174
-------- --------
Total other assets 1,127 1,151
-------- --------
Total assets $ 7,620 $ 7,033
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 953 $ 278
Accrued expenses 941 1,199
Deferred revenue 990 792
-------- --------
Total current liabilities 2,884 2,269
-------- --------
Long-term liabilities 197 200
-------- --------
-------- --------
Total liabilities 3,081 2,469
-------- --------
Total stockholders' equity 4,539 4,564
-------- --------
Total liabilities and stockholders' equity $ 7,620 $ 7,033
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