Bitstream Inc. Reports Second Quarter Results for 2006.CAMBRIDGE, Mass. -- By achieving its highest quarterly revenue since becoming a publicly-traded company and growing revenue by 31% as compared to the quarter ended June 30, 2005, the Company attained at·tain v. at·tained, at·tain·ing, at·tains v.tr. 1. To gain as an objective; achieve: attain a diploma by hard work. 2. a $1,253,000 net income or $0.12 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 income per share for the quarter ended June 30, 2006. Bitstream Inc. (Nasdaq: BITS) today reported that its total revenue increased $1,184,000 or 31% to $4,992,000 for the three months ended June 30, 2006 as compared to $3,808,000 for the three months ended June 30, 2005. We generated 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. of $773,000 for the three months ended June 30, 2006, an increase of $779,000 as compared to 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. of $(6,000) for the three months ended June 30, 2005. Our net income for the three months ended June 30, 2006 increased $1,247,000 to $1,253,000 or $0.12 per diluted share as compared to net income of $6,000 for the three months ended June 30, 2005. The Company's cash and cash equivalents at June 30, 2006 totaled $7,938,000, an increase of $1,545,000 from $6,393,000 at March 31, 2006 and an increase of $3,708,000 from $4,230,000 at June 30, 2005. Net income includes other income of approximately $464,000 resulting from the payment to us 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, 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. for attorneys' fees, expenses and costs awarded to Bitstream by 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. in connection with the TrueDoc lawsuit lawsuit: see procedure; tort. . Monotype Imaging, Inc. and International Typeface Corporation agreed to pay the full amount of the award and dismiss their appeal if Bitstream agreed not to appeal the Court's award set forth in the Court's May 17, 2006 Order. Bitstream accepted the proposal and the case has been terminated. Income from operations for the quarter ended June 30, 2006 includes $54,000 in non-cash compensation expense associated with our adoption of Statement of Financial Accounting Standards No. 123R, Share-Based Payments, ("SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 123R") which is effective for periods beginning January 1, 2006. We have adopted SFAS 123R on a modified prospective basis and thus periods prior to January 1, 2006 do not include stock-based compensation expense. We estimate our non-cash stock-based compensation expense on currently issued options as of June 30, 2006 will be approximately $220,000 for the year ending December 31, 2006. "Strong sales across all of our product lines allowed us to achieve our highest quarterly revenue level since becoming a publicly-held company." said Anna M. Chagnon, President and Chief Executive Officer. "We exceeded our revenue growth goal for the quarter, increasing revenue by 31% from the revenue recognized for the second quarter of 2005 and we continue to improve our operating performance as we generated operating income of $773,000 for the quarter ended June 30, 2006, which increased operating income to $1,162,000 for the six months ended June 30, 2006. Net income of $1,651,000 for the first six months of 2006 included $464,000 in recovered legal fees and related expenses and contributed to the increase in cash and cash equivalents of $2,474,000 during the six months ended June 30, 2006. Based on our continued focus on increasing revenue and managing operations we expect to enhance our operating performance and profitability throughout 2006." SECOND QUARTER 2006 HIGHLIGHTS AND OTHER RECENT DEVELOPMENTS April 5, 2006 -- Bitstream previewed the company's ThunderHawk Java/J2ME(TM) mobile browser A mobile browser (earlier referred to as a microbrowser or minibrowser) is a web browser designed for use on a mobile device such as a mobile phone or PDA. Mobile browsers are optimised so as to display Web content most effectively for small screens on portable , which brings a real desktop browsing See browse. experience to mass-market mobile phones that typically do not have enough memory to run a full 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. 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 , to mobile operators, device manufacturers and content providers at the CTIA (1) See CompTIA. (2) (Cellular Telecommunications & Internet Association, Washington, DC, www.ctia.org, www.wow-com.com) A membership organization founded in 1984 that is involved with regulatory and public affairs issues in the wireless industry. Wireless 2006 exhibition. April 11, 2006 -- Bitstream announced the release of a new 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. Windows 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. installer, greatly simplifying the process of downloading downloading - download and installing fonts from its MyFonts.com website. Windows users can now install purchased fonts immediately with just a few clicks. April 25, 2006 -- Bitstream announced the release of 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) 3.2, the Latest Update to Its Leading 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. Solution for Small 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. . This release is the latest update to Bitstream's Font Fusion technology, the company's smallest, most advanced font rasterizing rasterizing - rasterising engine, and the fastest font engine on the market today. May 1, 2006 -- Bitstream announced the successful launch by Marketing Services by Vectra, Inc. of an interactive marketing portal, utilizing Pageflex(TM) technology, enabling ministers of the national Breakthrough Ministries to create customized marketing materials designed to grow their local parishes. May 16, 2006 --The Company unveiled the Company's next generation Pageflex software for variable data, Web-to-print, and cross-media publishing. The new product is named simply Pageflex(TM) and will be marketed with the slogan A slogan is a memorable motto or phrase used in a political, commercial, religious and other context as a repetitive expression of an idea or purpose. Slogans vary from the written and the visual to the chanted and the vulgar. "One Application -- All Things Variable.(TM)" This offering brings all existing Pageflex capabilities together into a single, modular application, and adds robust scalability for server clusters, print production automation features, power capabilities for advanced users, and enhancements to make the product easier to use. May 22, 2006 --The Company announced that Pageflex Storefront 3.0 received a Best in Show award at the On Demand Conference & Exposition exposition or exhibition, term frequently applied to an organized public fair or display of industrial and artistic productions, designed usually to promote trade and to reflect cultural progress. . Pageflex Storefront, which enables companies to define, auto-generate, and manage attractive Web-to-print document customization and 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. sites, was recognized in the digital publishing category. June 5, 2006-- Bitstream announced that 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. , successfully launched a customized business card portal for Wiremold/Legrand, a Legrand North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. company. The portal utilizes e-Integrity's PrintHub suite of marketing automation tools integrated with document customization capabilities powered by Bitstream's Pageflex software. The portal has enabled Wiremold/Legrand to achieve significant savings of time and resources by making its business card production process more efficient. July 25, 2006 -- Bitstream announced that it was selected as a winner in the 2006 American Inhouse Design Awards from Graphic Design USA, a national magazine for design professionals. The annual awards recognize the creative work of in-house In-house In the context of general equities, keeping an activity within the firm. For example, rather than go to the marketplace and sell a security for a client to anyone, an attempt is made to find a buyer to complete the transaction with the firm. designers. The winning direct mail piece was designed by Bitstream Creative Director Victoria Kapsambelis in Pageflex Studio, a layout and design application, and produced using Pageflex technology, a Bitstream product line for document customization and cross-media campaigns. CONFERENCE CALL REMINDER Today, August 7, 2006, 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 results for the quarter ended June 30, 2006: --International Dial-in number: 1-703-639-1459 --Domestic Dial-in number: 1-866-861-4867 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 at Bitstream: (617) 497-6222. A replay of the conference call will be available through August 17, 2006 (access code): 947844 --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, 2005. 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)
(unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
--------------- ---------------
2006 2005 2006 2005
------- ------ ------- ------
Revenue:
Software license $ 4,262 $3,187 $ 7,977 $5,996
Services 730 621 1,570 1,208
------- ------ ------- ------
Total revenue 4,992 3,808 9,547 7,204
Cost of revenue:
Software license 1,491 1,081 2,876 2,086
Services 358 285 734 601
------- ------ ------- ------
Total cost of revenue 1,849 1,366 3,610 2,687
------- ------ ------- ------
Gross profit 3,143 2,442 5,937 4,517
------- ------ ------- ------
Operating expenses:
Marketing and selling 847 772 1,603 1,441
Research and development 1,061 975 2,150 1,981
General and administrative 462 701 1,022 1,186
------- ------ ------- ------
Total operating expenses 2,370 2,448 4,775 4,608
------- ------ ------- ------
Operating profit (loss) 773 (6) 1,162 (91)
------- ------ ------- ------
Other income and Expense:
Legal fee reimbursement 464 --- 464 ---
Other income, net 41 12 61 26
------- ------ ------- ------
Total other income and
expense 505 12 525 26
------- ------ ------- ------
Income (loss) before provision for
income taxes 1,278 6 1,687 (65)
Provision for income taxes 25 --- 36 1
------- ------ ------- ------
Net income (loss) $ 1,253 $ 6 $ 1,651 $ (66)
======= ====== ======= ======
Basic net earnings (loss) per share $ 0.14 $ 0.00 $ 0.19 $(0.01)
======= ====== ======= ======
Diluted net earnings (loss) per
share $ 0.12 $ 0.00 $ 0.16 $(0.01)
======= ====== ======= ======
Basic weighted average shares
outstanding 9,028 8,650 8,887 8,644
======= ====== ======= ======
Diluted weighted average shares
outstanding 10,644 9,472 10,526 8,644
======= ====== ======= ======
Bitstream Inc.
Consolidated Balance Sheets
(In Thousands)
(unaudited)
June 30, December 31,
------------ -------------
ASSETS 2006 2005
------------ -------------
Current assets:
Cash and cash equivalents $ 7,938 $ 5,464
Accounts receivable, net 2,199 1,663
Prepaid expenses and other current assets 436 341
----------- ------------
Total current assets 10,573 7,468
----------- ------------
Property and equipment, net 326 315
----------- ------------
Other assets:
Restricted cash 200 200
Goodwill 727 727
Intangible assets 92 125
----------- ------------
Total other assets 1,019 1,052
----------- ------------
Total assets $ 11,918 $ 8,835
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 864 $ 664
Accrued expenses 884 1,191
Deferred revenue 1,522 1,085
----------- ------------
Total current liabilities 3,270 2,940
----------- ------------
Long-term liabilities 192 194
----------- ------------
----------- ------------
Total liabilities 3,462 3,134
----------- ------------
Total stockholders' equity 8,456 5,701
----------- ------------
Total liabilities and stockholders' equity $ 11,918 $ 8,835
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