Bitstream Inc. Reports Second Quarter 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)--Aug. 1, 2001 Bitstream The transmission, or flow, of binary data (bits). Inc. (Nasdaq: BITS) today reported that revenues for the three months ended June June: see month. 30, 2001 were $1,871,000 compared to $1,628,000 for the three months ended March 31, 2001, an increase of $243,000 or 15%, and $2,470,000 for the three months ended June 30, 2000, a decrease of $599,000 or 24%. As compared to revenues for the three months ended March 31, 2001, the Company's type and technology, Pageflex and 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 segments experienced revenue increases of $115,000 or 10%, $95,000 or 22% and $33,000 or 41%, respectively. As compared to revenues for the three months ended June 30, 2000, the Company's type and technology and Pageflex segments experienced revenue decreases of $317,000 or 20% and $393,000 or 43%, respectively, while MyFonts.com experienced a $111,000 increase in revenue. Pageflex's revenue for the three months ended June 30, 2000 included $512,000 from an 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 relationship with Atex Media Solutions, Inc., which is not expected to be duplicated in future quarters. If the Atex revenue is excluded from Pageflex's revenue for the three months ended June 30, 2000, revenue from this segment would have increased by $119,000 or 29%. The decrease in revenues for the type and technology segment as compared to the three months ended June 30, 2000 was a result of the softening softening /sof·ten·ing/ (sof´en-ing) malacia. softening a change of consistency, with loss of firmness or hardness. of the market for high technology products in general and increased concern over future economic conditions, which caused customers to defer de·fer 1 v. de·ferred, de·fer·ring, de·fers v.tr. 1. To put off; postpone. 2. To postpone the induction of (one eligible for the military draft). v.intr. development expenses until later in 2001. 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. and cost of revenues for the three months ended June 30, 2001 were $2,777,000, a decrease of $72,000 or 3% from $2,849,000 for the three months ended March 31, 2001, and a decrease of $351,000 or 11% from $3,128,000 for the three months ended June 30, 2000. These reductions were a result of management's efforts to reduce expenses to minimize the Company's cash burn during the quarter. The Company's consolidated net loss for the three months ended June 30, 2001 was $(949,000), a decrease of $309,000 or 25% as compared to a net loss of $(1,258,000) for the three months ended March 31, 2001 and an increase of $305,000 or 47% as compared to a net loss of $(644,000) for the three months ended June 30, 2000. 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 was $(0.12) for the three months ended June 30, 2001 versus basic and diluted net loss per share of $(0.16) for the three months ended March 31, 2001 and ($0.08) for the three months ended June 30, 2000. Despite this net loss, the Company minimized the cash used in operations during the quarter. As a result, its cash and cash equivalent balance decreased by $370,000 to $6,554,000 at June 30, 2001 as compared to $6,924,000 at March 31, 2001. Included in the $370,000 of cash used during the quarter was $100,000 for an additional equity investment in DiamondSoft, Inc., a California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). corporation primarily engaged in the business of developing, marketing and distributing software tools to a variety of professional markets. Excluding the additional $100,000 equity investment in DiamondSoft, the Company's cash and cash equivalent balance would have decreased by $270,000 during the second quarter. Bitstream is composed of three different businesses: (1) its type and technology business whose primary revenues are from the license 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. and internet appliance Also called "information appliance," "smart appliance," and "Web appliance," it is a device specialized for accessing the Web and/or e-mail. Designed for ease of use, it plugs into a telephone jack or LAN connection for Internet hookup. 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 The Company's type and technology business segment's revenues for the three months ended June 30, 2001 were $1,234,000 compared to $1,119,000 for the three months ended March 31, 2001, an increase of $115,000 or 10%, and $1,551,000 for the three months ended June 30, 2000, a decrease of $317,000 or 20%. As mentioned above, the decrease in revenues from the three months ended June 30, 2001 as compared to the three months ended June 30, 2000 was primarily a result of the softening of the market for high technology products in general and increased concern over future economic conditions, which resulted in customers deciding to defer expenses for future development until later in 2001. Expenses, including cost of revenues, for the three months ended June 30, 2001 were $1,271,000 as compared to $1,266,000 for the three months ended March 31, 2001, an increase of $5,000 or less than 1%, and $1,358,000 for the three months ended June 30, 2000, a decrease $87,000 or 6%. Type and technology'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. was $(37,000) for the three months ended June 30, 2001, compared to an operating loss of $(147,000) for the three months ended March 31, 2001, a decrease of $110,000 or 75%, and 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 $193,000 for the three months ended June 30, 2000, a decrease of $230,000 or 119%. "While we continued to have lower than expected revenues due to the recent slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in the economy, we were able to increase revenues by $115,000 or 10% for our type & technology segment as compared to the first quarter of 2001," 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. . "Due to economic concerns, the Company's management has also taken proactive measures In antiterrorism, measures taken in the preventive stage of antiterrorism designed to harden targets and detect actions before they occur. to reduce expenses since the first quarter of 2001 and we will continue to monitor expenses closely. We are pleased that, despite these economic conditions, the Company's cash burn remained low during the second quarter of 2001 and, as a result, during the first six months of this year, we used $595,000 in cash versus $1,185,000 during the six months ended June 30, 2000." MyFonts.com Results Revenue from the Company's MyFonts.com segment for the three months ended June 30, 2001 was $168,000, an increase of $65,000 or 63% as compared to $103,000 for the three months ended March 31, 2001, and an increase of $160,000 or 2,000% as compared to $8,000 for the three months ended June 30, 2000, which was the first quarter its e-commerce site went live. Revenues attributable to this segment after the inter-company elimination of 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 were $113,000 for the three months ended June 30, 2001 as compared to $80,000 for the three months ended March 31, 2001 and $2,000 for the three months ended June 30, 2000. Operating expenses for the three months ended June 30, 2001 were $197,000, an increase of $29,000 or 17% from $168,000 for the three months ended March 31, 2001, and an increase of $92,000 or 88% from $105,000 for the three months ended June 30, 2000. This increase was primarily due to increases in research and development costs associated with continued enhancement of the website during 2001. Loss from operations for the MyFonts.com business for the three months ended June 30, 2001 was $(170,000), an increase of $19,000 or 13% from $(151,000) for the three months ended March 31, 2001 and an increase of $66,000 or 63% from $(104,000) for the three months ended June 30, 2000. "We are very excited that MyFonts.com's revenue increased by 63% in the quarter ended June 30, 2001 as compared to the quarter ended March 31, 2001," 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. "Since we have only recently commenced our marketing efforts, including advertising and trade show participation, to increase awareness of and sales on the site, we are very pleased with the results to date." Pageflex Results Revenues for Pageflex for the three months ended June 30, 2001 were $524,000, an increase of $95,000 or 22% from $429,000 for the three months ended March 31, 2001, and a decrease of $393,000 or 43% from $917,000 for the three months ended June 30, 2000. Revenues for the three months ended June 30, 2000 included $512,000 from an OEM relationship with Atex Media Solutions, Inc., which is not expected to be duplicated in future quarters. If the Atex revenue is excluded from Pageflex's revenue for the three months ended June 30, 2000, revenue from this segment would have increased by $119,000 or 29%. Expenses, including cost of revenues, for the three months ended June 30, 2001 were $1,223,000 as compared to $1,352,000 for the three months ended March 31, 2001, a decrease of $129,000 or 10%, and $1,664,000 for the three months ended June 30, 2000, a decrease of $441,000 or 27%. Pageflex's operating loss was $(699,000), a decrease of $224,000 or 24%, from $(923,000) for the three months ended March 31, 2001 and a decrease of $48,000 or 6% from $(747,000) for the three months ended June 30, 2000. The decrease in loss from operations was primarily due to the decrease in expenses. "During the second quarter, we continued to focus on growing license revenue for Pageflex by signing up a number of new subscription-based customers and selling licenses for Mpower," said Sang Lee, Vice President of Sales & Marketing for Pageflex. "As a result, we increased revenue by 22% as compared to the first quarter of this year. We also focused on building our relationships with both Xerox Corporation (company) XEROX Corporation - http://xerox.com/. See also XEROX PARC, XEROX Network Services. and Electronics For Imaging, Inc. since we believe that those relationships will serve as a catalyst for sales of Pageflex products in late 2001 and beyond." On Wednesday Wednesday: see week. , August 1, 2001, at 11:00 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy , Bitstream will host a conference call with the financial community to discuss its second quarter results. Interested participants should call 1-800-781-0003 (US and Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of only) or 781-482-0105 (outside US and Canada), and enter conference call number 5435571, no sooner than five minutes before the call begins. We will also be webcasting the call at http://bitstream.webex.com. If you are interested in joining the webcast, please go to http://bitstream.webex.com at the start of the call, click "Join a Meeting" and click on the Q2 2001 Earnings Release Conference Call. If you are unable to attend the conference call, you may listen to a replay of the conference call by dialing 1-888-836-6074 (US and Canada only) or 703-925-2505 (outside US and Canada), and entering conference call number 5435571. 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, 2000. Bitstream Inc. Bitstream Inc. (Nasdaq:BITS) is a leading developer of font technology, digital fonts, and custom font designs for a wide variety of markets. Bitstream holds numerous key patents that cover the creation of portable fonts for the Internet. Bitstream licenses its award-winning TrueDoc, WebFont, 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. technologies to Web and application developers, and to manufacturers of Internet appliances, wireless devices, set-top boxes 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. , 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. , printers, and personal digital assistants. Pageflex, Inc. Pageflex 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 [true?] 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, print service providers and corporations. 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 WebFont Maker, T2K T2K Tempest 2000 (game; sequel to Tempest) T2K Time 2 Kill (gaming clan) and Font Fusion are trademarks of Bitstream Inc. Pageflex, Mpower 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)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
Revenues:
Software license $ 1,673 $ 2,043 $ 2,969 $ 3,786
Services 198 427 530 866
Total revenues 1,871 2,470 3,499 4,652
Cost of revenues:
Software license 268 222 468 367
Services 92 210 176 467
Total cost of
revenues 360 432 644 834
Gross profit 1,511 2,038 2,855 3,818
Operating expenses
Selling and marketing 731 951 1,556 1,931
Research and
development 1,265 1,207 2,593 2,495
General and
administrative 421 538 833 1,137
Total operating
expenses 2,417 2,696 4,982 5,563
Loss from operations (906) (658) (2,127) (1,745)
Other income (expense):
(Loss) income on
investment
in DiamondSoft, Inc. (76) 3 (151) 11
Interest income, net 64 123 151 238
Loss before income
taxes (918) (532) (2,127) (1,496)
Provision for income
taxes 31 112 80 132
Net loss $ (949) $ (644) $(2,207) $(1,628)
Basic and diluted
net loss
per share $ (0.12) $ (0.08) $ (0.29) $ (0.21)
Basic and diluted
weighted average
shares outstanding 8,030 7,777 7,723 7,671
Bitstream Inc.
Consolidated Balance Sheets
(In Thousands)
June 30, December 31,
2001 2000
(Unaudited)
ASSETS
Current assets:
Cash and cash
equivalents $ 6,554 $ 7,149
Accounts receivable, net 931 2,043
Prepaid expenses and
other current assets 141 198
Total current assets 7,626 9,390
Property and equipment, net 544 636
Restricted cash 300 300
Goodwill, net 961 1,196
Investment in DiamondSoft, Inc. 548 449
Other assets 243 136
Total assets $10,222 $12,107
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 348 $ 261
Accrued expenses 1,091 1,287
Deferred revenue 775 471
Total current liabilities 2,214 2,019
Long-term deferred revenue 13 39
Total liabilities 2,227 2,058
Total stockholders' equity 7,995 10,049
Total liabilities and
stockholders' equity $10,222 $12,107
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