Bitstream Inc. Reports Third-Quarter 2002 Results.Business Editors & High-Tech Writers CAMBRIDGE, Mass.--(BUSINESS WIRE)--Oct. 30, 2002 Bitstream Inc. (Nasdaq:BITS) today reported that revenue for the three months ended Sept. 30, 2002, was $1,847,000, compared with $2,114,000 for the three months ended Sept. 30, 2001, an decrease of $267,000 or 12.6%. Cost of revenue for the three months ended Sept. 30, 2002, was $534,000, compared with $472,000 for the three months ended Sept. 30, 2001, an increase of $62,000 or 13.1%. This increase was due to an increase of $204,000 in royalties paid by its MyFonts.com segment to third-party foundries, partially offset by decreases at the company's other two business segments. 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 Sept. 30, 2002, were $1,947,000, a decrease of $400,000, or 17.0%, from $2,347,000 for the three months ended Sept. 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 Sept. 30, 2002 was $(634,000), compared with a $(705,000) loss for the three months ended Sept. 30, 2001, a decrease of $71,000 or 10.1%. The company's net loss for the three months ended Sept. 30, 2002, was $(616,000), representing a decrease of $169,000, or 21.5%, from a $(785,000) loss for the three months ended Sept. 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 $(0.07) for the three months ended Sept. 30, 2002 vs. $(0.10) for the three months ended Sept. 30, 2001. The company's cash and cash equivalent balance at Sept. 30, 2002, was $4,979,000, a decrease of $433,000 from the June 30, 2002, balance of $5,412,000. "We continue to fight a tough economy as consumers and businesses were reluctant to spend on 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 technologies and software products during the third quarter," said Charles Ying, chief executive officer. "As many of our customers delayed purchasing decisions this quarter, we remained vigilant in keeping our expenses under control and in maintaining our cash position. As a result, we have been able to minimize our cash burn, which was $737,000 for the nine months ended Sept. 30, 2002 vs. $1,146,000 for the nine months ended Sept. 30, 2001. In addition, we continue to focus on introducing our latest products, ThunderHawk and .EDIT, to the market as we believe they represent significant future growth potential for the company." Bitstream is composed of three different businesses: (1) its type and technology ("Type") business, which generates revenue primarily 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 Results Type revenue for the three months ended Sept. 30, 2002, decreased $379,000, or 26.8%, to $1,035,000 from $1,414,000 for the three months ended Sept. 30, 2001. Cost of revenue decreased $122,000, or 47.7%, to $134,000 for the three months ended Sept. 30, 2002, from $256,000 for the three months ended Sept. 30, 2001. As a result, Type Gross Profit decreased by $257,000 from $1,158,000 for the three months ended Sept. 30, 2001, to $901,000 for the three months ended Sept. 30, 2002. Operating expenses for the three months ended Sept. 30, 2002, increased $67,000, or 7.4%, to $977,000 compared with $910,000 for the three months ended Sept. 30, 2001. This increase was primarily due to increased research and development costs, including costs associated with the development of the ThunderHawk wireless 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 . Loss from operations for the company's Type business segment was $(76,000) or a decrease of $324,000 from an operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. of $248,000 for the three months ended Sept. 30, 2001. "We believe that the decrease in revenue during the quarter ended Sept. 30, 2002, as compared to the quarter ended Sept. 30, 2001 is only a temporary setback setback In architecture, a steplike recession in the profile of a high-rise building. Usually dictated by building codes to allow sunlight to reach streets and lower floors, the building must take another step back from the street for every specified added height interval. for the Type business as certain customers who were unable to complete purchases by Sept. 30, 2002, subsequently closed or are in the process of closing in the early part of the quarter ending Dec. 31, 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 have also made significant progress in qualifying potential corporate accounts for deployments of our ThunderHawk Enterprise Edition in 2003. The Enterprise Edition not only provides access to 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 on a wide variety of PocketPC devices, it also expands the ability of a corporation to provide key access to its intranet making it ideal for corporate applications such as sales order The sales order, sometimes abbreviated as SO, is an order received by a business from a customer. A sales order may be for products and/or services. Given the wide variety of businesses, this means that the orders can be fulfilled in several ways. entry, information retrieval information retrieval Recovery of information, especially in a database stored in a computer. Two main approaches are matching words in the query against the database index (keyword searching) and traversing the database using hypertext or hypermedia links. , delivery confirmation and expense report management. "In addition, we have continued our long-term strategy of working with wireless carriers in 3G trials to help solidify so·lid·i·fy v. so·lid·i·fied, so·lid·i·fy·ing, so·lid·i·fies v.tr. 1. To make solid, compact, or hard. 2. To make strong or united. v.intr. our goal of providing the killer application Killer Application Killer application or "killer app" is a buzzword that describes a software application that surpasses all of its competitors. Notes: The term is sometimes used to describe a type of software. for the world of 3G wireless technology." MyFonts.com Results MyFonts.com revenue for the three months ended Sept. 30, 2002, increased $250,000, or 173.6%, to $394,000 from $144,000 for the three months ended Sept. 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 Sept. 30, 2002, increased $278,000, or 140.4%, to $476,000 from $198,000 for the three months ended Sept. 30, 2001. Cost of revenue, which primarily represents royalties paid to non-related foundries whose products MyFonts.com resells, for the three months ended Sept. 30, 2002, increased $204,000, or 178.9%, to $318,000 from $114,000 for the three months ended Sept. 30, 2001. Operating expenses for the three months ended Sept. 30, 2002, decreased $135,000, or 46.1%, to $158,000 from $293,000 for the three months ended Sept. 30, 2001. This decrease was primarily due to the decrease in research and development expenses related to site development. Loss from operations for the MyFonts.com business decreased $181,000, or 68.8%, to $(82,000) for the three months ended Sept. 30, 2002, compared with $(263,000) for the three months ended Sept. 30, 2001. "We are delighted that third-quarter revenue for MyFonts.com increased by over 173% and 15% as compared with the three months ended Sept. 30, 2001, and the three months ended June 30, 2002, respectively," said John Collins, vice president and chief technology officer. "In August, we launched a new look together with new help pages for MyFonts.com. The new appearance, which makes it much easier for users to find their way around without assistance, and the new help pages that focus on frequently asked questions, have reduced the number of requests for technical support. One statistic statistic, n a value or number that describes a series of quantitative observations or measures; a value calculated from a sample. statistic a numerical value calculated from a number of observations in order to summarize them. that we are particularly pleased with is that 25 to 30% of the orders are from existing customers, which we believe is key to continued growth." Pageflex Results Revenue from the company's Pageflex business for the three months ended Sept. 30, 2002, decreased $138,000, or 24.8%, to $418,000 from $556,000 for the three months ended Sept. 30, 2001. Cost of revenue for the three months ended Sept. 30, 2002, decreased $20,000, or 19.6%, to $82,000 from $102,000 for the three months ended Sept. 30, 2001. Operating expenses for the three months ended Sept. 30, 2002, decreased $332,000 or 29.0%, to $812,000 from $1,144,000 for the three months ended Sept. 30, 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 $214,000, or 31.0%, to $(476,000) for the three months ended Sept. 30, 2002, from $(690,000) for the three months ended Sept. 30, 2001. "While concerns over the economy have affected the closure of new Mpower sales, our customer base is strong and includes a wide variety of corporations, including Web-to-print and application service providers, consumer products companies, advertising agencies and print service providers. "We are pleased that despite the effects of the economy we have continued our focus on profitability for this segment, leading to a $1,442,000, or 62.4% decrease in this segment's operating loss to $(870,000) for the first nine months of this year as compared to a $(2,312,000) operating loss for the same nine months last year," said David Frenkel, general manager of Pageflex. "We believe that .EDIT sets us apart from our competition and we will make every effort in the near future to exploit that advantage for the Web-top publishing generation." On Wednesday, Oct. 30, 2002, at 5 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 third- quarter results. Interested participants should call 973/935-8508 no sooner than 10 minutes before the call begins and ask the operator for the Bitstream earnings release call. An operator will request your name and organization and ask you to wait until the call begins. If you have any difficulty connecting with the conference call number, call the Liolios Group at 949/574-3860. There will also be an Internet Simulcast (Real Media Player needed for simulcast. Simulcast is voice only) at www.viavid.com/detailpage.asp?sid=1702. A replay of the conference call will be available until Nov. 6, 2002, at 973/341-3080, enter the playback Playback could mean:
Bitstream Inc. Bitstream 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 has recently released an end user version of ThunderHawk(TM), a full-featured browser for the wireless Web. MyFonts.com MyFonts.com Inc., a venture funded by Bitstream 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 online delivery and offers easy ways to find and purchase fonts online, 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 online. Pageflex Inc. Pageflex (www.pageflexinc.com) is the pioneer of a new direction in composition software: Web-top publishing. Moving beyond desktop publishing desktop publishing, system for producing printed materials that consists of a personal computer or computer workstation, a high-resolution printer (usually a laser printer), and a computer program that allows the user to select from a variety of type fonts and sizes, , Pageflex Web-top publishing software helps novice users create high-quality printed products using intelligent, flexible templates, without installing or learning any new software. Pageflex templates are intelligent and flexible because professional designers can set rules to define which elements can change, how much they can change and who can change them. Pageflex products maintain corporate identity and design integrity while enabling sophisticated customization of documents. Pageflex also leads the field in variable-data composition software for both enterprise and desktop. Pageflex software is used for a wide variety of applications, including on-demand marketing materials, stationery The term for boilerplate in the Eudora mail client, starting with Version 3.0. Stationery files are stored on disk and brought into new messages or added to replies. See boilerplate. and business cards, advertising, catalogs and personalized per·son·al·ize tr.v. per·son·al·ized, per·son·al·iz·ing, per·son·al·iz·es 1. To take (a general remark or characterization) in a personal manner. 2. To attribute human or personal qualities to; personify. digital printing. Pageflex products are distributed through original equipment manufacturers (OEMs), value added resellers See VAR. (company) value added reseller - (VAR, or "value added retailer") A company which sells something (e.g. computers) made by another company (an OEM) with extra components added (e.g. specialist software). (VARs), application service providers (ASPs) and system integrators See systems integrator. . The Pageflex worldwide customer base includes manufacturers, service providers, advertising agencies, commercial printers, graphic design houses and application service providers (ASPs). Users of Pageflex products include Xerox, IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) , Ford, EFI See UEFI. EFI - Extensible Firmware Interface , Coldwell Banker, Wunderman, Mail-Well, httprint and Spire. This news 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 Dec. 31, 2001. Note to Editors: 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 Nine Months
Ended Ended
Sept. 30, Sept. 30,
2002 2001 2002 2001
Revenue:
Software license $ 1,588 $ 1,818 $ 5,373 $ 4,787
Services 259 296 820 826
Total revenue 1,847 2,114 6,193 5,613
Cost of revenue:
Software license 430 348 1,238 816
Services 104 124 298 300
Total cost of revenue 534 472 1,536 1,116
Gross profit 1,313 1,642 4,657 4,497
Operating expenses
Selling and marketing 572 645 1,699 2,201
Research and development 1,077 1,191 3,027 3,784
General and administrative 298 511 1,059 1,344
Total operating expenses 1,947 2,347 5,785 7,329
Loss from operations (634) (705) (1,128) (2,832)
Other income (expense):
Income (loss) on investment
in DiamondSoft Inc. 5 (68) 47 (219)
Interest income, net 18 47 60 198
Loss before income taxes (611) (726) (1,021) (2,853)
Provision for income taxes 5 59 75 139
Net loss $ (616)$ (785)$(1,096)$(2,992)
Basic and diluted net loss
per share $ (0.07)$ (0.10)$ (0.13)$ (0.37)
Basic and diluted weighted
average shares outstanding 8,335 8,075 8,318 8,019
Bitstream Inc.
Consolidated Balance Sheets
(In Thousands)
Sept. 30, Dec. 31,
2002 2001
ASSETS
Current assets:
Cash and cash equivalents $4,979 $5,716
Accounts receivable, net 536 679
Prepaid expenses and other current assets 107 122
Total current assets 5,622 6,517
Property and equipment, net 315 473
Restricted cash 300 300
Goodwill 727 727
Investment in DiamondSoft Inc. 646 599
Intangible assets 242 218
Other assets 6 5
1,921 1,849
Total assets $7,858 $8,839
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 253 $ 93
Accrued expenses 1,086 1,126
Current portion of deferred revenue 580 610
Total current liabilities 1,919 1,829
Long-term deferred revenue 10 14
Total liabilities 1,929 1,843
Total stockholders' equity 5,929 6,996
Total liabilities and stockholders' equity $7,858 $8,839
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