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Bitstream Reports 2001 Results, Xerox Partnership Bolsters Pageflex

Wednesday, February 20, 2002

Press release from the issuing company

CAMBRIDGE, Mass.--February 19, 2002--Bitstream Inc. today reported that revenues for the three months ended December 31, 2001 were $2,355,000 compared to $2,088,000 for the three months ended December 31, 2000, an increase of $267,000 or 12.8%. Operating expenses for the three months ended December 31, 2001 were $2,499,000, a decrease of $213,000 or 7.8% from $2,712,000 for the three months ended December 31, 2000 due primarily to decreases in expenses incurred by the Company's Pageflex business segment. The loss from operations for the three months ended December 31, 2001 decreased $464,000 or 50.5% to $(455,000) from $(919,000) for the three months ended December 31, 2000. Revenues for the year ended December 31, 2001 were $7,968,000 compared to $8,982,000 for the year ended December 31, 2000, a decrease of $1,014,000 or 11.3%. Operating expenses for the year ended December 31, 2001 decreased $1,105,000 or 10.1% to $9,828,000 as compared to $10,933,000 for the year ended December 31, 2000. The loss from operations for the year ended December 31, 2001 decreased $57,000 or 1.7% to $(3,287,000) as compared to $(3,344,000) for the year ended December 31, 2000. The Company's net loss for the three months ended December 31, 2001 was $(489,000), representing a decrease of $410,000, or 45.6%, from a $(899,000) loss for the three months ended December 31, 2000. Basic and diluted net loss per share were $(0.06) for the three months ended December 31, 2001, versus $(0.12) for the three months ended December 31, 2000. The net loss for the year ended December 31, 2001 increased $342,000 to $(3,481,000) or 10.9% compared to a net loss of $(3,139,000) for the year ended December 31, 2000. Basic and diluted net loss per share were $(0.43) for the year ended December 31, 2001 versus basic and diluted net loss per share of $(0.41) for the year ended December 31, 2000. The Company's cash and cash equivalent balance at December 31, 2001 was $5,716,000, a decrease of $287,000 from the September 30, 2001 balance of $6,003,000. The net decrease in cash for the year ended December 31, 2001 was $1,433,000 versus a decrease of $1,888,000 for the year ended December 31, 2000. Bitstream is composed of three different businesses: (1) its type and technology business, whose primary revenues are generated from the license of font rendering software and fonts to the embedded, set-top box, wireless device and information appliance markets; (2) MyFonts.com, a wholly owned subsidiary that was formed in late 1999 as the first e-commerce 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 revenues for the three months ended December 31, 2001 increased $253,000 or 19.1% to $1,581,000 from $1,328,000 for the three months ended December 31, 2000. Revenues for the year ended December 31, 2001 were $5,348,000 compared to $6,197,000 for the year ended December 31, 2000, a decrease of $849,000 or 13.7%. Operating expenses and cost of revenues (which primarily represent engineering costs attributable to customer specific customizations) for the three months ended December 31, 2001 increased $39,000 or 3.1% to $1,280,000 as compared to $1,241,000 for the three months ended December 31, 2000. Operating expenses and cost of revenue for the year ended December 31, 2001 decreased $305,000 or 5.8% to $4,983,000 as compared to $5,288,000 for the year ended December 31, 2000. Income from operations for the Company's type and technology business segment increased $214,000 or 246% to $301,000 for the three months ended December 31, 2001 as compared to $87,000 for the three months ended December 31, 2000. Income from operations decreased $544,000 or 59.9% to $365,000 for the year ended December 31, 2001 as compared to $909,000 for the year ended December 31, 2000. "We are pleased to report that type and technology revenues increased $167,000 or 11.8% as compared to the third quarter of 2001, and $253,000 or 19.1% as compared to the fourth quarter of 2000,'' said Anna M. Chagnon, President and Chief Operating Officer. "In addition, OEM license revenues for the fourth quarter increased $440,000 or 53.7% as compared to the prior year resulting from the Company's continued focus on signing royalty-bearing deals with major set-top box, wireless device and information appliance manufacturers. We also continue to invest extensively in new product development and are about to release our newest technology, ThunderHawk, Bitstream's breakthrough browsing technology for the wireless Web. Even though the technology is currently in beta, it has already been endorsed by Hewlett-Packard for use with its Jornada PDA.'' MyFonts.com Results The Company's MyFonts.com business segment generated revenues of $233,000 and $702,000 for the three months and one year ended December 31, 2001 respectively. Revenues attributable to this segment after the inter-company elimination of royalties due on the resale of Bitstream products for the three months ended December 31, 2001 increased $132,000 or 322% to $173,000 from $41,000 for the three months ended December 31, 2000. Revenues for the year ended December 31, 2001 were $510,000 compared to $50,000 for the year ended December 31, 2000, an increase of $460,000 or 920%. Operating expenses for the three months ended December 31, 2001 increased $48,000 or 36.1% to $181,000 from $133,000 for the three months ended December 31, 2000. Operating expenses for the year ended December 31, 2001 increased $391,000 or 87.3% to $839,000 from $448,000 for the year ended December 31, 2000. Loss from operations for the MyFonts.com business increased $18,000 or 14.8% to $(140,000) for the three months ended December 31, 2001 as compared to $(122,000) for the three months ended December 31, 2000. The loss from operations for the year ended December 31, 2001 increased $292,000 or 67.6% to $(724,000) from $(432,000) for the year ended December 31, 2000. "We are excited that MyFonts.com's revenue for the fourth quarter of 2001 exceeded by $169,000 or 264% the revenue for the fourth quarter of 2000,'' said Charles Ying, Chief Executive Officer. "In addition, over 20% of our customers have returned to purchase additional fonts online through the site. To continue to grow MyFonts.com revenues, we remain committed to pursuing new advertising campaigns and marketing promotions and increasing the number of fonts on the site as well as the number of font foundries selling their fonts through MyFonts.com. We have already made significant progress on this goal as the number of font foundries that have made sales through the site has increased from five in December 2000 to 54 in December 2001.'' Pageflex Results Revenues from the Company's Pageflex business increased $318,000 or 112% to $601,000 for the three months ended December 31, 2001 as compared to $283,000 for the three months ended December 31, 2000 excluding $436,000 in non-recurring engineering revenue from a worldwide software development and licensing agreement with Xerox Corporation. Including the non-recurring engineering revenue from Xerox in revenue for the three months ended December 31, 2000, revenues from the Company's Pageflex business decreased $118,000 to $601,000 for the three months ended December 31, 2001 as compared to $719,000 for the three months ended December 31, 2000. Revenues from the Company's Pageflex business increased $565,000 or 38.7% from $1,460,000 for the year ended December 31, 2000 to $2,025,000 for the year ended December 31, 2001 excluding the $436,000 in non-recurring engineering revenue from Xerox Corporation described above, and $839,000 and $85,000 from non-recurring engineering and exclusivity fees related to the Company's NuDoc OEM relationship with Atex Media Solutions for the years ended December 31, 2000 and 2001, respectively. Including the non-recurring revenue from Xerox and Atex described above, revenues decreased $625,000 or 22.9% to $2,110,000 for the year ended December 31, 2001 as compared to $2,735,000 for the year ended December 31, 2000. Operating expenses for the three months ended December 31, 2001 decreased $374,000 or 24.4% to $1,156,000 as compared to $1,530,000 for the three months ended December 31, 2000. Operating expenses for the year ended December 31, 2001 decreased $1,350,000 or 22.2% to $4,726,000 as compared to $6,076,000 for the year ended December 31, 2000. Operating losses decreased by $268,000 or 30.3% and $893,000 or 23.4% for the three months and one year ended December 31, 2001, respectively, as compared to the same periods ended December 31, 2000. Operating losses were $(616,000) and $(2,928,000) for the three months and one year ended December 31, 2001, respectively, and $(884,000) and$(3,821,000) for the three months and one year ended December 31, 2000, respectively. The decrease in loss from operations was primarily due to the decrease in expenses described above. "Revenues from sales of Pageflex products increased $213,000 or 101% as compared to the fourth quarter of 2000 evidencing our commitment to growing the Pageflex business overall through sales of products rather than through non-recurring engineering revenues,'' said Sang Lee, Vice President of Sales & Marketing for Pageflex. "On a quarter by quarter basis, Pageflex product revenues steadily increased throughout 2001 as the Pageflex customer base continues to grow. In October 2001, we restructured the Pageflex business to focus specifically on developing applications and delivering new products to the marketplace and reduced expenses accordingly. We believe this restructuring will better position us to achieve profitability.''

 

 

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