CAMBRIDGE, Mass.--Feb. 27, 2007-- Bitstream Inc. today reported that it increased total revenue by $930,000 or 20% to $5,548,000 for the three months ended December 31, 2006 as compared to $4,618,000 for the three months ended December 31, 2005. We generated operating income of $473,000 for the three months ended December 31, 2006, as compared to $799,000 for the three months ended December 31, 2005 resulting in operating income for the year of $2,486,000 an increase of $1,448,000 or 140% as compared to the year ended December 31, 2005. Our net income for the three months ended December 31, 2006 was $630,000 or $0.07 per diluted share as compared to net income of $788,000 for the three months ended December 31, 2005, resulting in net income for the year of $3,324,000 or $0.30 per diluted share, an increase of 213% as compared to the year ended December 31, 2005. The Company's cash and cash equivalents at December 31, 2006 totaled $10,542,000, an increase of $723,000 from $9,819,000 at September 30, 2006 and an increase of $5,078,000 from $5,464,000 at December 31, 2005. Income from operations for the quarter ended December 31, 2006 includes $123,000 in non-cash compensation expense associated with our adoption of Statement of Financial Accounting Standards No. 123R, Share-Based Payments, ("SFAS 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. Our non-cash stock-based compensation expense for the year ending December 31, 2006 was $322,000. "We are very pleased with our continued revenue growth, achieving 29% growth for the year ended December 31, 2006 as compared to the year ended December 31, 2005 and surpassing the $20 million annual revenue mark for the first time since becoming a publicly-held company", said Anna M. Chagnon, President and Chief Executive Officer. "We continue to improve our operating performance generating operating income of $473,000 for the quarter ended December 31, 2006, which increased operating income to $2,486,000 for the year ended December 31, 2006 an increase of $1,448,000 or 140% as compared to operating income of $1,038,000 for the year ended December 31, 2005. Net income for the year ended December 31, 2006 was $3,234,000 and included other income recognized during our quarter ended June 30, 2006 of $464,000 in recovered legal fees and related expenses resulting from the payment to us by Monotype Imaging, Inc. and International Typeface Corporation for attorneys' fees, expenses and costs awarded to Bitstream by the U.S. District Court for the Northern District of Illinois in connection with the TrueDoc lawsuit.