Exhibit 99.1
Bitstream Inc. Reports Fourth Quarter Results for 2009
The Company reported fourth quarter revenue of $5,579,000 and net income of $167,000 or $0.02 diluted earnings per share.
MARLBOROUGH, MA—(Business Wire)—March 22, 2010—Bitstream Inc. (Nasdaq: BITS) today reported that total revenue decreased by $59,000 or 1% to $5,579,000 for the three months ended December 31, 2009 as compared to total revenue of $5,638,000 for the three months ended December 31, 2008. The Company’s cash and cash equivalents at December 31, 2009 totaled $17,915,000, an increase of $242,000 from a balance of $17,673,000 at September 30, 2009 and an increase of $1,753,000 from $16,162,000 at December 31, 2008.
GAAP Results
We increased e-commerce sales during the three months ended December 31, 2009, which led to an increase in direct third party cost of revenue, consisting primarily of royalty expenses, of $268,000 or approximately 19%, as compared to third party cost of revenue for the three months ended December 31, 2008. Total operating expenses for the three months ended December 31, 2009 increased $231,000 or approximately 8%, to $3,036,000 as compared to $2,805,000 for the three months ended December 31, 2008. This increase was primarily attributable to a $130,000 increase in research and development salary and other compensation expense associated with our BOLT Web browsing and publishing product lines, an approximately $57,000 increase in accounting, tax, and legal professional services associated with year-end audit and Sarbanes-Oxley related expenses, and a $112,000 increase in bad debt expense. As a result of the foregoing, our operating income decreased $471,000 or 63% to $273,000 for the three months ended December 31, 2009 as compared to $744,000 for the three months ended December 31, 2008. Net income decreased $542,000 or 76% to $167,000 or $0.02 per diluted share for the three months ended December 31, 2009 as compared to net income of $709,000 or $0.07 per diluted share for the three months ended December 31, 2008. Net income for the three months ended December 31, 2009 includes $80,000 from foreign taxes withheld by customers in countries having tax treaties with the United States.
“During the fourth quarter, we continued to generate momentum in building our Web browsing product line as we entered into three new OEM deals for our BOLT Web browsing product”, said Anna Magliocco-Chagnon, President and Chief Executive Officer. “Although these deals did not impact revenue during 2009, they are expected to contribute to revenue beginning in the second quarter of 2010. We continued to invest heavily in BOLT during the fourth quarter of 2009 and we have developed an aggressive plan to grow our Web browsing product line substantially in the next year. Given our recent success with BOLT and the increase in our e-commerce revenue in the fourth quarter, we anticipate being able to resume our revenue growth in the near future.”
Non-GAAP Results
Our income from operations, not including the effect of stock-based compensation expense, decreased $445,000 or 49% to $466,000 for the three months ended December 31, 2009 as compared to $911,000 for the three months ended December 31, 2008. Net income, not including the effect of stock-based compensation expense, decreased $516,000 or 59% to $360,000 or $0.03 per diluted share for the three months ended December 31, 2009 as compared to net income of $876,000 or $0.09 per diluted share for the three months ended December 31, 2008.
A reconciliation between GAAP and non-GAAP results is provided at the end of this press release.
CONFERENCE CALL REMINDER
Today, March 22, 2010 at 4:30 p.m. EST, Bitstream will host a conference call with the financial community to discuss its results for the quarter ended December 31, 2009:
• | Domestic Dial-in number: 1-866-253-6505 |
• | International Dial-in number: 1-703-639-1207 |
Call into the conference number 5-10 minutes prior to the start time. An operator will request that you provide 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 Bitstream at (617) 497-6222.
A replay of the conference call will be available through April 1, 2010 (access code): 1443455
• | Domestic Replay number: 1-888-266-2081 |
• | International Replay number: 1-703-925-2533 |
Forward Looking Statements Disclosure
This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act 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 for the year ended December 31, 2008.
Use of Non-GAAP Financial Information
To supplement the financial measures presented in the Company’s press release in accordance with accounting principles generally accepted in the United States (“GAAP”), the Company also presents non-GAAP measures relating to income from operations, net income and net income per diluted share which were adjusted from amounts determined based on GAAP to exclude share-based compensation expenses, as well as the related income tax effects.
The Company believes these non-GAAP financial measures will enhance the reader’s overall understanding of Bitstream’s current financial performance and the Company’s prospects for the future by providing a higher degree of transparency for certain financial measures and providing a level of disclosure that helps investors understand how the Company plans and measures its own business.
These non-GAAP measures are not in accordance with GAAP, should not be considered an alternative for measures prepared in accordance with GAAP, and may have limitations in that they do not reflect all of Bitstream’s results of operations as determined in accordance with GAAP.
These non-GAAP measures should only be used to evaluate Bitstream’s results of operations in conjunction with the corresponding GAAP measures. The presentation of non-GAAP information is not meant to be considered superior to, in isolation from or as a substitute for results prepared in accordance with GAAP.
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 the Web on wireless devices, select from the largest collection of fonts online, and customize documents over the Internet. Its core competencies include fonts and font technology, browsing technology, and publishing technology. For more information about Bitstream, please visit www.bitstream.com.
Bitstream and MyFonts.com are registered trademarks, and Pageflex, the Bitstream logo, BOLT 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. and Subsidiaries
Consolidated Statements of Operations
(In Thousands, Except Per Share Data)
(unaudited)
Three Months Ended December 31, | Year Ended December 31, | |||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||
Revenue: | ||||||||||||
Software license | $ | 4,443 | $ | 4,305 | $ | 16,804 | $ | 18,868 | ||||
Services | 1,136 | 1,333 | 4,685 | 5,140 | ||||||||
Total revenue | 5,579 | 5,638 | 21,489 | 24,008 | ||||||||
Cost of revenue: | ||||||||||||
Software license | 1,832 | 1,463 | 6,778 | 7,018 | ||||||||
Services | 438 | 626 | 2,060 | 2,408 | ||||||||
Total cost of revenue | 2,270 | 2,089 | 8,838 | 9,426 | ||||||||
Gross profit | 3,309 | 3,549 | 12,651 | 14,582 | ||||||||
Operating expenses: | ||||||||||||
Marketing and selling | 827 | 1,031 | 3,605 | 4,389 | ||||||||
Research and development | 1,351 | 1,133 | 4,992 | 5,181 | ||||||||
General and administrative | 858 | 641 | 3,053 | 2,713 | ||||||||
Total operating expenses | 3,036 | 2,805 | 11,650 | 12,283 | ||||||||
Operating income | 273 | 744 | 1,001 | 2,299 | ||||||||
Interest and other income, net | 6 | 17 | 59 | 177 | ||||||||
Income before provision for income taxes | 279 | 761 | 1,060 | 2,476 | ||||||||
Provision for income taxes | 112 | 52 | 208 | 108 | ||||||||
Net income | $ | 167 | $ | 709 | $ | 852 | $ | 2,368 | ||||
Basic net income per share | $ | 0.02 | $ | 0.07 | $ | 0.09 | $ | 0.25 | ||||
Diluted net income per share | $ | 0.02 | $ | 0.07 | $ | 0.08 | $ | 0.23 | ||||
Basic weighted average shares outstanding | 9,817 | 9,522 | 9,782 | 9,596 | ||||||||
Diluted weighted average shares outstanding | 10,399 | 10,003 | 10,249 | 10,254 | ||||||||
Bitstream Inc. and Subsidiaries
Consolidated Balance Sheets
(In Thousands)
(unaudited)
December 31, | ||||||
2009 | 2008 | |||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 17,915 | $ | 16,162 | ||
Accounts receivable, net | 1,689 | 1,827 | ||||
Prepaid expenses and other current assets | 916 | 527 | ||||
Restricted cash | — | 150 | ||||
Total current assets | 20,520 | 18,666 | ||||
Property and equipment, net | 643 | 427 | ||||
Other assets: | ||||||
Goodwill | 727 | 727 | ||||
Restricted cash, long-term | 136 | — | ||||
Intangible assets | 78 | 81 | ||||
Total other assets | 941 | 808 | ||||
Total assets | $ | 22,104 | $ | 19,901 | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 1,091 | $ | 832 | ||
Accrued payroll and other compensation | 261 | 1,057 | ||||
Other accrued expenses | 808 | 583 | ||||
Deferred revenue | 1,762 | 1,937 | ||||
Total current liabilities | 3,922 | 4,409 | ||||
Long-term deferred rent | 536 | — | ||||
Total liabilities | 4,458 | 4,409 | ||||
Total stockholders’ equity | 17,646 | 15,492 | ||||
Total liabilities and stockholders’ equity | $ | 22,104 | $ | 19,901 | ||
Bitstream Inc. and Subsidiaries
Non-GAAP Results
(In Thousands, Except Per Share Data)
(unaudited)
The following table shows Bitstream’s non-GAAP results reconciled to GAAP results included in this release.
Three Months Ended December 31, | ||||||
2009 | 2008 | |||||
GAAP operating income | $ | 273 | $ | 744 | ||
Stock-based compensation | 193 | 167 | ||||
Non-GAAP operating income | $ | 466 | $ | 911 | ||
GAAP net income | $ | 167 | $ | 709 | ||
Stock -based compensation | 193 | 167 | ||||
Non-GAAP net income | $ | 360 | $ | 876 | ||
Diluted net income per share: | ||||||
GAAP net income | $ | 0.02 | $ | 0.07 | ||
Stock -based compensation | 0.01 | 0.02 | ||||
Non-GAAP net income | $ | 0.03 | $ | 0.09 | ||
Shares used to compute diluted GAAP and Non-GAAP net income per share | 10,399 | 10,003 | ||||