UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 13, 2011
BITSTREAM INC.
(Exact name of registrant as specified in its charter)
| Delaware | 0-21541 | 04-2744890 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
| 500 Nickerson Road, Marlborough, Massachusetts | 01752 | |||
| (Address of principal executive offices) | (Zip Code) | |||
Registrant’s telephone number, including area code (617) 497-6222
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
On May 13, 2011, Bitstream Inc. announced its financial results for the quarter ended March 31, 2011. The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K.
The information in this Form 8-K and the exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibits |
| Number |
Title | |
| 99.1 | Press release issued May 13, 2011 | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
BITSTREAM INC.
(Registrant)
| Date : May 13, 2011 |
||||||||
| By: | /s/ James P. Dore | |||||||
| James P. Dore | ||||||||
| Vice President and Chief Financial Officer |
Exhibit 99.1
Bitstream Inc. Reports First Quarter Results for 2011
The Company reported revenue for the first quarter increased 31% to $6,813,000
as compared to the first quarter of 2010, as well as 5% sequentially
as compared to the fourth quarter of 2010.
MARLBOROUGH, Mass. —(Business Wire)—May 13, 2011—Bitstream Inc. (Nasdaq: BITS) today reported that total revenue increased by $1,605,000 or 31% to $6,813,000 for the three months ended March 31, 2011 as compared to total revenue of $5,208,000 for the three months ended March 31, 2010 and by $294,000 or 5% sequentially as compared to $6,519,000 for the three months ended December 31, 2010. The Company’s aggregate cash, cash equivalents, and investments at March 31, 2011 totaled $11,456,000, an increase of $188,000 from a balance of $11,268,000 at December 31, 2010.
“We are pleased to report that revenues increased sequentially for the fourth consecutive quarter to $6,813,000 for the first quarter of 2011,” said Amos Kaminski, Executive Chairman and Chief Executive Officer. “The increase from the prior year was the result of increased sales across all of our product lines. MyFonts sales, with the addition of Webfonts, continue to grow and exceeded our expectations. Our OEM font product line closed several large licenses during the quarter that include possible royalties in future quarters. In addition to closing Pageflex Storefront licenses, our publishing line also received OEM revenue from our acquired iWay product. We continue to strengthen the relationships with our iWay OEM partners and additionally have signed contracts with iWay resellers in the US and Europe. Our BOLT browser team, built over the past year, is focused on generating revenue opportunities through a variety of channels and establishing BOLT’s brand recognition.”
The increase in cost of license revenue for the three months ended March 31, 2011 as compared to the three months ended March 31, 2010 is due to the increase in direct third party cost of $473,000 primarily from royalties associated with e-commerce sales and $47,000 for amortization expense related to the acquisition of iWay technology. Cost of services increased primarily due to the additional personnel added with the iWay acquisition.
Operating expenses increased $1,558,000 to $4,496,000 for the three months ended March 31, 2011 from $2,938,000 for the three months ended March 31, 2010. The increase includes increases in general and administrative (“G&A”) expenses of $144,000 in professional fees and $100,000 in salaries and benefits from an increase in personnel. We also invested approximately $1 million in iWay technology and increased our investment in the BOLT technology by approximately $300,000.
On May 1, 2011, Anna Chagnon, Bitstream’s President and CEO, resigned as an employee and director of the Company. Approximately $685,000 in expenses related to this resignation will be recorded as a G&A expense during its second quarter.
GAAP Loss
Our loss from operations increased $602,000 to $1,005,000 for the three months ended March 31, 2011, as compared to $403,000 for the three months ended March 31, 2010. Our net loss increased $636,000 to $1,034,000 or $0.10 per share for the three months ended March 31, 2011 as compared to $398,000 or $0.04 per share for the three months ended March 31, 2010.
Non-GAAP Loss
Our non-GAAP results exclude stock-based compensation expense, the amortization of intangible assets primarily acquired from Press-Sense Ltd. and acquisition costs for certain assets of Press-Sense Ltd. Our non-GAAP loss from operations increased $511,000 to $680,000 for the three months ended March 31, 2011, as compared to $169,000 for the three months ended March 31, 2010. Our non-GAAP net loss increased $545,000 to $709,000 or $0.07 per share for the three months ended March 31, 2011, as compared to $164,000 or $0.02 per share for the three months ended March 31, 2010. A reconciliation between GAAP and non-GAAP results is provided at the end of this press release.
CONFERENCE CALL REMINDER
Today, May 13, 2011 at 4:30 p.m. EST, Bitstream will host a conference call with the financial community to discuss its results for the quarter ended March 31, 2011:
| • | Domestic Dial-in number: 1-866-238-0637 |
| • | International Dial-in number: 1-703-639-1156 |
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 May 23, 2011 (access code): 1531601
| • | Domestic Replay number: 1-888-266-2081 |
| • | International Replay number: 1-703-925-2533 |
The replay will also be available via the Company’s website at www.bitstream.com/corporate/investor
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, 2010, as supplemented by Bitstream’s subsequent quarterly reports on Form 10Q in 2011.
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 or loss from operations, net income or loss and net income or loss per diluted share which were adjusted from amounts determined based on GAAP to exclude share-based compensation expenses, as well as expenses from the amortization of intangible assets primarily acquired from Press-Sense Ltd. and the acquisition costs for acquiring certain assets of Press-Sense Ltd.
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 financial 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. develops software technologies and applications for the graphic art and mobile communications industries. Bitstream’s award-winning fonts and font technologies enable device manufacturers and application developers to render the highest quality text in any language, on any device, at any resolution. The company’s MyFonts brand is the world’s leading provider of fonts to consumers. Bitstream’s Pageflex brand enables marketers to easily produce customized communications in print, email and online. The company’s latest offering is the BOLT mobile browser, which has been installed by millions of users worldwide since its release in February 2009. For more information visit www.bitstream.com.
Bitstream Inc. and Subsidiaries
Consolidated Statements of Operations
(In Thousands, Except Per Share Data)
(unaudited)
| Three Months Ended March 31, |
||||||||
| 2011 | 2010 | |||||||
| Revenue: |
||||||||
| Software licenses |
$ | 5,204 | $ | 4,017 | ||||
| Services |
1,609 | 1,191 | ||||||
| Total revenue |
6,813 | 5,208 | ||||||
| Cost of revenue: |
||||||||
| Software licenses |
2,756 | 2,211 | ||||||
| Services |
566 | 462 | ||||||
| Total cost of revenue |
3,322 | 2,673 | ||||||
| Gross profit |
3,491 | 2,535 | ||||||
| Operating expenses: |
||||||||
| Marketing and selling |
1,055 | 803 | ||||||
| Research and development |
2,198 | 1,392 | ||||||
| General and administrative |
1,243 | 743 | ||||||
| Total operating expenses |
4,496 | 2,938 | ||||||
| Operating loss |
(1,005 | ) | (403 | ) | ||||
| Interest and other income, net |
24 | 13 | ||||||
| Loss before provision for income taxes |
(981 | ) | (390 | ) | ||||
| Provision for income taxes |
53 | 8 | ||||||
| Net loss |
$ | (1,034 | ) | $ | (398 | ) | ||
| Basic and diluted net loss per share |
$ | (0.10 | ) | $ | (0.04 | ) | ||
| Basic and diluted weighted average shares outstanding |
10,151 | 9,953 | ||||||
Bitstream Inc. and Subsidiaries
Consolidated Balance Sheets
(In Thousands)
(unaudited)
| March 31, 2011 |
December 31, 2010 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 3,293 | $ | 3,057 | ||||
| Accounts receivable, net |
1,535 | 1,999 | ||||||
| Prepaid expenses and other current assets |
801 | 750 | ||||||
| Short-term investments |
114 | 114 | ||||||
| Total current assets |
5,743 | 5,920 | ||||||
| Property and equipment, net |
614 | 606 | ||||||
| Restricted cash |
198 | 144 | ||||||
| Other |
46 | 43 | ||||||
| Goodwill |
3,526 | 3,526 | ||||||
| Intangible assets, net |
3,379 | 3,479 | ||||||
| Long-term investments |
8,049 | 8,097 | ||||||
| Total assets |
$ | 21,555 | $ | 21,815 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 1,643 | $ | 1,155 | ||||
| Accrued payroll and other compensation |
761 | 746 | ||||||
| Other accrued expenses |
713 | 667 | ||||||
| Deferred revenue |
2,322 | 2,413 | ||||||
| Total current liabilities |
5,439 | 4,981 | ||||||
| Long-term deferred revenue |
225 | 105 | ||||||
| Long-term deferred rent |
525 | 530 | ||||||
| Total liabilities |
6,189 | 5,616 | ||||||
| Total stockholders’ equity |
15,366 | 16,199 | ||||||
| Total liabilities and stockholders’ equity |
$ | 21,555 | $ | 21,815 | ||||
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 March 31, |
||||||||
| 2011 | 2010 | |||||||
| Operating loss: |
||||||||
| GAAP operating loss |
$ | (1,005 | ) | $ | (403 | ) | ||
| Stock-based compensation |
221 | 227 | ||||||
| Amortization of intangible assets |
104 | 7 | ||||||
| Non-GAAP operating loss |
$ | (680 | ) | $ | (169 | ) | ||
| Net loss: |
||||||||
| GAAP net loss |
$ | (1,034 | ) | $ | (398 | ) | ||
| Stock-based compensation |
221 | 227 | ||||||
| Amortization of intangible assets |
104 | 7 | ||||||
| Non-GAAP net loss |
$ | (709 | ) | $ | (164 | ) | ||
| Net loss per share: |
||||||||
| GAAP net loss per share |
$ | (0.10 | ) | $ | (0.04 | ) | ||
| Stock-based compensation per share |
0.02 | 0.02 | ||||||
| Amortization of intangible assets per share |
0.01 | — | ||||||
| Non-GAAP net loss per share |
$ | (0.07 | ) | $ | (0.02 | ) | ||
For the three months ended March 31, 2011 and 2010, net loss per share is based on 10,151 and 9,953, basic weighted average shares outstanding, respectively.
Investors:
EPOCH Financial Group
Victor Thompson, 888-751-1306
vthompson@epochfinancial.com