8-K

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): November 12, 2008

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.)

245 First Street, 17th Floor, Cambridge, Massachusetts	02142
(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.

Today, November 12, 2008, Bitstream, Inc. announced its financial results for the quarter ended September 30, 2008. 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 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	November 12, 2008 press release

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 : November 12, 2008
	By:	/s/ James P. Dore
		James P. Dore
		Vice President and Chief Financial Officer

EX-99.1

Exhibit 99.1

Bitstream Inc. Reports Third Quarter Results for 2008

The Company reported third quarter revenue of $5,483,000 and net income of $187,000 or $0.02 per diluted share.

CAMBRIDGE, MA—(Business Wire)—November 12, 2008—Bitstream Inc. (Nasdaq: BITS) today reported that revenue decreased by $324,000 or 6% to $5,483,000 for the three months ended September 30, 2008 as compared to total revenue of $5,807,000 for the three months ended September 30, 2007. The Company’s cash and cash equivalents at September 30, 2008 totaled $15,200,000, an increase of $1,261,000 from a Balance of $13,939,000 at June 30, 2008.

“Our concern about the changing economic outlook affecting large software purchases and consumer spending, caused us to adjust our spending and expenses during the third quarter to ensure profitability despite lower than anticipated revenue,” said Anna M. Chagnon, President and Chief Executive Officer. “We are pleased to report that we achieved a net profit of $187,000 for the quarter and increased our cash and cash equivalents for the third quarter by $1,261,000 despite the decrease in revenue of $324,000. With our strong balance sheet and no debt, we remain well positioned to take advantage of potential growth opportunities while managing our business through uncertain economic times. We continue to focus on building the Company for the future and increasing shareholder value.”

GAAP Results

Our income from operations decreased $568,000 or 78% to $163,000 for the three months ended September 30, 2008 as compared to $731,000 for the three months ended September 30, 2007. Our net income decreased $689,000 or 79% to $187,000 or $0.02 per diluted share for the three months ended September 30, 2008 as compared to net income of $876,000 or $0.08 per diluted share for the three months ended September 30, 2007.

Non-GAAP Results

Our income from operations, not including the effect of stock-based compensation expense, decreased $539,000 or 60% to $360,000 for the three months ended September 30, 2008 as compared to $899,000 for the three months ended September 30, 2007. Net income, not including the effect of stock-based compensation expense, decreased $660,000 or 63% to $384,000 or $0.04 per diluted share for the three months ended September 30, 2008 as compared to $1,044,000 or $0.10 per diluted share for the three months ended September 30, 2007.

A reconciliation between GAAP and non-GAAP results is provided at the end of this press release.

CONFERENCE CALL REMINDER

Today, November 12, 2008, at 4:30 p.m. EST, Bitstream will host a conference call with the financial community to discuss its results for the quarter ended September 30, 2008:

• Domestic Dial-in number: 1-866-219-5885

• International Dial-in number: 1-703-639-1124

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 at Bitstream: (617) 497-6222.

A replay of the conference call will be available through November 22, 2008 (access code): 1303925

• 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, 2007.

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 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.

Consolidated Statements of Operations

(In Thousands, Except Per Share Data)

(unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2008		2007		2008		2007
Revenue:
Software license	$	4,222	$	4,699	$	14,563	$	14,189
Services		1,261		1,108		3,807		3,146
Total revenue		5,483		5,807		18,370		17,335
Cost of revenue:
Software license		1,696		1,779		5,555		5,190
Services		598		434		1,782		1,410
Total cost of revenue		2,294		2,213		7,337		6,600
Gross profit		3,189		3,594		11,033		10,735
Operating expenses:
Marketing and selling		979		974		3,358		2,937
Research and development		1,334		1,223		4,048		3,514
General and administrative		713		666		2,072		1,870
Total operating expenses		3,026		2,863		9,478		8,321
Operating income		163		731		1,555		2,414
Interest income, net		30		156		160		424
Total other income and expense		30		156		160		424
Income before provision for income taxes		193		887		1,715		2,838
Provision for income taxes		6		11		56		21
Net income	$	187	$	876	$	1,659	$	2,817
Basic net earnings per share	$	0.02	$	0.09	$	0.17	$	0.29
Diluted net earnings per share	$	0.02	$	0.08	$	0.16	$	0.26
Basic weighted average shares outstanding		9,521		10,036		9,621		9,756
Diluted weighted average shares outstanding		10,160		10,963		10,332		10,992

Bitstream Inc.

Consolidated Balance Sheets

(In Thousands)

(unaudited)

	September 30, 2008		December 31, 2007
ASSETS
Current assets:
Cash and cash equivalents	$	15,200	$	16,420
Accounts receivable, net		1,844		2,245
Prepaid expenses and other current assets		618		465
Total current assets		17,662		19,130
Property and equipment, net		475		569
Other assets:
Restricted cash		150		150
Goodwill		727		727
Intangible assets		71		67
Total other assets		948		944
Total assets	$	19,085	$	20,643
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,061	$	1,137
Accrued expenses		1,599		1,759
Deferred revenue		1795		1,720
Total current liabilities		4,455		4,616
Long-term liabilities		—		40
Total liabilities		4,455		4,656
Total stockholders’ equity		14,630		15,987
Total liabilities and stockholders’ equity	$	19,085	$	20,643

Bitstream Inc.

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 September 30,
	2008		2007
GAAP operating income	$	163	$	731
SFAS 123R stock-based compensation		197		168
Non-GAAP operating income	$	360	$	899
GAAP net income	$	187	$	876
SFAS 123R stock-based compensation		197		168
Non-GAAP net income	$	384	$	1,044
Diluted net income per share:
GAAP net income	$	0.02	$	0.08
SFAS 123R stock-based compensation		0.02		0.02
Non-GAAP net income	$	0.04	$	0.10
Shares used to compute diluted net income per share		10,160		10,963