"We continue to fight a tough economy as consumers and businesses were reluctant to spend on OEM technologies and software products during the third quarter," said Charles Ying, Chief Executive Officer. "As many of our customers delayed purchasing decisions this quarter, we remained vigilant in keeping our expenses under control and in maintaining our cash position. As a result, we have been able to minimize our cash burn, which was $737,000 for the nine months ended September 30, 2002 versus $1,146,000 for the nine months ended September 30, 2001. In addition, we continue to focus on introducing our latest products, ThunderHawk and Mpower, to the market as we believe they represent significant future growth potential for the company."

Bitstream is composed of three different businesses: (1) its type and technology ("Type") business, which generates revenue primarily from the licensing 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 Results
Type revenue for the three months ended September 30, 2002 decreased $379,000 or 26.8% to $1,035,000 from $1,414,000 for the three months ended September 30, 2001. Cost of revenue decreased $122,000 or 47.7% to $134,000 for the three months ended September 30, 2002 from $256,000 for the three months ended September 30, 2001. As a result, Type Gross Profit decreased by $257,000 from $1,158,000 for the three months ended September 30, 2001 to $901,000 for the three months ended September 30, 2002. Operating expenses for the three months ended September 30, 2002 increased $67,000 or 7.4% to $977,000 as compared to $910,000 for the three months ended September 30, 2001. This increase was primarily due to increased research and development costs, including costs associated with the development of the ThunderHawk wireless browser. Loss from operations for the Company's Type business segment was $(76,000) or a decrease of $324,000 from an operating profit of $248,000 for the three months ended September 30, 2001.

"We believe that the decrease in revenue during the quarter ended September 30, 2002 as compared to the quarter ended September 30, 2001 is only a temporary setback for the Type business as certain customers who were unable to complete purchases by September 30, 2002 subsequently closed or are in the process of closing in the early part of the quarter ending December 31, 2002," said Anna M. Chagnon, President and Chief Operating Officer. "We have also made significant progress in qualifying potential corporate accounts for deployments of our ThunderHawk Enterprise Edition in 2003. The Enterprise Edition not only provides access to the Internet on a wide variety of Pocket PC devices, it also expands the ability of a corporation to provide key access to its intranet making it ideal for corporate applications such as sales order entry, information retrieval, delivery confirmation and expense report management. In addition, we have continued our long-term strategy of working with wireless carriers in 3G trials to help solidify our goal of providing the killer application for the world of 3G wireless technology."

MyFonts.com Results
MyFonts.com revenue for the three months ended September 30, 2002 increased $250,000 or 173.6% to $394,000 from $144,000 for the three months ended September 30, 2001. Revenue attributable to this segment, before elimination of intercompany royalties due on the resale of Bitstream products, for the three months ended September 30, 2002 increased $278,000 or 140.4% to $476,000 from $198,000 for the three months ended September 30, 2001. Cost of revenue, which primarily represents royalties paid to non-related foundries whose products MyFonts.com resells, for the three months ended September 30, 2002 increased $204,000 or 178.9% to $318,000 from $114,000 for the three months ended September 30, 2001. Operating expenses for the three months ended September 30, 2002 decreased $135,000 or 46.1% to $158,000 from $293,000 for the three months ended September 30, 2001. This decrease was primarily due to the decrease in research and development expenses related to site development. Loss from operations for the MyFonts.com business decreased $181,000 or 68.8% to $(82,000) for the three months ended September 30, 2002 as compared to $(263,000) for the three months ended September 30, 2001.

"We are delighted that third quarter revenue for MyFonts.com increased by over 173% and 15% as compared to the three months ended September 30, 2001 and the three months ended June 30, 2002, respectively," said John Collins, Vice President and Chief Technology Officer. "In August, we launched a new look together with new help pages for MyFonts.com. The new appearance, which makes it much easier for users to find their way around without assistance, and the new help pages that focus on frequently-asked questions, have reduced the number of requests for technical support. One statistic that we are particularly pleased with is that 25 to 30% of the orders are from existing customers, which we believe is key to continued growth."

Pageflex Results
Revenue from the Company's Pageflex business for the three months ended September 30, 2002 decreased $138,000 or 24.8% to $418,000 from $556,000 for the three months ended September 30, 2001. Cost of revenue for the three months ended September 30, 2002 decreased $20,000 or 19.6% to $82,000 from $102,000 for the three months ended September 30, 2001. Operating expenses for the three months ended September 30, 2002 decreased $332,000 or 29.0% to $812,000 from $1,144,000 for the three months ended September 30, 2001. Operating loss decreased by $214,000 or 31.0% to $(476,000) for the three months ended September 30, 2002 from $(690,000) for the three months ended September 30, 2001.

"While concerns over the economy have affected the closure of new Mpower sales, our customer base is strong and includes a wide variety of corporations, including Web-to-print and application service providers, consumer products companies, advertising agencies and print service providers. We are pleased that despite the effects of the economy we have continued our focus on profitability for this segment, leading to a $1,442,000 or 62.4% decrease in this segment's operating loss to $(870,000) for the first nine months of this year as compared to a $(2,312,000) operating loss for the same nine months last year," said David Frenkel, General Manager of Pageflex. "We believe that Mpower sets us apart from our competition and we will make every effort in the near future to exploit that advantage for the Web-top publishing generation."

On Wednesday October 30, 2002, at 5:00 p.m. EST, Bitstream will host a conference call with the financial community to discuss its third quarter results. Interested participants should call (973) 935-8508 no sooner than ten minutes before the call begins and ask the operator for the Bitstream Inc. earnings release call. An operator will request 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 call the Liolios Group at (949) 574-3860. There will also be an Internet Simulcast (Real Media Player needed for simulcast. Simulcast is voice only) at: www.viavid.com/detailpage.asp?sid=1702 . A replay of the conference call will be available until November 6, 2002 at: (973) 341-3080, enter the playback pass code (3559422) to access the replay. For Internet Simulcast replay see the link above.

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, 2001.

About

Bitstream Inc.
Bitstream Inc. (NASDAQ: BITS) is the leading developer of font technology, digital fonts, and custom font designs. Bitstream licenses its award-winning TrueDoc and Font Fusion technologies to Web and application developers, and to manufacturers of information appliances, wireless and handheld devices, set-top boxes, embedded systems, and printers. Setting the standard for excellence in font technology, Bitstream holds numerous key patents that cover the creation of portable fonts for the Internet. Building on this experience, Bitstream has recently released an end user version of ThunderHawk, a full-featured browser for the wireless Web.

MyFonts.com
MyFonts.com, Inc., a venture funded by Bitstream Inc. and established as a wholly owned subsidiary in 1999, is a showcase of the world's fonts available from one easy-to-use Internet portal. It provides the largest collection of fonts ever assembled for on-line delivery, and offers easy ways to find and purchase fonts on-line, unique typographic resources, and a forum for interacting with font experts.

For more information, visit http://www.myfonts.com , the Web site for finding, trying, and buying fonts on line.

Pageflex
Pageflex ( www.pageflexinc.com) is the pioneer of a new direction in composition software: Web-top publishing. Moving beyond desktop publishing, Pageflex Web-top publishing software helps novice users create high-quality printed products using intelligent, flexible templates, without installing or learning any new software. Pageflex templates are intelligent and flexible because professional designers can set rules to define which elements can change, how much they can change, and who can change them. Pageflex products maintain corporate identity and design integrity while enabling sophisticated customization of documents. Pageflex also leads the field in variable-data composition software for both enterprise and desktop.

Pageflex software is used for a wide variety of applications, including on-demand marketing materials, stationery and business cards, advertising, catalogs, and personalized digital printing. Pageflex products are distributed through original equipment manufacturers (OEMs), value added resellers (VARs), application service providers (ASPs), and system integrators. The Pageflex worldwide customer base includes manufacturers, service providers, advertising agencies, commercial printers, graphic design houses, and application service providers (ASPs). Users of Pageflex products include Xerox, IBM, Ford, EFI, Coldwell Banker, Wunderman, Mail-Well, httprint, and Spire.

Bitstream and TrueDoc are registered trademarks and Font Fusion and ThunderHawk are trademarks of Bitstream Inc. Pageflex, Mpower, Mpower and NuDoc are trademarks of Pageflex, a wholly-owned subsidiary of Bitstream Inc. MyFonts.com is a trademark of MyFonts.com, Inc., a wholly-owned subsidiary of Bitstream Inc. All other trademarks mentioned are for identification purposes only and may be trademarks of their respective owners.

Anna M. Chagnon
President, Chief Operating Officer
and Chief Financial Officer
Bitstream Inc.
617.520.8619

Bitstream Inc.

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Bitstream Inc.

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