if you want to read a good mathematical exposition, check out chapter 6 in Mackay's (the guy giving the presentation) book "Information Theory, Inference, and L

if you want to read a good mathematical exposition, check out chapter 6 in Mackay's (the guy giving the presentation) book "Information Theory, Inference, and Learning Algorithms". It covers stream codes and, specifically, arithmetic coding. I've recommended this book in other threads... its an amazing read.