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Monotype Imaging Announces Fourth Quarter And Full Year 2011 Results

Stocks in this article: TYPE

About Monotype Imaging

Monotype Imaging combines technology with design to help the world communicate. Based in Woburn, Mass. with offices in the U.S., Europe and Asia, Monotype Imaging brings text imaging and graphical user interface capabilities to consumer electronics devices such as laser printers, copiers, mobile phones, e-book readers, tablets, automotive displays, digital cameras, navigation devices, digital televisions, set-top boxes and consumer appliances. The company also provides printer drivers, page description language interpreters, printer user interface technology and color imaging solutions to printer manufacturers and OEMs (original equipment manufacturers). Monotype Imaging technologies are combined with access to more than 15,000 typefaces from the Monotype®, Linotype® and ITC® typeface libraries — home to some of the world's most widely used designs, including the Times New Roman®, Helvetica®, Frutiger® and ITC Franklin Gothic™ typefaces. Fonts are licensed to creative, business and Web professionals through e-commerce portals, direct and indirect sales and custom design services. Monotype Imaging offers industry-standard font solutions that support all of the world's major languages. Information about Monotype Imaging can be found at www.monotypeimaging.com.

Monotype is a trademark of Monotype Imaging Inc. registered in the U.S. Patent and Trademark Office and may be registered in certain jurisdictions. Times New Roman is a trademark of The Monotype Corp. registered in the U.S. Patent and Trademark Office and may be registered in certain jurisdictions. Linotype is a trademark of Linotype GmbH registered in the U.S. Patent and Trademark Office and may be registered in certain jurisdictions. Helvetica and Frutiger are trademarks of Linotype Corp. registered in the U.S. Patent and Trademark Office and may be registered in certain jurisdictions in the name of Linotype Corp. or its licensee Linotype GmbH. ITC is a trademark of International Typeface Corp. registered in the U.S. Patent and Trademark Office and may be registered in certain jurisdictions. ITC Franklin Gothic is a trademark of International Typeface Corp. and may be registered in certain jurisdictions. All other trademarks are the property of their respective owners. ©2012 Monotype Imaging Holdings Inc. All rights reserved.

MONOTYPE IMAGING HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands)
         
December 31,
2011 2010
ASSETS
Current assets:
Cash and cash equivalents $ 53,850 $ 42,786
Accounts receivable, net 6,588 4,720
Income tax refunds receivable 733 340
Deferred income taxes 506 350
Prepaid expenses and other current assets   3,228     2,480  
 
Total current assets 64,905 50,676
Property and equipment, net 2,404 1,589
Goodwill 140,807 142,354
Intangible assets, net 71,664 80,239
Other assets   4,042     3,947  
 
Total assets $ 283,822   $ 278,805  
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 1,123 $ 753
Accrued expenses and other current liabilities 12,235 13,045
Accrued income taxes 1,280 1,171
Deferred revenue 7,742 8,506
Current portion of long-term debt   10,000     8,355  
 
Total current liabilities 32,380 31,830
Long-term debt, less current portion 27,321 57,504
Other long-term liabilities 225 471
Deferred income taxes 20,596 19,328
Reserve for income taxes 1,174 1,125
Accrued pension benefits 3,765 3,565
Stockholders’ equity:
Common stock 36 35
Additional paid-in capital 167,448 155,791
Treasury stock, at cost (86 ) (86 )
Retained earnings 30,986 8,317
Accumulated other comprehensive (loss) income   (23 )   925  
 
Total stockholders’ equity   198,361     164,982  
 
Total liabilities and stockholders’ equity $ 283,822   $ 278,805  
 

MONOTYPE IMAGING HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited and in thousands, except share and per share data)
                 

Three Months Ended December 31,

Year Ended December 31,

2011 2010 2011 2010
Revenue $ 31,722 $ 29,405 $ 123,212 $ 106,659
Cost of revenue 2,665 1,924 10,155 7,477
Cost of revenue—amortization of acquired technology   796     880     3,169     3,488  
 
Total cost of revenue   3,461     2,804     13,324     10,965  
 
Gross profit 28,261 26,601 109,888 95,694
Operating expenses:
Marketing and selling 8,424 7,026 32,622 25,935
Research and development 4,364 3,879 16,540 15,404
General and administrative 4,792 4,288 17,413 16,488
Amortization of other intangible assets   1,224     1,218     5,071     4,795  
 
Total operating expenses 18,804 16,411 71,646 62,622
Income from operations 9,457 10,190 38,242 33,072
Other (income) expense:
Interest expense 466 1,034 2,854 4,421
Interest income (9 ) (3 ) (100 ) (16 )
Loss on extinguishment of debt 422
Other expense, net   223     377     446     1,687  
 
Total other expense 680 1,408 3,622 6,092
Income before provision for income taxes 8,777 8,782 34,620 26,980
Provision for income taxes   3,138     2,651     11,951     8,620  
 
Net income $ 5,639   $ 6,131   $ 22,669   $ 18,360  
 
Net income available to common shareholders – basic & diluted $ 5,550   $ 6,083   $ 22,302   $ 18,237  
 
Net income per common share:
Basic $ 0.16 $ 0.17 $ 0.63 $ 0.52
Diluted $ 0.15 $ 0.17 $ 0.61 $ 0.51
Weighted average number of shares:
Basic 35,624,809 35,302,470 35,357,630 34,762,919
Diluted 37,156,688 36,611,191 36,817,379 35,990,295
 

MONOTYPE IMAGING HOLDINGS INC.
OTHER INFORMATION
(Unaudited and in thousands)
                 
 
 
RECONCILIATION OF GAAP OPERATING INCOME TO NON-GAAP NET ADJUSTED EBITDA
 

Three Months Ended December 31,

Year Ended December 31,

2011 2010 2011 2010
GAAP operating income $ 9,457 $ 10,190 $ 38,242 $ 33,072
Depreciation and amortization 2,359 2,357 9,346 9,323
Share based compensation   1,846   1,244   6,974   5,450
 
Non-GAAP net adjusted EBITDA $ 13,662 $ 13,791 $ 54,562 $ 47,845
 
Transactions costs   596   238   786   248
 

Non-GAAP net adjusted EBITDA,  excluding transaction costs

$

14,258

$ 14,029 $ 55,348 $ 48,093
 

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME

                 

Three Months Ended December 31,

Year Ended December 31,
2011 2010 2011 2010
GAAP net income $ 5,639 $ 6,131 $ 22,669 $ 18,360
Amortization, net of tax 1,297 1,464 5,397 5,641
Share based compensation, net of tax   1,185   868   4,568   3,711

 

Non-GAAP net income $ 8,121 $ 8,463 $ 32,634 $ 27,712
 

RECONCILIATION OF GAAP EARNINGS PER DILUTED SHARE TO NON-GAAP EARNINGS PER DILUTED SHARE

                 
Three Months Ended December 31, Year Ended December 31,
2011 2010 2011 2010
GAAP earnings per diluted share $ 0.15 $ 0.17 $ 0.61 $ 0.51
Amortization, net of tax 0.03 0.04 0.15 0.16
Share based compensation, net of tax   0.03   0.02   0.12   0.10
 
Non-GAAP earnings per diluted share $ 0.21 $ 0.23 $ 0.88 $ 0.77
 
Transactions costs, net of tax   0.02   0.01   0.02   0.01
 

Non-GAAP earnings per diluted share, excluding  transaction costs

$ 0.23 $ 0.24 $ 0.90 $ 0.78
 

MONOTYPE IMAGING HOLDINGS INC.
OTHER INFORMATION
(Unaudited and in thousands)
 
OTHER INFORMATION
 
Share based compensation is comprised of the following:
                 
Three Months Ended December 31, Year Ended December 31,
2011 2010 2011 2010
Marketing and selling $ 794 $ 493 $ 2,966 $ 2,042
Research and development 425 262 1,612 1,154
General and administrative   627   489   2,396   2,254
 
Total share based compensation $ 1,846 $ 1,244 $ 6,974 $ 5,450
 
MARKET INFORMATION
(Unaudited and in thousands)
                 

The following table presents revenue for our two major markets:

 
Three Months Ended December 31, Year Ended December 31,
2011 2010 2011 2010
OEM $ 23,826 $ 22,512 $ 91,656 $ 80,000
Creative Professional   7,896   6,893   31,556   26,659
 
Total $ 31,722 $ 29,405 $ 123,212 $ 106,659
 

MONOTYPE IMAGING HOLDINGS INC.
OTHER INFORMATION
(Unaudited and in thousands, except share and per share data)
         

RECONCILIATION OF FORECAST GAAP EARNINGS PER DILUTED SHARE TO FORECAST NON-GAAP EARNINGS PER DILUTED SHARE

 

Low End of Guidance

High End of Guidance

Q1 2012 Q1 2012
GAAP net income $ 5,700 $ 6,200
Amortization, net of tax 1,300 1,300
Share-based compensation, net of tax   1,100   1,100
 
Non-GAAP net income $ 8,100 $ 8,600
 
 
GAAP earnings per diluted share $ 0.15 $ 0.17
Amortization, net of tax, per diluted share 0.03 0.03
Share-based compensation, net of tax, per diluted share   0.03   0.03
 
Non-GAAP earnings per diluted share $ 0.21 $ 0.23
 
 

Weighted average diluted shares used to compute non-  GAAP earnings per share

37,300,000

37,300,000

 

Assumes 37% effective tax rate.

 
 

Low End of Guidance

High End of Guidance

2012 2012
GAAP net income $ 25,300 $ 27,300
Amortization, net of tax 5,200 5,200
Share-based compensation, net of tax   4,200   4,200
 
Non-GAAP net income   34,700   36,700
 
 
GAAP earnings per diluted share $ 0.68 $ 0.73
Amortization, net of tax, per diluted share 0.14 0.14
Share-based compensation, net of tax, per diluted share   0.11   0.11
 
Non-GAAP earnings per diluted share $ 0.93 $ 0.98
 

Weighted average diluted shares used to compute non-  GAAP earnings per share

37,500,000

37,500,000

 

Assumes 36% effective tax rate.

 

MONOTYPE IMAGING HOLDINGS INC.

RECONCILIATION OF FORECAST GAAP OPERATING INCOME TO FORECAST NON-GAAP NET ADJUSTED EBITDA

(Unaudited and in thousands)

         

Low End of Guidance

High End of Guidance

Q1 2012 Q1 2012
GAAP operating income $ 9,400 $ 10,400
Depreciation and amortization 2,300 2,300
Share-based compensation   1,800   1,800
 
Non-GAAP net adjusted EBITDA $ 13,500 $ 14,500
 
Transaction expenses   500   500
 

Non-GAAP net adjusted EBITDA, excluding  transaction expenses

$ 14,000 $ 15,000
 
         

Low End of Guidance

High End of Guidance

2012 2012
GAAP operating income $ 41,200 $ 44,200
Depreciation and amortization 9,300 9,300
Share-based compensation   6,500   6,500
 
Non-GAAP net adjusted EBITDA $

57,000

$ 60,000
 
Transaction expenses   1,000   1,000
 

Non-GAAP net adjusted EBITDA, excluding  transaction expenses

$

58,000

$ 61,000




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