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Monotype Imaging Announces Third Quarter 2012 Results

About Monotype Imaging

Monotype Imaging is a leading global provider of typefaces, technology and expertise that enable the best user experience and ensure brand integrity. Based in Woburn, Mass., Monotype provides customers worldwide with typeface solutions for a broad range of creative applications and consumer devices. The company’s library and e-commerce sites are home to many of the most widely used typefaces – including the Helvetica®, Frutiger® and Univers® families – as well as the next generation of type designs. Further information is available 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. 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. Univers is a trademark of Linotype GmbH registered in the U.S. Patent and Trademark Office and may be registered in certain other jurisdictions. Typecast is a trademark of Design By Front Limited. 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)

   

September 30, 2012

December 31, 2011
Assets
Current assets:
Cash and cash equivalents $ 37,988 $ 53,850
Accounts receivable, net 6,383 6,588
Income tax refunds receivable 429 733
Deferred income taxes 2,529 506
Prepaid expenses and other current assets   3,249     3,228  
 
Total current assets 50,578 64,905
Property and equipment, net 2,510 2,404
Goodwill 172,090 140,807
Intangible assets, net 86,463 71,664
Deferred income taxes 328 396
Other assets   3,227     3,646  
 
Total assets $ 315,196   $ 283,822  
 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 1,148 $ 1,123
Accrued expenses and other current liabilities 14,296 12,235
Accrued income taxes 2,438 1,280
Deferred revenue 6,854 7,742
Current portion of long-term debt   10,000     10,000  
 
Total current liabilities 34,736 32,380
Long-term debt, less current portion 22,321 27,321
Other long-term liabilities 511 225
Deferred income taxes 26,804 20,596
Reserve for income taxes, net of current portion 901 1,174
Accrued pension benefits 3,924 3,765
Stockholders’ equity:
Common stock 37 36
Additional paid-in capital 175,723 167,448
Treasury stock, at cost (86 ) (86 )
Retained earnings 50,631 30,986
Accumulated other comprehensive income (loss)   (306 )   (23 )
 
Total stockholders’ equity   225,999     198,361  
 
Total liabilities and stockholders’ equity $ 315,196   $ 283,822  
 

 

MONOTYPE IMAGING HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited and in thousands, except share and per share data)

       
Three Months Ended September 30, Nine Months Ended September 30,
  2012     2011     2012     2011  
Revenue $ 37,982 $ 30,695 $ 110,827 $ 91,490
Costs and expenses:
Cost of revenue 5,426 2,503 15,164 7,490
Cost of revenue—amortization of acquired technology   1,085     798     2,965     2,373  
 
Total cost of revenue   6,511     3,301     18,129     9,863  
 
Gross profit 31,471 27,394 92,698 81,627
Operating expenses:
Marketing and selling 8,614 8,169 26,605 24,198
Research and development 4,617 4,116 13,549 12,176
General and administrative 4,386 4,284 14,011 12,621
Amortization of other intangible assets   1,405     1,252     4,057     3,847  
 
Total operating expenses 19,022 17,821 58,222 52,842
Income from operations 12,449 9,573 34,476 28,785
Other (income) expense:
Interest expense 457 587 1,461 2,388
Interest income (6 ) (29 ) (22 ) (91 )
Loss (gain) on foreign exchange 24 215 301 (266 )
Loss (gain) on derivatives 65 (536 ) (14 ) 487
Loss on extinguishment of debt 422 422
Other expense, net   33     2     19     2  
 
Total other expense 573 661 1,745 2,942
Income before provision for income taxes 11,876 8,912 32,731 25,843
Provision for income taxes   3,886     2,920     11,606     8,813  
 
Net income $ 7,990   $ 5,992   $ 21,125   $ 17,030  
 

Net income available to common shareholders—basic & diluted

$ 7,857   $ 5,891   $ 20,779   $ 16,753  
 
 
Net income per common share:
Basic $ 0.22 $ 0.17 $ 0.57 $ 0.48
Diluted $ 0.21 $ 0.16 $ 0.55 $ 0.46
Weighted average number of shares:
Basic 36,323,556 35,447,484 36,217,950 35,267,592
Diluted 37,620,269 36,829,518 37,600,448 36,703,298
 
Dividends declared per share $ 0.04 $ $ 0.04 $
 

 

MONOTYPE IMAGING HOLDINGS INC.

OTHER INFORMATION

(Unaudited and in thousands)

       

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

 
Three Months Ended September 30, Nine Months Ended September 30,
  2012   2011   2012   2011
Income from operations $ 12,449 $ 9,573 $ 34,476 $ 28,785
Depreciation and amortization 2,838 2,320 7,985 6,987
Share based compensation   1,666   1,806   5,300   5,128
 
Net adjusted EBITDA $ 16,953 $ 13,699 $ 47,761 $ 40,900
 

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME

       
Three Months Ended September 30, Nine Months Ended September 30,
  2012   2011   2012   2011
GAAP net income $ 7,990 $ 5,992 $ 21,125 $ 17,030
Amortization, net of tax 1,676 1,378 4,529 4,099
Share based compensation, net of tax   1,121   1,214   3,419   3,379
 
Non-GAAP net income $ 10,787 $ 8,584 $ 29,073 $ 24,508
 

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

       
Three Months Ended September 30, Nine Months Ended September 30,
  2012   2011   2012   2011
GAAP earnings per diluted share $ 0.21 $ 0.16 $ 0.55 $ 0.46
Amortization, net of tax 0.05 0.04 0.13 0.11
Share-based compensation, net of tax   0.03   0.03   0.09   0.09
 
Non-GAAP earnings per diluted share $ 0.29 $ 0.23 $ 0.77 $ 0.66
 

 

MONOTYPE IMAGING HOLDINGS INC.

OTHER INFORMATION

(Unaudited and in thousands)

       

OTHER INFORMATION

 

Share based compensation is comprised of the following:

 
Three Months Ended September 30, Nine Months Ended September 30,
  2012   2011   2012   2011
Marketing and selling $ 745 $ 777 $ 2,346 $ 2,172
Research and development 390 414 1,215 1,187
General and administrative   531   615   1,739   1,769
 
Total share based compensation $ 1,666 $ 1,806 $ 5,300 $ 5,128
 

MARKET INFORMATION

       

The following table presents revenue for our two major markets:

 
Three Months Ended September 30, Nine Months Ended September 30,
  2012   2011   2012   2011
OEM $ 24,280 $ 23,047 $ 73,873 $ 67,830
Creative Professional   13,702   7,648   36,954   23,660
 
Total $ 37,982 $ 30,695 $ 110,827 $ 91,490
 

 

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
Q4 2012 Q4 2012
GAAP net income $ 7,000 $ 7,800
Amortization, net of tax 1,600 1,600
Share-based compensation, net of tax 1,100 1,100
 
Non-GAAP net income $ 9,700 $ 10,500
 
 
GAAP earnings per diluted share $ 0.19 $ 0.21
Amortization, net of tax 0.04 0.04
Share-based compensation, net of tax 0.03 0.03
 
Non-GAAP earnings per diluted share $ 0.26 $ 0.28
 
 
Weighted average diluted shares used to compute non-GAAP earnings per share

37,800,000

37,800,000

Assumes 35% effective tax rate.

   

Low End of Guidance

High End of Guidance

2012 2012
GAAP net income $ 28,100 $ 28,900
Amortization, net of tax 6,100 6,100
Share-based compensation, net of tax 4,500 4,500
 
Non-GAAP net income 38,700 39,500
 
 
GAAP earnings per diluted share $ 0.74 $ 0.76
Amortization, net of tax 0.16 0.16
Share-based compensation, net of tax 0.12 0.12
 
Non-GAAP earnings per diluted share $ 1.02 $ 1.04
 
Weighted average diluted shares used to compute non-GAAP earnings per share

37,800,000

37,800,000

 

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

Q4 2012 Q4 2012
GAAP operating income $ 11,200 $ 12,200
Depreciation and amortization 2,800 2,800
Share-based compensation   1,700   1,700
Non-GAAP net adjusted EBITDA $ 15,700 $ 16,700
 
 

Low End of Guidance

High End of Guidance

 

2012

 

2012

GAAP operating income

$

45,600

$

46,600

Depreciation and amortization

10,900

10,900

Share-based compensation

 

7,000

 

7,000

Non-GAAP net adjusted EBITDA

$

63,500

$

64,500





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