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Bitstream Inc. (BITS)

November 11, 2011 8:00 am ET


Scott Landers - Chief Financial Officer, Principal Accounting Officer, Senior Vice President, Treasurer and Assistant Secretary

Staci Mortenson - IR, Integrated Corporate Relations

Amos Kaminski - Executive Chairman, Interim Chief Executive Officer and Member of Special Committee

Douglas J. Shaw - Chief Executive Officer, President and Director


Ralph Schackart - William Blair & Company L.L.C., Research Division

Saket Kalia - JP Morgan Chase & Co, Research Division

Matthew J. Kempler - Sidoti & Company, LLC

Richard H. Davis - Canaccord Genuity, Research Division

Steven B. Frankel - Dougherty & Company LLC, Research Division

Ross MacMillan - Jefferies & Company, Inc., Research Division



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Ladies and gentlemen, welcome to the Monotype Imaging conference call on the 11th of November 2011. [Operator Instructions] I will now hand the conference over to Staci Mortenson. Please go ahead, madam.

Staci Mortenson

Thank you, and good morning, everyone. With me this morning are Doug Shaw, President and Chief Executive Officer; and Scott Landers, Senior Vice President and Chief Financial Officer. Today, we'll review the acquisition of Bitstream's font business, which we announced following the close of markets yesterday. We will then open up the call for questions.

Before we begin, I'd like to remind everyone that matters we're discussing today and the information contained in the press release announcing the acquisition of Bitstream's font business that are not historical facts are considered forward-looking statements within the meaning of the Private Securities Litigation Act of 1995. Forward-looking statements including predictions, estimates, expectations and other forward-looking statements generally identifiable by the use of the words believe, will, expect or similar expressions, are subject to risks and uncertainties that could cause actual results to differ materially. Accordingly, participants on today's call are cautioned not to place undue reliance on these forward-looking statements, which reflect management's opinion only as of today's date, November 11, 2011. Information on the potential factors and detailed risks that could affect the companies actual results of operations is included in the company's filings with the SEC. The company undertakes no obligation to revise or publicly release the results of any revisions of forward-looking statements on this mornings conference call other than through filings that may be made with the SEC concerning the matters discussed on this call.

In addition, I'd like to remind you that today's discussion will include references to net adjusted EBITDA and non-GAAP diluted EPS, which are intended to serve as a further complement to our results provided in accordance with generally accepted accounting principles.

In addition, a link to today's call can be found under Events and Presentations in the Investor Relations section of our website at This call will be archived on our website.

And now I'd like to turn the call over to Doug Shaw. Doug?

Douglas J. Shaw

Thank you for joining us this morning to discuss our exciting news that Monotype Imaging has entered into a definitive agreement to acquire Bitstream's font business. I will provide an overview and the key strategic reasons behind our intent. Then I will pass the call over to Scott who will review the details related to the post structure of the transaction.

Monotype Imaging combines technology with design to help the world communicate. Today, we are a leading provider, global provider of text imaging solutions with fonts and technologies that enable the display and printing of high-quality digital content.

We have successfully grown our business organically into acquisitions. The acquisition of Bitstream's font business is clearly in our stated strategy of expanding IP, growing our customer base, capturing emerging opportunities and increasing momentum in our growth businesses.

The transaction will include Bitstream's popular website, which features 89,000 fonts from nearly 8 -- from nearly 900 foundries. The MyFonts site also includes the widely used WhatTheFont service, which helps customers identify fonts. It uses post and image to WhatTheFont to find the closest match in the database, while the font enthusiasts lend a hand in the WhatTheFont form.

The acquisition will also include the Bitstream Typeface Library the company's font fusion and panoramic font rendering and layout technologies in addition to fonts from embedded and mobile environments and 10 patents.

Bitstream is based in Marlborough, Massachusetts, and employs some of the most respected and talented professionals in the type industry. Approximately 15 people are expected to join us from their U.S. operations. We also anticipate that about 40 engineers and type designers will join us from Bitstream's development facility in India.

We believe the addition of Bitstream's expertise will further our ability to provide broad-based development resources to our OEM in greater professional businesses.

While Monotype Imaging and Bitstream are both font-focused businesses, they are based on complementary approaches. Classic historic type faces in multilingual offerings are at the heart of our product portfolio, where our strength is in targeting the needs of corporations and brands. Bitstream, on the other hand, serves a broad base of customers by way of new and distinctive type faces. We believe the combined entity will create market diversity that ultimately enhances choice for customers while fostering a creative community.

Through its MyFonts site and WhatTheFont service, Bitstream has cultivated an active, creative community, helping to drive exciting, innovative design. We believe that this community is a true asset to the font industry.

Bitstream also delivers an excellent online user experience and gives typeface designers considerable control over their work and business. It is our intent to maintain with an eye towards supporting and extending the best aspect of MyFonts within our e-commerce and cloud-based offerings.

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