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Monotype Imaging Announces Fourth Quarter and Full Year 2009 Results
Company Reports Strong Revenue and Profitability
WOBURN, Mass., Mar 04, 2010 (BUSINESS WIRE) -- Monotype Imaging Holdings Inc. (Nasdaq: TYPE), a leading global provider of text imaging solutions, today announced financial results for the fourth quarter and full year ended Dec. 31, 2009.
Fourth quarter and full year 2009 highlights:
- Fourth quarter revenue was $25.1 million, an eight percent decline year-over-year and a nine percent increase over the prior quarter. Full year 2009 revenue was $94.0 million, a decrease of 15 percent year-over-year.
- Net income for the fourth quarter was $4.0 million, versus $4.1 million in the fourth quarter of 2008. Full year 2009 net income was $13.4 million, versus $15.4 million in the prior year.
- Non-GAAP net adjusted EBITDA for the fourth quarter was $10.6 million, or 42 percent of revenue. Full year 2009 non-GAAP net adjusted EBITDA was $41.0 million, or 44 percent of revenue.
- Cash flow from operations was $5.7 million for the fourth quarter and $28.1 million for the full year 2009. Cash and cash equivalents balance as of Dec. 31, 2009, was $34.6 million, an increase of $2.7 million from the prior year, inclusive of $22.5 million in debt repayments.
"A return to sequential growth in our OEM business contributed to fourth quarter total revenues that exceeded our expectations. Our overall business has grown sequentially during each of the past two quarters, and we believe we have effectively managed the business past the low point we experienced earlier in 2009," said Doug Shaw, president and chief executive officer. "The strategic investments we made over the last year have strengthened our product offerings and expanded our market opportunities. We believe the company is well positioned for 2010 and beyond."
Scott Landers, senior vice president and chief financial officer, said, "Our results for the fourth quarter and the full year 2009 reflect our ability to manage our business to significant levels of profitability. We balanced cost containment with investments, while at the same time grew our cash balances to $34.6 million and reduced our debt balances by over $22 million."
Fourth quarter operating results
Revenue for the fourth quarter of 2009 was $25.1 million, down eight percent compared to $27.4 million in the fourth quarter of 2008. OEM revenue for the quarter was $18.5 million, decreasing eight percent year-over-year. Creative Professional revenue for the quarter was $6.7 million, decreasing nine percent from the fourth quarter of 2008.
Net income for the fourth quarter of 2009 was $4.0 million, compared to $4.1 million in the prior year period. Earnings per diluted share for the fourth quarter of 2009 were $0.11, consistent with the fourth quarter of 2008.
In the fourth quarter of 2009, non-GAAP net adjusted EBITDA was $10.6 million, compared to $13.1 million in the fourth quarter of last year.
Beginning in the second quarter of 2009, Monotype Imaging changed its definition of non-GAAP net adjusted EBITDA to be calculated as GAAP operating income and adding back share-based compensation, depreciation and amortization expenses.
Full year 2009 operating results
Revenue for the full year 2009 was $94.0 million, a decrease of 15 percent compared to $110.9 million in the full year 2008. OEM revenues were $69.0 million, decreasing 11 percent year-over-year. Creative Professional revenues were $25.0 million, decreasing 24 percent year-over-year.
Net income for the full year 2009 was $13.4 million, compared to net income of $15.4 million for the prior year. Earnings per diluted share for the full year 2009 were $0.38 compared to earnings per diluted share of $0.43 for the full year 2008.
For the full year 2009, non-GAAP net adjusted EBITDA was $41.0 million, compared to non-GAAP net adjusted EBITDA of $48.9 million for the prior year.
A reconciliation of GAAP operating income to non-GAAP net adjusted EBITDA for the three and 12 months ended Dec. 31, 2009 and 2008 is provided in the financial tables that accompany this release.
Cash, cash flow and debt balances
Monotype Imaging had cash and cash equivalents of $34.6 million as of Dec. 31, 2009, an increase from $31.9 million at the end of the prior year. Monotype Imaging generated $5.7 million of cash from operations in the fourth quarter of 2009 and $28.1 million on a full year basis. The company's outstanding debt was $91.4 million as of Dec. 31, 2009, a decrease from $99.2 million as of Sept. 30, 2009 and $113.6 million at the end of the prior year.
Financial Outlook
For the first quarter of 2010, Monotype Imaging expects revenue in the range of $24.0 million to $25.0 million. The company expects first quarter 2010 non-GAAP net adjusted EBITDA in the range of $9.5 million to $10.5 million and earnings per share in the range of $0.07 to $0.09.
For full year 2010, Monotype Imaging expects revenue in the range of $100 million to $104 million. The company expects full year 2010 non-GAAP net adjusted EBITDA in the range of $42 million to $45 million and earnings per share in the range of $0.36 to $0.41.
Conference call details
Monotype Imaging will host a conference call on Thursday, March 4, 2010 at 8:30 a.m. EST to discuss the company's fourth quarter and full year 2009 results and business outlook for 2010. Individuals who are interested in listening to the audio webcast should log on to the "Investor Relations" portion of the "About Us" section of Monotype Imaging's Web site at www.monotypeimaging.com. The live call can also be accessed by dialing (877) 941-2333 (domestic) or (480) 629-9723 (international) using passcode 4206505. If individuals are unable to listen to the live call, the audio webcast will be archived in the "Investor Relations" portion of the company's Web site for one year.
Non-GAAP financial measures
This press release contains non-GAAP financial measures under the rules of the U.S. Securities and Exchange Commission. This non-GAAP information supplements and is not intended to represent a measure of performance in accordance with disclosures required by generally accepted accounting principles. Non-GAAP financial measures are used internally to manage the business, such as in establishing an annual operating budget and in reporting to lenders. Non-GAAP financial measures are used by Monotype Imaging management in its operating and financial decision-making because management believes these measures reflect ongoing business in a manner that allows meaningful period-to-period comparisons. Accordingly, Monotype Imaging believes it is useful for investors and others to review both GAAP and non-GAAP measures in order to (a) understand and evaluate current operating performance and future prospects in the same manner as management does and (b) compare in a consistent manner the company's current financial results with past financial results. The primary limitations associated with the use of non-GAAP financial measures are that these measures may not be directly comparable to the amounts reported by other companies and they do not include all items of income and expense that affect operations. Monotype Imaging management compensates for these limitations by considering the company's financial results and outlook as determined in accordance with GAAP and by providing a detailed reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures in the tables attached to this press release.
Forward-looking statements
This press release may contain forward-looking statements including those related to future revenues and operating results, the growth of the company's OEM business and Creative Professional business, the execution of the company's growth strategy and anticipated business momentum that involve risks and uncertainties that could cause the company's actual results to differ materially. Factors that might cause or contribute to such differences include, but are not limited to: risks associated with changes in the economic climate, including decreased demand for fonts or products that incorporate the company's text imaging solutions; risks associated with changes in the financial markets, including the availability of credit; risks associated with increased competition, which may result in the company losing customers or force it to reduce prices; risks associated with the development and market acceptance of new products or product features; risks associated with the company's ability to adapt its products to new markets and to anticipate and quickly respond to evolving technologies and customer requirements; and risks associated with the ownership and enforcement of the company's intellectual property. Additional disclosure regarding these and other risks faced by the company is available in the company's public filings with the Securities and Exchange Commission, including the risk factors included in the company's Annual Report on Form 10-K for the year ended Dec. 31, 2008, as amended, and subsequent filings. The financial information set forth in this press release reflects estimates based on information available at this time. These amounts could differ from actual reported amounts stated in the company's Annual Report on Form 10-K for the year ended Dec. 31, 2009. While Monotype Imaging may elect to update forward-looking statements at some point in the future, the company specifically disclaims any obligation to do so, even if an estimate changes.
About Monotype Imaging
Monotype Imaging is a global provider of text imaging solutions for manufacturers and developers of consumer electronics devices including laser printers, copiers, mobile phones, digital televisions, set-top boxes, navigation devices, digital cameras and software applications and operating systems. The company also provides printer drivers and color imaging technologies to OEMs (original equipment manufacturers). Monotype Imaging technologies are combined with access to more than 10,000 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® and ITC Franklin Gothic™ typefaces. Fonts are licensed to creative and business professionals through custom font design services, direct sales or e-commerce portals. Monotype Imaging offers fonts and industry-standard solutions that support all of the world's major languages. The company is based in Woburn, Mass., with regional offices in the U.K., Germany (Linotype), Japan, China and Korea, in addition to U.S. regional offices in Mt. Prospect, Ill., Redwood City, Calif. and Boulder, Colo. Information about Monotype Imaging and its products 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 is a trademark 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. ©2010 Monotype Imaging Holdings Inc. All rights reserved.
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MONOTYPE IMAGING HOLDINGS INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands)
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December 31, |
| 2009 |
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2008 |
| ASSETS |
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|
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| Current assets: |
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|
|
|
|
|
|
| Cash and cash equivalents |
$ |
34,616 |
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|
$ |
31,941 |
|
| Accounts receivable, net |
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5,145 |
|
|
|
6,010 |
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| Income tax refunds receivable |
|
885 |
|
|
|
-- |
|
| Deferred income taxes |
|
878 |
|
|
|
1,637 |
|
| Prepaid expenses and other current assets |
|
1,666 |
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|
|
1,603 |
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| |
|
|
|
|
|
|
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| Total current assets |
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43,190 |
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|
41,191 |
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| Property, plant and equipment, net |
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1,790 |
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|
2,093 |
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| Goodwill |
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140,745 |
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138,898 |
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| Intangible assets, net |
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85,088 |
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|
91,416 |
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| Other assets |
|
1,564 |
|
|
|
3,823 |
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| |
|
|
|
|
|
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| Total assets |
$ |
272,377 |
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|
$ |
277,421 |
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| LIABILITIES AND STOCKHOLDERS' EQUITY |
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| Current liabilities: |
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| Accounts payable |
$ |
395 |
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$ |
646 |
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| Accrued expenses and other current liabilities |
|
8,635 |
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|
12,443 |
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| Accrued income taxes |
|
903 |
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|
|
1,700 |
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| Deferred revenue |
|
6,446 |
|
|
|
5,669 |
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| Current portion of long-term debt |
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16,293 |
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17,769 |
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|
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| Total current liabilities |
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32,672 |
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38,227 |
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| Long-term debt, less current portion |
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75,060 |
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|
95,827 |
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| Other long-term liabilities |
|
784 |
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|
|
1,064 |
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| Deferred income taxes |
|
18,310 |
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|
|
17,165 |
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| Reserve for income taxes, net of current portion |
|
1,550 |
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|
|
1,343 |
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| Accrued pension benefits |
|
3,479 |
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|
|
2,959 |
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| Stockholders' equity: |
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| Common stock |
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35 |
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35 |
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| Additional paid-in capital |
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148,273 |
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142,676 |
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| Treasury stock, at cost |
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(86 |
) |
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(86 |
) |
| Accumulated deficit |
|
(10,043 |
) |
|
|
(23,445 |
) |
| Accumulated other comprehensive income |
|
2,343 |
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|
|
1,656 |
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|
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|
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| Total stockholders' equity |
|
140,522 |
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|
|
120,836 |
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|
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| Total liabilities and stockholders' equity |
$ |
272,377 |
|
|
$ |
277,421 |
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MONOTYPE IMAGING HOLDINGS INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except share and per share data)
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Three Months Ended
December 31, |
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Year Ended
December 31, |
| |
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2009 |
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2008 |
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2009 |
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2008 |
| Revenue |
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$ |
25,116 |
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$ |
27,369 |
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$ |
94,005 |
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$ |
110,861 |
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| Cost of revenue |
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1,870 |
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|
1,702 |
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|
6,861 |
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|
9,101 |
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| Cost of revenue--amortization of acquired technology |
|
|
848 |
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|
844 |
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|
3,383 |
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|
3,392 |
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| Total cost of revenue |
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2,718 |
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2,546 |
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|
10,244 |
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12,493 |
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| Gross profit |
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22,398 |
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24,823 |
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83,761 |
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98,368 |
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| Operating expenses: |
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| Marketing and selling |
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6,358 |
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|
5,715 |
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|
23,645 |
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|
22,911 |
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| Research and development |
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|
3,958 |
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|
3,478 |
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|
14,142 |
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|
14,867 |
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| General and administrative |
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|
3,877 |
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|
4,531 |
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|
14,674 |
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|
19,882 |
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| Amortization of other intangible assets |
|
|
1,197 |
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|
1,382 |
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|
4,744 |
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|
6,924 |
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| Total operating expenses |
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15,390 |
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|
15,106 |
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|
57,205 |
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|
64,584 |
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| Income from operations |
|
|
7,008 |
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|
9,717 |
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|
26,556 |
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|
33,784 |
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| Other expense: |
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| Interest expense |
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1,253 |
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|
1,853 |
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|
4,496 |
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|
8,197 |
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| Interest income |
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(1 |
) |
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(10 |
) |
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(61 |
) |
|
(120 |
) |
| Other (income) expense, net |
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|
53 |
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|
1,295 |
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|
1,144 |
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|
556 |
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| Total other expense |
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1,305 |
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|
3,138 |
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|
5,579 |
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|
8,633 |
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| Income before provision for income taxes |
|
|
5,703 |
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|
6,579 |
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|
20,977 |
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|
25,151 |
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| Provision for income taxes |
|
|
1,681 |
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|
2,501 |
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|
7,575 |
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|
9,770 |
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|
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| Net income |
|
$ |
4,022 |
|
$ |
4,078 |
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$ |
13,402 |
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$ |
15,381 |
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| Net income available to common stockholders |
|
$ |
4,000 |
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$ |
4,032 |
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$ |
13,315 |
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$ |
15,130 |
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| Net income per common share: |
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| Basic |
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$ |
0.12 |
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$ |
0.12 |
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$ |
0.39 |
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$ |
0.45 |
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| Diluted |
|
$ |
0.11 |
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$ |
0.11 |
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$ |
0.38 |
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$ |
0.43 |
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Weighted average number of shares outstanding:
Basic
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34,470,331 |
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34,122,996 |
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34,365,544 |
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33,818,508 |
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Weighted average number of shares outstanding:
Diluted
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|
35,594,599 |
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|
35,088,430 |
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|
35,288,126 |
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|
35,304,794 |
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MONOTYPE IMAGING HOLDINGS INC.
OTHER INFORMATION
(Unaudited and in thousands)
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RECONCILIATION OF GAAP NET INCOME TO NON-GAAP ADJUSTED EBITDA
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Three Months Ended
December 31, |
|
Year Ended December 31, |
| |
2009 |
|
2008 |
|
2009 |
|
2008 |
| Net income |
$ |
4,022 |
|
|
$ |
4,078 |
|
$ |
13,402 |
|
|
$ |
15,381 |
| Provision for income taxes |
|
1,681 |
|
|
|
2,501 |
|
|
7,575 |
|
|
|
9,770 |
| Interest expense, net |
|
1,252 |
|
|
|
1,843 |
|
|
4,435 |
|
|
|
8,077 |
| Depreciation and amortization |
|
2,349 |
|
|
|
2,493 |
|
|
9,298 |
|
|
|
11,441 |
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|
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|
|
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|
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|
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|
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| EBITDA |
$ |
9,304 |
|
|
$ |
10,915 |
|
$ |
34,710 |
|
|
$ |
44,669 |
| Share based compensation |
|
1,282 |
|
|
|
893 |
|
|
5,186 |
|
|
|
3,634 |
| Non-cash add backs |
|
(265 |
) |
|
|
N/A |
|
|
(163 |
) |
|
|
N/A |
| Restructuring, issuance and cash non-operating add backs (2) |
|
782 |
|
|
|
N/A |
|
|
969 |
|
|
|
N/A |
| Acquisition expenses |
|
52 |
|
|
|
N/A |
|
|
65 |
|
|
|
N/A |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted EBITDA (1) |
$ |
11,155 |
|
|
$ |
11,808 |
|
$ |
40,767 |
|
|
$ |
48,303 |
(1) The definition of Adjusted EBITDA was modified on October 30, 2009. As a result, certain add backs to Adjusted EBITDA are not applicable in three months and year ended December 31, 2008.
(2) Permits an add-back of up to $250 thousand of cash non-operating expense, which is not to exceed a maximum of $1.5 million when combined together with restructuring and issuance costs, on a trailing twelve month basis.
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|
|
|
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RECONCILIATION OF GAAP OPERATING INCOME TO NON-GAAP NET ADJUSTED EBITDA
|
| |
|
|
|
|
|
|
|
|
| |
|
Three Months Ended
December 31, |
|
Year Ended
December 31, |
| |
|
2009 |
|
2008 |
|
2009 |
|
2008 |
| GAAP operating income |
|
$ |
7,008 |
|
$ |
9,717 |
|
$ |
26,556 |
|
$ |
33,784 |
| Depreciation and amortization |
|
|
2,349 |
|
|
2,493 |
|
|
9,298 |
|
|
11,441 |
| Share based compensation |
|
|
1,282 |
|
|
893 |
|
|
5,186 |
|
|
3,634 |
| |
|
|
|
|
|
|
|
|
| Non-GAAP net adjusted EBITDA |
|
$ |
10,639 |
|
$ |
13,103 |
|
$ |
41,040 |
|
$ |
48,859 |
| |
|
|
|
|
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MONOTYPE IMAGING HOLDINGS INC.
OTHER INFORMATION
(Unaudited and in thousands)
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| |
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OTHER INFORMATION
|
|
Share based compensation is comprised of the following:
|
| |
|
|
|
|
| |
|
Three Months Ended
December 31, |
|
Year Ended
December 31, |
| |
|
2009 |
|
2008 |
|
2009 |
|
2008 |
| Marketing and selling |
|
$ |
470 |
|
$ |
359 |
|
$ |
1,818 |
|
$ |
1,141 |
| Research and development |
|
|
278 |
|
|
20 |
|
|
1,186 |
|
|
717 |
| General and administrative |
|
|
534 |
|
|
514 |
|
|
2,182 |
|
|
1,776 |
| |
|
|
|
|
|
|
|
|
| Total share based compensation |
|
$ |
1,282 |
|
$ |
893 |
|
$ |
5,186 |
|
$ |
3,634 |
| |
|
|
|
|
|
|
|
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MONOTYPE IMAGING HOLDINGS INC.
MARKET INFORMATION
(Unaudited and in thousands)
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| |
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|
The following table presents revenue for our two major markets:
|
| |
|
|
|
|
|
|
|
|
| |
|
Three Months Ended
December 31, |
|
Year Ended
December 31, |
| |
|
2009 |
|
2008 |
|
2009 |
|
2008 |
| OEM |
|
$ |
18,461 |
|
$ |
20,073 |
|
$ |
68,967 |
|
$ |
77,810 |
| Creative professional |
|
|
6,655 |
|
|
7,296 |
|
|
25,038 |
|
|
33,051 |
| |
|
|
|
|
|
|
|
|
| Total |
|
$ |
25,116 |
|
$ |
27,369 |
|
$ |
94,005 |
|
$ |
110,861 |
MONOTYPE IMAGING HOLDINGS INC.
OTHER INFORMATION
(Unaudited and in thousands)
RECONCILIATION OF FORECASTED GAAP OPERATING INCOME TO FORECASTED NON-GAAP NET ADJUSTED EBITDA
| |
|
|
|
|
|
|
| |
|
Low End of Guidance |
|
High End of Guidance |
| |
|
Q1 2010 |
|
Q1 2010 |
| GAAP Operating income |
|
$ |
5,900 |
|
$ |
6,900 |
| Depreciation and amortization |
|
|
2,400 |
|
|
2,400 |
| Share based compensation |
|
|
1,200 |
|
|
1,200 |
| |
|
|
|
|
|
|
| Non-GAAP Net adjusted EBITDA |
|
$ |
9,500 |
|
$ |
10,500 |
| |
|
|
|
|
| |
|
Low End of Guidance |
|
High End of Guidance |
| |
|
2010 |
|
2010 |
| GAAP Operating income |
|
$ |
26,900 |
|
$ |
29,900 |
| Depreciation and amortization |
|
|
9,500 |
|
|
9,500 |
| Share based compensation |
|
|
5,600 |
|
|
5,600 |
| |
|
|
|
|
| Non-GAAP Net adjusted EBITDA |
|
$ |
42,000 |
|
$ |
45,000 |
 SOURCE: Monotype Imaging Holdings Inc.
ICR
Kori Doherty, 781-970-6120
ir@monotypeimaging.com
Copyright Business Wire 2010
|
