Annual Report 2013 a TY PE 2013 Financial Performance 2013 Was a Year Marked by Innovation Highlights Include: and Achievement, As We
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Annual Report 2013 a TY PE 2013 Financial Performance 2013 was a year marked by innovation Highlights Include: and achievement, as we: — launched the commercial version of our — released beautiful typefaces from the Typecast™ application, which also won Monotype Studio, such as the award- “Game-Changer-Of-The-Year” from winning Metro® Nova family, and our eText .net magazine Collection for digital reading environments — extended our partnership with Google, — expanded our Japanese collection, which bringing a public version of the Typecast now represents one of the world’s largest application to Google Fonts, enabling fast portfolios of Japanese designs, with more and easy Google font downloads powered than 500 fonts by our SkyFonts™ technology — held our popular Pencil to Pixel exhibition — expanded our reach into the automotive in New York City, which brought to life market, as we exited 2013 with nine Monotype’s brand story through a historical manufacturers and eight tier-1 suppliers perspective, as well as the importance of as Monotype customers type – yesterday, today and tomorrow — launched the Monotype® Baseline $50.7m platform, enabling OEMs and independent software vendors to build products that $50.7 million in operating take advantage of our fonts in the cloud income, an increase of nine percent year over year $71.0m $71.0 million in non-GAAP net adjusted EBITDA, or 43 percent of revenue, an 11 percent gain over 2012 $78.4m$78.4 million in cash and cash equivalents, an increase of $39.1 million over 2012 $166.6m$166.6 million in revenue, an 11 percent increase over 2012 Annual Report 2013 Financial Highlights 44850_Rev.indd 2 3/26/14 6:45 PM Fellow shareholders, 2013 was an excellent year for Monotype, as we saw more customers view Monotype as a strategic partner, particularly as they navigate today’s global, digital, content landscape. User experiences have become more fl uid, with consumers engaging anytime, anywhere, on any device, in any language. Every touch point is an opportunity to create We also expanded our value to independent a lasting impression. And key to this are software vendors, working as a strategic consistent, branded experiences across every partner with a wide range of customers to screen, which is why customers are turning help them support evolving world markets. to Monotype for the typefaces, technology and expertise they need to succeed in this In Printer Imaging, we continued to experience growing arena. growth in the mid-single-digits, in line with industry expectations, as OEMs capitalized In 2013, we continued to execute on our on emerging markets, such as China. strategy to diversify the business, strengthen our offerings, and invest in support of our Moving Forward long-term growth initiatives – all while In 2014, we expect Creative Professional to continuing to generate signifi cant profi tability continue to lead the way, as more customers and cash fl ow. Our business model of turn to Monotype to meet their digital recurring revenue and profi tability enabled requirements. Moreover, with the emergence us to return more than $10 million to of trends such as HTML5-based advertising, we see new opportunities for future growth. From an execution standpoint, shareholders through our dividend and 2013 was a great year for Monotype, share repurchase programs. In OEM, we expect accelerated growth in with record fi nancial results in automotive, while more mature categories both our Creative Professional and Today, we are a more diversifi ed Monotype. such as printers continue to provide a stable OEM businesses. Our footprint extends across all phases of the revenue stream. Execution against our strategic initiatives content continuum, from content creation, combined with market expanding to distribution, to consumption. Operationally, we intend to focus on four acquisitions has enabled our Creative key areas: Web fonts, which we believe will Professional business to more than double since 2011. 2013 was also a year where responsive design continue to be an important growth driver; came to the forefront, with its goal of crafting independent software vendors, where we a single, optimal viewing experience that works see expanding opportunities for cloud-based seamlessly across every screen. We believe solutions; automotive, where we believe that successful, cross-platform experiences legibility is critical to the driving experience; require fonts that ensure brand fi delity, and digital advertising, where we intend legibility and worldwide language support. to invest signifi cant resources to better understand the ecosystem and emerging Yet, most brands are still in the early stages standards, align our offerings, and establish of this transition. For example, in the spring meaningful partnerships. of 2013, research published through our Brand Perfect™ initiative revealed that 93 We’re excited about the future here percent of the leading consumer magazines at Monotype, and we’re committed to in the U.S., U.K. and Germany had yet to offer strengthening our leadership position in a viewing experience that’s optimized for every part of our business, while innovating, multiple devices. partnering and acquiring as appropriate to deliver more value to our customers. To that end, Monotype is taking a leadership position to help brands transform their On behalf of our board of directors and presence to fi t a multi-screen world. our dedicated employees, I’d like to thank our customers, our partners and you, our In our OEM business, 2013 was marked by shareholders, for your continued support. progress across a wide range of categories in Display Imaging, including automotive displays, Sincerely,Sincerely, TVs, medical instruments and games. DouglasD l JJ. SShawh President and CEO Annual Report 2013 A Letter to Our Shareholders 44850_Rev.indd 3 3/26/14 6:45 PM UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K Í ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2013 ‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-33612 MONOTYPE IMAGING HOLDINGS INC. (Exact name of registrant as specified in its charter) Delaware 20-3289482 (State of incorporation) (I.R.S. Employer Identification No.) 500 Unicorn Park Drive Woburn, Massachusetts 01801 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (781) 970-6000 Securities Registered Pursuant to Section 12(b) of the Act: Title of Each Class Name of Exchange on Which Registered Common Stock, $0.001 par value The NASDAQ Stock Market LLC Securities Registered Pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ‘ No Í Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ‘ No Í Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes Í No ‘ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes Í No ‘ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ‘ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ‘ Accelerated filer Í Non-accelerated filer ‘ Smaller reporting company ‘ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ‘ No Í The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant, computed by reference to the last reported sale price of the common stock as reported on the NASDAQ Global Select Market on June 30, 2013 was approximately $642,641,286 (assumes officers, directors, and all shareholders beneficially owning 5% or more of the outstanding common shares are affiliates). The number of shares outstanding of the registrant’s common stock as of March 7, 2014 was approximately 39,128,559. DOCUMENTS INCORPORATED BY REFERENCE. Portions of the registrant’s definitive Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A in connection with the 2014 Annual Meeting of Stockholders are incorporated herein by reference into Part III of this report. MONOTYPE IMAGING HOLDINGS INC. TABLE OF CONTENTS Item No. Page No. PART I Item 1. Business ....................................................................... 2 Item 1A. Risk Factors .................................................................... 15 Item 1B. Unresolved Staff Comments ..................................................... 27 Item 2. Properties ..................................................................... 28 Item 3. Legal Proceedings .............................................................. 28 Item 4. Mine Safety Disclosures ......................................................... 28 PART II Item 5. Market for Registrant’s Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities ................................................