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Monotype Imaging Monotype Monotype Imaging 2011 Annual Report CORPORATE HEADQUARTERS Monotype Imaging Inc. Linotype GmbH Monotype Imaging (Korea) 500 Unicorn Park Drive Werner-Reimers-Straße 2-4 #805, 642-6, Seongji Heights Woburn, MA 01801 61352 Bad Homburg 3-Cha Building, Yeoksam-dong PHONE: 781 970 6000 Germany Gangman-gu, Seoul 135-717 FAX: 781 970 6001 PHONE: 49 (0) 6172 484-418 Korea FAX: 49 (0) 6172 484-429 PHONE: 02-2051-9900 FAX: 02-6919-2044 Monotype Imaging Ltd. Monotype Imaging Hong Kong Ltd. Monotype Imaging K.K. Unit 2, Perrywood Business Park 7A Yardley Commercial Building 8th fl oor Hikari Building Salfords, Redhill, Surrey 3 Connaught Road West, Sheung Wan 1-43-7 Yoyogi RH1 5DZ Hong Kong Shibuya-ku, Tokyo 151-0053 England PHONE: 852 2575 6789 Japan PHONE: 44 (0)1737 765959 FAX: 852 2591 9232 PHONE: 81 3 5304 0920 FAX: 44 (0)1737 769243 FAX: 81 3 5304 0921 Monotype Imaging Holdings Inc. BOARD OF DIRECTORS and CORPORATE OFFICERS DIRECTORS EXECUTIVE OFFICERS Robert M. Givens Douglas J. Shaw Chairman of the Board of Directors President, Chief Executive Offi cer and Director Roger J. Heinen, Jr. John L. Seguin Pamela F. Lenehan Executive Vice President Robert L. Lentz Scott E. Landers Senior Vice President, Douglas J. Shaw Chief Financial Offi cer, Treasurer and Assistant Secretary Peter J. Simone Janet M. Dunlap Vice President, General Counsel and Secretary Daniel T. Gerron Vice President, Corporate Development Lisa Landa Monotype Imaging Holdings Inc. is a leading provider of text imaging solutions. Our end-user and embedded Vice President, Corporate Marketing solutions for print, Web and mobile environments enable people to create and consume dynamic content on Steven R. Martin any and every device. Our technologies and fonts allow for the display and printing of high-quality digital Vice President, Engineering content. Our software technologies have been widely deployed across, and embedded in, a range of CE devices John H. McCallum – including laser printers, digital copiers, mobile phones, e-book readers, tablets, automotive displays, digital Vice President and General Manager, Enterprise Solutions and Managing Director, cameras, navigation devices, digital televisions, set-top boxes and consumer appliances, as well as in numerous Monotype Imaging Ltd. software applications and operating systems. We combine proprietary technologies with access to more than David L. McCarthy 15,000 typefaces primarily from our Monotype®, Linotype® and ITC® typeface libraries — home to some of the Vice President and General Manager, Printer Imaging world’s most widely used designs, including popular names such as the Times New Roman®, Helvetica® and Ira Mirochnick ITC Franklin Gothic™ typefaces. Fonts are licensed through e-commerce portals, direct and indirect sales channels Vice President and General Manager, and custom design services. Display Imaging The front cover of this annual report was set in the Harmonia Sans™ Patricia J. Money and ITC Stone Serif® typefaces; designed by Jim Wasco of Monotype Vice President, Human Resources Imaging and Sumner Stone respectively. The back cover, inside cover Christopher J. Roberts and the letter to shareholders, was set in the Akko™ typeface Vice President and General Manager, by Linotype type director, Akira Kobayashi. The rest of this annual E-Commerce report is set in fonts from the Mentor™ typeface family, designed by Michael Harvey in 2005. It is a 21st century English interpretation of classic roman letterforms and is available from Monotype Imaging. OFFICERS Mark S. Brown Vice President, Display Imaging Sales Geoff rey W. Greve Vice President, Type Technologies Frank Wildenberg Managing Director, Linotype GmbH A Letter to Our Shareholders and Customers — DOUG SHAW, CEO Fellow shareholders, 2011 was a successful year for Monotype Imaging. We believe that our typefaces, tech nology and expertise are helping a growing number of brands ach ieve their goal of delivering high-quality user experiences, regardless of platform, device or language. In 2011, we continued to execute on our st rategy of diversifying our business, led by double-digit growth in our Display Imaging and Creative Professional businesses. We st rengthened our IP and continued to invest in our long-term growth initiatives, while again delivering signifi cant levels of profi tability and cash fl ow. IN 2011, MONOTYPE IMAGING’S FINANCIAL 2011 HIGHLIGHTS ACHIEVEMENTS INCLUDED: Our focus has been to help cust omers bring high-quality experiences across an ever-ch anging and unpredict able Full year revenue of $123.2 million, an increase ° digital landscape, where consumers expect an “always on” of 16 percent year-over-year experience – one that connect s their lives through ° Non-GAAP net income of $32.6 million, an increase any device or platform. of 18 percent over 2010 In 2011, Amazon adopted our solution on top of the ° Non-GAAP net adjust ed EBITDA of $54.6 million, or 44 percent of revenue, a 14 percent increase Google Android™ platform for the Kindle Fire™ tablet, compared to 2010 extending our foothold in the emerging tablet market. In e-readers, our solution is helping to power the reading Strong cash fl ow from operations of $39.3 million ° experiences of a number of devices, including the for 2011, with total cash exceeding total debt indust ry-leading Amazon™ Kindle™ and Barnes & Noble® by $16.5 million as of Dec. 31, 2011 Nook Tablet™ devices – brands noted for delivering crisp, clean type. With e-reader shipments expect ed 2011 was a year where st rategic progress drove to grow 28 percent to about 34 million units in fi nancial results. More than 50 percent of total revenue 2012 according to IDC, we continue to see excellent came from our growth businesses, Display Imaging and opportunities for growth. Creative Professional, up from 30 percent just prior to our IPO. We captured opportunities across our cust omer IN THE AUTOMOTIVE INDUSTRY, base and in emerging categories such as e-readers, TOP BRANDS ARE TURNING TO US FOR THEIR tablets, automotive displays and Web fonts. Our Printer IN-VEHICLE DISPLAYS Imaging business continued to serve a maturing yet signifi cant market, with its evolving requirements that In the automotive indust ry, top brands are turning to we’re well positioned to fulfi ll. us for their in-vehicle displays, and we’re expanding relationships with leading manufact urers. In 2011, we licensed multilingual fonts to Ford, which published a st udy on the importance of high-quality fonts. We’re committed to bringing key expertise to major We continued to st rengthen our position as a leader in auto manufact urers, as we help to unlock their ability to Web fonts, off ering the best select ion, the best quality, integrate crisp, easy-to-read fonts as part of the the best language support and the best workfl ow solution driving experience. through our Web font service. During 2011, we more than doubled the number of Web fonts available 2011 was a year that also brought expanded opportunities and now off er over 20,000 designs. With major brands through new tech nologies, such as our Edge360™ solution, increasingly adopting our solution, we’re seeing the value which brings advanced typographic eff ect s to user of Web fonts gain tract ion, as brands increasingly embrace interfaces, applications and games. We believe Edge360 the benefi ts, including better search -engine optimization opens a world of possibilities for rich er, more interact ive and ensuring brand consist ency. experiences, where text can display in 3D, rotate dynamically and zoom quick ly, all while retaining clarity In addition, we’re working with Google to make and sharpness. Web fonts even better. Today, when you search Google Web Fonts for some of the most popular designs such OUR PRINTER DRIVER TECHNOLOGY WILL BE as the Helvetica®, Frutiger® and the Trade Gothic® faces, PART OF THE NEXT VERSION OF THE MICROSOFT you’re conveniently direct ed to our service, which makes WINDOWS OPERATING SYSTEM TO SUPPORT XPS, it easy for cust omers to fi nd the fonts they need. MICROSOFT’S PAGE DESCRIPTION LANGUAGE AND DOCUMENT SHARING FORMAT MOVING FORWARD We’ve entered 2012 well positioned to capitalize on In our Printer Imaging business, our focus is to assist OEMs growth opportunities and to continue to diversify as they move ahead in response to ch anging requirements, our business. We’re committed to st rengthening our such as printing in any language, and printing from any leadership position in est ablished markets and emerging Web-enabled device. We also announced that our printer categories. Our rich hist ory is based on providing the driver tech nology will be part of the next version of highest -quality typefaces, tech nologies and expertise. the Microsoft® Windows® operating syst em to support These continue to be the main drivers of our business, XPS, Microsoft’s page description language and document today and in the future. sharing format. This will allow OEMs to gain an easy path to support XPS, without having to modify their printers. On behalf of our board of directors and our dedicated employees, I’d like to thank our customers, partners In our Creative Professional business, we’re committed and you, our shareholders, for your continued support. to serving enterprise and e-commerce cust omers by fulfi lling diverse requirements from print to Web, Sincerely, to downloadable apps, e-books and cloud-based services. We’re helping publishers, newspapers and corporations succeed in a complex world of increasing consumer touch points, where content fl ows across multiple Douglas J. Shaw platforms, devices and media. All this, while ensuring PRESIDENT AND CEO consist ent, high-quality experiences that do not compromise brand integrity. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C.
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