Monotype Imaging Holdings Inc. (TYPE, Financial) filed Quarterly Report for the period ended 2010-06-30.
Monotype Imaging Holdings Inc. has a market cap of $290.84 million; its shares were traded at around $8.32 with a P/E ratio of 21.33 and P/S ratio of 3.09. TYPE is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Cost of revenue, excluding amortization of acquired technology, was $1.9 million and $1.4 million for the three months ended June 30, 2010 and 2009, respectively, an increase of $0.5 million. As a percentage of total revenue, cost of revenue, excluding amortization of acquired technology, was 7.8% and 6.5% in the three months ended June 30, 2010 and 2009, respectively. The increase in cost of revenue in dollars was mainly due to increased revenue. The increase as a percentage of revenue was a result of a change in product mix. In the three months ended June 30, 2010 a portion our revenue had a higher associated cost, as compared to the same period in 2009.
Gross profit was 88.6% of sales in the three months ended June 30, 2010, as compared to 89.7% in the three months ended June 30, 2009, a decrease of 1.1%. The decrease in our gross profit in the second quarter of 2010, as compared to the same period in 2009, is primarily the result of low margin license revenue from a few OEM customers.
Marketing and Selling. Marketing and selling expense was $6.2 million and $5.5 million in the three months ended June 30, 2010 and 2009, respectively, an increase of $0.7 million, or 12.7%. Personnel costs increased $0.6 million in the three months ended June 30, 2010, as compared to the same period in 2009. The increase in personnel expenses was primarily due to a higher sales volume, which affects variable compensation, partially offset by a 9% reduction in headcount from our October 2009 restructuring plan. We recovered $0.1 million on our doubtful accounts during the second quarter of 2009, which did not repeat in the same quarter in 2010. Increased discretionary spending for travel related costs and outside services of $0.2 million were offset by decreased advertising spending of the same amount.
Interest expense, net of interest income increased $0.1 million, or 10.5%, to $1.1 million for the three months ended June 30, 2010, as compared to $1.0 million for the three months ended June 30, 2009. The increase is the result of a higher rate of interest on the outstanding debt, which was partially offset by lower total debt outstanding in the second quarter of 2010, as compared to the same period in 2009. At June 30, 2010, the blended interest rate of borrowings under our Amended and Restated Credit Agreement was 4.1%, as compared to a blended rate of 3.1% at June 30, 2009. Total debt outstanding, net of unamortized financing costs and debt discounts, at June 30, 2010 was $81.2 million, as compared to $101.7 million at June 30, 2009.
For the three months ended June 30, 2010 and 2009, our effective tax rate was 37.0% and 37.7%, respectively. Our effective state tax rate, net of federal benefit, for the second quarter of 2010 was 1.9%, as compared to 3.0% for the same period in 2009, a decrease of 1.1%. During the three months ended June 30, 2009, the effective rate included a one-time benefit of 2.1%, due to a change in state tax laws. During the three months ended June 30, 2010, the effective rate included 1.0% for permanent non-deductible share based compensation expense, as compared to 2.0% for the same period in 2009. Our effective tax rate in the three months ended June 30, 2010 includes a benefit of 0.5% related to the exercise of stock options, which did not occur in the same period in 2009.
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Monotype Imaging Holdings Inc. has a market cap of $290.84 million; its shares were traded at around $8.32 with a P/E ratio of 21.33 and P/S ratio of 3.09. TYPE is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
We derive a majority of our revenue from a limited number of customers, in particular manufacturers of laser printers and mobile phones. For the three months ended June 30, 2010 and 2009, our top ten licensees by revenue accounted for approximately 51.7% and 53.4% of our total revenue, respectively. For the six months ended June 30, 2010 and 2009, our top ten licensees by revenue accounted for approximately 50.9% and 49.6% of our total revenue, respectively. Although no one customer accounted for more than 10% of our total revenue for the three or six months ended June 30, 2010 or 2009, if we are unable to maintain relationships with major customers or establish relationships with new customers, our licensing revenue will be adversely affected.Cost of revenue, excluding amortization of acquired technology, was $1.9 million and $1.4 million for the three months ended June 30, 2010 and 2009, respectively, an increase of $0.5 million. As a percentage of total revenue, cost of revenue, excluding amortization of acquired technology, was 7.8% and 6.5% in the three months ended June 30, 2010 and 2009, respectively. The increase in cost of revenue in dollars was mainly due to increased revenue. The increase as a percentage of revenue was a result of a change in product mix. In the three months ended June 30, 2010 a portion our revenue had a higher associated cost, as compared to the same period in 2009.
Gross profit was 88.6% of sales in the three months ended June 30, 2010, as compared to 89.7% in the three months ended June 30, 2009, a decrease of 1.1%. The decrease in our gross profit in the second quarter of 2010, as compared to the same period in 2009, is primarily the result of low margin license revenue from a few OEM customers.
Marketing and Selling. Marketing and selling expense was $6.2 million and $5.5 million in the three months ended June 30, 2010 and 2009, respectively, an increase of $0.7 million, or 12.7%. Personnel costs increased $0.6 million in the three months ended June 30, 2010, as compared to the same period in 2009. The increase in personnel expenses was primarily due to a higher sales volume, which affects variable compensation, partially offset by a 9% reduction in headcount from our October 2009 restructuring plan. We recovered $0.1 million on our doubtful accounts during the second quarter of 2009, which did not repeat in the same quarter in 2010. Increased discretionary spending for travel related costs and outside services of $0.2 million were offset by decreased advertising spending of the same amount.
Interest expense, net of interest income increased $0.1 million, or 10.5%, to $1.1 million for the three months ended June 30, 2010, as compared to $1.0 million for the three months ended June 30, 2009. The increase is the result of a higher rate of interest on the outstanding debt, which was partially offset by lower total debt outstanding in the second quarter of 2010, as compared to the same period in 2009. At June 30, 2010, the blended interest rate of borrowings under our Amended and Restated Credit Agreement was 4.1%, as compared to a blended rate of 3.1% at June 30, 2009. Total debt outstanding, net of unamortized financing costs and debt discounts, at June 30, 2010 was $81.2 million, as compared to $101.7 million at June 30, 2009.
For the three months ended June 30, 2010 and 2009, our effective tax rate was 37.0% and 37.7%, respectively. Our effective state tax rate, net of federal benefit, for the second quarter of 2010 was 1.9%, as compared to 3.0% for the same period in 2009, a decrease of 1.1%. During the three months ended June 30, 2009, the effective rate included a one-time benefit of 2.1%, due to a change in state tax laws. During the three months ended June 30, 2010, the effective rate included 1.0% for permanent non-deductible share based compensation expense, as compared to 2.0% for the same period in 2009. Our effective tax rate in the three months ended June 30, 2010 includes a benefit of 0.5% related to the exercise of stock options, which did not occur in the same period in 2009.
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