(Former Name, Former Address and Former Fiscal year, if changed since last report)

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 for 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 x☒ 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 x☒ No ¨☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or emerging growth company. See the definitions of “large accelerated ~~filer,”~~filer”, “accelerated filer”, “smaller reporting company” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐ No x☒

The number of shares outstanding of the registrant’s common stock as of July ~~21, 2016~~25, 2017 was ~~40,810,386.~~41,717,178.


	June 30, 2016			December 31, 2015			June 30, 2017			December 31, 2016
Assets
Current assets:
Cash and cash equivalents	$	109,517		$	87,520		$	83,699		$	91,434
Accounts receivable, net of allowance for doubtful accounts of $331 at June 30, 2016 and $264 at December 31, 2015		13,872			15,179
Accounts receivable, net of allowance for doubtful accounts of $680 at June 30, 2017 and $467 at December 31, 2016								25,980			26,549
Income tax refunds receivable		1,396			2,558			1,310			2,967
Prepaid expenses and other current assets		4,430			3,846			6,213			4,631

Total current assets		129,215			109,103			117,202			125,581
Property and equipment, net		14,061			15,204			15,589			14,166
Goodwill		186,259			185,735			276,941			273,489
Intangible assets, net		65,687			69,264			87,949			90,717
Restricted cash		9,335			9,304			17,932			17,992
Other assets		2,834			3,177			3,076			3,075

Total assets	$	407,391		$	391,787		$	518,689		$	525,020

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,484		$	1,385		$	1,985		$	2,170
Accrued expenses and other current liabilities		20,682			21,422			24,648			28,762
Accrued income taxes payable		2,470			2,395			743			1,473
Deferred revenue		9,213			10,086			17,226			16,081

Total current liabilities		33,849			35,288			44,602			48,486
Revolving line of credit								99,000			105,000
Other long-term liabilities		7,867			6,914			14,978			11,753
Deferred income taxes		38,660			35,159			35,556			37,780
Reserve for income taxes		2,429			2,316			2,792			2,727
Accrued pension benefits		5,117			4,928			5,824			5,296
Commitments and contingencies(Note 12)
Commitments and contingencies(Note 13)
Stockholders’ equity:
Preferred stock, $0.001 par value, Authorized shares: 10,000,000; Issued and outstanding: none		—			—			—			—
Common stock, $0.001 par value, Authorized shares: 250,000,000; Issued: 42,862,295 at June 30, 2016 and 42,019,646 at December 31, 2015		43			42
Common stock, $0.001 par value, Authorized shares: 250,000,000; Issued: 44,666,826 at June 30, 2017 and 43,771,600 at December 31, 2016								44			43
Additional paid-in capital		264,886			256,215			286,607			274,946
Treasury stock, at cost, 2,060,841 shares at June 30, 2016 and 1,999,354 shares at December 31, 2015		(50,455	)		(50,455	)
Treasury stock, at cost, 2,763,378 shares at June 30, 2017 and 2,493,174 shares at December 31, 2016								(58,992	)		(56,232	)
Retained earnings		111,960			108,908			94,117			105,718
Accumulated other comprehensive loss		(6,965	)		(7,528	)		(5,839	)		(10,497	)

Total stockholders’ equity		319,469			307,182			315,937			313,978

Total liabilities and stockholders’ equity	$	407,391		$	391,787		$	518,689		$	525,020

The accompanying notes are an integral part of these condensed consolidated financial statements.


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015			2017			2016			2017			2016
Revenue	$	48,733		$	46,405		$	98,575		$	92,451		$	57,801		$	48,733		$	110,266		$	98,575
Cost of revenue		7,588			7,553			15,907			14,963			10,141			7,588			18,919			15,907
Cost of revenue—amortization of acquired technology		1,131			1,134			2,262			2,267			881			1,131			1,759			2,262

Total cost of revenue		8,719			8,687			18,169			17,230			11,022			8,719			20,678			18,169

Gross profit		40,014			37,718			80,406			75,221			46,779			40,014			89,588			80,406
Operating expenses:
Marketing and selling		14,648			14,532			28,735			27,508			22,722			14,648			43,964			28,735
Research and development		5,991			5,290			13,327			11,089			9,227			5,991			18,781			13,327
General and administrative		8,638			7,010			17,487			13,909			11,814			8,638			22,741			17,487
Amortization of other intangible assets		742			790			1,477			1,492			1,019			742			2,030			1,477

Total operating expenses		30,019			27,622			61,026			53,998			44,782			30,019			87,516			61,026

Income from operations		9,995			10,096			19,380			21,223			1,997			9,995			2,072			19,380
Other (income) expense:
Interest expense		162			449			324			795			792			162			1,550			324
Interest income		(72	)		(145	)		(126	)		(257	)		(66	)		(72	)		(193	)		(126	)
(Gain) loss on foreign exchange		(373	)		498			434			612
(Gain) loss on derivatives		(200	)		208			(206	)		72
Other income, net		(32	)		(1	)		(21	)		(2	)
Loss (gain) on foreign exchange														2,627			(373	)		3,187			434
Loss (gain) on derivatives														117			(200	)		171			(206	)
Other expense (income), net														50			(32	)		56			(21	)

Total other (income) expense		(515	)		1,009			405			1,220
Total other expense (income)														3,520			(515	)		4,771			405

Income before provision for income taxes		10,510			9,087			18,975			20,003
Provision for income taxes		3,857			3,183			6,964			6,742
(Loss) income before (benefit) provision for income taxes														(1,523	)		10,510			(2,699	)		18,975
(Benefit) provision for income taxes														(1,027	)		3,857			(1,128	)		6,964

Net income	$	6,653		$	5,904		$	12,011		$	13,261
Net (loss) income													$	(496	)	$	6,653		$	(1,571	)	$	12,011

Net income available to common stockholders—basic	$	6,447		$	5,754		$	11,668		$	12,960
Net (loss) income available to common stockholders—basic													$	(496	)	$	6,447		$	(1,571	)	$	11,668

Net income available to common stockholders—diluted	$	6,447		$	5,755		$	11,669		$	12,962
Net (loss) income available to common stockholders—diluted													$	(496	)	$	6,447		$	(1,571	)	$	11,669

Net income per common share:
Net (loss) income per common share:
Basic	$	0.16		$	0.15		$	0.30		$	0.33		$	(0.01	)	$	0.16		$	(0.04	)	$	0.30

Diluted	$	0.16		$	0.15		$	0.29		$	0.33		$	(0.01	)	$	0.16		$	(0.04	)	$	0.29

Weighted-average number of shares outstanding:
Basic		39,377,945			38,826,185			39,250,297			38,827,668			39,657,071			39,377,945			39,567,254			39,250,297
Diluted		39,748,905			39,395,395			39,635,262			39,458,758			39,657,071			39,748,905			39,567,254			39,635,262
Dividends declared per common share	$	0.11		$	0.10		$	0.22		$	0.20		$	0.113		$	0.11		$	0.226		$	0.22

The accompanying notes are an integral part of these condensed consolidated financial statements.


	Six Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2017			2016
Cash flows from operating activities
Net income	$	12,011		$	13,261
Adjustments to reconcile net income to net cash provided by operating activities:
Net (loss) income							$	(1,571	)	$	12,011
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		5,771			5,096			6,173			5,771
Amortization of deferred financing costs and accreted interest								110			110
Loss on retirement of fixed assets		—			20			90			—
Amortization of deferred financing costs and accreted interest		110			258
Share based compensation		7,399			6,241			10,023			7,399
Excess tax benefit on stock options		(304	)		(1,726	)		—			(304	)
Provision for doubtful accounts		128			105			591			128
Deferred income taxes		2,296			2,317			(4,645	)		2,296
Unrealized currency loss on foreign denominated intercompany transactions		430			13			2,611			430
Changes in operating assets and liabilities:
Accounts receivable		1,105			(737	)		421			1,105
Prepaid expenses and other assets		(480	)		2,186			(2,109	)		(480	)
Restricted cash		(31	)		—			61			(31	)
Accounts payable		95			(623	)		(207	)		95
Accrued income taxes payable		1,400			(131	)		1,117			1,400
Accrued expenses and other liabilities		(260	)		(3,164	)		(2,288	)		(260	)
Deferred revenue		(800	)		1,247			1,478			(800	)

Net cash provided by operating activities		28,870			24,363			11,855			28,870

Cash flows from investing activities
Purchases of property and equipment		(1,003	)		(6,847	)		(3,589	)		(1,003	)
Acquisition of business, net of cash acquired		(101	)		(14,289	)		—			(101	)

Net cash used in investing activities		(1,104	)		(21,136	)		(3,589	)		(1,104	)

Cash flows from financing activities
Payments on revolving line of credit								(6,000	)		—
Excess tax benefit on stock options		304			1,726			—			304
Common stock dividends paid		(8,473	)		(7,156	)		(9,295	)		(8,473	)
Purchase of treasury stock		—			(18,601	)		(2,213	)		—
Payment of contingent consideration		—			(289	)
Proceeds from exercises of common stock options		2,045			5,854			712			2,045

Net cash used in financing activities		(6,124	)		(18,466	)		(16,796	)		(6,124	)
Effect of exchange rates on cash and cash equivalents		355			(466	)		795			355

Increase (decrease) in cash and cash equivalents		21,997			(15,705	)
(Decrease) increase in cash and cash equivalents								(7,735	)		21,997
Cash and cash equivalents at beginning of period		87,520			90,325			91,434			87,520

Cash and cash equivalents at end of period	$	109,517		$	74,620		$	83,699		$	109,517

The accompanying notes are an integral part of these condensed consolidated financial statements.

Monotype Imaging Holdings Inc. (the “Company” or “we”) empowers expression and engagement for creatives, designers, engineers and marketers at the world’s most revered brands. These professionals sit at globally recognized organizations or are independent creatives located across the globe. Regardless of their organization or location, we support their efforts by producing compelling content and technologies that build beloved and valued brands, provide technology that cultivate meaningful engagement with their brand enthusiasts, and provide intelligence and insight through the measure of content performance to optimize resources and spending. Our mission is ~~a leading provider of type,~~to be the first place to turn for the design assets, technology and expertise for ~~creative professionals~~all touchpoints. For creatives, designers and ~~consumer device manufacturers. Our end-user~~engineers, we empower expression through high-value design assets, technologies that improve the discovery, curation, measurement and ~~embedded solutions for print, web~~brand integrity of content, and through custom studio design services. For marketers, we enable engagement with a customer’s brand enthusiasts and measurement of content interactions in digital environments such as mobile ~~environments enable consumers~~messaging and ~~professionals to create~~social media platforms. We offer more than 99,000 typeface designs, and ~~consume dynamic content across multiple devices and mediums. Our technologies and fonts enable the display and printing of high quality digital text. Our solutions power the visual expression~~include some of the ~~leading makers~~world’s most widely used designs, such as the Times New Roman^®, Helvetica^®, Frutiger^®, ITC Franklin Gothic™, FF Meta and Droid™ typefaces, and support more than 250 Latin and non-Latin languages. Our e-commerce websites, includingmyfonts.com, fonts.com, fontshop.com,and linotype.com, which attracted more than 50 million visits in 2016 from over 200 countries and territories, offer thousands of a wide range of devices, including laser printers, digital copiers, mobile phones, e-book readers, tablets, automotive displays, digital cameras, navigation devices, digital televisions, set-top boxes, consumer appliances and Internet of Things devices,high-quality font products from the Monotype Libraries, as well as ~~provide a high-quality text experience in numerous software applications and operating systems.~~ from third parties.

We also provide printer drivers and printer user interface technology to printer manufacturers and OEMs (original equipment manufacturers). We license our fonts and technologies to consumer device manufacturers, independent software vendors and creative and business professionals and we are headquartered in Woburn, ~~Massachusetts. We~~Massachusetts and we operate in one business segment: the development, marketing and licensing of ~~technologies~~design assets and ~~fonts.~~technology. We also maintain various offices worldwide for selling and marketing, research and development and administration. We conduct our operations through ~~four~~five domestic operating subsidiaries, Monotype Imaging Inc., Monotype ITC Inc. (“ITC”), MyFonts Inc. ~~and~~(“MyFonts”), Swyft Media Inc. and Olapic, Inc., and ~~five~~six wholly-owned foreign operating subsidiaries, Olapic Argentina S.A., Monotype Ltd. (“Monotype UK”), Monotype GmbH (“Monotype Germany”), Monotype Solutions India Pvt. Ltd. (“Monotype India”), Monotype Hong Kong Ltd. (“Monotype Hong Kong”) and Monotype ~~KK.~~KK (“Monotype Japan”).

The accompanying unaudited condensed consolidated interim financial statements as of June 30, ~~2016~~2017 and for the three and six months ended June 30, ~~2016~~2017 and ~~2015~~2016 include the accounts of the Company and its wholly-owned subsidiaries and have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for Quarterly Reports on Form 10-Q and Article 10 of Regulation S-X. Accordingly, such financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. The results for interim periods are not necessarily indicative of results to be expected for the year or for any future periods.

In management’s opinion, these unaudited condensed consolidated interim financial statements contain all adjustments of a normal recurring nature necessary for a fair presentation of the financial statements for the interim periods presented.

These unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, ~~2015~~2016, as reported in the Company’s Annual Report on Form 10-K.

The accompanying condensed consolidated financial statements reflect the application of certain significant accounting policies as described below and elsewhere in these notes to the condensed consolidated financial statements. As of June 30, 2016, the Company’s significant accounting policies and ~~estimates, which~~practices are ~~detailed~~as described in the ~~Company’s~~ Annual Report, ~~on Form 10-K~~except for the ~~year ended December 31, 2015, have not changed.~~adoption of Accounting Standards Update, or ASU, 2016-09, as described in Note 3 below.

In March 2016, the Financial Accounting Standards Board, or FASB, issued ~~Accounting Standards Update, or~~ ASU 2016-09,~~Compensation –~~ Compensation—Stock Compensation (Topic 718),: Improvements to Employee Share-Based Payment Accounting. ~~ASU 2016-09~~The guidance identifies areas for simplification involving several aspects of accounting for share based payments, including income tax consequences, classification of awards as either equity, or liabilities, an option to make a policy election to recognize gross share based compensation expense with actual forfeitures recognized as they occur as well as certain classification changes on the statement of cash flows. This guidance is effective for annual and interim reporting periods beginning after December 15, 2016, with early adoption permitted. We adopted ASU 2016-09 on January 1, 2017 and elected to account for forfeitures when they occur, on a modified retrospective basis. As a result of this adoption, $0.6 million of additional stock based compensation expense, net of tax, was recorded to retained earnings on the date of adoption as a cumulative effect adjustment related to our accounting policy change for forfeitures. In accordance with the adoption of this guidance, the tax effect of differences between tax deductions related to stock compensation and the corresponding

financial statement expense will no longer be recorded to additional paid in capital in our balance sheet. Instead, such amounts will be recorded to tax expense. During the second quarter of 2017, we recorded a tax expense of $71 thousand to differences (shortfalls) in stock compensation deductions realized in the second quarter and the corresponding amount of expense recognized for financial statement purposes. During the first half of 2017, we recorded a tax expense of $0.5 million to differences (shortfalls) in stock compensation deductions realized in the six months ended June 30, 2017 and the corresponding amount of expense recognized for financial statement purposes. We also elected to prospectively apply the change in presentation of excess tax benefits wherein excess tax benefits recognized on stock based compensation expense is now classified as an operating activity in our condensed consolidated statements of cash flows. We did not adjust the classifications of excess tax benefits in our condensed consolidated statements of cash flows for the three and six months ended June 30, 2016. The ~~Company is~~adoption did not have any other material impact on our financial statements.

In March 2017, the FASB issued ASU No. 2017-07 Compensation-Retirement Benefits (Topic 715)-Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This guidance revises the presentation of the net periodic benefit cost in the income statement. The new standard will be effective for annual and interim periods beginning after December 15, 2017. We are currently ~~assessing~~evaluating the impact ~~that adopting~~of the adoption of ASU ~~2016-09 will~~2017-07; however, we do not expect the adoption of this standard to have a material impact on ~~its~~our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04,Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which eliminated step 2 from the goodwill impairment test. This guidance is effective for annual and interim reporting periods beginning after December 15, 2019, with early adoption permitted for testing dates after January 1, 2017. We are currently evaluating the impact of the adoption of ASU 2017-04; however, we do not expect the adoption of this standard to have a material impact on our consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18,Statement of Cash Flows (Topic 230): Restricted Cash, which requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This guidance is effective for annual and interim reporting periods beginning after December 15, 2017, with early adoption permitted. We do not expect the adoption of this guidance to have a material effect on our consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU 2016-02,Leases (Topic 842),: Amendments to the FASB Accounting Standards Codification,which replaces the existing guidance for leases. ASU 2016-02 requires the identification of arrangements that should be accounted for as leases by lessees. In general, for lease arrangements exceeding a twelve month term, these arrangements must now be

recognized as assets and liabilities on the balance sheet of the lessee. Under ASU 2016-02, a right-of-use asset and lease obligation will be recorded for all leases, whether operating or financing, while the income statement will reflect lease expense for operating leases and amortization/interest expense for financing leases. The balance sheet amount recorded for existing leases at the date of adoption of ASU 2016-02 must be calculated using the applicable incremental borrowing rate at the date of adoption. In addition, ASU 2016-02 requires the use of the modified retrospective method, which will require adjustment to all comparative periods presented in the consolidated financial statements. This guidance is effective for annual and interim periods beginning after December 15, 2018 and requires retrospective application. The Company is currently assessing the impact that adopting ASU 2016-02 will have on its consolidated financial statements and related disclosures.

~~In August 2014, the FASB issued ASU 2014-15,~~~~Presentation of Financial Statements – Going Concern (Subtopic 205-40); Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern~~, which requires management of a company to evaluate whether there is substantial doubt about the company’s ability to continue as a going concern. The ASU provides guidance on evaluating an entity’s ability to continue as a going concern and the content of any required footnote disclosure based on that evaluation. The assessment period is one year after the date of the financial statements are issued. The standard is effective for the Company on January 1, 2017, with early adoption permitted. The Company is currently evaluating the impact of the adoption of ASU 2014-15, but we do not expect the adoption of this standard to have any impact on our consolidated financial statements.

In May 2014, the FASB and the International Accounting Standards Board jointly issued ASU ~~2014-9,~~2014-09,Revenue from Contracts with Customers (Topic 606), which ~~provides~~outlines a comprehensive ~~new~~five-step revenue recognition model based on principle that replaces virtually all existing revenue recognition under U.S. GAAP and which requires revenue to be recognized in a manner to depict the transfer of promised goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. The standard requires retrospective application, however, it allows entities to choose either full retrospective adoption in which the standard is applied to all of the periods presented, or modified retrospective adoption, in which the cumulative catch-up adjustment to the opening balance of retained earnings is recognized at the date of application, with additional disclosures required to describe these effects. In August 2015, the FASB issued ASU 2015-14,Revenue from Contracts with Customers (Topic 606): Deferral Date, which defers the effective date of ASU 2014-09 by one year. The guidance is effective for annual reporting and interim periods beginning after December 15, ~~2017. Early~~2017, with early adoption is permitted for annual and interim periods beginning after December 15, 2016.

We expect to adopt the standard on January 1, 2018, and at that time, we expect to apply the modified retrospective method of adoption. We have developed an implementation plan to adopt this new guidance. As part of this plan, we are currently assessing the impact of the new guidance on our results of operations and internal controls. Based on our procedures performed to date, we have identified certain revenue streams, specifically term and royalty-based license agreements, for which the standard could have a material impact; however, further analysis is required and we will continue to evaluate this assessment on a quarterly basis in 2017. Under the current guidance, revenue related to our term license agreements that are bundled with services related performance obligations for which vendor-specific objective evidence (“VSOE”) does not exist is required to be recognized ratably over the term of the agreement. However, under the new guidance, the Company will allocate revenue to each performance obligation in the agreement and each will require separate accounting treatment and lead to accelerated revenue recognition compared with current practice. The license portion will be recognized at the time of delivery and the service revenue will be recognized over time based on the standalone selling prices of each performance obligation. In addition, we have on occasion, offered extended payment terms for term licenses to our customers, including cases in which the license is delivered in full at the beginning of the contract. We currently recognize revenue under such arrangements when the payments become due, based upon the current requirement that the fee be fixed or determinable. However, under the new guidance, revenue related to such arrangements would be accelerated, with revenue related to the license recognized at the time of delivery, less a financing component (interest income) to be recognized over time based on the payment terms. Further, under the new guidance, we will be required to estimate royalty revenue from our royalty-based licenses in the period that the royalty-bearing event occurs, which is different from our current practice of recognizing royalty revenue when it is reported to us by the licensee, at which time the fee is deemed fixed or determinable. The Company ~~is currently~~has converted, and plans to continue to convert, printer imaging electronic OEM customers to fixed fee contracts from royalty bearing contracts. At June 30, 2017, approximately 60% of estimated printer revenue has been converted to fixed fee contracts. We expect these modifications to have a significant impact on our expected transition adjustment to adopt ASC 606 and we are still in the process of evaluating these and other revenue streams and quantifying the ~~adoption method it will apply, and the~~expected impact that ~~this guidance~~the standard will have on ~~its~~our financial statements and related disclosures.

On August 9, 2016, the Company purchased all of the outstanding shares of Olapic, Inc., a privately-held company located in New York, New York; its wholly-owned subsidiaries Olapic UK Ltd., based in London, England; and Olapic Argentina S.A., based in Córdoba, Argentina (collectively, “Olapic”). Olapic is ~~defined as~~a provider of a leading visual commerce platform for collecting, curating, showcasing and measuring crowd sourced photos and videos. Olapic’s Earned Content Platform helps brands collect, curate, use and analyze user-generated content in the form of images and videos in their ecommerce experiences and across multiple marketing channels. This allows consumers to make more educated purchasing decisions, discover new products and connect to the brand’s community. Olapic leverages photos and videos from social network sites to help to create powerful branded experiences that drive consumer engagement and increase conversions. The Company acquired Olapic for an aggregate purchase price of approximately $123.7 million, net of cash acquired; the Company paid approximately $13.7 million in cash and borrowed $110.0 million from its line of credit. The Olapic Merger Agreement included an additional $9.0 million of consideration that ~~would~~has been placed in escrow and will be ~~received to sell an asset or~~ paid to ~~transfer~~the founders of Olapic contingent upon their continued employment with the Company. Accordingly, this amount will be recognized as compensation expense over the service period contractually required to earn such amounts, which is $3.0 million after twenty four months and the remainder after thirty six months from the acquisition date. Monotype issued approximately $17.1 million of a ~~liability~~combination of restricted stock awards and restricted stock units to the founders and employees of Olapic. These awards will vest over time based on continued employment, and accordingly will be accounted for as compensation expense. Seventy four employees from Olapic’s U.S. operations, eighty four employees from Olapic’s Argentina operations and forty UK and European employees joined the Company in ~~an orderly transaction between market participants at~~connection with the measurement date. In order to increase consistency and comparability in fair value measurements, the Codification established a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:

~~Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities.~~acquisition. The ~~fair value hierarchy gives the highest priority to Level 1 inputs.~~

~~Level 2: Observable inputs other than quoted prices~~results of operations of Olapic have been included in ~~Level 1, such as quoted prices for similar~~our consolidated results and revenue is included within the Creative Professional market beginning on August 9, 2016, the date of acquisition.

The table below provides the Olapic employees by functional area who joined the Company in connection with the acquisition:

The purchase price was allocated to the assets and liabilities ~~in active markets; quoted prices for identical or similar~~based upon their estimated fair value at the date of acquisition, as noted below (in thousands):

The estimated fair values of intangible assets acquired were recorded as follows:

A portion of the purchase price has been allocated to intangible assets and ~~liabilities~~goodwill, respectively, and is reflected in ~~markets that are not active; or other inputs that are observable or can be corroborated by observable market data.~~

~~Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to~~ the tables above. The fair value of the assets ~~or liabilities. This includes certain pricing models, discounted cash flow methodologies~~acquired and ~~similar techniques~~liabilities assumed is less than the purchase price, resulting in the recognition of goodwill. The goodwill reflects the value of the synergies we expect to realize and the assembled workforce. The acquisition of Olapic was structured in such a manner that ~~use significant unobservable inputs.~~the goodwill is not expected to be deductible for tax purposes. The purchase price has been allocated to the tangible and intangible assets acquired and liabilities assumed based upon the respective estimates of fair value ~~hierarchy gives~~as of the ~~lowest priority~~date of the acquisition, which remains preliminary as of June 30, 2017, and using assumptions that the Company’s management believes are reasonable given the information currently available. The Company is in the process of completing its valuation of certain intangible assets, the valuation of the acquired deferred tax assets and liabilities. The final allocation of the purchase price to ~~Level 3 inputs.~~intangible assets, goodwill, deferred tax assets and liabilities may differ materially from the information presented in these consolidated financial statements.

~~In determining fair value,~~We included revenue of $4.6 million and $8.2 million, and a net loss of $9.2 million and $16.6 million, from the ~~Company utilizes valuation techniques~~acquired Olapic operations within the Company’s consolidated operations for the three and six months ended June 30, 2017, respectively.

The following table shows unaudited pro forma results of operations as if we had acquired Olapic at the beginning of the periods presented (in thousands, except per share amounts):

The unaudited pro forma results of operations are not necessarily indicative of the actual results that ~~maximize~~would have occurred had the ~~use~~transactions actually taken place at the beginning of ~~observable inputs and minimizes~~ the ~~use of unobservable inputs to the extent possible as well as considers counterparty and our own credit risk in its assessment of fair value.~~periods indicated.

The following table presents our financial assets and liabilities that are carried at fair value ~~classified according to the three categories described above~~ (in thousands):


									Fair Value Measurement at June 30, 2017
									Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents—money market funds									$	10,369	$	10,369	$	—	$	—
Cash equivalents—commercial paper										21,981		—		21,981		—
Cash equivalents—U.S. government and agency securities										17,975		17,975		—		—

Total current assets										50,325		28,344		21,981		—
Restricted cash equivalents—money market fund										9,000		9,000		—		—
Restricted cash equivalents—U.S. government and agency security fund										8,932		8,932		—		—

Total long term assets										17,932		17,932		—		—

Total assets									$	68,257	$	46,276	$	21,981	$	—


	Fair Value Measurement at December 31, 2015								Fair Value Measurement at December 31, 2016
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents—money market funds	$	21,808	$	21,808	$	—	$	—	$	16,994	$	16,994	$	—	$	—
Cash equivalents—commercial paper		8,920		—		8,920		—		16,989		—		16,989		—
Cash equivalents—corporate bonds		9,293		—		9,293		—		4,802		—		4,802		—
Cash equivalents—U.S. government and agency securities										11,368		11,368		—		—

Total current assets										50,153		28,362		21,791		—
Restricted cash equivalents—money market fund										9,000		9,000		—		—
Restricted cash equivalents—U.S. government and agency security fund										8,992		8,992		—		—

Total long term assets										17,992		17,992		—		—

Total assets	$	40,021	$	21,808	$	18,213	$	—	$	68,145	$	46,354	$	21,791	$	—

The Company’s recurring fair value measures relate to short-term investments, which are classified as cash equivalents, derivative instruments and from ~~time-to-time~~time to time contingent consideration. The fair value of our cash equivalents are either based on quoted prices for similar assets or other observable inputs such as yield curves at commonly quoted intervals and other market corroborated inputs. The fair value of our derivatives is based on quoted market prices from various banking institutions or an independent ~~third party~~third-party provider for similar instruments. In determining the fair value, we consider our non-performance risk and that of our counterparties. At June 30, ~~2016,~~2017, we had one 30-day forward contract to sell ~~2.5~~2.6 million British pounds sterling and purchase $3.4 million that together, had an immaterial fair ~~value. There were no outstanding forward contracts~~value; and at December 31, ~~2015.~~2016, we had one 30-day forward contract to sell 2.8 million British pounds sterling and purchase $3.4 million that together, had an immaterial fair value.

The Company’s non-financial assets and non-financial liabilities subject to non-recurring measurements include goodwill and intangible assets.

Intangible assets as of June 30, ~~2016~~2017 and December 31, ~~2015~~2016 were as follows (dollar amounts in thousands):

On September 15, 2015, the Company entered into a new credit agreement (the ~~“New~~“New Credit ~~Agreement”~~Agreement”) by and among the Company, the Company’s subsidiary, Monotype Imaging Inc., any financial institution that becomes a Lender (as defined therein) and Silicon Valley Bank, as agent which provides for a five-year $150.0 million secured revolving credit facility (the ~~“Credit Facility”~~“Credit Facility”). The Credit Facility permits the Company to request that the Lenders, at their election, increase the secured credit facility to a maximum of $200.0 million. The ~~New~~ Credit ~~Agreement replaced the Company’s existing $120.0 million revolving credit facility (the “Original Credit Agreement”) by and between~~Facility is available to the Company ~~and Wells Fargo Capital Finance, LLC. The Original Credit Agreement was terminated effective~~on a revolving basis through September 15, ~~2015~~2020. Repayment of any amounts borrowed is not required until maturity of the Credit Facility; however, the Company may repay any amounts borrowed at any time, without premium or penalty. At June 30, 2017 and ~~was scheduled to expire on July 13, 2016.~~December 31, 2016, the Company had $99.0 million and $105.0 million outstanding under the Credit Facility. At June 30, 2017 and December 31, 2016, available borrowings under the Credit Facility have been reduced by approximately $0.5 million for one standby letter of credit issued in connection with a facility lease agreement, leaving $50.5 million and $44.5 million available for borrowing at June 30, 2017 and December 31, 2016, respectively.

Borrowings under the Credit Facility bear ~~interest at~~ a variable rate not less than zero based upon, at the Company’s option, either LIBOR or the higher of (i) the prime rate as published in the Wall Street Journal, and (ii) 0.5% plus the overnight federal funds rate, plus in each case, an applicable margin. The applicable margin for LIBOR loans, based on the applicable leverage ratio, is 1.25%, 1.50% or 1.75% per annum, and the applicable margin for base rate loans, based on the applicable leverage ratio, is either 0.25%, 0.50% or 0.75%% per annum. At June 30, 2017, our rate, inclusive of applicable margins, was 2.7% for LIBOR, and at December 31, 2016, our rate, inclusive of applicable margins, was ~~1.9%~~2.5% for ~~LIBOR and~~LIBOR.

As of June 30, 2017, the Company had no outstanding borrowings under the Credit Facility. The Company is required to pay a commitment fee, based on the applicable leverage ratio, equal to 0.20%, 0.25% or 0.30% per annum on the undrawn portion available under the revolving credit facility and variable per annum fees in respect of outstanding letters of credit. In connection with the New Credit Agreement, the Company incurred closing and legal fees of $1.0 million, which have been accounted for as deferred financing costs and will be amortized to interest expense over the term of the New Credit Agreement.

In addition to other covenants, the New Credit Agreement places limits on the Company and its subsidiaries’ ability to incur debt or liens and engage in sale-leaseback transactions, make loans and investments, incur additional indebtedness, engage in mergers, acquisitions and asset sales, transact with affiliates and alter its business. The New Credit Agreement also contains events of default, and affirmative covenants, including financial maintenance covenants which include (i) a maximum leverage ratio ~~of consolidated total debt to consolidated adjusted EBITDA of 3.00 to~~ permitted was 3.00:1.00 and ~~(ii) a~~our leverage ratio was 2.41:1.00 and the minimum fixed charge coverage ratio ~~of 1.25 to 1.00. As of June 30, 2016, our leverage ratio~~ was ~~0.00:~~ 1.25:1.00 and our fixed charge ratio was ~~4.31:~~ 7.82:1.00. Adjusted EBITDA, under the Credit Facility, is defined as consolidated net income (or loss), plus net interest expense, income taxes, depreciation and amortization, and share based compensation expense, plus acquisition expenses not to exceed $2.0 million on a trailing twelve month basis, plus restructuring, issuance costs, cash non-operating costs and other expenses or losses minus cash non-operating gains and other non-cash gains. Failure to comply with these covenants, or the occurrence of an event of default, could permit the Lenders under the New Credit Agreement to declare all amounts borrowed under the New Credit Agreement, together with accrued interest and fees, to be immediately due and payable. In addition, the Credit Facility is secured by a lien on substantially all of the Company’s and its domestic subsidiaries’ tangible and intangible property by a pledge of all of the equity interests of the Company’s direct and indirect domestic subsidiaries and by a pledge by the Company’s domestic subsidiaries of 65% of the equity of their direct foreign subsidiaries, subject to limited exceptions. In addition to other covenants, the New Credit Agreement places limits on the Company and its subsidiaries’ ability to incur debt or liens and engage in sale-leaseback transactions, make loans and investments, incur additional indebtedness, engage in mergers, acquisitions and asset sales, transact with affiliates and alter its business. The Company was in compliance with ~~all~~the covenants under ~~our~~the Credit Facility as of June 30, ~~2016.~~2017.

Our German subsidiary maintains an unfunded defined benefit pension plan which covers substantially all employees who joined the Company prior to the plan’s closure to new participants in 2006. Participants are entitled to benefits in the form of retirement, disability and surviving dependent pensions. Benefits generally depend on years of service and the salary of the employees.

The components of net periodic benefit cost included in the accompanying condensed consolidated statements of ~~income~~operations were as follows (in thousands):

A reconciliation of income taxes computed at federal statutory rates to income tax expense is as follows (dollar amounts in thousands):


	Three Months Ended June 30,										Three Months Ended June 30,
	2016					2015					2017					2016
Provision for income taxes at statutory rate	$	3,678		35.0	%	$	3,180		35.0	%
(Benefit) provision for income taxes at statutory rate											$	(534	)	35.0	%	$	3,678			35.0	%
State and local income taxes, net of federal tax benefit		151		1.4	%		130		1.4	%		(41	)	2.7	%		151			1.4	%
Share based compensation		54		0.5	%		30		0.3	%
Stock based compensation												(56	)	3.7	%		54			0.5	%
Foreign rate differential		(156	)	(1.5	)%		(99	)	(1.1	)%		17		(1.0	)%		(156	)		(1.5	)%
Research credits		(90	)	(0.8	)%		—		—			152		(10.0	)%		(90	)		(0.8	)%
Permanent non-deductible acquisition-related expense		258		2.5	%		—		—			(657	)	43.1	%		258			2.5	%
Net shortfall on stock based compensation												71		(4.7	)%		—			—
Other, net		(38	)	(0.4	)%		(58	)	(0.6	)%		21		(1.4	)%		(38	)		(0.4	)%

Reported income tax provision	$	3,857		36.7	%	$	3,183		35.0	%
Reported income tax (benefit) provision											$	(1,027	)	67.4	%	$	3,857			36.7	%


											Six Months Ended June 30,
											2017					2016
(Benefit) provision for income taxes at statutory rate											$	(945	)	35.0	%		6,641			35.0	%
State and local income taxes, net of federal tax benefit												(61	)	2.3	%		271			1.4	%
Stock based compensation												(76	)	2.8	%		95		��	0.5	%
Foreign rate differential												62		(2.3	)%		(257	)		(1.4	)%
Research credits												211		(7.8	)%		(159	)		(0.9	)%
Permanent non-deductible acquisition-related expense												(902	)	33.4	%		419			2.2	%
Net shortfall on stock based compensation												542		(20.1	)%		—			—
Other, net												41		(1.5	)%		(46	)		(0.1	)%

Reported income tax (benefit) provision											$	(1,128	)	41.8	%	$	6,964			36.7	%

At June 30, ~~2016,~~2017, the reserve for uncertain tax positions was approximately ~~$5.7~~$6.8 million. Of this amount, ~~$3.3~~$4.0 million is recorded as a reduction of deferred tax assets and ~~$2.4~~$2.8 million is classified as ~~long term~~long-term liabilities. ~~During the first quarter of 2015, the Company settled a tax audit related to its Japan subsidiary. As a result of this settlement, the Company recognized a tax benefit of $0.3 million.~~

Basic and diluted earnings per share are computed pursuant to the two-class method. The two-class method determines earnings per share for each class of common stock and participating security according to their respective participation rights in undistributed earnings. Unvested restricted stock awards granted to employees are considered participating securities as they receive non-forfeitable rights to cash dividends at the same rate as common stock. In accordance with Accounting Standards Codification Topic No. 260,~~Earnings Per Share~~~~, diluted net income per share is calculated using the more dilutive of the following two approaches:~~

For the three and six months ended June 30, 2017 and 2016, the net (loss) income available to common shareholders is divided by the weighted average number of common shares outstanding during the period to calculate diluted earnings per share. For the three and ~~2015,~~six months ended June 30, 2017, the assumed exercise of stock options and assumed vesting of restricted stock and restricted stock units were not included in the computation of net loss per share as their effect would have been anti-dilutive. For the three and six months ended June 30, 2016, the two-class method was used in the computation of diluted net income per share, as ~~this approach~~the result was more dilutive.

The following presents a reconciliation of the numerator and denominator used in the calculation of basic net (loss) income per share and a reconciliation of the numerator and denominator used in the calculation of diluted net (loss) income per share (in thousands, except share and per share data):


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015			2017			2016			2017			2016
Numerator:
Net income available to common shareholders—basic	$	6,447		$	5,754		$	11,668		$	12,960
Net (loss) income, as reported													$	(496	)	$	6,653		$	(1,571	)	$	12,011
Less: net income attributable to participating securities														—			(206	)		—			(343	)

Net (loss) income available to common shareholders—basic													$	(496	)	$	6,447		$	(1,571	)	$	11,668

Denominator:
Basic:
Weighted-average shares of common stock outstanding														41,877,473			40,721,081			41,674,671			40,475,785
Less: weighted-average shares of unvested restricted common stock outstanding														(2,220,402	)		(1,343,136	)		(2,107,417	)		(1,225,488	)

Weighted-average number of common shares used in computing basic net (loss) income per common share														39,657,071			39,377,945			39,567,254			39,250,297

Net (loss) income per share applicable to common shareholders—basic													$	(0.01	)	$	0.16		$	(0.04	)	$	0.30


													Three Months Ended June 30,						Six Months Ended June 30,
													2017			2016			2017			2016
Numerator:
Net (loss) income available to common shareholders—basic													$	(496	)	$	6,447		$	(1,571	)	$	11,668
Add-back: undistributed earnings allocated to unvested shareholders		72			51			95			124			—			72			—			95
Less: undistributed earnings reallocated to unvested shareholders		(72	)		(50	)		(94	)		(122	)		—			(72	)		—			(94	)

Net income available to common shareholders—diluted	$	6,447		$	5,755		$	11,669		$	12,962
Net (loss) income available to common shareholders—diluted													$	(496	)	$	6,447		$	(1,571	)	$	11,669


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015			2017			2016			2017			2016
Denominator:
Diluted:
Weighted-average shares of common stock outstanding		40,721,081			39,873,730			40,475,785			39,758,947			41,877,473			40,721,081			41,674,671			40,475,785
Less: weighted-average shares of unvested restricted common stock outstanding		(1,343,136	)		(1,047,545	)		(1,225,488	)		(931,279	)		(2,220,402	)		(1,343,136	)		(2,107,417	)		(1,225,488	)
Weighted-average number of common shares issuable upon exercise of outstanding stock options, based on the treasury stock method		370,960			569,210			384,965			631,090			—			370,960			—			384,965

Weighted-average number of common shares used in computing diluted net income per common share		39,748,905			39,395,395			39,635,262			39,458,758
Weighted-average number of common shares used in computing diluted net (loss) income per common share														39,657,071			39,748,905			39,567,254			39,635,262

Net income per share applicable to common shareholders—diluted	$	0.16		$	0.15		$	0.29		$	0.33
Net (loss) income per share applicable to common shareholders—diluted													$	(0.01	)	$	0.16		$	(0.04	)	$	0.29

The following common share equivalents have been excluded from the computation of diluted weighted-average shares outstanding, as their effect would have been anti-dilutive:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015		2017		2016		2017		2016
Options		643,714		433,463		662,988		370,201		887,329		643,714		919,875		662,988
Unvested restricted stock		386,297		405,522		352,900		247,768		839,791		386,297		695,645		352,900
Unvested restricted stock units		15,377		14,825		14,085		11,341		83,469		15,377		71,526		14,085

On August 30, 2016, the Company’s Board of Directors approved a share purchase program permitting repurchases of up to $25.0 million of the Company’s outstanding shares of common stock through December 31, 2017. During the quarter ended June 30, 2017, the Company repurchased a total of 81,000 shares of its common stock for an aggregate purchase price of $1.6 million, including brokers’ fees. Intended to offset shareholder dilution, the Company expects to make repurchases periodically, either on the open market or in privately negotiated transactions, subject to availability, as business and market conditions warrant. The share repurchase program does not obligate the Company to acquire any particular amount of common stock, and the program may be suspended or discontinued at management’s and/or the Board of Directors’ discretion.

We account for share based compensation in accordance with ASC Topic No. 718,Compensation – Stock Compensation, which requires the measurement of compensation costs at fair value on the date of grant and recognition of compensation expense over the service period for awards expected to vest. The following presents the impact of share based compensation expense on our condensed consolidated statements of ~~income~~operations (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015		2017		2016		2017		2016
Marketing and selling	$	1,604	$	1,609	$	3,185	$	2,875	$	2,563	$	1,604	$	4,893	$	3,185
Research and development		876		644		1,689		1,186		1,078		876		2,096		1,689
General and administrative		1,141		1,217		2,525		2,180		1,551		1,141		3,034		2,525

Total expensed	$	3,621	$	3,470	$	7,399	$	6,241	$	5,192	$	3,621	$	10,023	$	7,399
Property and equipment		—		40		—		82	��	31		—		53		—

Total share based compensation	$	3,621	$	3,510	$	7,399	$	6,323	$	5,223	$	3,621	$	10,076	$	7,399

In the three and six months ended June 30, ~~2015, $40~~2017, $31 thousand and ~~$82~~$53 thousand, respectively, of share based compensation was capitalized as part of an internal software ~~project,~~projects, and this amount is included in property and equipment, net in our condensed consolidated balance sheet. As of June 30, ~~2016,~~2017, the Company had ~~$30.5~~$47.2 million of unrecognized compensation expense related to employees and directors’ unvested stock option awards, restricted stock units and restricted stock awards that are expected to be recognized over a weighted-average period of ~~2.9~~2.7 years.

We view our operations and manage our business as one segment: the development, marketing and licensing of technologies and fonts. Factors used to identify our single segment include the financial information available for evaluation by our chief operating decision maker in making decisions about how to allocate resources and assess performance. While our technologies and services are sold into two principal markets, Creative Professional and OEM, expenses and assets are not formally allocated to these market segments, and operating results are assessed on an aggregate basis to make decisions about the allocation of resources. The following table presents revenue for these two ~~major~~principle markets (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015		2017		2016		2017		2016
Creative Professional	$	23,457	$	20,678	$	47,372	$	41,182	$	30,642	$	23,457	$	57,713	$	47,372
OEM		25,276		25,727		51,203		51,269		27,159		25,276		52,553		51,203

Total	$	48,733	$	46,405	$	98,575	$	92,451	$	57,801	$	48,733	$	110,266	$	98,575

~~The Company attributes~~Effective as of January 1, 2017, our presentation of geographic revenue has been changed to better align with how our business operates. As a result, we now report revenue based on the geographic ~~areas~~location of our customers, rather than based on the location of our subsidiary receiving such revenue. For example, licenses may be sold to large international companies which may be headquartered in the Republic of Korea, but the sales are received and recorded by our subsidiary located in the United ~~States, U.S. In this example, the revenue would be reflected in the U.S. totals~~States. Historically, in the table ~~below.~~ below such revenues would be included in the revenue for the United States, whereas for our new presentation, such revenues would be reported in the Republic of Korea and included in the revenue for Rest of World. Geographic revenue for the three months and six months ended June 30, 2016 has been recast to conform to this presentation.

We market our products and services principally through offices in the U.S., United Kingdom, Germany, China, Republic of Korea and Japan. The following table summarizes revenue by ~~location:~~customer location (in thousands of dollars, except percentages):


	Six Months Ended June 30,										Three Months Ended June 30,
	2016					2015					2017					2016
	Sales		% of Total			Sales		% of Total			Sales		% of Total			Sales		% of Total
	(In thousands, except percentages)										(In thousands, except percentages)
United States	$	53,761		54.5	%	$	51,363		55.5	%	$	26,750		46.3	%	$	20,354		41.8	%
United Kingdom		6,572		6.7			3,378		3.7
Germany		12,567		12.8			11,233		12.2
Japan		25,348		25.7			25,980		28.1			14,854		25.7			13,016		26.7
Other Asia		327		0.3			497		0.5
Europe, Middle East and Africa (EMEA)												12,551		21.7			10,649		21.8
Rest of World												3,646		6.3			4,714		9.7

Total	$	98,575		100.0	%	$	92,451		100.0	%	$	57,801		100.0	%	$	48,733		100.0	%


											Six Months Ended June 30,
											2017					2016
											Sales		% of Total			Sales		% of Total
											(In thousands, except percentages)
United States											$	46,680		42.3	%	$	39,014		39.6	%
Japan												29,315		26.6			26,685		27.1
Europe, Middle East and Africa (EMEA)												23,440		21.3			22,225		22.5
Rest of World												10,831		9.8			10,651		10.8

Total											$	110,266		100.0	%	$	98,575		100.0	%

Long-lived assets, which include property and equipment, goodwill and intangible assets, but exclude other assets and deferred tax assets, are attributed to geographic areas in which Company assets reside and is shown below (in thousands):


	June 30, 2016		December 31, 2015		June 30, 2017		December 31, 2016
Long-lived assets:
United States	$	202,909	$	206,822	$	317,146	$	318,786
United Kingdom		4,025		4,581		3,958		3,882
Germany		55,639		55,269		55,905		52,237
Asia (including Japan)		3,434		3,531
Rest of World						3,470		3,467

Total	$	266,007	$	270,203	$	380,479	$	378,372

We conduct operations in facilities under operating leases expiring through 2022. In accordance with the lease terms, we pay real estate taxes and other operating costs. Our leases in California, New York, Massachusetts, Germany, India and Republic of Korea contain renewal options. The Company’s future minimum payments under non-cancelable operating leases as of June 30, 2016 are approximately as follows (in thousands):

From time-to-time, we may be a party to various claims, suits and complaints. We do not believe that there are claims or legal proceedings that, if determined adversely to us, would have a material adverse effect on our business, results of operations or financial condition.

Under our standard license agreement with our OEM customers, we warrant that the licensed technologies are free of infringement claims of intellectual property rights and will meet the specifications as defined in the licensing agreement for a specified period, typically one year. Under the licensing agreements, liability for such indemnity obligations is limited, generally to the total arrangement fee; however, exceptions have been made on a case-by-case basis, increasing the maximum potential liability to agreed upon amounts at the time the contract is entered into or unlimited liability. We ~~believe~~have never incurred costs payable to a customer or business partner to defend lawsuits or settle claims related to these warranties, and as a result, management believes the estimated fair value of these warranties is minimal. Accordingly, there are no liabilities recorded for these warranties as of June 30, ~~2016~~2017 and December 31, ~~2015.~~

On July 20, 2016 the Company entered into an agreement and plan of merger to purchase all of the outstanding shares of Olapic, Inc., a privately-held company located in located in New York, New York; its wholly-owned subsidiaries Olapic UK Ltd., based in London, England; and Olapic Argentina S.A., based in Córdoba, Argentina; for an aggregate all cash purchase price of approximately $130.0 million, upon the closing of the merger. Olapic’s Earned Content Platform helps brands collect, curate, use and analyze user-generated content in the form of images and videos in their ecommerce experiences and across multiple marketing channels. This helps to create powerful branded experiences that drive consumer engagement and increase conversions. Monotype also plans to issue approximately $19.0 million of stock awards to the founders and employees of Olapic. These awards will vest over time, and accordingly will be accounted for as compensation expense. We expect to use a combination of cash on hand and borrowings under our current Credit Facility to finance the transaction. The closing is contingent upon necessary regulatory approvals and we expect the acquisition to close in the third quarter of 2016. The results of operations of Olapic will be included in our consolidated results beginning on the date of acquisition.

On July 26, ~~2016~~2017 the Company’s Board of Directors declared a ~~$0.11~~$0.113 per share quarterly cash dividend on our outstanding common stock. The record date is set for October ~~3, 2016~~2, 2017 and the dividend is payable to shareholders of record on October ~~21, 2016.~~20, 2017. Dividends are declared at the discretion of the Company’s Board of Directors and depend on actual cash from operations, the Company’s financial condition and capital requirements and any other factors the Company’s Board of Directors may consider relevant. Future dividend declarations, as well as the record and payment dates for such dividends, will be determined by the Company’s Board of Directors on a quarterly basis.

Subsequent to June 30, 2017, the Company purchased 196,989 shares of common stock for $3.6 million, at an average price per share of $18.00 through July 25, 2017. The Company purchased these shares on the open market at prevailing market prices and in accordance with its previously announced share purchase program. At July 25, 2017, $13.6 million remains for future purchase under the Plan.

This Quarterly Report on Form 10-Q contains forward looking statements. Forward looking statements relate to future events or our future financial performance. We generally identify forward looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar words. These statements are only predictions. We have based these forward looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, results of operations and financial condition. The outcome of the events described in

these forward looking statements is subject to risks, uncertainties and other factors described in “Risks Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2015,~~2016, as well as those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Accordingly, you should not rely upon forward looking statements as predictions of future events. We cannot assure you that the events and circumstances reflected in the forward looking statements will be achieved or occur, and actual results could differ materially from those projected in the forward looking statements. The forward looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

WeMonotype empowers expression and engagement for creatives, designers, engineers and marketers at the world’s most revered brands. These professionals sit at globally recognized organizations or are ~~a leading provider~~independent creatives located across the globe. Regardless of ~~type,~~their organization or location, we support their efforts by producing compelling content and technologies that build beloved and valued brands, provide technology that cultivates meaningful engagement with their brand enthusiasts, and provide intelligence and insight through the measure of content performance to optimize resources and spending.

Our mission is to be the first place to turn for the design assets, technology and expertise for ~~creative professionals~~all touchpoints.

For creatives, designers and ~~consumer device manufacturers. Our vision is~~engineers, we empower expression through high-value design assets, technologies that ~~our fonts~~improve the discovery, curation, measurement and ~~technology empower every word~~brand integrity of content, and ~~experience. We help creative professionals, consumer device manufacturers~~through custom studio design services. For marketers, we enable engagement with a customer’s brand enthusiasts and ~~independent software vendors connect their brands,~~measurement of content ~~products~~interactions in digital environments such as mobile messaging and services to consumers and businesses everywhere. Monotype is home to some of the world’s most well-known typeface collections. Along with our custom type services, our solutions enable consumers and professionals to express their creativity, while our tools and technologies improve creative workflows and maximize efficiency as content is published or distributed. Our solutions provide worldwide language coverage and high-quality text, and our embedded solutions support compelling user interfaces. social media platforms.

We offer more than ~~16,000~~99,000 typeface designs, and include some of the world’s most widely used designs, such as the Times New Roman^®, Helvetica^®, Frutiger^®, ITC Franklin ~~Gothic~~^™Gothic™, FF Meta and ~~Droid~~^™Droid™ typefaces, and support more than 250 Latin and non-Latin languages. Our e-commerce websites, includingmyfonts.com, fonts.com, fontshop.com,and linotype.com, which attracted more than 8050 million visits in ~~2015~~2016 from over 200 countries and territories, offer thousands of high-quality font products ~~including our own fonts~~ from the Monotype Libraries, as well as ~~fonts~~ from third parties.

We derive revenue from two principal sources: licensing our fonts and ~~font related services~~technology to ~~creative~~brands and ~~business~~creative professionals, which we refer to as our Creative Professional revenue, and licensing our ~~text imaging solutions~~fonts and technology to consumer device manufacturers and independent software vendors, which we refer to as our OEM revenue. We derive our Creative Professional revenue primarily from brands, agencies, publishers, corporations, enterprises, small businesses and individuals. We derive our OEM revenue primarily from consumer device manufacturers. Some of our revenue streams, particularly project-related and custom ~~font design services~~revenue where spending is largely discretionary in nature, have historically been, and we expect them to continue to be in the future, susceptible to weakening economic conditions.

~~Geographic~~Effective as of January 1, 2017, our presentation of geographic revenue ~~which is~~has been changed to better align with how our business operates. As a result, we now report revenue based on the geographic location of our customers, rather than based on the location of our subsidiary receiving such revenue. For example, licenses may be sold to large international companies which may be headquartered in the Republic of Korea, but the sales are received and recorded by our subsidiary located in the United States. Historically, such revenues would be included in the revenue isfor the United States in the table ~~below:~~below, whereas for our new presentation, such revenues would be reported in the Republic of Korea and included in the revenue for Rest of World in the table below. Geographic revenue for the three months and six months ended June 30, 2016, has been recast to conform to this presentation.

We market our products and services principally through offices in the U.S., United Kingdom, Germany, China, Republic of Korea and Japan. The following summarizes revenue by customer location (in thousands of dollars, except percentages):


	Six Months Ended June 30,										Three Months Ended June 30,
	2016					2015					2017					2016
	Sales		% of Total			Sales		% of Total			Sales		% of Total			Sales		% of Total
	(In thousands, except percentages)										(In thousands, except percentages)
United States	$	53,761		54.5	%	$	51,363		55.5	%	$	26,750		46.3	%	$	20,354		41.8	%
United Kingdom		6,572		6.7			3,378		3.7
Germany		12,567		12.8			11,233		12.2
Japan		25,348		25.7			25,980		28.1			14,854		25.7			13,016		26.7
Other Asia		327		0.3			497		0.5
Europe, Middle East and Africa (EMEA)												12,551		21.7			10,649		21.8
Rest of World												3,646		6.3			4,714		9.7

Total	$	98,575		100.0	%	$	92,451		100.0	%	$	57,801		100.0	%	$	48,733		100.0	%


											Six Months Ended June 30,
											2017					2016
											Sales		% of Total			Sales		% of Total
											(In thousands, except percentages)
United States											$	46,680		42.3	%	$	39,014		39.6	%
Japan												29,315		26.6			26,685		27.1
Europe, Middle East and Africa (EMEA)												23,440		21.3			22,225		22.5
Rest of World												10,831		9.8			10,651		10.8

Total											$	110,266		100.0	%	$	98,575		100.0	%

For the three months ended June 30, 2017 and 2016, ~~and 2015, sales by our subsidiaries located~~revenue from customers outside the United States comprised ~~44.1%~~53.7% and ~~42.8%~~58.2%, respectively, of our total revenue. For the six months ended June 30, 2017 and 2016, ~~and 2015, sales by our subsidiaries located~~revenue from customers outside the United States comprised ~~45.5%~~57.7% and ~~44.5%~~60.4%, respectively, of our total revenue. We expect that sales byto our international ~~subsidiaries~~customers will continue to represent a substantial portion of our revenue for the foreseeable future. Future international revenue will depend on the continued use and expansion of our ~~text imaging solutions~~products worldwide.

We derive a significant portion of our OEM revenue from a limited number of customers, in particular manufacturers of laser printers and consumer ~~electronics.~~electronic devices. For the three months ended June 30, ~~2016~~2017 and ~~2015,~~2016, our top ten licensees by revenue, ~~all~~most of which are ~~with~~ OEM customers, accounted for approximately ~~30.4%~~29.3% and ~~34.1%~~32.3% of our total revenue, respectively. For the six months ended June 30, ~~2016~~2017 and ~~2015,~~2016, our top ten licensees by revenue accounted for approximately ~~30.7%~~30.0% and 34.8% of our total revenue, respectively. As Creative Professional revenue growth is expected to continue to outpace OEM revenue growth, we expect total revenue from our top ten licensees to continue to decrease as a percentage of total revenue. Although no one customer accounted for more than 10% ~~or more~~ of our total revenue for the three months or six months ended June 30, ~~2016~~2017 or ~~2015,~~2016, if we are unable to maintain relationships with major customers or establish relationships with new customers, our licensing revenue will be adversely affected.

Our Creative Professional revenue is primarily derived from font licenses, font related services and from custom font design services. We license fonts directly to end-users through our direct sales organization, e-commerce websites ~~via telephone, e-mail~~ and indirectly through third-party resellers. ~~Font~~Web font and digital ad related services refer to our web font services and web design tools. ~~We also license fonts and provide custom font design services to~~Our customers include graphic designers, advertising agencies, media organizations and corporations. We refer to direct, indirect and custom font design services, as non-web revenue, and refer to revenue that is derived from our websites, as web revenue. In addition, Creative Professional revenue includes revenue derived from our software as a service, or SaaS, offerings.

Revenue from font licenses to our e-commerce customers is recognized upon payment by the customer and the software embodying the font is shipped or made available. Revenue from font licenses to other customers is recognized upon shipment of the software embodying the font and when all other revenue recognition criteria have been met. Revenue from resellers is recognized upon notification from the reseller that our font product has been licensed and when all other revenue recognition criteria have been met. Custom font design services are generally recognized upon ~~delivery. Font related~~delivery, unless it is part of a bundled services arrangement, in which case, it is recognized over the longest service period, or accounted for on a percentage-of-completion basis where appropriate. Web font and digital ad service revenue is mainly self-hosted and recorded upon delivery. Revenue from Olapic’s Earned Content platform is a SaaS-based, subscription ~~based~~model. Company hosted subscription-based arrangements and ~~it may contain~~our software as a ~~service. The~~service products are accounted for as subscription revenue, is recognized ratably over the subscription period.

We consider web server and commercial rights to online fonts as recurring revenue and it is recognized upon payment by the customer and proof of font delivery, when all other revenue recognition criteria have been met. Contract accounting, completed contract for short-term projects and percentage-of-completion for long-term projects, is used where services are deemed essential to the software.

Our OEM revenue is derived substantially from ~~per-unit royalties received for~~ printer imaging, ~~and~~ printer driver ~~or printer products,~~ and display imaging products. Under our licensing arrangements, we ~~typically~~either receive a royalty for each product unit incorporating our fonts and technology that is shipped by our OEM ~~customers. We also receive OEM revenue from~~customers or a fixed fee ~~licenses~~as specified under license arrangements with certain of our OEM customers. Fixed fee licensing arrangements are not based on units shipped by the customer, but instead, customers pay us on a periodic basis for the right to embed our fonts and technology in their ~~products.~~products over a certain term. Although significantly less than royalties from per-unit shipments and fixed fees from OEM customers, we also receive revenue from software application and operating systems vendors, who include our fonts and technology in their products, and for font development. Many of our per-unit royalty licenses continue for the duration that our OEM customers ship products that include our technology, unless terminated for breach. Other licenses have terms that typically range from one fiscal quarter to five years, and usually provide for automatic or optional renewals. We recognize revenue from per-unit royalties in the period during which we receive a royalty report from a customer, typically one quarter after royalty-bearing units are ~~shipped.~~shipped, as we do not have the ability to estimate the number of units shipped by our customers. Revenue from fixed fee licenses is generally recognized when it is billed to the customer, so long as the product has been delivered, the license fee is fixed and non-refundable, is not bundled with any time-based elements and collection is probable. OEM revenue also includes project-related agreements for which contract accounting, completed contract for short-term projects and percentage-of-completion for long-term projects, may be used.

Our cost of revenue consists of font license fees that we pay on certain fonts that are owned by third parties, allocated internal engineering expense and overhead costs directly related to custom font design ~~services.~~services and cloud-based web services costs related to our SaaS-based offerings. License fees that we pay to third parties are typically based on a percentage of our Creative Professional and OEM revenue and do not involve minimum fees. Our cost of OEM revenue has typically had a lower cost than our cost of Creative Professional revenue because we own a higher percentage of the fonts licensed to our OEM customers, provide value-added technology and have negotiated lower royalty rates on the fonts we license from third parties because of volume. We have achieved improved margins on our Creative Professional revenue as a result of product mix and lower royalty rates. In addition, Creative Professional revenue includes custom font design service revenue, which has a substantially higher cost than our other revenue. Our gross profit margin may vary depending on the mix of revenue between sales of our fonts and sales of ~~third party~~third-party fonts, and depending on the level of custom font design service revenue.

Cost of revenue also includes amortization of acquired technology, which we amortize over 87 to 15 years. For purposes of amortizing acquired technology we estimate the remaining useful life of the technology based upon various considerations, including our knowledge of the technology and the way our customers use it. We use the straight-line method to amortize our acquired technology. There is no reliable evidence to suggest that we should expect any other pattern of amortization than an even pattern, and we believe this best reflects the expected pattern of economic usage.

Our gross profit percentage is influenced by a number of factors including product mix, pricing and volume at any particular time. However, our cost of OEM revenue is typically lower than our cost of Creative Professional revenue because we own a higher percentage of the fonts licensed to our OEM customers, provide value-added technology and have negotiated lower royalty rates on the fonts we license from third parties because of volume. In addition, within our Creative Professional business, the cost of our custom font design service revenue is substantially higher than the cost of our other revenue. The relative cost of our Creative Professional revenue has decreased in recent periods, as efforts to sell license rights to more ~~of our~~ fonts that we own have been successful, and because we have recently experienced success in our effort to sell certain license rights that carry lower royalty rates to Creative Professional customers. Our Creative Professional revenue is growing at a faster rate than our OEM revenue. We expect these trends to continue. Our gross profit is subject to variability from period-to-period, depending on the product mix and the level of custom font design service revenue.

The preparation of financial statements and related disclosures in conformity with GAAP and our discussion and analysis of our financial condition and results of operations requires us to make judgments, assumptions and estimates that affect the amounts reported in our ~~condensed~~ consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates.

~~There has been no material change in our critical accounting policies since December 31, 2015.~~ Information about our critical accounting policies may be found in ~~Part II, Item 7,~~ “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” under the heading “Critical Accounting Policies,” ofincluded in our Annual Report on Form 10-K for the year ended December 31, ~~2015.~~2016, except for the adoption as of January 1, 2017, of guidance in ASU 2016-09 as more fully described in Note 3 to the accompanying unaudited condensed consolidated quarterly statements.

Results of Operations for the Three Months Ended June 30, ~~2016~~2017 Compared to Three Months Ended June 30, ~~2015~~2016

The following table sets forth items in the condensed consolidated quarterly statements of ~~income~~operations as a percentage of sales for the periods indicated:


	Three Months Ended June 30,						Three Months Ended June 30,
	2016			2015			2017			2016
Revenue:
Creative Professional		48.1	%		44.6	%		53.0	%		48.1	%
OEM		51.9			55.4			47.0			51.9

Total revenue		100.0			100.0			100.0			100.0
Cost of revenue		15.6			16.3			17.6			15.6
Cost of revenue—amortization of acquired technology		2.3			2.4			1.5			2.3

Total cost of revenue		17.9			18.7			19.1			17.9

Gross profit		82.1			81.3			80.9			82.1
Marketing and selling		30.1			31.3			39.3			30.1
Research and development		12.3			11.4			15.9			12.3
General and administrative		17.7			15.1			20.4			17.7
Amortization of other intangible assets		1.5			1.7			1.8			1.5

Total operating expenses		61.6			59.5			77.4			61.6

Income from operations		20.5			21.8			3.5			20.5
Interest expense, net		0.2			0.7			1.3			0.2
(Gain) loss on foreign exchange		(0.8	)		1.1
(Gain) loss on derivatives		(0.4	)		0.4
Other income, net		(0.1	)		—
Loss (gain) on foreign exchange								4.6			(0.8	)
Loss (gain) on derivatives								0.2			(0.4	)
Other								0.1			(0.1	)

Total other (income) expense		(1.1	)		2.2
Income before provision for income taxes		21.6			19.6
Provision for income taxes		7.9			6.9
Total other expense (income)								6.2			(1.1	)
(Loss) income before (benefit) provision for income taxes								(2.7	)		21.6
(Benefit) provision for income taxes								(1.8	)		7.9

Net income		13.7	%		12.7	%
Net (loss) income								(0.9	)%		13.7	%

The following discussion compares the three months ended June 30, ~~2016~~2017 with the three months ended June 30, ~~2015.~~2016.

We view our operations and manage our business as one segment: the development, marketing and licensing of technologies and fonts. Factors used to identify our single segment include the financial information available for evaluation by our chief operating decision maker in making decisions about how to allocate resources and assess performance. While our technologies and services are sold to customers in two principal markets, Creative Professional and consumer device manufacturers and independent software vendors, together OEM, expenses and assets are not formally allocated to these markets, and operating results are assessed on an aggregate basis to make decisions about the allocation of resources.

The following table presents revenue for these two principal markets (in thousands):


	Three Months Ended June 30,				Increase
	2017		2016		Increase
Creative Professional	$	30,642	$	23,457	$	7,185
OEM		27,159		25,276		1,883

Total revenue	$	57,801	$	48,733	$	9,068

Revenue was ~~$48.7~~$57.8 million and ~~$46.4~~$48.7 million for the three months ended June 30, ~~2016~~2017 and ~~2015,~~2016, respectively, an increase of ~~$2.3~~$9.1 million, or ~~5.0%~~18.6%.

Creative Professional revenue increased ~~$2.8~~$7.1 million, or ~~13.4%~~30.6%, to $30.6 million for the three months ended June 30, 2017, as compared to $23.5 million for the three months ended June 30, 2016, mainly due to revenue from Olapic and continued growth in sales of recurring licenses and digital ad revenue in the second quarter of 2017, as compared to ~~$20.7~~the same period in 2016.

OEM revenue increased $1.9 million, or 7.4%, to $27.2 million for the three months ended June 30, ~~2015, mainly due to an increase in direct revenue~~2017, from ~~our enterprise customers, primarily due to increased sales of digital advertising and web font services, and growth in sales of recurring licenses.~~

~~OEM revenue was~~ $25.3 ~~million and $25.7~~ million for the three months ended June 30, ~~2016 and 2015, respectively, a decrease of $0.5 million, or 1.8%. Decreased revenue~~2016. Revenue from ~~per unit royalty arrangements with~~ our printer imaging electronic OEM customers ~~mainly~~increased period over period, due to ~~lower volumes~~$2.4 million of ~~shipments,~~one-time benefits as we continue to convert customers to fixed fee contracts from royalty bearing contracts, and increased revenue from our display imaging consumer electronic OEM customers, partially offset by decreased revenue from our independent software vendor ~~customers, mainly due to the timing of revenue, was partially offset by increased revenue from our automotive display imaging OEM customers, period over period.~~customers.

Cost of revenue, excluding amortization of acquired technology, was ~~consistent at~~$10.1 million and $7.6 million for the three months ended June 30, 2017 and 2016, respectively, an increase of $2.5 million, or 33.6%. The increase in cost of revenue, excluding amortization of acquired technology, is partially due to both product mix and ~~2015, respectively.~~an increase in revenue, period over period. In the second quarter of 2017, cost of revenue included our Olapic business and a larger proportion of our Creative Professional revenue, as compared to the same period in 2016. As a percentage of ~~total revenue,~~sales, cost of revenue, excluding amortization of acquired technology, was 17.6% and 15.6% ~~and 16.3%~~of total revenue in the three months ended June 30, 2017 and 2016, ~~and 2015,~~ respectively. In the second quarter of 2016, as compared to the same period in 2015, there were fewer custom font development projects, which typically have a higher associated cost. In the three months ended June 30, 2016, Creative Professional revenue was 48.1% of total revenue, as compared to 44.6% of total revenue in the same period in 2015. Our Creative Professional revenue has typically had a higher associated cost than our OEM revenue. Historically, when Creative Professional revenue increased as a percentage of total revenue, we would have expected our overall gross profit percentage to decrease. However, in the second quarter of 2016, as compared to the same period in 2015, we achieved improved margins on our Creative Professional revenue with enterprise customers, from selling a lower proportion of third party fonts, and from license revenues to Creative Professional customers that carry lower royalty rates.

The portion of cost of revenue consisting of amortization of acquired technology was ~~unchanged at~~$0.9 million and $1.1 million for the three months ended June 30, 2017 and 2016, ~~and 2015, respectively.~~respectively, a decrease of $0.2 million, or 22.1%.

Gross profit in the three months ended June 30, ~~2016 increased 0.8%~~2017 decreased 1.2 percentage points to ~~82.1%~~80.9% of sales in the second quarter of ~~2016,~~2017, as compared to ~~81.3%~~82.1% of sales in the same period in ~~2015,~~2016, mainly due to variations in product mix, net of decreased amortization of acquired technology. In the second quarter of 2017, as ~~detailed above.~~compared to the same period in 2016, our gross profit included lower margins from our Olapic business, which we acquired in August 2016. In addition, for the three months ended June 30, 2017, Creative Professional revenue, which typically has a higher associated cost than OEM revenue, increased as a percentage of our total revenue to 53.0%, as compared to 48.1% of total revenue in the same period in 2016.

Marketing and Selling.Marketing and selling expense ~~was $14.6~~increased $8.1 million, ~~and $14.5~~or 55.1% to $22.7 million in the three months ended June 30, ~~2016~~2017, as compared to $14.6 million in the three months ended June 30, 2016. Personnel and ~~2015, respectively, an increase of $0.1~~personnel related expenses increased $6.8 million ~~or 0.8%. Personnel expenses, including travel, increased $0.6 million mainly~~ due to additional headcount mainly from our acquisition of Olapic and targeted hiring in our direct sales organization, and additional compensation expense recognized on deferred compensation arrangements in connection with ~~an amendment to the~~our acquisitions of Swyft ~~Media Merger Agreement executed in November 2015, which was partially offset by a net decrease in salary~~and Olapic. Increased infrastructure expense due to ~~a redeployment of certain employees at~~increased headcount contributed $0.7 million to the ~~beginning of 2016 to development related activities from our sales~~overall increase in marketing and ~~marketing organization, net of other sales and marketing headcount additions. Consulting~~selling expense, ~~decreased $0.5 million,~~ period over period. Targeted marketing spending increased $0.3 million in the second quarter of 2017, as compared to the same period ~~a reduction~~ in ~~targeted spending mainly~~2016, due to the timing of activities.

Research and Development. Research and development expense increased ~~$0.7~~$3.2 million, or ~~13.3%~~54.0%, to $9.2 million in the three months ended June 30, 2017, as compared to $6.0 million in the three months ended June 30, ~~2016, as compared~~2016. Personnel expenses increased $2.3 million due to ~~$5.3 million~~increased headcount in ~~the three months ended June 30, 2015, primarily from~~connection with our acquisition of Olapic, net of a reduction for capitalized personnel costs for development projects and an increase in personnel ~~expenses due to increased headcount from the redeployment~~costs classified as cost of ~~certain former marketing and selling employees and fewer~~sales for custom font development ~~projects, partially offset by a grant received related~~in the second quarter of 2017, as compared to the ~~company’s development work within Northern Ireland.~~same period in 2016. Consulting expenses increased $0.3 million in the second quarter of 2017, as compared to the same period in 2016. Increased rent expense contributed $0.2 million to the overall increase, period over period.

General and Administrative. General and administrative expense increased ~~$1.6~~$3.2 million, or ~~23.2%~~36.8%, to $11.8 million in the three months ended June 30, 2017, as compared to $8.6 million in the three months ended June 30, ~~2016,~~2016. Personnel and personnel related expenses increased $2.2 million in the second quarter of 2017, as compared to ~~$7.0~~the same period in 2016, primarily the result of key hiring and the Olapic acquisition. Infrastructure expenses, such as rent, software and depreciation expense, increased $0.9 million period over period, mainly due to the addition of Olapic. Legal expenses decreased $0.2 million in the three months ended June 30, ~~2015, primarily due to increased personnel expenses. Personnel expenses increased $1.1 million in the second quarter of 2016,~~2017, as compared to the same period in ~~2015, mainly the result~~2016, due to timing of key hiring. In the second quarter of 2015, approximately $0.3 million of personnel expenses were capitalized in connection with our new ERP system. As the system was placed into service in the third quarter of 2015, there was no capitalization benefit in the same period in 2016, and the associated depreciation expense contributed an additional $0.3 million to the overall increase in general and administrative expense.acquisitions.

Amortization of Other Intangible Assets. Amortization of other intangible assets was ~~$0.7~~$1.0 million and ~~$0.8~~$0.7 million for the three months ended June 30, 2017 and 2016, ~~and 2015,~~ respectively, ~~a decrease~~an increase of ~~$0.1~~$0.3 million, or ~~6.1%.~~37.3%, mainly due to our acquisition of Olapic.

Interest expense, net of interest income was ~~$0.1~~$0.7 million and ~~$0.3~~$0.1 million for the three months ended June 30, 2017 and 2016, ~~and 2015, a decrease~~an increase of ~~$0.2 million. There was no debt outstanding during either the three months ended June 30,~~$0.6 million, mainly due to borrowings under our revolving line of credit in August 2016, ~~or 2015. Interest expense in both periods consisted mainly of unused line fees~~ in connection with our ~~Credit Facility.~~acquisition of Olapic.

~~(Gain) loss~~Loss (gain) on foreign exchange was a ~~gain~~loss of ~~$0.4~~$2.6 million and a ~~loss~~gain of ~~$0.5~~$0.4 million for the three months ended June 30, 2017 and 2016, respectively, a decrease of $3.0 million, primarily the result of currency fluctuations on our foreign denominated receivables and ~~2015, respectively, an increase of $0.9 million.~~payables. In the three months ended June 30, ~~2016,~~2017, the ~~gain~~loss was primarily due to the strengthening of the ~~U.S. dollar as compared to the Japanese Yen. In the three months ended June 30, 2015, the loss on foreign exchange was primarily due to the strengthening of the British pound sterling,~~Euro, as compared to the U.S. ~~dollar.~~dollar, on U.S. dollar denominated receivables held by our foreign subsidiaries.

~~(Gain)~~Loss (gain) loss on derivatives was a ~~gain~~loss of ~~$0.2~~$0.1 million and a ~~loss~~gain of $0.2 million in the three months ended June 30, 2017 and 2016, ~~and 2015,~~ respectively, ~~an increase~~a decrease of ~~$0.4~~$0.3 million due to our 30-day forward currency contracts.

For the three months ended June 30, ~~2016~~2017 and ~~2015,~~2016, our effective tax rate was ~~36.7%~~a benefit of 67.4% and ~~35.0%~~a provision of 36.7%, respectively. The ~~increase~~change in our effective tax rate is primarily due to a charge of 43.1% for non-deductible expenses, as compared to 2.5% for the same period in 2016. The change is due to deferred compensation associated with the Olapic acquisition and also due to the fact that the impact of the non-deductible ~~acquisition~~expenses as a percentage of pre-tax income (loss) is higher in 2017 as compared to 2016, as a result of the decrease in overall pre-tax (loss) income. The effective tax rate for the three months ended June 30, 2017 included an expense of 4.7% related ~~expenses, offset by~~to a ~~benefit of 0.8% for research credits.~~net shortfall on stock compensation. We adopted ASU 2016-09,Improvements to Employee Share-Based Payments on January 1, 2017 which specifies that all tax effects related to share based payments will be recorded through the income statement. There ~~were~~was no similar ~~items~~item in the same period in ~~2015.~~2016, as these items were recorded to equity prior to the adoption of this standard. The ~~legislation~~effective tax rate for the second quarter of 2017 included a benefit of 10.0% for research ~~credit for 2015 had not yet been passed~~credits, as ~~of June 30, 2015.~~compared to 0.8% in the same period in 2016.

Results of Operations for the Six Months Ended June 30, ~~2016~~2017 Compared to Six Months Ended June 30, ~~2015~~2016

The following table sets forth items in the condensed consolidated year-to-date statement of ~~income~~operations as a percentage of sales for the periods indicated:


	Six Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2017			2016
Revenue:
Creative Professional		48.1	%		44.5	%		52.3	%		48.1	%
OEM		51.9			55.5			47.7			51.9

Total revenue		100.0			100.0			100.0			100.0
Cost of revenue		16.1			16.2			17.2			16.1
Cost of revenue—amortization of acquired technology		2.3			2.4			1.6			2.3

Total cost of revenue		18.4			18.6			18.8			18.4

Gross profit		81.6			81.4			81.2			81.6
Marketing and selling		29.2			29.8			39.9			29.2
Research and development		13.5			12.0			17.0			13.5
General and administrative		17.7			15.0			20.6			17.7
Amortization of other intangible assets		1.5			1.6			1.8			1.5

Total operating expenses		61.9			58.4			79.3			61.9

Income from operations		19.7			23.0			1.9			19.7
Interest expense, net		0.2			0.6			1.2			0.2
Loss on foreign exchange		0.4			0.6			2.8			0.4
(Gain) loss on derivatives		(0.2	)		0.1
Other income, net		—			—
Loss (gain) on derivatives								0.2			(0.2	)
Other								0.1			—

Total other expense		0.4			1.3			4.3			0.4
Income before provision for income taxes		19.3			21.7
Provision for income taxes		7.1			7.4
(Loss) income before (benefit) provision for income taxes								(2.4	)		19.3
(Benefit) provision for income taxes								(1.0	)		7.1

Net income		12.2	%		14.3	%
Net (loss) income								(1.4	)%		12.2	%

The following discussion compares the six months ended June 30, ~~2016~~2017 with the six months ended June 30, ~~2015.~~2016.

The following table presents revenue for these two principal markets (in thousands):


	Six Months Ended June 30,				Increase/ (Decrease)			Six Months Ended June 30,				Increase
	2016		2015		Increase/ (Decrease)			2017		2016		Increase
Creative Professional	$	47,372	$	41,182	$	6,190		$	57,713	$	47,372	$	10,341
OEM		51,203		51,269		(66	)		52,553		51,203		1,350

Total revenue	$	98,575	$	92,451	$	6,124		$	110,266	$	98,575	$	11,691

Revenue was ~~$98.6~~$110.3 million and ~~$92.5~~$98.6 million for the six months ended June 30, ~~2016~~2017 and ~~2015,~~2016, respectively, an increase of ~~$6.1~~$11.7 million, or ~~6.6%~~11.9%.

Creative Professional revenue increased ~~$6.2~~$10.3 million, or ~~15.0%~~21.8%, to $57.7 million for the six months ended June 30, 2017, as compared to $47.4 million for the six months ended June 30, 2016, mainly due to revenue from Olapic and continued growth in sales of recurring licenses and digital ad revenue in the first half of 2017, as compared to ~~$41.2~~the same period in 2016.

OEM revenue was $52.6 million and $51.2 million for the six months ended June 30, ~~2015. Direct revenue from our enterprise customers increased, primarily due to increased sales~~2017 and 2016, respectively, an increase of web font services, growth in sales of recurring licenses, and increased branded mobile messaging revenue due to increased sales volume in the six months ended June 30, 2016, as compared to the same period in 2015.

~~OEM revenue was $51.2 million and $51.3 million for the six months ended June 30, 2016 and 2015, respectively, a decrease $0.1~~$1.4 million, or ~~0.1%~~2.6%. ~~Decreased royalty revenue~~Revenue from our printer imaging electronic OEM customers ~~mainly~~increased period over period, due to ~~lower volume~~$4.1 million of ~~shipments~~one-time benefits as we continue to convert customers to fixed fee contracts from ~~our printer imaging OEM customers,~~royalty bearing contracts, and ~~decreased license revenue from our independent software vendor customers, was partially offset by increased~~ revenue from our display imaging consumer electronic OEM customers increased, partially offset by decreased revenue from our independent software vendor customers.

Cost of revenue excluding amortization of acquired technology was ~~$15.9~~$18.9 million and ~~$15.0~~$15.9 million in the six months ended June 30, ~~2016~~2017 and ~~2015,~~2016, respectively, an increase of ~~$0.9~~$3.0 million, or ~~6.3%~~18.9%. The increase in cost of revenue, excluding amortization of acquired technology, is partially due to both product mix and an increase in revenue, period over period. In the first half of 2017, cost of revenue included our Olapic business and a larger proportion of our Creative Professional revenue, as compared to the same period in 2016. As a percentage of ~~total revenue,~~sales, cost of revenue, excluding amortization of acquired technology, was ~~relatively unchanged at~~17.2% and 16.1% ~~and 16.2%~~of total revenue in the six months ended June 30, 2017 and 2016, ~~and 2015,~~ respectively. The increase in dollars is predominantly due to increased revenue. In the six months ended June 30, 2016, Creative Professional revenue was 48.1% of total revenue, as compared to 44.5% of total revenue in the same period in 2015. Our Creative Professional revenue has typically had a higher associated cost than our OEM revenue. Historically, when Creative Professional revenue increases as a percentage of total revenue, we would have expected our overall gross profit percentage to decrease. However, in the six months ended June 30, 2016, as compared to the same period in 2015, we achieved improved margins on our Creative Professional revenue with enterprise customers from selling a lower proportion of third party fonts, and from license revenues to Creative Professional customers that carry lower royalty rates.

Amortization of acquired technology was ~~unchanged at~~$1.8 million and $2.3 million for the six months ended June 30, 2017 and 2016, ~~and 2015, respectively.~~respectively, a decrease of $0.5 million, or 22.2%, primarily due to an asset that became fully amortized in October 2016.

Gross profit ~~increased 0.2% to~~was 81.2% and 81.6% of sales in the six months ended June 30, 2017 and 2016, respectively, a decrease of 0.4%, mainly due to variations in product mix, net of decreased amortization of acquired technology. In the first half of 2017, as compared to ~~81.4% of sales~~the same period in 2016, our gross profit included lower margins from our Olapic business, which we acquired in August 2016. In the six months ended June 30, ~~2015, due~~2017, Creative Professional revenue, which typically has a higher associated cost than OEM revenue, increased as a percentage of total revenue to ~~variations~~52.3% of total revenue, as compared to 48.1% of total revenue in ~~product mix, as detailed above.~~the same period in 2016.

Marketing and Selling.Marketing and selling expense ~~was $28.7~~increased $15.3 million, ~~and $27.5~~or 53.0%, to $44.0 million in the six months ended June 30, ~~2016 and 2015, respectively, an increase of $1.2 million, or 4.5%. Personnel expenses increased $2.6 million, period over period, mainly due~~2017, as compared to additional compensation expense in connection with an amendment to the Swyft Media Merger Agreement executed in November 2015 and variable compensation and share based compensation expense. These were partially offset by decreased salary expense due to a redeployment of certain employees at the beginning of 2016 to development related activities from our sales and marketing organization, period over period. Consulting and marketing expenses decreased $1.1$28.7 million in the six months ended June 30, ~~2016,~~2016. Personnel and personnel related expenses increased $12.5 million due to additional headcount mainly from our acquisition of Olapic and targeted hiring in our direct sales organization, and additional compensation expense recognized on deferred compensation arrangements in connection with our acquisitions of Swyft and Olapic. Increased infrastructure expense due to increased headcount contributed $1.7 million to the overall increase in marketing and selling expense, period over period. Consulting and marketing expenses increased $0.6 million in the first half of 2017, as compared to the same period in ~~2015, mainly~~2016, due to the timing of activities. Decreased transaction fees on web sales, bank fees and bad debts together contributed $0.3 million to the overall change period over period, mainly the result of improved credit and collections efforts.

Research and Development. Research and development expense increased ~~$2.2~~$5.5 million, or ~~20.2%~~40.9%, to $18.8 million in the six months ended June 30, 2017, as compared to $13.3 million in the six months ended June 30, ~~2016, as compared to $11.1 million in the six months ended June 30, 2015.~~2016. Personnel expenses increased ~~$1.6~~$4.3 million in the first half of ~~2016,~~2017, as compared to the same period in ~~2015,~~2016, a result of increased headcount ~~from the redeployment~~in connection with our acquisition of ~~certain employees from our sales and marketing organization to development related activities at the beginning~~Olapic, net of ~~2016, partially offset by~~ a ~~grant received~~reduction for capitalized personnel costs for development ~~work within Northern Ireland.~~projects and an increase in personnel costs classified as cost of sales for custom font development. Increased ~~software license~~rent expense ~~and consulting expenses~~ contributed $0.6 million to the ~~remainder~~overall increase period over period, mainly due to the addition of Olapic. Consulting expenses increased $0.4 million in the ~~increase.~~first half of 2017, as compared to the same period in 2016.

General and Administrative. General and administrative expense increased ~~$3.6~~$5.2 million, or ~~25.7%~~30.1% to ~~$17.5~~$22.7 million in the six months ended June 30, ~~2016,~~2017, as compared to ~~$13.9~~$17.5 million in the same period in ~~2015.~~2016. Personnel expenses increased ~~$2.7~~$3.5 million in the six months ended June 30, ~~2016,~~2017, as compared to the same period in ~~2015,~~2016, mainly the result of key ~~hiring. In~~hiring and the Olapic acquisition. Infrastructure expenses, such as software, rent and depreciation expenses, increased $1.8 million period over period, mainly due to the addition of Olapic. Legal expenses decreased $0.4 million in the six months ended June 30, 2015, approximately $0.6 million of personnel expenses were capitalized in connection with our new ERP system. As the system was placed into service in the third quarter of 2015, there was no capitalization benefit in2017, as compared to the same period in 2016, ~~and associated depreciation expense contributed an additional $0.6 million~~due to ~~the overall increase in general and administrative expense.~~timing of acquisitions.

Amortization of Other Intangible Assets. Amortization of other intangible assets was ~~unchanged at~~$2.0 million and $1.5 million for the six months ended June 30, 2017 and 2016, ~~and 2015, respectively.~~respectively, an increase of $0.5 million, or 37.4%, mainly due to our acquisition of Olapic.

Interest expense, net of interest income ~~decreased $0.3~~increased $1.2 million to $1.4 million for the six months ended June 30, 2017, as compared to $0.2 million for the six months ended June 30, 2016, ~~as compared to $0.5 million for the six months ended June 30, 2015,~~ mainly due to ~~a reduction~~borrowings under our revolving line of credit in ~~the commitment fee rate~~August 2016, in connection with ~~the refinancing~~our acquisition of ~~our Original Credit Agreement in September 2015. There was no debt outstanding during either period.~~Olapic.

Loss on foreign exchange ~~decreased $0.2~~increased $2.8 million ~~or 29.1%,~~to $3.2 million for the six months ended June 30, 2017, as compared to $0.4 million for the six months ended June 30, 2016, ~~as compared to $0.6 million for the six months ended June 30, 2015. The loss in both periods was~~ primarily the result of currency fluctuations on our foreign denominated receivables and payables. In the first half of 2017, the loss was mainly attributed to the strengthening of the Euro, as compared to the U.S. dollar, on U.S. dollar denominated receivables held by our foreign subsidiaries.

~~(Gain) loss~~Loss (gain) on derivatives was a ~~gain~~loss of $0.2 million and a ~~loss~~gain of ~~$0.1~~$0.2 million in the six months ended June 30, ~~2016~~2017 and ~~2015,~~2016, respectively, a decrease of ~~$0.3~~$0.4 million primarily due to our 30-day forward currency contracts.

For the six months ended June 30, ~~2016~~2017 and ~~2015,~~2016, our effective tax rate was ~~36.7%~~a benefit of 41.8% and ~~33.7%~~a provision of 36.7%, respectively. The increase in ~~our~~the effective tax rate ~~includes~~for the six months ended June 30, 2017 included a charge of 33.4% for non-deductible expenses, as compared to 2.2% for the same period in 2016. The increase is due to deferred compensation associated with the Olapic acquisition and also due to the fact that the impact of the non-deductible ~~acquisition related expenses.~~expenses as a percentage of pre-tax income (loss) is higher in 2017 as compared to 2016, as a result of the decrease in overall pre-tax (loss) income. The effective tax rate for the six months ended June 30, ~~2015~~2017 included ~~a benefit~~an expense of ~~1.7% for the reversal of reserves in connection with a settlement of the tax audit~~20.1% related to a net shortfall on stock compensation. We adopted ASU 2016-09,Improvements to Employee Share-Based Payments on January 1, 2017 which specifies that all tax effects related to share based payments will be recorded through the ~~Company’s Japan subsidiary.~~income statement. There was no similar item in the same period in ~~2016.~~2016, as these items were recorded to equity prior to the adoption of this standard. The effective tax rate for the ~~six months ended June 30, 2016~~second quarter of 2017 included a benefit of ~~0.9%~~7.8% for research ~~credits. There was no similar item~~credits, as compared to 0.9% in the same period in ~~2015, as the legislation for the credit for 2015 had not yet been passed.~~2016.

Information concerning recently issued accounting pronouncements may be found in Note 3 to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Since our inception, we have financed our operations primarily through cash from operations, private and public stock sales and long-term debt arrangements, as described below. We believe our existing cash and cash equivalents, our cash flow from operating activities and available bank borrowings will be sufficient to meet our anticipated cash needs for at least one year from the ~~next twelve months.~~issuance of these financial statements. At June 30, ~~2016,~~2017, our principal sources of liquidity were cash and cash equivalents totaling ~~$109.5~~$83.7 million and a $150.0 million revolving credit facility, of which there ~~were no~~was $99.0 million of outstanding borrowings. On ~~October 23, 2013,~~August 30, 2016, our Board of Directors approved a share repurchase program of up to ~~$50.0~~$25.0 million of our outstanding common stock, ~~over a maximum two year period.~~which permits purchases through December 31, 2017. In the ~~first half of 2015,~~six months ended June 30, 2017, we used ~~$18.2~~$2.2 million in cash to ~~repurchase~~purchase shares under the plan. Olapic has, and ~~completed the repurchase program in June 2015, after reaching the maximum cumulative spend. We also used $0.4 million in cash~~will continue to repurchase shares in excess of our previously approved share repurchase program. On July 20, 2016, we entered into an agreement to purchase Olapic Inc. for approximately $130.0 million. We expect the acquisition to closeoperate at a net loss in the ~~third quarter of 2016, and intend to fund the acquisition with a combination of cash on hand and borrowings from our Credit Facility.~~near term. Our future working capital requirements will depend on many factors, including the operations of our existing business, our potential strategic expansion and future acquisitions we might undertake.

The following table presents our cash flows from operating activities, investing activities and financing activities for the periods presented (in thousands):


	Six Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2017			2016
Net cash provided by operating activities	$	28,870		$	24,363		$	11,855		$	28,870
Net cash used in investing activities		(1,104	)		(21,136	)		(3,589	)		(1,104	)
Net cash used in financing activities		(6,124	)		(18,466	)		(16,796	)		(6,124	)
Effect of exchange rates on cash and cash equivalents		355			(466	)		795			355

Total increase (decrease) in cash and cash equivalents	$	21,997		$	(15,705	)
Total (decrease) increase in cash and cash equivalents							$	(7,735	)	$	21,997

~~Significant variations~~Variations in operating cash flows ~~may~~ occur ~~because,~~ from time-to-time, because our enterprise customers make ~~prepayments against future royalties. Prepayments may be~~upfront payments on subscription revenue. These payments are required under the terms of our license agreements and ~~are occasionally made on an elective basis and often~~can cause large fluctuations in accounts receivable and deferred revenue. The timing and extent of such ~~prepayments~~payments may significantly ~~impacts~~impact our cash balances.

We generated $11.9 million in cash from operations during the six months ended June 30, 2017. Net loss, after adjusting for depreciation and amortization, amortization of deferred financing costs and accretion of interest, loss on retirement of fixed assets, share based compensation, provision for doubtful accounts, deferred income taxes, and unrealized currency loss on foreign denominated intercompany transactions generated $13.5 million in cash. Decreased accrued expenses and accounts payable used $2.5 in cash, primarily a result of the payment of 2016 accrued variable compensation. Increased deferred revenue and decreased accounts receivable, offset by increased prepaid expense used $0.2 million in cash, mainly due to timing. Accrued income taxes generated $1.1 million during the six months ended June 30, 2017.

We generated $28.9 million in cash from operations during the six months ended June 30, 2016. Net (loss) income, after adjusting for depreciation and amortization, amortization of deferred financing costs and accretion of interest, share based compensation, excess tax benefit on stock options, provision for doubtful accounts, deferred income taxes, and unrealized currency loss on foreign denominated intercompany transactions generated $27.8 million in cash. Decreased accounts receivable offset by decreased deferred revenue generated $0.3 million in cash, mainly due to timing of customer payments. Decreased accrued expenses and increased prepaid expenses offset by increased accounts payable used $0.6 million, primarily a result of the payment of 2015 accrued variable compensation amounts. Increased accrued income taxes generated $1.4 million during the six months ended June 30, 2016.

~~We generated $24.4 million in cash from operations during~~Investing Activities

During the six months ended June 30, 2015. Net income, after adjusting for depreciation and amortization, amortization of deferred financing costs and accretion of interest, share based compensation, excess tax benefit on stock options, provision for doubtful accounts, deferred income taxes, and unrealized currency loss on foreign denominated intercompany transactions generated $25.62017, we used $3.6 million in ~~cash. Decreased accrued expenses~~investing activities mainly for the purchase of property and income taxes, and accounts payable, offset by decreased prepaid expenses, used $1.5 million in cash, primarily a result of the payment of 2014 accrued variable compensation amounts. Decreased deferred revenue offset by increased accounts receivable generated $0.5 million in cash mainly due to timing of customer payments.

equipment. During the six months ended June 30, 2016 we used $1.1 million in investing activities mainly for the purchase of property and equipment. ~~During~~

Cash used in financing activities for the six months ended June 30, ~~2015~~2017 was $16.8 million. We received cash from exercises of stock options of $0.7 million. We paid cash dividends of $9.3 million and we ~~used $21.1~~paid $6.0 million ~~in investing activities mainly for the purchase~~on our outstanding revolving line of ~~$6.8~~credit. We also purchased $2.2 million of ~~property and equipment, primarily for new ERP systems and our new corporate office, and $14.3 million for acquisitions.~~

Cash used in financing activities for the six months ended June 30, 2016 was $6.1 million. We received cash from exercises of stock options of $2.0 million, ~~and~~ excess tax benefit on stock options provided $0.3 million and we paid cash dividends of $8.5 million in the six months ended June 30, 2016.

Cash used in financing activities for the six months ended June 30, 2015 was $18.5 million. We received cash from exercises of stock options of $5.9 million and excess tax benefit on stock options provided $1.7 million. We paid cash dividends of $7.2 million, made contingent consideration payments of $0.3 million and purchased $18.6 million in treasury stock in the six months ended June 30, 2015.

On April ~~26, 2016~~27, 2017 our Board of Directors approved a ~~$0.11~~$0.113 per share or ~~$4.2~~$4.7 million, quarterly cash dividend on our outstanding common stock. The record date was July ~~1, 2016~~3, 2017 and the dividend was paid to shareholders of record on July 21, ~~2016.~~2017. We anticipate this to be a recurring quarterly dividend with future payments and record dates, subject to board approval. On July 26, 2016 the Company’s Board of Directors approved a $0.11 per share, quarterly cash dividend on our outstanding common stock. The record date is set for October 3, 2016 and the dividend is payable to shareholders of record on October 21, 2016.

2020. Repayment of any amounts borrowed is not required until maturity of the Credit Facility; however, the Company may repay any amounts borrowed at any time, without premium or penalty. Borrowings under the Credit Facility bear ~~interest through September 15, 2020 at~~ a variable rate not less than zero based upon, at the Company’s option, either LIBOR or the higher of (i) the prime rate as published in the Wall Street Journal, and (ii) 0.5% plus the overnight federal funds rate, plus in each case, an applicable margin. The applicable margin for LIBOR loans, based on the applicable leverage ratio, is 1.25%, 1.50% or 1.75% per annum, and the applicable margin for base rate loans, based on the applicable leverage ratio, is either 0.25%, 0.50% or 0.75%% per annum. At June 30, 2017, our rate, inclusive of applicable margins, was 2.7% for LIBOR, and at December 31, 2016, our rate, inclusive of applicable margins, was ~~1.9%~~2.5% for ~~LIBOR and the~~LIBOR. The Company had no outstanding debt under the Credit Facility. The Company is required to pay a commitment fee, based on the applicable leverage ratio, equal to 0.20%, 0.25% or 0.30% per annum on the undrawn portion available under the revolving credit facility and variable per annum fees in respect of outstanding letters of credit. In connection with the New Credit Agreement, the Company incurred closing and legal fees of approximately $1.0 million in 2015, which have been accounted for as deferred financing costs and will be amortized to interest expense over the term of the New Credit Agreement.

As of June 30, ~~2016,~~2017, the maximum leverage ratio permitted was 3.00:1.00 and our leverage ratio was ~~0.00:~~2.41:1.00 and the minimum fixed charge coverage ratio was 1.25:1.00 and our fixed charge ratio was ~~4.31:~~7.82:1.00. Failure to comply with these covenants, or the occurrence of an event of default, could permit the Lenders under the New Credit Agreement to declare all amounts borrowed under the New Credit Agreement, together with accrued interest and fees, to be immediately due and payable. In addition, the Credit Facility is secured by a lien on substantially all of the Company’s and its domestic subsidiaries’ tangible and intangible property by a pledge of all of the equity interests of the Company’s direct and indirect domestic subsidiaries and by a pledge by the Company’s domestic subsidiaries of 65% of the equity of their direct foreign subsidiaries, subject to limited exceptions. In addition to other covenants, the New Credit Agreement places limits on the Company and its subsidiaries’ ability to incur debt or liens and engage in sale-leaseback transactions, make loans and investments, incur additional indebtedness, engage in mergers, acquisitions and asset sales, transact with affiliates and alter its business. The Company was in compliance with the covenants under the Credit Facility as of June 30, 2017.

The following table presents a reconciliation from net (loss) income, which is the most directly comparable GAAP operating performance measure, to EBITDA and from EBITDA to Adjusted EBITDA as defined in our credit facilities (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,					Six Months Ended June 30,
	2016		2015		2016		2015		2017			2016		2017			2016
Net income	$	6,653	$	5,904	$	12,011	$	13,261
Provision for income taxes		3,857		3,183		6,964		6,742
Net (loss) income									$	(496	)	$	6,653	$	(1,571	)	$	12,011
(Benefit) provision for income taxes										(1,027	)		3,857		(1,128	)		6,964
Interest expense, net		90		304		198		538		726			90		1,357			198
Depreciation and amortization		2,897		2,794		5,771		5,096		3,122			2,897		6,173			5,771

EBITDA	$	13,497	$	12,185	$	24,944	$	25,637	$	2,325		$	13,497	$	4,831		$	24,944
Share based compensation		3,621		3,470		7,399		6,241		5,192			3,621		10,023			7,399
Non-cash add backs		—		—		—		—		—			—		—			—
Restructuring, issuance and cash non-operating costs		98		78		478		199		(53	)		98		(4	)		478
Acquisition expenses		—		—		—		339		—			—		—			—

Adjusted EBITDA⁽¹⁾	$	17,216	$	15,733	$	32,821	$	32,416	$	7,464		$	17,216	$	14,850		$	32,821

The Credit Facility also contains provisions for an increased interest rate during periods of default. We do not believe that these covenants will affect our ability to operate our business, and we were in compliance with all covenants under our Credit Facility as of June 30, ~~2016.~~2017.

In addition to Adjusted EBITDA as discussed above, we rely internally on ~~certain measures~~a financial measure that ~~are~~is not calculated according to GAAP. This non-GAAP measure is net adjusted EBITDA, which is defined as net (loss) income before interest expense, net, other (income) expense, net, provision for income taxes, depreciation, amortization of acquired intangible assets and share based compensation expenses. We use net adjusted EBITDA as a principal indicator of the operating performance of our business. We use net adjusted EBITDA in internal forecasts and models when establishing internal operating budgets, supplementing the financial results and forecasts reported to our board of directors, determining bonus compensation for our employees based on operating performance and evaluating short-term and long-term operating trends in our operations. We believe that net adjusted EBITDA permits a comparative assessment of our operating performance, relative to our performance based on our GAAP results, while isolating the effects of charges that may vary from period-to-period without direct correlation to underlying operating performance. We believe that these non-GAAP financial adjustments are useful to investors because they allow investors to evaluate the effectiveness of the methodology and information used by management in our financial and operational decision-making. We believe that trends in our net adjusted EBITDA may be valuable indicators of our operating performance.

In November 2015, we revised our definition of non-GAAP net adjusted EBITDA to exclude the impact of acquisition-related contingent consideration adjustments. The impact of these adjustments has been added back in calculating non-GAAP net adjusted EBITDA. This change more accurately reflects management’s view of the Company’s business and financial performance.

The following table presents a reconciliation from net (loss) income, which is the most directly comparable GAAP operating financial measure, to net adjusted EBITDA as used by management (in thousands):


	Three Months Ended June 30,					Six Months Ended June 30,				Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015⁽¹⁾		2016		2015⁽¹⁾		2017			2016			2017			2016
Net income	$	6,653		$	5,904	$	12,011	$	13,261
Net (loss) income										$	(496	)	$	6,653		$	(1,571	)	$	12,011
Interest expense, net		90			304		198		538		726			90			1,357			198
Other (income) expense, net		(605	)		705		207		682
Provision for income taxes		3,857			3,183		6,964		6,742
Other expense (income), net											2,794			(605	)		3,414			207
(Benefit) provision for income taxes											(1,027	)		3,857			(1,128	)		6,964

Income from operations		9,995			10,096		19,380		21,223		1,997			9,995			2,072			19,380
Depreciation and amortization		2,897			2,794		5,771		5,096		3,122			2,897			6,173			5,771
Share based compensation		3,621			3,470		7,399		6,241		5,192			3,621			10,023			7,399
Contingent consideration adjustment⁽²⁾		578			—		1,156		—
Acquisition-related compensation⁽¹⁾											1,407			578			2,814			1,156

Net adjusted EBITDA⁽³⁾⁽²⁾	$	17,091		$	16,360	$	33,706	$	32,560	$	11,718		$	17,091		$	21,082		$	33,706

In our quarterly earnings press releases and conference calls, in addition to Adjusted EBITDA and net adjusted EBITDA as discussed above, we discuss a key measure that is not calculated according to GAAP. This non-GAAP measure is non-GAAP earnings per diluted share, which is defined as earnings per diluted share before amortization of acquired intangible assets and share based compensation expenses. We use non-GAAP earnings per diluted share as one of our principal indicators of the operating performance of our business. We use non-GAAP earnings per diluted shares in internal forecasts, supplementing the financial results and forecasts reported to our board of directors and evaluating short-term and long-term operating trends in our operations. We believe that non-GAAP earnings per diluted share permits a comparative assessment of our operating performance, relative to our performance based on our GAAP results, while isolating the effects of charges that may vary from period-to-period without direct correlation to underlying operating performance. We believe that these non-GAAP financial adjustments are useful to investors because they allow investors to evaluate the effectiveness of the methodology and information used by management in our financial and operational decision-making. We believe that trends in our non-GAAP earnings per diluted share may be valuable indicators of our operating performance.

~~In November 2015, we revised our definition of non-GAAP earnings per diluted share to exclude the impact ofacquisition-related~~ ~~contingent consideration adjustments. The impact of these adjustments has been added back in calculatingnon-GAAP~~ ~~earnings per diluted share. This change more accurately reflects management’s view of the Company’s business and financial performance.~~

The following table presents a reconciliation from ~~earnings~~net (loss) income per diluted share, which is the most directly comparable GAAP measure, to non-GAAP earnings per diluted share as used by management:

The table below summarizes our operating lease contractual obligations at June 30, 2016 and the effects of such obligations on liquidity and cash flow in future years (in thousands). There is no change in our other contractual obligations from those disclosed in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2015.

~~Information concerning recently issued accounting pronouncements may be found in Note 3 to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.~~

We are exposed to financial market risk, including interest rate risk and foreign currency exchange risk.

Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents and trade receivables. Cash equivalents consist primarily of bank deposits and certain investments, such as commercial paper, corporate securities and municipal securities, with maturities less than 90 ~~days or containing seven day guaranteed put features to the issuer.~~days. Deposits of cash held outside the United States totaled approximately ~~$16.5~~$19.0 million and ~~$15.3~~$16.3 million at June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively.

We grant credit to customers in the ordinary course of business. Credit evaluations are performed on an ongoing basis to reduce credit risk, and no collateral is required from our customers. An allowance for uncollectible accounts is provided for those accounts receivable considered to be uncollectible based upon historical experience and credit evaluation. ~~None of our customers individually accounted for 10% or more of our gross accounts receivable as~~As of June 30, ~~2016. At~~2017 and December 31, ~~2015,~~2016, none of our customers individually accounted for 10% or more of our gross accounts receivable. Due to the nature of our quarterly revenue streams derived from royalty revenue, it is not unusual for our accounts receivable balances to include a few customers with large balances. Historically, we have not recorded material losses due to customers’ nonpayment. Our Creative Professional business consists of a higher volume of lower dollar value transactions. Accordingly, as the percent of Creative Professional revenue increases in relation to total revenue, we expect the average time to collect our accounts receivables, and our overall accounts receivables balances, to increase.

For the three and six months ended June 30, ~~2016~~2017 and ~~2015,~~2016, no customer accounted for more than 10% of our revenue.

In the past we have used interest rate derivative instruments to hedge our exposure to interest rate volatility resulting from our variable rate debt. ASC Topic No.815,Derivatives and Hedging, or ASC 815, requires that all derivative instruments be reported on the balance sheet at fair value and establishes criteria for designation and effectiveness of hedging relationships, including a requirement that all designations must be made at the inception of each instrument. As we did not make such initial designations, ASC 815 requires changes in the fair value of the derivative instrument to be recognized as current period income or expense.

The fair value of derivative instruments is estimated based on the amount that we would receive or pay to terminate the agreements at the reporting date. Our exposure to market risk associated with changes in interest rates relates primarily to our ~~long term~~long-term debt. The interest rate on our Credit Facility fluctuates with either the prime rate or the LIBOR interest rate. At June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, the Company had no borrowings under our revolving Credit ~~Facility.~~Facility of $99.0 million and $105.0 million, respectively. Historically, we have purchased interest rate swap instruments to hedge our exposure to interest rate fluctuations on our debt obligations.

In accordance with ASC Topic No. 830,Foreign Currency Matters, or ASC 830, all assets and liabilities of our foreign subsidiaries whose functional currency is a currency other than U.S. dollars are translated into U.S. dollars at an exchange rate as of the balance sheet date. Revenue and expenses of these subsidiaries are translated at the average monthly exchange rates. The resulting

translation adjustments as calculated from the translation of our foreign subsidiaries to U.S. dollars are recorded as a separate component of stockholders’ equity. For the three months ended June 30, 2017 and 2016, ~~and 2015, sales by our subsidiaries located~~revenue from customers outside ~~North America, particularly~~ the ~~U.K, Germany~~United States, primarily EMEA and Japan, comprised ~~44.1%~~53.7% and ~~42.8%, respectively, of our total revenue. For the six months ended June 30, 2016 and 2015, sales by our subsidiaries located outside North America comprised 45.5% and 44.5%~~58.2%, respectively, of our total revenue. An effect of a 10% strengthening of the British pound sterling, the Euro, ~~and~~ Japanese yen and/or Argentine peso, relative to the U.S. dollar, would have decreased our revenues by ~~$2.5~~$2.2 million, decreased expenses by ~~$2.1~~$2.6 million and decreased operating income by $0.4 million for the three months ended June 30, ~~2016.~~2017. For the six months ended June 30, 2017 and 2016, revenue from customers outside the United States, primarily EMEA and Japan, comprised 57.7% and 60.4%, respectively, of our total revenue. An effect of a 10% strengthening of the British pound sterling, the Euro, ~~and~~ Japanese yen and/or Argentine peso, relative to the U.S. dollar, would have decreased our revenues by ~~$5.3~~$4.4 million, decreased expenses by ~~$4.2~~$5.1 million and decreased operating income by ~~$1.1 million.~~$0.7 million for the six months ended June 30, 2017. The sensitivity analysis assumes that all currencies move in the same direction at the same time and the ratio of non-U.S. dollar denominated revenue and expenses to U.S. dollar denominated revenue and expenses does not change from current levels.

We incur foreign currency exchange gains and losses related to certain customers that are invoiced in U.S. dollars, but who have the option to make an equivalent payment in their own functional currencies at a specified exchange rate as of a specified date. In the period from that date until payment in the customer’s functional currency is received and converted into U.S. dollars, we can incur realized gains and losses. We also incur foreign currency exchange gains and losses on certain intercompany assets and liabilities denominated in foreign currencies. We are currently utilizing 30-day forward contracts to mitigate our exposure on these currency fluctuations. Any increase or decrease in the fair value of the forward contracts is offset by the change in the value of the hedged assets of our consolidated foreign affiliate. At June 30, ~~2016 there was~~2017, we had one ~~currency~~30-day forward contract ~~outstanding,~~to sell 2.6 million British pounds sterling and to purchase ~~and sell two different currencies, which was entered into on those dates, and accordingly, the~~$3.4 million that together, had an immaterial fair value, ~~was materially equivalent to its book value. There were no outstanding forward contracts~~and at December 31, ~~2015.~~2016, we had one 30-day forward contract to sell 2.8 million British pounds sterling and to purchase $3.4 million that together, had an immaterial fair value.

Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, ~~2016.~~2017. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures are designed to provide a reasonable assurance of achieving their objectives.

Based on the evaluation of our disclosure controls and procedures as of June 30, ~~2016,~~2017, our principal executive officer and principal financial officer concluded that, as of such date, the Company’s disclosure controls and procedures were effective at the reasonable assurance level.

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter ended June 30, ~~2016~~2017 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

From ~~time to time,~~time-to-time, we may be a party to various claims, suits and complaints. We do not believe that there are claims or legal proceedings that, if determined adversely to us, would have a material adverse effect on our business, results of operations or financial condition.

~~Except as noted below, there~~There are no material changes in our risk factors from those disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2015.~~

~~We conduct a substantial portion of our business outside North America and, as a result, we face diverse risks related to engaging in international business.~~

We have offices in six foreign countries and we are dedicating a significant portion of our sales efforts in countries outside North America. We are dependent on international sales for a substantial amount of our total revenue. In 2015, 2014 and 2013, approximately 45.5%, 47.6% and 45.3%, respectively, of our total revenue was derived from operations outside the U.S. and we expect that international sales will continue to represent a substantial portion of our revenue for the foreseeable future. This future international revenue will depend on the continued use and expansion of our type and technologies, including the licensing of our solutions worldwide.

~~We are subject to the risks of conducting business internationally, including:~~2016.

~~If we are unsuccessful in managing these risks, our business and results of operations could be adversely affected.~~

(c) Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table provides information about purchases by the Company during the quarter ended June 30, ~~2016~~2017 of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act:

Subsequent to June 30, 2017, the Company purchased 196,989 shares of common stock for $3.6 million, at an average price per share of $18.00 through July 24, 2017. The Company purchased these shares on the open market at prevailing market prices and in accordance with its previously announced share purchase program. At July 24, 2017, $13.6 million remains for future purchase under the Plan.

The exhibits listed in the Exhibit Index immediately preceding the exhibits are filed as part of this Quarterly Report on Form 10-Q and such Exhibit Index is incorporated herein by reference.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Delaware		20-3289482
(State of incorporation)		(I.R.S. Employer Identification No.)

600 Unicorn Park Drive Woburn, Massachusetts		01801
(Address of principal executive offices)		(Zip Code)


		Page
Part I. Financial Information			2

Item 1.1.	Condensed Consolidated Financial Statements (Unaudited)		2

	• Condensed Consolidated Balance Sheets as of June 30, 2017 and December 31, 2016		2

	•	~~Condensed Consolidated Balance Sheets as of June 30, 2016 and December 31, 2015~~		2

	•	Condensed Consolidated Statements of ~~Income~~Operations for the three and six months ended June 30, ~~2016~~2017 and ~~2015~~2016		3

	•	Condensed Consolidated Statements of Comprehensive ~~Income~~Loss (Income) for the three and six months ended June 30, ~~2016~~2017 and ~~2015~~2016		4

	•	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, ~~2016~~2017 and ~~2015~~2016		5

	•	Notes to Condensed Consolidated Financial Statements		6

Item2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		1516

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		28

~~Item 4.~~	~~Controls and Procedures~~			29

~~Part II. Other Information~~				29

Item 1.4.	~~Legal Proceedings~~Controls and Procedures		2931

~~Item 1A.~~		~~Risk Factors~~			30

~~Item 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds~~			30

~~Item 3.~~	~~Defaults Upon Senior Securities~~Part II. Other Information			31

Item 4.1.	~~Mine Safety Disclosures~~Legal Proceedings		31

Item 5.1A.	~~Other Information~~Risk Factors		31

Item 6.2.	~~Exhibits~~Unregistered Sales of Equity Securities and Use of Proceeds		31

Item 3.	~~Signatures~~Defaults Upon Senior Securities		32

Item 4.	Mine Safety Disclosures		32

Item 5.	Other Information		32

Item 6.	Exhibits		32

~~Exhibit Index~~Signatures			33

Exhibit Index			34


	Estimated Fair Value at Acquisition Date
Cash	$	5,942
Accounts receivable and other current assets		8,174
Property and equipment and other assets		1,029
Goodwill		89,705
Identifiable intangible assets		30,100
Accounts payable and other accrued expenses		(2,468	)
Deferred revenue		(7,334	)
Deferred tax liability		(1,449	)

Total purchase price	$	123,699


	Estimated Fair Value at Acquisition Date (in thousands)		Estimated Useful Life (in years)
Developed technology	$	14,300		10
Customer relationships		7,900		10
Non-compete agreements		1,400		4
Indefinite-lived intangible assets:
Trademarks and tradenames		6,500

Total	$	30,100


	Number of employees
Marketing and selling		117
Research and development		68
General and administration		13

Total		198


	Fair Value Measurement at June 30, 2016
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents—money market funds	$	30,872	$	30,872	$	—	$	—
Cash equivalents—commercial paper		10,807		—		10,807		—
Cash equivalents—corporate bonds		8,419		—		8,419		—

Total assets	$	50,098	$	30,872	$	19,226	$	—


		June 30, 2016							December 31, 2015
	Weighted- Average Amortization Period (Years)	Gross Carrying Amount		Accumulated Amortization			Net Balance		Gross Carrying Amount		Accumulated Amortization			Net Balance
Customer relationships	10	$	60,070	$	(49,825	)	$	10,245	$	59,994	$	(48,767	)	$	11,227
Acquired technology	11		54,365		(41,858	)		12,507		54,424		(39,336	)		15,088
Non-compete agreements	4		12,972		(12,291	)		681		12,946		(12,111	)		835
Indefinite-lived intangible assets:
Trademarks			37,854		—			37,854		37,714		—			37,714
Domain names			4,400		—			4,400		4,400		—			4,400

Total		$	169,661	$	(103,974	)	$	65,687	$	169,478	$	(100,214	)	$	69,264


			June 30, 2017							December 31, 2016
	Weighted- Average Amortization Period (Years)		Gross Carrying Amount		Accumulated Amortization			Net Balance		Gross Carrying Amount		Accumulated Amortization			Net Balance
Customer relationships		10	$	67,976	$	(52,548	)	$	15,428	$	67,502	$	(50,808	)	$	16,694
Acquired technology		11		68,772		(46,668	)		22,104		68,228		(44,361	)		23,867
Non-compete agreements		4		14,554		(13,098	)		1,456		14,440		(12,655	)		1,785
Indefinite-lived intangible assets:
Trademarks				44,561		—			44,561		43,971		—			43,971
Domain names				4,400		—			4,400		4,400		—			4,400

Total			$	200,263	$	(112,314	)	$	87,949	$	198,541	$	(107,824	)	$	90,717


Years ending June 30:
2017	$	3,316
2018		2,982
2019		2,618
2020		2,299
2021		2,221
Thereafter		2,104

Total	$	15,540


Contractual Obligations	Total		July 2016 - June 2017		July 2017 - June 2019		July 2019 - June 2021		Thereafter
Operating leases	$	15,540	$	3,316	$	5,600	$	4,520	$	2,104


Period	Total Number of Shares Purchased⁽¹⁾		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs⁽²⁾		Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs
April 3, 2017 to April 28, 2017⁽³⁾		26,241	$	6.38		8,000	$	18,561,232
May 1, 2017 to May 31, 2017		57,365	$	13.95		42,000	$	17,758,852
June 2, 2017 to June 30, 2017⁽³⁾		58,641	$	12.18		31,000	$	17,164,792

Total		142,247	$	10.84		81,000	$	17,164,792


	MONOTYPE IMAGING HOLDINGS INC.

Date: July ~~27, 2016~~31, 2017	By:	/S/ SCOTT E. LANDERS
		Scott E. Landers
		President, Chief Executive Officer and Director
		(Principal Executive Officer)

Date: July ~~27, 2016~~31, 2017	By:	/S/ JA~~OSEPH~~NTHONY ~~D. H~~C~~ILL~~ALLINI
	~~Joseph D. Hill~~	Anthony Callini
		Executive Vice President, Chief Financial Officer, Treasurer and Assistant Secretary (Principal Financial Officer)


Exhibit No.		Description

10.1		Third Amended and Restated 2007 Stock Option and Incentive Plan (1)

10.2		Form of Incentive Stock Option Agreement under the Third Amended and Restated 2007 Stock Option and Incentive Plan.*

10.3		Form of Non-Qualified Option Agreement under the Third Amended and Restated 2007 Stock Option and Incentive Plan.*

10.4		Form of Restricted Stock Agreement under the Third Amended and Restated 2007 Stock Option and Incentive Plan.*

10.5		Form of Restricted Stock Unit Agreement under the Third Amended and Restated 2007 Stock Option and Incentive Plan.*

10.6		Form of Restricted Stock Award Agreement for Non-employee Directors under the Third Amended and Restated 2007 Stock Option and Incentive Plan.*

10.7		Equity Award Grant Policy, as amended.*

31.1		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by Chief Executive Officer.*

31.2		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by Chief Financial Officer.*

32.1		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief Executive Officer and Chief Financial Officer.**

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

Large accelerated filer

Accelerated filer

Non-accelerated filer

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Smaller reporting company

Emerging growth company