☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware 20-3289482(State of incorporation)
(§ an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” inRule 12b-2 of the Exchange Act.Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ (Do not check if a smaller reporting company) Smaller reporting company ☐ Emerging growth company ☐ April 19,July 18, 2019 was 41,373,437.41,288,487. Page
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March 31, 2019 | December 31, 2018 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 46,354 | $ | 60,106 | ||||
Restricted cash | 6,000 | 6,000 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $455 at March 31, 2019 and $492 at December 31, 2018, respectively | 46,083 | 55,943 | ||||||
Income tax refunds receivable | 5,726 | 5,122 | ||||||
Prepaid expenses and other current assets | 7,672 | 6,473 | ||||||
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Total current assets | 111,835 | 133,644 | ||||||
Right of use asset | 13,432 | — | ||||||
Property and equipment, net | 12,881 | 14,105 | ||||||
Goodwill | 275,466 | 276,222 | ||||||
Intangible assets, net | 72,823 | 74,699 | ||||||
Other assets | 9,714 | 8,986 | ||||||
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Total assets | $ | 496,151 | $ | 507,656 | ||||
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Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 2,325 | $ | 1,719 | ||||
Accrued expenses and other current liabilities | 30,182 | 43,840 | ||||||
Accrued income taxes payable | 190 | 510 | ||||||
Deferred revenue | 11,941 | 10,337 | ||||||
Lease liability | 3,621 | — | ||||||
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Total current liabilities | 48,259 | 56,406 | ||||||
Revolving line of credit | 70,000 | 75,000 | ||||||
Other long-term liabilities | 1,649 | 3,102 | ||||||
Deferred income taxes | 35,697 | 35,083 | ||||||
Reserve for income taxes | — | 2,471 | ||||||
Lease liability | 11,229 | — | ||||||
Accrued pension benefits | 5,829 | 5,888 | ||||||
Commitments and contingencies (Note 15) | ||||||||
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; Shares issued 46,397,404 at March 31, 2019 and 45,803,288 at December 31, 2018 | 46 | 46 | ||||||
Additional paid-in capital | 324,027 | 319,486 | ||||||
Treasury stock, at cost, 4,955,996 shares at March 31, 2019 and 4,504,236 shares at December 31, 2018 | (91,329 | ) | (83,518 | ) | ||||
Retained earnings | 97,458 | 99,605 | ||||||
Accumulated other comprehensive loss | (6,714 | ) | (5,913 | ) | ||||
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Total stockholders’ equity | 323,488 | 329,706 | ||||||
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Total liabilities and stockholders’ equity | $ | 496,151 | $ | 507,656 | ||||
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June 30, 2019 | December 31, 2018 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 47,763 | $ | 60,106 | ||||
Restricted cash | 6,000 | 6,000 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $555 at June 30, 2019 and $492 at December 31, 2018 | 47,076 | 55,943 | ||||||
Income tax refunds receivable | 6,904 | 5,122 | ||||||
Prepaid expenses and other current assets | 7,634 | 6,473 | ||||||
Total current assets | 115,377 | 133,644 | ||||||
Right of use asset | 14,320 | — | ||||||
Property and equipment, net | 11,850 | 14,105 | ||||||
Goodwill | 275,946 | 276,222 | ||||||
Intangible assets, net | 71,265 | 74,699 | ||||||
Other assets | 15,184 | 8,986 | ||||||
Total assets | $ | 503,942 | $ | 507,656 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 1,748 | $ | 1,719 | ||||
Accrued expenses and other current liabilities | 33,864 | 43,840 | ||||||
Accrued income taxes payable | 180 | 510 | ||||||
Deferred revenue | 10,777 | 10,337 | ||||||
Lease liability | 3,701 | — | ||||||
Total current liabilities | 50,270 | 56,406 | ||||||
Revolving line of credit | 65,000 | 75,000 | ||||||
Other long-term liabilities | 1,711 | 3,102 | ||||||
Deferred income taxes | 36,891 | 35,083 | ||||||
Reserve for income taxes | — | 2,471 | ||||||
Lease liability | 12,053 | — | ||||||
Accrued pension benefits | 5,956 | 5,888 | ||||||
Commitments and contingencies (Note 15) | ||||||||
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; Shares issued: 46,464,430 at June 30, 2019 and 45,803,288 at December 31, 2018 | 46 | 46 | ||||||
Additional paid-in capital | 327,918 | 319,486 | ||||||
Treasury stock, at cost, 5,166,895 shares at June 30, 2019 and 4,504,236 shares at December 31, 2018 | (92,747 | ) | (83,518 | ) | ||||
Retained earnings | 102,973 | 99,605 | ||||||
Accumulated other comprehensive loss | (6,129 | ) | (5,913 | ) | ||||
Total stockholders’ equity | 332,061 | 329,706 | ||||||
Total liabilities and stockholders’ equity | $ | 503,942 | $ | 507,656 | ||||
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
License revenue | $ | 41,872 | $ | 45,867 | ||||
Service revenue | 9,484 | 10,816 | ||||||
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Total revenue | 51,356 | 56,683 | ||||||
Cost of revenue—license | 6,802 | 9,612 | ||||||
Cost of revenue—service | 2,801 | 2,824 | ||||||
Cost of revenue—amortization of acquired technology | 857 | 864 | ||||||
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Total cost of revenue | 10,460 | 13,300 | ||||||
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Gross profit | 40,896 | 43,383 | ||||||
Operating expenses: | ||||||||
Marketing and selling | 17,130 | 20,089 | ||||||
Research and development | 7,441 | 9,296 | ||||||
General and administrative | 12,019 | 15,618 | ||||||
Restructuring | (24 | ) | 194 | |||||
Amortization of other intangible assets | 832 | 1,024 | ||||||
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Total operating expenses | 37,398 | 46,221 | ||||||
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Income (loss) from operations | 3,498 | (2,838 | ) | |||||
Other (income) expense: | ||||||||
Interest expense | 908 | 852 | ||||||
Interest income | (137 | ) | (124 | ) | ||||
Loss (gain) on foreign exchange | 66 | (34 | ) | |||||
Loss on derivatives | 95 | 136 | ||||||
Other | 45 | (4 | ) | |||||
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Total other expense, net | 977 | 826 | ||||||
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Income (loss) before benefit from income taxes | 2,521 | (3,664 | ) | |||||
Benefit from income taxes | (139 | ) | (2,465 | ) | ||||
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Net income (loss) | $ | 2,660 | $ | (1,199 | ) | |||
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Net income (loss) available to common stockholders—basic | $ | 2,514 | $ | (1,199 | ) | |||
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Net income (loss) available to common stockholders—diluted | $ | 2,514 | $ | (1,199 | ) | |||
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Net income (loss) per common share: | ||||||||
Basic | $ | 0.06 | $ | (0.03 | ) | |||
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Diluted | $ | 0.06 | $ | (0.03 | ) | |||
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Weighted-average number of shares outstanding: | ||||||||
Basic | 40,004,354 | 40,005,789 | ||||||
Diluted | 40,066,059 | 40,005,789 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
License revenue | $ | 54,136 | $ | 48,093 | $ | 96,008 | $ | 93,960 | ||||||||
Service revenue | 9,100 | 12,594 | 18,584 | 23,410 | ||||||||||||
Total revenue | 63,236 | 60,687 | 114,592 | 117,370 | ||||||||||||
Cost of revenue—license | 8,231 | 7,282 | 15,033 | 16,894 | ||||||||||||
Cost of revenue—service | 2,759 | 2,674 | 5,560 | 5,498 | ||||||||||||
Cost of revenue—amortization of acquired technology | 843 | 860 | 1,700 | 1,724 | ||||||||||||
Total cost of revenue | 11,833 | 10,816 | 22,293 | 24,116 | ||||||||||||
Gross profit | 51,403 | 49,871 | 92,299 | 93,254 | ||||||||||||
Operating expenses: | �� | |||||||||||||||
Marketing and selling | 18,570 | 20,081 | 35,700 | 40,170 | ||||||||||||
Research and development | 6,764 | 8,456 | 14,205 | 17,752 | ||||||||||||
General and administrative | 11,588 | 11,858 | 23,607 | 27,476 | ||||||||||||
Restructuring | 32 | 6,376 | 8 | 6,570 | ||||||||||||
Amortization of other intangible assets | 829 | 965 | 1,661 | 1,989 | ||||||||||||
Total operating expenses | 37,783 | 47,736 | 75,181 | 93,957 | ||||||||||||
Income (loss) from operations | 13,620 | 2,135 | 17,118 | (703 | ) | |||||||||||
Other (income) expense: | ||||||||||||||||
Interest expense | 781 | 945 | 1,689 | 1,797 | ||||||||||||
Interest income | (83 | ) | (146 | ) | (220 | ) | (270 | ) | ||||||||
Other | 239 | (633 | ) | 445 | (535 | ) | ||||||||||
Total other expense, net | 937 | 166 | 1,914 | 992 | ||||||||||||
Income (loss) before provision (benefit) for income taxes | 12,683 | 1,969 | 15,204 | (1,695 | ) | |||||||||||
Provision for (benefit from) income taxes | 2,376 | 1,274 | 2,237 | (1,191 | ) | |||||||||||
Net income (loss) | $ | 10,307 | $ | 695 | $ | 12,967 | $ | (504 | ) | |||||||
Net income (loss) available to common stockholders—basic and diluted | $ | 9,971 | $ | 666 | $ | 12,558 | $ | (504 | ) | |||||||
Net income (loss) per common share—basic and diluted | $ | 0.25 | $ | 0.02 | $ | 0.31 | $ | (0.01 | ) | |||||||
Weighted-average number of shares outstanding: | ||||||||||||||||
Basic | 40,026,865 | 40,418,308 | 40,015,672 | 40,436,595 | ||||||||||||
Diluted | 40,065,910 | 40,537,852 | 40,066,047 | 40,436,595 |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Net income (loss) | $ | 2,660 | $ | (1,199 | ) | |||
Other comprehensive income, net of tax: | ||||||||
Unrecognized actuarial gain, net of tax of $5 and $5, respectively | 16 | 19 | ||||||
Foreign currency translation adjustments, net of tax of ($276) and $356, respectively | (817 | ) | 1,325 | |||||
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Comprehensive income | $ | 1,859 | $ | 145 | ||||
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Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net income (loss) | $ | 10,307 | $ | 695 | $ | 12,967 | $ | (504 | ) | |||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||
Unrecognized actuarial gain, net of tax of $5, $8, $10 and $13, respectively | 6 | 22 | 22 | 41 | ||||||||||||
Foreign currency translation adjustments, net of tax of $193, ($834), ($83) and ($478), respectively | 579 | (3,507 | ) | (238 | ) | (2,182 | ) | |||||||||
Comprehensive income (loss) | $ | 10,892 | $ | (2,790 | ) | $ | 12,751 | $ | (2,645 | ) | ||||||
For the three months ended March 31, 2019 and 2018
Common Stock | Treasury Stock | Additional Paid-In | Retained | Accumulated Other Comprehensive | Total Stock- holders’ | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Earnings | Income (Loss) | Equity | |||||||||||||||||||||||||
Balance, December 31, 2018 | 45,803,288 | $ | 46 | 4,504,236 | $ | (83,518 | ) | $ | 319,486 | $ | 99,605 | $ | (5,913 | ) | $ | 329,706 | ||||||||||||||||
Net income | 2,660 | 2,660 | ||||||||||||||||||||||||||||||
Issuance of capital shares | ||||||||||||||||||||||||||||||||
—restricted share grants | 483,952 | — | — | — | ||||||||||||||||||||||||||||
—exercised options | 48,486 | — | 322 | 322 | ||||||||||||||||||||||||||||
—restricted units converted | 61,678 | — | — | — | ||||||||||||||||||||||||||||
Repurchase of unvested shares of restricted common stock | 19,360 | — | — | |||||||||||||||||||||||||||||
Purchase of treasury stock | 370,500 | (6,590 | ) | (6,590 | ) | |||||||||||||||||||||||||||
Shares withheld | 61,900 | (1,221 | ) | (1,221 | ) | |||||||||||||||||||||||||||
Stock based compensation | 4,219 | 4,219 | ||||||||||||||||||||||||||||||
Dividends declared ($0.116 per share) | (4,807 | ) | (4,807 | ) | ||||||||||||||||||||||||||||
Unrecognized actuarial loss, net of tax | 16 | 16 | ||||||||||||||||||||||||||||||
Cumulative translation adjustment, net of tax | (817 | ) | (817 | ) | ||||||||||||||||||||||||||||
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Balance, March 31, 2019 | 46,397,404 | $ | 46 | 4,955,996 | $ | (91,329 | ) | $ | 324,027 | $ | 97,458 | $ | (6,714 | ) | $ | 323,488 | ||||||||||||||||
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Balance, December 31, 2017 | 44,934,364 | $ | 44 | 3,215,644 | $ | (64,083 | ) | $ | 298,113 | $ | 97,815 | $ | (2,521 | ) | $ | 329,368 | ||||||||||||||||
Net loss | (1,199 | ) | (1,199 | ) | ||||||||||||||||||||||||||||
Issuance of capital shares | ||||||||||||||||||||||||||||||||
—restricted share grants | 392,352 | — | — | — | ||||||||||||||||||||||||||||
—exercised options | 186,783 | — | 2,648 | 2,648 | ||||||||||||||||||||||||||||
—restricted units converted | 74,484 | — | — | — | ||||||||||||||||||||||||||||
Repurchase of unvested shares of restricted common stock | 153,344 | — | — | |||||||||||||||||||||||||||||
Shares withheld | 50,128 | (1,211 | ) | (1,211 | ) | |||||||||||||||||||||||||||
Stock based compensation | 4,262 | 4,262 | ||||||||||||||||||||||||||||||
Dividends declared ($0.116 per share) | (4,893 | ) | (4,893 | ) | ||||||||||||||||||||||||||||
Cumulative adjustment, ASC 606 adoption | 8,950 | 8,950 | ||||||||||||||||||||||||||||||
Unrecognized actuarial loss, net of tax | 19 | 19 | ||||||||||||||||||||||||||||||
Cumulative translation adjustment, net of tax | 1,325 | 1,325 | ||||||||||||||||||||||||||||||
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Balance, March 31, 2018 | 45,587,983 | $ | 44 | 3,419,116 | $ | (65,294 | ) | $ | 305,023 | $ | 100,673 | $ | (1,177 | ) | $ | 339,269 | ||||||||||||||||
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Three Months Ended June 30, 2019 | ||||||||||||||||||||||||||||||||
Accumulated | Total | |||||||||||||||||||||||||||||||
Additional | Other | Stock- | ||||||||||||||||||||||||||||||
Common Stock | Treasury Stock | Paid-In | Retained | Comprehensive | holders’ | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Earnings | Income (Loss) | Equity | |||||||||||||||||||||||||
Balance, March 31, 2019 | 46,397,404 | $ | 46 | 4,955,996 | $ | (91,329 | ) | $ | 324,027 | $ | 97,458 | $ | (6,714 | ) | $ | 323,488 | ||||||||||||||||
Net income | 10,307 | 10,307 | ||||||||||||||||||||||||||||||
Issuance of capital shares | ||||||||||||||||||||||||||||||||
— exercised options | 1,157 | — | 12 | 12 | ||||||||||||||||||||||||||||
— restricted share grants | 56,706 | — | — | — | ||||||||||||||||||||||||||||
— restricted units converted | 9,163 | — | — | — | ||||||||||||||||||||||||||||
Repurchase of unvested shares of restricted common stock | 135,736 | — | — | |||||||||||||||||||||||||||||
Purchase of treasury stock | 55,428 | (1,088 | ) | (1,088 | ) | |||||||||||||||||||||||||||
Shares withheld | 19,735 | (330 | ) | (330 | ) | |||||||||||||||||||||||||||
Stock based compensation | 3,879 | 3,879 | ||||||||||||||||||||||||||||||
Dividends declared ($0.116 per share) | (4,792 | ) | (4,792 | ) | ||||||||||||||||||||||||||||
Unrecognized actuarial income, net of tax | 6 | 6 | ||||||||||||||||||||||||||||||
Cumulative translation adjustment, net of tax | 579 | 579 | ||||||||||||||||||||||||||||||
Balance, June 30, 2019 | 46,464,430 | $ | 46 | 5,166,895 | $ | (92,747 | ) | $ | 327,918 | $ | 102,973 | $ | (6,129 | ) | $ | 332,061 | ||||||||||||||||
Three Months Ended June 30, 2018 | ||||||||||||||||||||||||||||||||
Accumulated | Total | |||||||||||||||||||||||||||||||
Additional | Other | Stock- | ||||||||||||||||||||||||||||||
Common Stock | Treasury Stock | Paid-In | Retained | Comprehensive | holders’ | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Earnings | Income (Loss) | Equity | |||||||||||||||||||||||||
Balance, March 31, 2018 | 45,588,021 | $ | 44 | 3,419,116 | $ | (65,294 | ) | $ | 305,023 | $ | 100,673 | $ | (1,177 | ) | $ | 339,269 | ||||||||||||||||
Net income | 695 | 695 | ||||||||||||||||||||||||||||||
Issuance of capital shares | ||||||||||||||||||||||||||||||||
—exercised options | 55,258 | — | 734 | 734 | ||||||||||||||||||||||||||||
—restricted share grants | 84,523 | — | — | — | ||||||||||||||||||||||||||||
—restricted units converted | 10,381 | — | — | — | ||||||||||||||||||||||||||||
Repurchase of unvested shares of restricted common stock | 109,165 | — | — | |||||||||||||||||||||||||||||
Purchase of treasury stock | 44,600 | (981 | ) | (981 | ) | |||||||||||||||||||||||||||
Shares withheld | 13,901 | (306 | ) | (306 | ) | |||||||||||||||||||||||||||
Stock based compensation | 3,195 | 3,195 | ||||||||||||||||||||||||||||||
Dividends declared ($0.116 per share) | (4,891 | ) | (4,891 | ) | ||||||||||||||||||||||||||||
Unrecognized actuarial loss, net of tax | 22 | 22 | ||||||||||||||||||||||||||||||
Cumulative translation adjustment, net of tax | (3,507 | ) | (3,507 | ) | ||||||||||||||||||||||||||||
Balance, June 30, 2018 | 45,738,183 | $ | 44 | 3,586,782 | $ | (66,581 | ) | $ | 308,952 | $ | 96,477 | $ | (4,662 | ) | $ | 334,230 |
STOCKHOLDERS’ EQUITY – (Continued)
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Cash flows from operating activities | ||||||||
Net income (loss) | $ | 2,660 | $ | (1,199 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 3,169 | 3,249 | ||||||
Loss on extinguishment of debt | 34 | — | ||||||
Loss on retirement of assets | 13 | 9 | ||||||
Amortization of deferred financing costs and accretion of interest | 43 | 55 | ||||||
Stock based compensation | 4,219 | 4,247 | ||||||
Provision for doubtful accounts | 91 | 191 | ||||||
Deferred income taxes | 881 | (4,582 | ) | |||||
Unrealized currency gain on foreign denominated intercompany transactions | (265 | ) | (575 | ) | ||||
Changes in operating assets and liabilities, net of effect of acquisitions: | ||||||||
Accounts receivable | 9,789 | 7,783 | ||||||
Prepaid expenses and other assets | (1,709 | ) | (1,321 | ) | ||||
Accounts payable | 598 | 1,463 | ||||||
Income tax refunds receivable | (604 | ) | (716 | ) | ||||
Accrued income taxes | (2,842 | ) | 26 | |||||
Accrued expenses and other liabilities | (13,054 | ) | (4,179 | ) | ||||
Deferred revenue | 1,072 | 3,045 | ||||||
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Net cash provided by operating activities | 4,095 | 7,496 | ||||||
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Cash flows from investing activities | ||||||||
Purchases of property and equipment | (411 | ) | (1,463 | ) | ||||
Purchases of intangible assets | — | (160 | ) | |||||
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Net cash used in investing activities | (411 | ) | (1,623 | ) | ||||
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Cash flows from financing activities | ||||||||
Net payments on revolving line of credit | (5,200 | ) | (3,000 | ) | ||||
Proceeds from line of credit, net of issuance costs | 42 | — | ||||||
Common stock dividends paid | (4,791 | ) | (4,712 | ) | ||||
Purchase of treasury stock | (6,590 | ) | — | |||||
Payments for employee taxes on shares withheld | (1,221 | ) | (1,210 | ) | ||||
Proceeds from exercises of common stock options | 322 | 2,648 | ||||||
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Net cash used in financing activities | (17,438 | ) | (6,274 | ) | ||||
Effect of exchange rates on cash, cash equivalents and restricted cash | 2 | 943 | ||||||
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(Decrease) increase in cash, cash equivalents and restricted cash | (13,752 | ) | 542 | |||||
Cash, cash equivalents and restricted cash at beginning of period | 66,106 | 100,809 | ||||||
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Cash, cash equivalents and restricted cash at end of period | $ | 52,354 | $ | 101,351 | ||||
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Noncash transactions: | ||||||||
Borrowing under revolving line of credit | $ | 158 | $ | — |
per share data)
Six Months Ended June 30, 2019 | ||||||||||||||||||||||||||||||||
Accumulated | Total | |||||||||||||||||||||||||||||||
Additional | Other | Stock- | ||||||||||||||||||||||||||||||
Common Stock | Treasury Stock | Paid-In | Retained | Comprehensive | holders’ | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Earnings | Income (Loss) | Equity | |||||||||||||||||||||||||
Balance, December 31, 2018 | 45,803,288 | $ | 46 | 4,504,236 | $ | (83,518 | ) | $ | 319,486 | $ | 99,605 | $ | (5,913 | ) | $ | 329,706 | ||||||||||||||||
Net income | 12,967 | 12,967 | ||||||||||||||||||||||||||||||
Issuance of capital shares | ||||||||||||||||||||||||||||||||
—exercised options | 49,643 | — | 334 | 334 | ||||||||||||||||||||||||||||
—restricted share grants | 540,658 | — | — | — | ||||||||||||||||||||||||||||
—restricted units converted | 70,841 | — | — | — | ||||||||||||||||||||||||||||
Repurchase of unvested shares of restricted common stock | 155,096 | — | — | |||||||||||||||||||||||||||||
Purchase of treasury stock | 425,928 | (7,678 | ) | (7,678 | ) | |||||||||||||||||||||||||||
Shares withheld | 81,635 | (1,551 | ) | (1,551 | ) | |||||||||||||||||||||||||||
Stock based compensation | 8,098 | 8,098 | ||||||||||||||||||||||||||||||
Dividends declared ($0.232 per share) | (9,599 | ) | (9,599 | ) | ||||||||||||||||||||||||||||
Unrecognized actuarial income, net of tax | 22 | 22 | ||||||||||||||||||||||||||||||
Cumulative translation adjustment, net of tax | (238 | ) | (238 | ) | ||||||||||||||||||||||||||||
Balance, June 30, 2019 | 46,464,430 | $ | 46 | 5,166,895 | $ | (92,747 | ) | $ | 327,918 | $ | 102,973 | $ | (6,129 | ) | $ | 332,061 |
Six Months Ended June 30, 2018 | ||||||||||||||||||||||||||||||||
Accumulated | Total | |||||||||||||||||||||||||||||||
Additional | Other | Stock | ||||||||||||||||||||||||||||||
Common Stock | Treasury Stock | Paid-In | Retained | Comprehensive | holders’ | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Earnings | Income (Loss) | Equity | |||||||||||||||||||||||||
Balance, December 31, 2017 | 44,934,364 | $ | 44 | 3,215,644 | $ | (64,083 | ) | $ | 298,113 | $ | 97,815 | $ | (2,521 | ) | $ | 329,368 | ||||||||||||||||
Net loss | (504 | ) | (504 | ) | ||||||||||||||||||||||||||||
Issuance of capital shares | ||||||||||||||||||||||||||||||||
—exercised options | 242,079 | — | 3,383 | 3,383 | ||||||||||||||||||||||||||||
—restricted share grants | 476,875 | — | — | — | ||||||||||||||||||||||||||||
—restricted units converted | 84,865 | — | — | — | ||||||||||||||||||||||||||||
Repurchase of unvested shares of restricted common stock | 262,509 | — | — | |||||||||||||||||||||||||||||
Purchase of treasury stock | 44,600 | (981 | ) | (981 | ) | |||||||||||||||||||||||||||
Shares withheld | 64,029 | (1,517 | ) | (1,517 | ) | |||||||||||||||||||||||||||
Stock based compensation | 7,456 | 7,456 | ||||||||||||||||||||||||||||||
Dividends declared ($0.232 per share) | (9,784 | ) | (9,784 | ) | ||||||||||||||||||||||||||||
Cumulative adjustment, ASC 606 adoption | 8,950 | 8,950 | ||||||||||||||||||||||||||||||
Unrecognized actuarial loss, net of tax | 41 | 41 | ||||||||||||||||||||||||||||||
Cumulative translation adjustment, net of tax | (2,182 | ) | (2,182 | ) | ||||||||||||||||||||||||||||
Balance, June 30, 2018 | 45,738,183 | $ | 44 | 3,586,782 | $ | (66,581 | ) | $ | 308,952 | $ | 96,477 | $ | (4,662 | ) | $ | 334,230 |
Six Months Ended June 30, | ||||||||
2019 | 2018 | |||||||
Cash flows from operating activities | ||||||||
Net income (loss) | $ | 12,967 | $ | (504 | ) | |||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 6,337 | 6,447 | ||||||
Loss on extinguishment of debt | 34 | — | ||||||
Loss on retirement of assets | 21 | 10 | ||||||
Loss on abandonment of product line | — | 3,223 | ||||||
Amortization of deferred financing costs and accreted interest | 108 | 110 | ||||||
Stock based compensation | 8,098 | 7,435 | ||||||
Provision for doubtful accounts | 229 | 659 | ||||||
Deferred income taxes | 1,829 | (4,603 | ) | |||||
Unrealized currency (gain) on foreign denominated intercompany transactions | (38 | ) | (207 | ) | ||||
Changes in operating assets and liabilities, net of effect of acquisitions: | ||||||||
Accounts receivable | 8,677 | 4,345 | ||||||
Prepaid expenses and other assets | (7,317 | ) | (3,957 | ) | ||||
Accounts payable | 31 | (108 | ) | |||||
Income tax refunds receivable | (1,782 | ) | — | |||||
Accrued income taxes | (2,793 | ) | (1,013 | ) | ||||
Accrued expenses and other liabilities | (9,760 | ) | (9,801 | ) | ||||
Deferred revenue | 460 | 1,283 | ||||||
Net cash provided by operating activities | 17,101 | 3,319 | ||||||
Cash flows from investing activities | ||||||||
Purchases of property and equipment | (811 | ) | (2,125 | ) | ||||
Purchases of intangible assets | — | (160 | ) | |||||
Net cash used in investing activities | (811 | ) | (2,285 | ) | ||||
Cash flows from financing activities | ||||||||
Net payments on revolving line of credit | (10,200 | ) | (8,000 | ) | ||||
Proceeds from line of credit, net of issuance costs | 42 | — | ||||||
Common stock dividends paid | (9,598 | ) | (9,604 | ) | ||||
Purchase of treasury stock | (7,678 | ) | (981 | ) | ||||
Payments for employee taxes on shares withheld | (1,551 | ) | (1,517 | ) | ||||
Proceeds from exercises of common stock options | 334 | 3,382 | ||||||
Net cash used in financing activities | (28,651 | ) | (16,720 | ) | ||||
Effect of exchange rates on cash, cash equivalents and restricted cash | 18 | (304 | ) | |||||
Decrease in cash, cash equivalents and restricted cash | (12,343 | ) | (15,990 | ) | ||||
Cash, cash equivalents and restricted cash at beginning of period | 66,106 | 100,809 | ||||||
Cash, cash equivalents and restricted cash at end of period | $ | 53,763 | $ | 84,819 | ||||
Noncash transactions: | ||||||||
Borrowing under revolving line of credit | $ | 158 | $ | — |
March 31,
presented.
For the quarter ended March 31, 2018, to conform to current year presentation, we reclassified restructuring charges to disclose the expense amount separately from other operating expenses. Previously the expense amounts were included within the following other operating expense line items:
Three Months Ended March 31, 2018 | ||||
Marketing and selling | $ | (24 | ) | |
Research and development | 146 | |||
General and administrative | 72 | |||
|
| |||
Total | 194 | |||
|
|
See Note 14 for further details.
March 31, 2019 | March 31, 2018 | |||||||||||||||||||||||
Creative Professional | OEM | Total | Creative Professional | OEM | Total | |||||||||||||||||||
License revenue: | ||||||||||||||||||||||||
License transferred in point in time | $ | 24,139 | $ | 17,733 | $ | 41,872 | $ | 24,879 | $ | 20,333 | $ | 45,212 | ||||||||||||
License transferred over time | — | — | — | 655 | — | 655 | ||||||||||||||||||
Service revenue: | ||||||||||||||||||||||||
Service transferred in point in time | 432 | 196 | 628 | 470 | 656 | 1,126 | ||||||||||||||||||
Service transferred over time | 8,192 | 664 | 8,856 | 8,994 | 696 | 9,690 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 32,763 | $ | 18,593 | $ | 51,356 | $ | 34,998 | $ | 21,685 | $ | 56,683 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 30, | ||||||||||||||||||||||||
2019 | 2018 | |||||||||||||||||||||||
Creative Professional | OEM | Total | Creative Professional | OEM | Total | |||||||||||||||||||
License revenue: | ||||||||||||||||||||||||
License transferred at a point in time | $ | 27,049 | $ | 27,087 | $ | 54,136 | $ | 27,215 | $ | 20,878 | $ | 48,093 | ||||||||||||
Service revenue: | ||||||||||||||||||||||||
Service transferred at a point in time | 436 | 409 | 845 | 568 | 720 | 1,288 | ||||||||||||||||||
Service transferred over time | 7,740 | 515 | 8,255 | 10,634 | 672 | 11,306 | ||||||||||||||||||
Total | $ | 35,225 | $ | 28,011 | $ | 63,236 | $ | 38,417 | $ | 22,270 | $ | 60,687 | ||||||||||||
For the Six Months Ended June 30, | ||||||||||||||||||||||||
2019 | 2018 | |||||||||||||||||||||||
Creative Professional | OEM | Total | Creative Professional | OEM | Total | |||||||||||||||||||
License revenue: | ||||||||||||||||||||||||
License transferred at a point in time | $ | 51,188 | $ | 44,820 | $ | 96,008 | $ | 52,749 | $ | 41,211 | $ | 93,960 | ||||||||||||
License transferred over time | — | — | — | — | — | — | ||||||||||||||||||
Service revenue: | ||||||||||||||||||||||||
Service transferred at a point in time | 868 | 605 | 1,473 | 1,190 | 1,705 | 2,895 | ||||||||||||||||||
Service transferred over time | 15,932 | 1,179 | 17,111 | 19,476 | 1,039 | 20,515 | ||||||||||||||||||
Total | $ | 67,988 | $ | 46,604 | $ | 114,592 | $ | 73,415 | $ | 43,955 | $ | 117,370 | ||||||||||||
unconditional right to invoice (a receivable). Substantially all the long-term amount is expected to be recognized as revenue within the following 24 month period. The aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied or are partially satisfied as of March 31,June 30, 2019 and December 31, 2018 are in the table below (in thousands):
March 31, 2019 | December 31, 2018 | |||||||||||||||||||||||
Current | Long-term | Total | Current | Long-term | Total | |||||||||||||||||||
Deferred revenue | $ | 11,941 | $ | 1,018 | $ | 12,959 | $ | 10,337 | $ | 1,552 | $ | 11,889 | ||||||||||||
Unbilled backlog | 4,490 | 1,406 | 5,896 | 5,666 | 1,837 | 7,503 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 16,431 | $ | 2,424 | $ | 18,855 | $ | 16,003 | $ | 3,389 | $ | 19,392 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2019 | December 31, 2018 | |||||||||||||||||||||||
Current | Long-term | Total | Current | Long-term | Total | |||||||||||||||||||
Deferred revenue | $ | 10,777 | $ | 1,566 | $ | 12,343 | $ | 10,337 | $ | 1,552 | $ | 11,889 | ||||||||||||
Unbilled backlog | 3,389 | 1,679 | 5,068 | 5,666 | 1,837 | 7,503 | ||||||||||||||||||
Total | $ | 14,166 | $ | 3,245 | $ | 17,411 | $ | 16,003 | $ | 3,389 | $ | 19,392 | ||||||||||||
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Consolidated balance sheet classification: | ||||||||
Cash and cash equivalents | $ | 46,354 | $ | 85,351 | ||||
Restricted cash, short term | 6,000 | 10,000 | ||||||
Restricted cash, long term | — | 6,000 | ||||||
|
|
|
| |||||
Total cash, cash equivalents and restricted cash | $ | 52,354 | $ | 101,351 | ||||
|
|
|
|
Six Months Ended June 30, | ||||||||
2019 | 2018 | |||||||
Consolidated balance sheet classification: | ||||||||
Cash and cash equivalents | $ | 47,763 | $ | 75,819 | ||||
Restricted cash, short term | 6,000 | 3,000 | ||||||
Restricted cash, long term | — | 6,000 | ||||||
Total cash, cash equivalents and restricted cash | $ | 53,763 | $ | 84,819 | ||||
Fair Value Measurement at March 31, 2019 | ||||||||||||||||
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 | $ | 14,038 | $ | 14,038 | $ | — | $ | — | ||||||||
Restricted cash equivalents—money market fund | 6,000 | 6,000 | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total current assets | $ | 20,038 | $ | 20,038 | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total assets | $ | 20,038 | $ | 20,038 | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
Fair Value Measurement at December 31, 2018 | ||||||||||||||||
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 | $ | 28,940 | $ | 28,940 | $ | — | $ | — | ||||||||
Restricted cash equivalents—money market fund | 6,000 | 6,000 | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total current assets | $ | 34,940 | $ | 34,940 | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total assets | $ | 34,940 | $ | 34,940 | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
|
Fair Value Measurement at June 30, 2019 | ||||||||||||||||
Total | Quoted Prices (unadjusted) 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 | $ | 14,126 | $ | 14,126 | $ | — | $ | — | ||||||||
Cash equivalents—Certificate of Deposit | 578 | 578 | — | — | ||||||||||||
Restricted cash equivalents—money market fund | 6,000 | 6,000 | — | — | ||||||||||||
Total current assets | $ | 20,704 | $ | 20,704 | $ | — | $ | — | ||||||||
Total assets | $ | 20,704 | $ | 20,704 | $ | — | $ | — | ||||||||
Fair Value Measurement at December 31, 2018 | ||||||||||||||||
Total | Quoted Prices (unadjusted) 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 | $ | 28,940 | $ | 28,940 | $ | — | $ | — | ||||||||
Restricted cash equivalents—money market fund | 6,000 | 6,000 | — | — | ||||||||||||
Total current assets | $ | 34,940 | $ | 34,940 | $ | — | $ | — | ||||||||
Total assets | $ | 34,940 | $ | 34,940 | $ | — | $ | — | ||||||||
The Company’s
Weighted- Average Amortization Period (Years) | March 31, 2019 | December 31, 2018 | ||||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Balance | Gross Carrying Amount | Accumulated Amortization | Net Balance | |||||||||||||||||||||
Customer relationships | 10 | $ | 64,711 | $ | (55,797 | ) | $ | 8,914 | $ | 64,822 | $ | (55,288 | ) | $ | 9,534 | |||||||||||
Acquired technology | 11 | 68,745 | (53,693 | ) | 15,052 | 68,823 | (52,747 | ) | 16,076 | |||||||||||||||||
Non-compete agreements | 4 | 13,611 | (13,136 | ) | 475 | 13,636 | (13,073 | ) | 563 | |||||||||||||||||
Indefinite-lived intangible assets: | ||||||||||||||||||||||||||
Trademarks | 43,982 | — | 43,982 | 44,126 | — | 44,126 | ||||||||||||||||||||
Domain names | 4,400 | — | 4,400 | 4,400 | — | 4,400 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | $ | 195,449 | $ | (122,626 | ) | $ | 72,823 | $ | 195,807 | $ | (121,108 | ) | $ | 74,699 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2019 | December 31, 2018 | |||||||||||||||||||||||||||
Weighted- Average Amortization Period (Years) | Gross Carrying Amount | Accumulated Amortization | Net Balance | Gross Carrying Amount | Accumulated Amortization | Net Balance | ||||||||||||||||||||||
Customer relationships | 10 | $ | 64,784 | $ | (56,454 | ) | $ | 8,330 | $ | 64,822 | $ | (55,288 | ) | $ | 9,534 | |||||||||||||
Acquired technology | 11 | 68,773 | (54,704 | ) | 14,069 | 68,823 | (52,747 | ) | 16,076 | |||||||||||||||||||
Non-compete agreements | 4 | 13,626 | (13,239 | ) | 387 | 13,636 | (13,073 | ) | 563 | |||||||||||||||||||
Indefinite-lived intangible assets: | ||||||||||||||||||||||||||||
Trademarks | 44,079 | — | 44,079 | 44,126 | — | 44,126 | ||||||||||||||||||||||
Domain names | 4,400 | — | 4,400 | 4,400 | — | 4,400 | ||||||||||||||||||||||
Total | $ | 195,662 | $ | (124,397 | ) | $ | 71,265 | $ | 195,807 | $ | (121,108 | ) | $ | 74,699 | ||||||||||||||
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Finance lease cost | $ | — | $ | — | ||||
Operating lease cost | 1,154 | — | ||||||
Short-term lease cost | — | — | ||||||
Variable lease cost | 52 | — | ||||||
|
|
|
| |||||
Total lease cost | 1,206 | — | ||||||
|
|
|
|
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Finance lease cost | $ | — | $ | — | $ | — | $ | — | ||||||||
Operating lease cost | 1,137 | — | 2,291 | — | ||||||||||||
Short-term lease cost | 10 | — | 10 | — | ||||||||||||
Variable lease cost | 107 | — | 159 | — | ||||||||||||
Total lease cost | $ | 1,254 | $ | — | $ | 2,460 | $ | — | ||||||||
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
Operating cash flows from operating leases | $ | 1,224 | — | |||||
Right-of-use assets obtained in exchange for lease obligations: | ||||||||
Operating leases | — | — |
Six Months Ended June 30, | ||||||||
2019 | 2018 | |||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
Operating cash flows from operating leases | $ | 1,215 | — | |||||
Right-of-use | ||||||||
Operating leases | 1,890 | — |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Weighted average remaining lease term | ||||||||
Operating leases | 4.72 years | — | ||||||
Weighted average discount rate | ||||||||
Operating leases | 3.93 | % | — |
follows:
Six Months Ended June 30, | ||||||||
2019 | 2018 | |||||||
Weighted average remaining lease term: | ||||||||
Operating leases | 4.75 years | — | ||||||
Weighted average discount rate: | ||||||||
Operating leases | 3.92% | — |
Maturities of operating lease liabilities were as follows (in thousands):
2019 | $ | 4,144 | ||
2020 | 3,409 | |||
2021 | 3,237 | |||
2022 | 2,650 | |||
2023 | 1,145 | |||
Thereafter | 1,718 | |||
|
| |||
Total future minimum lease payments | $ | 16,303 | ||
Less: amounts representing interest | (1,145 | ) | ||
|
| |||
Total lease liabilities | $ | 14,850 | ||
Less: current operating lease liability | (3,621 | ) | ||
|
| |||
Long-term operating lease liability | $ | 11,229 | ||
|
|
June 30:
2020 | $ | 4,250 | ||
2021 | 3,740 | |||
2022 | 3,543 | |||
2023 | 2,451 | |||
2024 | 1,473 | |||
Thereafter | 1,813 | |||
Total future minimum lease payments | $ | 17,270 | ||
Less: amounts representing interest | (1,516 | ) | ||
Total lease liabilities | $ | 15,754 | ||
Less: current operating lease liability | (3,701 | ) | ||
Long-term operating lease liability | $ | 12,053 | ||
2019 | $ | 4,728 | ||
2020 | 3,131 | |||
2021 | 2,806 | |||
2022 | 2,652 | |||
2023 | 1,256 | |||
Thereafter | 2,004 | |||
Total | $ | 16,577 |
Borrowings under the Credit Facility bear interest through March 21, 2024 at a variable rate per annum equal to LIBOR plus between 1.0% and 1.625%, or at the Borrower’s option, the higher of (i) the prime rate as announced by Bank of America and (ii) 0.5% plus the overnight federal funds rate, plus in each case, between 0.0% and 0.625%, with the exact interest rate margin determined based on the consolidated leverage ratio. At June 30, 2019, our rate, inclusive of applicable margins, was 3.3% for LIBOR. At December 31, 2018, our rate under the Original Credit Agreement, inclusive of applicable margins, was 4.3% for LIBOR. The Company is required to pay a commitment fee, based on the consolidated leverage ratio, equal to 0.175%, 0.20%, 0.225% or 0.25% 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 $0.9$1.0 million, which have been accounted for as deferred financing costs, that, together with approximately $0.3 million of unamortized deferred financing costs associated with loan syndicate lenders who participated in the new facility, will be amortized to interest expense over the term of the New Credit Agreement. In addition, $34 thousand of unamortized deferred financing costs associated with the
Three Months Ended March 31, | ||||||||||||||||
2019 | 2018 | |||||||||||||||
Provision (benefit) from income taxes at statutory rate | $ | 529 | 21.0 | % | $ | (770 | ) | 21.0 | % | |||||||
State and local income taxes, net of federal tax benefit | 53 | 2.1 | % | (78 | ) | 2.1 | % | |||||||||
Impact of foreign income (loss) | 90 | 3.6 | % | (1,237 | ) | 33.8 | % | |||||||||
Foreign tax credit valuation allowance | (258 | ) | (10.2 | )% | — | — | ||||||||||
Permanentnon-deductible acquisition-related expense | 60 | 2.4 | % | (301 | ) | 8.2 | % | |||||||||
Net shortfall (windfall) on stock based compensation | 108 | 4.3 | % | (117 | ) | 3.2 | % | |||||||||
Reversal of reserve for income taxes | (734 | ) | (29.1 | )% | 22 | (0.6 | )% | |||||||||
Other, net | 13 | 0.4 | % | 16 | (0.4 | )% | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Reported income tax benefit | $ | (139 | ) | (5.5 | )% | $ | (2,465 | ) | 67.3 | % | ||||||
|
|
|
|
|
|
|
|
Three Months Ended June 30, | ||||||||||||||||
2019 | 2018 | |||||||||||||||
Provision for income taxes at statutory rate | $ | 2,663 | 21.0 | % | $ | 414 | 21.0 | % | ||||||||
State and local income taxes, net of federal tax benefit | 265 | 2.1 | % | 26 | 1.3 | % | ||||||||||
Foreign tax credit valuation allowance | (1,299 | ) | (10.2 | )% | — | — | ||||||||||
Impact of foreign income | 415 | 3.2 | % | 790 | 40.1 | % | ||||||||||
Permanent non-deductible expense | 274 | 2.2 | % | 60 | 3.1 | % | ||||||||||
Net shortfall (windfall) on stock based compensation | 111 | 0.9 | % | (39 | ) | (1.9 | )% | |||||||||
Other, net | (53 | ) | (0.5 | )% | 23 | 1.1 | % | |||||||||
Reported income tax provision | $ | 2,376 | 18.7 | % | $ | 1,274 | 64.7 | % | ||||||||
Six Months Ended June 30, | ||||||||||||||||
2019 | 2018 | |||||||||||||||
Provision (benefit) for income taxes at statutory rate | $ | 3,193 | 21.0 | % | $ | (356 | ) | 21.0 | % | |||||||
State and local income taxes, net of federal tax benefit | 318 | 2.1 | % | (51 | ) | 3.0 | % | |||||||||
Foreign tax credit valuation allowance | (1,557 | ) | (10.2 | )% | — | — | ||||||||||
Impact of foreign income (loss) | 505 | 3.3 | % | (448 | ) | 26.4 | % | |||||||||
Permanent non-deductible expense | 334 | 2.2 | % | (241 | ) | 14.2 | % | |||||||||
Net shortfall (windfall) on stock based compensation | 218 | 1.4 | % | (156 | ) | 9.2 | % | |||||||||
Reversal of reserve for income taxes | (544 | ) | (3.6 | )% | — | — | ||||||||||
Other, net | (230 | ) | (1.5 | )% | 61 | (3.5 | )% | |||||||||
Reported income tax (benefit) | $ | 2,237 | 14.7 | % | $ | (1,191 | ) | 70.3 | % | |||||||
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Numerator: | ||||||||
Net income (loss), as reported | $ | 2,660 | $ | (1,199 | ) | |||
Less: net income attributable to participating securities | (146 | ) | — | |||||
|
|
|
| |||||
Net income (loss) available to common shareholders—basic | $ | 2,514 | $ | (1,199 | ) | |||
|
|
|
| |||||
Denominator: | ||||||||
Basic: | ||||||||
Weighted-average shares of common stock outstanding | 41,263,669 | 41,846,619 | ||||||
Less: weighted-average shares of unvested restricted common stock outstanding | (1,259,315 | ) | (1,840,830 | ) | ||||
|
|
|
| |||||
Weighted-average number of common shares used in computing basic and diluted net income (loss) per common share | 40,004,354 | 40,005,789 | ||||||
|
|
|
| |||||
Net income (loss) per share applicable to common shareholders—basic | $ | 0.06 | $ | (0.03 | ) | |||
|
|
|
|
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Numerator: | ||||||||
Net income (loss) available to common shareholders - basic | $ | 2,514 | $ | (1,199 | ) | |||
Add-back: undistributed earnings allocated to unvested shareholders | — | — | ||||||
Less: undistributed earnings reallocated to unvested shareholders | — | — | ||||||
|
|
|
| |||||
Net income (loss) available to common shareholders—diluted | $ | 2,514 | $ | (1,199 | ) | |||
|
|
|
| |||||
Denominator: | ||||||||
Diluted: | ||||||||
Weighted-average shares of common stock outstanding | 41,263,669 | 41,846,619 | ||||||
Less: weighted-average shares of unvested restricted common stock outstanding | (1,259,315 | ) | (1,840,830 | ) | ||||
Weighted-average number of common shares issuable upon exercise of outstanding stock options | 61,705 | — | ||||||
|
|
|
| |||||
Weighted-average number of common shares used in computing diluted net income (loss) per share | 40,066,059 | 40,005,789 | ||||||
|
|
|
| |||||
Net income (loss) per share applicable to common shareholders—diluted | $ | 0.06 | $ | (0.03 | ) | |||
|
|
|
|
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Numerator: | ||||||||||||||||
Net income (loss), as reported | $ | 10,307 | $ | 695 | $ | 12,967 | $ | (504 | ) | |||||||
Less: net income (loss) attributable to participating securities | (336 | ) | (29 | ) | (409 | ) | — | |||||||||
Net income (loss) available to common shareholders—basic | $ | 9,971 | $ | 666 | $ | 12,558 | $ | (504 | ) | |||||||
Denominator: | ||||||||||||||||
Basic: | ||||||||||||||||
Weighted-average shares of common stock outstanding | 41,377,788 | 42,188,672 | 41,321,044 | 42,252,027 | ||||||||||||
Less: weighted-average shares of unvested restricted common stock outstanding | (1,350,923 | ) | (1,770,364 | ) | (1,305,372 | ) | (1,815,432 | ) | ||||||||
Weighted-average number of common shares used in computing basic net income (loss) per common share | 40,026,865 | 40,418,308 | 40,015,672 | 40,436,595 | ||||||||||||
Net income (loss) per share applicable to common shareholders—basic | $ | 0.25 | $ | 0.02 | $ | 0.31 | $ | (0.01 | ) | |||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Numerator: | �� | |||||||||||||||
Net income (loss) available to common shareholders—basic | $ | 9,971 | $ | 666 | $ | 12,558 | $ | (504 | ) | |||||||
Add-back: undistributed earnings allocated to unvested shareholders | 180 | — | 107 | — | ||||||||||||
Less: undistributed earnings reallocated to unvested shareholders | (180 | ) | — | (107 | ) | — | ||||||||||
Net income (loss) available to common shareholders—diluted | $ | 9,971 | $ | 666 | $ | 12,558 | $ | (504 | ) | |||||||
Denominator: | ||||||||||||||||
Diluted: | ||||||||||||||||
Weighted-average shares of common stock outstanding | 41,377,788 | 42,188,672 | 41,321,044 | 42,252,027 | ||||||||||||
Less: weighted-average shares of unvested restricted common stock outstanding | (1,350,923 | ) | (1,770,364 | ) | (1,305,372 | ) | (1,815,432 | ) | ||||||||
Weighted-average number of common shares issuable upon exercise of outstanding stock options | 39,045 | 119,544 | 50,375 | — | ||||||||||||
Weighted-average number of common shares used in computing diluted net income (loss) per common share | 40,065,910 | 40,537,852 | 40,066,047 | 40,436,595 | ||||||||||||
Net income (loss) per share applicable to common shareholders—diluted | $ | 0.25 | $ | 0.02 | $ | 0.31 | $ | (0.01 | ) | |||||||
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Options | 490,897 | 620,312 | ||||||
Unvested restricted common stock | 912,271 | 685,719 | ||||||
Unvested restricted stock units | 81,854 | 64,024 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Options | 488,867 | 543,794 | 489,882 | 641,825 | ||||||||||||
Unvested restricted stock | 1,082,601 | 643,109 | 997,436 | 846,046 | ||||||||||||
Unvested restricted stock units | 86,034 | 57,158 | 83,944 | 67,219 |
Stock purchases
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Marketing and selling | $ | 1,770 | $ | 1,734 | ||||
Research and development | 722 | 988 | ||||||
General and administrative | 1,727 | 1,525 | ||||||
|
|
|
| |||||
Total expensed | 4,219 | 4,247 | ||||||
Property and equipment | — | 14 | ||||||
|
|
|
| |||||
Total stock based compensation | $ | 4,219 | $ | 4,261 | ||||
|
|
|
|
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Marketing and selling | $ | 1,702 | $ | 2,152 | $ | 3,472 | $ | 3,886 | ||||||||
Research and development | 640 | 893 | 1,362 | 1,881 | ||||||||||||
General and administrative | 1,537 | 1,545 | 3,264 | 3,070 | ||||||||||||
Restructuring | — | (1,402 | ) | — | (1,402 | ) | ||||||||||
Total expensed | $ | 3,879 | $ | 3,188 | $ | 8,098 | $ | 7,435 | ||||||||
Property and equipment | — | 7 | — | 21 | ||||||||||||
Total stock based compensation | $ | 3,879 | $ | 3,195 | $ | 8,098 | $ | 7,456 | ||||||||
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Creative Professional | $ | 32,763 | $ | 34,998 | ||||
OEM | 18,593 | 21,685 | ||||||
|
|
|
| |||||
Total | $ | 51,356 | $ | 56,683 | ||||
|
|
|
|
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Creative Professional | $ | 35,225 | $ | 38,417 | $ | 67,988 | $ | 73,415 | ||||||||
OEM | 28,011 | 22,270 | 46,604 | 43,955 | ||||||||||||
Total | $ | 63,236 | $ | 60,687 | $ | 114,592 | $ | 117,370 | ||||||||
of World.
Three Months Ended March 31, | ||||||||||||||||
2019 | 2018 | |||||||||||||||
Revenue | % of Total | Revenue | % of Total | |||||||||||||
United States | $ | 23,216 | 45.2 | % | $ | 24,823 | 43.8 | % | ||||||||
Japan | 9,634 | 18.8 | 11,652 | 20.5 | ||||||||||||
Europe, Middle East, and Africa (EMEA) | 13,457 | 26.2 | 15,066 | 26.6 | ||||||||||||
Rest of the World | 5,049 | 9.8 | 5,142 | 9.1 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 51,356 | 100.0 | % | $ | 56,683 | 100.0 | % | ||||||||
|
|
|
|
|
|
|
|
Three Months Ended June 30, | ||||||||||||||||
2019 | 2018 | |||||||||||||||
Sales | % of Total | Sales | % of Total | |||||||||||||
(In thousands, except percentages) | ||||||||||||||||
United States | $ | 34,396 | 54.4 | % | $ | 27,086 | 44.6 | % | ||||||||
Japan | 9,748 | 15.4 | 11,718 | 19.3 | ||||||||||||
Europe, Middle East and Africa (EMEA) | 13,934 | 22.0 | 15,060 | 24.8 | ||||||||||||
Rest of World | 5,158 | 8.2 | 6,823 | 11.3 | ||||||||||||
Total | $ | 63,236 | 100.0 | % | $ | 60,687 | 100.0 | % | ||||||||
Six Months Ended June 30, | ||||||||||||||||
2019 | 2018 | |||||||||||||||
Sales | % of Total | Sales | % of Total | |||||||||||||
(In thousands, except percentages) | ||||||||||||||||
United States | $ | 57,612 | 50.3 | % | $ | 51,971 | 44.3 | % | ||||||||
Japan | 19,382 | 16.9 | 23,370 | 19.9 | ||||||||||||
Europe, Middle East and Africa (EMEA) | 27,391 | 23.9 | 30,064 | 25.6 | ||||||||||||
Rest of World | 10,207 | 8.9 | 11,965 | 10.2 | ||||||||||||
Total | $ | 114,592 | 100.0 | % | $ | 117,370 | 100.0 | % | ||||||||
March 31, 2019 | December 31, 2018 | |||||||
Long-lived assets: | ||||||||
United States | $ | 311,124 | $ | 303,046 | ||||
United Kingdom | 4,198 | 3,484 | ||||||
Germany | 53,615 | 54,357 | ||||||
Asia (including Japan) | 5,665 | 4,139 | ||||||
|
|
|
| |||||
Total | $ | 374,602 | $ | 365,026 | ||||
|
|
|
|
June 30, 2019 | December 31, 2018 | |||||||
Long-lived assets: | ||||||||
United States | $ | 308,586 | $ | 303,046 | ||||
United Kingdom | 3,864 | 3,484 | ||||||
Germany | 55,302 | 54,357 | ||||||
Asia (including Japan) | 5,629 | 4,139 | ||||||
Total | $ | 373,381 | $ | 365,026 |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Severance and termination benefits | $ | (24 | ) | $ | 194 | |||
|
|
|
| |||||
Total restructuring | $ | (24 | ) | $ | 194 | |||
|
|
|
|
Three Months Ended June 30, | ||||||||
2019 | 2018 | |||||||
Severance and termination benefits | $ | 32 | $ | 4,032 | ||||
Reversal of stock based compensation expense | — | (1,402 | ) | |||||
Accelerated deferred compensation | — | 523 | ||||||
Intangible assets impairment | — | 2,623 | ||||||
Write off of allocated goodwill | — | 600 | ||||||
Total restructuring | $ | 32 | $ | 6,376 | ||||
Six Months Ended June 30, | ||||||||
2019 | 2018 | |||||||
Severance and termination benefits | $ | 8 | $ | 4,226 | ||||
Reversal of stock based compensation expense | — | (1,402 | ) | |||||
Accelerated deferred compensation | — | 523 | ||||||
Intangible assets impairment | — | 2,623 | ||||||
Write off of allocated goodwill | — | 600 | ||||||
Total restructuring | $ | 8 | $ | 6,570 |
Personnel related | Total | |||||||
Restructuring reserve at December 31, 2018 | $ | 2,968 | $ | 2,968 | ||||
Restructuring charges | (24 | ) | (24 | ) | ||||
Cash payments | (1,595 | ) | (1,595 | ) | ||||
Foreign currency exchange rate changes | (9 | ) | (9 | ) | ||||
|
|
|
| |||||
Restructuring reserve at March 31, 2019 | 1,340 | 1,340 | ||||||
|
|
|
|
Personnel related | ||||
Restructuring reserve at January 1, 2019 | $ | 2,968 | ||
Restructuring charges | (24 | ) | ||
Cash payments | (1,595 | ) | ||
Foreign currency exchange rate changes | (9 | ) | ||
Restructuring reserve at March 31, 2019 | 1,340 | |||
Restructuring charges | 32 | |||
Cash payments | (807 | ) | ||
Foreign currency exchange rate changes | (8 | ) | ||
Restructuring reserve at June 30, 2019 | $ | 557 | ||
Stock Purchase Program
Subsequent to March 31, 2019, the Company purchased 44,600 shares
Dividend Declaration
Monotype
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
Three Months Ended March 31, | ||||||||||||||||
2019 | 2018 | |||||||||||||||
Revenue | % of Total | Revenue | % of Total | |||||||||||||
(In thousands of dollars, except percentages) | ||||||||||||||||
United States | $ | 23,216 | 45.2 | % | $ | 24,823 | 43.8 | % | ||||||||
Japan | 9,634 | 18.8 | 11,652 | 20.5 | ||||||||||||
Europe, Middle East, and Africa (EMEA) | 13,457 | 26.2 | 15,066 | 26.6 | ||||||||||||
Rest of the World | 5,049 | 9.8 | 5,142 | 9.1 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 51,356 | 100.0 | % | $ | 56,683 | 100.0 | % | ||||||||
|
|
|
|
|
|
|
|
Three Months Ended June 30, | ||||||||||||||||
2019 | 2018 | |||||||||||||||
Sales | % of Total | Sales | % of Total | |||||||||||||
(In thousands, except percentages) | ||||||||||||||||
United States | $ | 34,396 | 54.4 | % | $ | 27,086 | 44.6 | % | ||||||||
Japan | 9,748 | 15.4 | 11,718 | 19.3 | ||||||||||||
Europe, Middle East and Africa (EMEA) | 13,934 | 22.0 | 15,060 | 24.8 | ||||||||||||
Rest of World | 5,158 | 8.2 | 6,823 | 11.3 | ||||||||||||
Total | $ | 63,236 | 100.0 | % | $ | 60,687 | 100.0 | % | ||||||||
Six Months Ended June 30, | ||||||||||||||||
2019 | 2018 | |||||||||||||||
Sales | % of Total | Sales | % of Total | |||||||||||||
(In thousands, except percentages) | ||||||||||||||||
United States | $ | 57,612 | 50.3 | % | $ | 51,971 | 44.3 | % | ||||||||
Japan | 19,382 | 16.9 | 23,370 | 19.9 | ||||||||||||
Europe, Middle East and Africa (EMEA) | 27,391 | 23.9 | 30,064 | 25.6 | ||||||||||||
Rest of World | 10,207 | 8.9 | 11,965 | 10.2 | ||||||||||||
Total | $ | 114,592 | 100.0 | % | $ | 117,370 | 100.0 | % | ||||||||
If we are unable to maintain relationships with major customers or establish relationships with new customers, our licensing revenue will be adversely affected.
March 31,June 30, 2019 Compared to Three Months Ended March 31,June 30, 2018
Three Months Ended March 31, | ||||||||||||
2019 | 2018 | (Decrease) | ||||||||||
License revenue | $ | 41,872 | $ | 45,867 | $ | (3,995 | ) | |||||
Service revenue | 9,484 | 10,816 | (1,332 | ) | ||||||||
Cost of revenue—license | 6,802 | 9,612 | (2,810 | ) | ||||||||
Cost of revenue—service | 2,801 | 2,824 | (23 | ) |
Three Months Ended June 30, | Increase (Decrease) | |||||||||||
2019 | 2018 | |||||||||||
License revenue | $ | 54,136 | $ | 48,093 | $ | 6,043 | ||||||
Service revenue | 9,100 | 12,594 | (3,494 | ) | ||||||||
Cost of revenue—license | 8,231 | 7,282 | 949 | |||||||||
Cost of revenue—service | 2,759 | 2,674 | 85 |
Gross profit from license revenue, before amortization of acquired technology, increased to 83.9% from 79.0% mainly due to theone-time additionalnon-recurring royalty expensewas consistent at 84.8% and 84.9% in the three months ended March 31,June 30, 2019 and 2018, for which there was no corresponding revenue in the period, in accordance with ASC 606. There was no similar charge in the same period in 2019.respectively. Gross profit from service revenue, before amortization of acquired technology, decreased from 73.9% to 70.5%, mainly due69.7% in the second quarter of 2019, as compared to a decline78.8% in our service revenue as some of our cost of revenue does not fluctuate with changesthe same period in revenue.2018. See further discussion below for additional information regarding our period over period revenue and cost of revenue.
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Revenue: | ||||||||
Creative Professional | 63.8 | % | 61.7 | % | ||||
OEM | 36.2 | 38.3 | ||||||
|
|
|
| |||||
Total revenue | 100.0 | 100.0 | ||||||
Cost of revenue | 18.7 | 22.0 | ||||||
Cost of revenue—amortization of acquired technology | 1.7 | 1.5 | ||||||
|
|
|
| |||||
Total cost of revenue | 20.4 | 23.5 | ||||||
|
|
|
| |||||
Gross profit | 79.6 | 76.5 | ||||||
Marketing and selling | 33.3 | 35.4 | ||||||
Research and development | 14.5 | 16.6 | ||||||
General and administrative | 23.4 | 27.7 | ||||||
Amortization of other intangible assets | 1.6 | 1.8 | ||||||
|
|
|
| |||||
Total operating expenses | 72.8 | 81.5 | ||||||
|
|
|
| |||||
Income (loss) from operations | 6.8 | (5.0 | ) | |||||
Interest expense, net | 1.4 | 1.3 | ||||||
Loss on extinguishment of debt | 0.1 | — | ||||||
Loss (gain) on foreign exchange | 0.1 | (0.1 | ) | |||||
Loss on derivatives | 0.2 | 0.2 | ||||||
Other | — | — | ||||||
|
|
|
| |||||
Total other expenses | 1.8 | 1.4 | ||||||
Income (loss) before benefit from income taxes | 5.0 | (6.4 | ) | |||||
Benefit from income taxes | (0.2 | ) | (4.3 | ) | ||||
|
|
|
| |||||
Net income (loss) | 5.2 | % | (2.1 | %) | ||||
|
|
|
|
Three Months Ended June 30, | ||||||||
2019 | 2018 | |||||||
Revenue: | ||||||||
Creative Professional | 55.7 | % | 63.3 | % | ||||
OEM | 44.3 | 36.7 | ||||||
Total revenue | 100.0 | 100.0 | ||||||
Cost of revenue | 17.4 | 16.4 | ||||||
Cost of revenue—amortization of acquired technology | 1.3 | 1.4 | ||||||
Total cost of revenue | 18.7 | 17.8 | ||||||
Gross profit | 81.3 | 82.2 | ||||||
Marketing and selling | 29.4 | 33.1 | ||||||
Research and development | 10.7 | 14.0 | ||||||
General and administrative | 18.3 | 19.5 | ||||||
Restructuring | 0.1 | 10.5 | ||||||
Amortization of other intangible assets | 1.3 | 1.6 | ||||||
Total operating expenses | 59.8 | 78.7 | ||||||
Income from operations | 21.5 | 3.5 | ||||||
Interest expense, net | 1.1 | 1.4 | ||||||
Other | 0.3 | (1.1 | ) | |||||
Total other expense | 1.4 | 0.3 | ||||||
Income before provision from income taxes | 20.1 | 3.2 | ||||||
Provision from income taxes | 3.8 | 2.1 | ||||||
Net income | 16.3 | % | 1.1 | % | ||||
Three Months Ended March 31, | ||||||||||||
2019 | 2018 | (Decrease) | ||||||||||
Creative Professional | $ | 32,763 | $ | 34,998 | $ | (2,235 | ) | |||||
OEM | 18,593 | 21,685 | (3,092 | ) | ||||||||
|
|
|
|
|
| |||||||
Total revenue | $ | 51,356 | $ | 56,683 | $ | (5,327 | ) | |||||
|
|
|
|
|
|
Three Months Ended June 30, | Increase (Decrease) | |||||||||||
2019 | 2018 | |||||||||||
Creative Professional | $ | 35,225 | $ | 38,417 | $ | (3,192 | ) | |||||
OEM | 28,011 | 22,270 | 5,741 | |||||||||
Total revenue | $ | 63,236 | $ | 60,687 | $ | 2,549 | ||||||
Creative Professional revenue was $32.8 million and $35.0 million for the three months ended March 31, 2019 and 2018, respectively, a decrease of $2.2 million, or 6.4%8.3%, due to a decline in certain SAAS-based revenue and2018.
2018, partially offset by growth in sales to enterprise customers.
revenue, excluding amortization of acquired technology, is mainly due to higher associated costs with certain of our OEM product mix and partially due to an increase in revenue, period over period.
respectively, a decrease of $0.1 million, or 2.0%.
Operating Expenses
Marketingover period.
Research and Development. Research and developmenthigher advisor fees related to shareholder activities.
General and Administrative. General and administrative expense decreased $3.6 million, or 23.0%, to $12.0 million in the three months ended March 31, 2019, as compared to $15.6 million in the three months ended March 31, 2018. Outside consulting and legal expenses decreased $3.2 million in the three months ended March 31, 2019, as compared to the same period in 2018, primarily due to additional expenses incurred in the prior period related to shareholder activities. Personnel and personnel related expenses decreased $0.4 million in the three months ended March 31, 2019, as compared to the same period in 2018, mainly thea result of the restructuring actions in the fourth quarter ofaction announced June 2018.
Restructuring.Restructuring expense decreased $0.2 million, or 112.4%, due to a credit of $24 thousand in the three months ended March 31, 2019 from $0.2 million in the three months ended March 31, 2018 due to severance expense and charges associated with the closure of one of our regional offices in the prior period.
See Note 14 for further details.
Loss (Gain) on Foreign Exchange
Loss (gain) on foreign exchangecredit and partially due to a decrease in interest rates.
Loss on Derivatives
Loss on derivatives was $0.1 million and $0.1 million in the three months ended March 31, 2019 and 2018, respectively, the net result of changes in the market value of our30-day forward currency derivative contracts.
In the three months ended March 31, 2019, we recorded a benefit of 29.1% for the reversal of reserve for unrecognized tax benefits, as compared to a benefit of 0.6% in the prior period, due to the completion of an audit of our 2016 federal tax return.
Six Months Ended June 30, | ||||||||||||
2019 | 2018 | Increase (Decrease) | ||||||||||
License revenue | $ | 96,008 | $ | 93,960 | $ | 2,048 | ||||||
Service revenue | 18,584 | 23,410 | (4,826 | ) | ||||||||
Cost of revenue—license | 15,033 | 16,894 | (1,861 | ) | ||||||||
Cost of revenue—service | 5,560 | 5,498 | 62 |
Six Months Ended June 30, | ||||||||
2019 | 2018 | |||||||
Revenue: | ||||||||
Creative Professional | 59.3 | % | 62.6 | % | ||||
OEM | 40.7 | 37.4 | ||||||
Total revenue | 100.0 | 100.0 | ||||||
Cost of revenue | 18.0 | 19.1 | ||||||
Cost of revenue—amortization of acquired technology | 1.5 | 1.4 | ||||||
Total cost of revenue | 19.5 | 20.5 | ||||||
Gross profit | 80.5 | 79.5 | ||||||
Marketing and selling | 31.2 | 34.2 | ||||||
Research and development | 12.4 | 15.2 | ||||||
General and administrative | 20.6 | 23.4 | ||||||
Restructuring | — | 5.6 | ||||||
Amortization of other intangible assets | 1.4 | 1.7 | ||||||
Total operating expenses | 65.6 | 80.1 | ||||||
Income (loss) from operations | 14.9 | (0.6 | ) | |||||
Interest expense, net | 1.3 | 1.3 | ||||||
Other | 0.4 | (0.5 | ) | |||||
Total other expense | 1.7 | 0.8 | ||||||
Income (loss) before benefit from income taxes | 13.2 | (1.4 | ) | |||||
Provision (benefit) from income taxes | 1.9 | (1.0 | ) | |||||
Net income (loss) | 11.3 | % | (0.4 | )% | ||||
Six Months Ended June 30, | Increase (Decrease) | |||||||||||
2019 | 2018 | |||||||||||
Creative Professional | $ | 67,988 | $ | 73,415 | $ | (5,427 | ) | |||||
OEM | 46,604 | 43,955 | 2,649 | |||||||||
Total revenue | $ | 114,592 | $ | 117,370 | $ | (2,778 | ) | |||||
2018
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Net cash provided by operating activities | $ | 4,095 | $ | 7,496 | ||||
Net cash used in investing activities | (411 | ) | (1,623 | ) | ||||
Net cash used in financing activities | (17,438 | ) | (6,274 | ) | ||||
Effect of exchange rates on cash, cash equivalents and restricted cash | 2 | 943 | ||||||
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Total (decrease) increase in cash, cash equivalents and restricted cash | $ | (13,752 | ) | $ | 542 | |||
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Six Months Ended June 30, | ||||||||
2019 | 2018 | |||||||
Net cash provided by operating activities | $ | 17,101 | $ | 3,319 | ||||
Net cash used in investing activities | (811 | ) | (2,285 | ) | ||||
Net cash used in financing activities | (28,651 | ) | (16,720 | ) | ||||
Effect of exchange rates on cash, cash equivalents and restricted cash | 18 | (304 | ) | |||||
Total decrease in cash, cash equivalents and restricted cash | $ | (12,343 | ) | $ | (15,990 | ) | ||
equipment.
Dividends
On February 13, 2019, our Board of Directors approved an $0.116 per share, or $4.8 million, quarterly cash dividend on our outstanding common stock. The record date was April 1, 2019 andwithheld in the dividend was paid to shareholders on April 18, 2019. We anticipate this to be a recurring quarterly dividend with future payments and record dates, subject to board approval. six months ended June 30, 2018.
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Net income (loss) | $ | 2,660 | $ | (1,199 | ) | |||
Interest expense, net | 771 | 728 | ||||||
Other expense, net | 206 | 98 | ||||||
Provision for (benefit from) income taxes | (139 | ) | (2,465 | ) | ||||
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Income (loss) from operations | $ | 3,498 | $ | (2,838 | ) | |||
Depreciation and amortization | 3,169 | 3,249 | ||||||
Stock based compensation | 4,219 | 4,247 | ||||||
Acquisition-related compensation(1) | 167 | 1,189 | ||||||
Non-recurring expenses (income)(2) | (24 | ) | 5,114 | |||||
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Net adjusted EBITDA(4) | $ | 11,029 | $ | 10,961 | ||||
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Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net income (loss) | $ | 10,307 | $ | 695 | $ | 12,967 | $ | (504 | ) | |||||||
Interest expense, net | 698 | 799 | 1,469 | 1,527 | ||||||||||||
Other (income) expense, net | 239 | (633 | ) | 445 | (535 | ) | ||||||||||
Provision (benefit) for income taxes | 2,376 | 1,274 | 2,237 | (1,191 | ) | |||||||||||
Income (loss) from operations | 13,620 | 2,135 | 17,118 | (703 | ) | |||||||||||
Depreciation and amortization | 3,168 | 3,198 | 6,337 | 6,447 | ||||||||||||
Stock based compensation (1) | 3,879 | 4,590 | 8,098 | 8,837 | ||||||||||||
Acquisition-related compensation (2) | 166 | 1,084 | 333 | 2,273 | ||||||||||||
Non-recurring expenses(3) | 743 | 6,376 | 719 | 11,490 | ||||||||||||
Net adjusted EBITDA (5) | $ | 21,576 | $ | 17,383 | $ | 32,605 | $ | 28,344 | ||||||||
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
GAAP income (loss) per diluted share | $ | 0.06 | $ | (0.03 | ) | |||
Amortization, net of tax of $0.01 and $0.01, respectively | 0.03 | 0.04 | ||||||
Stock based compensation, net of tax of $0.01 and $0.02, respectively | 0.09 | 0.09 | ||||||
Acquisition-related compensation, net of tax of $0.00 and $0.00, respectively(1) | 0.01 | 0.03 | ||||||
Non-recurring expenses (income), net of tax of $0.00 and $0.03, respectively(3) | — | 0.09 | ||||||
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Non-GAAP earnings per diluted share(5) | $ | 0.19 | $ | 0.22 | ||||
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Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
GAAP income (loss) per diluted share | $ | 0.25 | $ | 0.02 | $ | 0.31 | $ | (0.01 | ) | |||||||
Amortization, net of tax of $0.01, $0.01, $0.01 and $0.02, respectively | 0.04 | 0.03 | 0.07 | 0.07 | ||||||||||||
Stock based compensation, net of tax of $0.02, $0.02, $0.03 and $0.03, respectively (1) | 0.08 | 0.10 | 0.17 | 0.18 | ||||||||||||
Acquisition-related compensation, net of tax of $0.00, $0.00, $0.00 and $0.00, respectively (2) | 0.00 | 0.03 | 0.01 | 0.05 | ||||||||||||
Non-recurring expenses, net of tax of $0.00, $0.04, $0.00 and $0.07, respectively(4) | 0.01 | 0.12 | 0.01 | 0.22 | ||||||||||||
Non-GAAP earnings per diluted share(6) | $ | 0.38 | $ | 0.30 | $ | 0.57 | $ | 0.51 | ||||||||
(1) | For the three and six months ended June 30, 2018, $1.4 million, or $0.03 per share, of stock based compensation expense was reversed as a result of forfeitures of awards by employees included in the restructuring plan. This non-recurring amount has been included in restructuring expenses. |
(2) | For the three months ended |
For the three months ended |
For the three months ended |
Net adjusted EBITDA is not a measure of operating performance under GAAP and should not be considered as an alternative or substitute for GAAP profitability measures such as income (loss) from operations and net income (loss). Net adjusted EBITDA as an operating performance measure has material limitations since it excludes the statement of income impact of depreciation and amortization expense and stock based compensation and therefore does not represent |
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is the most directly comparable GAAP operating performance measure to non-GAAP earnings per diluted share. Asnon-GAAP earnings per diluted share is not defined by GAAP, our definition ofnon-GAAP earnings per diluted share may differ from and therefore may not be comparable to similarly titled measures used by other companies, thereby limiting its usefulness as a comparative measure. Because of the limitations thatnon-GAAP earnings per diluted share has as an analytical tool, investors should not consider it in isolation, or as a substitute for analysis of our operating results as reported under GAAP. |
Contractual Obligations | Total | April 2019 - March 2020 | April 2020 - March 2022 | April 2012 - March 2024 | Thereafter | |||||||||||||||
Operating leases | $ | 16,303 | $ | 4,144 | $ | 6,646 | $ | 3,795 | $ | 1,718 |
Contractual Obligations | Total | July 2019 - June 2020 | July 2020 - June 2022 | July 2012 - June 2024 | Thereafter | |||||||||||||||
Operating leases | $ | 17,270 | $ | 4,250 | $ | 7,283 | $ | 3,924 | $ | 1,813 |
For
total revenue for the three months ended June 30, 2018 or for the six months ended June 30, 2019 or 2018.
As discussed in Note 1, our wholly-owned Olapic Argentina S.A. subsidiary employs 99 people whose functions mainly include development, sales support and administration. The Argentinian economy was recently determined to be highly inflationary. Argentina’s inflation rate reached this threshold with the quarterly period ended June 30, 2018. In accordance with this designation,
we were required to apply the guidance in ASC Topic 830,Foreign Currency Matters, (Subtopic ASC 830-10-45-10), and account for a change in functional currency from the Argentine peso to the U.S. dollar effective July 1, 2018. While we conduct our operation in Argentine pesos, effective July 1, 2018, the functional currency was changed to the U.S. dollar. The operation is a service center supporting the company’s products and generates no revenue. Thus, the expenses primarily consist of compensation and related costs, totaling approximately $0.4 million to $0.5 million per month. The change in functional currency to U.S. dollars did not have a material impact on our financial position, operating results or cash flows.
For the three months ended March 31,June 30, 2019 and 2018, revenue from customers outside the United States, particularlyprimarily EMEA and Japan, comprised 54.8%45.6% and 56.2 %,55.4%, 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 $1.7$1.8 million, decreased expenses by $1.7$1.8 million and increasedleft operating income by $0.1 millionunchanged for the three months ended March 31,June 30, 2019. For the six months ended June 30, 2019 and 2018, revenue from customers outside the United States, primarily EMEA and Japan, comprised 49.7% and 55.7%, respectively, of our total revenue. An effect of a 10% strengthening of the British pound sterling, the Euro, Japanese yen and/or Argentine peso, relative to the U.S. dollar, would have decreased our revenues by $3.5 million, decreased expenses by $3.5 million and left operating income unchanged for the six months ended June 30, 2019. The sensitivity analysis assumes that all currencies move in the same direction at the same time and the ratio of
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Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs | ||||||||||||
January 2, 2019 to January 31, | 136,807 | $ | 14.74 | 123,500 | $ | 5,696,486 | ||||||||||
February 1, 2019 to February 28, | 146,554 | $ | 17.44 | 123,500 | $ | 3,536,730 | ||||||||||
March 1, 2019 to March 29, | 168,399 | $ | 19.12 | 123,500 | $ | 1,088,429 | ||||||||||
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Total | 451,760 | $ | 17.29 | 370,500 | $ | 1,088,429 | ||||||||||
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Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs | ||||||||||||
April 3, 2019 to April 29, 2019 (1)(2)(3) | 81,496 | $ | 13.88 | 55,428 | $ | 777 | ||||||||||
May 3, 2019 to May 31, 2019 (1) | 33,475 | $ | — | — | $ | — | ||||||||||
June 2, 2019 to June 30, 2019 (1)(2) | 95,928 | $ | 2.96 | — | $ | — | ||||||||||
Total | 210,899 | $ | 6.72 | 55,428 | $ | — | ||||||||||
(1) | The Company repurchased unvested restricted stock in accordance with either the Third Amended and Restated 2007 Stock Option and Incentive Plan, “2007 Award Plan” or the 2010 Inducement Plan. The price paid by the Company was determined pursuant to the terms of either the 2007 Award Plan or the 2010 Inducement Plan and related restricted stock agreements. |
(2) | The Company withheld |
(3) | The Company purchased shares of common stock in accordance with its share repurchase program announced on May 3, 2018. The Company purchased the shares on the open market at prevailing prices. |
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Exhibit No. | Description | |||
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31.1 | ||||
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32.1 | ||||
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 |
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* | Filed herewith. |
** | Furnished herewith. |
MONOTYPE IMAGING HOLDINGS INC. | ||||||
Date: | By: | / | ||||
Scott E. Landers
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Director | ||||||
(Principal Executive Officer and Principal Accounting
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36