Font technology has evolved rapidly with the increase in the functionality of consumer electronic, or CE, devices. The latest generation of digital font technology focuses on scalable fonts rather than bitmaps. Bitmaps require the storage of images for each individual character and size, which limits deployment across multiple CE devices. Scalable fonts are more flexible, compressed and memory efficient.

The market for laser printers and digital copiers is generally more mature and stable than the rest of the CE device market, and this has resulted in commoditization at the lower-end of the market. Laser printer manufacturers have responded by increasing the functionality of their products, with advancements such as a larger number of embedded fonts and color output, scanning and copying capabilities. This increasing functionality is in turn driving the advancement of the printer industry, particularly the laser printer industry which accounts for a significant portion of the printer market. More than 30 million laser printers were sold in 2005, generating $44 billion in revenues for laser printer manufacturers.

Graphic designers, advertisers, printers, publishers and other creative and business professionals also rely heavily on fonts to convey meaning and to differentiate brand identity. For example, creative and business professionals at multinational corporations are increasingly tasked with creating solutions that extend branding and marketing communications into new markets around the world. Creative and business professionals historically acquired fonts primarily from local or regional distributors or dealers.

OEMs and creative and business professionals are increasingly demanding comprehensive text imaging solutions with flexible technologies that can be rapidly integrated into their products. In the CE device market, advanced text imaging solutions, including scalable and multilingual type that is optimized for CE device memory and display limitations, are critical in supporting text portability.

The Company’s iType font scaling engine renders high quality text on the small screens of CE devices, including mobile phones, hand-held computers, video game consoles and set-top boxes in virtually any language and any size. The iType engine is fully compatible with industry-standard font formats of TrueType and OpenType as well as the Company’s proprietary format for stroke-based Asian fonts.

WorldType Layout Engine is designed for building complex language subsystems, including left-reading and right-reading languages displayed in a single line, which allow CE devices to display multilingual text. The positioning and layout of complex languages and scripts, like Indic, Arabic, and Hebrew scripts, must follow rules for character shaping and construction based on the line of text.

The Company’s printer driver kits, or PDKs, enable the creation of customized printer drivers by providing software tools that allow applications to print as intended. The Graphics PDK for PDL-based laser printers and the Image PDK for host-based laser and ink jet printers are compliant with Microsoft Windows printing architecture and contain source code for both the core driver and the graphical user interface.

The Company offers three ColorSet tool kits. ColorSet Management Module Tool Kit ensures consistent color mapping between input and output CE devices. ColorSet Profile Tool Kit saves time creating profiles and editing applications. ColorSet Screening Tool Kit maximizes image quality in color laser printers.

A key component of the Company’s text imaging solutions is a library of over 9,000 typefaces. The Company’s library has three components: the Monotype library, the Linotype library and the ITC library.

Cost of revenue was $6.8 million and $6.6 million for the nine months ended September 30, 2005 and 2006, respectively, a decrease of $247, or 3.6%.

Marketing and selling expense was $8.7 million and $10.5 million in the nine months ended September 30, 2005 and 2006, respectively, an increase of $1.8 million, or 19.6%.

Research and development expense was $7.6 million and $9.7 million for the nine months ended September 30, 2005 and 2006, respectively, an increase of $2.2 million, or 27.8%.

Interest expense, net was $10.6 million and $13.6 million for the nine months ended September 30, 2005 and 2006, respectively, an increase of $3.0 million, or 27.9%.