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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Form 10-K

Commission File Number: 0-18805

ELECTRONICS FOR IMAGING, INC.

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act

     Indicate by check mark whether the registrant (1) has filed all reports required 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 þ          No o

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     o

         Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).     Yes þ          No o

      The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant computed by reference to the price at which the common equity was last sold on June 30, 2003.

Common Stock, $.01 par value: $784,340,285**

      The number of shares outstanding of each of the registrant’s classes of common stock as of February 28, 2004.

Common Stock, $.01 par value: 54,204,759

DOCUMENTS INCORPORATED BY REFERENCE

        Portions of the definitive Proxy Statement to be delivered to stockholders in connection with the Annual Meeting of Stockholders to be held on June 3, 2004 are incorporated by reference into Part III hereof.

**

Based upon the last trade price of the Common Stock reported on the Nasdaq National Market on June 30, 2003. Excludes approximately 15,567,850 shares of common stock held by Directors, Officers and holders known to the Registrant to hold 5% or more of the Registrant’s outstanding Common Stock on December 31, 2003. Exclusion of shares held by any person should not be construed to indicate that such person possesses the power, direct or indirect, to direct or cause the direction of the management or policies of the Registrant, or that such person is controlled by or under common control with the Registrant.

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PART I

      This Annual Report on Form 10-K includes certain registered trademarks and tradenames of Electronics for Imaging, Inc., its subsidiaries (collectively, “EFI” or “the Company”) and others. Auto-Count, ColorCal, ColorWise, Command WorkStation, EDOX, EFI, Fiery, the Fiery logo, MicroPress, Printcafe, PrinterSite, Prograph, Proteus, Spot-On, Bestcolor, AutoCal, Digital StoreFront, DocStream, Fiery Link, FreeForm, Hagen OA, Intelligent Device Management, Logic, OneFlow, PrintFlow, PrintMe, PrintSmith Site, PrintSmith, PSI Flexo, PSI, SendMe, Splash, VisualCal, the EFI logo, Essential to Print, Best, the Best logo, Colorproof, PhotoXposure, Remoteproof, and Screenproof are trademarks of the Company. All other terms and product names may be registered trademarks or trademarks of their respective owners, and are hereby acknowledged.

      Certain of the information contained in this Annual Report on Form 10-K, including without limitation, statements made under this Part I, Item 1 “Business” and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Item 7A, “Quantitative and Qualitative Disclosures about Market Risk” which are not historical facts, may include “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. When used herein, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will” and similar expressions as they relate to the Company or its management are intended to identify such statements as “forward-looking statements.” Such statements reflect the current views of the Company and its management with respect to future events and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, the Company’s actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements. Important factors that could cause the Company’s actual results to differ materially from those included in the forward-looking statements made herein include, without limitation, those factors discussed in Item 1 “Business — Competition,” in Item 7 “Management’s Discussion and Results of Operations — Factors That Could Adversely Affect Performance” and elsewhere in this Annual Report on Form 10-K and in the Company’s other filings with the Securities and Exchange Commission, including the Company’s most recent Quarterly Report on Form 10-Q. The Company assumes no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.

Item 1:     Business.

Filings

      We file annual reports, quarterly reports, proxy statements and other documents with the Securities and Exchange Commission (SEC) under the Securities Exchange Act of 1934 (Exchange Act). The public may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 450 Fifth Street N.W., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Also, the SEC maintains an Internet website that contains reports, proxy and information statements and other information regarding issuers, including EFI, that file electronically with the SEC. The public can obtain any documents that we file with the SEC at http://www.sec.gov.

      We also make available free of charge through our Internet website (http://www.efi.com) our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and, if applicable, amendments to those reports filed or furnished pursuant to the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

General

      EFI was founded by Efraim Arazi and incorporated in Delaware in 1989. Our corporate offices are located at 303 Velocity Way, Foster City, California 94404.

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      We are a global provider of digital imaging and print management solutions for professional and enterprise printing. Our technologies offer document management tools from creation to print, including production workflow, print management information software solutions, proofing software and enterprise and mobile printing solutions. Our main products include stand-alone servers, which are connected to digital copiers and other peripheral devices and controllers, which are embedded in digital copiers and desktop color laser printers. Our products support a broad range of printers, copiers, multifunction devices and mobile communication devices. The growth of color printing, driven both by Internet usage and the adoption of color within the corporate market, provides us with a tremendous opportunity to leverage our core color server technology.

      We sell our products primarily to original equipment manufacturers, or OEMs, such as Canon, Xerox, KonicaMinolta and others, in North America, Europe and Japan. OEMs sell equipment under their brand name to the end-user. In some instances, their equipment carries both their own brand name, and our brand name.

      In January 2004, we changed our brand name to EFI to better encompass the broad range of end to end solutions we now offer as a result of several acquisitions in 2003 as well as new products developed in-house. We are re-branding most of our products under the EFI umbrella and product descriptions in the following sections generally reflect this new nomenclature. Our flagship Fiery brand will continue to be the name used for our server and controller products. However, other products either developed internally such as Velocity OneFlow or obtained through acquisitions such as Printcafe Hagen OA will now be called EFI OneFlow and EFI Hagen OA, respectively. Most other products will follow this new nomenclature.

The EFI Solution

      Our Fiery, Splash, EDOX, DocStream and MicroPress brands of print controllers transform digital copiers and printers into networked printing devices. Once networked, EFI-powered printers and copiers can be shared across workgroups, departments, the enterprise and the Internet to quickly and economically produce high-quality color and black-and-white documents. We develop products with a wide range of price and performance levels. We believe that consumers generally prefer color as evidenced by the migration of photographs, motion pictures, television and newspapers from black-and-white to color. In the personal computer field, we believe this preference is shown by the migration of personal digital assistants (“PDAs”) to color and the almost exclusive use of color monitors with color-oriented graphical user interfaces, application software and Internet content. In each of these cases, once the enabling technology developed sufficiently, consumer adoption of color quickly followed. We believe that consumers prefer color in documents created through desktop publishing. Until recently, however, the technology was not available to do this in a high quality, quick and cost-effective manner due to the complexity of accurate color reproduction. EFI’s color servers permit users of digital color copiers to transmit and convert digital data from a computer to a color copier so that the color copier can print high-quality color documents easily, quickly and cost-effectively. As a result, EFI’s color servers transform digital color copiers into fast, high-quality, networked color printers. The black-and-white copier market has migrated toward the development and use of digital black-and-white copiers. Thus, in addition to EFI color servers for digital color copiers, we have leveraged our technology to develop and manufacture other products that support both color and black-and-white printing. These products include: (i) Fiery servers for digital black-and-white copiers; (ii) Fiery color servers for wide-format inkjet printers; and (iii) embedded Fiery controllers for digital black-and-white copiers and desktop color laser printers. We have also focused our efforts on both expanding the market for digital printing by developing end-to-end solutions as well as expanding into complementary markets. See “Products and Technology.”

Growth and Expansion Strategies

      Our overall objective is to continue to introduce new generations of controller products as well as expand our offerings in software applications and other new product lines related to digital printing, workflow and print management. With respect to our current products, our primary goal is to provide a range of processing and printing solutions that address broad sections of the color printing market and to continue to leverage our technology to enable digital black-and-white printing on additional peripheral devices including digital black-

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     Proliferate and Expand Product Lines

      We intend to continue to develop new products that are “scalable”, meaning products that continue to meet the changing needs of the user as their business grows. Our products offer a broad range of features and performance when connected to, or integrated with, digital color and black-and-white copiers, as well as desktop color laser printers. Historically, we sold products that supported digital color copiers. We have since expanded our line of color servers to drive a wide range of output devices and developed products that support black-and-white printing systems and copiers. Each year we attempt to introduce new generations of our products. In 2003, we introduced the Fiery S300 and Fiery S500 servers designed to drive mid-range and high volume print engines as well as the Fiery Q4500 designed for color production class engines and digital presses. We acquired T/ R Systems, Inc. in late 2003 and added their MicroPress server to our server product line. We intend to continue developing new products by utilizing the advantages of these new platforms.

      We also intend to continue to develop new software applications that advance the performance and usability of our servers and embedded controllers and provide cohesive, end-to-end solutions for our customers. In 2003 we expanded our workflow software products with a new version of EFI Balance, which provides centralized management of up to 16 print devices and the introduction of EFI OneFlow, an automated prepress software that increases turnaround time and reduces cost for print shops. In 2003 we also began testing our new field support product called Intelligent Device Management, or IDM, which allows customers to remotely track printer/copier usage. In 2003, we also introduced EFI SendMe, our new scan-to solution that transforms paper documents into electronic files for instantaneous delivery or simplified storage.

      Our acquisition of Best GmbH in early 2003 added a range of proofing and remote proofing solutions to our portfolio of products. Late in the year we introduced new releases of EFI proofing products with Best technology, including EFI Colorproof, Screenproof and Designer Edition color management solutions for the PC and Macintosh markets.

      Our acquisition of Printcafe Software, Inc. (“Printcafe”) in late 2003 added management information software solutions for all sizes of print environments to our portfolio of products furthering our efforts to provide our customers with end-to-end solutions that maximize efficiency. Finally, in late 2003, our acquisition of T/ R Systems, Inc. (“T/ R Systems’) added servers aimed at clustering multiple output devices to achieve higher speed throughput and web submission tools aimed at easing the job management between a customer and their print provider. See “Products and Technology — EFI Technology.” We expect to continue developing new software applications as well as acquiring new software applications through business combinations.

     Develop and Expand Relationships with Key Industry Participants

      We have established relationships with leading printer and copier industry companies, including Canon, Epson, Fuji-Xerox, KonicaMinolta, Océ, Ricoh, Toshiba and Xerox, who we collectively refer to as our OEM partners. Sales to each of the listed OEM partners accounted for at least 2% of our revenues in 2003 and collectively sales to such OEM customers accounted for over 85% of our revenues in 2003. Additionally, we have established relationships with many leading distribution companies in the office, graphic arts and commercial print industries such as IKON, Danka Business Systems, Kodak Polychrome Graphics, Enovation, Pitman and others who distribute our products. We seek to establish new relationships and expand our existing relationships with our OEM and distribution partners and other customers in pursuit of the goal of offering Fiery, EDOX, DocStream, MicroPress and Splash controller and server products as well as our software technology for optimizing the management and creation of documents in a variety of print environments. Our relationships with our OEM partners are based upon business relationships we have established over time. However, our agreements with such OEM partners generally do not require them to make any future purchases from us and our OEM partners are generally free to purchase products from our competitors and cease purchasing our products at any time, for any reason or no reason.

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     Establish Enterprise Coherence and Leverage Industry Standardization

      In our development of new products and platforms, we seek to establish coherence across our entire product line by designing products that provide a consistent “look and feel” to the end-user. For example, we believe cross product coherence can create higher productivity levels as a result of shortened learning curves. Additionally, we believe the end-to-end coherence that end-users can achieve using EFI products for all of their digital printing and imaging needs leads to a lower total cost of ownership by providing one source for sales, support and training. We believe that our effort to achieve coherence engenders goodwill among our OEM customers and other customers and end-users of our products and assists in the development of new strategic relationships and markets for us. We also advocate open architecture utilizing industry-established standards to provide inter-operability across a range of digital printing devices and software applications, ultimately providing end-users more choice and flexibility in their selection of products.

      We have assembled, organically and through acquisitions, an experienced team of technical and sales and marketing personnel with backgrounds in color reproduction, digital pre-press, image processing, management information systems, networking and software and hardware engineering as well as market knowledge of enterprise printing, graphic arts and commercial printing. By applying our expertise in these areas, we expect to continue to expand the scope and sophistication of our products and gain access to new markets and channels of distribution.

Products and Technology

      Our technology allows copiers, printers and digital presses to be shared across work groups, the enterprise and the Internet. We develop products with a wide range of price and performance levels designed to make high-quality, short-run color and black-and-white digital printing easier and more accessible to the broader market. We produce a product for almost every major digital printing technology available today, including:

	•	desktop color laser printers,
	•	high-end desktop ink jet printers,
	•	wide-format printers,
	•	mid-range color copiers,
	•	mid-range digital black-and-white copiers,
	•	production color copiers and
	•	high-speed color and black-and-white digital presses.

      Additionally, we provide technology for nearly every step of the print production process spanning creation, submission, estimation, prepress, proofing, scheduling, load management, output management, fulfillment and accounting. Given the breadth of our product offerings, we believe our products are attractive to a variety of end users, including multimedia authors, advertising agencies, print-for-pay businesses, graphic designers, pre-press providers, commercial printers and small to large businesses.

     Server and Controller Solutions

      We historically have had three main product categories supporting color and black-and-white printing: (i) stand-alone color servers which are connected to color digital copiers and other peripheral devices; (ii) embedded and design-licensed color solutions which are used in digital color copiers and desktop laser printers; and (iii) digital black-and-white solutions, which include both stand-alone servers and embedded and design-licensed solutions, for digital black-and-white copiers and laser printers.

      Our print servers and controllers provide solutions for a broad range of the printing market — from entry level desktop printers to production level digital copiers. Our main server and controller solutions are the Fiery

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     Print Servers

      Print servers permit users of digital copiers to transmit and convert digital data from a computer to a color or black-and-white copier so that the copier can print documents easily, quickly and cost-effectively. As a result, our servers transform digital copiers into fast, high-quality networked printers. In addition to servers for digital color and black-and-white copiers, we have leveraged our technology to develop and manufacture other products that support digital printing.

      Since the introduction of the first Fiery color server in 1991, we have expanded our color server product line. During 2003, we focused our development efforts in this area on improvements to our color server products’ performance, features and ease of use and introduced the Fiery S300, the Fiery S500 and the Fiery Q4500 servers. Each of these new platforms features a major re-architecture — enabling improvements in printing speed — and is designed to run new EFI software featuring specialized tools for graphic arts professionals. The Fiery S300 is designed for production of continuous tone color pages on a variety of mid-range color copiers while the Fiery S500 is designed for printing complex variable data and imposed pages at top engine-rated speeds. The Fiery Q4500 delivers improved performance using dual Xeon Pentium 4 CPUs running at 2.8 Ghz and support for gigabit Ethernet networking. The latest platforms feature the new Fiery 5.5 software offering enhanced job processing and color management features for the graphics arts professionals. We have also utilized our color technology to provide stand-alone servers for digital black-and-white copiers and laser printers. Our black-and-white servers permit users of digital copiers to transmit and convert digital data from a computer to a black-and-white copier or printer to print documents easily, quickly and cost-effectively in professional environments. In 2003, we shipped stand-alone color servers for use with color copiers, color inkjet printers and wide-format color printers distributed by companies such as Canon, Fuji-Xerox, KonicaMinolta, Océ, Ricoh, Toshiba, Ikon Office Solutions, Sharp and Xerox. In 2003, we also shipped servers for use with digital black-and-white copiers distributed by Canon, Fuji-Xerox, KonicaMinolta, Ricoh and Xerox.

     Embedded Controller Solutions

      Unlike our Fiery, EDOX, MicroPress and Splash servers, which are sold as stand-alone products that are connected to copiers and printers, controllers are embedded inside copiers and desktop printers manufactured by our OEM customers. Our OEM partners can manufacture their own controller using our design and proprietary asics under our design-licensed model, or purchase the fully manufactured controllers on a turnkey basis from us. Color controllers allow users to print documents directly from their computers to the digital color copier, desktop color laser printers and color multi-function devices. We have also leveraged our color technology to provide embedded controllers and design-licensed solutions for digital black-and-white copiers and laser printers. Our black-and-white controllers permit users of digital copiers to transmit and convert digital data from a computer to a black-and-white copier or printer to print documents easily, quickly and cost-effectively in enterprise and professional environments. The Fiery X3e, an embedded controller, allows users to efficiently print large quantities of black-and-white documents in corporate environments. We have increased the penetration of the EFI technology by licensing the EFI embedded solutions to our OEM partners for their manufacture and use in their own products.

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     Proprietary Software and Hardware Features on our Print Servers and Embedded Controllers

      All of our server and controller products incorporate our proprietary software and hardware features. Examples of such features include:

	•	Fiery DocBuilder ProTM, which enables electronic collation, reverse order printing, job merging and editing;
	•	EFI RIP-While-Print which allows one page to be printed while subsequent pages are simultaneously processed;
	•	Continuous Print which allows processed pages to be stored in memory before printing, eliminating the need for the copier or printer to cycle down between unique pages;
	•	Fiery NetWise 3.0, our third generation networking architecture which provides enhanced programmability that helps users build customized printing solutions and provides extensive Internet-based functionality;
	•	Fiery ColorWise 3.0, our third generation color management system which provides greater image quality and calibration,
	•	Workflow management architecture which allows for the management and manipulation of digital print jobs, including EFI CommandWorkstation 4.0, Fiery WebTools, EFI Balance and EFI OneFlow — a complete, PDF-based, pre-print workflow system for small and mid-size print shops,
	•	Variable Data Printing solutions including, FreeForm and FreeForm 2,
	•	Fiery Driver, a unified printing interface that simplifies the printing process;
	•	Fiery Link, providing users with information on print job status and connected Fierys allowing users to monitor the status of any print job, its position in the queue, general information on the Fiery and paper and toner levels from any workstation; and
	•	ECT compression, an improved and more advanced compression scheme than our previous STARR compression technologies, offering definite compression ratios and virtually lossless image quality.

      Compression software reduces the amount of memory required in our products to store documents during processing and enables faster printing of documents. In addition to such software innovations, we custom design our products to increase productivity. For example, our custom-designed RIPChips, application specific integrated circuits, or ASICs, decrease overall print times by off-loading data movement from the microprocessor. We expect to continue to refine these printing technologies and to develop new printing technologies.

     Professional Printing Applications

      In an effort to provide our customers with end-to-end print solutions, we have developed technology that enhances printing workflow and makes printing production more powerful, productive and easier to manage from one centralized user interface. Examples of such technologies include:

	•	EFI Workflow This software includes modules for intelligent job routing, document layout, scanning and cost management. EFI OneFlow software offers graphics arts professionals advanced digital press capabilities in an easy-to-use, cost effective software solution for most major computer-to-plate, computer-to-film, direct imaging, or digital printing environments. In 2003, we announced the availability of EFI Balance which provides centralized management of up to 16 print devices and began offering MicroPress for automated job distribution, a product addition from our acquisition of T/ R Systems in November of 2003.
	•	EFI Proofing Solutions with Best Technology This software allows professional printers to accurately and affordably proof color documents before sending them to an offset printing press. In 2003, we announced the Best Premium Family, a comprehensive suite of digital proofing workflow solutions. It

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		combines a range of Best’s most powerful proofing software and color management solutions in four different combinations to meet the precise graphic arts requirements of each customer. Offerings include: Colorproof, a powerful proofing solution for high-quality output on inkjet and laser printers, Screenproof for color and screen accurate digital proofing on large-format inkjet printers and Remoteproof which allows users to compare and measure color values of proofs created at single or multiple locations.
	•	EFI Print Management Information Software Solutions Our enterprise resource planning and collaborative supply chain software solutions enable printers and print buyers to improve productivity and lower costs. These solutions resulted from our acquisition of Printcafe in late 2003. Products include EFI Hagen OA, Logic, PrintSmith, Printflow and other solutions that improve management information systems for graphic arts and commercial printers of all sizes. These solutions also allow printers to optimize the process of cost estimation and job quotes helping to protect their margins while providing competitive bids on print jobs.
	•	EFI Web Submission and Job Tracking Tools: EFI offers a number of web submission solutions that allow a print buyer to submit a print job along with all the relevant instructions necessary for the printer to properly fulfill the order. These instructions are submitted in the form of an electronic job ticket which travels with the job into the other integrated print shop processes. The customer can track the job status through automated updates and approval requests built into the workflow. Products of this type may be internal enterprise purchasing tools such as Enterprise Site which we acquired in the Printcafe transaction or printer based store front software solutions such as PrinterSite, PrintChannel and PrintSmith Site, also from Printcafe or Digital StoreFront which we received in the T/ R Systems acquisition.

     Enterprise Solutions

      We also offer a variety of solutions for enterprises beyond Fiery print controllers including:

	•	EFI SendMe. Our new scan-to solution offers access to a streamlined digital workflow by quickly and easily transforming paper documents into electronic files for instantaneous delivery or simplified storage.
	•	Intelligent Device Management. Our new IDM solution allows our customers to remotely monitor, manage and service geographically dispersed networked and non-networked printer/copier devices.

Significant Relationships

      We have established and continue to build and expand relationships with our OEM customers and other leading copier and printer companies, in order to benefit from their respective products, distribution channels and marketing resources. These OEMs include domestic and international manufacturers, distributors and sellers of digital copiers (both color and black-and-white), wide-format printers and desktop color printers. We work closely with our OEM customers with the aim of developing solutions that incorporate leading technology and that work optimally in conjunction with such companies’ products. The top 11 revenue-generating OEMs, in alphabetical order, that we sold products to in 2003 include, Canon, Epson, Fuji-Xerox, Hewlett-Packard, Ikon Office Solutions, KonicaMinolta, Océ, Ricoh, Sharp, Toshiba and Xerox. Together, sales to Canon, Xerox and KonicaMinolta accounted for approximately 72% of our 2003 revenue, with sales to each of these three customers accounting for more than 10% of our revenue. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Factors That Could Adversely Affect Performance — We rely on sales to a relatively small number of OEM partners, and to the loss of any of these customers could substantially decrease our revenues.”

      We customarily enter into development and distribution agreements with our OEM customers. These agreements can be terminated under a range of circumstances and often upon relatively short notice. The circumstances under which an agreement can be terminated vary from agreement to agreement and there can be no assurance that our OEM customers will continue to purchase products from us in the future, despite

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      In addition to development and sales relationships with our OEM customers, in order to increase the distribution and presence of our controller solutions connected to both color and black-and-white copiers and wide-format printing devices, we have developed strategic alliances with well-known print-for-pay companies, including Allegra Print and Imaging, AlphaGraphics, American Speedy, Kinko’s, MultiCopy, Inc., OfficeMax, PIP, Sir Speedy, Speedy Printer and Zippy Print and Quik Print. Strategic alliances allow us to enter into agreements to achieve a common goal with companies that have complementary strengths.

      We also have a continuing relationship pursuant to a license agreement with Adobe and license PostScript® software from Adobe for use in many of our controller solutions. This relationship is important because each of our controller solutions requires page description language software such as that provided by Adobe in order to operate. Adobe’s PostScript®software is widely used to manage the geometry, shape and typography of hard copy documents and Adobe is a leader in providing page description software. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Factors That Could Adversely Affect Performance— We license software used in most of our products from Adobe Systems Incorporated and the loss of this license would prevent us from shipping these products.”

Distribution and Marketing

      Our primary distribution method for our controller solutions is to sell them to our OEMs. Our OEMs in turn sell these products to OEM-affiliated and independent distributors/dealers/resellers and end-users for use with the OEMs’ copiers or printers as part of an integrated printing system. For Fiery embedded controller solutions, our primary distribution method has been to sell the products to the OEMs that embed the products into their copiers and printers. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Factors That Could Adversely Affect Performance — We rely on sales to a relatively small number of OEM partners and to the loss of any of these customers could substantially decrease our revenues.”

      Our primary distribution method for our EDOX, DocStream and MicroPress servers; and our EFI Proofing Solutions and EFI Workflow software products is to sell them directly to our authorized distributors/dealers/resellers who in turn sell the solutions to end users either in a stand alone form or bundled with other solutions they offer. Primary partners with whom we have established distribution agreements include Kodak Polychrome Graphics, Enovation, Heidelberg, Screen USA, Pitman, Prestek and others. There can be no assurance that we will continue to successfully distribute our products through these channels. Our Print Management Information Solutions are primarily sold directly to the end user by EFI’s own sales force. Any interruption of the distribution methods could negatively impact us in the future.

      We promote all of our products through public relations, direct mail, advertising, promotional material, trade shows and ongoing customer communication programs.

Research and Development

      Research and development costs for 2003, 2002 and 2001 were $96.7 million, $90.0 million and $98.1 million, respectively. As of December 31, 2003, 675 of our 1,382 full-time employees were involved in

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      We are developing products to support additional color and black-and-white printing devices including desktop printers, high-end color copiers, digital black-and-white copiers and multi-function devices. This ongoing development work includes a multiprocessor architecture for high-end systems and lower-cost designs for desktop color laser printers. We are also developing new software applications designed to maximize workflow efficiencies and to meet the needs of the graphics arts and commercial print professional, including proofing solutions and print management information systems solutions. We also expect to continue to enhance functionality of our other product lines, including our enterprise solutions. See “—Growth and Expansion Strategies — Proliferate and Expand Product Lines.” Substantial additional work and expense will be required to complete and bring to market each of the products currently being developed by us See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Factors That Could Adversely Affect Performance — If we are unable to develop new products, or execute product introductions on a timely basis, our future revenue and operating results may be harmed.”

Manufacturing

      We utilize subcontractors to manufacture our products. These subcontractors work closely with us to promote low costs and high quality in the manufacture of our products. Subcontractors purchase components needed for our products from third parties. We are completely dependent on the ability of our subcontractors to produce products sold by us and although we supervise our subcontractors, there can be no assurance that such subcontractors will continue to perform for us as well as they have in the past. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Factors That Could Adversely Affect Performance — We are dependent on a limited number of subcontractors, with whom we do not have long-term contracts, to manufacture and deliver products to our customers and the loss of any of these subcontractors could adversely affect our business.”

      A significant number of the components necessary for the manufacture of our products are obtained from a sole supplier or a limited group of suppliers. These include processors from Intel and other related semiconductor components. We depend largely on the following sole and limited source suppliers for our components and manufacturing services:

      We do not maintain long-term agreements with any of our suppliers of components and conduct our business with such suppliers solely on a purchase order basis. If any of our sole or limited source suppliers were unwilling or unable to supply us with the components for which we rely on them, we may be unable to continue manufacturing our products utilizing such components. The absence of agreements with our suppliers also subjects us to fluctuations in pricing, a factor we believe is partially offset by the fact that our suppliers benefit from selling as many components to us as possible, which is driven in part by competitive pricing. Many of our components are similar to those used in personal computers, and the demand and price fluctuations of personal computer components could affect our component costs. Because the purchase of key components involves long lead times, in the event of unanticipated volatility in demand for our products, we may be unable to manufacture certain products in a quantity sufficient to meet end user demand, or we may hold excess quantities of inventory. We maintain an inventory of components for which we are dependent upon sole or limited source suppliers and of components with prices that fluctuate significantly.

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Human Resources

      As of December 31, 2003, we employed 1,382 full-time individuals. Of the 1,382 total employees, approximately 349 were in sales and marketing, 169 were in management and administration, 189 were in manufacturing and 675 were in research and development. Of the total number of employees, we had approximately 1,136 employees located in U.S. and Canadian offices and 246 employees located in international offices including employees based in The United Kingdom, The Netherlands, Germany, Japan, France, Italy, Spain, Australia, Korea, Singapore, Brazil, Mexico, Sweden, India, China and Hong Kong. Our employees are not represented by any collective bargaining organization and we have never experienced a work stoppage. However, there can be no assurance that collective bargaining, work stoppage or other employment related issues will not arise.

Competition

      Competition in our markets is intense and involves rapidly changing technologies and frequent new product introductions. To maintain and improve our competitive position, we must continue to develop and introduce, on a timely and cost-effective basis, new products and features that keep pace with the evolving needs of our customers. The principal competitive factors affecting the markets for our controller solutions include, among others, customer service and support, product reputation, quality, performance, price and product features such as functionality, scalability, ability to interface with OEM products and ease of use. We believe we have generally competed effectively in the past against product offerings of our competitors on the basis of such factors. However, there can be no assurance that we will continue to be able to compete effectively in the future based on these or any other competitive factors.

      We currently have two main product categories that support color and black-and-white printing: (i) stand-alone print servers which are connected to digital copiers and other peripheral devices and (ii) embedded and design-licensed solutions which are used in digital copiers and desktop laser printers. Our primary competitor for the stand-alone color servers is Creo although Creo only sells to a single OEM, Xerox, while EFI serves many industry leaders. Our OEM customers themselves, as well as Peerless and Zoran Corporation, are the principal competitors for the embedded and design-licensed color solutions. Our digital black-and-white solutions face competition from Peerless and our OEM customers. Additionally, our OEM customers and other copier and printer manufacturers offer internally developed server products or incorporate internally developed embedded solutions or server features into their copiers and printers, thereby eliminating the need for our products. Our market position vis-a-vis internally-developed controllers is small. We are, however, the largest third party controller vendor. We believe that our advantages include our continuously advancing technology, time-to-market, brand recognition, end-user loyalty, sizable installed base, number of products supported, price and market knowledge. A significant disadvantage is our lack of control of the distribution channels. We do, however, provide a variety of features as well as a unique “look and feel” to our OEMs as required to differentiate their products from those of their competitors.

      Our Professional Printing Applications category, which includes our Workflow, Proofing, Print Management Information Software and Web Submission Tools, faces competition from software application vendors that specifically target the printing industry, which are typically small, privately-owned companies and from larger vendors, such as Heidelberg and SAP, who currently offer or are seeking to develop printer-focused enterprise resource planning products. We believe that the principal competitive factors affecting our market include adoption by significant number of print buyers and printers, product quality and performance, customer service, core technology, product features, price and the value of services. There can be no assurance that we will be able to continue to advance our technology and products or to compete effectively against other companies’ product offerings and any failure to do so could have a material adverse effect upon our business, operating results and financial condition.

Intellectual Property Rights

      We rely on a combination of patent, copyright, trademark and trade secret laws, non-disclosure agreements and other contractual provisions to establish, maintain and protect our intellectual property rights,

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      We have registered certain trademarks, which include, among others, our EFI, EFI and Design, Electronics For Imaging (stylized), Fiery, Fiery and Design, Fiery Driven, Fiery Driven and Design, Fiery Spark and Design, Colorcal, ColorWise, Command Workstation, Bestcolor, EDOX, MicroPress, Mousitometer, Printcafe, PrinterSite, PrintMe, Splash. Spot-On and RIP-While-Print trademarks and have applied for registration of certain additional trademarks, in the United States and/or in foreign jurisdictions. We will continue to evaluate the registration of additional trademarks as appropriate. Any failure by us to properly register or maintain our trademarks or to otherwise take all necessary steps to protect our trademarks may diminish the value associated with our trademarks. Our products include software sold pursuant to “shrink wrap” licenses that are not signed by the end user and, therefore, may be unenforceable under the laws of certain jurisdictions. In addition, the laws of some foreign countries, including several in which we operate or sell our products, do not protect intellectual property and proprietary rights to as great an extent as do the laws of the United States.

      From time to time, litigation may be necessary to defend and enforce our proprietary rights. Such litigation, whether or not concluded successfully for us, could involve significant expense and the diversion of management’s attention and other resources. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Factors That Could Adversely Affect Performance — We may be unable to adequately protect our proprietary information and may incur expenses to defend our proprietary information.”

Risk Factors

      In addition to the above information, a discussion of factors that may adversely affect our future performance and financial results can be found in this Report under the heading “Factors That Could Adversely Affect Performance” in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operation.”

Financial Information About Foreign and Domestic Operations and Export Sales

      See Note 12 of the Notes to Consolidated Financial Statements. See also Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Factors That Could Adversely Affect Performance —We face risks from our international operations and from currency fluctuations.”

Item 2:     Properties

      Our principal offices are located at 303 Velocity Way, Foster City, California on approximately 35 acres of land which we own. The corporate headquarters facility, which we lease, includes approximately 295,000 square feet completed in 1999 and 165,000 square feet of additional facilities completed in 2001. In January 2001 we purchased facilities with approximately 44,000 square feet in Minneapolis, Minnesota. In addition to the Foster City and Minneapolis facilities, we have leased facilities in Parsippany, New Jersey; Vancouver, Washington, Pittsburgh, Pennsylvania, Lebanon, New Hampshire, Phoenix, Arizona, Krefeld, Germany, Bangalore, India and Amsterdam, The Netherlands. We also lease a number of domestic and international sales offices. For additional information on our lease obligations see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.”

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      We believe that our facilities, in general, are adequate for our present and currently foreseeable future needs.

Item 3:     Legal Proceedings.

      Over the past five years, Mr. Jan R. Coyle, an individual living in Nevada, has repeatedly demanded that we buy technology allegedly invented by his company, Kolbet Labs. In December 2001, Mr. Coyle threatened to bring suit against us and our customers for allegedly infringing his soon to be issued patent and for misappropriating his alleged trade secrets. We believe Mr. Coyle’s claims are baseless and without merit. On December 11, 2001, we filed a declaratory relief action in the United States District Court for the Northern District of California, asking the Court to declare that we and our customers have not breached any nondisclosure agreement with Mr. Coyle or Kolbet Labs, nor has it infringed any alleged patent claims or misappropriated any alleged trade secrets belonging to Mr. Coyle or Kolbet Labs through our sale of Fiery, Splash or EDOX print controllers. We also sought an injunction to enjoin both Mr. Coyle and Kolbet Labs from bringing or threatening to bring a lawsuit against us, our suppliers, vendors, customers or users of our products for breach of contract and misappropriation of trade secrets. On March 26, 2002, the Northern District of California Court dismissed our complaint for lack of jurisdiction over Mr. Coyle. We appealed the Court’s dismissal to the Court of Appeals for the Federal Circuit, who reversed the dismissal of our case and remanded it to the Northern District of California. Mr. Coyle and Kolbet Labs subsequently moved to dismiss our complaint under the Declaratory Judgment Act. The Court entered an order granting that dismissal on February 17, 2004. We have filed a notice of appeal for that decision. On the same day, we filed another declaratory relief action in the Northern District of California against Mr. Coyle and Kolbet Labs. We are pursuing our case against Mr. Coyle and Kolbet Labs.

      On February 26, 2002, Coyle’s company, J & L Electronics, filed a complaint against us in the United States District Court for the District of Nevada alleging patent infringement, breach of non-disclosure agreements, misappropriation of trade secrets, violations of federal antitrust law and related causes of action. We denied all of the allegations and management believed this lawsuit to be without merit. On March 28, 2003, the Federal District Judge dismissed the complaint for lack of jurisdiction over us. J & L Electronics appealed the dismissal to the Court of Appeals for the Federal Circuit. On February 9, 2004, the Court of Appeals for the Federal Circuit affirmed the dismissal of the complaint against us.

      On September 16, 2002, ArrivalStar, Inc., a Delaware corporation, filed a complaint in the U.S. District Court for the Northern District of Georgia against fourteen defendants, including us, alleging that each of the defendants has infringed one or more claims of six identified patents owned by ArrivalStar. The named defendants are Delta Air Lines, Inc.; Sabre, Inc.; Travelocity.com, L.L.P.; The City of Atlanta; Worldspan, L.L.P.; Flytecomm Corporation; Centerpost Corporation; Continental Airlines, Inc.; Japan Air Lines Company, Ltd.; American Airlines, Inc.; Roadway Express, Inc.; EFI; American Express Company; and SITA Information Networking Computing USA, Inc. The complaint alleged that the defendants infringe the claims by providing vehicle location communication services, arrival notifications and other related services. We settled this case with ArrivalStar on December 10, 2003 with each side dropping its claims and ArrivalStar furnishing us a covenant not to sue on the technology in suit. The case was dismissed on January 13, 2004, and this action is now concluded.

      On February 13, 2003, we entered into agreements with Printcafe to facilitate a merger between our two companies. On February 19, 2003, Creo Inc. (a Printcafe shareholder) commenced litigation in the Delaware Court of Chancery against us, Printcafe and certain of Printcafe’s principal officers and directors, challenging those agreements and seeking to restrain us and Printcafe from proceeding to enter into any further agreements with respect to a business merger. On February 21, 2003, the Delaware Court of Chancery denied the temporary restraining order sought by Creo. On February 26, 2003 we and Printcafe entered into a merger agreement providing for our acquisition of Printcafe and we completed the acquisition on October 21, 2003. Creo has agreed to dismiss all claims with prejudice. We await approval by the Court of the dismissal.

      On June 25, 2003, a securities class action complaint was filed against Printcafe Software, Inc., now our wholly-owned subsidiary and certain of Printcafe’s officers in the United States District Court for the Western

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      In addition, we are involved from time to time in litigation relating to claims arising in the normal course of our business. We face risks from third party claims of infringement and potential litigation. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Factors That Could Adversely Affect Performance — We face risks from third party claims of infringement and potential litigation.”

Item 4:     Submission of Matters to a Vote of Security Holders.

      None.

PART II

      Our common stock was first traded on the Nasdaq National Market under the symbol EFII on October 2, 1992. The table below lists the high and low sales price during each quarter the stock was traded in 2003 and 2002.

      As of March 3, 2004, there were approximately 266 stockholders of record. Because many of such shares are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.

      We have never paid cash dividends on our capital stock. We currently anticipate that we will retain all available funds for our business and do not anticipate paying any cash dividends in the foreseeable future.

Equity Compensation Plan Information

      Information regarding our equity compensation plans may be found in Item 12 of this annual report on Form 10-K and is incorporated herein by this reference.

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Purchases of Equity Securities

Issuer Purchases of Equity Securities

(1)	On May 29, 2003 we announced the sale of $240.0 million of Convertible Senior Debentures. In the Offering Memorandum we announced that we were using a portion of the net proceeds to purchase 3,135,300 shares of our outstanding common stock at $18.56 per share, including transaction fees, from UBS Warburg, the lead underwriter for the offering.
(2)	On March 21, 2003 we filed a S-4 in connection with our acquisition of Printcafe Software, Inc. In that document we announced that we intended to repurchase approximately the same number of shares of our common stock that we issued in connection with the acquisition. On October 21, 2003 we completed the acquisition of Printcafe and issued 201,897 shares of common stock. In November we began repurchasing shares in the open market.
(3)	On November 18, 2003 we announced that our Board of Directors had approved $50.0 million for the repurchase of our outstanding common stock during the next twelve months.

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Item 6:     Selected Financial Data.

      The following table summarizes selected consolidated financial data as of and for the five years ended December 31, 2003. This information should be read in conjunction with the audited consolidated financial statements and related notes thereto.