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8-K - FORM 8-K - ELECTRONICS FOR IMAGING INCd337372d8k.htm

Exhibit 99.1

 

For more information:         Investor Relations:

Vincent Pilette

      JoAnn Horne

Chief Financial Officer

      Market Street Partners

EFI

      415-445-3235

650-357-3500

     

EFI Reports First Quarter 2012 Results

Revenue Up 14% Fueled by 47% Growth in Industrial Inkjet and 45% Growth in Productivity Software

Foster City, Calif. — April 19, 2012 — Electronics For Imaging, Inc. (Nasdaq: EFII), a world leader in customer-focused digital printing innovation, today announced its results for the first quarter of 2012.

For the quarter ended March 31, 2012, the Company reported revenue of $160.1 million, up 14% compared to first quarter 2011 revenue of $140.1 million. First quarter 2012 non-GAAP net income was $14.2 million or $0.30 per diluted share, compared to non-GAAP net income of $13.5 million or $0.28 per diluted share for the same period in 2011. GAAP net income was $6.2 million or $0.13 per diluted share, compared to $6.2 million or $0.13 per diluted share for the same period in 2011.

“Our team delivered another great quarter, marking EFI’s ninth consecutive quarter of double-digit revenue growth, along with record inkjet, software, and recurring revenues,” said Guy Gecht, CEO of EFI. “We are very pleased with the solid execution in our seasonally low quarter and ahead of the industry’s largest tradeshow. At drupa we are set to unveil some amazing new technology that enables our customers to transform their businesses to target the growth areas of print and optimize their operations.”

For the second quarter of 2012, the company is expecting approximately 15% year-over-year revenue growth.

EFI will discuss the Company’s financial results by conference call at 2:00 p.m. PDT today. Instructions for listening to the conference call over the Web are available on the investor relations portion of EFI’s website at www.efi.com.

About EFI

EFITM (www.efi.com) is a worldwide provider of products, technology, and services leading the transformation of analog to digital imaging. Based in Silicon Valley with offices around the globe, the company’s powerful integrated product portfolio includes digital front-end servers; superwide, wide-format, label, and ceramic inkjet presses and inks; production workflow, web-to-print, and business automation software; and office, enterprise, and mobile cloud solutions. These products allow users to produce, communicate and share information in an easy and effective way, and enable businesses to increase their profits, productivity, and efficiency.

 

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Safe Harbor for Forward Looking Statements

Certain statements in this press release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements other than statements of historical fact including words such as “anticipate”, “believe”, “estimate”, “expect”, “consider” and “plan” and statements in the future tense are forward looking statements. The statements in this press release that could be deemed forward-looking statements include statements regarding EFI’s strategy, plans, expectations regarding its revenue growth and new technology, and any statements or assumptions underlying any of the foregoing.

Forward-looking statements are subject to certain risks and uncertainties that could cause our actual future results to differ materially, or cause a material adverse impact on our results. Potential risks and uncertainties include, but are not necessarily limited to, unforeseen expenses; the difficulty of aligning expense levels with revenue; management’s ability to forecast revenues, expenses and earnings; any world-wide financial and economic difficulties and downturns; adverse tax-related matters such as tax audits, changes in our effective tax rate or new tax legislative proposals; the unpredictability of development schedules and commercialization of products by the leading printer manufacturers and declines or delays in demand for our related products; changes in the mix of products sold; the uncertainty of market acceptance of new product introductions; intense competition in each of our businesses, including competition from products developed by EFI’s customers; challenge of managing asset levels, including inventory and variations in inventory levels; the uncertainty of continued success in technological advances; the challenges of obtaining timely, efficient and quality product manufacturing and components supplying; litigation involving intellectual property rights or other related matters; our ability to successfully integrate acquired businesses; and any other risk factors that may be included from time to time in the Company’s SEC reports.

The statements in this press release are made as of the date of this press release. EFI undertakes no obligation to update information contained in this press release. For further information regarding risks and uncertainties associated with EFI’s businesses, please refer to the section entitled “Risk Factors” in the Company’s SEC filings, including, but not limited to, its annual report on Form 10-K and its quarterly reports on Form 10-Q, copies of which may be obtained by contacting EFI’s Investor Relations Department by phone at 650-357-3828 or by email at investor.relations@efi.com or EFI’s Investor Relations website at www.efi.com.

Use of Non-GAAP Financial Information

To supplement our condensed consolidated financial results prepared under generally accepted accounting principles, or GAAP, we use non-GAAP measures of net income (loss), as the case may be, and earnings per diluted share that are GAAP net income (loss), as the case may be, and GAAP earnings per diluted share adjusted to exclude certain recurring and non-recurring costs, expenses and gains. A reconciliation of the adjustments to GAAP results for the three months ended March 31, 2012 and 2011 is provided below. In addition, an explanation of how management uses non-GAAP financial information to evaluate its business, the substance behind management’s decision to use this non-GAAP financial information, the material limitations associated with the use of non-GAAP financial information, the manner in which management compensates for those limitations, and the substantive reasons management believes that this non-GAAP financial information provides useful information to investors is included under “About our Non-GAAP Net Income and Adjustments” after the tables below.

These non-GAAP measures are not in accordance with or an alternative to GAAP and may be materially different from other non-GAAP measures, including similarly titled non-GAAP measures, used by other companies. The presentation of this additional information should not be considered in isolation from, as a substitute for, or superior to, net income (loss), as the case may be, or earnings per diluted share prepared in accordance with GAAP.

 

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Electronics For Imaging, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

 

     Three Months Ended
March 31,
 
     2012     2011  

Revenue

   $ 160,056      $ 140,053   

Cost of revenue

     72,389        61,342   
  

 

 

   

 

 

 

Gross profit

     87,667        78,711   

Operating expenses:

    

Research and development

     30,899        27,471   

Sales and marketing

     30,917        28,248   

General and administrative

     12,902        13,157   

Amortization of identified intangibles

     4,184        3,420   

Restructuring and other

     1,084        1,347   
  

 

 

   

 

 

 

Total operating expenses

     79,986        73,643   
  

 

 

   

 

 

 

Income from operations

     7,681        5,068   

Interest and other income, net

     570        2,396   
  

 

 

   

 

 

 

Income before income taxes

     8,251        7,464   

Provision for income taxes

     (2,017     (1,215
  

 

 

   

 

 

 

Net income

   $ 6,234      $ 6,249   
  

 

 

   

 

 

 

Fully Diluted EPS calculation

    

Net income

   $ 6,234      $ 6,249   
  

 

 

   

 

 

 

Net income per diluted common share

   $ 0.13      $ 0.13   
  

 

 

   

 

 

 

Shares used in diluted per share calculation

     47,359        48,445   
  

 

 

   

 

 

 

 

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Electronics For Imaging, Inc.

Reconciliation of GAAP Net Income to Non-GAAP Net Income

(in thousands, except per share data)

(unaudited)

 

     Three Months Ended
March 31,
 
     2012     2011  

Net income

   $ 6,234      $ 6,249   
  

 

 

   

 

 

 

Amortization of identified intangibles

     4,184        3,420   

Stock based compensation expense — Cost of revenue

     298        236   

Stock based compensation expense — Research and development

     1,563        877   

Stock based compensation expense — Sales and marketing

     756        885   

Stock based compensation expense — General and administrative

     2,049        3,173   

Acquisition-related transaction costs

     451        600   

Restructuring and other

     1,084        1,347   
  

 

 

   

 

 

 

Tax effect of non-GAAP adjustments

     (2,457     (3,285
  

 

 

   

 

 

 

Non-GAAP net income

   $ 14,162      $ 13,502   
  

 

 

   

 

 

 

Non-GAAP net income per diluted common share

   $ 0.30      $ 0.28   
  

 

 

   

 

 

 

Shares used in per share calculation

     47,359        48,445   
  

 

 

   

 

 

 

 

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Electronics For Imaging, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

     March 31,
2012
     December 31,
2011
 

Assets

     

Cash and cash equivalents

   $ 113,668       $ 120,058   

Short-term investments

     89,762         99,100   

Accounts receivable, net

     119,516         91,923   

Inventories

     56,494         44,788   

Other current assets

     34,898         20,792   
  

 

 

    

 

 

 

Total current assets

     414,338         376,661   

Property and equipment, net

     30,610         30,096   

Restricted investments

     56,850         56,850   

Goodwill

     188,927         164,323   

Intangible assets, net

     74,441         55,992   

Other assets

     53,732         55,812   
  

 

 

    

 

 

 

Total assets

   $ 818,898       $ 739,734   
  

 

 

    

 

 

 

Liabilities & Stockholders’ equity

     

Accounts payable

   $ 59,259       $ 46,965   

Accrued and other liabilities

     112,038         82,289   

Income taxes payable

     4,414         2,583   
  

 

 

    

 

 

 

Total current liabilities

     175,711         131,837   

Contingent and other liabilities

     12,503         3,427   

Deferred tax liabilities

     11,416         4,090   

Long term taxes payable

     37,702         35,597   
  

 

 

    

 

 

 

Total liabilities

     237,332         174,951   

Total stockholders’ equity

     581,566         564,783   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 818,898       $ 739,734   
  

 

 

    

 

 

 

 

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Electronics For Imaging, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

     Three Months Ended
March 31,
 
     2012     2011  

Cash flows from operating activities:

    

Net income

   $ 6,234      $ 6,249   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

     6,139        5,397   

Deferred taxes

     602        36   

Excess tax benefit from stock-based compensation

     (385     (614

Stock-based compensation

     4,666        5,171   

Other non-cash charges and adjustments

     2,524        3,366   

Changes in operating assets and liabilities

     (10,161     (8,481
  

 

 

   

 

 

 

Net cash provided by operating activities

     9,619        11,124   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Purchases of short-term investments

     (20,415     (32,287

Proceeds from sales and maturities of short-term investments

     29,298        33,936   

Purchases, net of proceeds from sales, of property and equipment

     (1,307     (2,655

Businesses purchased, net of cash acquired

     (28,759     (11,044

Proceeds from collection of notes receivable of acquired business

     5,216        713   
  

 

 

   

 

 

 

Net cash used for investing activities

     (15,967     (11,337
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Proceeds from issuance of common stock

     6,094        3,337   

Purchases of treasury stock and net settlement of restricted stock

     (1,680     (6,057

Repayment of acquired business debt

     (5,547     (210

Excess tax benefit from stock-based compensation

     385        614   
  

 

 

   

 

 

 

Net cash used for financing activities

     (748     (2,316
  

 

 

   

 

 

 

Effect of foreign exchange rate changes on cash and cash equivalents

     706        105   
  

 

 

   

 

 

 

Decrease in cash and cash equivalents

     (6,390     (2,424

Cash and cash equivalents at beginning of year

     120,058        126,363   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 113,668      $ 123,939   
  

 

 

   

 

 

 

 

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Electronics For Imaging, Inc.

Revenue by Operating Segment and Geographic Area

(in thousands)

(unaudited)

 

     Three Months Ended  
     March 31,  
     2012      2011  

Revenue by Operating Segment

     

Industrial Inkjet

   $ 75,092       $ 51,035   

Productivity Software (1)

     24,069         16,654   

Fiery

     60,895         72,364   
  

 

 

    

 

 

 

Total

   $ 160,056       $ 140,053   
  

 

 

    

 

 

 

Revenue by Geographic Area

     

Americas

   $ 82,181       $ 74,192   

EMEA

     55,126         44,538   

APAC

     22,749         21,323   

Japan

     6,952         11,821   

ROW

     15,797         9,502   
  

 

 

    

 

 

 

Total

   $ 160,056       $ 140,053   
  

 

 

    

 

 

 

 

(1)    

Previously referred to as APPS. In Q1 2012, we changed the name of our APPS operating segment to “Productivity Software.”

 

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About our Non-GAAP Net Income and Adjustments

Use of Non-GAAP Financial Information

To supplement our condensed consolidated financial results prepared in accordance with GAAP, we use non-GAAP measures of net income and earnings per diluted share that are GAAP net income and GAAP earnings per diluted share adjusted to exclude certain recurring and non-recurring costs, expenses, and gains.

We believe that the presentation of non-GAAP net income and non-GAAP earnings per diluted share provides important supplemental information regarding non-cash expenses, significant recurring and non-recurring items that we believe are important to understanding our financial and business trends relating to our financial condition and results of operations. Non-GAAP net income and non-GAAP earnings per diluted share are among the primary indicators used by management as a basis for planning and forecasting future periods and by management and our board of directors to determine whether our operating performance has met specified targets and thresholds. Management uses non-GAAP net income and non-GAAP earnings per diluted share when evaluating operating performance because it believes that the exclusion of the items described below, for which the amounts and/or timing may vary significantly depending upon the Company’s activities and other factors, facilitates comparability of the Company’s operating performance from period to period. We have chosen to provide this information to investors so they can analyze our operating results in the same way that management does and use this information in their assessment of our business and the valuation of our Company.

Use and Economic Substance of Non-GAAP Financial Measures

We compute non-GAAP net income and non-GAAP earnings per diluted share by adjusting GAAP net income and GAAP earnings per diluted share to remove the impact of recurring amortization of acquisition-related intangibles and stock-based compensation expense, as well as restructuring related and non-recurring charges and gains and the tax effect of these adjustments. Such non-recurring charges and gains include acquisition-related transaction costs and costs to integrate such acquisitions into our business.

 

   

Recurring charges and gains, including:

 

   

Amortization of acquisition-related intangibles. Intangible assets acquired to date are being amortized on a straight-line basis.

 

   

Other acquisition-related expenses, which are included within Restructuring and other.

 

   

Stock-based compensation expense recognized in accordance with FASB Accounting Standards Codification (“ASC”), Topic 718, Stock Compensation.

 

   

Non-recurring charges and gains consists of:

 

   

Restructuring related charges.

 

   

We have incurred Restructuring and other charges as we reduced the number and size of our facilities and the size of our workforce.

 

   

Expenses incurred to integrate businesses acquired during the periods reported.

 

   

Acquisition-related transaction costs associated with businesses acquired during the periods reported and anticipated transactions.

 

   

Tax effect of non-GAAP adjustments.

 

   

After excluding the items described above, we apply the principles of ASC 740, Income Taxes, to estimate the non-GAAP income tax provision in each jurisdiction in which we operate. The expected annual non-GAAP income tax rate assumes that the U.S. federal research and development tax credit will be retroactively re-enacted in 2012.

 

   

We have excluded the recognition of interest expense accrued on prior year tax reserves of $0.1 million from our non-GAAP net income for the three months ended March 31, 2012 and 2011 to facilitate comparability of our operating performance from period to period.

 

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Usefulness of Non-GAAP Financial Information to Investors

These non-GAAP measures are not in accordance with or an alternative to GAAP and may be materially different from other non-GAAP measures, including similarly titled non-GAAP measures, used by other companies. The presentation of this additional information should not be considered in isolation from, as a substitute for, or superior to, net income or earnings per diluted share prepared in accordance with GAAP. Non-GAAP financial measures have limitations in that they do not reflect certain items that may have a material impact upon our reported financial results. We expect to continue to incur expenses of a nature similar to the non-GAAP adjustments described above, and exclusion of these items from our non-GAAP net income and non-GAAP earnings per diluted share should not be construed as an inference that these costs are unusual, infrequent, or non-recurring.

 

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