10-Q/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment Number 2
to

FORM 10-Q

[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2003

OR

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 0-18805

ELECTRONICS FOR IMAGING, INC.

(Exact name of registrant as specified in its charter)

Delaware	94-3086355
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

303 Velocity Way, Foster City, CA 94404
(Address of principal executive offices, including zip code)

(650) 357 - 3500
(Registrant’s telephone number, including area code)

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 [X] No [   ]

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

The number of shares of Common Stock outstanding as of November 4 was 53,973,462.

An Exhibit Index can be found on Page 16.

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION
	ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
		Condensed Consolidated Balance Sheets
		Condensed Consolidated Statements of Income
		Condensed Consolidated Statements of Cash Flows
		Notes to Condensed Consolidated Financial Statements
	ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
EXHIBIT INDEX*
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2
EXHIBIT 99.1
EXHIBIT 99.2

ELECTRONICS FOR IMAGING, INC.

INDEX

		Page No.
PART I – Financial Information
Item 1. Condensed Consolidated Financial Statements
	Condensed Consolidated Balance Sheets
	September 30, 2003 and December 31, 2002		3
	Condensed Consolidated Statements of Income
	Three and Nine Months Ended September 30, 2003 and 2002		4
	Condensed Consolidated Statements of Cash Flows
	Nine Months Ended September 30, 2003 and 2002		5
	Notes to Condensed Consolidated Financial Statements		6
PART II – Other Information
Item 6. Exhibits and Reports on Form 8-K			15
Signatures			15

2

Preliminary Note

This amendment to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003 is being filed to include the Printcafe Software unaudited condensed consolidated financial statements for the quarter ended September 30, 2003. In addition, this amendment includes updated unaudited pro forma condensed consolidated financial statements for EFI as of September 30, 2003. These items are included as Exhibits 99.1 and 99.2, respectively. No revisions other than those previously listed have been made to the Registrant’s financial statements or any other disclosure contained in such report.

PART I FINANCIAL INFORMATION

     ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Electronics for Imaging, Inc.
Condensed Consolidated Balance Sheets

		September 30,			December 31,
		2003			2002
(in thousands, except per share amounts)		(unaudited)
Assets
Current assets:
Cash and cash equivalents		$	172,812		$	153,905
Short-term investments			479,602			344,465
Restricted cash and short-term investments			69,486			—
Accounts receivable, net			42,848			42,267
Inventories			4,232			4,125
Other current assets			28,540			18,053
Total current assets			797,520			562,815
Property and equipment, net			49,829			53,187
Restricted investments			43,080			43,080
Goodwill			49,140			43,552
Intangible assets, net			18,853			17,386
Other assets			13,034			7,086
	Total assets	$	971,456		$	727,106
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	17,440		$	13,067
Accrued and other liabilities			45,729			47,353
Income taxes payable			35,512			32,341
Total current liabilities			98,681			92,761
Long-term obligations			240,249			278
Commitments and contingencies (Note 10)
	Total liabilities		338,930			93,039
Stockholders’ equity:
Preferred stock, $0.01 par value, 5,000 shares authorized; none issued and outstanding			—			—
Common stock, $0.01 par value; 150,000 shares authorized; 53,311 and 54,569 shares issued and outstanding, respectively			609			590
Additional paid-in capital			303,507			272,456
Treasury stock, at cost, 7,613 and 4,478 shares, respectively			(158,150	)		(99,959	)
Accumulated other comprehensive income			1,238			1,991
Retained earnings			485,322			458,989
Total stockholders’ equity			632,526			634,067
	Total liabilities and stockholders’ equity	$	971,456		$	727,106

     See accompanying notes to condensed consolidated financial statements.

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Electronics for Imaging, Inc.
Condensed Consolidated Statements of Income
(unaudited)

			Three Months Ended						Nine Months Ended
			September 30,						September 30,
			2003			2002			2003			2002
(In thousands, except per share amounts)
Revenue			$	97,330		$	92,652		$	271,734		$	259,476
	Cost of revenue			37,652			43,444			109,139			126,871
Gross profit				59,678			49,208			162,595			132,605
	Operating expenses:
		Research and development		23,725			22,998			69,807			68,422
		Sales and marketing		14,746			12,833			44,659			37,583
		General and administrative		5,518			5,424			15,510			16,358
		Amortization of identified intangibles and other acquisition-related expense		1,330			1,144			5,208			3,246
	Total operating expenses			45,319			42,399			135,184			125,609
Income from operations				14,359			6,809			27,411			6,996
	Interest and other income, net			1,854			2,760			7,094			8,984
	Litigation settlement income (charges)			1,568			(4,409	)		1,568			(4,409	)
Income before income taxes				17,781			5,160			36,073			11,571
	Provision for income taxes			(4,801	)		(1,548	)		(9,740	)		(3,471	)
Net income			$	12,980		$	3,612		$	26,333		$	8,100
Net income per basic common share			$	0.25		$	0.07		$	0.49		$	0.15
Shares used in per-share calculation				52,467			54,308			53,734			54,173
Net income per diluted common share			$	0.24		$	0.07		$	0.48		$	0.15
Shares used in per-share calculation				53,594			54,659			54,569			54,794

See accompanying notes to condensed consolidated financial statements.

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Electronics for Imaging, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)

				Nine Months Ended
				September 30,
				2003			2002
(In thousands)
Cash flows from operating activities:
Net income				$	26,333		$	8,100
Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization			11,911			11,270
		In-process research and development expense			1,220			—
		Bad debt reserve			(170	)		(124	)
		Deferred income taxes			(3,157	)		376
	Changes in operating assets and liabilities:
		Accounts receivable			681			(4,650	)
		Inventories			37			4,271
		Receivable from subcontract manufacturers			(3,134	)		(1,140	)
		Other current assets			(6,274	)		1,431
		Accounts payable and accrued liabilities			656			(837	)
		Income taxes payable			3,195			3,991
			Net cash provided by operating activities		31,298			22,688
Cash flows from investing activities:
	Purchases and sales/maturities of short-term investments, net				(136,654	)		(25,051	)
	Net purchases of restricted cash and investments				(167	)		(2,945	)
	Reclassification of cash & short-term investments to restricted cash & short-term investments				(69,320	)		—
	Investment in property and equipment, net				(3,889	)		(7,874	)
	Acquisition of subsidiary				(8,936	)		(1,870	)
	Change in other assets				189			433
			Net cash used for investing activities		(218,777	)		(37,307	)
Cash flows from financing activities:
	Repayment of long-term obligation				(29	)		(24	)
	Issuance of long-term debt, net				233,500			—
	Issuance of common stock				31,071			7,037
	Repurchase of common stock				(58,191	)		—
			Net cash provided by financing activities		206,351			7,013
Effect of exchange rate changes on cash and cash equivalents					35			—
Increase (decrease) in cash and cash equivalents					18,907			(7,606	)
Cash and cash equivalents at beginning of year					153,905			190,816
Cash and cash equivalents at end of period				$	172,812		$	183,210

See accompanying notes to condensed consolidated financial statements.

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Electronics for Imaging, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)

1. Basis of Presentation

The unaudited interim condensed consolidated financial statements of Electronics for Imaging, Inc., a Delaware corporation (the “Company”), as of and for the interim periods ended September 30, 2003, have been prepared on the same basis as the audited consolidated financial statements as of and for the year ended December 31, 2002, contained in the Company’s Annual Report to Stockholders on Form 10-K, as amended. In the opinion of management, the unaudited interim condensed consolidated financial statements of the Company include all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial position of the Company and the results of its operations and cash flows, in accordance with accounting principles generally accepted in the United States of America. The interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements referred to above and the notes thereto. Certain prior year balances have been reclassified to conform with the current year presentation.

The preparation of the interim condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the interim condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates.

The interim results of the Company are subject to fluctuation. As a result, the Company believes the results of operations for the interim periods ended September 30, 2003 are not necessarily indicative of the results to be expected for any other interim period or the full year.

2. Recent Accounting Pronouncements

SFAS 148

In December 2002, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure. This Statement amends SFAS No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this Statement amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The disclosure provisions of this Standard are effective for fiscal years and interim periods beginning after December 15, 2002.

		Three months ended						Nine months ended
		September 30,						September 30,
		2003			2002			2003			2002
(in thousands, except per share amounts)
Net income	As reported	$	12,980		$	3,612		$	26,333		$	8,100
Total stock-based employee compensation expense determined under the fair value based method for all awards, net of related tax effects			(3,431	)		(6,661	)		(10,941	)		(20,555	)
Net income (loss)	Pro forma	$	9,549		$	(3,049	)	$	15,392		$	(12,455	)
Earnings (loss) per basic common share	As reported	$	0.25		$	0.07		$	0.49		$	0.15
	Pro forma	$	0.18		$	(0.06	)	$	0.29		$	(0.23	)
Earnings (loss) per diluted common share	As reported	$	0.24		$	0.07		$	0.48		$	0.15
	Pro forma	$	0.18		$	(0.06	)	$	0.28		$	(0.23	)

SFAS 149

In December 2002, the FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. This Statement amends SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities,

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to provide clarification on the financial accounting and reporting of derivative instruments and hedging activities. We do not anticipate that SFAS No. 149 will have a material impact on our financial condition or results of operation.

SFAS 150

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. SFAS No. 150 establishes standards on the classification and measurement of financial instruments with characteristics of both liabilities and equity. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, or otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The implementation of the pronouncement has not had a material impact on our financial condition or results of operations.

FASB Interpretation No. 46

In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities (“FIN 46”). The primary objectives of FIN 46 are to provide guidance on the identification of entities for which control is achieved through means other than through voting rights (“variable interest entities” or “VIEs”) and how to determine when and which business enterprise should consolidate the VIE (the “primary beneficiary”). This new model for consolidation applies to an entity in which either (1) the equity investors (if any) do not have a controlling financial interest or (2) the equity investment at risk is sufficient to finance that entity’s activities without receiving additional subordinated financial support from other parties. In addition, FIN 46 requires that both the primary beneficiary and all other enterprises with a significant variable interest in a VIE make additional disclosures regarding the nature, purpose, size and activities of the VIE and the enterprise’s maximum exposure to loss as a result of its involvement with the VIE. The interpretation is effective immediately for any VIEs created after January 31, 2003 and for VIEs in which an enterprise obtains an interest after that date. The interpretation is effective for interim or annual periods commencing after December 15, 2003 for pre-existing VIEs. Based upon our analysis, the implementation of the interpretation will not have any material impact on our financial statements.

3. Accounting for Derivative Instruments and Hedging

SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS No. 137, Accounting for Derivative Instruments and Hedging Activities — Deferral of the Effective Date of FASB Statement No. 133, and SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities, an Amendment of SFAS No. 133 requires companies to reflect the fair value of all derivative instruments, including those embedded in other contracts, as assets or liabilities in an entity’s balance sheet. The Company had no such derivative or hedging instruments outstanding as of September 30, 2003.

4. Comprehensive Income

The Company’s comprehensive income, which encompasses net income, market valuation adjustments and currency translation adjustments, is as follows:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2003			2002			2003			2002
(In thousands, unaudited)
Net income	$	12,980		$	3,612		$	26,333		$	8,100
Market valuation of investments, net of tax		(512	)		304			(1,517	)		617
Currency translation adjustment		(228	)		(4	)		764			16
Comprehensive Income	$	12,240		$	3,912		$	25,580		$	8,733

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5. Earnings Per Share

The following table represents unaudited disclosures of basic and diluted earnings per share for the periods presented below:

		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2003		2002		2003		2002
(in thousands, except per share amounts, unaudited)
Net income available to common shareholders		$	12,980	$	3,612	$	26,333	$	8,100
Shares
	Basic shares		52,467		54,308		53,734		54,173
	Effect of dilutive securities		1,127		351		835		621
Diluted Shares			53,594		54,659		54,569		54,794
Earnings per common share
	Basic EPS	$	0.25	$	0.07	$	0.49	$	0.15
	Diluted EPS	$	0.24	$	0.07	$	0.48	$	0.15

Anti-dilutive weighted average shares of common stock of 4,881,344 and 5,093,311 as of September 30, 2003 and 2002, respectively, have been excluded from the effect of dilutive securities because the options’ exercise prices were greater than the average market price of the common stock for the periods then ended. The convertible debentures issued June 4, 2003 are considered contingently convertible securities and were excluded from the earnings per share calculations for all periods presented. The debentures represent 9,084,192 potential shares of common stock issuable upon conversion.

6. Acquisitions

Best GmbH

In January 2003 the Company acquired Best GmbH, a German-based software company that provides proofing products for worldwide print and publishing markets for approximately $9.3 million in cash. The acquisition was accounted for as a purchase business combination and accordingly, the purchase price has been allocated to the tangible and identifiable intangible assets acquired and liabilities assumed on the basis of their fair values on the date of acquisition. The following table summarizes the allocation of the purchase price to assets acquired and liabilities assumed:

(in thousands)
Fair value of assets acquired and liabilities assumed	$	36
In-process research and development		1,220
Developed technology		2,080
Trademarks and trade names, license and distributor relationships		2,860
Deferred tax liability related to assets acquired		(1,952	)
Goodwill		5,034
	$	9,278

The intangible assets consist of developed technology, trademarks and trade names, licenses and distributor relationships. The amount allocated to the purchased in-process research and development (“IPR&D”) was determined using established valuation techniques and was expensed upon acquisition because technological feasibility had not been established and no future alternative uses existed. The value of this IPR&D was determined by estimating the costs to develop the purchased IPR&D into a commercially viable product, estimating the resulting net cash flows from the sale of the products resulting from the completion of the IPR&D and discounting the net cash flows back to their present value at rates ranging from 25% to 30%. The excess of the purchase price over tangible and identifiable intangible assets acquired and liabilities

8

assumed has been recorded as goodwill. The intangible assets are being amortized over estimated useful lives of 5 to 10 years.

Printcafe Software, Inc.

On October 21, 2003, the shareholders of Printcafe Software Inc. approved the merger between Printcafe and the Company. The purchase price was approximately $33.5 million, paid in cash and common stock of the Company. Approximately 12.8 million shares of Printcafe common stock were issued and outstanding on that date. Approximately 8.8 million shares of Printcafe common stock were redeemed for $2.60 per share, and approximately 1.9 million shares were exchanged for approximately 0.2 million shares of the Company common stock. The remaining 2.1 million shares of stock, acquired by the Company for $5.5 million earlier in 2003, were cancelled. See Note 10, Commitments and Contingencies, for a discussion of the lawsuits filed by Creo, Inc. related to the merger.

T/R Systems, Inc.

On November 3, 2003, the Company acquired T/R Systems, Inc. for approximately $20.7 million in cash. We anticipate that the valuation of the acquired technology of T/R Systems, Inc. will be completed during the fourth quarter of 2003.

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7. Balance Sheet Components

(in thousands)		September 30, 2003			December 31, 2002
Accounts receivable:
	Accounts receivable	$	44,074		$	43,505
	Less reserves and allowances		(1,226	)		(1,238	)
		$	42,848		$	42,267
Inventories:
	Raw materials	$	2,348		$	2,295
	Finished goods		1,884			1,830
		$	4,232		$	4,125
Other current assets:
	Deferred income taxes, current portion	$	14,301		$	13,260
	Receivable from subcontract manufacturers		4,693			1,559
	Investment in Printcafe		5,737			—
	Other		3,809			3,234
		$	28,540		$	18,053
Property and equipment:
	Land, building and improvements	$	41,457		$	41,349
	Equipment and purchased software		43,503			41,121
	Furniture and leasehold improvements		12,922			12,544
			97,882			95,014
	Less accumulated depreciation and amortization		(48,053	)		(41,827	)
		$	49,829		$	53,187
Other assets:
	Debt issuance costs, net	$	6,046		$	—
	Deferred income taxes, non-current, net of valuation		6,297			6,238
	Other		691			848
		$	13,034		$	7,086

		September 30, 2003		December 31, 2002
Accrued and other liabilities:
	Accrued compensation and benefits	$	13,522	$	15,585
	Deferred revenue		2,412		3,501
	Accrued warranty provision		2,079		2,515
	Accrued royalty payments		7,435		7,933
	Other accrued liabilities		20,281		17,819
		$	45,729	$	47,353

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8. Goodwill and Other Identified Intangible Assets

	September 30, 2003					December 31, 2002
	Gross					Gross
	Carrying		Accumulated			Carrying		Accumulated
(in thousands)	Amount		Amortization			Amount		Amortization
Goodwill	$	59,419	$	(10,279	)	$	53,831	$	(10,279	)
Acquired technology	$	23,109	$	(8,926	)	$	20,800	$	(6,253	)
Trademarks and trade names		6,266		(4,287	)		6,000		(3,161	)
Other intangible assets		2,909		(218	)		—		—
Amortizable intangible assets	$	32,284	$	(13,431	)	$	26,800	$	(9,414	)

As required under SFAS 142, the Company has performed an annual review and has determined that no impairments need to be recorded against the goodwill account at this time.

Aggregate amortization expense was $1.3 million and $4.0 million for the three and nine months ended September 30, 2003, respectively and $1.1 million and $3.2 million for the three and nine months ended September 30, 2002, respectively. As of September 30, 2003 future estimated amortization expense related to intangible assets is estimated to be:

	(in thousands)
2003	$	1,296
2004		4,841
2005		3,809
2006		3,809
2007 and thereafter		4,049

9. Long-term Debt

On June 4, 2003 the Company issued $240.0 million convertible senior debentures due in 2023 (the “Debentures”). The Debentures were offered only to qualified institutional buyers in reliance on the exemption from registration provided by Rule 144A. The Debentures are unsecured senior obligations of the Company, paying interest semi-annually in arrears at an annual rate of 1.50%. Additional interest at a rate of 0.35% per annum will be paid under certain conditions, beginning in the sixth year after issuance. The Debentures are convertible before maturity into shares of EFI common stock at a conversion price of approximately $26.42 per share of common stock but only upon the stock trading at or above $31.70 per share for 20 consecutive trading days during the last 30 consecutive trading days of the preceding fiscal quarter, or upon the occurrence of certain other specified events. The Company may redeem the Debentures at its option, on or after June 1, 2008 at a redemption price equal to par plus accrued interest, if any. In addition, holders of the Debentures may require the Company to repurchase all or some of the Debentures on June 1, 2008, 2013 and 2018 at a price equal to 100% of the principal amount plus accrued interest, including contingent interest, if any. The Company will pay the repurchase price for any debentures repurchased on June 1, 2008 in cash, but may choose to pay the repurchase price in cash, common stock of the Company, or any combination thereof in 2013 and 2018. Additionally, a holder may require us to repurchase all or a portion of that holder’s debentures if a fundamental change, as defined in the indenture, occurs prior to June 1, 2008 at 100% of their principal amount, plus any accrued and unpaid interest, including contingent interest, if any. We may choose to pay the repurchase price in cash, common stock of the Company, or any combination thereof. A registration statement on Form S-3 was filed with respect to the resale of the Debentures and the shares of common stock issuable upon conversion of the Debentures with the Securities and Exchange Commission on August 29, 2003. As of the filing of this document the registration statement was not deemed effective.

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	September 30,		December 31,
(in thousands)	2003		2002
1.50% convertible debentures due June 1, 2023, with interest payable semi-annually on June 1 and December 1	$	240,000	$	—
Bonds due to City of Foster City, variable interest rate, interest and principal payments due semi-annually		249		278
	$	240,249	$	278

Maturities of long-term debt are approximately $58 thousand per year for the next five years.

10. Commitments and Contingencies

Off-Balance Sheet Financing - Synthetic Lease Arrangement

In 1997, the Company purchased a 35-acre parcel of land in Foster City, California and began development of a corporate campus. In July 1999 the Company completed construction of a ten-story, 295,000 square foot building funded under a lease agreement entered into in 1997 (the “1997 Lease”) and began making rent payments. Also in conjunction with the 1997 Lease, the Company has entered into a separate ground lease with the lessor of the building for approximately 35 years at a nominal rate. If the Company does not renew the 1997 Lease, the ground lease converts to a market rate.

In December 1999 the Company entered into a second lease agreement (the “1999 Lease” and together with the 1997 Lease, the “Leases”) to lease additional buildings, to be constructed adjacent to the first building discussed above. A 165,000 square foot building was completed in December 2001 at a cost of approximately $43.1 million. Rent obligations for the 1999 Lease began in January 2002 and bear a direct relationship to the funded amount, as described below. In connection with the 1999 Lease, the Company entered into a separate ground lease of the related parcels of land in Foster City with the lessor of the buildings at a nominal rate and for a term of 30 years. If the Company does not renew the 1999 Lease, the ground lease converts to a market rate.

Each Lease has an initial term of seven years, with an option to renew subject to certain conditions. The Company may, at its option, purchase the facilities during or at the end of the term of the lease for the amount expended by the respective lessor to construct the facilities ($56.8 million for the 1997 Lease and $43.1 million for the 1999 Lease). The Company has guaranteed to the lessors a residual value associated with the buildings equal to approximately 82% of their funding. The Company may be liable to the lessor for the amount of the residual guarantee if it either fails to renew the lease or does not purchase or locate a purchaser for the leased building at the end of the lease term. During the term of each of the Leases, the Company must meet certain financial covenant requirements related to cash to debt, fixed charge coverage ratio, leverage ratio and consolidated tangible net worth as defined by the underlying agreements. If the Company maintains pledged collateral, then a limited subset of these covenants must be met. The tangible net worth financial covenant requires that the Company maintain a minimum tangible net worth as of the end of each quarter. There are other covenants regarding mergers, liens and judgments, and lines of business. The Company was in compliance with all of the covenants, either directly, or through the existence of the pledged collateral as of September 30, 2003. The pledged collateral under the 1997 Lease ($69.5 million at September 30, 2003) has been classified as restricted cash and short-term investments. The Company is liable to the lessor for the full purchase amount of the buildings if it defaults on its covenants ($56.8 million for the 1997 Lease and $43.1 million for the 1999 Lease). The Company could be required to purchase the building if (1) it defaulted on any indebtedness in excess of $10.0 million, (2) it failed to appeal a judgment in excess of $10.0 million, or (3) a creditor has commenced enforcement proceedings on an order for payment of money in excess of $10.0 million. In addition, the Company has pledged certain marketable securities, which are in proportion to the amount drawn under each lease. The funds pledged under the 1999 Lease (approximately $43.1 million at September 30, 2003) are in a LIBOR-based interest bearing account and are restricted as to withdrawal at all times. The Company is considered a Tranche A lender of $35.3 million of the $43.1 million, while the lessor is considered a Tranche B lender for the remaining $7.8 million.

12

The Company is treated as the owner of these buildings for federal income tax purposes.

Under each Lease, the Company has first loss guarantees to the lessors, which make the Company liable for declines in the value of the buildings up to approximately 82% of the cost of the construction of the buildings. The first loss guarantee requires payment upon the end of the lease. The Company has assessed its exposure in relation to the first loss guarantees for both of the buildings under the Leases and has determined there is no deficiency to the guaranteed value at the current time. The Company will continue to assess the real estate market conditions to evaluate whether it needs to record any reserves under its first loss guarantee obligations.

Purchase Commitments

The Company sub-contracts with other companies to manufacture most of its products. During the normal course of business the sub-contractors procure components based upon orders placed by the Company. If the Company cancels all or part of the order, it may still be liable to the sub-contractors for the cost of the components purchased by the sub-contractors for placement in its products. The Company periodically reviews the potential liability and the adequacy of the related reserve. The Company’s consolidated financial position and results of operations could be negatively impacted if the Company were required to compensate the sub-contract manufacturers in an amount significantly in excess of the accrued liability.

Product Warranties

The Company adopted FASB Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantors, Including Direct Guarantees of Indebtedness of Others (“FIN 45”) during the fourth quarter of 2002. FIN 45 requires specific disclosures concerning the Company’s obligations under certain guarantees. The Company’s products are generally accompanied by a 12-month warranty, which covers both parts and labor. The warranty provision is based upon historical experience, by product, configuration and geographic region.

Changes in the warranty reserves for the three months ended September 30, 2003 were as follows:

(in thousands)
Balance at December 31, 2002	$	2,515
Provision for warranty during the period		486
Settlements		(486	)
Balance at March 31, 2003	$	2,515
Provision for warranty during the period		589
Settlements		(615	)
Balance at June 30, 2003	$	2,489
Provision for warranty during the period		182
Settlements		(592	)
Balance at September 30, 2003	$	2,079

Legal Proceedings

Over the past five years, Mr. Jan R. Coyle, an individual living in Nevada, has repeatedly demanded that the Company buy technology allegedly invented by his company, Kolbet Labs. In December 2001, Mr. Coyle threatened to sue the Company and its customers for allegedly infringing his soon to be issued patent and for misappropriating his alleged trade secrets. The Company believes Mr. Coyle’s claims are baseless and without merit. On December 11, 2001, the Company filed a declaratory relief action in the United States District Court for the Northern District of California, asking the Court to declare that the Company and its 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 its sale of Fiery, Splash or EDOX print controllers. The Company also sought an injunction enjoining both Mr. Coyle and Kolbet Labs from bringing or threatening to bring a lawsuit against the Company, its

13

suppliers, vendors, customers and users of its products for breach of contract and misappropriation of trade secrets. On March 26, 2002, the Northern District of California court dismissed the Company’s complaint for lack of jurisdiction over Mr. Coyle. The Company appealed the Court’s dismissal and on August 18, 2003, the Court of Appeals for the Federal Circuit reversed the dismissal of the Company’s case and remanded it to the Northern District of California. The Company is now vigorously pursuing its case against Mr. Coyle and Kolbet Labs.

On February 26, 2002, Coyle’s company, J & L Electronics, filed a complaint against the Company 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. The Company denies all of these allegations and management believes this lawsuit is without merit and intends to defend the action vigorously. On March 28, 2003, the Federal District Judge dismissed the complaint for lack of jurisdiction over the Company. J & L Electronics appealed the dismissal to the Court of Appeals for the Federal Circuit. The Company is opposing the appeal. However, due to the inherent uncertainties of litigation, the Company cannot predict the ultimate outcome of the appeal. Any unfavorable outcome of the litigation could have an adverse impact on the Company’s financial condition and results of operations.

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 EFI, alleging that each of the defendants has infringed one or more claims of six identified patents owned by the plaintiff. 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 alleges that the defendants infringe the claims by providing vehicle location communication services, arrival notifications and other related services. EFI believes that the plaintiff’s claims are without merit and intends to vigorously defend itself in this litigation. However, due to the inherent uncertainties of litigation, the Company cannot accurately predict the ultimate outcome of the litigation. Any unfavorable outcome of the litigation could have an adverse impact on the Company’s financial condition and results of operations.

On February 13, 2003, the Company entered into agreements with Printcafe to facilitate a merger between the two companies. On February 19, 2003, Creo Inc. (a Printcafe shareholder) commenced litigation in the Delaware Court of Chancery against the Company, Printcafe and certain of Printcafe’s principal officers and directors, challenging those agreements and seeking to restrain the Company 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 the Company and Printcafe entered into a merger agreement providing for the Company’s acquisition of Printcafe and the Company completed the acquisition on October 21, 2003. This litigation is still pending and, due to the inherent uncertainties of litigation, the Company cannot accurately predict the ultimate outcome of the litigation. Any unfavorable outcome of the litigation could have an adverse impact on the Company’s financial condition and results of operations.

On June 25, 2003, a securities class action complaint was filed against Printcafe Software, Inc., now a wholly-owned subsidiary of the Company, and certain officers in the United States District Court for the Western District of Pennsylvania. The complaint alleges that the defendants violated Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 due to allegedly false and misleading statements in connection with Printcafe’s initial public offering and subsequent press releases. The Company, which acquired Printcafe in October 2003, believes that the lawsuit is completely without merit and intends to defend itself accordingly.

In addition, the Company is involved from time to time in litigation relating to claims arising in the normal course of its business.

14

  ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits*

No.	Description
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a).
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a).
32.1	Chief Executive Officer Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley act of 2002.
32.2	Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley act of 2002.
99.1	Printcafe Software, Inc. Unaudited Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2003.
99.2	Unaudited Pro Forma Condensed Combined Financial Statements of Electronics for Imaging as of September 30, 2003.

* Exhibits to the Company’s Annual Report on Form 10-K and 10-K/A for the year ended December 31, 2002 and the Company’s Quarterly Report on Form 10-Q for the quarters ended March 31, 2003 and June 30, 2003 are incorporated herein by reference.

SIGNATURES

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

	ELECTRONICS FOR IMAGING, INC.
Date: January 15, 2004		/s/ Guy Gecht
		Guy Gecht
		Chief Executive Officer
		(Principal Executive Officer)
		/s/ Joseph Cutts
		Joseph Cutts
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

15

EXHIBIT INDEX*

No.	Description
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a).
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a).
32.1	Chief Executive Officer Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley act of 2002.
32.2	Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley act of 2002.
99.1	Printcafe Software, Inc. Unaudited Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2003.
99.2	Unaudited Pro Forma Condensed Combined Financial Statements of Electronics for Imaging as of September 30, 2003.

* Exhibits to the Company’s Annual Report on Form 10-K and 10-K/A for the year ended December 31, 2002 and the Company’s Quarterly Report on Form 10-Q for the quarters ended March 31, 2003 and June 30, 2003 are incorporated herein by reference.

16 EX-31.1 3 f95582a2exv31w1.txt EXHIBIT 31.1 EXHIBIT 31.1 CERTIFICATION I, Guy Gecht, certify that: 1. I have reviewed this Quarterly Report on Form 10-Q/A of Electronics for Imaging, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(c) and 15d-1415(c) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) [intentionally omitted] c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: January 15, 2004 /s/ Guy Gecht ---------------------------- Guy Gecht Chief Executive Officer EX-31.2 4 f95582a2exv31w2.txt EXHIBIT 31.2 EXHIBIT 31.2 CERTIFICATION I, Joseph Cutts, certify that: 1. I have reviewed this Quarterly Report on Form 10-Q of Electronics for Imaging, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(c) and 15d-1415(c) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) [intentionally omitted] c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: January 15, 2004 /s/ Joseph Cutts ------------------------------ Joseph Cutts Chief Financial Officer EX-32.1 5 f95582a2exv32w1.txt EXHIBIT 32.1 EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the accompanying Quarterly Report of Electronics for Imaging, Inc. (the "Company"), on Form 10-Q for the quarter ended September 30, 2003 (the "Report"), I, Guy Gecht, Chief Executive Officer of the Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that: (1) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. 1/15/04 /s/ Guy Gecht - --------- -------------------- Date Guy Gecht Chief Executive Officer EX-32.2 6 f95582a2exv32w2.txt EXHIBIT 32.2 EXHIBIT 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the accompanying Quarterly Report of Electronics for Imaging, Inc. (the "Company"), on Form 10-Q for the quarter ended September 30, 2003 (the "Report"), I, Joseph Cutts, Chief Financial Officer of the Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that: (1) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. 1/15/04 /s/ Joseph Cutts - --------- ------------------------- Date Joseph Cutts Chief Financial Officer EX-99.1 7 f95582a2exv99w1.htm EXHIBIT 99.1

Exhibit 99.1

PRINTCAFE SOFTWARE, INC

INDEX

	PAGE NO.
Unaudited Condensed Consolidated Balance Sheets - September 30, 2003 and December 31, 2002	1
Unaudited Condensed Consolidated Statements of Operations - Three months and Nine months ended September 30, 2003 and 2002	2
Unaudited Condensed Consolidated Statements of Cash Flows - Nine months ended September 30, 2003 and 2002	3
Notes to Unaudited Condensed Consolidated Financial Statements	4

PRINTCAFE SOFTWARE, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

				September 30,			December 31,
				2003			2002
				(UNAUDITED)
ASSETS
Current assets:
	Cash and cash equivalents			$	3,624		$	8,775
	Accounts receivable, net				9,019			12,896
	Other current assets				1,769			1,361
			Total current assets		14,412			23,032
Property and equipment, net					1,774			2,706
Purchased technology, net					—			2,806
Customer lists, net					238			2,487
Goodwill					22,480			22,480
Other intangibles, net					93			162
			Total assets	$	38,997		$	53,673
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Line of credit				—		$	2,000
	Accounts payable			$	1,735			2,099
	Accrued compensation and related liabilities				1,314			1,470
	Accrued and other liabilities				1,840			1,221
	Deferred revenue				8,996			9,653
	Restructuring reserve				62			67
	Current portion of long term debt- related party, (net of debt origination costs of $917 at September 30, 2003 and $0 at December 31, 2002)				15,361			2,100
		Current portion of long term debt			178			326
	Current portion of capital lease obligations				—			33
			Total current liabilities		29,486			18,969
Long-term debt-related party, (net of debt origination costs of $0 at September 30, 2003 and $3,507 at December 31, 2002)					525			12,745
Commitments and contingencies (Note 5)					—			—
Stockholders’ equity:
	Common stock				1			1
	Additional paid-in capital				258,615			253,823
	Warrants				8,677			8,677
	Deferred compensation				(2,233	)		(3,836	)
	Accumulated other comprehensive loss:
	Foreign translation adjustment				(83	)		(46	)
	Retained deficit				(254,021	)		(234,690	)
	Treasury stock				(1,930	)		(1,930	)
	Notes receivable from stockholders				(40	)		(40	)
			Total stockholders’ equity		8,986			21,959
			Total liabilities and stockholders’ equity	$	38,997		$	53,673

See accompanying notes to consolidated financial statements.

1

PRINTCAFE SOFTWARE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

			Three months ended						Nine months ended
			September 30,						September 30,
			2003			2002			2003			2002
Revenue:
	License and subscription		$	2,229		$	5,024		$	7,184		$	16,308
	Maintenance			5,299			5,413			16,618			16,176
	Professional services and other			1,189			844			3,383			2,718
		Total revenue		8,717			11,281			27,185			35,202
Cost of revenue:
	License and subscription			360			874			1,444			2,800
	Maintenance			1,387			1,237			3,856			3,842
	Professional services and other			409			443			1,264			1,316
		Total cost of revenue		2,156			2,554			6,564			7,958
Gross profit				6,561			8,727			20,621			27,244
Operating expenses:
	Sales and marketing			4,140			4,090			12,770			12,611
	Research and development			2,800			3,063			8,803			9,189
	General and administrative(1)			2,336			1,556			7,966			4,790
	Depreciation			291			721			1,170			2,191
	Amortization			43			7,374			5,176			22,154
	Stock-based compensation and warrants			262			358			745			895
	Restructuring charge			—			525			—			525
		Total operating expenses		9,872			17,687			36,630			52,355
Loss from operations				(3,311	)		(8,960	)		(16,009	)		(25,111	)
Amortization of debt origination fees and other expense				(847	)		(1,041	)		(2,531	)		(2,799	)
Interest expense, net				(264	)		(284	)		(791	)		(3,388	)
Net loss				(4,422	)		(10,285	)		(19,331	)		(31,298	)
Accretion of redeemable preferred stock				—			—			—			(6,200	)
Net loss attributable to common stock			$	(4,422	)	$	(10,285	)	$	(19,331	)	$	(37,498	)
Net loss per share, basic and diluted			$	(0.34	)	$	(0.97	)	$	(1.67	)	$	(9.15	)
Weighted average shares used to compute basic and diluted loss per share				12,874			10,595			11,555			4,098
(1) Amounts exclude stock-based compensation as follows:				262			358			745			895

See accompanying notes to consolidated financial statements.

2

PRINTCAFE SOFTWARE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)

			Nine months ended
			September 30,
			2003			2002
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss			$	(19,331	)	$	(31,298	)
Adjustments to reconcile net loss to net cash used in operating activities:
	Depreciation and amortization			6,346			24,345
	Provision for doubtful accounts			2,257			(4	)
	Write-down of shareholder note principal			—			392
	Issuance of warrants			—			23
	Stock-based compensation			745			872
	Interest on note receivable from stockholders			—			(18	)
	Interest accretion on related party debt discount			2,552			2,446
Changes in assets and liabilities:
	Accounts receivable			1,620			(4,472	)
	Other current assets			(408	)		398
	Accounts payable			(364	)		(1,178	)
	Accrued liabilities			463			(1,490	)
	Restructuring reserve			(5	)		(25	)
	Deferred revenue			(657	)		119
		Net cash used in operating activities		(6,782	)		(9,890	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment				(238	)		(761	)
Purchases of intangible assets				(51	)		—
		Net cash used in investing activities		(289	)		(761	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on debt - related party				(1,549	)		(17,800	)
Principal payments on debt				(148	)		(113	)
Repayment on line of credit				(2,000	)		—
Principal payments on capital lease obligations				(33	)		(54	)
Net proceeds from initial public offering				—			32,950
Issuance of redeemable preferred stock				—			755
Proceeds from note receivable repayment by stockholder				—			56
Debt origination costs				—			(188	)
Payment of debt restructuring fee to related party				—			(3,700	)
Proceeds from exercise of stock options				5,535			—
Proceeds from issuance of stock under employee stock purchase plan				115			—
		Net cash provided by financing activities		1,920			11,906
Increase (decrease) in cash and cash equivalents				(5,151	)		1,255
Cash and cash equivalents - beginning of period				8,775			8,648
Cash and cash equivalents - end of period			$	3,624		$	9,903
NON-CASH INVESTING AND FINANCING ACTIVITIES:
		Deferred compensation	$	—		$	5,176
		Accretion of preferred stock		—			6,201
		Conversion of preferred stock to common stock upon initial public offering		—			139,529

See accompanying notes to consolidated financial statements.

3

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1.     DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Printcafe Software, Inc. (“the Company”) is a provider of software solutions designed specifically for the printing industry supply chain. The Company’s enterprise resource planning and collaborative supply chain software solutions enable printers and print buyers to lower costs and improve productivity. The Company’s procurement applications, which are designed for print buyers, facilitate collaboration between printers and print buyers over the Web. The Company’s software solutions have been installed by more than 4,000 customers in over 8,000 facilities worldwide, including 24 of the 25 largest printing companies in North America and over 50 businesses in the Fortune 1000.

On February 26, 2003, we entered into a merger agreement with Electronics for Imaging, Inc., or EFI. If the merger is completed, Printcafe would become a wholly-owned subsidiary of EFI. Under the terms of the merger agreement, each share of our common stock will be converted into $2.60 of consideration which will be paid, at the election of each of our stockholders, in shares of EFI’s common stock or cash. EFI’s common stock is traded on the NASDAQ National Market under the symbol “EFII”. Our board of directors has approved the merger with EFI and has called a special meeting of our stockholders to vote on the merger. The merger will be adopted if the holders of a majority of our outstanding shares of common stock vote for the proposed merger with EFI.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

INTERIM BASIS OF PRESENTATION

The Company’s financial statements include the accounts of the Company and its wholly-owned subsidiaries after the elimination of all significant intercompany balances and transactions. Amounts within the financial statements and footnote disclosures have been recorded in thousands except for the share and per share data.

The accompanying consolidated financial statements as of September 30, 2003, and for the three and nine month periods ended September 30, 2002 and 2003, respectively, are unaudited. The unaudited interim consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal, recurring accruals necessary to state fairly the Company’s financial position as of September 30, 2003, and the results of operations and cash flows for the three and nine month periods ended September 30, 2002 and 2003, respectively. These consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in its Form 10K, as filed with the Securities and Exchange Commission on March 21, 2003. The results for interim periods are not necessarily indicative of the expected results for any other interim period or the year ending December 31, 2003. The amounts included in the consolidated balance sheet at December 31, 2002 were derived from our audited financial statements.

4

STOCK-BASED COMPENSATION AND WARRANTS

Effective December 2002, the Company adopted the disclosure-only provisions of SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure” (SFAS No. 148), which is consistent with the Company’s utilization of the disclosure-only provisions of SFAS No. 123, Accounting for Stock-Based Compensation (SFAS No. 123). The Company accounts for equity instruments issued to non-employees and pursuant to strategic alliance arrangements in accordance with the provisions of SFAS No. 123, Emerging Issues Task Force (EITF) No. 96-18, Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring or in Conjunction with Selling Goods or Services, and Emerging Issues Task Force (EITF) No. 01-9, Accounting for Consideration Given by Vendor to a Customer or a Reseller of the Vendor’s Product.

The following table illustrates the effect on net loss and loss per share if the Company had applied the fair value recognition provisions of SFAS No. 123 to employee stock-based awards:

	Three months ended						Nine months ended
	September 30,						September 30,
	2003			2002			2003			2002
	(in thousands, except per share data)
Reported net loss attributable to common stock	$	(4,422	)	$	(10,285	)	$	(19,331	)	$	(37,498	)
Eliminate: Stock-based compensation expense included in reported net loss		262			358			745			895
Apply: Total stock-based compensation expense determined under fair value method for all awards		(1,175	)		(1,365	)		(1,159	)		(4,285	)
Pro forma net loss	$	(5,335	)	$	(11,292	)	$	(19,745	)	$	(40,888	)
Basic and diluted loss per share:
Basic and diluted, as reported	$	(0.34	)	$	(0.97	)	$	(1.67	)	$	(9.15	)
Basic and diluted, pro forma	$	(0.41	)	$	(1.07	)	$	(1.71	)	$	(9.98	)

RECENT ACCOUNTING PRONOUNCEMENTS

VARIABLE INTEREST ENTITIES

In January 2003, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 46, “Consolidation of Variable Interest Entities”. This Interpretation applies immediately to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains an interest after that date. It applies in the first fiscal year or interim period beginning after December 15, 2003, to variable interest entities in which an enterprise holds a variable interest that is acquired before February 1, 2003. The Company does not believe the provisions of this Interpretation Standard have an impact on its consolidated financial statements upon adoption.

FINANCIAL INSTRUMENTS

In May 2003, the FASB issued Statement of Financial Accounting Standards No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity” (“SFAS No. 150”). The Statement improves the accounting for certain financial instruments that, under previous guidance, issuers could account for as equity. The new Statement requires those instruments be classified as liabilities in statements of financial position. SFAS No. 150 also requires disclosures about alternative ways of settling financial instruments and the capital structure of entities whose shares are mandatorily redeemable. Most of the guidance in SFAS No. 150 is effective for all financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The Company does not believe the provisions of this Statement will have an impact on its consolidated financial statements upon adoption.

5

2.     NET LOSS PER SHARE

Basic and diluted net loss per share have been computed using the weighted average number of shares of common stock outstanding during the period. Potential common shares issuable upon conversion of convertible preferred stock and exercise of stock options and warrants are excluded from historical diluted net loss per share because they would be antidilutive. At September 30, 2002 and 2003, 1,495,621 and 1,426,254 potential common shares, respectively, are excluded from the determination of diluted net loss per share, as the effect of such shares is antidilutive.

		Three months ended						Nine months ended
		September 30,						September 30,
		2003			2002			2003			2002
		(in thousands, except per share data)
Numerator:
	Net loss	$	(4,422	)	$	(10,285	)	$	(19,331	)	$	(31,298	)
	Preferred stock accretion		—			—			—			(6,200	)
Net loss attributable to common stock			(4,422	)		(10,285	)		(19,331	)		(37,498	)
Denominator:
Weighted average shares			12,874			10,595			11,555			4,098
Basic and diluted net loss per share		$	(0.34	)	$	(0.97	)	$	(1.67	)	$	(9.15	)

3.     GOODWILL AND OTHER INTANGIBLE ASSETS

Intangible assets and purchased technology are related mainly to the business acquisitions consummated in early 2000. Amortization is recorded on a straight-line basis over the estimated useful lives (generally three years) of the remaining assets and consists of the following at September 30, 2003 and December 31, 2002:

	September 30,			December 31,
	2003			2002
Customer list	$	42,713		$	42,713
Purchased technology		44,023			44,023
Patent		2,116			2,065
Goodwill		58,730			58,730
		147,582			147,531
Less: accumulated amortization		(124,771	)		(119,596	)
Goodwill and other intangible assets, net	$	22,811		$	27,935

The Company previously adopted SFAS No. 142, Goodwill and Other Intangible Assets, which prohibits companies from amortizing goodwill and instead requires annual impairment testing of the goodwill. As a result, beginning January 1, 2002, the Company no longer amortizes goodwill. As of the adoption date, September 30, 2003 and December 31, 2002, the unamortized balance of goodwill was $22,480. Goodwill is subject to annual impairment testing.

The Company previously adopted SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which requires the Company to review its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of long-lived assets may not be recoverable. No impairment charge has been recorded in any periods presented.

4.     INITIAL PUBLIC OFFERING

In June 2002, the Company issued 3,750,000 shares of its common stock at a price of $10.00 per share in its initial public offering. The Company received approximately $33,000 in proceeds, net of underwriting discounts, commissions, and offering expenses. Simultaneously with the closing of the initial public offering, each outstanding share of preferred stock was automatically converted into common stock based on the applicable conversion ratio. In connection with the offering, the Company repaid approximately $17,800 of related party debt.

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5.     COMMITMENTS AND CONTINGENCIES

On February 19, 2003, Creo Inc. commenced an action in The Court of Chancery of the State of Delaware in and for New Castle County captioned Creo, Inc. v. Printcafe Software, Inc., Electronics For Imaging, Inc. (EFI), Marc D. Olin, Charles J. Billerbeck, Victor A. Cohn and Thomas J. Gill. Creo requested a temporary restraining order with respect to (a) triggering, exercising or otherwise giving effect to the stockholders’ rights plan adopted by the Company, (b) enforcing any action taken or to be taken by us “with the intent or effect of impeding the operation of market forces in an open bidding contest for Printcafe,” (c) taking any steps or actions to enforce the fee provided for in a letter agreement the Company entered into with EFI, (d) taking any steps or any actions to enforce an option the Company granted to EFI, (e) taking any steps or actions to enforce the no solicitation provisions of the standby credit letter that the Company entered into with EFI, (f) engaging in any “conduct intended to cause or having the effect of causing Printcafe to forgo the opportunity to explore and enter into economically more favorable transactions” and (g) entering into, or purporting to enter into, a merger agreement between EFI and the Company before the court finally rules on the action. On February 21, 2003 the court denied Creo’s request for a temporary restraining order. The matter is still pending in the Delaware Chancery Court with respect to the other relief sought by Creo. The Company believes that the lawsuit is completely without merit and intends to vigorously defend itself. If this lawsuit is resolved unfavorably to us, our business and financial condition could be adversely affected and we may not be able to complete the merger.

On June 25, 2003 a securities class action complaint was filed against the Company, Marc Olin, President and Chief Executive Officer, and Joseph Whang, Chief Financial Officer and Chief Operating Officer, in the United States District Court for the Western District of Pennsylvania. The complaint alleges that the defendants violated Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 due to allegedly false and misleading statements in connection with the Company’s initial public offering and subsequent press releases. The Company believes that the lawsuit is completely without merit and intends to vigorously defend itself. To date, the Company has not been required to file a response to the complaint and has not done so. In light of the early stage of this proceeding, the Company cannot predict with certainty the likely outcome of the action or the likely value of any of the related claims.

The Company is involved in disputes and litigation in the normal course of business. In the opinion of management, the ultimate disposition of these matters is not expected to have a material adverse effect on the Company’s business, financial condition, or results of operations. The Company has accrued for estimated losses in the accompanying financial statements for those matters where it believes that the likelihood that a loss has occurred is probable and the amount of loss is reasonably estimable. Although management currently believes the outcome of other outstanding legal proceedings, claims, and litigation involving the Company will not have a material adverse effect on its business, financial condition, or results of operations, litigation is inherently uncertain and there can be no assurance that existing or future litigation will not have a material adverse effect on the Company’s business, financial condition, or results of operations.

6.     COMPREHENSIVE LOSS

The components of the Company’s comprehensive loss for each period presented are as follows:

	Three months ended						Nine months ended
	September 30,						September 30,
(in thousands)		2003			2002			2003			2002
Net loss	$	(4,422	)	$	(10,285	)	$	(19,331	)	$	(31,298	)
Foreign currency translation adjustments		—			8			(37	)		14
Comprehensive loss	$	(4,422	)	$	(10,277	)	$	(19,368	)	$	(31,284	)

7.     LINE OF CREDIT AND LONG-TERM DEBT

On February 13, 2003, the Company entered into an agreement with EFI for a standby credit facility in the amount of $11,000 plus a working capital facility which will provide up to an additional $3,000 under certain circumstances. Under

7

the terms of the standby credit facility, EFI is obligated to disburse up to $11,000 to the Company in the event that certain amounts under the Company’s existing credit facilities become due and payable as a result of any action taken by the Company in order to facilitate the proposed business combination with EFI or certain other criteria. All loans made under this facility bear interest at the rate of 8% per annum payable on January 2, 2004. With certain exceptions, the maturity date would be accelerated if a business combination with EFI is not consummated on or before August 31, 2003 or upon the termination of the agreement. Subject to certain conditions, the credit facility also provides the Company with a working capital facility up to an aggregate amount of $3,000 to be disbursed in the event that, among other things, the Company’s cash balance as of the close of business on the date notice is given by the Company is less than $1,000. The Company is obligated to use the proceeds of any exercise by EFI of the option agreement entered into on February 13, 2003 to pay down outstanding amounts under the standby credit facility. All loans under the working capital facility bear interest at a rate per annum equal to the prime rate as published, from time to time, by Citibank, plus two percent payable on the maturity date of the loans.

In June 2003, the Company repaid the entire amount outstanding of $2,000 on its line of credit with National City Bank. After repayment, this facility was closed by the Company and National City Bank.

As of September 30, 2003, the Company had a total of $917 of unamortized deferred interest and debt discount fees, which are reflected within the short-term debt related-party section of the Company’s balance sheet.

8.     NON-CASH DEFERRED STOCK-BASED COMPENSATION

In February 2002, the Company’s board of directors adopted the 2002 Key Executive Stock Incentive Plan. The Company reserved 766,520 shares of common stock for grants under the plan. During fiscal year 2002, the Company granted options to purchase 766,520 shares of common stock with an exercise price of $4.21 per share. In March 2002, the Company’s board of directors adopted the 2002 Stock Incentive Plan. The Company has reserved 765,765 shares of common stock for grants under the plan. In April 2002, the Company granted options to purchase 381,603 shares of common stock, with an exercise price of $15.54 per share, to certain employees. In June 2002, the Company granted an additional 92,910 options to purchase common stock at an exercise price of $2.00 per share. These option grants, adjusted for any terminations and forfeitures during the period, resulted in $262 and $745 in non-cash stock compensation for the three and nine months ended September 30, 2003, respectively.

9.     STOCK OPTION

On February 13, 2003, the Company entered into a stock option agreement with EFI granting them an option to purchase up to 2,126,574 shares of Common Stock at a purchase price equal to $2.60 per share. Subject to certain conditions, the option shares must be repurchased by the Company, at the request of EFI, at a price equal to the aggregate purchase price paid for such shares by EFI. In addition, subject to certain conditions, the Company may repurchase from EFI the option shares at a price equal to the price paid by EFI for those shares. In June 2003, EFI exercised this option and the Company received $5,529 in exchange for 2,126,574 shares of its common stock.

10.     SUBSEQUENT EVENTS

On October 21, 2003, the stockholders of Printcafe approved the sale of all of the outstanding stock of the Company to EFI for $2.60 per share and the transaction closed that day.

8 EX-99.2 8 f95582a2exv99w2.htm EXHIBIT 99.2

Exhibit 99.2

ELECTRONICS FOR IMAGING, INC.

INTRODUCTORY NOTE TO THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS

     The following unaudited pro forma condensed combined financial statements are presented to illustrate the effects of the merger on the historical financial position and operating results of EFI. The unaudited pro forma condensed combined balance sheet gives effect to the merger as if it was completed on September 30, 2003. The unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2003 and for the year ended December 31, 2002 give effect to the merger as if it was completed on January 1, 2002.

     The following unaudited pro forma condensed combined financial statements were derived from (a) EFI’s audited statement of income for the year ended December 31, 2002, its unaudited statement of income for the nine months ended September 30, 2003 and its unaudited balance sheet as of September 30, 2003, and (b) Printcafe’s audited statement of operations for the year ended December 31, 2002, and Printcafe’s unaudited statement of operations for the nine months ended September 30, 2003 and Printcafe’s unaudited balance sheet as of September 30, 2003.

     The following unaudited pro forma condensed combined financial statements are not necessarily indicative of EFI’s financial position or results of operations if the merger had been completed as of the dates indicated. Additionally, the following unaudited pro forma condensed combined financial statements are not necessarily indicative of EFI’s future financial condition or operating results.

     The following unaudited pro forma condensed combined financial statements are based on estimates and assumptions set forth in the notes to these statements. EFI prepared the unaudited pro forma condensed combined financial statements using the purchase method of accounting with EFI as the acquirer. Accordingly, EFI’s costs to acquire Printcafe were allocated to the assets and the liabilities assumed based upon their estimated fair values as of the date of acquisition. The valuation of the intangible assets was based upon an evaluation of Printcafe’s technology, the knowledge of the technology embedded in Printcafe’s products, and EFI’s extensive knowledge of the industry and the marketplace.

1

ELECTRONICS FOR IMAGING, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
September 30, 2003
(in thousands)

		EFI			Printcafe			Pro Forma			EFI
		Historical			Historical			Adjustments			Pro Forma
ASSETS
Cash and cash equivalents		$	172,812		$	3,624		$	(42,636	)(a)	$	133,800
Short-term investments			479,602			—			—			479,602
Restricted marketable securities			69,486			—			—			69,486
Accounts receivable, net			42,848			9,019			—			51,867
Inventories			4,232			—			—			4,232
Other current assets			28,540			1,769			(5,529	)(f)		24,780
	Total current assets		797,520			14,412			(48,165	)		763,767
Property and equipment, net			49,829			1,774			—			51,603
Restricted investments			43,080			—			—			43,080
Goodwill			49,140			22,480			1,854	(b)		73,474
Intangible assets, net			18,853			331			26,869	(b)		46,053
Other assets			13,034			—			—			13,034
	Total assets	$	971,456		$	38,997		$	(19,442	)	$	991,011
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable		$	17,440		$	1,735			—		$	19,175
Accrued and other liabilities			45,729			3,154			—			48,883
Deferred revenue			—			8,996			(2,249	)(d)		6,747
Restructuring reserve			—			62			—			62
Current portion of long-term obligations, related party			—			16,278			(16,278	)(c)		—
Current portion of long-term debt			—			178			(178	)(c)		—
Debt discount			—			(917	)		917	(c)		—
Income taxes payable			35,512			—			—			35,512
	Total current liabilities		98,681			29,486			(17,788	)		110,379
Long-term obligations, related party			—			525			(525	)(c)		—
Long-term debt			240,249			—			—			240,249
Other long-term liabilities			—			—			10,880	(e)		10,880
Common stock			609			1			1	(f)(g)		611
Treasury stock			(158,150	)		(1,930	)		1,930	(f)		(158,150	)
Additional paid-in capital			303,507			258,615			(253,040	)(f)(g)		309,082
Warrants			—			8,677			(8,677	)(f)		—
Deferred compensation			—			(2,233	)		2,233	(f)		—
Other comprehensive income			1,238			(83	)		83	(f)		1,238
Notes receivable from stockholder			—			(40	)		40	(f)		—
Retained earnings (deficit)			485,322			(254,021	)		245,421	(f)		476,722
	Total stockholders’ equity		632,526			8,986			(12,009	)		629,503
	Total liabilities and stockholders’ equity	$	971,456		$	38,997		$	(19,442	)	$	991,011

See Notes to Unaudited Pro Forma Condensed Combined Financial Statements.

2

ELECTRONICS FOR IMAGING, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
Year Ended December 31, 2002
(in thousands, except per share data)

		EFI			Printcafe			Pro Forma
		Historical			Historical			Adjustments			EFI Pro Forma
Revenue		$	350,185		$	46,521		$	—		$	396,706
Cost of revenue			167,685			10,377			749	(h)		178,811
	Gross profit		182,500			36,144			(749	)		217,895
Research and development			89,973			12,003			976	(h)		102,952
Sales and marketing			50,624			16,989			814	(h)		68,427
General and administrative			21,778			6,193			383	(h)		28,354
Amortization of identified intangibles and other acquisition related charges			4,391			29,511			(24,832	)(i)		9,070
Depreciation			—			2,922			(2,922	)(h)		—
Stock-based compensation and warrants			—			1,386			—			1,386
Restructuring charge			—			525			—			525
	Total operating expenses		166,766			69,529			(25,581	)		210,714
Income (loss) from operations			15,734			(33,385	)		24,832			7,181
Other income (expense), net			7,077			(524	)		(1,208	)(j)		5,345
Debt discount						(3,300	)		3,300	(k)		—
Interest expense, related party			—			(3,588	)		3,588	(l)		—
	Income (loss) before income taxes		22,811			(40,797	)		30,512			12,526
Provision for income taxes			(6,843	)		—			3,448	(m)		(3,395	)
	Net income (loss)		15,968			(40,797	)		33,960			9,131
Accretion of redeemable preferred stock			—			(6,201	)		—			(6,201	)
Net income (loss) attributable to common stock		$	15,968		$	(46,998	)	$	33,960		$	2,930
Shares used in basic per share calculation			54,256			5,797			202	(n)		54,458
Net income (loss) per basic common share		$	0.29		$	(8.11	)				$	0.05
Shares used in diluted per share calculation			54,852			5,797			202	(n)		55,054
Net income (loss) per diluted common share		$	0.29		$	(8.11	)				$	0.05

See Notes to Unaudited Pro Forma Condensed Combined Financial Statements

3

ELECTRONICS FOR IMAGING, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

Nine Months Ended September 30, 2003
(in thousands, except per share data)

		EFI			Printcafe			Pro Forma			EFI Pro
		Historical			Historical			Adjustments			Forma
Revenue		$	271,734		$	27,185		$	—		$	298,919
Cost of revenue			109,139			6,564			300	(o)		116,003
	Gross profit		162,595			20,621			(300	)		182,916
Research and development			69,807			8,803			391	(o)		79,001
Sales and marketing			44,659			12,770			326	(o)		57,755
General and administrative			15,510			7,966			153	(o)		23,629
Amortization of identified intangibles and other acquisition related charges			5,208			5,176			(1,667	)(p)		8,717
Depreciation			—			1,170			(1,170	)(o)		—
Stock-based compensation and warrants			—			745			—			745
	Total operating expenses		135,184			36,630			(1,967	)		169,847
Income (loss) from operations			27,411			(16,009	)		1,667			13,069
Other income (expense), net			7,094			—			(886	)(q)		6,208
Litigation settlement income			1,568			—			—			1,568
Debt discount			—			(2,531	)		2,531	(r)		—
Interest expense related party			—			(791	)		791	(s)		—
	Income (loss) before income taxes		36,073			(19,331	)		4,103			20,845
Provision for income taxes			(9,740	)		—			5,342	(t)		(4,398	)
	Net income (loss)	$	26,333		$	(19,331	)	$	9,445		$	16,447
Shares used in basic per share calculation			53,734			11,555			202	(n)		53,936
Net income (loss) per basic common share		$	0.49		$	(1.67	)				$	0.30
Shares used in diluted per share calculation			54,569			11,555			202	(n)		54,771
Net income (loss) per diluted common share		$	0.48		$	(1.67	)				$	0.30

See Notes to Unaudited Pro Forma Condensed Combined Financial Statements

4

ELECTRONICS FOR IMAGING, INC.

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS
(in thousands, except per share data)

NOTE 1 DESCRIPTION OF TRANSACTION AND BASIS OF PRESENTATION

     On February 26, 2003, EFI and Printcafe signed a merger agreement providing for the acquisition of Printcafe for $2.60 per share for each outstanding Printcafe share of common stock. The merger agreement provided each Printcafe stockholder with the right to elect whether to receive the merger consideration in cash or shares of EFI’s common stock. The merger was completed on October 21, 2003.

NOTE 2 PURCHASE PRICE

     Printcafe’s stockholders could elect to receive cash or shares of EFI common stock in the merger. The exchange ratio was derived as follows:

(A)	Consideration per share of Printcafe common stock	$	2.60
(B)	10-day average closing price of EFI stock ending on and	$	24.82
	including October 14, 2003
(C)	Exchange ratio (A÷ B)		0.1048

     The allocation of the purchase price was made as follows:

Purchase Price
Fair value of 201,923 shares of EFI common stock issued in exchange for 1,926,747 shares of Printcafe common stock electing to exchange shares in the Merger				$	5,011
Cash paid to Printcafe shareholders in exchange for Printcafe common stock					22,916
Pre-merger acquisition of Printcafe common stock					5,529
Estimated acquisition costs comprised of investment banking fees, employee retention bonuses, legal fees and accounting and administrative fees					2,739
Fair value of stock options and warrants assumed using Black-Scholes valuation with the following assumptions: stock price at grant of $25.28; volatility of 52%; risk free interest rate of 2.3%; no dividend yield; and the contractual remaining term of the option or warrant					566
Total purchase price				$	36,761
Net Assets Acquired
Excess of Printcafe liabilities over its tangible assets					12,493
In-process research and development					8,600
	Developed technology	$	7,400
	Patents, trademarks & trade names		3,700
	Maintenance agreements		10,700
	Customer contracts & relationships		5,400
Identifiable intangibles (estimated 7 year life)					27,200
Goodwill					24,334
Adjustments to Recorded Balances
Increase in deferred tax liability related to intangibles					10,880
Elimination of debt discount					917
Reduction in deferred revenue					(2,249	)
Elimination of EFI’s investment in Printcafe					(5,529	)

NOTE 3 ACCOUNTING POLICIES AND FINANCIAL STATEMENT CLASSIFICATION

     EFI and Printcafe will review their accounting policies and financial statement classifications. As a result of the review, it may become necessary to make certain reclassifications to the combined company’s financial statements to conform to those accounting policies and classifications.

5

NOTE 4 PRO FORMA ADJUSTMENTS

     (a)  To record the cash portion of the purchase price, acquisition costs and retirement of Printcafe debt that becomes due upon completion of the merger.

Cash portion of purchase price	$	(22,916	)
Acquisition costs		(2,739	)
Retirement of Printcafe’s outstanding debt balances at September 30, 2003		(16,981	)
	$	(42,636	)

     (b)  To record the elimination of Printcafe intangibles as of September 30, 2003, and record the EFI intangible assets recognized as a result of the merger.

Elimination of Printcafe goodwill	$	(22,480	)
Recognition of goodwill as a result of the EFI/Printcafe merger		24,334
	$	1,854
Elimination of Printcafe identified intangibles	$	(331	)
Recognition of identified intangibles as a result of the EFI/Printcafe merger		27,200
	$	26,869

     (c)  To record the payment by EFI of Printcafe’s outstanding debt balances as of September 30, 2003.

Current portion, long-term debt		$	(178	)
Current portion, long-term obligations, related parties			(16,278	)
Long-term debt			(525	)
	Subtotal		(16,981	)
Debt discount			917
		$	(16,064	)

     (d)  To reduce deferred revenue by 25%, to an amount which represents EFI’s estimate of the estimated fair market value of the deferred revenue balance as of September 30, 2003.

Deferred revenue $ (2,249 )

     (e)  To establish deferred tax liability related to identified intangibles.

Deferred tax liability $ 10,880

     (f)  Elimination of Printcafe equity balance at September 30, 2003.

Common stock	$	(1	)
Treasury stock		1,930
Additional paid-in capital		(258,615	)
Warrants		(8,677	)
Deferred compensation		2,233
Foreign currency translation adjustments		83
Notes receivable from stockholder		40
Retained deficit (Printcafe September 30, 2003 balance of $(254,021) adjusted for EFI acquisition-related in-process research and development expense of $8,600)		245,421
Investment in Printcafe common stock		(5,529	)
	$	(23,115	)

6

     (g)  Increase common stock and paid-in capital for equity related activity.

Shares of EFI common stock issued as merger consideration	$	2
Additional paid in capital on shares issued	$	5,009
Assumed Printcafe stock options and warrants		566
	$	5,575

     (h)  Reclassification of Printcafe depreciation expense for the twelve months ended December 31, 2002 to conform with EFI’s financial statement presentation.

Elimination of depreciation expense presented as a separate line item	$	(2,922	)
Reclassification of depreciation expense to cost of revenue		749
Reclassification of depreciation expense to research and development expense		976
Reclassification of depreciation expense to sales and marketing expense		814
Reclassification of depreciation expense to general and administrative expense		383
	$	0

     (i)  To eliminate Printcafe’s amortization of acquired identified intangibles, offset by the amortization of the identifiable intangibles of $27,200. The developed technology has an estimated useful life of 4 years, with trademarks, trade names, patents, maintenance agreements and customer relationships to have estimated useful lives of 7 years.

Eliminate Printcafe amortization of acquired identified intangibles for twelve months ended December 31, 2002	$	(29,511	)
Recognize amortization of EFI acquired identified intangibles for twelve months ended December 31, 2002		4,679
	$	(24,832	)

     (j)  To reduce interest income related to reduction in cash balances expended upon completion of acquisition (cash consideration and payoff of Printcafe’s debt), and to eliminate interest related to the forgiveness of a stockholder note.

Reduction of interest income earned on cash balance through December 31, 2002 $ (1,208 )

     (k)  To eliminate debt origination fees related to Printcafe debt.

Elimination of debt origination fees $ 3,300

     (l)  To eliminate interest expense associated with Printcafe’s related party outstanding debt.

Elimination of interest expense $ 3,588

     (m)  Reduction of income tax liability related to the incorporation of Printcafe losses.

Reduction in provision for income taxes $ 3,448

     (n)  Increase in EFI shares outstanding of 202 (1,927 shares of Printcafe common stock converted at a ratio of 0.1048).

7

     (o)  Reclassification of Printcafe depreciation expense for the nine months ended September 30, 2003 to conform with EFI’s financial statement presentation.

Elimination of depreciation expense presented as a separate line item	$	(1,170	)
Reclassification of depreciation expense to cost of revenue		300
Reclassification of depreciation expense to research and development expense		391
Reclassification of depreciation expense to sales and marketing expense		326
Reclassification of depreciation expense to general and administrative expense		153
	$	0

     (p)  To eliminate Printcafe’s amortization of goodwill and intangibles, offset by the amortization of the acquired identifiable intangibles of $27,200. The developed technology has an estimated useful life of 4 years, with trademarks, trade names, patents, maintenance agreements and customer relationships to have estimated useful lives of 7 years.

Eliminate Printcafe amortization of acquired identified intangibles for nine months ended September 30, 2003	$	(5,176	)
Recognize amortization of EFI acquired identified intangibles for nine months ended September 30, 2003		3,509
	$	(1,667	)

     (q)  To reduce interest income related to reduction in cash balances expended upon completion of acquisition (cash consideration and payoff of Printcafe’s debt), and to eliminate interest related to the forgiveness of a stockholder note.

Reduction of interest income earned on cash balance through September 30, 2003 $ (886 )

     (r)  To eliminate debt origination fees related to Printcafe debt.

Elimination of debt origination fees $ 2,531

     (s)  To eliminate interest expense associated with Printcafe’s related party outstanding debt.

Elimination of interest expense $ 791

     (t)  Reduction of income tax liability related to the incorporation of Printcafe losses.

Reduction in provision for income taxes $ 5,342

8 -----END PRIVACY-ENHANCED MESSAGE-----

EX-31.1

                                                                    EXHIBIT 31.1

                                  CERTIFICATION

I, Guy Gecht, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q/A of Electronics for
Imaging, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(c) and 15d-1415(c) for the registrant and have:

         a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;

         b) [intentionally omitted]

         c) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and

         d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and

5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal controls over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of directors
(or persons performing the equivalent functions):

         a) All significant deficiencies and material weaknesses in the design
or operation of internal controls over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and

         b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal control
over financial reporting.

  Date: January 15, 2004                        /s/ Guy Gecht
                                                ----------------------------
                                                Guy Gecht
                                                Chief Executive Officer

EX-31.2

                                                                    EXHIBIT 31.2

                                  CERTIFICATION

I, Joseph Cutts, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Electronics for
Imaging, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(c) and 15d-1415(c) for the registrant and have:

         a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;

         b) [intentionally omitted]

         c) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and

         d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and

5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal controls over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of directors
(or persons performing the equivalent functions):

         a) All significant deficiencies and material weaknesses in the design
or operation of internal controls over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and

         b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal control
over financial reporting.

Date: January 15, 2004                   /s/ Joseph Cutts
                                         ------------------------------
                                         Joseph Cutts
                                         Chief Financial Officer

EX-32.1

                                                                    EXHIBIT 32.1

                                  CERTIFICATION
                       PURSUANT TO 18 U.S.C. SECTION 1350
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the accompanying Quarterly Report of Electronics for Imaging,
Inc. (the "Company"), on Form 10-Q for the quarter ended September 30, 2003 (the
"Report"), I, Guy Gecht, Chief Executive Officer of the Company, hereby certify
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 that: (1) the Report fully complies with the
requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934,
as amended; and (2) the information contained in the Report fairly presents, in
all material respects, the financial condition and results of operations of the
Company.

1/15/04                                      /s/ Guy Gecht
- ---------                                    --------------------
Date                                         Guy Gecht
                                             Chief Executive Officer

EX-32.2

                                                                    EXHIBIT 32.2

                                  CERTIFICATION
                       PURSUANT TO 18 U.S.C. SECTION 1350
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

         In connection with the accompanying Quarterly Report of Electronics for
Imaging, Inc. (the "Company"), on Form 10-Q for the quarter ended September 30,
2003 (the "Report"), I, Joseph Cutts, Chief Financial Officer of the Company,
hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 that: (1) the Report fully
complies with the requirements of section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended; and (2) the information contained in the
Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.

1/15/04                                    /s/ Joseph Cutts
- ---------                                  -------------------------
Date                                       Joseph Cutts
                                           Chief Financial Officer

EX-99.1

Exhibit 99.1

EX-99.2

Exhibit 99.2