EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

For more information:    Investor Relations:
John Ritchie    JoAnn Horne
Chief Financial Officer    Market Street Partners
EFI    415-445-3239
650-357-3500   

EFI REPORTS Q3 2009 RESULTS

Sequential Revenue Growth Reported In All Three Divisions;

Inkjet Revenues Increased 22% Over Prior Quarter

Foster City, Calif. – October 28, 2009 – Electronics For Imaging, Inc. (Nasdaq: EFII), a world leader in customer-focused digital printing innovation, today announced its results for the third quarter of 2009. For the quarter ended September 30, 2009, the Company reported revenues of $100.9 million, compared to third quarter 2008 revenue of $144.7 million.

GAAP net loss was $(12.2) million or $(0.25) per diluted share in the third quarter of 2009, compared to a GAAP net loss of $(3.6) million or $(0.07) per diluted share for the same period in 2008.

GAAP net income was $1.2 million or $0.02 per diluted share for the nine months ended September 30, 2009, compared to a GAAP net loss of $(8.9) million or $(0.17) per diluted share for the same period in 2008.

Non-GAAP net loss was $(2.6) million or $(0.05) per diluted share in the third quarter of 2009, compared to non-GAAP net income of $10.4 million or $0.20 per diluted share for the same period in 2008.

Non-GAAP net loss was $(13.1) million or $(0.26) per diluted share for the nine months ended September 30, 2009, compared to non-GAAP net income of $34.5 million or $0.61 per diluted share for the same period in 2008.

“We are pleased with the sequential revenue increases in all our lines of business, led by 22% growth in our inkjet business driven by several new inkjet product introductions,” said Guy Gecht, CEO of EFI. “We will continue to bring industry-leading innovation to the market and expect our positive momentum to continue which combined with strict cost controls should result in our return to profitability in the current quarter.”

Separately, the Company announced today that its Board of Directors has approved the use of the balance, in the amount of $70 million, of its previously authorized $100 million share repurchase program.

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

About our Non-GAAP Net Income and Adjustments

To supplement our consolidated financial results prepared under generally accepted accounting principles, or GAAP, we use non-GAAP measures of net income and earnings per diluted share that are GAAP net income and GAAP earnings per diluted share adjusted to exclude certain recurring and non-recurring costs, expenses and gains.


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

We compute non-GAAP net income and non-GAAP earnings per diluted share by adjusting GAAP net income and GAAP earnings per diluted share to remove the impact of recurring amortization of acquisition-related intangibles, stock-based compensation expense, as well as restructuring related and non-recurring charges and gains and the tax effect of these adjustments. Such non-recurring charges and gains include project abandonment costs, asset impairment charges, costs related to our stock option review completed in 2008, certain legal settlements, and our sale of certain real estate assets. Examples of these excluded items are described below:

 

   

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

 

   

Stock-based compensation expense is recognized in accordance with FASB Accounting Standards Codification, Topic 718, Stock Compensation (formerly, SFAS 123R).

 

   

Non-recurring charges and gains, including:

 

   

Restructuring related charges. We have incurred restructuring charges as we reduce the number and size of our facilities and the size of our workforce.

 

   

Asset impairment costs consist of equipment and non-cancellable purchase orders incurred relating to a planned product that was cancelled.

 

   

Gain on sale of building and land. On January 29, 2009, we sold a portion of the Foster City, California campus for a final amount of $137.3 million to Gilead Sciences, Inc., resulting in a gain on sale of approximately $80 million.

 

   

Tax effect of these adjustments.


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

For more information on the non-GAAP adjustments, please see the table captioned “Reconciliation of GAAP Net Income to Non-GAAP Net Income” included in this press release.

Safe Harbor for Forward Looking Statements

Certain statements in this press release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Statements other than statements of historical fact including words such as “anticipate”, “believe”, “estimate”, “expect”, “consider” and “plan” and statements in the future tense are forward looking statements. The statements in this press release that could be deemed forward-looking statements include statements regarding opportunities for the inkjet segment, our planned industry-leading new products, continuation of our positive momentum, return to profitability, and any statements or assumptions underlying any of the foregoing.

Forward-looking statements are subject to certain risks and uncertainties that could cause our actual future results to differ materially, or cause a material adverse impact on our results. Potential risks and uncertainties include, but are not necessarily limited to, inaccurate data or assumptions; unforeseen expenses; the difficulty of aligning expense levels with revenue changes; execution of actions to reduce our operational costs and ability to maintain effective costs control measures; unexpected declines in revenues or increases in expenses; management’s ability to forecast revenues, expenses and earnings, especially on a quarterly basis; the market prices of the Company’s common stock; the uncertainty regarding the amount and timing of future share repurchases by the Company and the origin of funds used for such repurchases; current world-wide financial, economic and political difficulties and downturns, including the ongoing contraction in credit markets, and adverse variations in foreign exchange rates, that could affect demand for our products, and increase the volatility of our profitability, as well as the risk of bank failures, insolvency or illiquidity of other financial


institutions and other adverse conditions in financial markets that could cause a loss of our cash deposits and invested cash and cash equivalents; uncertainty to accurately predict the outcome of foreign tax audits and determine our tax provisions; uncertainty regarding our effective tax rate in the future that may be impacted by various factors, including but not limited to new U.S. tax legislative proposals; failure to retain key employees; product cancellation costs; a significant decline or delay in demand for our products by any of our important OEM partners; the unpredictability of development schedules and commercialization of the products manufactured and sold by our OEM partners; variations in growth rates or declines in the printing and imaging markets across various geographic regions; changes in historic customer order patterns, including changes in customer and channel inventory levels; changes in the mix of products sold leading to variations in operating results; the uncertainty of market acceptance of new product introductions; delays in product deliveries that cause quarterly revenues and income to fall significantly short of anticipated levels; competition and/or market factors, which may adversely affect margins; competition in each of our businesses, including competition from products internally developed by EFI’s customers; challenge of managing assets levels, including inventory and variations in inventory valuation; intense competition in the industrial and commercial digital inkjet market; the uncertainty of continued success in technological advances, including development and implementation of new processes and strategic products; the challenges of obtaining timely, efficient and quality product manufacturing and components supplying; litigation involving intellectual property rights or other related matters; our ability to successfully integrate acquired businesses, without operational disruption to our existing businesses; the potential that investments in new business strategies and initiatives could disrupt the Company’s ongoing businesses and may present risks not originally contemplated; the potential loss of sales, unexpected costs or adverse impact on relations with customers or suppliers as a result of acquisitions; differences between the financial results as filed with the SEC and the preliminary results included in our earnings or other press releases due to the complexity in accounting rules; and any other risk factors that may be included from time to time in the Company’s SEC reports.

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

About EFI

EFI (www.efi.com) is a world leader in customer-focused digital printing innovation. EFI’s award-winning solutions, integrated from creation to print, deliver increased performance, cost savings and productivity. The company’s robust product portfolio includes Fiery® digital color print servers; VUTEk® superwide digital inkjet printers, UV and solvent inks; Rastek UV wide-format inkjet printers; Jetrion® industrial inkjet printing systems; print production workflow and management information software; and corporate printing solutions. EFI maintains 23 offices worldwide.


Electronics For Imaging, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2009     2008     2009     2008  

Revenue

   $ 100,855      $ 144,666      $ 287,110      $ 425,116   

Cost of revenue

     48,665        62,601        135,221        183,846   
                                

Gross profit

     52,190        82,065        151,889        241,270   

Operating expenses:

        

Research and development

     27,128        33,782        84,236        106,157   

Sales and marketing

     25,691        30,249        75,584        90,650   

General and administrative

     9,147        13,597        26,037        40,620   

Amortization of identified intangibles and in-process research & development

     3,078        9,560        15,501        23,952   

Restructuring and other

     2,206        3,496        12,166        8,710   
                                

Total operating expenses

     67,250        90,684        213,524        270,089   
                                

Loss from operations

     (15,060     (8,619     (61,635     (28,819

Interest and other income, net:

           —     

Interest and other income, net

     1,185        222        2,708        12,259   

Gain on sale of building & land

     —          —          79,991        —     
                                

Total interest and other income, net

     1,185        222        82,699        12,259   
                                
           —     

Income (loss) before income taxes

     (13,875     (8,397     21,064        (16,560

Benefit from (provision for) income taxes

     1,706        4,753        (19,828     7,629   
                                

Net income (loss)

   $ (12,169   $ (3,644   $ 1,236      $ (8,931
                                

Fully Diluted EPS calculation

        

Net income (loss)

   $ (12,169   $ (3,644   $ 1,236      $ (8,931
                                

Net income (loss) per diluted common share

   $ (0.25   $ (0.07   $ 0.02      $ (0.17
                                

Shares used in diluted per share calculation

     49,400        52,167        50,564        52,919   
                                


Electronics For Imaging, Inc.

Reconciliation of GAAP Net Income to Non-GAAP Net Income

(in thousands, except per share data)

(unaudited)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2009     2008     2009     2008  

Net income (loss)

   $ (12,169   $ (3,644   $ 1,236      $ (8,931
                                

Amortization of identified intangibles

     3,078        7,560        15,501        21,952   

In-process research and development

     —          2,000        —          2,000   

Stock based compensation expense – Cost of revenue

     253        560        807        2,023   

Stock based compensation expense – Research and development

     1,797        3,002        4,744        10,408   

Stock based compensation expense – Sales and marketing

     995        1,430        3,188        4,840   

Stock based compensation expense – General and administrative

     1,844        3,277        4,590        9,527   

Option review & Legal costs

     —          463        (82     1,926   

Restructuring and other

     2,206        3,496        12,166        8,710   

Gain on sale of building & land

     —          —          (79,991     —     
                                

Tax effect of non-GAAP adjustments

     (634     (7,699     24,761        (17,965
                                

Non-GAAP net income (loss)

   $ (2,630   $ 10,446      $ (13,080   $ 34,490   
                                

After-tax adjustment of convertible debt-related expense

     —          —          —          1,262   
                                

Income (loss) for purposes of computing diluted non-GAAP net income (loss) per share

   $ (2,630   $ 10,446      $ (13,080   $ 35,752   
                                

Non-GAAP net income (loss) per diluted common share

   $ (0.05   $ 0.20      $ (0.26   $ 0.61   
                                

Shares used in per share calculation

     49,400        53,199        49,990        58,808   
                                


Electronics For Imaging, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

     September 30,
2009
   December 31,
2008

Assets

     

Cash, cash equivalents and short-term investments

   $ 270,064    $ 189,351

Accounts receivable, net

     79,467      97,286

Inventories, net

     43,474      48,785

Assets held for sale

     —        55,367

Other current assets

     18,139      20,013
             

Total current assets

     411,144      410,802
             

Property and equipment, net

     29,839      35,225

Restricted investments

     56,850      56,850

Goodwill

     121,162      122,581

Intangible assets, net

     57,471      72,992

Other assets

     54,019      53,498
             

Total assets

   $ 730,485    $ 751,948
             

Liabilities & Stockholders’ equity

     

Accounts payable

   $ 34,528    $ 44,634

Accrued and other liabilities

     54,037      70,386

Income taxes payable

     11,735      1,952
             

Total current liabilities

     100,300      116,972

Long term taxes payable

     37,884      33,758
             

Total liabilities

     138,184      150,730

Total stockholders’ equity

     592,301      601,218
             

Total liabilities and stockholders’ equity

   $ 730,485    $ 751,948
             


Electronics For Imaging, Inc.

Revenue by Operating Segment and Geographic Area

(in thousands)

(unaudited)

 

     Three Months Ended
September 30,
   Nine Months Ended
September 30,
     2009    2008    2009    2008

Revenue by Operating Segment

           

Fiery

   $ 42,004    $ 68,036    $ 131,319    $ 208,547

Inkjet

     44,336      60,805      112,897      172,185

Professional printing applications

     14,515      15,825      42,894      44,384
                           

Total

   $ 100,855    $ 144,666    $ 287,110    $ 425,116
                           

Revenue by Geographic Area

           

Americas

   $ 58,184    $ 77,274    $ 167,349    $ 220,830

EMEA

     30,083      49,885      85,307      152,468

Japan

     8,879      13,755      24,897      38,224

Other international locations

     3,709      3,752      9,557      13,594
                           

Total

   $ 100,855    $ 144,666    $ 287,110    $ 425,116