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EFI Reports Third Quarter 2012 Results

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

Use of Non-GAAP Financial Information

To supplement our condensed consolidated financial results prepared under generally accepted accounting principles, or GAAP, we use non-GAAP measures of net income (loss), as the case may be, and earnings per diluted share that are GAAP net income (loss), as the case may be, and GAAP earnings per diluted share adjusted to exclude certain recurring and non-recurring costs, expenses and gains. A reconciliation of the adjustments to GAAP results for the three and nine months ended September 30, 2012 and 2011 is provided below. In addition, an explanation of how management uses non-GAAP financial information to evaluate its business, the substance behind management's decision to use this non-GAAP financial information, the material limitations associated with the use of non-GAAP financial information, the manner in which management compensates for those limitations, and the substantive reasons management believes that this non-GAAP financial information provides useful information to investors is included under "About our Non-GAAP Net Income and Adjustments" after the tables below.

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

Electronics For Imaging, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
         
  Three Months Ended Nine Months Ended
  September 30, September 30,
         
  2012 2011 2012 2011
         
Revenue  $ 154,074  $ 147,284  $ 478,031  $ 428,498
Cost of revenue  70,997  64,506  217,495  188,432
Gross profit  83,077  82,778  260,536  240,066
Operating expenses:        
Research and development  29,068  29,473  90,194  85,850
Sales and marketing  30,329  30,137  93,480  88,036
General and administrative  12,775  14,095  36,831  40,550
Amortization of identified intangibles  4,619  2,311  13,434  8,720
Restructuring and other  2,280  604  4,530  2,316
Total operating expenses  79,071  76,620  238,469  225,472
Income from operations  4,006  6,158  22,067  14,594
Interest and other income, net  1,555  1,363  800  4,571
Income before income taxes  5,561  7,521  22,867  19,165
Benefit from (provision for) income taxes  7,850  (1,397)  3,783  (3,177)
Net income  $ 13,411  $ 6,124  $ 26,650  $ 15,988
         
Fully Diluted EPS calculation        
Net income  $ 13,411  $ 6,124  $ 26,650  $ 15,988
Net income per diluted common share  $ 0.28  $ 0.13  $ 0.56  $ 0.34
Shares used in diluted per share calculation  48,009  47,307  47,670  47,701
 
Electronics For Imaging, Inc.
Reconciliation of GAAP Net Income to Non-GAAP Net Income
(in thousands, except per share data)
(unaudited)
         
  Three Months Ended Nine Months Ended
  September 30, September 30,
         
  2012 2011 2012 2011
         
Net income  $ 13,411  $ 6,124  $ 26,650  $ 15,988
Amortization of identified intangibles  4,619  2,311 13,434 8,720
Stock based compensation – Cost of revenue  293  657 826 1,334
Stock based compensation – Research and development  1,365  1,245 4,189 4,013
Stock based compensation – Sales and marketing  790  1,027 2,404 3,086
Stock based compensation – General and administrative  2,457  2,358 6,919 9,130
Acquisition-related transaction costs  384  673 1,208 1,540
Change in fair value of contingent consideration —   1,476 (1,404) 1,476
Restructuring and other  2,280  604 4,530 2,316
Litigation settlements  506 —  255 — 
Gain on sale of minority investment in a privately-held company —   (2,866) —  (2,866)
Tax effect of non-GAAP adjustments  (12,797)  (2,005) (17,355) (8,302)
Non-GAAP net income  $ 13,308  $ 11,604  $ 41,656  $ 36,435
         
Non-GAAP net income per diluted common share  $ 0.28  $ 0.25  $ 0.87  $ 0.76
Shares used in per share calculation  48,009  47,307  47,670  47,701
         
Note: all items included within general and administrative expense unless otherwise indicated by the caption.
 
Electronics For Imaging, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
     
  September 30, December 31,
  2012 2011
     
Assets    
Cash and cash equivalents  $ 110,870  $ 120,058
Short-term investments  81,624  99,100
Accounts receivable, net  122,910  91,923
Inventories  63,653  44,788
Assets held for sale  62,144 — 
Other current assets  39,288  20,792
Total current assets  480,489  376,661
Property and equipment, net  25,804  30,096
Restricted investments —   56,850
Goodwill  202,203  164,323
Intangible assets, net  72,779  55,992
Other assets  49,640  55,812
Total assets  $ 830,915  $ 739,734
     
Liabilities & Stockholders' equity    
Accounts payable  $ 62,707  $ 46,965
Accrued and other liabilities  99,515  82,289
Income taxes payable  6,069  2,583
Total current liabilities  168,291  131,837
Contingent and other liabilities  12,785  3,427
Deferred tax liabilities  13,446  4,090
Long term taxes payable  30,359  35,597
Total liabilities  224,881  174,951
Total stockholders' equity  606,034  564,783
Total liabilities and stockholders' equity  $ 830,915  $ 739,734
 
Electronics For Imaging, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)    
(unaudited)    
     
  Nine Months Ended
  September 30,
  2012 2011
     
Cash flows from operating activities:    
Net income   $ 26,650  $ 15,988
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization 19,558 14,413
Deferred taxes 1,317 (247)
Excess tax benefit from stock-based compensation (1,186) (1,872)
Stock-based compensation 14,338 17,563
Provision for inventory obsolescence 2,574 6,055
Gain on sale of minority investment in a privately-held company —  (2,866)
Other non-cash charges and adjustments 3,867 3,805
Changes in operating assets and liabilities (41,508) (9,994)
Net cash provided by operating activities 25,610 42,845
     
Cash flows from investing activities:    
Purchases of short-term investments (34,611) (75,178)
Proceeds from sales and maturities of short-term investments 50,851 71,896
Purchases, net of proceeds from sales, of property and equipment (5,319) (7,687)
Businesses purchased, net of cash acquired (45,133) (28,966)
Proceeds from sale of minority investment in a privately-held company —  2,866
Proceeds from collection of notes receivable of acquired business 5,216 713
Net cash used for investing activities (28,996) (36,356)
     
Cash flows from financing activities:    
Proceeds from issuance of common stock 18,557 8,088
Purchases of treasury stock and net settlement of restricted stock (18,392) (45,055)
Repayment of acquired business debt (6,817) (210)
Contingent consideration related to businesses acquired (382) — 
Excess tax benefit from stock-based compensation 1,186 1,872
Net cash used for financing activities (5,848) (35,305)
     
Effect of foreign exchange rate changes on cash and cash equivalents 46 (23)
Decrease in cash and cash equivalents (9,188) (28,839)
Cash and cash equivalents at beginning of year 120,058 126,363
Cash and cash equivalents at end of period  $110,870  $ 97,524
 
Electronics For Imaging, Inc.
Revenue by Operating Segment and Geographic Area
(in thousands)
(unaudited)
         
  Three Months Ended Nine Months Ended
  September 30, September 30,
         
Revenue by Operating Segment 2012 2011 2012 2011
Industrial Inkjet  $ 79,096  $ 59,411  $ 234,008  $ 167,689
Productivity Software (1)  24,252  21,520  74,043  57,506
Fiery  50,726  66,353  169,980  203,303
Total  $ 154,074  $ 147,284  $ 478,031  $ 428,498
         
Revenue by Geographic Area        
Americas  $ 86,445  $ 84,935  $ 251,351  $ 241,980
EMEA  41,137  46,589  147,823  133,770
APAC  26,492  15,760  78,857  52,748
Japan  7,471  7,267  22,290  28,587
ROW   19,021  8,493  56,567  24,161
Total  $ 154,074  $ 147,284  $ 478,031  $ 428,498
         
         
(1) Previously referred to as APPS. In Q1 2012, we re-named our APPS operating segment as the "Productivity Software operating segment."

About our Non-GAAP Net Income and Adjustments

Use of Non-GAAP Financial Information

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

Stock quotes in this article: EFII 

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