EFI Reports Fourth Quarter And Full Year 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 [e-mail] 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 twelve months ended December 31, 2012 and 2011 is provided below. In addition, an explanation of how management uses non-GAAP financial information to evaluate its business, the substance behind management's decision to use this non-GAAP financial information, the material limitations associated with the use of non-GAAP financial information, the manner in which management compensates for those limitations, and the substantive reasons management believes that this non-GAAP financial information provides useful information to investors is included under "About our Non-GAAP Net Income and Adjustments" after the tables below.

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

Electronics For Imaging, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
	Three Months Ended December 31,		Year Ended December 31,
	2012	2011	2012	2011
Revenue	$ 174,105	$ 163,058	$ 652,137	$ 591,556
Cost of revenue	79,820	72,141	297,316	260,573
Gross profit	94,285	90,917	354,821	330,983
Operating expenses:
Research and development	30,103	30,051	120,298	115,901
Sales and marketing	32,035	31,451	125,513	119,487
General and administrative	13,893	13,206	50,727	53,756
Amortization of identified intangibles	5,160	2,528	18,594	11,248
Restructuring and other	1,273	942	5,803	3,258
Total operating expenses	82,464	78,178	320,935	303,650
Income from operations	11,821	12,739	33,886	27,333
Interest and other income (expense), net	336	(1,484)	1,137	3,087
Income before income taxes	12,157	11,255	35,023	30,420
Benefit from (provision for) income taxes	44,462	222	48,246	(2,955)
Net income	$ 56,619	$ 11,477	$ 83,269	$ 27,465
Fully Diluted EPS calculation
Net income	$ 56,619	$ 11,477	$ 83,269	$ 27,465
Net income per diluted common share	$ 1.19	$ 0.25	$ 1.74	$ 0.58
Shares used in diluted per share calculation	47,566	46,765	47,734	47,579

Electronics For Imaging, Inc.
Reconciliation of GAAP Net Income to Non-GAAP Net Income
(in thousands, except per share data)
(unaudited)
	Three Months Ended December 31,		Year Ended December 31,
	2012	2011	2012	2011
Net income	$ 56,619	$ 11,477	$ 83,269	$ 27,465
Amortization of identified intangibles	5,160	2,528	18,594	11,248
Stock based compensation – Cost of revenue	367	330	1,193	1,664
Stock based compensation – Research and development	1,532	1,711	5,719	5,723
Stock based compensation – Sales and marketing	915	1,047	3,320	4,133
Stock based compensation – General and administrative	2,572	2,718	9,490	11,848
Acquisition-related transaction costs	993	787	2,200	2,326
Imputed net expenses related to sale of building and land	377	—	377	—
Change in fair value of contingent consideration	44	—	(1,360)	1,476
Restructuring and other	1,273	942	5,803	3,258
Litigation settlements	—	—	256	—
Gain on sale of minority investment in a privately-held company	—	—	—	(2,866)
Tax effect of non-GAAP adjustments	(50,022)	(4,912)	(67,375)	(13,214)
Non-GAAP net income	$ 19,830	$ 16,628	$ 61,486	$ 53,061
Non-GAAP net income per diluted common share	$ 0.42	$ 0.36	$ 1.29	$ 1.12
Shares used in per share calculation	47,566	46,765	47,734	47,579
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)
	Years Ended December 31,
	2012	2011
Assets
Cash and cash equivalents	$ 283,996	$ 120,058
Short-term investments	80,966	99,100
Accounts receivable, net	135,110	91,923
Inventories	58,343	44,788
Other current assets	74,877	20,792
Total current assets	633,292	376,661
Property and equipment, net	86,582	30,096
Restricted investments	—	56,850
Goodwill	218,269	164,323
Intangible assets, net	80,244	55,992
Other assets	55,397	55,812
Total assets	$ 1,073,784	$ 739,734
Liabilities & Stockholders' equity
Accounts payable	$ 63,446	$ 46,965
Deferred proceeds from property transaction	180,216	—
Accrued and other liabilities	118,060	82,289
Income taxes payable	7,562	2,583
Total current liabilities	369,284	131,837
Contingent and other liabilities	17,742	3,427
Deferred tax liabilities	6,210	4,090
Long term taxes payable	29,755	35,597
Total liabilities	422,991	174,951
Total stockholders' equity	650,793	564,783
Total liabilities and stockholders' equity	$ 1,073,784	$ 739,734

Electronics For Imaging, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
	Years Ended December 31,
	2012	2011
Cash flows from operating activities:
Net income	$ 83,269	$ 27,465
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	27,032	18,765
Deferred taxes	(52,820)	(2,691)
Excess tax benefit from stock-based compensation	(1,360)	(2,038)
Stock-based compensation	19,721	23,369
Provision for inventory obsolescence	3,231	6,991
Provision for allowance for bad debts and sales-related allowances	3,250	2,010
Gain on sale of minority investment in a privately-held company	—	(2,866)
Other non-cash charges and adjustments	3,193	2,852
Changes in operating assets and liabilities	(32,162)	(1,661)
Net cash provided by operating activities	53,354	72,196
Cash flows from investing activities:
Purchases of short-term investments	(64,528)	(99,155)
Proceeds from sales and maturities of short-term investments	80,992	101,716
Purchases, net of proceeds from sales, of property and equipment	(6,147)	(9,828)
Proceeds from property transaction, net of direct transaction costs	179,173	—
Businesses purchased, net of cash acquired	(61,591)	(36,690)
Proceeds from sale of minority investment in a privately-held company	—	2,866
Proceeds from notes receivable of acquired business	5,216	713
Net cash provided by (used for) investing activities	133,115	(40,378)
Cash flows from financing activities:
Proceeds from issuance of common stock	18,958	8,123
Purchases of treasury stock and net settlement of restricted stock	(35,176)	(45,841)
Repayment of debt assumed through business acquisitions	(6,914)	(210)
Contingent consideration related to businesses acquired	(969)	(1,746)
Excess tax benefit from stock-based compensation	1,360	2,038
Net cash used for financing activities	(22,741)	(37,636)
Effect of foreign exchange rate changes on cash and cash equivalents	210	(487)
Increase (decrease) in cash and cash equivalents	163,938	(6,305)
Cash and cash equivalents at beginning of year	120,058	126,363
Cash and cash equivalents at end of period	$ 283,996	$ 120,058

 

Electronics For Imaging, Inc.
Revenue by Operating Segment and Geographic Area
(in thousands)
(unaudited)
	Three Months Ended December 31,		Year Ended December 31,
Revenue by Operating Segment	2012	2011	2012	2011
Industrial Inkjet	$ 86,219	$ 72,629	$ 320,228	$ 240,318
Productivity Software (1)	29,423	23,659	103,466	81,165
Fiery	58,463	66,770	228,443	270,073
Total	$ 174,105	$ 163,058	$ 652,137	$ 591,556
Revenue by Geographic Area
Americas	$ 102,762	$ 103,323	$ 354,114	$ 345,303
EMEA	47,574	44,701	195,397	178,471
APAC	23,769	15,034	102,626	67,782
Japan	5,580	7,068	27,870	35,655
ROW	18,189	7,966	74,756	32,127
Total	$ 174,105	$ 163,058	$ 652,137	$ 591,556
(1) Previously referred to as APPS. In Q1 2012, we re-named our APPS operating segment as the "Productivity Software" operating segment.

 

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