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EFI Reports Record First Quarter With Revenue Of $171M, Up 7%

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
  March 31,
  2013 2012
     
Revenue  $ 171,359  $ 160,056
Cost of revenue  77,499  72,389
Gross profit  93,860  87,667
Operating expenses:    
Research and development 31,067 30,899
Sales and marketing 32,736 30,917
General and administrative 13,698 12,902
Amortization of identified intangibles  4,927  4,184
Restructuring and other  1,902  1,084
Total operating expenses  84,330  79,986
Income from operations  9,530  7,681
Interest and other income (expense), net  (2,924)  570
Income before income taxes  6,606  8,251
Benefit from (provision for) income taxes  1,756  (2,017)
Net income  $ 8,362  $ 6,234
     
Fully Diluted EPS calculation    
Net income  $ 8,362  $ 6,234
Net income per diluted common share  $ 0.17  $ 0.13
Shares used in diluted per share calculation  47,986  47,359
 
 
Electronics For Imaging, Inc.
Reconciliation of GAAP Net Income to Non-GAAP Net Income
(in thousands, except per share data)
(unaudited)
     
  Three Months Ended
  March 31,
  2013 2012
     
Net income  $ 8,362  $ 6,234
Amortization of identified intangibles 4,927 4,184
Stock based compensation – Cost of revenue 469 298
Stock based compensation – Research and development 1,867 1,563
Stock based compensation – Sales and marketing 888 756
Stock based compensation – General and administrative 3,420 2,049
Restructuring and other 1,902 1,084
General and administrative ("G&A")    
Acquisition-related transaction costs 19 451
Change in fair value of contingent consideration (262) — 
Sublease income related to our deferred property sale (720) — 
Depreciation expense related to our deferred property sale 410 — 
Interest and other income (expense), net ("OI&E"):    
Interest expense related to our deferred property sale 880 — 
Relocation expenses related to deferred property sale 76 — 
Tax effect of non-GAAP adjustments (6,487) (2,457)
Non-GAAP net income  $ 15,751  $ 14,162
     
Non-GAAP net income per diluted common share  $ 0.33  $ 0.30
Shares used in per share calculation  47,986  47,359
 
 
Electronics For Imaging, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
     
  March 31, December 31,
  2013 2012
     
Assets    
Cash and cash equivalents  $ 298,251  $ 283,996
Short-term investments  83,210  80,966
Accounts receivable, net  126,497  135,110
Inventories  62,164  58,343
Other current assets  86,428  74,877
Total current assets  656,550  633,292
Property and equipment, net  85,679  86,582
Goodwill  216,530  219,383
Intangible assets, net  74,460  80,244
Other assets  58,380  55,397
Total assets  $ 1,091,599  $ 1,074,898
     
Liabilities & Stockholders' equity    
Accounts payable  $ 72,222  $ 63,446
Deferred proceeds from property transaction  181,096  180,216
Accrued and other liabilities  126,410  119,174
Income taxes payable  5,057  7,562
Total current liabilities  384,785  370,398
Contingent and other liabilities  7,654  17,742
Deferred tax liabilities  6,012  6,210
Long term taxes payable  31,017  29,755
Total liabilities  429,468  424,105
Total stockholders' equity  662,131  650,793
Total liabilities and stockholders' equity  $ 1,091,599  $ 1,074,898
     
Note: In accordance with ASC 805, we revised previously issued financial information to reflect adjustments to the accounting for business acquisitions as if they occurred on the acquisition date. Accordingly, we have increased goodwill and accrued and other liabilities by $1.1 million at December 31, 2012 to reflect opening balance sheet adjustments related to our acquisitions of Cretaprint, OPS, and Technique.    
     
 
Electronics For Imaging, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
     
  Three Months Ended
  March 31,
  2013 2012
     
Cash flows from operating activities:    
Net income   $ 8,362  $ 6,234
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 7,158 6,139
Deferred taxes (5,366) 602
Tax benefit from employee stock plans 1,885 127
Excess tax benefit from stock-based compensation (2,013) (385)
Stock-based compensation 6,644 4,666
Provision for (releases of) inventory obsolescence reserves 1,842 (35)
Provision for allowance for bad debts and sales-related allowances 1,337 201
Contingent consideration payments related to business acquired (618) — 
Other non-cash charges and adjustments 306 2,231
Changes in operating assets and liabilities 3,081 (9,814)
Net cash provided by operating activities* 22,618* 9,966
     
Cash flows from investing activities:    
Purchases of short-term investments (12,288) (20,415)
Proceeds from sales and maturities of short-term investments 9,860 29,298
Purchases, net of proceeds from sales, of property and equipment (2,269) (1,307)
Businesses purchased, net of cash acquired —  (29,106)
Proceeds from notes receivable of acquired business —  5,216
Net cash used for investing activities (4,697) (16,314)
     
Cash flows from financing activities:    
Proceeds from issuance of common stock 7,621 6,094
Purchases of treasury stock and net settlement of restricted stock (11,567) (1,680)
Repayment of debt assumed through business acquisitions (354) (5,547)
Contingent consideration related to business acquired (349) — 
Excess tax benefit from stock-based compensation 2,013 385
Net cash used for financing activities (2,636) (748)
     
Effect of foreign exchange rate changes on cash and cash equivalents (1,030) 706
Increase (decrease) in cash and cash equivalents 14,255 (6,390)
Cash and cash equivalents at beginning of year 283,996 120,058
Cash and cash equivalents at end of period  $ 298,251  $ 113,668
     
* If we excluded $5.5 million of taxes paid during the current quarter related to the sale of our corporate headquarters facility, then our net cash provided by operating activities would be $28.1 million for the three months ended March 31, 2013.
 
     
Electronics For Imaging, Inc.
Revenue by Operating Segment and Geographic Area
(in thousands)
(unaudited)
     
  Three Months Ended
  March 31,
     
Revenue by Operating Segment 2013 2012
Industrial Inkjet  $ 80,303  $ 75,092
Productivity Software  27,729  24,069
Fiery  63,327  60,895
Total  $ 171,359  $ 160,056
     
Revenue by Geographic Area    
Americas  $ 93,897  $ 82,181
EMEA  50,046  55,126
APAC  27,416  22,749
Japan  7,219  6,952
ROW   20,197  15,797
Total  $ 171,359  $ 160,056

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.

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