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 Q4 2008 Results
Revenues $135.3M and Non-GAAP EPS $0.13
Company completes real estate sale
Foster City, Calif. – January 29, 2009 – EFI (Nasdaq: EFII), the world leader in customer-focused digital printing, announced today its results for the fourth quarter of 2008. For the quarter ended December 31, 2008, the Company reported revenues of $135.3 million, compared to fourth quarter 2007 revenues of $152.0 million. The Company also announced that in the fourth quarter of 2008, it will recognize a non-cash charge currently estimated in the range of approximately $100 million to $130 million related to the impairment of goodwill and long-lived assets.
Including the non-cash charge, the GAAP net (loss) is estimated to be in the range of $(103.3) million to $(133.3) million or $(2.01) to $(2.59) per diluted share in the fourth quarter of 2008, compared to net income of $7.0 million or $0.12 per diluted share for the same period in 2007.
Including the non-cash charge, the GAAP net (loss) is estimated to be in the range of $(112.3) million to $(142.3) million or $(2.14) to $(2.71) per diluted share for the twelve months ended December 31, 2008, compared to net income of $26.8 million or $0.44 per diluted share for the same period in 2007.
Non-GAAP net income was $6.7 million or $0.13 per diluted share in the fourth quarter of 2008, compared to $14.3 million or $0.23 per diluted share for the same period in 2007.
Non-GAAP net income was $41.2 million or $0.73 per diluted share for the twelve months ended December 31, 2008, down from $78.0 million or $1.19 per diluted share for the same period in 2007.
Non-GAAP net income is computed by adjusting GAAP net income by the impact of recurring amortization of acquisition-related intangibles and in-process research and development, stock based compensation expenses, certain tax charges, asset impairment charges, as well as other non-recurring charges and gains.
“The deteriorating economic environment continued to impact our business during the quarter. In particular, our inkjet business was affected by a difficult credit environment and the global slowdown in advertising and marketing spend,” said Guy Gecht, CEO of EFI. “At the same time, the relative strength of our Fiery and software businesses helped to offset the impact from the equipment spending environment, once again proving the value of our diversified business model. We took significant measures to rationalize our spending to reflect the current business conditions while at the same time focusing on providing innovative tools to help our customers grow new sources of revenues, increase productivity, and identify areas where their costs can be trimmed.”
Today, the Company also announced that it closed the sale of certain real estate property in Foster City, California, to Gilead Sciences, Inc. (NASDAQ: GILD) for a total purchase price of $137.5 million, subject to an escrow holdback of approximately 11%. The property sold included approximately thirty acres of land, which is entitled for development, the office building located at 301 Velocity Way consisting of approximately 163,000 square feet, and certain other assets related to the property.
Impairment Analysis
Based on a combination of factors, including the current economic environment and continued erosion in market capitalization, the Company concluded that there were sufficient indicators to require EFI to perform an interim impairment analysis, including goodwill and long-lived assets, in connection with the preparation of the Company’s financial statements for the fiscal year ended December 31, 2008. EFI has not yet completed the analysis. However, the Company has concluded that impairment has occurred. The non-cash charge is currently estimated in the range of approximately $100 million to $130 million. The Company expects to finalize the impairment analysis prior to the date of filing its Annual Report on Form 10-K for the period ended December 31, 2008. The current estimates are subject to change.
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 atwww.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 a non-GAAP measure of net income that is GAAP net income adjusted to exclude certain recurring and non-recurring costs, expenses and gains. Management believes that our non-GAAP net income provides investors with useful information because it gives an indication of our baseline performance before gains, losses or other charges that are considered by management to be outside our core operating results. In addition, non-GAAP net income is among the primary indicators management uses as a basis for planning and forecasting future periods. These measures are not in accordance with or an alternative for GAAP and may be materially different from non-GAAP measures used by other companies. We compute non-GAAP net income by adjusting GAAP net income with the impact of recurring amortization of acquisition-related intangibles, stock-based compensation expenses, certain tax charges, asset impairment charges, as well as non-recurring charges and gains. The presentation of this additional information should not be considered in isolation from, as a substitute for, or superior to, net income prepared in accordance with GAAP.
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 a non-cash charge related to impairment and our impairment analysis, GAAP net loss estimates, statements about our non-GAAP net income and adjustments in “About our Non-GAAP Net Income and Adjustments.”
Past performance is not necessarily indicative of future results. 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, which include, but are not necessarily limited to the following: changes in our impairment analysis; a risk that the purchase price under the sale agreement with Gilead may be reduced or otherwise changed; management’s ability to forecast revenues, expenses and earnings, especially on a quarterly basis; unexpected declines in revenues or increases in expenses; current world-wide financial, economic and political difficulties and downturns, including the ongoing contraction in credit, and adverse variations in foreign exchange rates, that could affect demand for our products, 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; 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; excess or obsolete 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; 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 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 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 atinvestor.relations@efi.com or EFI’s Investor Relations website athttp://www.efi.com.
About EFI
EFI (www.efi.com) is the 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.
Electronics for Imaging, Inc.
Condensed Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31, | | | Twelve Months Ended
December 31, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
Revenue | | $ | 135,264 | | | $ | 152,019 | | | $ | 560,380 | | | $ | 620,586 | |
Cost of revenue | | | 59,117 | | | | 67,409 | | | | 242,963 | | | | 259,439 | |
| | | | | | | | | | | | | | | | |
Gross profit | | | 76,147 | | | | 84,610 | | | | 317,417 | | | | 361,147 | |
Operating expenses: | | | | | | | | | | | | | | | | |
Research and development | | | 34,280 | | | | 33,528 | | | | 140,437 | | | | 140,470 | |
Sales and marketing | | | 28,750 | | | | 30,454 | | | | 119,400 | | | | 120,444 | |
General and administrative | | | 6,964 | | | | 14,441 | | | | 47,584 | | | | 67,461 | |
Amortization of identified intangibles and in-process research & development | | | 8,095 | | | | 7,417 | | | | 32,047 | | | | 33,502 | |
Restructuring and other(1) | | | 2,294 | | | | — | | | | 11,005 | | | | 1,501 | |
| | | | | | | | | | | | | | | | |
Total operating expenses | | | 80,383 | | | | 85,840 | | | | 350,473 | | | | 363,378 | |
| | | | | | | | | | | | | | | | |
Loss from operations | | | (4,236 | ) | | | (1,230 | ) | | | (33,056 | ) | | | (2,231 | ) |
Interest and other income, net: | | | | | | | | | | | | | | | | |
Interest and other income | | | (318 | ) | | | 7,236 | | | | 13,476 | | | | 29,452 | |
Interest expense | | | (2 | ) | | | (1,262 | ) | | | (1,537 | ) | | | (5,012 | ) |
| | | | | | | | | | | | | | | | |
Total interest and other income, net | | | (320 | ) | | | 5,974 | | | | 11,939 | | | | 24,440 | |
| | | | | | | | | | | | | | | | |
Income (loss) before income taxes | | | (4,556 | ) | | | 4,744 | | | | (21,117 | ) | | | 22,209 | |
Benefit from income taxes | | | 1,237 | | | | 2,250 | | | | 8,866 | | | | 4,634 | |
| | | | | | | | | | | | | | | | |
Net income (loss)(1) | | $ | (3,319 | ) | | $ | 6,994 | | | $ | (12,251 | ) | | $ | 26,843 | |
| | | | | | | | | | | | | | | | |
Fully Diluted EPS calculation | | | | | | | | | | | | | | | | |
Net income (loss)(1) | | $ | (3,319 | ) | | $ | 6,994 | | | $ | (12,251 | ) | | $ | 26,843 | |
| | | | | | | | | | | | | | | | |
After-tax adjustment of convertible debt-related costs | | | — | | | | 750 | | | | — | | | | 3,000 | |
| | | | | | | | | | | | | | | | |
Income (loss) for purposes of computing diluted net income per share | | | (3,319 | ) | | | 7,744 | | | | (12,251 | ) | | | 29,843 | |
| | | | | | | | | | | | | | | | |
Net income (loss) per diluted common share | | $ | (0.06 | ) | | $ | 0.12 | | | $ | (0.23 | ) | | $ | 0.44 | |
| | | | | | | | | | | | | | | | |
Shares used in diluted per share calculation | | | 51,454 | | | | 66,732 | | | | 52,553 | | | | 68,102 | |
| | | | | | | | | | | | | | | | |
(1) | Results do not include goodwill and long-lived asset impairment charges and related income tax benefit |
Reconciliation of GAAP Net Loss, including estimated Impairment charges on Goodwill and Long-lived Assets
Estimated impairment charges and related income tax benefits on goodwill and long-lived assets not yet recorded in the fourth quarter of 2008:
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31, 2008 | | | Twelve Months Ended
December 31, 2008 | |
| | | (Estimated Range) | | | (Estimated Range) | |
| | | Low | | | High | | | Low | | | High | |
Net loss as stated above | | $ | (3,319 | ) | | $ | (3,319 | ) | | $ | (12,251 | ) | | $ | (12,251 | ) |
Estimated Impairment on Goodwill and Long-lived Assets, net of income tax benefit | | | (100,000 | ) | | | (130,000 | ) | | | (100,000 | ) | | | (130,000 | ) |
| | | | | | | | | | | | | | | | |
Estimated GAAP Net loss including estimated impairment charges | | $ | (103,319 | ) | | $ | (133,319 | ) | | $ | (112,251 | ) | | $ | (142,251 | ) |
| | | | | | | | | | | | | | | | |
Fully Diluted GAAP EPS calculation | | | | | | | | | | | | | | | | |
GAAP Net loss per diluted common share before impairment charges | | $ | (0.06 | ) | | $ | (0.06 | ) | | $ | (0.23 | ) | | $ | (0.23 | ) |
| | | | | | | | | | | | | | | | |
Expected GAAP Net loss per diluted common share with impairment charges | | | (2.01 | ) | | | (2.59 | ) | | | (2.14 | ) | | | (2.71 | ) |
| | | | | | | | | | | | | | | | |
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, | | | Twelve Months Ended
December 31, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
Net income (loss) (1) | | $ | (3,319 | ) | | $ | 6,994 | | | $ | (12,251 | ) | | $ | 26,843 | |
| | | | | | | | | | | | | | | | |
Amortization of identified intangibles | | | 7,415 | | | | 7,417 | | | | 29,367 | | | | 33,502 | |
In-process research & development | | | 680 | | | | — | | | | 2,680 | | | | — | |
Write-off of abandoned acquisition costs | | | — | | | | — | | | | — | | | | 1,513 | |
Stock based compensation expense – Cost of revenue | | | 448 | | | | 421 | | | | 2,471 | | | | 1,909 | |
Stock based compensation expense – Research and development | | | 2,515 | | | | 1,193 | | | | 12,923 | | | | 9,018 | |
Stock based compensation expense – Sales and marketing | | | 1,220 | | | | 764 | | | | 6,059 | | | | 3,968 | |
Stock based compensation expense – General and administrative | | | 2,345 | | | | 2,232 | | | | 11,873 | | | | 9,635 | |
Option review costs | | | — | | | | 2,124 | | | | 1,847 | | | | 19,341 | |
Legal reserve | | | (3,699 | ) | | | — | | | | (3,620 | ) | | | — | |
Restructuring and other | | | 2,294 | | | | — | | | | 11,005 | | | | 1,501 | |
| | | | | | | | | | | | | | | | |
Tax effect of non-GAAP adjustments | | | (3,180 | ) | | | (6,835 | ) | | | (21,144 | ) | | | (29,257 | ) |
| | | | | | | | | | | | | | | | |
Non-GAAP net income | | $ | 6,719 | | | $ | 14,310 | | | $ | 41,210 | | | $ | 77,973 | |
| | | | | | | | | | | | | | | | |
After-tax adjustment of convertible debt-related expense | | | — | | | | 750 | | | | 1,262 | | | | 3,000 | |
| | | | | | | | | | | | | | | | |
Income for purposes of computing diluted non-GAAP net income per share | | $ | 6,719 | | | $ | 15,060 | | | $ | 42,472 | | | $ | 80,973 | |
| | | | | | | | | | | | | | | | |
Non-GAAP net income per diluted common share | | $ | 0.13 | | | $ | 0.23 | | | $ | 0.73 | | | $ | 1.19 | |
| | | | | | | | | | | | | | | | |
Shares used in Non-GAAP per share calculation | | | 52,551 | | | | 66,732 | | | | 58,492 | | | | 68,102 | |
(1) | Results do not include goodwill and long-lived asset impairment charges and related income tax benefit |
Electronics for Imaging, Inc.
Condensed Consolidated Balance Sheets (unaudited)
(in thousands)
| | | | | | |
| | | December 31,
2008 | | December 31,
2007 |
Assets | | | | | | |
Cash, cash equivalents and short-term investments | | $ | 189,351 | | $ | 499,852 |
Accounts receivable, net | | | 97,286 | | | 101,955 |
Inventories, net | | | 49,226 | | | 39,949 |
Assets held for sale | | | 55,367 | | | — |
Other current assets | | | 20,781 | | | 15,844 |
| | | | | | |
Total current assets | | | 412,011 | | | 657,600 |
| | | | | | |
Property and equipment, net | | | 36,607 | | | 57,604 |
Restricted investments | | | 56,850 | | | 88,580 |
Goodwill | | | 226,572 | | | 211,780 |
Intangible assets, net | | | 72,992 | | | 86,554 |
Other assets | | | 48,009 | | | 55,621 |
| | | | | | |
Total assets (1) | | $ | 853,041 | | $ | 1,157,739 |
| | | | | | |
Liabilities & Stockholders’ equity | | | | | | |
Accounts payable | | $ | 44,634 | | $ | 42,262 |
Convertible debt | | | — | | | 240,000 |
Accrued and other liabilities | | | 70,387 | | | 96,765 |
Income taxes payable | | | 1,952 | | | 7,896 |
| | | | | | |
Total current liabilities | | | 116,973 | | | 386,923 |
Long term taxes payable | | | 33,758 | | | 26,820 |
| | | | | | |
Total liabilities | | | 150,731 | | | 413,743 |
Total stockholders’ equity | | | 702,310 | | | 743,996 |
| | | | | | |
Total liabilities and stockholders’ equity (1) | | $ | 853,041 | | $ | 1,157,739 |
| | | | | | |
(1) | Carrying values do not include goodwill and long-lived asset impairment charges and related income tax benefit |
Electronics for Imaging, Inc.
Revenue Break-Down
(in thousands) (unaudited)
| | | | | | | | | | | | |
| | | Three Months Ended
December 31, | | Twelve Months Ended
December 31, |
| | | 2008 | | 2007 | | 2008 | | 2007 |
Revenue by Product | | | | | | | | | | | | |
Controller products | | $ | 70,191 | | $ | 66,957 | | $ | 278,738 | | $ | 331,474 |
Inkjet products | | | 47,775 | | | 69,265 | | | 219,959 | | | 229,253 |
Professional printing applications | | | 17,298 | | | 15,797 | | | 61,683 | | | 59,859 |
| | | | | | | | | | | | |
Total | | $ | 135,264 | | $ | 152,019 | | $ | 560,380 | | $ | 620,586 |
| | | | | | | | | | | | |
Revenue by Geographic Area | | | | | | | | | | | | |
Americas | | $ | 77,066 | | $ | 76,999 | | $ | 297,896 | | $ | 327,232 |
EMEA | | | 42,006 | | | 54,642 | | | 194,474 | | | 216,308 |
Japan | | | 13,824 | | | 15,038 | | | 52,048 | | | 58,015 |
All other | | | 2,368 | | | 5,340 | | | 15,962 | | | 19,031 |
| | | | | | | | | | | | |
Total | | $ | 135,264 | | $ | 152,019 | | $ | 560,380 | | $ | 620,586 |
| | | | | | | | | | | | |
