Foster City, Calif. – April 20, 2006 – EFI (Nasdaq: EFII), the world leader in digital controllers, super-wide format printers and inks and print management solutions, announced today that for the quarter ended March 31, 2006, revenue was $134.3 million, up 64% compared to the first quarter 2005 revenue of $82.0 million.
Non-GAAP net income was $18.0 million or $0.28 per diluted share in the first quarter of 2006, up 400% from the $3.8 million or $0.07 per diluted share for the same period in 2005.
GAAP net income was $12.5 million or $0.20 per diluted share in the first quarter of 2006, compared to a net loss of $0.7 million or $0.01 per diluted share for the same period in 2005.
Non-GAAP net income is computed by adjusting GAAP net income by the impact of amortization of acquisition-related intangibles, stock-based compensation and other non-recurring charges and gains.
As of March 31, 2006, the Company’s total assets were $1.1 billion, even with the $1.1 billion reported as of December 31, 2005. Total liabilities as of March 31, 2006 were $365.8 million, down from the $375.8 million reported as of December 31, 2005.
“We are pleased to report results at the higher end of our range driven by solid performance in all three areas of our business. At the same time we also showed continued progress in growing our recurring revenues, due largely to a record ink revenue quarter” said Guy Gecht, CEO, EFI. “As we have discussed, we expect a robust level of new product introductions in the second half of 2006 which we believe will continue into 2007 and beyond.”
Q2 Outlook
For the second quarter of 2006 the company expects revenues in the range of $137 million to $140 million and non-GAAP earnings per share of $0.28 to $0.30. GAAP earnings are estimated to be $0.14 to $0.16 per share. GAAP net income outlook includes an estimated charge related to the implementation of FAS 123R. This estimate is subject to change. Both the non-GAAP and the GAAP earnings estimates for Q2 include the 9.1 million shares related to the Company’s contingently convertible debt.
Reconciliation of non-GAAP to GAAP EPS estimates
Non-GAAP EPS estimate
$
0.28
$
0.30
Amortization of acquisition-related intangibles
$
(0.13
)
$
(0.13
)
Amortization of stock based compensation
$
(0.07
)
$
(0.07
)
Tax effect of non-GAAP adjustments
$
0.06
$
0.06
GAAP EPS estimate
$
0.14
$
0.16
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 costs, expenses and gains. Our non-GAAP net income 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 amortization of acquisition-related intangibles, stock-based compensation and other non-recurring charges and gains. The presentation of this additional information should not be considered in isolation or as a substitute for net income prepared in accordance with GAAP.
Safe Harbor for Forward Looking Statements
The statements, “As we have discussed, we expect a robust level of new product introductions in the second half of 2006 which we believe will continue into 2007 and beyond” and “For the second quarter of 2006 the company expects revenues in the range of $137 million to $140 million and non-GAAP earnings per share of $0.28 to $0.30” and “GAAP earnings are estimated to be $0.14 to $0.16 per share” and “GAAP net income outlook includes an estimated charge related to the implementation of FAS 123R” and “This estimate is subject to change”, 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. Past performance is not necessarily indicative of future results. Forward-looking statements are subject to certain risks and uncertainties that could cause actual future results to differ materially, including, but not necessarily limited to, the following: (1) Management’s ability to forecast revenues and control expenses, especially on a quarterly basis, continues to be a challenge. Unexpected declines in revenue without a corresponding and timely decline in expenses could have a material adverse effect on results of operations; (2) current world-wide financial/economic difficulties continue including variations in foreign exchange rates; (3) variations in growth rates or declines in the printing and imaging market across various geographic regions may cause a material impact in our results; (4) changes in historic customer order patterns, including changes in customer and channel inventory levels may cause a material impact in our results; (5) changes in the mix of products sold leads to variations in results; (6) market acceptance of new products and contribution to EFI’s revenue cannot be assured; (7) delays in product delivery can cause quarterly revenues and income to fall significantly short of anticipated levels; (8) competition and/or market factors in the various markets may pressure EFI to reduce prices on certain products; (9) competition with products internally developed by EFI’s customers may result in declines in EFI sales and revenues; (10) excess or obsolete inventory and variations in inventory valuation may cause a material impact in our results; (11) continued success in technological advances, including development and implementation of new processes and strategic products for specific market segments may not be assured; (12) timely and qualitative execution in the manufacturing of products may not be assured; (13) litigation involving intellectual property or other matters may cause a material impact in our results; (14) our ability to adequately service our debt; (15) our ability to successfully integrate VUTEk’s business with our own without operational disruption to their business or ours, loss of sales, unexpected costs or adverse impact on relations with customers or suppliers; (16) our financial results as filed on Form 10-Q and Form 10-K may differ from the results included in our earnings press releases due to the complexity in accounting rules and (17) other risk factors listed from time to time in the Company’s SEC reports. EFI undertakes no obligation to update information contained in this release. For further information regarding risks and uncertainties associated with EFI’s business, please refer to the section entitled “Factors That Could Adversely Affect Performance” of EFI’s SEC filings, including, but not limited to, its annual report on Form 10-K and 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 Electronics for Imaging, Inc. / EFI
EFI (www.efi.com) is the world leader in digital controllers, superwide format printers and inks and print management solutions. EFI’s award-winning technologies offer end to end, integrated document management tools from creation to print, including high fidelity color Fiery® print servers that can output up to 2000 ppm; VUTEk superwide digital inkjet printers and UV and solvent inks capable of printing on flexible and rigid substrates; powerful print production workflow and management information software solutions for increased performance and cost efficiency; and an array of corporate printing solutions. EFI’s integrated solutions connect seamlessly, delivering unbeatable performance, cost savings and increased productivity. EFI maintains 23 offices worldwide.
Electronics for Imaging, Inc.
Three Months Ended
Three Months Ended
Consolidated Statements of Income
March 31, 2006
March 31, 2005
(in thousands, except per share data)
(unaudited)
GAAP
Non GAAPAdj.
Non GAAP
GAAP
Non GAAPAdj.
Non GAAP
Revenue
$
134,265
$
—
$
134,265
$
82,003
$
—
$
82,003
Cost of revenue1
53,099
(268
)
52,831
28,794
—
28,794
Gross profit
81,166
268
81,434
53,209
—
53,209
Operating expenses:
Research and development1
31,460
(1,540
)
29,920
26,379
—
26,379
Sales and marketing1
23,076
(525
)
22,551
16,838
—
16,838
General and administrative1,2
6,026
2,631
8,657
7,493
—
7,493
Severance expense3
—
—
—
2,685
(2,685
)
—
Amortization of identified intangibles and other acquisition related charges4
9,064
(9,064
)
—
3,176
(3,176
)
—
Total operating expenses
69,626
(8,498
)
61,128
56,571
(5,861
)
50,710
Income (loss) from operations
11,540
8,766
20,306
(3,362
)
5,861
2,499
Interest income and other income, net
3,654
—
3,654
2,519
—
2,519
Income (loss) before income taxes
15,194
8,766
23,960
(843
)
5,861
5,018
Provision for (benefit from) income taxes5
2,657
3,330
5,987
(185
)
1,440
1,255
Net income (loss)
$
12,537
$
5,436
$
17,973
$
(658
)
$
4,421
3,763
Dilutive EPS calculation
Net income (loss)
$
12,537
$
5,436
$
17,973
$
(658
)
$
4,421
$
3,763
After-tax adjustment of convertible debt-related costs
750
—
750
—
—
—
Income (loss) income for purposes of computing diluted net income (loss) per share
$
13,287
$
5,436
$
18,723
$
(658
)
$
4,421
$
3,763
Net income (loss) per diluted common share
$
0.20
$
—
$
0.28
$
(0.01
)
$
—
$
0.07
Shares used in diluted per share calculation
67,765
67,765
53,945
54,713
Reconciliation of non GAAP adjustments
1 FAS123R
$
3,475
$
—
2 Gain from adjustment to receivables allowance
(3,773
)
—
3Severance expense
—
2,685
4Amortization of identified intangibles
9,064
3,176
5Tax impact of pro forma adjustments
(3,330
)
(1,440
)
Total pro forma adjustment
$
5,436
$
4,421
Electronics for Imaging, Inc.
Consolidated Balance Sheets (unaudited)
March 31,
December 31,
(in thousands)
2006
2005
Assets
Cash, cash equivalents and short-term investments
$
491,464
$
469,616
Accounts receivable, net
78,795
67,926
Inventories, net
25,382
25,874
Other current assets
34,632
32,267
Total current assets
630,273
595,683
Property and equipment, net
49,917
49,600
Restricted investments
88,580
88,580
Goodwill
189,980
189,667
Intangible assets, net
144,715
153,722
Other assets
4,911
5,276
Total assets
$
1,108,376
$
1,082,528
Liabilities & Stockholders’ equity
Accounts payable
$
31,018
$
30,937
Accrued and other liabilities
80,935
88,035
Income taxes payable
5,964
16,327
Total current liabilities
117,917
135,299
Long term deferred tax liability
7,897
530
Long-term obligations
240,000
240,000
Total liabilities
365,814
375,829
Common stock
679
662
Additional paid-in capital
433,303
403,379
Treasury stock
(221,845
)
(214,722
)
Retained earnings
530,425
517,380
Total stockholders’ equity
742,562
706,699
Total liabilities and stockholders’ equity
$
1,108,376
$
1,082,528
Revenue Break-Down
(in thousands) (unaudited)
Three Months Ended March 31,
Revenue by Product
2006
2005
Controller products
$
75,752
$
64,611
Wide format digital inkjet products
39,868
—
Professional printing applications
18,645
17,392
Total
$
134,265
$
82,003
Revenue by Geographic Area
North America
$
67,727
$
48,367
Europe
40,004
19,709
Japan
13,491
9,798
Rest of World
13,043
4,129
Total
$
134,265
$
82,003
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