UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
October 23, 2000
(Date of earliest event reported)
ELECTRONICS FOR IMAGING, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-18805 94-3086355
(State or other jurisdiction (Commission IRS Employer
of incorporation) File Number) Identification No.)
303 VELOCITY WAY, FOSTER CITY, CA 94404
(Address of principal executive offices, including zip code)
(650) 357-3500
(Registrant's telephone number, including area code)
Item 2. Acquisition or Disposition of Assets
On October 31, 2000, the Registrant filed a current report on Form 8-K and
reported under Item 2 that on October 23, 2000, the Registrant acquired
approximately 94 percent of the outstanding common stock of Splash Technology
Holdings, Inc. Because it was impracticable to provide the required financial
statements and pro forma financial information related to the transaction at the
time of filing, such financial statements and pro forma financial information
were not included with that report on Form 8-K. Pursuant to Item 7(a)(2) of Form
8-K, item 7 herein supplements the earlier filing by providing the required
financial statements and pro forma financial information.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired The required financial statements
for Splash Technologies Holdings, Inc. for December 31, 1999 and June 30,
2000, as filed with the Securities and Exchange Commission on Form 10-K and
Form 10-Q, are incorporated herein by reference.
(b) Pro Forma Financial Information
The required pro forma financial statements for Electronics for Imaging,
Inc. for December 31, 1999 and June 30, 2000 are included as Exhibits to
this Form 8-K/A and are incorporated herein by reference.
(c) Exhibits.
ELECTRONICS FOR IMAGING, INC. PRO FORMA
Introduction to Unaudited Pro Forma Financial Statements...............F-2
Pro Forma Balance Sheet (Unaudited)....................................F-3
Pro Forma Statements of Operations (Unaudited).........................F-4
Notes to Pro Forma Financial Statements (Unaudited) ...................F-6
F-1
ELECTRONICS FOR IMAGING, INC.
INTRODUCTION TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
On October 23, 2000, Vancouver Acquisition Corp., a wholly owned subsidiary
of Electronics for Imaging, Inc. ("Electronics for Imaging" or the "Company"),
completed its cash tender offer for all of the outstanding shares of common
stock of Splash Technology Holdings, Inc. ("Splash"). On October 23, 2000, the
Company was merged with Splash.
The following unaudited pro forma financial statements present the balance
sheet and statement of operations data from the consolidated financial
statements of the Company combined with the historical financial data of Splash
as follows: (i) the unaudited pro forma combined balance sheet includes the
historical consolidated balance sheet data of Electronics for Imaging at June
30, 2000 combined with those of Splash at June 30, 2000 as if Splash had been
acquired on June 30, 2000 and (ii) the unaudited pro forma combined statements
of operations for the year ended December 31, 1999 and for the six months ended
June 30, 2000 include the historical consolidated statements of operations of
Electronics for Imaging for the respective periods combined with those of
Splash, as if Splash had been acquired on January 1, 1999, subject to the
assumptions and adjustments in the accompanying notes to the pro forma financial
information.
The pro forma financial statements include certain adjustments to the
historical financial statements of the Acquired Company, including adjustments
to depreciation and amortization expense to reflect purchase price allocations
and adjustments to interest income to reflect cash expended in connection with
the acquisition. With respect to other expected potential cost savings,
Electronics for Imaging has not and cannot quantify these savings and,
accordingly, they have not been included in the pro forma financial information
of the Company.
The pro forma adjustments are based on preliminary estimates, available
information and certain assumptions and may be revised as additional information
becomes available. The pro forma financial statements do not purport to
represent what the Company's financial position or results of operations would
actually have been if such transactions in fact had occurred on those dates or
project the Company's financial position or results of operations for any future
period. Since the Company and the Acquired Company were not under common control
or management for all periods, the pro forma financial results may not be
comparable to, or indicative of, future performance.
This pro forma financial information should be read in conjunction with the
historical financial statements of Electronics for Imaging and Splash.
Electronics for Imaging historical financial statements can be found in the
Company's annual report on Form 10-K filed March 17, 2000. Splash historical
financial statements can be found in the exhibits attached hereto.
F-2
ELECTRONICS FOR IMAGING, INC.
PRO FORMA BALANCE SHEET
(unaudited)
June 30, 2000
Historical Acquired Pro forma
(in thousands, except per share amounts) Company Company Adjustments Pro forma
- --------------------------------------------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 80,517 $ 51,000 $ - $131,517
Short-term investments 375,789 24,410 (146,843) (c) 253,356
Accounts receivable, net 96,304 6,382 - 102,686
Inventories 13,391 4,910 - 18,301
Other current assets 35,355 3,270 (142) (a) 38,483
- --------------------------------------------------------------------------------------------------------------------
Total current assets 601,356 89,972 (146,985) 544,343
- --------------------------------------------------------------------------------------------------------------------
Property and equipment, net 50,872 2,043 (951) (a) 51,964
Other assets 16,338 13,133 57,359 (a) 86,830
Total assets $668,566 $105,148 $ (90,577) $683,137
- --------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 46,967 $ 6,143 $ - $ 53,110
Accrued and other liabilities 27,403 8,623 - 36,026
Income taxes payable 13,908 4,070 - 17,978
- --------------------------------------------------------------------------------------------------------------------
Total current liabilities 88,278 18,836 - 107,114
Long - term obligations, less current portion 3,308 323 9,757 13,388
Commitments and Contingencies
Stockholders' equity:
Preferred stock - - - -
Common stock 565 14 (14) (d) 565
Additional paid-in capital 222,555 90,980 (85,025) (d) 228,510
Deferred stock based compensation (1,730) 1,730 (e) -
Retained earnings 397,978 (3,275) (17,025) (k) 377,678
Treasury Stock, at cost (44,118) (44,118)
- --------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 576,980 85,989 (100,334) 562,635
- --------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $668,566 $105,148 $ (90,577) $683,137
- --------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of this pro forma financial statement.
F-3
ELECTRONICS FOR IMAGING, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
(unaudited)
For the Year Ended December 31, 1999
-----------------------------------------------------
Historical Acquired Pro forma
(in thousands, except per share amounts) Company Company Adjustments Pro forma
- ------------------------------------------------------------------------------------------------------
Revenue $ 570,752 $ 70,008 $ -- $ 640,760
Cost of revenue 290,636 33,413 -- 324,049
- ------------------------------------------------------------------------------------------------------
Gross profit 280,116 36,595 -- 316,711
Operating expenses:
Research and development 74,971 15,244 -- 90,215
Sales and marketing 59,373 12,638 -- 72,011
General and administrative 18,403 3,738 9,384 (f) 31,525
Other non-recurring costs 1,422 998 -- 2,420
- ------------------------------------------------------------------------------------------------------
Total operating expense 154,169 32,618 9,384 196,171
- ------------------------------------------------------------------------------------------------------
Income from operations 125,947 3,977 (9,384) 120,540
Other income, net 16,250 3,250 (8,030)(h) 11,470
- ------------------------------------------------------------------------------------------------------
Income before income taxes 142,197 7,227 (17,414) 132,010
Provision for income taxes 46,914 1,436 (4,787)(j) 43,563
- ------------------------------------------------------------------------------------------------------
Net income $ 95,283 $ 5,791 $ (12,627) $ 88,447
- ------------------------------------------------------------------------------------------------------
Net income per basic common share $ 1.74 $ 1.61
Shares used in per-share calculation 54,853 54,853
Net income per diluted common share $ 1.67 $ 1.55
Shares used in per-share calculation 56,963 (g) 57,027
The accompanying notes are an integral part of this pro forma financial statement.
F-4
ELECTRONICS FOR IMAGING, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
(unaudited)
For the Six Months ended June 30, 2000
-----------------------------------------------------
Historical Acquired Pro forma
(in thousands, except per share amounts) Company Company Adjustments Pro forma
- ------------------------------------------------------------------------------------------------------
Revenue $ 303,691 $ 46,225 -- $ 349,916
Cost of revenue 157,136 24,969 -- 182,105
- -----------------------------------------------------------------------------------------------------------
Gross profit 146,555 21,256 -- 167,811
Operating expenses:
Research and development 41,954 7,963 -- 49,917
Sales and marketing 32,302 8,008 -- 40,310
General and administrative 11,403 2,074 4,692 (f) 18,169
- -----------------------------------------------------------------------------------------------------------
Total operating expense 85,659 18,045 4,692 108,396
- -----------------------------------------------------------------------------------------------------------
Income from operations 60,896 3,211 (4,692) 59,415
Other income, net 11,128 2,084 (4,015)(h) 9,197
- -----------------------------------------------------------------------------------------------------------
Income before income taxes $ 72,024 $ 5,295 $ (8,707) $ 68,612
Provision for income taxes 23,768 1,059 (2,394)(j) 22,433
- -----------------------------------------------------------------------------------------------------------
Net income $ 48,256 $ 4,236 $ (6,313) $ 46,179
- -----------------------------------------------------------------------------------------------------------
Net income per basic common share $ 0.86 $ 0.83
Shares used in per-share calculation 55,906 55,906
Net income per diluted common share $ 0.84 $ 0.80
Shares used in per-share calculation 57,404 (g) 57,695
The accompanying notes are an integral part of this pro forma financial statement.
F-5
ELECTRONICS FOR IMAGING, INC.
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
(unaudited)
Note 1 - Pro Forma Adjustments and Assumptions
On October 23, 2000 the Company acquired Splash for total consideration of
approximately $153.5 million, comprising $146.8 million in cash, $5.8 million
for the fair value of stock options assumed and $0.7 million of capitalized
transaction-related costs. (See (b) below.) The Acquisition has been accounted
for as a purchase business combination and accordingly, the purchase price has
been allocated to the tangible and identifiable intangible assets acquired and
liabilities assumed on the basis of their estimated fair values on the
acquisition date.
The following adjustments have been reflected in the unaudited pro forma
condensed combined financial statements:
(a) To allocate the purchase price to the fair value of the acquired assets and
liabilities of Splash at June 30, 2000. This adjustment is for illustrative
pro forma purposes only. Actual fair values will be based on financial
information as of the acquisition date (October 23, 2000). Assuming the
transaction had occurred on June 30, 2000 the allocation would have been as
follows:
"000's"
--------
Fair value of assets acquired and liabilities assumed $ 1,297
In-process research and development 20,300
Developed technology 18,500
Deferred tax liability for acquired intangibles (9,757)
Workforce-in-place 2,200
Trademarks and trade names 5,500
Goodwill 35,458
--------
$153,498
Valuation of the intangible assets acquired was determined by an
independent third-party appraiser and consists of developed technology,
trademarks and trade names, and workforce-in-place. The amount allocated to
the purchased in-process research and development was determined using
established valuation techniques and was expensed upon acquisition because
technological feasibility had not been established and no future
alternative uses exist. The percentage of completion for such products was
estimated to range from 50% to 90%. The value of this in-process research
and development ("IPRD") was determined by estimating the costs to develop
the purchased IPRD into a commercially viable product, estimating the
resulting net cash flows from the sale of the products resulting from the
completion of the IPRD and discounting the net cash flows back to their
present value at rates ranging from 25% to 30%. The excess of purchase
price over tangible and identifiable intangible assets acquired and
liabilities assumed has been recorded as goodwill.
(b) To record the accrual of estimated costs resulting from the Acquisition. It
is anticipated that the Company will incur charges related to the business
combination with Splash, currently estimated to be $2.5 million. These
charges include direct transaction costs primarily for financial advisory
and legal fees totaling $0.7 million and costs associated with terminating
certain contracts of Splash totaling $1.8 million. The estimated charge is
reflected in the unaudited pro forma condensed combined statements of
operation as merger-related expenses. The charge is a preliminary estimate
only and is subject to change. Actual amounts ultimately incurred could
differ from estimated amounts due to the actual time incurred by
professional advisors, including attorneys and accountants, as well as
negotiations between the Company and its vendors, including landlords.
(c) To reflect cash payment of $146.8 million for the acquisition of Splash.
(d) To eliminate Splash's historical invested capital.
(e) To eliminate the unamortized portion of the deferred stock-based
compensation as such shares had no intrinsic value at the date the purchase
transaction was consummated.
(f) To record amortization expense of intangible assets resulting from the
purchase business combination of Splash as if the business combination had
occurred on January 1, 1999, using estimated useful lives ranging from 4 to
7 years.
(g) Pro forma weighted average number of shares include 64,147 and 291,303
diluted options outstanding at December 31, 1999 and June 30, 2000,
respectively, for Splash common stock options assumed. Anti-dilutive
weighted shares of 1,024,043 and 33,602 at December 31, 1999 and June 30,
2000, respectively, for Splash common stock options assumed were excluded
from the pro forma weighted average number of shares.
F-6
(h) To eliminate interest income on the $146.2 million of marketable securities
used to purchase Splash. The assumed interest income yield was 5.5% per
annum.
(i) To recognize deferred tax liabilities associated with acquired intangibles.
(j) To recognize tax benefits associated with reduced interest income,
described in (h) above, and tax deductions associated with certain
amortized intangible assets purchased in the acquisition of Splash.
(k) To write-off the value assigned to the IPRD.
F-7