UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 0-18805
ELECTRONICS FOR IMAGING, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-3086355
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 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)
Indicate by check mark whether the registrant (1) has filed all reports required
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes [x] No [ ]
The number of shares of Common Stock outstanding as of March 31, 1999 was
53,809,636.
An Exhibit Index can be found on Page 27.
ELECTRONICS FOR IMAGING, INC.
INDEX
Page No.
PART I - Financial Information
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Statements of Income
Three Months Ended March 31, 1999 and 1998....................3
Condensed Consolidated Balance Sheets
March 31, 1999 and December 31, 1998 .........................4
Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 1999 and 1998....................5
Notes to Condensed Consolidated Financial Statements ..............6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ...................................9
Item 3. Quantitative and Qualitative Disclosures About Market Risk............24
PART II - Other Information
Items 1 - 5. Not Applicable .......................................................25
Item 6. Exhibits and Reports on Form 8-K .....................................25
Signatures .............................................................................26
PART I Financial Information
ITEM 1. Condensed Consolidated Financial Statements
ELECTRONICS FOR IMAGING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
----------------------------------------
March 31, March 31,
1999 1998
-------------- -------------
Revenue $ 120,016 $ 82,523
Cost of revenue 63,721 45,356
-------------- -------------
56,295 37,167
-------------- -------------
Operating expenses:
Research and development 16,294 14,084
Sales and marketing 13,799 15,322
General and administrative 3,923 3,461
-------------- -------------
34,016 32,867
-------------- -------------
Income from operations 22,279 4,300
Other income, net 3,427 2,221
-------------- -------------
Income before income taxes 25,706 6,521
Provision for income taxes 8,740 2,348
-------------- -------------
Net income $ 16,966 $ 4,173
============== =============
Net income per basic common share $ 0.32 $ 0.08
============== =============
Shares used in per share calculation (basic) 53,654 52,582
============== =============
Net income per diluted common share $ 0.31 $ 0.08
============== =============
Shares used in per share calculation (diluted) 55,526 54,891
============== =============
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
3
ELECTRONICS FOR IMAGING, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
March 31, December 31,
1999 1998
-------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 94,671 $ 53,210
Short-term investments 261,180 269,823
Accounts receivable, net 65,596 57,494
Inventories 10,319 13,726
Other current assets 20,255 21,382
-------------- -------------
Total current assets 452,021 415,635
Property and equipment, net 46,289 46,579
Other assets 9,562 9,818
-------------- -------------
Total assets $ 507,872 472,032
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable $ 39,920 $ 32,707
Accrued and other liabilities 25,584 26,953
Income taxes payable 13,791 9,672
-------------- -------------
Total current liabilities 79,295 69,332
-------------- -------------
Long-term debt, less current portion 3,777 3,777
-------------- -------------
Stockholders' equity:
Preferred Stock, $.01 par value, 5,000,000 shares
authorized; none issued and outstanding -- --
Common Stock, $.01 par value, 150,000,000 shares authorized;
53,809,636 and 53,499,233 shares issued and outstanding,
respectively 538 535
Additional paid-in capital 160,178 151,270
Retained earnings 264,084 247,118
-------------- -------------
Total stockholders' equity 424,800 398,923
-------------- -------------
Total liabilities and stockholders' equity $ 507,872 $ 472,032
============== =============
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
4
ELECTRONICS FOR IMAGING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended March 31,
----------------------------------------
1999 1998
-------------- -------------
Cash flows from operating activities:
Net income $ 16,966 $ 4,173
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 3,384 2,823
Change in reserve for bad debts (18) --
Other (32) --
Changes in operating assets and liabilities:
Accounts receivable (8,084) (7,139)
Inventories 3,407 485
Receivable from subcontract manufacturers 702 (4,749)
Other current assets 425 (769)
Accounts payable and accrued liabilities 5,634 9,228
Income taxes payable 8,310 1,030
-------------- -------------
Net cash provided by operating activities 30,694 5,082
-------------- -------------
Cash flows from investing activities:
Purchases, sales & maturities of
short-term investments, net 8,643 279
Investment in property and equipment, net (2,849) (3,887)
Decrease of other assets, net 11 29
-------------- -------------
Net cash provided by (used for)
investing activities 5,805 (3,579)
-------------- -------------
Cash flows from financing activities:
Issuance of common stock 4,962 290
-------------- -------------
Net cash provided by financing activities 4,962 290
-------------- -------------
Net change in cash and cash equivalents 41,461 1,793
Cash and cash equivalents at beginning of period 53,210 57,195
-------------- -------------
Cash and cash equivalents at end of period $ 94,671 $ 58,988
============== =============
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
5
ELECTRONICS FOR IMAGING, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands)
(Unaudited)
1. Basis of Presentation
The unaudited interim condensed consolidated financial statements of
Electronics for Imaging, Inc. (the "Company") as of and for the interim
period ended March 31, 1999, have been prepared on the same basis as
the audited consolidated financial statements as of and for the year
ended December 31, 1998, contained in the Company's Annual Report to
Stockholders, and, in the opinion of management, include all
adjustments (consisting only of normal recurring adjustments) necessary
to present fairly the financial position of the Company and the results
of its operations and cash flows, in accordance with generally accepted
accounting principles. The interim condensed consolidated financial
statements should be read in conjunction with the audited consolidated
financial statements and notes thereto referred to above.
The preparation of the interim condensed consolidated financial
statements in conformity with generally accepted accounting principles
for such financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities as of the date of
the interim condensed consolidated financial statements and the
reported amounts of revenue and expenses during the reporting period.
Actual results could differ from these estimates.
The interim results of the Company are subject to fluctuation. As a
result, the Company believes the results of operations for the interim
period ended March 31, 1999 are not necessarily indicative of the
results to be expected for any other interim period or the full year.
2. Comprehensive Income
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130 (SFAS 130) "Reporting Comprehensive
Income". This statement requires that all items recognized under
accounting standards as components of comprehensive earnings be
reported in an annual financial statement that is displayed with the
same prominence as other annual financial statements. This statement
also requires that an entity classify items of other comprehensive
earnings by their nature in an annual financial statement. There was no
material difference between comprehensive income and net income for the
quarter ending March 31, 1999.
6
3. Accounting for Derivative Instruments and Hedging
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133 (SFAS 133) "Accounting for
Derivative Instruments and Hedging". This statement establishes
accounting and reporting standards for derivative instruments and for
hedging activities and requires, among other things, that all
derivatives be recognized as either assets or liabilities in the
statement of financial position and measure those instruments at fair
value. SFAS 133 is effective for fiscal quarters and fiscal years
beginning after June 15, 1999. The Company is currently studying the
provisions of the SFAS 133 and the potential impact it may have on its
financial statements.
4. Earnings Per Share
The following table represents unaudited disclosures of basic and
diluted earnings per share for the periods presented below:
Three Months Three Months
Ended Ended
(in thousands, except per share amounts) March 31, 1999 March 31, 1998
-------------- --------------
Net income available to common shareholders $16,966 $ 4,173
======= =======
Shares
Basic shares 53,654 52,582
Effect of Dilutive Securities 1,872 2,309
------- -------
Diluted shares 55,526 54,891
======= =======
Earnings per common share
Basic EPS $ 0.32 $ 0.08
Diluted EPS $ 0.31 $ 0.08
Antidilutive Options. Options to purchase 1,304,851 and 1,852,799
shares of common stock outstanding as of March 31, 1999 and March 31,
1998 were not included in the computations of diluted EPS because the
options' exercise prices were greater than the average market price of
the common shares for the three month-periods then ended.
7
5. Balance Sheet Components (in thousands)
March 31, December 31,
1999 1998
-------- -------
Accounts receivable:
Accounts receivable $ 67,032 $ 58,948
Less reserves and allowances (1,436) (1,454)
-------- --------
$ 65,596 $ 57,494
======== ========
Inventories:
Raw materials $ 9,538 $ 13,261
Work-in-process 232 17
Finished goods 549 448
-------- --------
$ 10,319 $ 13,726
======== ========
Other current assets:
Receivable from subcontract manufacturers $ 4,664 $ 5,366
Other 15,591 16,016
-------- --------
$ 20,255 $ 21,382
======== ========
Property and equipment:
Land $ 27,767 $ 27,706
Equipment and purchased software 46,219 44,348
Furniture and leasehold improvements 8,279 7,565
-------- --------
82,265 79,619
Less accumulated depreciation and amortization (35,976) (33,040)
-------- --------
$ 46,289 $ 46,579
======== ========
Accrued and other liabilities:
Accrued product-related obligations $ 5,685 $ 4,650
Accrued royalty payments 7,829 8,232
Accrued compensation and benefits 5,001 6,383
Other accrued liabilities 7,069 7,688
-------- --------
$ 25,584 $ 26,953
======== ========
8
6. Legal Proceedings
The Company and certain principal officers and directors were named as
defendants in class action complaints filed in both the California
Superior Court of the County of San Mateo on December 16,1997, and the
United States District Court for the Northern District of California on
January 2, 1998 on behalf of purchasers of the common stock of the
Company during the class period from April 10, 1997, through December
11, 1997. The complaints allege violations of securities laws during
the class period. Management believes the lawsuits are without merit
and that the outcome will not have a material adverse effect on the
financial position or overall trends in the results of operations of
the Company. However, due to the inherent uncertainties of litigation,
the Company cannot accurately predict the ultimate outcome of the
litigation. Any unfavorable outcome of the litigation could have an
adverse impact on the Company's financial condition and results of
operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
Management's Discussion and Analysis and the audited consolidated financial
statements of Electronics for Imaging, Inc. (the "Company") and related notes
thereto contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 1998. Results for the three months ended March 31, 1999 are not
necessarily indicative of the results expected for the entire fiscal year ended
December 31, 1999. All assumptions, anticipations, expectations and forecasts
contained herein are forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed here. For a more complete discussion of factors which might impact the
Company's results, please see the section entitled "Factors that Could Adversely
Affect Performance" below and in the Company's 1998 Annual Report on Form 10-K,
as filed with the Securities and Exchange Commission.
RESULTS OF OPERATIONS FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1999 AND MARCH
31, 1998
Revenue
Revenue increased 45% to $120.0 million in the three month period ended March
31,1999 compared to $82.5 million in the three month period ended March 31,
1998. The increase in revenue was primarily due to significant increases in unit
volumes shipped, positive market acceptance of new product introductions and the
impact of new customers, partially offset by price reductions on older product
lines.
The Company's revenue is principally derived from three major categories. The
first category is made up of stand-alone servers which connect digital color
copiers with computer networks. This category includes the Fiery XJ+, X2 and ZX
products and accounted for a majority of the Company's revenue prior to 1998.
The second category is made up of embedded / desktop controllers, bundled color
solutions and chipset solutions primarily for the office market. The third
category is made up of controllers for digital black and white products.
9
The following is a break-down of categories by revenue, both in terms of
absolute dollars and as a percentage (%) of total. Also shown is volume as a
percentage (%) of total units shipped.
Three Months Three Months
Ended Ended Increase /
Revenue March 31, 1999 March 31, 1998 (Decrease)
(in thousands) Revenue Revenue %
------- ------- --------
Stand-alone Servers Connecting
to Digital Color Copiers $ 59,329 49% $ 64,129 78% (7)%
Embedded / Desktop Controllers,
Bundled Color Solutions
& Chipset Solutions 31,664 27% 9,909 12% 220%
Controllers for Digital
Black and White Solutions 16,794 14% 1,128 1% 1,389%
Spares, Licensing
& Other misc. sources 12,229 10% 7,357 9% 66%
-------- ---- -------- ---- --------
Total Revenue $120,016 100% $ 82,523 100% 45%
======== ==== ======== ==== ========
Three Months Three Months
Ended Ended
Volume March 31, 1999 March 31, 1998
Volume Volume
------ ------
Stand-alone Servers Connecting
to Digital Color Copiers 15% 60%
Embedded / Desktop Controllers,
Bundled Color Solutions
& Chipset Solutions 59% 37%
Controllers for Digital
Black and White Solutions 26% 3%
Spares, Licensing
& Other misc. sources -- --
---- ----
Total Revenue 100% 100%
==== ====
10
Growth in 1999 primarily took place in the two newer categories: controllers for
digital black & white solutions and embedded / desktop controllers, bundled
color solutions and chipset solutions. The Company's traditional business of
stand-alone servers connecting to digital color copiers decreased further, which
is consistent with the trend since early 1998. The Company is seeing a trend of
the market moving away from mid-range servers to high-end servers and desktop /
embedded products.
The segment of controllers for digital black & white solutions accounted for 14%
of total revenue and 26% of total units for the three month period ended March
31, 1999, compared to 1% of total revenue and 3% of total units shipped for the
same period in 1998. The segment of embedded desktop controllers, bundled color
solutions and chipset solutions accounted for 27% for total revenue and 59% of
total units for the three month period ended March 31, 1999, compared to 12% of
total revenue and 37% of total units for the same period in 1998.
The products in the two growth segments, except for chipset solutions, are
generally characterized by much higher unit volumes but lower unit prices and
associated margins than the Company has experienced in its more traditional
stand-alone server line of products. The chipset solutions can be characterized
by lower unit prices and higher per unit margins compared to the traditional
stand-alone server line of products. The Company anticipates further growth in
these two categories as a percentage of total revenue. To the extent these
categories do not grow over time in absolute terms, or if the Company is not
able to meet demand for higher unit volumes, it could have a material adverse
effect on the Company's results. The Company believes that stand-alone server
products have not experienced revenue growth for the three-month period ended
March 31, 1999 compared to the three-month period ended March 31, 1998, due to a
number of factors. Since early 1998, low-end products that previously shipped as
stand-alone products have begun to ship as embedded products. In addition,
desktop products are replacing stand-alone servers as the price / performance
relationship on the newer color desktop printers continues to improve. Finally,
prices have been reduced on older product lines as new products have begun to
ship in volume. There can be no assurance that the new products for the
remainder of 1999 will be qualified by all the OEMs, or that they will
successfully compete, or be accepted by the market, or otherwise be able to
effectively replace the volume of revenue and / or income from the older
products.
The Company also believes that in addition to the factors described above, price
reductions for all of its products may affect revenues in the future. The
Company has made and may in the future make price reductions for its products.
Depending upon the price-elasticity of demand for the Company's products, the
pricing and quality of competitive products, and other economic and competitive
conditions, such price reductions may have an adverse impact on the Company's
revenues and profits. If the Company is not able to compensate for lower gross
margins that may result from price reductions with an increased volume of sales,
its results of operations could be adversely affected. In addition, if the
Company's revenue in the future depends more upon sales of products with
relatively lower gross margins than the Company obtained in the first quarter of
1999 (such as embedded controllers for printers, embedded controllers for color
and black-and-white copiers, and stand-alone controllers for black-and-white
copiers), results of operations may be adversely affected.
11
Shipments by geographic area for the three-month periods ended March 31, 1999
and March 31, 1998 were as follows:
Three Months Three Months
Ended Ended
March 31, 1999 March 31, 1998 % Change
-------------- --------------
(in thousands)
North America $53,748 45% $37,761 46% 42 %
Europe 41,641 35% 29,662 36% 40 %
Japan 22,175 18% 12,769 15% 74 %
Rest of World 2,452 2% 2,331 3% 5 %
-------- ---- ------- ---- ----
$120,016 100% $82,523 100% 45%
======== ==== ======= ==== ====
Whereas shipments to North America, Europe and Japan increased significantly for
the three-month period ended March 31, 1999 compared to the same period in 1998,
the Rest of World region experienced modest growth of 5% during the same time
periods. The Rest of World is predominantly represented by the Southeast Asian
region, and the modest increase in export sales in the three month period ended
March 31, 1999 compared to the three month period ended March 31, 1998 is a
reflection of the challenging economic situation in that region. Although such
conditions are difficult to predict, the Company does not assume that there will
be a significant improvement in the economic conditions in Asia in the remainder
of 1999, and limited demand from Asia may have an adverse impact on the
Company's results of operations.
As shipments to some of the Company's OEM partners are made to centralized
purchasing and manufacturing locations which in turn sell through to other
locations, the Company believes that export sales of its products into each
region may differ from what is reported. The Company expects that export sales
will continue to represent a significant portion of its total revenue.
Substantially all of the revenue for the last three years was attributable to
sales of products through the Company's OEM channels with such partners as
Canon, Epson, Fuji-Xerox, IBM, Hewlett-Packard, Kodak/Danka Business Systems,
Konica, Lanier, Minolta, Oce, Ricoh, Sharp, Xerox and others. During 1999, the
Company has continued to work on both increasing the number of OEM partners, and
expanding the size of existing relationships with OEM partners. The Company
relied on three OEM customers, Canon, Xerox and Minolta in aggregate for 68% of
its revenue for the three-month period ended March 31, 1999. The Company relied
on three OEM customers, Canon, Xerox and Ricoh in aggregate for 76% of its
revenue for the three-month period ended March 31, 1998. In the event that any
of these OEM relationships are scaled back or discontinued, the Company may
experience a significant negative impact on its consolidated financial position
and results of operations. In addition, no assurance can be given that the
Company's relationships with these OEM partners will continue.
12
The Company continues to work on the development of products utilizing both the
Fiery architecture and other products and intends to continue to introduce new
generations of Fiery products and other new product lines during the remainder
of 1999 and beyond. No assurance can be given that the introduction or market
acceptance of new, current or future products will be successful.
It is also possible that revenues in the future may be affected if individuals
with responsibility for purchasing the Company's Fiery products, such as
information technology professionals, choose to devote available discretionary
resources to other perceived needs, such as technology expenses associated with
Year 2000 preparation and / or Euro currency conversion projects. In addition,
Companies that performed successfully Year 2000 compliant testing might not be
willing to buy external products until year 2000 in order to avoid any risks
associated with external products. At this time, the Company cannot determine
how much impact, if any, these factors may have.
Cost of Revenue
Third-party manufacturers who purchase most of the necessary components
manufacture Fiery color servers as well as embedded / desktop controllers and
digital black and white products. The Company sources directly processors,
memory, certain ASICs, and software licensed from various sources, including
PostScript interpreter software, which the Company licenses from Adobe Systems,
Inc.
Included in cost of revenue as well as operating expenses for the three-month
period ended March 31, 1999, are one-time costs of moving to the Company's new
corporate headquarters in Foster City, California. Total moving costs for the
three month period ended March 31, 1999 amounted to $1.8 million of which
approximately $0.2 million related to cost of revenue.
Gross Margins
The Company's gross margin was 47% and 45% for the three-month periods ended
March 31, 1999 and March 31, 1998, respectively. The slight increase in gross
margin was due to a combination of factors, including the product mix and the
mix of OEM partners during the two time periods. Slightly offsetting these
manufacturing efficiencies, were price reductions on older product lines. In
addition, the increased volume and resulting production shift to larger
subcontractor manufacturers resulted in efficiencies in purchasing and
manufacturing in the three-month period ended March 31, 1999 as compared to the
same time period one year ago.
The Company expects that sales of products with relatively lower margins may
further increase as a percentage of revenue. Such products include older
products for which prices are reduced during product transitions, embedded
products for both desktop printers and copiers, and stand-alone servers and
embedded controllers for black-and-white copiers.
If such sales increase as a percentage of the Company's revenue, gross margins
may decline, unless the Company is able to obtain additional efficiencies in
purchasing and manufacturing.
The Company's ability to maintain current gross margins may not continue. In
addition to the factors affecting revenue described above, the Company expects
to be subject to pressures to reduce prices, and as a result, gross margins for
all of its products may be lower.
13
In general, the Company believes that gross margin will continue to be impacted
by a variety of factors. These factors include the market prices that can be
achieved on the Company's current and future products, the availability and
pricing of key components (including DRAM and Postscript interpreter software),
third party manufacturing costs, product, channel and geographic mix, the
success of the Company's product transitions and new products, competition, and
general economic conditions in the United States and abroad. Consequently, the
Company anticipates gross margins will fluctuate from period to period.
Operating Expenses
Operating expenses increased by 3% to $34.0 million for the three months period
ended March 31, 1999 compared to $32.9 million for the three months period ended
March 31, 1998. Operating expenses as a percentage of revenue amounted to 28%
for the three months period ended March 31, 1999 and 40% for the three months
period ended March 31, 1998. Excluding the one time moving expenses allocated to
operating expenses of approximately $1.6 million, operating expenses decreased
by 1% for the three month period ended March 31, 1999 compared to the same
period in 1998. The relatively flat operating expenses are the result of the
Company's successful spending control during early 1999, and the shift toward
more embedded / desktop and black and white business which requires less sales
and marketing support on the Company's part.
The Company anticipates that operating expenses will continue to grow and may
increase both in absolute dollars and as a percentage of revenue.
The components of operating expenses are detailed below.
Research and Development
Expenses for research and development consist primarily of personnel expenses
and, to a lesser extent, consulting, depreciation and costs of prototype
materials. Research and development expenses amounted to $16.3 million or 14% of
revenue for the three months period ended March 31, 1999 compared to $14.1
million or 17% of revenue for the three months period ended March 31, 1998.
Excluding the one time moving expenses allocated to research and development
expenses of approximately $0.9 million, research and development expenses
amounted to $15.4 million or 13% of total revenue for the three months period
ended March 31, 1999. The majority of the 16% increase (or 9% increase excluding
the one time moving expenses) of research and development expenses in the first
quarter of 1999 compared to the same quarter in 1998 was due to an increase in
research and development projects. This resulted in increased headcount related
costs (increase of headcount by 21 employees as of March 31, 1999 compared to
March 31, 1998). The Company believes that the development of new products and
the enhancement of existing products are essential to its continued success, and
intends to continue to devote substantial resources to research and new product
development efforts. Accordingly, the Company expects that its research and
development expenses may continue to increase in absolute dollars and also as a
percentage of revenue.
14
Sales and Marketing
Sales and marketing expenses include personnel expenses, costs for trade shows,
marketing programs and promotional materials, sales commissions, travel and
entertainment expenses, depreciation, and costs associated with sales offices in
the United States, Europe, Japan and other locations around the world. Sales and
marketing expenses amounted to $13.8 million or 12% of revenue for the
three-month period ended March 31, 1999 compared to $15.3 million or 19% of
revenue for the three-month period ended March 31, 1998. Excluding the one time
moving expenses related to sales and marketing costs of $0.4 million, sales and
marketing expenses amounted to $13.4 million for the three-month period ended
March 31, 1999. Sales and marketing expenses decreased by 10% (or 12% excluding
the one-time moving expenses) in the three-month period ended March 31, 1999
over the three-month period ended March 31, 1998. The decrease is the result of
the lower relative promotional expenses required to support the growing two
newer business segments compared to the traditional segment of stand-alone
servers connecting to digital color copiers. The decrease in expenses was
partially offset by an increase in headcount by 7 employees as of March 31, 1999
compared to March 31, 1998.
The Company expects that its sales and marketing expenses may increase in
absolute dollars and possibly also as a percentage of revenue as it continues to
actively promote its products, launch new products and continue to build its
sales and marketing organization, particularly in Europe and Asia Pacific,
including Japan. This increase might not proportionally increase with increases
in volume, if the Company's sales continue to gravitate toward embedded desktop
controllers, bundled color solutions and chipset solutions as well as
controllers for digital black and white solutions, which require less support
from the Company as the OEM partners take over this role.
General and Administrative
General and administrative expenses consist primarily of personnel expenses and,
to a lesser extent, depreciation and facility costs, professional fees and other
costs associated with public companies. General and administrative expenses
amounted to $3.9 million or 3% of revenue for the three-months period ended
March 31, 1999, compared to $3.5 million or 4% of revenue for the three-month
period ended March 31, 1998. General and administrative expenses increased by
11% (or by 3 % excluding the one-time moving expenses of approximately $0.3
million) in the three-months period ended March 31, 1999 over the three-months
period ended March 31, 1998. While general and administrative expenses have
remained relatively constant as a percentage of total revenue during the two
periods, these expenses have slightly increased in absolute dollars. The
increases were primarily due to the increase in headcount in order to support
the needs of the growing Company's operations, including the use of outside
consultants. Headcount increased by 15 employees as of March 31, 1999 compared
to March 31, 1998. The Company expects that its general and administrative
expenses may continue to increase in absolute dollars and possibly also as a
percentage of revenue in order to support the Company's efforts to grow its
business.
Other Income
Other income relates mainly to interest income and expense, and gains and losses
on foreign currency transactions. Other income amounted to $3.4 million in the
first quarter of 1999 compared to $2.2 million in the first quarter of 1998. The
55% increase in other income is due to the interest earned on the higher average
cash and short-term investment balances for the three-month period ended March
31, 1999 as compared to the three-month period ended March 31, 1998. Included in
other income for the three-month period ended March 31, 1998 are approximately
$0.3 million in losses suffered on Asian currency denominated transactions.
Although the Company's exposure to currency fluctuations has been relatively
minor, in response to currency fluctuations in Asia, the, Company began to
implement a hedging program in June 1998.
15
Income Taxes
The Company's effective tax rate was 34% for the first quarter ended March 31,
1999 compared to 36% for the first quarter ended March 31, 1998. The effective
tax rate for the three-month period ended March 31, 1998 was retroactively
adjusted to 32% in the third quarter of 1998. The increase in the effective tax
rate for the three-month period ended March 31, 1999 compared to the adjusted
effective tax rate for the three-month period ended March 31, 1998 was primarily
due to the fact that the research and development credit is scheduled to expire
mid-year of 1999.
LIQUIDITY AND CAPITAL RESOURCES
Cash, cash equivalents and short-term investments increased by $32.9 million to
$355.9 million as of March 31, 1999, from $323.0 million as of December 31,
1998. Working capital increased by $26.4 million to $372.7 million as of March
31, 1999, up from $346.3 million as of December 31, 1998. These increases were
primarily the result of net income, changes of balance sheet components and the
exercise of employee stock options.
Net cash provided by operating activities was $30.7 million and $5.1 million for
the three-month periods ended March 31, 1999 and March 31, 1998, respectively.
Cash provided by operating activities increased by $25.6 million, primarily due
to a significant increase in net income, a reduction in inventory levels, a
reduction of receivables from subcontractors and an increase in taxes payable.
During the first quarter of 1999, the Company continued to invest cash in
short-term investments, mainly municipal securities. Due to capital market
situations during the first three months of 1999, the Company invested
relatively more cash in securities with a maturity at the date of purchase of
less than 90 days, which resulted in an increase of cash and cash equivalents of
$41.5 million and a decrease of short-term investments of $8.6 million from
December 31, 1998 compared to March 31, 1999.
The Company's capital expenditures generally consist of investments in computers
and related peripheral equipment and office furniture for use in the Company's
operations. The Company purchased approximately $2.8 million and $3.9 million of
such equipment and furniture during the three month periods ended March 31, 1999
and March 31, 1998, respectively.
16
In 1997, the Company entered into an agreement to lease a ten-story 295,000
square foot building to be constructed in 1998 and 1999 on 35 acres, which the
Company owns in Foster City, California. The lessor of the building has
committed to fund up to a maximum of $65.0 million for the construction to be
directed by the Company. Rent payments for the building will commence upon
completion of construction and bear a direct relationship to the carrying cost
of the amount drawn on the commitment. The initial term of the lease is 7 years
with options to purchase at any time. As of March 31, 1999, the Company has
drawn $46.0 million on the commitment. The building construction is scheduled to
be completed in the second quarter of 1999. The move to the new corporate
headquarters was completed in the first quarter of 1999 and the Company incurred
one time moving expenses of approximately $1.8 million during the first quarter
of 1999. Also in conjunction with the lease, the Company has entered into a
separate ground lease with the lessor of the building for approximately 35
years. The Company has guaranteed a residual value associated with the building
to the lessor of approximately 82% of the lessor's funding. If the Company
defaults on the lease, does not renew the lease, does not purchase the building
or does not arrange for a third party purchase of the building at the end of the
lease term, it may be liable to the lessor for the amount of the residual
guarantee. As part of the lease agreement the Company must maintain a minimum
tangible net worth. In addition, the Company has pledged certain marketable
securities ($55.4 million at March 31, 1999) to be held in proportion to the
amount drawn in order to secure a more favorable lease rate and avoid other
covenant restrictions. The Company may use these funds at any time, but their
conversion would also result in an increase to the lease rate and the imposition
of additional financial covenant restrictions.
Cash provided by the exercise of stock options amounted to $5.0 million for the
three-months period ended March 31, 1999, a $4.7 million increase over the
corresponding period in 1998. The increase was due to a higher volume of stock
option exercises as a result of the higher relative market prices available for
the stock during the three-month period ended March 31, 1999 compared to the
three-month period ended March 31, 1998.
The Company believes that its existing capital resources, together with cash
generated from continuing operations will be sufficient to fund its operations
and meet capital requirements for at least the next twelve-month period.
Year 2000 Status
Although the Company has not completed a formal contingency plan for potential
Year 2000 related problems, management has taken steps and continues to assess
the possible effects and potential solutions for a Year 2000 problem. The
Company has updated substantially all of its computer system infrastructure over
the last few years, and management believes that all critical pieces of hardware
and software have been represented to be Year 2000 compliant by their
manufacturers. In some cases compliance is expected to be met by releases of
software updates from the manufacturers that were scheduled to be released by
the end of March 1999 but have now been delayed until the second quarter of
1999. For software that is currently available and represented to be compliant,
the Company is performing limited tests on the manufacturing representations.
Due to the complexities involved in moving into the new building in the first
quarter of 1999, the Company was only able to spend approximately $0.1 million
of the approximately $1.0 million the Company has allotted to spend in fiscal
1999 on addressing and preparing for a potential Year 2000 problem. The Company
anticipates spending at a significantly higher rate during the second quarter
fiscal 1999.
17
Although the Company continues to review and test, based on the reviews to date,
the Company currently believes that Year 2000 issues will not materially affect
its internal MIS systems. However, there can be no assurance that the Company
will have identified or procured all of the resources necessary to address all
critical Year 2000 deficient hardware and software systems on a timely basis and
the Company may need to spend additional amounts to identify, modify or repair
internal systems.
The Company has tested its products to determine if the products will
successfully rollover from the years 1999 to 2000 and 2000 to 2001, and if the
products will correctly recognize the date February 29, 2000. Products first
released after November 1, 1997 have passed internal tests for these criteria,
and future products will be required to pass the same internal tests before
shipping. The estimated installed base of products released before November 1,
1997 is considered to be relatively small. Although all of these products are
expected to continue to be functional at some level, the Company has notified
each of the OEM customers about the potential problems that may be encountered.
Because the Company cannot control other companies' products used in conjunction
with the Company's products (such as other companies' software), the Company
does not intend to assure its customers that its products will meet the above
referenced criteria when used in conjunction with any other software or hardware
not manufactured by the Company.
To date the Company has not reviewed Year 2000 plans and preparations of its
significant manufacturers, suppliers, customers and other critical third parties
with whom it does business. The Company is currently in the process of
identifying and contacting these third parties and anticipates completion of
this process by the end of June 1999. The Company has also begun to work on
contingency plans and currently believes that internal problems encountered in
handling transactions could be processed manually for a short period of time.
The contingency plans will be more fully developed by the third quarter of 1999.
The Company continues to assess the effects and costs associated with possible
Year 2000 problems, however, the total effects and costs are unknown to the
Company at this time, and there can be no assurance that such effects and costs
will not have a materially adverse effect on the Company, its financial
condition, or results of operations.
Euro Assessment
Eleven of the fifteen member countries of the European Union have established
fixed conversion rates between their existing sovereign currencies and the Euro
and have adopted the Euro as a common currency as of January 1, 1999. The Euro
is trading on currency exchanges and is available for non-cash transactions. The
conversion to the Euro is not expected to have a material adverse effect on the
operating results of the Company as the Company predominantly invoices in US
Dollars. The Company is currently in the process of evaluating the reporting
requirements in the respective countries and the related system, legal and
taxation requirements. The Company expects that required modifications will be
made on a timely basis and that such modifications will not have a material
adverse impact on the Company's operating results. There can be no assurance,
however, the Company will be able to complete such modifications to comply with
Euro requirements, which could have a material adverse effect on the Company's
operating results.
18
Factors That Could Adversely Affect Performance
The following factors may adversely impact the Company's future performance and
financial results:
Reliance on OEM Resellers; Risks Associated with Significant OEM Group
Concentration
The Company's strategy of selling principally to OEMs anticipates that the
Company will be relying on high sales volumes to a relatively small number of
customers. Although there can be no assurance that the Company's major customers
will continue to utilize the Company's products at current levels, if at all,
the Company expects to continue to depend upon such customers for a significant
percentage of its revenues. A decline in demand for color and black and white
copiers or laser printers, or other factors affecting the computer industry in
general, or major customers in particular, may adversely affect the Company's
results of operations.
The Company relies upon the ability of its OEMs to develop new products,
applications and product enhancements on a timely and cost-effective basis. The
ability of these OEMs to meet changing customer needs and respond to emerging
industry standards and other technological changes is essential to the Company's
continued success. There is no assurance that the Company's OEMs will
effectively meet these technological challenges. These OEMs, who are not within
the control of the Company, may incorporate into their products the technologies
of other companies in addition to, or instead of the Company's products, and
with the exception of certain minimum purchase obligations, are not obligated to
purchase products from the Company. There can be no assurance that any OEM will
continue to carry the Company's products; and the loss of important OEMs, or an
inability to recruit additional OEMs, may have a material adverse effect on the
Company's business, operating results, and financial condition.
The Company's sales have been and will continue to be heavily influenced by
order quantities and timing of delivery to its OEMs. No assurance can be given
that the Company will be able to successfully maintain sales of its products in
any OEM channel. The Company's sales may be adversely affected if an OEM
introduces or supports additional products that compete with the Company's
products, fails to effectively market the Company's products, modifies its color
and black and white copiers or printers such that the Company's products are no
longer compatible, introduces new copiers or printers that are incompatible with
the Company's products, or does not allow the Company's products to support all
of the features available on its new copiers or printers.
Although the Company is pursuing, and will continue to pursue, the business of
additional copier and printer OEMs, customer concentration will continue to be a
risk due to the limited number of OEMs producing copiers and printers in
sufficient volume to be attractive to the Company.
Delays in Product Launches; Product Transitions
Although the Company plans to introduce new products, delays in the launch or
availability of these products could have an adverse effect on the Company's
financial results. Product transitions also carry the risk that customers will
delay or cancel orders for existing products. If the Company is not able to
successfully manage product transitions or cannot guarantee the availability of
products once they have been introduced, its results of operations may be
adversely affected.
19
Product Diversification and Coordination of Development with Customers
The Company's customers have historically requested a broader range of products
with different and unique features, and the Company believes that this trend may
continue. If the Company cannot successfully manage the effort and risks
associated with a broader range of products, its results of operations may be
adversely affected.
The Company's customers work closely with the Company to develop products that
are specific to each customer. Many of the products the Company is developing
require the Company and its customers to coordinate development, quality
testing, marketing and other tasks. The Company cannot control other companies'
efforts, and such coordination may result in delays that the Company cannot
manage by itself. If the Company cannot successfully manage the effort and risks
associated with coordination, its results of operations may be adversely
affected.
Reliance on Continued Demand for the Company's Products That Enable Color
Printing of Digital Data and the Effects of a Potential Decrease
Although the Company has expanded its product line in recent years, and
continues to explore opportunities to further diversify its business, the
Company's business has been focused heavily on sales of products that enable the
color printing of digital data. Should conditions arise that reduce the demand
for this service, the Company's results of operations may be adversely affected.
The Company believes that purchases of the Company's products may be affected by
a variety of economic conditions and considerations, and there can be no
assurance that demand for the Company's products will continue at current
levels. For example, although such conditions are difficult to predict, the
Company is not assuming that there will be significant improvement in economic
conditions in Asia, including Japan, during the remainder of 1999. The Company
believes that continued economic distress in Japan and elsewhere in Asia might
limit demand in these regions for the Company's products. Economic distress in
other parts of the world such as Brazil may also limit demand for the Company's
products. The move to a single European currency, the Euro, and the resulting
central bank management of interest rates to maintain fixed currency exchange
rates among the member nations may lead to economic conditions which adversely
impact the sale of the Company's products. In addition, it is possible that
individuals with responsibility for purchasing the Company's products, such as
information technology professionals, may choose to devote available
discretionary resources to other perceived needs, such as technology expenses
associated with Year 2000 preparation and / or Euro currency conversion
projects. In addition, Companies that performed successfully Year 2000 compliant
testing might not be willing to buy external products until year 2000 in order
to avoid any risks associated with external products. At this time, the Company
cannot determine how much impact, if any, these factors may have.
New Product Introductions
The Company continues to explore opportunities to develop product lines distinct
from its Fiery color servers. Such new products may require the investment of
capital for the development of new distribution and marketing channels at an
unknown cost to the Company. There can be no guarantee that the Company would be
successful in the development of such channels or that any new products would
gain market acceptance. If the Company is not able to successfully manage the
introduction of new products, its results of operations may be adversely
affected. In addition to these risks, if the Company is successful in
introducing new products, there can be no assurance that such product
introductions (including more powerful products sold at a lower price) will not
adversely impact gross margins or sales of existing products.
20
Competition
The Company has seen competition in the market from companies and products that
provide similar functionality to the Company's products and believes that such
competition will continue and may intensify. It is also possible that the
Company's customers may themselves internally develop and supply products
presently sold by the Company. There can be no assurance that the Company will
be able to continue to successfully compete against other companies' product
offerings or their financial and other resources. In addition to competition
among suppliers of the Company's products, the Company believes that competition
among the Company's customers and potential customers, including competition
over price, may increase. Such competition may have an adverse impact on the
Company's results of operations.
Managing Growth
The Company continues to increase its headcount, and is working to build
relationships with OEMs and other customers. As a result, the number and
complexity of relationships the Company must manage, including relationships
with customers, manufacturers, and suppliers, has increased and may increase
further. If the Company cannot successfully manage growth, its results of
operations may be adversely affected.
Hiring and Retention of Employees
The Company depends upon skilled employees, such as software and hardware
engineers, quality assurance engineers, marketing and sales professionals, and
persons in administrative and managerial positions. Demand for such employees in
Northern California, where the Company's main offices are located, is high. To
assure that the Company can adequately support its business, the Company
undertakes a number of efforts to hire and retain qualified employees. If the
Company cannot successfully hire and retain employees, its results of operations
could be adversely affected.
Fluctuations in Operating Results
Operating results may fluctuate due to factors such as demand for the Company's
products, success and timing of the new product introductions, price reductions
by the Company and its competitors, delay, cancellation or rescheduling of
orders, product performance, or availability of key components. Operating
results may also fluctuate due to seasonal purchasing patterns of its OEM
partners or the status of the Company's relationships with its OEM partners as
well as performance of third-party manufacturers or the status of the Company's
relationships with its key suppliers. The Company's results have typically
followed a seasonal pattern reflecting the buying patterns of its large OEM
customers. In the past, this pattern has indicated that the Company's fiscal
fourth quarter results may be adversely affected by a desire on the part of some
or all of its OEM customers to slow down, or otherwise delay fourth quarter
orders in an effort to minimize their inventory investment at the end of their
fiscal year. Additionally, the first fiscal quarter is also a traditionally
weaker quarter as the Company's OEM partners focus on training of their sales
forces. Moreover, the Company's ability to develop and market new products, the
timing and amount of sales and marketing expenditures, and the general demand
for what are discretionary purchase items (color copiers, digital
black-and-white copiers, and color laser printers) and general global economic
conditions will also effect operating results.
21
Interest Rate Risk
The Company has an investment portfolio of mainly fixed income securities
classified as available-for-sale securities. These securities are subject to
interest rate risk and will fall in value if market interest rates increase. The
Company attempts to limit these exposures by investing primarily in short-term
securities.
Limited Backlog
The Company typically does not obtain long-term volume purchase contracts from
its customers, and a substantial portion of the Company's backlog is scheduled
for delivery within 90 days or less. Customers may cancel orders and change
volume levels or delivery times without penalty. Sales and operating results
therefore depend on the volume and timing of the backlog as well as bookings
received. Significant portions of the Company's operating expenses are fixed,
and planned expenditures are based primarily on sales forecasts and product
development programs. If sales do not meet the Company's expectations in any
given period, the adverse impact on operating results may be magnified by the
Company's inability to adjust operating expenses sufficiently or quickly enough
to compensate for such a shortfall.
Volatility of Stock Price
Due to various factors, including those noted above, the Company's future
revenues and earnings might be subject to significant volatility. Any shortfall
in revenue or earnings from levels expected by securities analysts could have an
immediate and significant adverse effect on the trading price of the Company's
common stock in any given period. The Company participates in a highly dynamic
industry, which often results in significant volatility for the Company's common
stock price.
International Operations and Currency Fluctuations
Approximately 55% and 54% of the Company's product revenue for the three-month
periods ended March 31, 1999 and March 31, 1998, respectively, were attributable
to sales outside North America, primarily to Europe and Japan. The Company
expects that sales to international destinations will continue to represent a
significant portion of its total revenue. The Company is subject to certain
risks associated with international operations, including tariff regulations and
requirements for export licenses, particularly with respect to the export of
certain technologies, which may on occasion be delayed or difficult to obtain.
Given the significance of export sales to the Company, the Company faces a
continuing risk in that the strengthening of the U.S. dollar versus the Japanese
yen, the Euro and other major European currencies, and numerous Southeast Asian
currencies could adversely impact the Company's revenues and gross margin.
Although the Company typically invoices in U.S. dollars, these adverse impacts
could occur through lower unit demand and the necessity to lower average selling
prices to compensate for the reduced strength of local currencies. Where the
Company does invoice in local currency, the Company's cash flows and earnings
are exposed to fluctuations in interest rates and foreign currency exchange
rates. The Company attempts to limit these exposures through operational
strategies and, where appropriate, the use of hedge oriented financial market
instruments. To date the Company has primarily utilized forward contracts to
mitigate its exposure in these markets.
22
Proprietary Information
The Company relies on a combination of copyright, patent and trade secret
protection, nondisclosure agreements, and licensing and cross-licensing
arrangements to establish and protect its proprietary rights. There can be no
assurance that any patents that may be issued to the Company, or which the
Company may license from third parties, or that any other proprietary rights of
the Company will not be challenged, invalidated or circumvented, or that any
rights granted thereunder would provide proprietary protection to the Company.
Infringement and Potential Litigation
The Company may receive in the future, communications from third parties
asserting that the Company's products infringe, or may infringe, the proprietary
rights of third parties. There can be no assurance that any of these claims will
not result in protracted and costly litigation. While it may be necessary or
desirable in the future to obtain licenses relating to one or more of its
products or relating to current or future technologies, there can be no
assurance that the Company will be able to do so on commercially reasonable
terms, or at all.
Reliance on Adobe Systems Incorporated
Under the Company's license agreements with Adobe, a separate license must be
granted from Adobe to the Company for each type of copier or printer used with a
Fiery Server or Controller. To date, the Company has successfully obtained
licenses to use Adobe's PostScript(TM) software for products that it offers.
However, there can be no assurance that Adobe will continue to grant future
licenses to Adobe PostScript(TM) software on reasonable terms, in a timely
manner, or at all, or that Adobe will continue to give quality assurance
approvals. Such actions by Adobe may adversely affect the Company's results of
operations. If Adobe does not grant the Company such licenses or approvals, if
the Adobe license agreements are terminated, or if the Company's relationship
with Adobe is otherwise impaired, the Company's operations may be adversely
affected.
Quarterly Fluctuations in Operating Results
The Company's operating results have historically been subject to quarterly
fluctuations due, for example, to the following factors: economic situations in
various geographic locations around the world, acceptance of new products by OEM
partners and their customers, demand for the Company's products by its OEM
partners, which is in turn subject to fluctuations because of customer demand
and inventory levels, timing of training and product releases by the Company's
OEM partners and the Company's timing of expenses which could affect one quarter
significantly more than another (for expenditures in connection with the move to
the new corporate headquarters during the first quarter of 1999). The Company
anticipates that future operating results might be subject to quarterly
fluctuations.
23
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk
The Company is exposed to various market risks, including the changes in foreign
currency exchange rates. Market risk is the potential loss arising from adverse
changes in market rates and prices, such as foreign currency exchange and
interest rates. The Company does not enter into derivatives or other financial
instruments for trading or speculative purposes. The Company enters into
financial instruments to manage and reduce the impact of changes in foreign
currency exchange rates. The counterparts are major financial institutions.
Foreign Exchange Contracts
As of mid 1998, the Company started to enter into forward foreign exchange
contracts to hedge the currency fluctuations in transactions denominated in
foreign currencies, thereby limiting the Company's risk that would otherwise
result from changes in exchange rates. During the three-month period ended March
31, 1999, the transactions hedged were intercompany accounts receivable and
payable between the Company and its Japanese subsidiary. The periods of the
forward foreign exchange contracts correspond to the reporting periods of the
hedged transactions. Foreign exchange gains and losses on intercompany balances
and the offsetting losses and gains on forward foreign exchange contracts are
reflected in the income statement.
As of March 31, 1999, the Company had one outstanding forward foreign exchange
contract to sell Yen equivalent to approximately $4.9 million with an expiration
date of April 30, 1999.
The estimated fair value of the foreign currency contract represents the amount
required to enter into offsetting contracts with similar remaining maturities
based on quoted market prices. As of March 31, 1999, the difference between the
fair value of the outstanding contract and the contract amount was immaterial.
Market risk was estimated as the potential decrease in fair value resulting from
a hypothetical 10% increase of the amount of Yen to purchase one US Dollar. A
10% fluctuation in the exchange rate for this currency would change the fair
value by approximately $0.4 million. However, since the contract hedges foreign
currency denominated transactions, any change in the fair value of the contract
would be offset by changes in the underlying value of the transactions being
hedged.
Interest Rate Risk
The fair value of the Company's cash and short-term investment portfolio at
March 31, 1999, approximated carrying value due to its short-term duration.
Market risk was estimated as the potential decrease in fair value resulting from
an instantaneous hypothetical 100 basis-point increase in interest rates for the
issues contained in the investment portfolio. As of March 31, 1999, the
Company's cash and short-term investment portfolio includes debt securities of
$300 million, subject to interest rate risk. A 100 basis-point increase in
market interest rates would result in a decrease of fair value of approximately
$2.5 million.
The fair value of the Company's long-term debt, including current maturities was
estimated to be $4.1 million as of March 31, 1999, and equaled the carrying
value. The Company's long-term debt requires interest payments based on a
variable rate and therefore is subject to interest rate risk. A 10% fluctuation
in interest rates would not have a material effect on the fair value of the
outstanding long-term debt of the Company as of March 31, 1999.
24
PART II OTHER INFORMATION
ITEMS 1 - 5.
There is no applicable information to report under Part II, Items 1 - 5 during
the period covered by this report.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 10.28 1999 Equity Incentive Plan
Exhibit 27.1 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during
the three-month period ended March 31, 1999.
25
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ELECTRONICS FOR IMAGING, INC.
Date: May 13, 1999
By /s/ Dan Avida
-----------------------------------------
Dan Avida
Chairman of the Board of Directors and
and Chief Executive Officer
(Principal Executive Officer)
By /s/ Eric Saltzman
--------------------------------------------
Eric Saltzman
Chief Financial Officer, General Counsel and
Corporate Secretary
(Principal Financial and Accounting Officer)
26
EXHIBIT INDEX
Exhibit
No. Description
- --- -----------
10.28 1999 Equity Incentive Plan
27.1 Financial Data Schedule
27