EFI Reports Fourth Quarter and Full Year 2012 Results

EFI Reports Fourth Quarter and Full Year 2012 Results

  *Q4 2012 Revenue Increases 7% to a Record $174 Million
  *FY 2012 Revenue Increases 10% to a Record $652 Million
  *Third Consecutive Year of Double-Digit Growth

FOSTER CITY, Calif., Jan. 24, 2013 (GLOBE NEWSWIRE) -- Electronics For
Imaging, Inc. (Nasdaq:EFII), a world leader in customer-focused digital
printing innovation, today announced its results for the fourth quarter and
full year of 2012.

For the quarter ended December 31, 2012, the Company reported record revenue
of $174.1 million, up 7% compared to fourth quarter 2011 revenue of $163.1
million. Fourth quarter 2012 non-GAAP net income was $19.8 million or $0.42
per diluted share compared to non-GAAP net income of $16.6 million or $0.36
per diluted share for the same period in 2011, up 19% and 17%, respectively.
GAAP net income was $56.6 million or $1.19 per diluted share, compared to
$11.5 million or $0.25 per diluted share for the same period in 2011, up 393%
and 376%, respectively.

For the twelve months ended December 31, 2012, the Company reported revenue of
$652.1 million, up 10% year-over-year compared to $591.6 million for the same
period in 2011. Non-GAAP net income was $61.5 million or $1.29 per diluted
share, compared to non-GAAP net income of $53.1 million or $1.12 per diluted
share for the same period in 2011, up 16% and 15%, respectively. GAAP net
income was $83.3million or $1.74 per diluted share, compared to GAAP net
income of $27.5 million or $0.58 per diluted share for the same period in
2011, up 203% and 200%, respectively.

"We finished 2012 with a very strong quarter that marked a record year for
EFI. The fourth quarter again demonstrated tremendous execution and commitment
by our team, solidifying our third consecutive year of double-digit growth,"
said Guy Gecht, Chief Executive Officer of EFI. "We are excited about 2013 and
the growth opportunities ahead for EFI and our customers."

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 at
www.efi.com.

About EFI 

EFI™ (www.efi.com) is a worldwide provider of products, technology, and
services leading the transformation of analog to digital imaging.Based in
Silicon Valley with offices around the globe, the company's powerful
integrated product portfolio includes digital front-end servers; superwide,
wide-format, label, and ceramic inkjet presses and inks; production workflow,
web-to-print, and business automation software; and office, enterprise, and
mobile cloud solutions. These products allow users to produce, communicate and
share information in an easy and effective way, and enable businesses to
increase their profits, productivity, and efficiency.

The Electronics For Imaging, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=15847

Safe Harbor for Forward Looking Statements

Certain statements in this press release are forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Statements
other than statements of historical fact including words such as "anticipate",
"believe", "estimate", "expect", "consider" and "plan" and statements in the
future tense are forward looking statements.The statements in this press
release that could be deemed forward-looking statements include statements
regarding EFI's strategy, plans, expectations regarding its revenue growth,
future opportunities for EFI and its customers, and any statements or
assumptions underlying any of the foregoing.

Forward-looking statements are subject to certain risks and uncertainties that
could cause our actual future results to differ materially, or cause a
material adverse impact on our results.Potential risks and uncertainties
include, but are not necessarily limited to, unforeseen expenses; the
difficulty of aligning expense levels with revenue; management's ability to
forecast revenues, expenses and earnings; any world-wide financial and
economic difficulties and downturns; adverse tax-related matters such as tax
audits, changes in our effective tax rate or new tax legislative proposals;
the unpredictability of development schedules and commercialization of
products by the leading printer manufacturers and declines or delays in demand
for our related products; changes in the mix of products sold; the uncertainty
of market acceptance of new product introductions; intense competition in each
of our businesses, including competition from products developed by EFI's
customers; challenge of managing asset levels, including inventory and
variations in inventory levels; the uncertainty of continued success in
technological advances; the challenges of obtaining timely, efficient and
quality product manufacturing and supply of components; litigation involving
intellectual property rights or other related matters; our ability to
successfully integrate acquired businesses; the uncertainty regarding the
amount and timing of future share repurchases by EFI and the origin of funds
used for such repurchases; the market prices of EFI's common stock prior to,
during and after the share repurchases; any disruptions in our operations and
additional expenses that we may incur as a result of our relocation from the
Foster City campus; the compliance with the new requirements regarding the
"conflict minerals," if they are found to be used in our products, and any
other risk factors that may be included from time to time in the Company's SEC
reports.

The statements in this press release are made as of the date of this press
release.EFI undertakes no obligation to update information contained in this
press release. For further information regarding risks and uncertainties
associated with EFI's businesses, please refer to the section entitled "Risk
Factors" in the Company's SEC filings, including, but not limited to, its
annual report on Form 10-K and its quarterly reports on Form 10-Q, copies of
which may be obtained by contacting EFI's Investor Relations Department by
phone at 650-357-3828 or by email at investor.relations@efi.com or EFI's
Investor Relations website at www.efi.com.

Use of Non-GAAP Financial Information

To supplement our condensed consolidated financial results prepared under
generally accepted accounting principles, or GAAP, we use non-GAAP measures of
net income (loss), as the case may be, and earnings per diluted share that are
GAAP net income (loss), as the case may be, and GAAP earnings per diluted
share adjusted to exclude certain recurring and non-recurring costs, expenses
and gains. A reconciliation of the adjustments to GAAP results for the three
and twelve months ended December 31, 2012 and 2011 is provided below. In
addition, an explanation of how management uses non-GAAP financial information
to evaluate its business, the substance behind management's decision to use
this non-GAAP financial information, the material limitations associated with
the use of non-GAAP financial information, the manner in which management
compensates for those limitations, and the substantive reasons management
believes that this non-GAAP financial information provides useful information
to investors is included under "About our Non-GAAP Net Income and Adjustments"
after the tables below.

These non-GAAP measures are not in accordance with or an alternative to GAAP
and may be materially different from other non-GAAP measures, including
similarly titled non-GAAP measures, used by other companies.The presentation
of this additional information should not be considered in isolation from, as
a substitute for, or superior to, net income (loss), as the case may be, or
earnings per diluted share prepared in accordance with GAAP.

Electronics For Imaging, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
                                                                
                                  Three Months Ended    Year Ended
                                   December 31,          December 31,
                                                                
                                  2012       2011       2012       2011
                                                                
Revenue                            $174,105 $163,058 $652,137 $591,556
Cost of revenue                    79,820    72,141    297,316   260,573
Gross profit                       94,285    90,917    354,821   330,983
Operating expenses:                                              
Research and development           30,103    30,051    120,298   115,901
Sales and marketing                32,035    31,451    125,513   119,487
General and administrative         13,893    13,206    50,727    53,756
Amortization of identified         5,160     2,528     18,594    11,248
intangibles
Restructuring and other            1,273     942       5,803     3,258
Total operating expenses           82,464    78,178    320,935   303,650
Income from operations             11,821    12,739    33,886    27,333
Interest and other income          336       (1,484)   1,137     3,087
(expense), net
Income before income taxes         12,157    11,255    35,023    30,420
Benefit from (provision for)       44,462    222       48,246    (2,955)
income taxes
Net income                         $56,619  $11,477  $83,269  $27,465
                                                                
Fully Diluted EPS calculation                                    
Net income                         $56,619  $11,477  $83,269  $27,465
Net income per diluted common      $1.19    $0.25    $1.74    $0.58
share
Shares used in diluted per share   47,566    46,765    47,734    47,579
calculation



Electronics For Imaging, Inc.
Reconciliation of GAAP Net Income to Non-GAAP Net Income
(in thousands, except per share data)
(unaudited)
                                                                 
                                      Three Months Ended  Year Ended
                                       December 31,        December 31,
                                                                 
                                      2012      2011      2012      2011
                                                                 
Net income                             $56,619 $11,477 $83,269 $27,465
Amortization of identified intangibles 5,160    2,528    18,594    11,248
Stock based compensation – Cost of     367      330      1,193     1,664
revenue
Stock based compensation – Research    1,532    1,711    5,719     5,723
and development
Stock based compensation – Sales and   915      1,047    3,320     4,133
marketing
Stock based compensation – General and 2,572    2,718    9,490     11,848
administrative
Acquisition-related transaction costs  993      787      2,200     2,326
Imputed net expenses related to sale   377      —        377       —
of building and land
Change in fair value of contingent     44       —        (1,360)   1,476
consideration
Restructuring and other                1,273    942      5,803     3,258
Litigation settlements                 —        —        256       —
Gain on sale of minority investment in —        —        —        (2,866)
a privately-held company
Tax effect of non-GAAP adjustments     (50,022) (4,912)  (67,375)  (13,214)
Non-GAAP net income                    $19,830 $16,628 $61,486 $53,061
                                                                 
Non-GAAP net income per diluted common $0.42   $0.36   $1.29   $1.12
share
Shares used in per share calculation   47,566   46,765   47,734   47,579
                                                                 
Note: all items included within general and administrative expense unless
otherwise indicated by the caption.



Electronics For Imaging, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
                                           Years Ended
                                            December 31,
                                           2012         2011
                                                       
Assets                                                  
Cash and cash equivalents                   $283,996   $120,058
Short-term investments                      80,966      99,100
Accounts receivable, net                    135,110     91,923
Inventories                                 58,343      44,788
Other current assets                        74,877      20,792
Total current assets                        633,292     376,661
Property and equipment, net                 86,582      30,096
Restricted investments                      —           56,850
Goodwill                                    218,269     164,323
Intangible assets, net                      80,244      55,992
Other assets                                55,397      55,812
Total assets                                $1,073,784 $739,734
                                                       
Liabilities & Stockholders' equity                      
Accounts payable                            $63,446    $46,965
Deferred proceeds from property transaction 180,216     —
Accrued and other liabilities               118,060     82,289
Income taxes payable                        7,562       2,583
Total current liabilities                   369,284     131,837
Contingent and other liabilities            17,742      3,427
Deferred tax liabilities                    6,210       4,090
Long term taxes payable                     29,755      35,597
Total liabilities                           422,991     174,951
Total stockholders' equity                  650,793     564,783
Total liabilities and stockholders' equity  $1,073,784 $739,734



Electronics For Imaging, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
                                                                  
                                                        Years Ended
                                                         December 31,
                                                        2012       2011
                                                                  
Cash flows from operating activities:                              
Net income                                              $83,269  $27,465
Adjustments to reconcile net income to net cash provided           
by operating activities:
Depreciation and amortization                            27,032     18,765
Deferred taxes                                           (52,820)   (2,691)
Excess tax benefit from stock-based compensation         (1,360)    (2,038)
Stock-based compensation                                 19,721     23,369
Provision for inventory obsolescence                     3,231      6,991
Provision for allowance for bad debts and sales-related  3,250      2,010
allowances
Gain on sale of minority investment in a privately-held  —         (2,866)
company
Other non-cash charges and adjustments                   3,193      2,852
Changes in operating assets and liabilities              (32,162)   (1,661)
Net cash provided by operating activities                53,354     72,196
                                                                  
Cash flows from investing activities:                              
Purchases of short-term investments                      (64,528)   (99,155)
Proceeds from sales and maturities of short-term         80,992     101,716
investments
Purchases, net of proceeds from sales, of property and   (6,147)    (9,828)
equipment
Proceeds from property transaction, net of direct        179,173    —
transaction costs
Businesses purchased, net of cash acquired               (61,591)   (36,690)
Proceeds from sale of minority investment in a           —         2,866
privately-held company
Proceeds from notes receivable of acquired business      5,216      713
Net cash provided by (used for) investing activities     133,115    (40,378)
                                                                  
Cash flows from financing activities:                              
Proceeds from issuance of common stock                   18,958     8,123
Purchases of treasury stock and net settlement of        (35,176)   (45,841)
restricted stock
Repayment of debt assumed through business acquisitions  (6,914)    (210)
Contingent consideration related to businesses acquired  (969)      (1,746)
Excess tax benefit from stock-based compensation         1,360      2,038
Net cash used for financing activities                   (22,741)   (37,636)
                                                                  
Effect of foreign exchange rate changes on cash and cash 210        (487)
equivalents
Increase (decrease) in cash and cash equivalents         163,938    (6,305)
Cash and cash equivalents at beginning of year           120,058    126,363
Cash and cash equivalents at end of period               $283,996 $120,058

                                      



Electronics For Imaging, Inc.
Revenue by Operating Segment and Geographic Area
(in thousands)
(unaudited)
                                                             
                     Three Months Ended           Year Ended
                      December 31,                 December 31,
                                                             
Revenue by Operating  2012           2011          2012          2011
Segment
Industrial Inkjet     $86,219      $72,629     $320,228    $240,318
Productivity Software 29,423        23,659       103,466      81,165
(1)
Fiery                 58,463        66,770       228,443      270,073
Total                 $174,105     $163,058    $652,137    $591,556
                                                             
Revenue by Geographic                                         
Area
Americas              $102,762     $103,323    $354,114    $345,303
EMEA                  47,574        44,701       195,397      178,471
APAC                  23,769        15,034       102,626      67,782
Japan                 5,580         7,068        27,870       35,655
ROW                   18,189        7,966        74,756       32,127
Total                 $174,105     $163,058    $652,137    $591,556
                                                             
(1) Previously referred to as APPS.In Q1 2012, we re-named our APPS operating
segment as the "Productivity Software" operating segment.

                                      

                About our Non-GAAP Net Income and Adjustments

Use of Non-GAAP Financial Information

To supplement our condensed consolidated financial results prepared in
accordance with GAAP, we use non-GAAP measures of net income and earnings per
diluted share that are GAAP net income and GAAP earnings per diluted share
adjusted to exclude certain recurring and non-recurring costs, expenses, and
gains.

We believe that the presentation of non-GAAP net income and non-GAAP earnings
per diluted share provides important supplemental information regarding
non-cash expenses, significant recurring and non-recurring items that we
believe are important to understanding our financial and business trends
relating to our financial condition and results of operations. Non-GAAP net
income and non-GAAP earnings per diluted share are among the primary
indicators used by management as a basis for planning and forecasting future
periods and by management and our board of directors to determine whether our
operating performance has met specified targets and thresholds. Management
uses non-GAAP net income and non-GAAP earnings per diluted share when
evaluating operating performance because it believes that the exclusion of the
items described below, for which the amounts and/or timing may vary
significantly depending upon the Company's activities and other factors,
facilitates comparability of the Company's operating performance from period
to period. We have chosen to provide this information to investors so they can
analyze our operating results in the same way that management does and use
this information in their assessment of our business and the valuation of our
Company.

Use and Economic Substance of Non-GAAP Financial Measures

We compute non-GAAP net income and non-GAAP earnings per diluted share by
adjusting GAAP net income and GAAP earnings per diluted share to remove the
impact of recurring amortization of acquisition-related intangibles and
stock-based compensation expense, as well as restructuring-related and
non-recurring charges and gains and the tax effect of these adjustments. Such
non-recurring charges and gains include acquisition-related transaction costs
and the costs to integrate such acquisitions into our business, sale of a
non-strategic minority investment in a privately held company, and changes in
fair value of contingent consideration.

These excluded items are described below:

  *Recurring charges and gains, including:

    *Amortization of acquisition-related intangibles. Intangible assets
      acquired to date are being amortized on a straight-line basis.
      Post-acquisition non-competition agreements are amortized over their
      term.
    *Stock-based compensation expense recognized in accordance with ASC 718,
      Stock Compensation.

  *Non-recurring charges and gains, including:

    *Restructuring and other, that consists of:

  - Restructuring charges incurred as we are consolidating
  our facilities and, as a result, reduce the size of our workforce.

  - Acquisition-related executive deferred compensation
  costs, which are dependent on the
   continuing employment of a former shareholderof an
  acquired company are being amortized on a straight-line basis.

  - Expenses incurred to integrate businesses acquired during
  the periods reported.

    *Acquisition-related transaction costs associated with businesses
      acquired during the periods reported and anticipated transactions.
    *On November 1, 2012, we sold our 294,000 square foot building located at
      303 Velocity Way in Foster City, California, which serves as our
      corporate headquarters, along with approximately fouracres of land and
      certain other assets related to the property, to Gilead for $179.6
      million. The property is subject to a leaseback of up to one year for
      which rent is not required to be paid. This constitutes a form of
      continuing involvement that prevents gain recognition. Until we vacate
      the building, the proceeds from the sale including imputed interest, net
      of direct transaction costs, are accounted for as a current liability on
      our balance sheet. Imputed interest expense and depreciation, net of
      accrued sublease income of $0.4 million has been accrued as of December
      31, 2012.
    *Change in fair value of contingent consideration. Our management
      determined that we should analyze the total return provided by the
      investment when evaluating operating results of an acquired entity. The
      total return consists of operating profit generated from the acquired
      entity compared to the purchase price paid, including the final amounts
      paid for contingent consideration without considering any
      post-acquisition adjustments related to the change in the fair value of
      the contingent consideration. Because management believes the final
      purchase price paid for the acquisition reflects the accounting value
      assigned to both contingent consideration and to the intangible assets,
      we exclude the GAAP impact of any adjustments to the fair value of
      acquisition-related contingent consideration from the operating results
      of an acquisition in subsequent periods. We believe this approach is
      useful in understanding the long-term return provided by an acquisition
      and that investors benefit from a supplemental non-GAAP financial
      measure that excludes the impact of this adjustment.
    *Gain on sale of minority investment in a privately-held company. Other
      investments, included within other assets, consist of equity and debt
      investments in privately-held companies that develop products, markets,
      and services that are considered to be strategic to us. Each of these
      investments had been fully impaired in prior years. In 2011, we sold one
      of these investments for $2.9 million because it was no longer
      considered to be strategic.
    *Settlement of a dispute with the lessor of a facility in the U.K. for
      $0.5 million in 2012, which was partially offset by the receipt of an
      additional $0.3 million in insurance proceeds in 2012, net of legal fees
      and costs, related to our previously disclosed settlement of the
      shareholder derivative litigation concerning our historical stock option
      granting practices.

  *Tax effect of non-GAAP adjustments as follows:

    *After excluding the items described above, we apply the principles of
      ASC 740, Income Taxes, to estimate the non-GAAP income tax provision in
      each jurisdiction in which we operate.
    *We have excluded a $43.6 million benefit from our non-GAAP net income
      for the year ended December 31, 2012 related to a partial recovery of
      our initial investment in the stock of VUTEk, Inc. This capital loss
      will never be recognized for financial reporting purposes; consequently,
      this tax benefit constitutes a permanent tax difference that is
      recognized in the Consolidated Statement of Operations during 2012.
    *We have excluded a $6.4 million benefit from our non-GAAP net income for
      the year ended December 31, 2012 related to the step-up of the value of
      acquired intangibles for tax purposes as a result of an operational
      restructuring in Spain.
    *We have excluded the recognition of previously unrecognized tax benefits
      of $10.9 and $2.7 million from our non-GAAP net income for the years
      ended December 31, 2012 and 2011, respectively, to facilitate
      comparability of our operating performance between the years. These tax
      benefits primarily arose from the release of previously unrecognized tax
      benefits resulting from the expiration of U.S. federal and state
      statutes of limitations.
    *We have excluded interest accrued on prior year tax reserves of $0.3 and
      $0.4 million from our non-GAAP net income for the years ended December
      31, 2012 and 2011, respectively, as well as other tax benefits of $0.4
      million for the year ended December 31, 2011.

Usefulness of Non-GAAP Financial Information to Investors

These non-GAAP measures are not in accordance with or an alternative to GAAP
and may be materially different from other non-GAAP measures, including
similarly titled non-GAAP measures, used by other companies. The presentation
of this additional information should not be considered in isolation from, as
a substitute for, or superior to, net income or earnings per diluted share
prepared in accordance with GAAP. Non-GAAP financial measures have limitations
as they do not reflect certain items that may have a material impact upon our
reported financial results. We expect to continue to incur expenses of a
nature similar to the non-GAAP adjustments described above, and exclusion of
these items from our non-GAAP net income and non-GAAP earnings per diluted
share should not be construed as an inference that these costs are unusual,
infrequent, or non-recurring.

CONTACT: Vincent Pilette
         Chief Financial Officer
         EFI
         650-357-3500
        
         JoAnn Horne
         Market Street Partners
         415-445-3235

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