UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): April 16, 2014
Electronics For Imaging, Inc.
(Exact name of Registrant as Specified in its Charter)
Delaware | 000-18805 | 94-3086355 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
6750 Dumbarton Circle
Fremont, California 94555
(Address of Principal Executive Offices)
(650) 357-3500
(Registrants telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. | Results of Operations and Financial Condition. |
On April 16, 2014, the Company announced preliminary financial results for the fiscal quarter ended March 31, 2014. A copy of the press release is attached hereto as Exhibit 99.1 and is being furnished under Item 2.02 of this Current Report on Form 8-K.
Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits
Exhibit No. |
Description | |
99.1 | Press Release Dated April 16, 2014 EFI Reports Record First Quarter Revenue of $189M, up 10%
The information included in Exhibit 99.1 is intended to be furnished and shall not be deemed filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act, or the Exchange Act, except as expressly set forth by specific reference in such filing. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
Date: April 16, 2014 | ELECTRONICS FOR IMAGING, INC. | |||||
By: | /s/ David Reeder | |||||
Name: | David Reeder | |||||
Title: | Chief Financial Officer |
INDEX TO EXHIBITS FILED WITH
THE CURRENT REPORT ON FORM 8-K DATED APRIL 16, 2014
Exhibit No. |
Description | |
99.1 | Press Release Dated April 16, 2014 EFI Reports Record First Quarter Revenue of $189M, up 10% |
Exhibit 99.1
For more information: | Investor Relations: | |||||
David Reeder |
JoAnn Horne | |||||
Chief Financial Officer |
Market Street Partners | |||||
EFI |
415-445-3235 | |||||
650-357-3500 |
EFI Reports Record First Quarter Revenue of $189M, up 10%
Recurring Revenue up 16% Driven by 25% Growth in UV Ink Volume and Continued Strength in Software Bookings
Fremont, Calif. April 16, 2014 Electronics For Imaging, Inc. (Nasdaq: EFII), a world leader in customer-focused digital printing innovation, today announced its results for the first quarter of 2014.
For the quarter ended March 31, 2014, the Company reported record first quarter revenue of $188.7 million, up 10% compared to first quarter 2013 revenue of $171.4 million. First quarter 2014 non-GAAP net income was $20.4 million or $0.42 per diluted share, up 29% and 27%, respectively, compared to non-GAAP net income of $15.8 million or $0.33 per diluted share for the same period in 2013. GAAP net income was $10.1 million or $0.21 per diluted share, up 21% and 24%, respectively, compared to $8.4 million or $0.17 per diluted share for the same period in 2013.
The EFI team kicked off 2014 with another very strong quarter, delivering revenue and profitability above our expectations, said Guy Gecht, CEO of EFI. With upcoming product innovations across the portfolio we expect to see solid demand throughout the year as our technology continues to help customers around the world drive growth and productivity in their businesses.
EFI will discuss the Companys 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 EFIs 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 companys 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.
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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, consider, continue, estimate, expect, 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 EFIs strategy, plans, expectations regarding its revenue growth, product portfolio, productivity, future opportunities for EFI and its customers, demand for products, 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; managements 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 EFIs 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 EFIs common stock prior to, during and after the share repurchases; 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 Companys 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 EFIs businesses, please refer to the section entitled Risk Factors in the Companys 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 EFIs Investor Relations Department by phone at 650-357-3828 or by email at investor.relations@efi.com or EFIs 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 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. A reconciliation of the adjustments to GAAP results for the three months ended March 31, 2014 and 2013 is provided below. In addition, an explanation of how management uses non-GAAP financial information to evaluate its business, the substance behind managements 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 or earnings per diluted share prepared in accordance with GAAP.
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Electronics For Imaging, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2013 | |||||||
Revenue |
$ | 188,688 | $ | 171,359 | ||||
Cost of revenue |
85,713 | 77,499 | ||||||
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Gross profit |
102,975 | 93,860 | ||||||
Operating expenses: |
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Research and development |
33,073 | 31,067 | ||||||
Sales and marketing |
36,304 | 32,736 | ||||||
General and administrative |
16,847 | 13,698 | ||||||
Amortization of identified intangibles |
4,870 | 4,927 | ||||||
Restructuring and other |
1,094 | 1,978 | ||||||
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Total operating expenses |
92,188 | 84,406 | ||||||
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Income from operations |
10,787 | 9,454 | ||||||
Interest and other expense, net |
(126 | ) | (2,848 | ) | ||||
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Income before income taxes |
10,661 | 6,606 | ||||||
Benefit from (provision for) income taxes |
(579 | ) | 1,756 | |||||
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Net income |
$ | 10,082 | $ | 8,362 | ||||
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Fully Diluted EPS calculation |
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Net income |
$ | 10,082 | $ | 8,362 | ||||
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Net income per diluted common share |
$ | 0.21 | $ | 0.17 | ||||
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Shares used in diluted per share calculation |
48,357 | 47,986 | ||||||
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Electronics For Imaging, Inc.
Reconciliation of GAAP Net Income to Non-GAAP Net Income
(in thousands, except per share data)
(unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2013 | |||||||
Net income |
$ | 10,082 | $ | 8,362 | ||||
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Amortization of identified intangibles |
4,870 | 4,927 | ||||||
Stock based compensation Cost of revenue |
532 | 469 | ||||||
Stock based compensation Research and development |
2,235 | 1,867 | ||||||
Stock based compensation Sales and marketing |
1,411 | 888 | ||||||
Stock based compensation General and administrative |
4,286 | 3,420 | ||||||
Restructuring and other |
1,094 | 1,978 | ||||||
General and administrative: |
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Acquisition-related transaction costs |
505 | 19 | ||||||
Change in fair value of contingent consideration |
(557 | ) | (262 | ) | ||||
Litigation settlements |
115 | | ||||||
Sublease income related to our deferred property sale |
| (720 | ) | |||||
Depreciation expense related to our deferred property sale |
| 410 | ||||||
Interest and other expense, net |
||||||||
Interest expense related to our deferred property sale |
| 880 | ||||||
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Tax effect of non-GAAP adjustments |
(4,201 | ) | (6,487 | ) | ||||
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Non-GAAP net income |
$ | 20,372 | $ | 15,751 | ||||
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Non-GAAP net income per diluted common share |
$ | 0.42 | $ | 0.33 | ||||
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Shares used in per share calculation |
48,357 | 47,986 | ||||||
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Electronics For Imaging, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
March 31, | December 31, | |||||||
2014 | 2013 | |||||||
Assets |
||||||||
Cash and cash equivalents |
$ | 149,690 | $ | 177,084 | ||||
Short-term investments |
165,994 | 177,957 | ||||||
Accounts receivable, net |
144,378 | 130,717 | ||||||
Inventories |
70,802 | 68,345 | ||||||
Other current assets |
48,998 | 46,461 | ||||||
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Total current assets |
579,862 | 600,564 | ||||||
Property and equipment, net |
85,337 | 84,829 | ||||||
Goodwill |
236,708 | 233,203 | ||||||
Intangible assets, net |
65,586 | 68,722 | ||||||
Other assets |
14,688 | 39,066 | ||||||
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Total assets |
$ | 982,181 | $ | 1,026,384 | ||||
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Liabilities & Stockholders equity |
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Accounts payable |
$ | 70,451 | $ | 75,132 | ||||
Accrued and other liabilities |
122,534 | 121,084 | ||||||
Income taxes payable |
3,241 | 4,654 | ||||||
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Total current liabilities |
196,226 | 200,870 | ||||||
Imputed financing obligation |
11,708 | 11,500 | ||||||
Contingent and other liabilities |
5,671 | 6,815 | ||||||
Deferred tax liabilities |
6,425 | 6,738 | ||||||
Long term taxes payable |
7,234 | 33,011 | ||||||
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Total liabilities |
227,264 | 258,934 | ||||||
Total stockholders equity |
754,917 | 767,450 | ||||||
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Total liabilities and stockholders equity |
$ | 982,181 | $ | 1,026,384 | ||||
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Electronics For Imaging, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2013 | |||||||
Cash flows from operating activities: |
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Net income |
$ | 10,082 | $ | 8,362 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
7,277 | 7,158 | ||||||
Deferred taxes |
(5,557 | ) | (5,366 | ) | ||||
Tax benefit from employee stock plans |
6,092 | 1,885 | ||||||
Excess tax benefit from stock-based compensation |
(6,095 | ) | (2,013 | ) | ||||
Stock-based compensation |
8,463 | 6,644 | ||||||
Provisions for inventory obsolescence |
1,620 | 1,842 | ||||||
Provisions for bad debts and sales-related allowances |
71 | 1,337 | ||||||
Contingent consideration payment related to business acquired |
| (618 | ) | |||||
Other non-cash charges and adjustments, net of effect of acquired companies |
77 | 306 | ||||||
Changes in operating assets and liabilities |
(16,144 | ) | 3,081 | |||||
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Net cash provided by operating activities |
5,886 | 22,618 | ||||||
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Cash flows from investing activities: |
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Purchases of short-term investments |
(12,281 | ) | (12,288 | ) | ||||
Proceeds from sales and maturities of short-term investments |
23,634 | 9,860 | ||||||
Purchases, net of proceeds from sales, of property and equipment |
(7,664 | ) | (2,269 | ) | ||||
Acquisition of SmartLinc, Inc., net of cash acquired |
(2,344 | ) | | |||||
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Net cash provided by (used for) investing activities |
1,345 | (4,697 | ) | |||||
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Cash flows from financing activities: |
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Proceeds from issuance of common stock |
10,196 | 7,621 | ||||||
Purchases of treasury stock and net share settlements |
(48,449 | ) | (11,567 | ) | ||||
Repayment of debt assumed through business acquisitions |
(494 | ) | (354 | ) | ||||
Contingent consideration payments related to businesses acquired |
(2,000 | ) | (349 | ) | ||||
Excess tax benefit from stock-based compensation |
6,095 | 2,013 | ||||||
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Net cash used for financing activities |
(34,652 | ) | (2,636 | ) | ||||
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Effect of foreign exchange rate changes on cash and cash equivalents |
27 | (1,030 | ) | |||||
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Increase (decrease) in cash and cash equivalents |
(27,394 | ) | 14,255 | |||||
Cash and cash equivalents at beginning of quarter |
177,084 | 283,996 | ||||||
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Cash and cash equivalents at end of quarter |
$ | 149,690 | $ | 298,251 | ||||
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Electronics For Imaging, Inc.
Revenue by Operating Segment and Geographic Area
(in thousands)
(unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2013 | |||||||
Revenue by Operating Segment |
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Industrial Inkjet |
$ | 87,944 | $ | 80,303 | ||||
Productivity Software |
31,693 | 27,729 | ||||||
Fiery |
69,051 | 63,327 | ||||||
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Total |
$ | 188,688 | $ | 171,359 | ||||
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Revenue by Geographic Area |
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Americas |
$ | 100,981 | $ | 93,897 | ||||
EMEA |
60,541 | 50,046 | ||||||
APAC |
27,166 | 27,416 | ||||||
Japan |
5,817 | 7,219 | ||||||
APAC, ex Japan |
21,349 | 20,197 | ||||||
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Total |
$ | 188,688 | $ | 171,359 | ||||
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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 and significant recurring and non-recurring items that we believe are important to understanding 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 the exclusion of the items described below, for which the amounts and/or timing may vary significantly depending on the Companys activities and other factors, facilitates comparability of the Companys 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 expenses and the costs to integrate such acquisitions into our business, changes in the fair value of contingent consideration, litigation settlement charges, and imputed interest expense and depreciation, net of accrued sublease income and capitalized interest related to the sale of our corporate headquarters facility and related land.
These excluded items are described below:
| Recurring charges, including: |
| Amortization of acquisition-related intangibles. Intangible assets acquired to date are being amortized on a straight-line basis. |
| Stock-based compensation expense recognized in accordance with ASC 718, Stock Compensation. |
| Non-recurring charges and gains, including: |
| Restructuring and other consists of: |
| Restructuring charges incurred as we consolidate the number and size of 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 shareholder of 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. |
8
| Changes 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 changes in the fair value of the contingent consideration. Because our 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 our acquisitions and that investors benefit from a supplemental non-GAAP financial measure that excludes the impact of this adjustment. |
| Imputed net expenses related to sale of building and land. On November 1, 2012, we sold the 294,000 square foot building located at 303 Velocity Way in Foster City, California, which at that time served as our corporate headquarters, along with approximately four acres of land and certain other assets related to the property, to Gilead for $179.7 million. We used the facility until October 31, 2013, for which period rent was not required to be paid. This constituted a form of continuing involvement that prevented gain recognition until the fourth quarter of 2013. Until we vacated the building, the proceeds from the sale were recognized as deferred proceeds from property transaction on our Condensed Consolidated Balance Sheet. Imputed interest expense and depreciation, net of accrued sublease income, of $0.6 million was accrued during the three months ended March 31, 2013, related to the deferred property transaction. |
| Tax effect of non-GAAP adjustments |
| Effective in the first quarter of 2014 and continuing for the balance of the year, we will be using a constant non-GAAP tax rate of 19%, which we believe reflects the long term average tax rate based on our international structure and geographic distribution of revenue and profits. The long-term average tax rate is calculated in accordance with the principles of ASC 740, Income Taxes, after excluding the tax effect of the non-GAAP items described above, to estimate the non-GAAP income tax benefit (provision) in each jurisdiction in which we operate. |
| We have excluded the following from our non-GAAP net income for the three months ended March 31, 2013: |
| Tax charge of $0.3 million resulting from the filing of tax returns by foreign subsidiaries for periods prior to their acquisition by EFI. |
| Tax benefit of $3.2 and $0.2 million from the retroactive renewal of both the 2012 U.S. federal research and development tax credit and certain international tax provisions, respectively, on January 2, 2013. The tax benefit for these items had been previously recognized in our non-GAAP net income for the year ended December 31, 2012. |
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