Form 8-K ELECTRONICS FOR IMAGING For: Apr 22

 

 

 

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 23, 2015 (April 22, 2015)

 

 

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

(Registrant’s 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))

 

 

 

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Item 2.02.

Results of Operations and Financial Condition.

On April 23, 2015, Electronics For Imaging, Inc. announced preliminary financial results for the quarter ended March 31, 2015. 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 5.02.

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On April 22, 2015, the Board of Directors (the “Board”) of Electronics For Imaging, Inc. (the “Company”) appointed Marc Olin, 50, as its Chief Financial Officer effective April 22, 2015.

Mr. Olin was appointed Chief Operating Officer of the Company effective January 16, 2014. From January 9, 2015 to the present time, Mr. Olin has served as the Company’s Interim Chief Financial Officer, and previously from September 2013 until January 2014, Mr. Olin also served as the Company’s Interim Chief Financial Officer. Mr. Olin joined the Company in 2003 when the Company acquired Printcafe Software. Since 2003, Mr. Olin has served in various roles at the Company, including from 2006 until January 2014 as Senior Vice President and General Manager of EFI Productivity Software. Mr. Olin holds a B.S. in Graphic Communications Management and Applied Mathematics from Carnegie Mellon University.

There are no arrangements or understandings between Mr. Olin and any other persons pursuant to which he was selected as Chief Financial Officer. There are also no family relationships between Mr. Olin and any director or executive officer of the Company and he has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.

Compensation Arrangements for Mr. Olin. In connection with the appointment of Mr. Olin as Chief Financial Officer, the Compensation Committee of the Board approved the Company’s grant to Mr. Olin of an award of 17,964 performance-based vesting restricted stock units under the Company’s 2009 Equity Incentive Award Plan (the “Plan”) and an award of 5,988 time-based vesting restricted stock units under the Plan. The restricted stock units are, subject to vesting, payable in an equal number of shares of the Company’s common stock. Vesting of the performance-based restricted stock units will occur based on the average of the per-share closing prices of the Company’s common stock over a period of 90 consecutive trading days. One-third of the performance-based vesting restricted stock units will vest on the date such average of the closing prices equals or exceeds $50, one-third of the performance-based vesting restricted stock units will vest on the date such average of the closing prices equals or exceeds $56, and one third of performance-based vesting restricted stock units will vest on the date such average of the closing prices equals or exceeds $62, in each case subject to Mr. Olin’s continued employment through that date. One-third of the time-based vesting restricted stock units are scheduled to vest on each of April 23, 2016, April 23, 2017, and April 23, 2018, in each case subject to Mr. Olin’s continued employment through that date.

Other than as described above, Mr. Olin’s compensation as Chief Financial Officer remains the same as his prior compensation as Chief Operating Officer of the Company. Mr. Olin has entered into an employment agreement with the Company, the terms of which are substantially the same as his prior agreement with the Company entered into in January 2014. In addition, the Indemnity Agreement Mr. Olin previously entered into with the Company continues in effect.

 

Item 7.01

Regulation FD Disclosure.

On April 23, 2015, the Company issued a press release announcing preliminary financial results for the quarter ended March 31, 2015 and the management changes set forth in Item 5.02 of this Current Report on Form 8-K. A copy of the Company’s press release is furnished with this Current Report on Form 8-K and attached hereto as Exhibit 99.1. Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act.

 

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit No.		Description
99.1		Press Release dated April 23, 2015 — EFI Reports Record First Quarter Revenue of $195M

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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 23, 2015				ELECTRONICS FOR IMAGING, INC.
				By:		/s/ Guy Gecht
				Name:		Guy Gecht
				Title:		Chief Executive Officer, President

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INDEX TO EXHIBITS FILED WITH

THE CURRENT REPORT ON FORM 8-K DATED APRIL 23, 2015

 

Exhibit No.		Description
99.1		Press Release dated April 23, 2015 — EFI Reports Record First Quarter Revenue of $195M

Exhibit 99.1

 

 

EFI Reports Record First Quarter Revenue of $195M

• Diversified Portfolio Drives 12% Non-GAAP Operating Income Growth, $0.45 Non-GAAP EPS

• Marc Olin Named Chief Financial Officer

Fremont, Calif. – April 23, 2015 – Electronics For Imaging, Inc. (Nasdaq: EFII), a world leader in customer-focused digital printing innovation, today announced its results for the first quarter of 2015.

For the quarter ended March 31, 2015, the Company reported record first quarter revenue of $194.6 million, up 3% compared to first quarter 2014 revenue of $188.7 million. Non-GAAP operating income was $28.3 million compared to $25.3 million for the same period in 2014. Non-GAAP net income was $21.4 million or $0.45 per diluted share, which included an unfavorable non-operational currency impact of $0.02 per share, compared to non-GAAP net income of $20.4 million or $0.42 per diluted share for the same period in 2014. GAAP operating income was $11.1 million compared to $10.8 million for the same period in 2014. GAAP net income was $5.2 million or $0.11 per diluted share, compared to $10.1 million or $0.21 per diluted share for the same period in 2014.

“Our Company’s balanced portfolio and execution allowed us to report record first quarter revenue and solid profitability despite the continued significant impact of foreign currency,” said Guy Gecht, CEO of EFI. “The EFI team’s ability to consistently develop new, innovative technologies for the EFI ecosystem continues to expand our addressable market while enabling our customers around the globe to be more profitable.”

Chief Financial Officer Announcement

Separately, the Company announced that the Board of Directors has named Marc Olin Chief Financial Officer.

“I am excited to have Marc as our new CFO, especially after the terrific job he did managing EFI’s financial operations both times he served in an interim role,” said Gecht. “In the past few months it was very evident to the Board and myself that Marc’s business acumen, drive and utmost respect inside and outside of EFI make him the perfect candidate for such a key role in driving M&A and organic growth to the billion dollar mark and beyond.”

Marc joined EFI in 2003 when the Company acquired Nasdaq-listed PrintCafe, where he was CEO. Since joining EFI, Marc has served as SVP and General Manager of the Productivity Software business, and most recently as COO and Interim CFO.

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.

 

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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”, “look”, 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, 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; 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; 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 [email protected] 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 and earnings per diluted share that are GAAP net income and GAAP earnings per diluted share adjusted to exclude certain costs, expenses and gains. A reconciliation of the adjustments to GAAP results for the three months ended March 31, 2015 and 2014 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 or earnings per diluted share prepared in accordance with GAAP. Non-GAAP financial measures have limitations in that 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.

 

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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,
		2015				2014
Revenue		$	194,554			$	188,688
Cost of revenue			89,114				85,713
Gross profit			105,440				102,975
Operating expenses:
Research and development			33,711				33,073
Sales and marketing			37,170				36,304
General and administrative			17,650				16,847
Amortization of identified intangibles			4,804				4,870
Restructuring and other			1,029				1,094
Total operating expenses			94,364				92,188
Income from operations			11,076				10,787
Interest expense			(4,099	)			(249	)
Interest income and other income (expense), net			(659	)			123
Income before income taxes			6,318				10,661
Provision for income taxes			(1,081	)			(579	)
Net income		$	5,237			$	10,082
Diluted EPS calculation
Net income		$	5,237			$	10,082
Net income per diluted common share		$	0.11			$	0.21
Shares used in diluted per share calculation			47,856				48,357

 

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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,
		2015				2014
Net income		$	5,237			$	10,082
Amortization of identified intangibles			4,804				4,870
Stock based compensation – Cost of revenue			937				532
Stock based compensation – Research and development			3,169				2,235
Stock based compensation – Sales and marketing			2,710				1,411
Stock based compensation – General and administrative			3,429				4,286
Restructuring and other			1,029				1,094
General and administrative:
Acquisition-related transaction costs			661				505
Change in fair value of contingent consideration			(15	)			(557	)
Litigation settlements			540				115
Interest income and other income (expense), net
Non-cash interest expense related to our convertible notes			2,878				—
Tax effect of non-GAAP adjustments			(3,946	)			(4,201	)
Non-GAAP net income		$	21,433			$	20,372
Non-GAAP net income per diluted common share		$	0.45			$	0.42
Shares used in diluted per share calculation			47,856				48,357

 

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Electronics For Imaging, Inc.

Reconciliation of GAAP Income from Operations to Non-GAAP Income from Operations

(in thousands, except per share data)

(unaudited)

 

		Three Months Ended March 31,
		2015				2014
Income from operations		$	11,076			$	10,787
Amortization of identified intangibles			4,804				4,870
Stock based compensation – Cost of revenue			937				532
Stock based compensation – Research and development			3,169				2,235
Stock based compensation – Sales and marketing			2,710				1,411
Stock based compensation – General and administrative			3,429				4,286
Restructuring and other			1,029				1,094
General and administrative:
Acquisition-related transaction costs			661				505
Change in fair value of contingent consideration			(15	)			(557	)
Litigation settlements			540				115
Non-GAAP income from operations		$	28,340			$	25,278

 

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Electronics For Imaging, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

		March 31,
		2015				2014
Assets
Cash and cash equivalents		$	195,740			$	298,133
Short-term investments			410,792				318,599
Accounts receivable, net			170,094				155,421
Inventories			81,516				72,132
Other current assets			39,831				34,422
Total current assets			897,973				878,707
Property and equipment, net			86,841				86,197
Goodwill			237,083				245,443
Intangible assets, net			56,950				62,571
Other assets			33,028				31,642
Total assets		$	1,311,875			$	1,304,560
Liabilities & Stockholders’ equity
Accounts payable		$	84,932			$	86,940
Accrued and other liabilities			109,233				105,110
Income taxes payable and deferred tax liabilities			4,426				1,759
Total current liabilities			198,591				193,809
Convertible senior notes, net			287,667				284,818
Imputed financing obligation related to build-to-suit lease			12,720				12,472
Noncurrent contingent and other liabilities			4,965				5,440
Noncurrent deferred tax liabilities			2,709				3,820
Noncurrent income taxes payable			15,819				15,512
Total liabilities			522,471				515,871
Total stockholders’ equity			789,404				788,689
Total liabilities and stockholders’ equity		$	1,311,875			$	1,304,560

 

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Electronics For Imaging, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

		Three Months Ended March 31,
		2015				2014
Cash flows from operating activities:
Net income		$	5,237			$	10,082
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			7,803				7,277
Deferred taxes			(5,066	)			(5,557	)
Tax benefit (expense) from employee stock plans			(155	)			6,092
Excess tax benefit from stock-based compensation			(127	)			(6,095	)
Stock-based compensation			8,892				8,463
Non-cash settlement of vacation liabllities by issuing restricted stock units (“RSUs”)			1,353				—
Provisions for inventory obsolescence			1,450				1,620
Provisions for (releases of) bad debt and sales-related allowances			(1,080	)			71
Non-cash accretion of interest expense on convertible notes and imputed financing obligation			3,097				208
Other non-cash charges and gains			(306	)			(131	)
Changes in operating assets and liabilities, net of effect of acquired businesses			(14,015	)			(16,144	)
Net cash provided by operating activities			7,083				5,886
Cash flows from investing activities:
Purchases of short-term investments			(162,363	)			(12,281	)
Proceeds from sales and maturities of short-term investments			70,123				23,634
Purchases of property and equipment			(4,915	)			(7,664	)
Businesses purchased, net of cash acquired			(10	)			(2,344	)
Net cash provided by (used for) investing activities			(97,165	)			1,345
Cash flows from financing activities:
Proceeds from issuance of common stock			4,864				10,196
Purchases of treasury stock and net share settlements			(13,539	)			(48,449	)
Contingent consideration payments related to businesses acquired			(2,032	)			(2,000	)
Other			(79	)			(494	)
Excess tax benefit from stock-based compensation			127				6,095
Net cash used for financing activities			(10,659	)			(34,652	)
Effect of foreign exchange rate changes on cash and cash equivalents			(1,652	)			27
Decrease in cash and cash equivalents			(102,393	)			(27,394	)
Cash and cash equivalents at beginning of quarter			298,133				177,084
Cash and cash equivalents at end of quarter		$	195,740			$	149,690

 

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Electronics For Imaging, Inc.

Revenue by Operating Segment and Geographic Area

(in thousands)

(unaudited)

 

		Three Months Ended March 31,
		2015				2014
Revenue by Operating Segment
Industrial Inkjet		$	87,607			$	87,944
Productivity Software			31,107				31,693
Fiery			75,840				69,051
Total		$	194,554			$	188,688
Revenue by Geographic Area
Americas		$	107,714			$	100,981
EMEA			60,128				60,541
APAC			26,712				27,166
Japan			8,207				5,817
APAC, ex Japan			18,505				21,349
Total		$	194,554			$	188,688

 

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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 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 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 our activities and other factors, facilitates comparability of our 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 amortization of acquisition-related intangibles, stock-based compensation expense, restructuring and other expenses, acquisition-related transaction expenses, costs to integrate such acquisitions into our business, changes in the fair value of contingent consideration, litigation settlement charges, and non-cash interest expense related to our 0.75% convertible senior notes (“Notes”). We use 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 profit.

These excluded items are described below:

 

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Intangible assets acquired to date are being amortized on a straight-line basis.

 

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Stock-based compensation expense of $10.2 million consists of $8.8 million of stock-based compensation expense recognized in accordance with ASC 718, Stock Compensation, and the non-cash settlement of $1.4 million of vacation liabilities settled through the issuance of RSUs, which is not included in the GAAP presentation of our stock-based compensation expense.

 

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Restructuring and other expenses 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.

 

•

Expenses incurred to integrate businesses acquired during the periods reported.

 

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Acquisition-related transaction costs associated with businesses acquired during the periods reported and anticipated transactions.

 

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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.

 

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Non-cash interest expense on our Notes. Our Notes may be settled in cash on conversion. We are required to separately account for the liability (debt) and equity (conversion option) components of the Notes in a manner that reflects our non-convertible debt borrowing rate. Accordingly, for GAAP purposes, we are required to amortize a debt discount equal to the fair value of the conversion option as interest expense on our $345 million of 0.75% convertible senior notes that were issued in a private placement in September 2014 over the term of the Notes.

 

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Litigation settlements. We settled, or accrued reserves related to, several litigation claims of $0.6 and $0.1 million during the three months ended March 31, 2015 and 2014, respectively.

 

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Tax effect of non-GAAP adjustments are as follows:

 

•

We use 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 profit. 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 provision in each jurisdiction in which we operate.

 

•

The long-term average tax rate assumes that the U.S. federal research and development tax credit will be retroactively re-enacted as of January 1, 2015.

 

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