Electronics For Imaging, Inc. (Nasdaq:EFII), a world leader in
customer-focused digital printing innovation, today announced its
results for the first quarter of 2017.
For the quarter ended March 31, 2017, the Company reported
revenue of $228.7 million, down 2% compared to first quarter 2016
revenue of $234.1 million. GAAP net income was $5.5 million,
up 160% compared to $2.1 million for the same period in 2016 or
$0.12 per diluted share, up 200% compared to $0.04 per diluted
share for the same period in 2016. Non-GAAP net income was
$25.8 million, down 2% compared to non-GAAP net income of $26.3
million for the same period in 2016 or $0.55 per diluted share,
flat compared to $0.55 per diluted share for the same period in
2016. Cash flow from operating activities was $14.9 million,
up 66% compared to $9.0 million during the same period in 2016.
“We are pleased that our financial discipline allowed EFI to
achieve the midpoint of our non-GAAP EPS outlook despite a slow
start to the year,” said Guy Gecht, CEO of EFI. “To address
the challenges we faced in Q1 we are taking steps to better execute
on our pipeline, while further leveraging the solid growth in the
textile printing business, the start of the Nozomi beta rollout and
our new product introductions in the back half of the year.”
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™ is a global technology company, based in Silicon Valley,
and is leading the worldwide transformation from analog to
digital imaging. We are passionate about fueling customer
success with products that increase
competitiveness and boost productivity. To do that, we
develop breakthrough technologies for the manufacturing of signage,
packaging, textiles, ceramic tiles, and personalized documents,
with a wide range of printers, inks, digital front ends, and a
comprehensive business and production workflow suite that
transforms and streamlines the entire production
process. (www.efi.com)
Safe Harbor for Forward Looking Statements
Our first quarter 2017 GAAP EPS results of $0.12 excludes a
stock-based compensation expense of approximately $1.2 million that
is currently under review for determination of whether to include
that expense in the first or second quarter of 2017. The resolution
of this review could negatively impact our reported first quarter
2017 GAAP EPS results by up to 3 cents per share.
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 “address”, “anticipate”, “believe”,
“consider”, “continue”, “develop”, “estimate”, “expect”, “further”,
“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, introduction of new products, 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, potential differences between the
results disclosed in this release and the Company’s final results
when disclosed in its Quarterly Report on Form 10-Q as a result of
developments that may arise between now and the disclosure of the
final results; intense competition in each of our businesses,
including competition from products developed by EFI’s customers;
unforeseen expenses; fluctuations in currency exchange rates; the
difficulty of aligning expense levels with revenue; management’s
ability to forecast revenues, expenses and earnings; our
ability to successfully integrate acquired businesses; changes in
the mix of products sold; the uncertainty of market acceptance of
new product introductions; 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; 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; the impact of changing consumer
preferences on demand for our textile products; litigation
involving intellectual property rights or other related matters;
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 and are subject to revision until the
Company will have filed its Quarterly Report on Form 10-Q for the
quarter ended March 31,2017. 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 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, 2017 and 2016 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.
|
|
|
|
|
|
Electronics For
Imaging, Inc. |
|
|
|
|
|
Condensed
Consolidated Statements of Operations |
|
|
|
|
|
(in thousands,
except per share data) |
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
Revenue |
|
$ |
228,691 |
|
|
$ |
234,133 |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue |
|
|
105,026 |
|
|
|
115,736 |
|
|
Gross
profit |
|
|
123,665 |
|
|
|
118,397 |
|
|
Operating
expenses: |
|
|
|
|
|
Research
and development |
|
|
38,907 |
|
|
|
37,122 |
|
|
Sales and
marketing |
|
|
42,804 |
|
|
|
41,530 |
|
|
General
and administrative |
|
|
20,883 |
|
|
|
20,832 |
|
|
Amortization of identified intangibles |
|
|
10,778 |
|
|
|
9,229 |
|
|
Restructuring and other |
|
|
918 |
|
|
|
2,715 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating expenses |
|
|
114,290 |
|
|
|
111,428 |
|
|
Income from
operations |
|
|
9,375 |
|
|
|
6,969 |
|
|
Interest expense |
|
|
(4,660 |
) |
|
|
(4,358 |
) |
|
Interest income and
other (income) expense, net |
|
|
287 |
|
|
|
(221 |
) |
|
Income before
income taxes |
|
|
5,002 |
|
|
|
2,390 |
|
|
Benefit from (provision
for) income taxes |
|
|
463 |
|
|
|
(287 |
) |
|
Net income |
|
$ |
5,465 |
|
|
$ |
2,103 |
|
|
|
|
|
|
|
|
Diluted EPS
calculation |
|
|
|
|
|
Net income |
|
$ |
5,465 |
|
|
$ |
2,103 |
|
|
Net
income per diluted common share |
|
$ |
0.12 |
|
|
$ |
0.04 |
|
|
Shares used in diluted
per share calculation |
|
|
47,208 |
|
|
|
47,923 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Based Compensation. As permitted by ASU
2016-09, Stock Compensation – Improvements to Employee Share Based
Payment Accounting, which we adopted in Q2 2016, we have elected to
account for forfeitures when they occur instead of estimating the
expected forfeiture rate. Adoption of this provision during
the second quarter of 2016 resulted in a retroactive net income
adjustment of $0.2 million in the first quarter of 2016. |
|
|
|
|
|
|
|
|
|
|
|
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, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ex-Currency |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
Net
income |
|
$ |
5,465 |
|
|
$ |
2,103 |
|
|
$ |
5,465 |
|
|
Cost of revenue related
to fair value inventory adjustment |
|
|
1,024 |
|
|
|
— |
|
|
|
1,024 |
|
|
Ex-currency
adjustment |
|
|
— |
|
|
|
— |
|
|
|
1,157 |
|
|
Stock based
compensation – Cost of revenue |
|
|
698 |
|
|
|
1,010 |
|
|
|
698 |
|
|
Stock based
compensation – Research and development |
|
|
2,850 |
|
|
|
4,684 |
|
|
|
2,850 |
|
|
Stock based
compensation – Sales and marketing |
|
|
2,063 |
|
|
|
2,835 |
|
|
|
2,063 |
|
|
Stock based
compensation – General and administrative |
|
|
3,435 |
|
|
|
5,489 |
|
|
|
3,435 |
|
|
Amortization of
identified intangibles |
|
|
10,778 |
|
|
|
9,229 |
|
|
|
10,778 |
|
|
Restructuring and
other |
|
|
918 |
|
|
|
2,715 |
|
|
|
918 |
|
|
General and
administrative: |
|
|
|
|
|
|
|
Acquisition-related transaction costs |
|
|
729 |
|
|
|
478 |
|
|
|
729 |
|
|
Changes
in fair value of contingent consideration |
|
|
1,283 |
|
|
|
(205 |
) |
|
|
1,283 |
|
|
Litigation settlements |
|
|
19 |
|
|
|
320 |
|
|
|
19 |
|
|
Interest income and
other (income) expense, net |
|
|
|
|
|
|
|
Non-cash
interest expense related to our convertible notes |
|
|
3,171 |
|
|
|
3,004 |
|
|
|
3,171 |
|
|
Foreign
exchange fluctuation related to contingent consideration |
|
|
(103 |
) |
|
|
507 |
|
|
|
(103 |
) |
|
Balance
sheet currency remeasurement impact |
|
|
— |
|
|
|
— |
|
|
|
1,059 |
|
|
Tax effect of non-GAAP
adjustments |
|
|
(6,518 |
) |
|
|
(5,880 |
) |
|
|
(6,939 |
) |
|
Non-GAAP net
income |
|
$ |
25,812 |
|
|
$ |
26,289 |
|
|
$ |
27,607 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income per
diluted common share |
|
$ |
0.55 |
|
|
$ |
0.55 |
|
|
$ |
0.58 |
|
|
Shares used in diluted
per share calculation |
|
|
47,208 |
|
|
|
47,923 |
|
|
|
47,208 |
|
|
|
|
|
|
|
|
|
|
Stock Based Compensation. As permitted by ASU
2016-09, Stock Compensation – Improvements to Employee Share Based
Payment Accounting, which we adopted in Q2 2016, we have elected to
account for forfeitures when they occur instead of estimating the
expected forfeiture rate. Adoption of this provision during
the second quarter of 2016 resulted in a retroactive net income
adjustment of $0.2 million in the first quarter of 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electronics For
Imaging, Inc. |
|
|
|
Condensed
Consolidated Balance Sheets |
|
|
|
(in
thousands) |
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
|
2017 |
|
|
2016 |
|
|
|
|
Assets |
|
|
|
Cash and cash
equivalents |
$ |
151,096 |
|
$ |
164,313 |
Short-term
investments |
|
292,403 |
|
|
295,428 |
Accounts receivable,
net |
|
225,529 |
|
|
220,813 |
Inventories |
|
113,810 |
|
|
99,075 |
Other current
assets |
|
40,013 |
|
|
36,637 |
Total
current assets |
|
822,851 |
|
|
816,266 |
Property and equipment,
net |
|
103,181 |
|
|
103,304 |
Goodwill |
|
371,674 |
|
|
359,841 |
Intangible assets,
net |
|
136,458 |
|
|
122,997 |
Other assets |
|
85,258 |
|
|
79,088 |
Total
assets |
$ |
1,519,422 |
|
$ |
1,481,496 |
|
|
|
|
Liabilities
& Stockholders’ equity |
|
|
|
Accounts payable |
$ |
109,835 |
|
$ |
114,287 |
Accrued and other
liabilities |
|
164,333 |
|
|
139,318 |
Income taxes
payable |
|
10,256 |
|
|
10,256 |
Total
current liabilities |
|
284,424 |
|
|
263,861 |
Convertible senior
notes, net |
|
308,000 |
|
|
304,484 |
Imputed financing
obligation related to build-to-suit lease |
|
14,024 |
|
|
14,152 |
Noncurrent contingent
and other liabilities |
|
54,048 |
|
|
42,786 |
Deferred tax
liabilities |
|
14,940 |
|
|
16,351 |
Noncurrent income taxes
payable |
|
11,882 |
|
|
12,030 |
Total
liabilities |
|
687,318 |
|
|
653,664 |
Total stockholders’
equity |
|
832,104 |
|
|
827,832 |
Total
liabilities and stockholders’ equity |
$ |
1,519,422 |
|
$ |
1,481,496 |
|
|
|
|
Electronics For Imaging, Inc. |
|
|
|
|
Condensed Consolidated Statements of Cash
Flows |
|
|
|
|
(in
thousands) |
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
Cash flows from operating activities: |
|
|
|
|
Net
income |
|
$ |
5,465 |
|
|
$ |
2,103 |
|
Adjustments
to reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
Depreciation and amortization |
|
|
14,929 |
|
|
|
13,008 |
|
|
Deferred
taxes |
|
|
(1,010 |
) |
|
|
(3,827 |
) |
|
Stock-based compensation, net of cash settlements |
|
|
9,046 |
|
|
|
11,265 |
|
|
Provision
for inventory obsolescence |
|
|
752 |
|
|
|
2,272 |
|
|
Provision
for bad debts and sales-related allowances |
|
|
2,822 |
|
|
|
4,140 |
|
|
Non-cash
accretion of interest expense on convertible notes and imputed
financing obligation |
|
|
3,672 |
|
|
|
3,273 |
|
|
Other
non-cash charges and gains |
|
|
2,486 |
|
|
|
2,878 |
|
Changes in
operating assets and liabilities, net of effect of acquired
businesses |
|
|
(23,264 |
) |
|
|
(26,147 |
) |
Net cash
provided by operating activities |
|
|
14,898 |
|
|
|
8,965 |
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
Purchases
of short-term investments |
|
|
(35,149 |
) |
|
|
(58,323 |
) |
|
Proceeds
from sales and maturities of short-term investments |
|
|
38,235 |
|
|
|
110,417 |
|
|
Purchases
of restricted investments and cash equivalents |
|
|
(4,405 |
) |
|
|
— |
|
|
Purchases, net of proceeds from sales, of property and
equipment |
|
|
(3,789 |
) |
|
|
(5,213 |
) |
|
Businesses purchased, net of cash acquired |
|
|
(5,700 |
) |
|
|
(7,982 |
) |
Net cash
provided by (used for) investing activities |
|
|
(10,808 |
) |
|
|
38,899 |
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
Proceeds
from issuance of common stock |
|
|
5,855 |
|
|
|
4,909 |
|
|
Purchases
of treasury stock and net share settlements |
|
|
(22,455 |
) |
|
|
(23,092 |
) |
|
Repayment
of debt assumed through business acquisitions and debt issuance
costs |
|
|
(411 |
) |
|
|
(4,492 |
) |
|
Contingent consideration payments related to businesses
acquired |
|
|
(1,265 |
) |
|
|
(1,443 |
) |
Net cash
used for financing activities |
|
|
(18,276 |
) |
|
|
(24,118 |
) |
|
|
|
|
|
|
|
Effect of
foreign exchange rate changes on cash and cash equivalents |
|
|
969 |
|
|
|
2,319 |
|
|
Decrease
in cash and cash equivalents |
|
|
(13,217 |
) |
|
|
26,065 |
|
|
Cash and
cash equivalents at beginning of period |
|
|
164,313 |
|
|
|
164,091 |
|
Cash and cash equivalents at end of period |
|
$ |
151,096 |
|
|
$ |
190,156 |
|
|
|
|
|
|
|
|
Stock Based Compensation. ASU 2016-09, Stock
Compensation – Improvements to Employee Share Based Payment
Accounting, which we adopted in Q2 2016, eliminated the requirement
to reclassify gross excess tax benefits related to stock-based
compensation from operating to financing activities in the
statement of cash flows. The retrospective application to prior
periods resulted in a $0.2 million increase in cash flows provided
by operating activities for the quarter ended March 31,2016, and a
corresponding decrease in cash flows provided by financing
activities. As permitted by ASU 2016-09, we have elected to account
for forfeitures when they occur instead of estimating the expected
forfeiture rate. Adoption of this provision during the second
quarter of 2016 required a retroactive net income adjustment of
$0.2 million in the first quarter of 2016, and adjustments to
stock-based compensation, deferred taxes, and net income in the
Condensed Consolidated Statement of Cash Flows. |
|
|
|
|
|
|
Electronics For Imaging, Inc. |
|
|
|
Revenue by Operating Segment and Geographic
Area |
|
|
|
(in
thousands) |
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
March 31, |
|
|
|
|
|
|
|
|
|
|
|
Revenue by
Operating Segment |
|
|
2017 |
|
|
2016 |
|
|
|
Industrial Inkjet |
|
$ |
123,263 |
|
$ |
125,798 |
|
|
|
Productivity Software |
|
|
35,058 |
|
|
32,540 |
|
|
|
Fiery |
|
|
70,370 |
|
|
75,795 |
|
|
|
Total |
|
$ |
228,691 |
|
$ |
234,133 |
|
|
|
|
|
|
|
|
|
|
|
Revenue by
Geographic Area |
|
|
|
|
|
|
|
Americas |
|
$ |
109,895 |
|
$ |
120,266 |
|
|
|
EMEA |
|
|
88,033 |
|
|
83,583 |
|
|
|
APAC |
|
|
30,763 |
|
|
30,284 |
|
|
|
Total |
|
$ |
228,691 |
|
$ |
234,133 |
|
|
|
|
|
|
|
|
|
|
|
Revenue
Ex-Currency Adjustment |
|
|
2,747 |
|
|
— |
|
|
|
Total |
|
$ |
231,438 |
|
$ |
234,133 |
|
|
|
|
|
|
|
|
|
|
|
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 certain costs, expenses, gains, 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,
incremental cost of revenue due to the fair value adjustment to
inventories acquired in business combinations, 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.
Ex-Currency. To better understand trends in our business,
we believe it is helpful to adjust our statement of operations to
exclude the impact of year-over-year changes in the translation of
foreign currencies into U.S. dollars. This is a non-GAAP measure
that is calculated by adjusting revenue and non-GAAP net income by
using historical exchange rates in effect during the comparable
prior year period and removing the balance sheet currency
remeasurement impact from interest income and other income
(expense), net, including removal of any hedging gains and losses.
We refer to these adjustments as “ex-currency.” Management believes
the ex-currency measures provide investors with an additional
perspective on year-over-year financial trends and enables
investors to analyze our operating results in the same way
management does. The year-over-year currency impact can be
determined as the difference between year-over-year actual growth
rates and year-over-year ex-currency growth rates.
These excluded items are described below:
- Inventory acquired in the acquisition of FFPS is required to be
recorded at fair value rather than historical cost in accordance
with ASC 805. The fair value of FFPS inventory reflects the
manufacturing cost plus a portion of the expected gross profit. We
have adjusted our cost of revenue to reflect the expected gross
profit that was included in the inventory valuation under ASC 805.
We believe this adjustment is useful to investors to understand the
gross profit trends of our ongoing business.
- Intangible assets acquired to date are being amortized on a
straight-line basis.
- Stock-based compensation expense of $9.0 and $14.0 million
during the three months ended March 31, 2017 and 2016,
respectively, consists of $9.0 and $11.3 million of stock-based
compensation expense recognized in accordance with ASC 718, Stock
Compensation, and the non-cash settlement of $2.7 million of
vacation liabilities settled through the issuance of RSUs during
the three months ended March 31, 2016, which is not included in the
GAAP presentation of our stock-based compensation expense.
- 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 of $0.5 and
$0.1 million for the three months ended March 31, 2017 and 2016
respectively.
- Acquisition-related transaction costs associated with
businesses acquired during the periods reported and anticipated
transactions of $0.7 and $0.5 million for the three months ended
March 31, 2017 and 2016 respectively.
- 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, including the
related foreign exchange fluctuation impact. 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.
- 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.
- Litigation settlements. We settled or accrued reserves related
several litigation claims of $0.3 million during the three months
ended March 31, 2016.
- 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, to estimate the non-GAAP
income tax provision in each jurisdiction in which we operate after
excluding the tax effect of the non-GAAP items described
above.
For more information:
Marc Olin
Chief Financial Officer
EFI
650-357-3500
Investor Relations:
JoAnn Horne
Market Street Partners
415-445-3235
Electronics For Imaging (NASDAQ:EFII)
Historical Stock Chart
From Mar 2024 to Apr 2024
Electronics For Imaging (NASDAQ:EFII)
Historical Stock Chart
From Apr 2023 to Apr 2024