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EFI Reports $100 Million Loss on Quarter

Friday, January 30, 2009

Press release from the issuing company

Foster City, Calif.– EFI, the world leader in customer-focused digital printing, announced today its results for the fourth quarter of 2008. For the quarter ended December 31, 2008, the Company reported revenues of $135.3 million, compared to fourth quarter 2007 revenues of $152.0 million.  The Company also announced that in the fourth quarter of 2008, it will recognize a non-cash charge currently estimated in the range of approximately $100 million to $130 million related to the impairment of goodwill and long-lived assets.

Including the non-cash charge, the GAAP net (loss) is estimated to be in the range of $(103.3) million to $(133.3) million or $(2.01) to $(2.59) per diluted share in the fourth quarter of 2008, compared to net income of $7.0 million or $0.12 per diluted share for the same period in 2007.

Including the non-cash charge, the GAAP net (loss) is estimated to be in the range of $(112.3) million to $(142.3) million or $(2.14) to $(2.71) per diluted share for the twelve months ended December 31, 2008, compared to net income of $26.8 million or $0.44 per diluted share for the same period in 2007. Non-GAAP net income was $6.7 million or $0.13 per diluted share in the fourth quarter of 2008, compared to $14.3 million or $0.23 per diluted share for the same period in 2007.

Non-GAAP net income was $41.2 million or $0.73 per diluted share for the twelve months ended December 31, 2008, down from $78.0 million or $1.19 per diluted share for the same period in 2007.

Non-GAAP net income is computed by adjusting GAAP net income by the impact of recurring amortization of acquisition-related intangibles and in-process research and development, stock based compensation expenses, certain tax charges, asset impairment charges, as well as other non-recurring charges and gains.

“The deteriorating economic environment continued to impact our business during the quarter. In particular, our inkjet business was affected by a difficult credit environment and the global slowdown in advertising and marketing spend,” said Guy Gecht, CEO of EFI.  “At the same time, the relative strength of our Fiery and software businesses helped to offset the impact from the equipment spending environment, once again proving the value of our diversified business model.   We took significant measures to rationalize our spending to reflect the current business conditions while at the same time focusing on providing innovative tools to help our customers grow new sources of revenues, increase productivity, and identify areas where their costs can be trimmed.”

Today, the Company also announced that it closed the sale of certain real estate property in Foster City, California, to Gilead Sciences, Inc. for a total purchase price of $137.5 million, subject to an escrow holdback of approximately 11%. The property sold included approximately thirty acres of land, which is entitled for development, the office building located at 301 Velocity Way consisting of approximately 163,000 square feet, and certain other assets related to the property.

Impairment Analysis

Based on a combination of factors, including the current economic environment and continued erosion in market capitalization, the Company concluded that there were sufficient indicators to require EFI to perform an interim impairment analysis, including goodwill and long-lived assets, in connection with the preparation of the Company’s financial statements for the fiscal year ended December 31, 2008.  EFI has not yet completed the analysis.  However, the Company has concluded that impairment has occurred.  The non-cash charge is currently estimated in the range of approximately $100 million to $130 million.  The Company expects to finalize the impairment analysis prior to the date of filing its Annual Report on Form 10-K for the period ended December 31, 2008.  The current estimates are subject to change.

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.

 

 

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Wide Format Editor

Richard Romano

Richard Romano, Section Editor/Senior Analyst
Richard has written about communication, graphics hardware and software trends for the past 15 years.

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