By Trevor Shackelford October 27, 2005 -- EFI (NASDAQ: EFII) announced third quarter results today. The company reported revenue of $142.1 million, up 46% from the same period last year. EFI posted net income of $18.5 million, or $0.30 per share, compared to net income of $16.1, or $0.27 per share, from the same period last year. EFI’s CEO Guy Gecht cited better than expected performance in the Fiery controller business and the newly acquired VUTEk super wide digital inkjet business. Contents of this Summary Quarter Highlights Segment Performance Guidance Raine Radar Q & A Quarter Highlights First full quarter of results with the new VUTEk business unit $31.1 million generated in cash during third quarter Revenue by geographic area: 51% North America, 30% Europe, 11% Japan, 8% Rest of the world General and administrative costs were 6.5% of revenue, down from 8.3% last quarter Sales and marketing expenses were 16.8%, down from 18.5% last quarter Research and development costs were 19.3%, down from 27.3% last quarter Segment Performance Controllers Controller revenue for the quarter was $78.8 million or 55% of the company’s total revenue for the quarter. This represents 7.7% growth year-over-year. The server and embedded portions of the business both performed well as OEM partners released new engines. Professional Printing Applications Sales for the quarter were $17.8 million or 25% of the total revenue for the company. This represents 5.9% year-over-year growth from the same period last year. Sales were slow during the summer months, as expected. Wide Format Digital Inkjet This new segment was created from the acquisition of VUTEk. This is the first full quarter of results with the new segment. The segment posted sales of $36.0 million, or 25% of sales. EFI expects the fourth quarter Miscellaneous All other business was $9.5 million, or 7% of sales. The company expects the fourth quarter to be stable in this segment. Guidance During the call, EFI stated that they would be raising their expectations for the fourth quarter. The company now expects revenues between $140 million - $143 million, with earnings per share of between $0.23 -$0.25 per share. Raine Radar Last quarter, Raine Radar commented that EFI would need strong performance from OEM partnerships to be able to salvage 2005. It appears as though that has happened, with several partners releasing new engines, especially in the area of high-end office color. In addition, the VUTEk acquisition seems to be paying off. Although the OEM benefit will likely taper off, EFI seems to be banking on continued solid performance in the fourth quarter as the company moves out of its seasonally slower Summer months. The company has also seen benefit from increased momentum in high-end color office products. This is a reverse of the trend from last year. Q & A Generally EFI sees seasonally slower business in the first and second quarters. EFI has seen a lot of momentum toward higher end color office copiers and printers, which is right in EFI’s sweet spot of 30 ppm color. EFI sees a large potential for product cycles among OEM partners generating growth in 2006. The stronger European and Asian performance is a result of the revenue distribution of VUTEk. EFI sees its largest opportunities in digital prepress and a new product the company is working on a print auction programs for large enterprises. The biggest portion of the miscellaneous segment is replacements and upgrades for the Fiery business. EFI is satisfied that the new product and new OEM product pipeline is sufficient to keep the seasonal dip in the first half from being magnified in 2006. EFI is planning on investing in the VUTEk segment to take advantage of a perceived market opportunity in that business. Based on the strong cash performance this quarter, EFI is investigating potential acquisition investments.