867374--3/2/2010--ELECTRONICS_FOR_IMAGING

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We rely on sales to a relatively small number of OEM customers and the loss of any of these OEM customers could substantially decrease our revenues. We do not typically have long-term purchase contracts with our OEM customers and our OEM customers have in the past, and could at any time in the future, reduce or cease purchasing products from us, harming our operating results and business. The market for our super-wide format printers is very competitive. We face competition from other suppliers as well as our own OEM customers. If we are not able to compete successfully our business may be harmed. We face strong competition in the market for printing supplies such as ink. We rely on our OEM customers to develop and sell products incorporating our Fiery technology and if they fail to successfully develop and sell these products, or curtail or cease the use of our technology in their products, our business will be harmed. We face strong competition in the super-wide format printer market and in our APPS category. Ongoing economic uncertainty has had and may continue to have a negative effect on our business. Our operating results may fluctuate based upon many factors, which could adversely affect our stock price. Price reductions for all of our products may affect our revenues in the future. Entry into new markets or distribution channels could result in higher operating expenses that may not be offset by increased revenue. We license software used in most of our products from Adobe Systems Incorporated and the loss of this license would prevent us from shipping these products. We depend upon a limited group of suppliers for key components in our products. The loss of any of these suppliers, the inability of any of these suppliers to meet our requirements, or delays or shortages of supply of these components could adversely affect our business. We are dependent on a limited number of subcontractors, with whom we do not have long-term contracts, to manufacture and deliver products to our customers and the loss of any of these subcontractors could adversely affect our business. We may face increased risk of inventory obsolescence, excess, or shortages related to our super-wide format inkjet printers and ink. If we are not able to hire and retain skilled employees, we may not be able to develop products or meet demand for our products in a timely fashion. Our acquisitions in the Inkjet and APPS operating segments increased the chance that we will experience additional bad debt expense. For some products, we sell our products to distributors and directly to the end-user. If we are unable to effectively manage a direct sales force, revenues could decline. Acquisitions may result in unanticipated accounting charges or otherwise adversely affect our results of operations and result in difficulties in assimilating and integrating the operations, personnel, technologies, products, and information systems of acquired companies or businesses. We face risks relating to the impairment of our goodwill and long-lived assets. We face risks from currency fluctuations. We face risks from our international operations. We may be unable to adequately protect our proprietary information and may incur expenses to defend our proprietary information. We face risks from third party claims of infringement and potential litigation. We may be subject to environmental-related liabilities due to our use of hazardous materials and solvents. Future sales of our hardware products could be limited if we don t comply with current and future environmental/chemical content regulation in electrical and electronic equipment. Our products may contain defects, which are not discovered until after shipping, which could subject us to warranty claims in excess of our warranty provisions. Actual or perceived security vulnerabilities in our products could adversely affect our revenues. System failures, or system unavailability, could harm our business. The location and concentration of our facilities subjects us to risk of earthquakes, floods, or other natural disasters. We are subject to numerous federal and state employment laws and may face claims in the future under such laws. We may be subject to risk of loss due to fire because materials we use in the manufacturing process of our inks are flammable. The value of our investment portfolio is subject to interest rate volatility. Our stock price has been volatile historically and may continue to be volatile. Our stock repurchase program could affect our stock price and add volatility. Under regulations required by the Sarbanes-Oxley Act of 2002, our internal controls over financial reporting may be deemed to be ineffective and this could have a negative impact on our stock price. A reduction in our net income as reported in our financial statements could increase the likelihood of identifying a material weakness in our internal controls over financial reporting. Our remaining synthetic lease arrangement may adversely affect our cash flow. Our profitability may be affected by unanticipated changes in our tax provisions, the adoption of new U.S. tax legislation, or exposure to additional income tax liabilities. Certain provisions contained in our amended and restated certificate of incorporation and our amended and restated bylaws and under Delaware law could delay or impair a change in control.

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867374--3/2/2010--ELECTRONICS_FOR_IMAGING_INC