UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington D.C. 20549
                                    FORM 10-K

(Mark One)

   [X]   ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
         EXCHANGE ACT OF 1934

   For the fiscal year ended December 31, 2000 Commission File Number: 0-18805

   [ ]   TRANSITION  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE  SECURITIES
         EXCHANGE ACT OF 1934

                          ELECTRONICS FOR IMAGING, INC.
             (Exact name of registrant as specified in its charter)

              Delaware                                     94-3086355
     (State or other jurisdiction of                     (I.R.S. Employer
    incorporation or organization)                      Identification No.)

 303 Velocity Way, Foster City, CA                            94404
(Address of principal executive offices)                    (Zip Code)

                                 (650) 357- 3500
              (Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:          None.

Securities registered pursuant to Section 12(g) of the Act:       Common Stock, 
                                                                  $.01 Par Value
                                                                (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
by  Section  13 or 15(d)  of the  Securities  Exchange  Act of 1934  during  the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports),  and (2) has been subject to such filing requirements for
the past 90 days. Yes X No

     The aggregate  market value of the voting stock held by  non-affiliates  of
     the registrant as of February 28, 2001.

 
         Common Stock, $.01 par value:                        $1,166,534,171 **
 

     The number of shares  outstanding  of each of the  registrant's  classes of
     common stock as of February 28, 2001.

 
         Common Stock , $.01 par value:                           53,820,155
 

                       DOCUMENTS INCORPORATED BY REFERENCE

 
     Portions of the definitive  Proxy Statement to be delivered to stockholders
     in connection with the Annual Meeting of Stockholders to be held on May 17,
     2001 are incorporated by reference into Part III hereof.

     ** Based upon the last  trade  price of the Common  Stock  reported  on the
     NASDAQ  National  Market  on  February  28,  2001.  Excludes  approximately
     5,386,418 shares of common stock held by Directors,  Officer and holders of
     5% or more of the  Registrant's  outstanding  Common  Stock on December 31,
     2000.  Exclusion  of shares held by any person  should not be  construed to
     indicate  that such person  possesses  the power,  direct or  indirect,  to
     direct  or  cause  the  direction  of the  management  or  policies  of the
     Registrant,  or that such person is controlled  by or under common  control
     with the Registrant.
                                                                               1


<PAGE>

PART I

This Annual  Report on Form 10-K  includes  certain  registered  trademarks  and
trademarks of Electronics  for Imaging,  Inc. ("EFI or the Company") and others.
EFI, the EFI logo,  Fiery, the Fiery logo, Fiery Driven,  the Fiery Driven logo,
Fiery Driven and Design,  ColorWise,  RIP-While-Print,  PowerPage, the PowerPage
logo, PowerBand,  PowerSmooth,  PSClone,  PSView, EDOX,  Mousitometer,  Spot-On,
Spot-On and Design,  Check Mate,  Freedom of Press,  Go Wide and  Solitaire  are
registered  trademarks of Electronics for Imaging, Inc. with the U.S. Patent and
Trademark Office, and certain other foreign  jurisdictions.  Fiery Prints, Fiery
ZX,  Fiery LX,  Fiery SI, Fiery XJ,  Fiery XJe,  Fiery XJ-W,  Bookleaker,  Fiery
Downloader, Fiery Scan, Fiery Spooler, Fiery FreeForm, Fiery Link, Fiery Driver,
PowerWise Architecture, RIPChips, WebTools, WebSpooler, WebInstaller, WebStatus,
Command Workstation,  Continuous Print,  DocBuilder,  EFICOLOR,  EFICOLOR Works,
FreeForm, Memory Multiplier,  NetWise, STARR Compression,  EDOX Profile Manager,
RIP Ahead,  Instant Reprint,  Document Recovery,  Sapphire,  Opal,  Velocity and
eBeam are  trademarks  of  Electronics  for  Imaging,  Inc.  All other terms and
product  names may be registered  trademarks  or trademarks of their  respective
owners, and are hereby acknowledged.

Certain  of the  information  contained  in this  Annual  Report  on Form  10-K,
including  without  limitation,  statements  made  under  this  Part  I,  Item 1
"Business"  and  Part II,  Item 7,  "Management's  Discussion  and  Analysis  of
Financial  Condition and Results of Operations  and Item 7A,  "Quantitative  and
Qualitative  Disclosures  about Market Risk" which are not historical facts, may
include  "forward-looking  statements"  within the meaning of Section 21E of the
Securities  Exchange  Act of 1934,  as  amended.  When  used  herein,  the words
"anticipate,"  "believe,"  "estimate,"  "expect,"  "intend,"  "will" and similar
expressions  as they relate to the  Company or its  management  are  intended to
identify  such  statements  as  "forward-looking  statements."  Such  statements
reflect the current  views of the Company  and its  management  with  respect to
future events and are subject to certain risks,  uncertainties  and assumptions.
Should  one or more of  these  risks or  uncertainties  materialize,  or  should
underlying   assumptions   prove   incorrect,   the  Company's  actual  results,
performance or achievements  could differ  materially from the results expressed
in, or implied by,  these  forward-looking  statements.  Important  factors that
could  cause the  Company's  actual  results  to differ  materially  from  those
included  in  the  forward-looking   statements  made  herein  include,  without
limitation, those factors discussed in Item 1 "Business - Competition," in "Item
7  Management's  Discussion  and  Results  of  Operations  - Factors  That Could
Adversely  Affect  Performance" and elsewhere in this Annual Report on Form 10-K
and in the Company's other filings with the Securities and Exchange  Commission,
including the Company's most recent  Quarterly  Report on Form 10-Q. The Company
assumes no  obligation  to update these  forward-looking  statements  to reflect
actual   results  or  changes  in   factors  or   assumptions   affecting   such
forward-looking statements.


Item 1: Business.

General

EFI, a Delaware corporation was founded in 1989 by Efraim Arazi. EFI designs and
markets products that support color and black-and-white printing on a variety of
peripheral devices. Its products incorporate hardware and software  technologies
that   transform   digital   copiers  and  printers  from  many  leading  copier
manufacturers into fast, high-quality networked printers. The Company's products
include  stand-alone  servers,  which are connected to digital copiers and other
peripheral devices,  and controllers,  which are embedded in digital copiers and
desktop  color laser  printers.  The Company  sells its  products  primarily  to
original equipment manufacturers ("OEMs") in North America, Europe and Japan.

The Company was founded to develop innovative  solutions to enable color desktop
publishing.  In pursuit of this goal,  the Company first  developed the Fiery(R)
line  of  color   servers   ("Fiery   Color   Servers")   to  enable   in-house,
short-production  run color  printing,  together  with  application  and  system
software to facilitate  color  correction and  device-independent  color.  Fiery
Color  Servers are  sophisticated,  stand-alone  computers  that enable  digital
copier  machines to accept,  process,  and print  digital  images from  personal
computers and computer networks. Historically, the Company primarily focused its
efforts on its  stand-alone  Fiery  Color  Servers  that  supported  printing on
digital color copiers and, until 1999, substantially all of its revenue resulted
from  the  development  and  sale  of  these  stand-alone   products.   Although
development  and marketing of embedded  solutions  began in prior years,  during
1999,  the Company  expanded its focus to include  several  additional  embedded
solutions that support printing on a broader range of devices, including digital
black-and-white  copiers and desktop  color  laser and inkjet  printers  ("Fiery
Controllers" and, together with Fiery Color Servers, "Fiery Products"). In 1999,
the Company also developed newer stand-alone Fiery Color Servers for wide-format
color inkjet printers and  restructured  its sales model by entering into direct
relationships  with the  manufacturers of such wide-format  printers rather than
selling to sales  distributors.  During 1999,  the Company  expanded its line of
digital color servers through its merger with Management Graphics,  Inc. ("MGI")
and its  EDOX(R)  line of digital  color  servers  ("EDOX  Color  Servers")  and
introduced its first Internet appliance product, eBeam(TM).

In 2000, the Company continued to develop Fiery and EDOX Products as well as new
software  applications  for  existing  and new  generations  of a variety of new
peripheral devices,  including the development of its Velocity(TM) software. See
"Growth and Expansion  
                                                                               2

<PAGE>

Strategies - Proliferate  and Expand Product  Lines." In 2000, the Company again
expanded its line of digital color  servers  through its  acquisition  of Splash
Technology  Holdings,  Inc.  ("Splash") and its Splash(TM) line of digital color
servers  ("Splash  Color Servers" and together with Fiery Color Servers and EDOX
Color  Servers,  "EFI  Color  Servers").  Additionally,  in  2000,  the  Company
announced EFI Professional  Services in an effort to provide technical  support,
training  and  strategic  consulting  to end users.  See "Growth  and  Expansion
Strategies - Develop and Expand Professional Services." Also in 2000 the company
began selling its Velocity(TM)  brand of workflow software  ("Velocity  Workflow
Software").  See "Growth and Expansion  Strategies - Develop and Expand Velocity
Workflow Software."

In the past,  the Company  has  achieved  significant  growth in net revenue and
operating  income  before  adjustments  for purchase  accounting.  The Company's
growth is  contingent  on a number of factors,  many of which are outside of its
control.  These  factors  include the overall rate of growth in the color server
market and the impact of  economic  conditions  on the demand for the  Company's
products.  Due to these and other factors (including an increasingly higher base
from which to grow), the Company's  historical growth rate has been difficult to
sustain and will be difficult to exceed in the future. Accordingly,  the Company
believes that  period-to-period  comparisons of its financial results should not
be relied upon as an indication of future performance.
 
The Electronics for Imaging Solution

The Company develops products with a wide range of price and performance  levels
designed to make high-quality color printing in short-run productions easier and
more  accessible to the broader  market.  The Company  believes  that  consumers
generally  prefer  color as evidenced by the  migration of  photographs,  motion
pictures and television from  black-and-white to color. In the personal computer
field,  EFI believes  this  preference  is shown by the almost  exclusive use of
color  monitors  with  color-oriented  graphical  user  interfaces,  application
software  and  Internet  content.  In each of these  cases,  once  the  enabling
technology developed sufficiently,  consumer adoption of color quickly followed.
The Company  believes that consumers  prefer color in documents  created through
desktop publishing. Until recently, however, the technology was not available to
do this in a high quality, quick and cost-effective manner due to the complexity
of accurate color reproduction.  EFI Color Servers permit users of digital color
copiers to transmit  and convert  digital data from a computer to a color copier
so that the color copier can print high-quality color documents easily,  quickly
and cost-effectively. As a result, the Company's color servers transform digital
color copiers into fast, high-quality, networked color printers.

The Company also  believes that the  black-and-white  copier market is migrating
toward the  development  and use of digital  black-and-white  copiers.  Thus, in
addition  to EFI Color  Servers  for  digital  color  copiers,  the  Company has
leveraged its technology to develop and manufacture  other products that support
both color and  black-and-white  printing.  These  products  include:  (i) Fiery
servers  for  digital  black-and-white  copiers;  (ii) Fiery  Color  Servers for
wide-format  inkjet printers;  and (iii) embedded Fiery  Controllers for digital
black-and-white  copiers and desktop  color laser  printers.  See  "Products and
Technology."

Growth and Expansion Strategies

The Company's  overall  objective is to continue to introduce new generations of
controller products, new software applications,  and other new product lines, as
well as offering professional  consulting services.  With respect to its current
products,  the Company's  primary goal is to provide a range of  processing  and
printing  solutions that address broad sections of the color printing market and
to  continue  to  leverage  its  technology  to enable  digital  black-and-white
printing on additional  peripheral  devices  including  digital  black-and-white
copiers and multi-function  devices.  The Company's strategy to accomplish these
goals consists of six key elements.

Proliferate and Expand Lines

The Company  intends to continue to develop new  products  that are scalable and
offer a broad range of features and performance when connected to, or integrated
with, digital color and black-and-white  copiers, as well as desktop color laser
printers.  Historically,  the Company sold products that supported digital color
copiers.  In 1996 the Company expanded its line of color servers to drive a wide
range of output devices  including  desktop color laser printers and wide-format
color inkjet  printers with  poster-size  output.  In 1997, the Company  further
expanded the use of its  technology,  shipping its first products that supported
black-and-white  printing systems and copiers.  In 1998, the Company  introduced
its next generation of products based upon EFI's Fiery ZX and Fiery X2 platforms
and in 1999, the Company  introduced its next  generation of products based upon
EFI's Fiery Z4 and Fiery X4 platforms. In 2000, the Company again introduced its
next  generation  of  products  based  upon  EFI's new Fiery X3  platform  which
includes  more  advanced  hardware  and  EFI's  latest  technology  innovations,
including ColorWise(R) 2.0, NetWise(TM) 2.0, Fiery Link(TM) and Fiery Driver(TM)
which provide for advances in color  performance,  networking  capabilities  and
workflow  productivity.  In 2000,  the  Company  also  introduced  the EDOX 2000
Document  Server,  an  upgrade  to the EDOX  Color  Servers.  By  utilizing  the
advantages of these new  platforms,  the Company  intends to continue to develop
new  products.  The Company  also  intends to  continue to develop new  software
applications  

                                                                               3

<PAGE>

that  advance  the  performance  and  usability  of  its  servers  and  embedded
controllers.  In 2000, the Company  developed a new line of software designed to
maximize    workflow    efficiencies    which   includes    VelocityBalance(TM),
VelocityBuild(TM),  VelocityEstimate(TM)  and  VelocityScan(TM).  In  2000,  the
Company also developed  Harmony(TM) Software  Developers Kit which enables users
to develop custom  applications that maximize the power, speed and throughput of
copiers and printers powered by Fiery  technology.  We expect these new software
applications will be the first of many software offerings from the Company.

On October 23, 2000, the Company acquired Splash in a cash  transaction,  valued
at  approximately  $159.7  million.  Splash  was a  Sunnyvale,  California-based
corporation  that  developed  and  manufactured  color  servers  that provide an
integrated  link between  desktop  computers and digital color laser copiers and
wide format printers,  including  Splash(TM) Servers.  The acquisition of Splash
adds to EFI's engineering  talent and complements the Company's product strategy
of bringing  high-performance,  cost-effective  digital printing technology to a
wide range of markets.

The Company also plans to expand its product line to include Internet  appliance
products.  In  November,  1999,  the  Company  introduced  eBeam(TM).  eBeam(TM)
converts a conventional  whiteboard into a digital workspace,  allowing users to
capture  whiteboard  meeting-notes  and diagrams in real time on their  personal
computers.  Words and images can be viewed,  edited and shared  across the world
using a standard  web browser.  eBeam(TM)  will be competing in a new market for
EFI - the market for office supplies and meeting-related services. In May, 2000,
the Company  introduced  its second  generation  eBeam(TM)  product.  Currently,
eBeam(TM) is being sold through resellers and distributors,  as well as directly
to consumers via the Web and a toll-free number.

Develop and Expand Velocity(TM) Workflow Software

The Company is continuing to develop  software  workflow  solutions  designed to
provide print production operations with important new value-adding capabilities
while at the same time increasing equipment  utilization and overall throughput.
Upcoming  Velocity(TM) modules are expected to include scanning,  imposition and
editing, Internet print services, content management, advance ticketing, and job
estimating and bidding.

Develop and Expand Professional Services

In February,  2000,  the Company  announced  EFI  Professional  Services.  While
contract-based  technical  support has been available from EFI for some time, an
expanded-services  group has been  formed  and is  offering  end  users  greater
options for technical  support,  training with both  standardized and customized
curriculums,  and strategic  consulting.  EFI strategic  consultants offer large
organizations  expertise in network  print  architecture  and  support,  printer
management,  data  visualization,  and document  management.  EFI believes  that
offering  professional  services  will help to lower the total cost of networked
corporate  printing,  lead to greater  productivity,  and  improve  the  overall
quality  and  visual  appeal  of  documents.  EFI also  believes  that  offering
professional  services will help  accelerate  the migration of color printing in
the corporate marketplace.

Develop and Expand Relationships with Key Industry Participants

The Company has established  relationships  with leading color printer  industry
companies  such  as  Canon,   Danka   Business   Systems,   Epson,   Fuji-Xerox,
Hewlett-Packard,  Ikon Office Solutions,  Konica,  Minolta,  Oce, Ricoh,  Sharp,
Toshiba, and Xerox  (collectively,  the "Strategic Partners" or "OEM partners").
EFI seeks to expand its relationships  with its Strategic Partners in pursuit of
the goal of offering  Fiery,  EDOX and Splash  products for  additional  digital
color and  black-and-white  devices  produced  by its  Strategic  Partners.  The
Company  also seeks to establish  relationships  with other  digital  copier and
printer  companies for the distribution of Fiery,  EDOX and Splash products with
their copiers and printers.

Establish Enterprise Coherence

In its  development  of new  products  and  platforms,  EFI  seeks to  establish
coherence  across its entire  product line by designing  products that provide a
consistent "look and feel" to the end-user.  EFI believes  enterprise  coherence
should  create  higher  productivity  levels as a result of  shortened  learning
curves.  Additionally,  enterprise  coherence  should  lower the  total  cost of
ownership by providing one source for sales,  support and training.  The Company
believes  that its effort to  achieve  enterprise  coherence  will  continue  to
engender goodwill among its Strategic Partners and the end-users of its products
and assist in the development of new strategic relationships and markets for the
Company.
                                                                               4

<PAGE>

Leverage Technology Expertise to Expand the Scope of Products and Markets

The Company has  assembled  an  experienced  team of  technical  personnel  with
backgrounds  in color  reproduction,  electronic  pre-press,  image  processing,
networking, and software and hardware engineering.  By applying its expertise in
these  areas,   the  Company  expects  to  continue  to  expand  the  scope  and
sophistication of its products and gain access to new markets.

Products and Technology

The  Company  is a  leader  in  enabling  networked  printing  solutions.  EFI's
technology allows copiers, printers and digital presses to be shared across work
groups,  the enterprise and the Internet.  The Company develops  products with a
wide  range of price  and  performance  levels  designed  to make  high-quality,
short-run color and black and white digital  printing easier and more accessible
to the broader  market.  The Company has a model for almost every major  digital
printing technology today, including:

o      desktop color laser printers,
o      high-end desktop ink jet printers,
o      wide-format printers,
o      mid-range color copiers,
o      mid-range digital black and white copiers,
o      production color copiers and
o      high-speed digital presses.

Thus, we believe the Company's products are attractive to a variety of end users
including,  multimedia authors, advertising agencies,  print-for-pay businesses,
graphic  designers,  pre-press  providers  and  small to large  businesses.  The
Company   currently   has  two  main  product   lines  that  support  color  and
black-and-white printing: (i) stand-alone servers which are connected to digital
copiers and other peripheral  devices and (ii) controllers which are embedded in
digital  copiers and desktop laser printers.  All of EFI's products  incorporate
EFI's proprietary software and hardware features.

EFI Technology

From its inception,  EFI has invested heavily in research and  development.  EFI
has focused on developing technologies that could be implemented in a variety of
products.  Examples of such  technologies  include Fiery  DocBuilder(TM),  which
enables electronic collation,  reverse order printing,  job merging and editing,
and Fiery  WebTools(TM)  which  enables  print  job  management  from  different
computer platforms via a Java(TM)-enabled  Web Browser.  Fiery WebTools(TM) also
provides remote access to the print queue so an administrator can obtain instant
updates on job status and error  messages,  allowing  for a timely  response  to
problems,  and provides job accounting and job security  capabilities  which are
essential in network printing  environments.  Other examples of EFI technologies
include,  (i)RIP-While-Print(R)  which  allows  one  page  to be  printed  while
subsequent pages are simultaneously  processed;  (ii) Continuous Print(TM) which
allows processed pages to be stored in memory before  printing,  eliminating the
need for the  copier or  printer  to cycle  down  between  unique  pages;  (iii)
ColorWise(R)2.0,  EFI's  next-generation color management system that simplifies
color printing for beginners  through  features like automatic  Pantone-matching
and the  ability to  process  multiple  files on the same page  while  providing
expert users with even greater color control and accuracy; (iv) Fiery Driver(TM)
which is a unified printing interface that simplifies the printing process;  (v)
Fiery Link(TM)  which  provides  users with  information on print job status and
connected  Fierys  allowing  users to monitor  the status of any print job,  its
position in the queue, and general  information on the Fiery and paper and toner
levels from any  workstation;  and (vi) ECT  compression,  an improved  and more
advanced   compression   scheme  than  EFI's  previous   STARR(TM)   compression
technologies,  which offers definite  compression  ratios and virtually lossless
image quality.  Compression software decreases the amount of memory necessary to
store documents during  processing and enables faster printing of documents.  In
addition  to such  software  innovations,  EFI custom  designs  its  hardware to
increase   productivity.   For  example,  EFI's  custom  designed  RipChips(TM),
application  specific integrated circuit ("ASIC") chips,  decrease overall print
times  by  off-loading  data  movement  from  the  microprocessor.  The  Company
continues to refine these printing technologies.

In 2000, the Company continued its efforts to improve its products' performance,
features and ease of use. Software features developed by the Company during 2000
include:  (i) NetWise(TM)  3.0, EFI's third generation  networking  architecture
which  provides  enhanced  programmability  that helps  users  build  customized
printing solutions and provides extensive Internet-based  functionality and (ii)
the next generation  DocBuilder  Pro(TM) which provides users with comprehensive
in-RIP job editing.

Stand-Alone Servers

EFI Color Servers  permit users of digital color copiers to transmit and convert
digital  data from a  computer  to a color  copier so that the color  copier can
print color documents easily,  quickly and  cost-effectively.  As a result,  EFI
Color Servers transform digital color copiers into fast,  high-quality networked
color printers.  In addition to EFI Color Servers for digital color copiers, the
Company has leveraged its technology to develop and  manufacture  other products
that support both color and  black-and-white  printing.  These products  include
Fiery servers

                                                                               5

<PAGE>

for digital  black-and-white  copiers and Fiery  Color  Servers for  wide-format
inkjet  printers.  EDOX Color  Servers and Splash  Color  Servers  also  support
wide-format inkjet printers.

Since the  introduction of the first Fiery Color Server in 1991, the Company has
expanded its product line. In 1995, the Company introduced its  third-generation
platform,  the Fiery XJ.  During 1996,  the Company  shifted the majority of its
product  line  to  the  XJ  platform  and  later  refined   these   products  by
transitioning  to a variation of the XJ platform known as the Fiery XJ+.  During
1998, the Company  introduced two new platforms,  the Fiery ZX and the Fiery X2,
which included  software  features  developed or further  refined by the Company
during 1998,  and began  migrating its product line to these  platforms.  During
1999, the Company again  introduced two new server  platforms,  the Fiery Z4 and
the Fiery X4, which  incorporated  several new technologies or enhancements from
EFI including, ColorWise(R)2.0,  NetWise(TM) 2.0, the PowerWise(TM) architecture
and the next generation  DocBuilder Pro(TM). The Fiery Z4 is approximately twice
as fast as its predecessor, the Fiery ZX, is optimized for high-speed processing
and  photographic-quality  color and is designed  for  demanding  graphic  arts,
print-for-pay and advertising agency environments. The Fiery X4 is approximately
three times as fast as its predecessor,  the Fiery X2, and is designed for users
in a corporate  environment.  In 2000, the Company again focused its development
efforts on improvements to its products'  performance,  features and ease of use
and introduced one new platform,  the X3, which includes  features  developed or
further refined by the Company during 2000. The X3 is approximately  seven times
faster  than its  predecessor  the  Fiery  X2.  In  2000,  the  Company  shipped
stand-alone EFI Color Servers for use with color copiers,  color inkjet printers
and wide-format  color printers  distributed by companies such as Canon,  Epson,
Fuji-Xerox,  Minolta,  Oce, Ricoh,  Toshiba,  Ikon Office  Solutions,  Sharp and
Xerox.  In 2000,  the Company  also shipped  Fiery  servers for use with digital
black-and-white  copiers distributed by Canon, Danka,  Konica,  Minolta, Oce and
Sharp.

Controllers

Unlike  our  Fiery,  EDOX and  Splash  servers,  which  are sold as  stand-alone
products to be  connected to copiers,  Fiery  Controllers  are  embedded  inside
copiers and desktop  printers.  Fiery Controllers allow users to print documents
directly from their computers to the digital copier.  Embedded Fiery Controllers
support both color and black-and-white printing on desktop color laser printers,
color multi-function devices and digital  black-and-white  copiers.  Because the
Company  believes  that the Fiery name and  trademark,  including  the trademark
"Fiery  Driven(R)," are associated with substantial  goodwill and recognition in
the marketplace,  the Company seeks to have the "Fiery Driven(R)" logo placed on
printing  solutions  that include an embedded  Fiery  Controller.  In 2000,  the
Company shipped Fiery Controllers embedded in color and digital  black-and-white
copiers and desktop  color  printers  distributed  by  companies  such as Canon,
Fuji-Xerox, Hewlett Packard, Konica, Minolta, Ricoh and Xerox.

Significant Relationships

The  Company  has  established,  and  continues  to  try  to  build  and  expand
relationships  with its Strategic  Partners and other leading copier and printer
companies,  in order to benefit from the OEMs' products,  distribution  channels
and  marketing   resources.   The  OEMs  include   domestic  and   international
manufacturers,  distributors  and  sellers of digital  copiers  (both  color and
black-and-white ), wide-format printers and desktop color printers.  The Company
works  closely  with  the  OEMs  with  the  aim  of  developing  solutions  that
incorporate  leading technology and that optimally work in conjunction with such
companies'  products.  OEMs that the Company sold  products to in 2000  include,
among others,  Canon, ENCAD,  Epson,  Fuji-Xerox,  Hewlett-Packard,  Ikon Office
Solutions,  Konica,  Minolta,  Oce, Ricoh, Sharp,  Toshiba and Xerox.  Together,
sales to Canon, Xerox and Ricoh accounted for approximately 70% of the Company's
2000 revenue, with sales to each of these customers accounting for more than 10%
of the Company's revenue.

In April,  2000,  the Company  announced an agreement to provide  updated  Fiery
controllers   for  Hewlett   Packard's  new  color  laser  jet  printer  series.
Hewlett-Packard  also distributes Fiery Controllers  designed for use with their
wide-format  color inkjet and Fiery Servers designed for use with their graphics
large-format printers.

In 2000 the Company announced a product partnership with Atlas Software B.V. for
the development of Velocity  Design(TM)  which enables users to create and print
variable data documents more efficiently;  the Company also recently announced a
partnership  with  Pageflex in an effort to offer  customers  industry  standard
variable data printing solutions. Additionally, in 2000, the Company announced a
partnership with PictureTel  Corporation and Edding  International  GmbH for the
distribution of eBeam.

The Company customarily enters into development and distribution agreements with
its  OEM  customers.  These  agreements  can be  terminated  under  a  range  of
circumstances,  and often upon relatively short notice. The circumstances  under
which an agreement can be terminated  vary from agreement to agreement and there
can be no assurance  that the Company's OEM customers  will continue to purchase
products from the Company in the future,  despite such  agreements.  The Company
recognizes the importance of, and works 

                                                                               6

<PAGE>

hard to maintain,  its relationships with its customers.  However, the Company's
relationships  with  its  customers  can be  affected  by a  number  of  factors
including,  among others:  competition  from other  suppliers,  competition from
internal development efforts by the customers  themselves  (including the OEMs),
and  changes in general  economic,  competitive  or market  conditions  (such as
changes in demand for the Company's or the OEM's  products,  or  fluctuations in
currency  exchange  rates).  There can be no  assurance  that the  Company  will
continue to maintain or build the relationships it has developed to date.

In addition to its development and sales  relationships  with the OEMs, in order
to increase the distribution and presence of EFI Color Servers connected to both
color and black-and-white  copiers and wide-format printing devices, the Company
has developed strategic relationships with well-known  print-for-pay  companies,
including  Kinko's,  AlphaGraphics,  the CopyMax  operations of office  products
superstore  OfficeMax,  the American Speedy group of franchised printing centers
(including  Allegra Print and Imaging,  American Speedy,  Speedy Printer,  Zippy
Print and Quik Print) , MultiCopy, Inc. and the SAMPA Corporation, franchiser of
Signal Graphics  Printing  Centers.  Several of these  print-for-pay  companies,
including,  American Speedy,  OfficeMax,  MultiCopy, Inc. and SAMPA Corporation,
have entered into worldwide  strategic  alliances with the Company  whereby they
agreed to continue  standardization efforts on EFI's Fiery(R) Color Servers with
respect to their printing services.

The Company also has a continuing  relationship  pursuant to a license agreement
with Adobe and licenses  PostScript(R) software from Adobe for use in many Fiery
Products.  This  relationship is important  because each Fiery Product  requires
page description  language software in order to operate.  Adobe's  PostScript(R)
software is widely used to manage the  geometry,  shape and  typography  of hard
copy documents and Adobe is a leader in providing page description software.

Distribution and Marketing

The Company's primary  distribution  method for its Fiery and Splash servers has
been to sell the Fiery and Splash  servers to its OEMs.  The  Company's  OEMs in
turn sell these  products to  distributors  and end-users for use with the OEMs'
copiers  or  printers  as part  of an  integrated  printing  system.  For  Fiery
Controllers,  the  Company's  primary  distribution  method has been to sell the
products to the OEMs that embed the products  into their  copiers and  printers.
The Company's primary  distribution method for its EDOX servers has been to sell
the EDOX servers  directly to its  distributors.  There can be no assurance that
the Company will continue to successfully  distribute its products through these
channels.  Any interruption of the distribution  methods will negatively  impact
the  Company  in the  future.  See  "Management's  Discussion  and  Analysis  of
Financial  Condition  and Results of  Operations - Factors That Could  Adversely
Affect   Performance  -  Reliance  on  OEM  Resellers;   Risks  Associated  With
Significant OEM Group Concentration".

The Company promotes all of its products through public relations,  direct mail,
advertising,   promotional   material,   trade   shows  and   ongoing   customer
communication programs.

Research and Development

Research and  development  costs for 2000,  1999,  and 1998 were $94.1  million,
$75.0 million, and $60.2 million,  respectively. As of December 31, 2000, 476 of
the Company's 895 full-time employees were involved in research and development.
The Company  believes  that  development  of new  products  and  enhancement  of
existing products are essential to its continued success, and management intends
to  continue  to  devote  substantial  resources  to  research  and new  product
development. The Company expects to make significant expenditures to support its
research and development programs for the foreseeable future.

The   Company  is   developing   products  to  support   additional   color  and
black-and-white  printing devices  including  desktop  printers,  high-end color
copiers,  digital  black-and-white  copiers  and  multi-function  devices.  This
ongoing  development  work includes a  multiprocessor  architecture for high-end
systems and lower-cost designs for desktop color laser printers.  The Company is
also  developing  new  software   applications  designed  to  maximize  workflow
efficiencies.    This   includes   VelocityBalance(TM),    VelocityEstimate(TM),
VelocityScan(TM), and VelocityBuild(TM).

The Company expects to enhance  functionality of its Internet  appliance product
eBeam(TM).  See  "-Growth and  Expansion  Strategies  -  Proliferate  and Expand
Product  Lines".  Substantial  additional  work and expense  will be required to
complete the development of these  projects.  See  "Management's  Discussion and
Analysis of Financial  Condition  and Results of Operations - Factors That Could
Adversely Affect Performance - Product Transitions".

Manufacturing

The  Company  utilizes   subcontractors  to  manufacture  its  products.   These
subcontractors  work  closely  with the  Company  to  ensure  low 

                                                                               7

<PAGE>

costs  and  high  quality  in  the   manufacture  of  the  Company's   products.
Subcontractors  purchase components needed for the Company's products from third
parties.  The Company is totally reliant on the ability of its subcontractors to
produce  products sold by the Company,  and although the Company  supervises its
subcontractors, there can be no assurance that such subcontractors will continue
to  perform  for the  Company  as well as they  have in the  past.  Difficulties
experienced  by  the  Company's  subcontractors  (such  as  interruptions  in  a
subcontractor's  ability  to  make  or  ship  the  Company's  products,  quality
assurance problems or the ongoing business  viability of a subcontractor)  would
adversely affect the Company's operations.

Certain  components  necessary for the  manufacture  of the Company's  products,
including ASICs and certain other semiconductor components,  are obtained from a
sole supplier or a limited group of suppliers.  The purchase of certain of these
key components may involve significant lead times. Accordingly,  in the event of
interruptions in the supply of these key components or  unanticipated  increases
in demand for the Company's products, the Company could be unable to manufacture
certain of its products in a quantity sufficient to meet customer demand.  There
can be no  assurance  that  such  supply  or  manufacturing  problems  would not
adversely affect the Company's results of operations or financial condition.  In
an attempt to mitigate these supply issues, the Company will purchase components
for later resale to the Company's  subcontractors  thus increasing the Company's
inventory balances and the risk associated with inventory obsolence.

Human Resources

As of December 31, 2000, the Company employed 895 individuals.  Of the 895 total
employees, approximately 216 were in sales and marketing, 114 were in management
and  administration,  89 were in  manufacturing,  and 476 were in  research  and
development. Of the total number of employees, the Company had approximately 782
employees  located in U.S. and Canadian  offices,  and 113 employees  located in
international  offices  including  employees  based in The United  Kingdom,  The
Netherlands,   Germany,   Japan,  France,  Italy,  Finland,   Spain,  Australia,
Singapore, Brazil, Mexico, Sweden and Hong Kong. The Company's employees are not
represented by any collective bargaining  organization and the Company has never
experienced a work stoppage.

Competition

Competition in the Company's  markets is intense and involves  rapidly  changing
technologies and frequent new product introductions. To maintain and improve its
competitive position,  the Company must continue to develop and introduce,  on a
timely and  cost-effective  basis, new products and features that keep pace with
the evolving needs of its customers. The principal competitive factors affecting
the markets for the Company's  Fiery,  EDOX and Splash products  include,  among
others, customer service and support, product reputation,  quality, performance,
price and  product  features  such as  functionality,  scalability,  ability  to
interface  with  OEM  products  and ease of use.  The  Company  believes  it has
generally  competed  effectively  in the past against  product  offerings of its
competitors  on the basis of such  factors.  However,  there can be no assurance
that the Company will continue to be able to compete  effectively  in the future
based on these or any other competitive factors.

The Company  competes  directly with other  independent  manufacturers  of color
servers,  independent manufacturers of embedded solutions, copier manufacturers,
printer  manufacturers  and others.  The  Company  also faces  competition  from
wide-format  printer  manufacturers that develop their own controllers and other
companies that develop  controllers for wide-format  printers.  The Company also
faces competition from its customers and other copier and printer  manufacturers
that offer internally  developed server products or that incorporate  internally
developed embedded solutions or server features into their copiers and printers,
thereby  eliminating  the need for the  Company's  products and limiting  future
opportunities for the Company.  In addition,  the Company faces competition from
manufacturers  of desktop color laser printers which do not utilize a controller
(relying  instead on host based  processing of data) and which offer  increasing
speed and color  capability.  The Company believes that it competes  effectively
due to, among other things,  its efforts to continually  advance its technology,
name  recognition,  sizable  installed  base,  number of products  supported and
price. The Company expects that competition in its markets will increase due to,
among other  factors,  market  demand for higher  performance  products at lower
prices,  rapidly changing  technology and product offerings from competitors and
customers.  There can be no assurance  that the Company will be able to continue
to advance its  technology  and its products or to compete  effectively  against
other  companies'  product  offerings,  and any  failure  to do so would  have a
material  adverse  effect upon the  Company's  business,  operating  results and
financial condition.

Intellectual Property Rights

The Company  relies on a combination of patent,  copyright,  trademark and trade
secret laws,  non-disclosure  agreements  and other  contractual  provisions  to
establish,  maintain and protect its intellectual  property rights, all of which
afford only limited  protection.  As of December  31,  2000,  the Company had 54
issued U.S.  patents,  63 pending U.S. patent  applications  and various foreign
counterpart  

                                                                               8

<PAGE>

patents and applications. There can be no assurance that patents will issue from
these pending  applications or from any future  applications or that, if issued,
any  claims  allowed  will  be  sufficiently  broad  to  protect  the  Company's
technology. The Company's issued patents expire between May 2002 and March 2019.
Failure  of the  Company to obtain or  maintain  patent  protection  may make it
easier for the Company's competitors to offer equivalent or superior technology.
In addition,  third parties may independently develop similar technology without
misappropriation  of the Company's trade secrets or breach of other  proprietary
rights.  Any failure by the Company to take all  necessary  steps to protect its
trade secrets or other intellectual property rights and failure to enforce these
rights may have a material adverse effect on the Company's ability to compete in
its markets.

The Company has registered certain trademarks,  which include, among others, its
EFI(R),  Fiery(R),  Fiery and  Design(R),  Fiery  Driven(R),  Fiery  Driven  and
Design(R),  ColorWise(R),  EDOX(R), and RIP-While-Print(R)  trademarks,  and has
applied for  registration  of certain  additional  trademarks.  The Company will
continue to evaluate the  registration of additional  trademarks as appropriate.
Any failure by the Company to properly register or maintain its trademarks or to
otherwise  take all necessary  steps to protect its  trademarks may diminish the
value associated with the Company's  trademarks.  The Company's products include
software sold pursuant to "shrink wrap"  licenses that are not signed by the end
user  and,   therefore,   may  be  unenforceable   under  the  laws  of  certain
jurisdictions.  In  addition,  the  laws of some  foreign  countries,  including
several in which the  Company  operates  or sells its  products,  do not protect
intellectual  property  and  proprietary  rights to as great an extent as do the
laws of the United States.

From time to time,  litigation  may be  necessary  to  defend  and  enforce  the
Company's  proprietary  rights.  Such  litigation,   whether  or  not  concluded
successfully  for  the  Company,  could  involve  significant  expense  and  the
diversion of management's attention and other Company resources.

Risk Factors

In addition to the above information, a discussion of factors that may adversely
affect the Company's  future  performance and financial  results can be found in

I
tem 7: Management's  Discussion and Analysis of Financial Condition and Results
of Operation.

Financial Information About Foreign and Domestic Operations and Export Sales

See Note 10 of the Company's Notes to  Consolidated  Financial  Statements.  See
also Item 7  "Management's  Discussion  and Analysis of Financial  Condition and
Results of Operations  -Factors That Could Adversely Affect Performance -We face
risks from our international operations and from currency fluctuations."


Item 2: Properties

The Company's  principal  offices are located at 303 Velocity Way,  Foster City,
California  on  approximately  35 acres of land  which  the  Company  owns.  The
corporate  headquarters  facility,  which includes  approximately 295,000 square
feet,  was completed in July,  1999 and is leased by the Company.  In 1999,  the
Company  entered  into an agreement to lease  additional  facilities,  for up to
543,000  square feet of space,  to be  constructed  on the Foster City property.
Construction  of the first 163,000 square feet of the additional  facilities was
begun in 2000,  with an estimated  completion  date of June 2001. In addition to
the Foster City offices,  the Company has leased  facilities in Parsippany,  New
Jersey;  Minneapolis,   Minnesota;  Vancouver,  Washington  and  Amsterdam,  The
Netherlands.  The Company  also leases a number of  domestic  and  international
sales offices. In January 2001 the Company purchased  facilities in Minneapolis,
Minnesota.

The Company  believes  that its  facilities,  in general,  are  adequate for its
present and currently foreseeable future needs.


Item 3: Legal Proceedings.

On December 15, 1997, a shareholder  class action lawsuit,  entitled Steele,  et
al. v. Electronics for Imaging,  Inc., et al., No. CV 403099,  was filed against
the Company and certain of its officers and directors in the California Superior
Court,  San Mateo  County  (the "San  Mateo  Superior  Court").  Five  virtually
identical  class  action  complaints  were  subsequently  filed in the San Mateo
Superior  Court.  On December  31,  1997,  a putative  shareholder  class action
entitled Smith v. Electronics for Imaging,  Inc., et al., No. C97-4739 was filed
against  the Company and certain of its  officers  and  directors  in the United
States District Court for the Northern  District of California.  The state court
class  actions  allege that the  Company  made false and  misleading  statements
concerning its business during a putative class period of April 10, 1997 through
December 11, 1997 and allege violations of California Corporations Code Sections
25400 and 25500 and Civil Code Sections  1709 and 1710.  The federal court class
action complaint makes the same factual  allegations,  but alleges violations of
certain United States federal securities laws. The complaints do not specify the
damages sought.  The 

                                                                               9

<PAGE>

Company  believes  that these  lawsuits are without merit and intends to contest
them  vigorously,  but there can be no assurance  that if damages are ultimately
awarded  against the  Company,  the  litigation  will not  adversely  affect the
Company's results of operations.

On February 16, 2001, the U.S.  Magistrate Judge handling the patent  litigation
between  the  Company and Splash  granted  the  Company's  motion to dismiss the
complaint and Splash's counterclaims.  The Court's order ends the litigation and
brings to a close all pending patent issues between the Company and Splash.

In January  1999,  two class  action  complaints  were filed,  and  subsequently
consolidated into one case, in the United States District Court for the Northern
District  of  California  against  Splash  and  certain  of  its  officers.  The
complaints  allege that  defendants made false and misleading  statements  about
Splash's  business  condition and prospects  during a class period of January 7,
1997 - October 13, 1998,  and assert claims for violations of Sections 10(b) and
20(a) of the Securities  Exchange Act of 1934 and SEC Rule 10b-5. The complaints
in both  actions  seek  damages  of an  unspecified  amount.  There  has been no
discovery  to date and no trial is  scheduled  in  these  actions.  The  Company
believes  it has  meritorious  defenses  in this action and intends to defend it
vigorously.  Failure by the  Company  to obtain a  favorable  resolution  of the
claims set forth in these  actions could have a material  adverse  affect on the
Company's business,  results of operations and financial  condition.  Currently,
the amount of such material effect cannot be reasonably estimated.
 
On August 31, 2000,  after the  announcement  of the tender offer for Splash,  a
shareholder  class action lawsuit was filed against Splash and its directors for
violation of federal and state securities  laws. The plaintiffs,  Splash and the
Company have agreed in principle to enter into a settlement agreement that would
resolve  the  outstanding  disputes  and dismiss  the case with  prejudice.  The
parties are currently  finalizing the details of the settlement  agreement.  The
Company and Splash deny any wrongdoing whatsoever,  but agreed to the settlement
to eliminate the burden and expense of further litigation.

In addition, the Company is involved from time to time in litigation relating to
claims arising in the normal course of its business.  The Company  believes that
the ultimate  resolution of such claims will not materially affect the Company's
business  or  financial  condition.  See "Item 7.  Management's  Discussion  and
Analysis of Financial  Condition  and Results of Operations - Factors That Could
Adversely Affect Performance - Infringement and Potential Litigation."


Item 4: Submission of Matters to a Vote of Security Holders.

A special meeting of the Company's  shareholders was held on December 7, 2000 to
approve an amendment to the Company's 1999 Equity Incentive Plan to increase the
number shares of Common Stock authorized for issuance by 4,500,000  shares.  The
meeting was adjourned  until December 14, 2000, at which time  18,678,156  votes
were cast for the amendment, 16,509,165 votes were cast against and 95,035 votes
abstained. Accordingly, the amendment passed.


PART  II


Item 5: Market for Registrant's Common Equity and Related Stockholder Matters.


<TABLE>
The Company's  common stock was first traded on the Nasdaq National Market under
the  symbol  EFII on October 2,  1992.  The table  below  lists the high and low
closing sales price during each quarter the stock was traded in 2000 and 1999.
<CAPTION>
                                       2000                                                         1999
                    Q1            Q2           Q3          Q4                     Q1          Q2           Q3       Q4      
-----------------------------------------------------------------------------------------------------------------------
                                                                                                                  
<S>              <C>           <C>         <C>          <C>                    <C>         <C>          <C>      <C>   
High             $65.13        $64.06      $29.42       $24.69                 $41.56      $54.75       $62.69   $58.88

Low               45.19         22.31       21.38        11.94                  32.75       41.13        51.41    36.19

-----------------------------------------------------------------------------------------------------------------------
</TABLE>



As of February 28, 2001,  there were  approximately  322 stockholders of record.
The Company has never paid cash  dividends  on its  capital  stock.  The Company
currently  anticipates that it will retain all available funds for its business,
and does not anticipate paying any cash dividends in the foreseeable future.

                                                                              10

<PAGE>



Item 6: Selected Financial Data.

<TABLE>
The following tables summarize selected  consolidated  financial data as of, and
for the five years ended December 31, 2000. This  information  should be read in
conjunction with the audited consolidated financial statements and related notes
thereto.
<CAPTION>
                                                                      As of and for the years ended December 31,

(In thousands, except per share amounts)                  2000            1999            1998           1997            1996
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>             <C>             <C>            <C>             <C>     
      Operations

Revenue                                               $588,449        $570,752        $446,999       $373,404        $316,458
Cost of revenue                                        311,152         290,636         249,179        171,138         155,171
-----------------------------------------------------------------------------------------------------------------------------
Gross profit                                           277,297         280,116         197,820        202,266       161,287
                                                                                                                             
Operating expenses

      Research and development                          94,097          74,971          60,150         42,868          25,388
      Sales and marketing                               64,526          59,373          60,615         46,776          34,275
      General and administrative                        24,784          18,403          16,637         13,578          11,142
      Amortization of goodwill and other acquisition-
        related charges *                               23,621              --              --          9,400              --
      Merger-related expense **                             --           1,422              --             --              --
                                                       -------         -------         -------          -----          ------
           Total operating expenses                    207,028         154,169         137,402        112,622          70,805
                                                                                                                             
Income from operations                                  70,269         125,947          60,418         89,644          90,482
                                                                                                                             
 
Other income, net                                       21,550          16,250           9,859         10,309           7,426
                                                      --------        --------        --------       --------        --------
Income before income taxes                              91,819         142,197          70,277         99,953          97,908
Provision for income taxes                             (37,461)        (46,914)        (22,456)       (35,944)        (35,211)
                                                                                                                             
-----------------------------------------------------------------------------------------------------------------------------
Net income                                            $ 54,358         $95,283         $47,821        $64,009         $62,697
                                                      ========         =======         =======        =======         =======
                                                                                                                             
-----------------------------------------------------------------------------------------------------------------------------

Net income per basic common share  ***                  $ 0.99           $1.74           $0.89          $1.21           $1.23
Net income per diluted common share  ***                 $0.97           $1.67           $0.87          $1.13           $1.13
Shares used in computing net income
 
    per basic common share  ***                         54,649          54,853          53,507         52,831          51,144
Shares used in computing net income per
    diluted common share  ***                           55,983          56,963          54,972         56,713          55,338
                                                                                                                             

      Financial Position

Cash and short-term investments                       $353,603        $470,328        $328,732       $246,764        $215,781
Working capital                                        389,917         487,591         355,361        293,972         245,245
Long term liabilities, less current portion              3,140           3,467           4,142          4,267             398
Total assets                                           654,390         656,075         484,191        395,949         310,058
Stockholders' equity                                  $545,316        $551,187        $408,680       $346,727        $258,105
                                                                                                                             
-----------------------------------------------------------------------------------------------------------------------------
      Ratios and Benchmarks

Current ratio                                              4.7             5.8             6.0            7.5             5.8
Inventory turns                                           13.2            20.5            11.6            8.3            11.5
Full-time employees                                        895             758             660            614             456
                                                                                                                             
-----------------------------------------------------------------------------------------------------------------------------
<FN>
*   See Note 2 of notes to Consolidated Financial Statements.
** The Company incurred  approximately  $1.4 million of  non-recurring  expenses
related to the merger with Management Graphics,  Inc. in 1999. *** See Note 1 of
Notes to Consolidated Financial Statements.

</FN>
                                                          11
</TABLE>




<PAGE>


Item 7:  Management's Discussion and Analysis of Financial Condition and Results
         of  Operations.

The following  discussion and analysis  should be read in  conjunction  with the
audited consolidated  financial statements and related notes thereto included in
this Annual Report on Form 10K.

All assumptions, anticipations,  expectations and forecasts contained herein are
forward-looking  statements that involve risks and uncertainties.  The Company's
actual  results  could  differ  materially  from  those  discussed  here.  For a
discussion of the factors that could impact the Company's  results,  readers are
referred to the section  below  entitled  "Factors that Could  Adversely  Affect
Performance. "

Results of Operations

<TABLE>
The following tables set forth items in the Company's consolidated statements of
income  as a  percentage  of total  revenue  for 2000,  1999 and  1998,  and the
year-to-year  percentage  change  from 2000  over 1999 and from 1999 over  1998,
respectively.  These operating results are not necessarily indicative of results
for any future period.
<CAPTION>
                                                       Years ended December 31,                                % change
                                                                                                         2000          1999
                                                                                                         over          over
                                                     2000          1999          1998                    1999          1998
---------------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>           <C>           <C>                       <C>          <C> 
Revenue                                             100 %         100 %         100 %                     3 %          28 %
Cost of revenue                                      53 %          51 %          56 %                     7 %          17 %
---------------------------------------------------------------------------------------------------------------------------

Gross profit                                         47 %          49 %          44 %                    (1)%          42 %
---------------------------------------------------------------------------------------------------------------------------

Research and development                             16 %          13 %          13 %                    26 %          25 %
Sales and marketing                                  11 %          11 %          13 %                     9 %         (2) %
General and administrative                            4 %           3 %           4 %                    35 %          11 %
Amortization of goodwill and other acquisition-
 
  related charges                                     4 %           -- %         -- %                   100 %          -- %
Merger-related expenses                               0 %           -- %         -- %                    -- %          -- %
                                                    -----        ------          ----
 

Operating expenses                                   35 %          27 %          30 %                    34 %          12 %
                                                                                                                           

Income from operations                               12 %          22 %          14 %                   (44)%         108 %
                                                                                                                           

Other income, net                                     4 %           3 %           2 %                    33 %          65 %
                                                      ---           ---           ---

Income before income taxes                           16 %          25 %          16 %                   (35)%         102 %
Provision for income taxes                            6 %           8 %           5 %                   (20)%         109 %
                                                                                                                           
---------------------------------------------------------------------------------------------------------------------------

Net income                                           10 %          17 %          11 %                   (43)%          99 %
</TABLE>


Revenue 

The  Company's  revenue  in  2000  was  principally  derived  from  three  major
categories.  The first category was made up of stand-alone servers which connect
digital color copiers with computer  networks.  This category includes the Fiery
X2, X4, ZX and Z4 products and accounted for a majority of the Company's revenue
prior to 1999. The second category  consisted of embedded  desktop  controllers,
bundled color solutions and chipsets  primarily for the office market. The third
category consisted of controllers for digital black and white products.


                                                                              12


<PAGE>


<TABLE>
The  following is a break-down of revenue in dollars and volumes as a percentage
of total units shipped by category.
<CAPTION>

                                                                                                              % change
                                                                                                          2000         1999
Revenue                                   2000                  1999                1998                  over         over
(in thousands)                           Revenue               Revenue             Revenue                1999         1998
---------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>         <C>      <C>         <C>       <C>         <C>             <C>        <C>  
Stand-alone Servers Connecting
    to Digital Color Copiers        $268,436    46%      $244,028    43%       $291,785    66%             10 %       (16)%
Embedded Desktop Controllers,
    Bundled Color Solutions

    & Chipset Solutions              129,277    22%       149,899    26%         90,133    20%            (14)%        66 %
Controllers for Digital
    Black and White Solutions        130,780    22%       121,071    21%         19,196     4%              8 %       531 %
Spares, Licensing
    & Other misc. sources             59,956    10%        55,754    10%         45,885    10%              8 %        22 %
---------------------------------------------------------------------------------------------------------------------------

Total Revenue                       $588,449   100%      $570,752   100%       $446,999   100%              3 %        28 %

</TABLE>



<TABLE>
<CAPTION>
                                               2000                    1999                    1998
Volume                                        Volume                  Volume                  Volume
---------------------------------------------------------------------------------------------------------------------------
<S>                                                <C>                      <C>                     <C> 
Stand-alone Servers Connecting
    to Digital Color Copiers                       16 %                     14 %                    27 %
Embedded Desktop Controllers,
    Bundled Color Solutions

    & Chipset Solutions                            48 %                     50 %                    62 %
Controllers for Digital
    Black and White Solutions                      32 %                     36 %                    11 %
Spares, Licensing
    & Other misc. sources                           4 %                       --                      --                   
---------------------------------------------------------------------------------------------------------------------------

Total Volume                                       100%                     100%                    100%
                                                                                                                           
---------------------------------------------------------------------------------------------------------------------------
</TABLE>


Revenue increased to $588.4 million in 2000,  compared to $570.8 million in 1999
and $447.0  million in 1998,  which yielded a 3% increase in 2000 as compared to
1999 and a 28%  increase  in 1999 as compared to 1998.  The  corresponding  unit
volume  increased  by 20% in 2000 over 1999 and by 75% in 1999  over  1998.  The
increase in revenue in 2000 from 1999 and in 1999 from 1998 was primarily due to
increases  in  unit  volumes  and  positive  market  acceptance  of new  product
introductions,  partially  offset by a decline in average  selling prices due to
changes in product mix. The small sequential increase in 2000 from 1999 compared
to the  increase  from 1999 over 1998 was due to delays in OEM  partner  product
launches,  disruption  in  distribution  channels due to financial and operating
constraints in the imaging market and worsening general economic conditions

The category of  stand-alone  servers  made up 46% of total  revenue and 16 % of
total unit  volume in 2000.  The  increase  in  revenue  over 1999 was driven by
introduction  of new  products  by our OEM  partners.  It  made up 43% of  total
revenue and 14% of total unit volume in 1999 and 66% of total revenue and 27% of
total unit  volume in 1998.  The  products  in this  category  continue to offer
higher  margins  relative to the other  product  lines.  As  products  that were
previously  only  offered  with the  stand-alone  servers are now  offered  with
embedded controllers, some of the volume in this category will transition to the
embedded category. The desktop product category made up 22% of total revenue and
48% of total unit  volume in 2000.  It made up 26% of total  revenue  and 50% of
total unit volume in 1999 and 20% of total  revenue and 62% of total unit volume
in 1998.  The  decline  from  1999 in  absolute  dollars  in this  category  was
primarily the result of product transitions.  As OEM partners planned to move to
new platforms,  sales of existing products declined. These products,  except for
the chipset  solutions,  are also  generally  characterized  by much higher unit
volumes  but 


                                                                              13


<PAGE>

lower unit prices and associated margins than the Company has experienced in its
more traditional  stand-alone server line of products. The chipset solutions can
be characterized by lower unit prices but significantly  higher per unit margins
compared to the traditional  stand-alone server line of products.  The black and
white product category made up 22% of total revenue and 32% of total unit volume
in 2000.  This category,  first  introduced in 1998, has seen continued  growth,
with 21% of the revenue and 36% of the volume in 1999 and only 4% of the revenue
and 11% of the unit volume in 1998. This product  category can be  characterized
by much higher unit  volumes and lower unit prices and  associated  margins than
the Company has experienced in its more traditional  stand-alone  server line of
products.  The Company anticipates further growth in the black and white as well
as in the desktop category as a percentage of total revenue. To the extent these
categories  do not grow over time in  absolute  terms,  or if the Company is not
able to meet demand for higher unit  volumes,  it could have a material  adverse
effect on the Company's  operating  results.  There can be no assurance that the
new  products  for 2001 will be  qualified  by all the  OEMs,  or that they will
successfully  compete,  or be accepted by the market,  or  otherwise  be able to
effectively  replace  the  volume  of  revenue  and / or  income  from the older
products.

The Company also believes that in addition to the factors described above, price
reductions  for all of its  products  may affect  revenues  in the  future.  The
Company has made and may in the future make price  reductions  for its products.
Depending upon the  price-elasticity of demand for the Company's  products,  the
pricing and quality of competitive products,  and other economic and competitive
conditions,  such price  reductions  may have an adverse impact on the Company's
revenues and profits.  If the Company is not able to compensate  for lower gross
margins that may result from price reductions with an increased volume of sales,
its results of  operations  could be adversely  affected.  In  addition,  if the
Company's  revenue  in the  future  depends  more upon  sales of  products  with
relatively  lower  gross  margins  than the  Company  obtained  in 2000 (such as
embedded   controllers  for  printers,   embedded   controllers  for  color  and
black-and-white   copiers,  and  stand-alone   controllers  for  black-and-white
copiers), results of operations may be adversely affected.

<TABLE>
Shipments by  geographic  area for the years ended  December 31, 2000,  1999 and
1998 were as follows:
<CAPTION>
                                                       Years ended December 31,                                  % change
                                                                                                               2000    1999
                                                                                                               over    over
(In thousands)                   2000                      1999                      1998                      1999    1998
---------------------------------------------------------------------------------------------------------------------------
<S>                          <C>        <C>            <C>         <C>           <C>         <C>                <C>    <C> 
North America                $291,679   50 %           $277,997    49 %          $221,638    50 %               5 %    25 %
Europe                        191,403   32 %            182,602    32 %           144,076    32 %               5 %    27 %
Japan                          85,983   15 %             90,781    16 %            68,991    15 %              (5)%    32 %
Rest of World                  19,384    3 %             19,372     3 %            12,294     3 %               0 %    58 %
                                                                                                                           
---------------------------------------------------------------------------------------------------------------------------
                             $588,449  100 %           $570,752   100 %          $446,999   100 %               3 %    28 %
---------------------------------------------------------------------------------------------------------------------------
</TABLE>


While shipments to North America and Europe saw a 5% increase in 2000 over 1999,
Japan saw a decrease of 5% and the Rest of World Region, primarily Asia Pacific,
remained flat. The Asia Pacific and Japan drop in revenue stems from  increasing
sales of low end products as well as the continuing  difficult economic times in
these regions.  Worldwide economic  conditions may have an adverse impact on the
Company's results of operations in the future.

As shipments  to some of the  Company's  OEM  partners  are made to  centralized
purchasing  and  manufacturing  locations  which in turn sell  through  to other
locations,  the Company  believes  that export sales of its  products  into each
region may differ from what is reported,  though  accurate  data is difficult to
obtain.  The Company  expects  that export  sales will  continue to  represent a
significant portion of its total revenue.

Substantially  all of the revenue for the last three years was  attributable  to
sales of products  through the  Company's  OEM  channels  with such  partners as
Canon, Encad, Epson,  Fuji-Xerox,  IBM,  Hewlett-Packard,  Kodak/Danka  Business
Systems,  Konica,  Lanier,  Minolta, Oce, Ricoh, Sharp, Xerox and others. During
2000,  the Company has  continued to work on both  increasing  the number of OEM
partners,  and expanding the size of existing  relationships  with OEM partners.
The Company relied on three OEM customers,  Canon,  Xerox and Ricoh in aggregate
for 70%, 68%, and 67% of its revenue for 2000, 1999 and 1998,  respectively.  In
the event that any of these OEM  relationships  are scaled back or discontinued,
the Company may  experience a significant  negative  impact on its  consolidated
financial position and results of operations.  In addition,  no assurance can be
given that the Company's relationships with these OEM partners will continue.

The Company  continues  to work on the  development  of products  utilizing  the
Fiery,  Splash and EDOX  architecture and other products and intends to continue
to introduce new  generations  of server and  controller  products and other new
product lines with current and 


                                                                              14


<PAGE>

new OEM's in 2001 and beyond. No assurance can be given that the introduction or
market acceptance of new, current or future products will be successful.

Cost of Revenue 

The Company's color servers as well as embedded desktop  controllers and digital
black and white  products are  manufactured  by  third-party  manufacturers  who
purchase  most  of  the  necessary  components.  The  Company  sources  directly
processors,  memory,  certain ASICs, and software licensed from various sources,
including PostScript interpreter software, which the Company licenses from Adobe
Systems, Inc.

Gross Margins

The  Company's  gross  margin  was  47%,  49% and 44% for  2000,  1999  and 1998
respectively. The decrease in gross margin from 49% to 47% from 1999 to 2000 was
primarily due to a higher mix of low-end  products with relatively lower margins
as  well  as  increased  component  costs  in  the  volatile  components  market
experienced  throughout  most of 2000.  The increase in gross margin from 44% to
49% from 1998 to 1999 was  attributable  to volume driven  economies of scale as
well  as  increased  outsourcing  of  manufacturing  operations  to  lower  cost
subcontract manufacturers..

The Company  expects that sales of products  with  relatively  lower margins may
further  increase as a percentage  of revenue.  Such products  include  embedded
products for both desktop printers and copiers,  stand-alone  servers,  embedded
controllers for black-and-white  copiers and older products for which prices are
reduced  during product  transitions.  If such sales increase as a percentage of
the Company's revenue, gross margins may decline.

In general, the Company believes that gross margins will continue to be impacted
by a variety of factors.  These  factors  include the market  prices that can be
achieved on the Company's  current and future  products,  the  availability  and
pricing of key components (including DRAM, Processors and Postscript interpreter
software), third party manufacturing costs, product, channel and geographic mix,
the success of the Company's product transitions and new products,  competition,
and general economic  conditions in the United States and abroad.  Consequently,
the Company anticipates gross margins will fluctuate from period to period.

In  addition to the  factors  affecting  revenue  described  above,  the Company
expects to be subject to  pressures  to reduce  prices,  and as a result,  gross
margins for all of its products may be lower and therefore the Company's ability
to maintain current gross margins may not continue.

Operating Expenses 

Operating  expenses  increased  by 34% in 2000 over 1999 and by 12% in 1999 over
1998. Operating expenses as a percentage of revenue amounted to 35%, 27% and 30%
for 2000,  1999 and 1998,  respectively.  Increases  in  operating  expenses  in
absolute  dollars of $29.2 million before the amortization of goodwill and other
acquisition-related  charges in 2000  compared to 1999 and $16.8 million in 1999
compared to 1998, were primarily caused by costs associated with the development
and  introduction  of new  products  and the  hiring  of  additional  full  time
employees  to support  the  growing  business  (a net  increase of 137 people at
December  31, 2000 over  December  31,  1999 and a net  increase of 98 people at
December  31,  1999 over  December  31,  1998).  The  Company  hired  additional
employees  to  support  product  development  as  well  as to  support  expanded
operations,  including  new  operations  and  functions  being  performed in The
Netherlands.

Operating   expenses  for  2000   included   approximately   $23.6   million  of
acquisition-related costs and the amortization of goodwill and other intangibles
in  connection  with the  acquisition  of Splash in  October  2000.  In 1999 the
Company  incurred $1.4 million of  merger-related  expenses  associated with the
merger of MGI.  In  addition,  the  Company  incurred  additional  non-recurring
expenses  during 1999 in  connection  with the  Company's  move to a new central
facility in Foster City, California. Total moving costs amounted to $1.8 million
of which approximately $0.2 million related to cost of revenue.

The Company  anticipates  that operating  expenses will continue to grow and may
increase both in absolute dollars and as a percentage of revenue.

The components of operating expenses are detailed below.


                                                                              15


<PAGE>

Research and Development

Expenses for research and development  consist  primarily of personnel  expenses
and,  to a lesser  extent,  consulting,  depreciation  and  costs  of  prototype
materials.  Research  and  development  expenses  were  $94.1  million or 16% of
revenue in 2000  compared  to $75.0  million or 13% of revenue in 1999 and $60.2
million or 13% of revenue in 1998.  The year over year  increase in research and
development  expenses was mainly due to an increase in research and  development
projects.  The majority of the 26% increase in research and development expenses
in 2000  compared to 1999 and in 1999  compared to 1998 was due to a 23% and 21%
growth,  respectively,  in engineering headcount.  The Company believes that the
development  of new  products  and the  enhancement  of  existing  products  are
essential  to  its  continued  success,   and  intends  to  continue  to  devote
substantial resources to research and product development efforts.  Accordingly,
the Company expects that its research and  development  expenses may continue to
increase in absolute dollars and also as a percentage of revenue.

Sales and Marketing

Sales and marketing expenses include personnel expenses,  costs for trade shows,
marketing  programs and promotional  materials,  sales  commissions,  travel and
entertainment expenses, depreciation, and costs associated with sales offices in
the United States, Europe, Japan and other locations around the world. Sales and
marketing  expenses  for 2000 were $64.5  million or 11% of revenue  compared to
$59.4 million or 11% of revenue in 1999 and $60.6 million or 13% in 1998.  Sales
and  marketing  expenses  showed no change in 2000 over 1999 as a percentage  of
revenue.  The  nominal  increase  in absolute  dollars is  primarily  due to the
broader  product  line the company now supports  offset by continued  efforts to
control  spending  across the Company  during 2000. In addition the  gravitation
toward  desktop and embedded  products  require less support from the Company as
the OEM's take over some of the financial  responsibilities for the support. The
decrease of sales and  marketing  expenses in 1999 over 1998 is primarily due to
tightly controlled spending, offset by a 12% increase in headcount.

The  Company  expects  that its sales and  marketing  expenses  may  increase in
absolute dollars and possibly also as a percentage of revenue as it continues to
actively  promote its  products,  launch new  products and continue to build its
sales and  marketing  organization,  particularly  in Europe  and Asia  Pacific,
including Japan. This expected increase might not  proportionally  increase with
increases in volume if the Company's sales continue to gravitate  toward desktop
and  embedded  products  which  require less support from the Company as the OEM
partners take over this role.

General and Administrative

General and administrative expenses consist primarily of personnel expenses and,
to a lesser extent, depreciation and facility costs, professional fees and other
costs associated with public companies. General and administrative expenses were
$24.8  million  or 4% of  revenue in 2000,  compared  to $18.4  million or 3% of
revenue in 1999 and $16.6  million or 4% of revenue in 1998.  While  general and
administrative  expenses  have remained  relatively  constant as a percentage of
total  revenue  over the three year  period  ended  2000,  these  expenses  have
increased in absolute dollars.  The increases in 2000 over 1999 and in 1999 over
1998 were primarily due to the increase in headcount to support the needs of the
growing  Company's   operations,   including  a  growing  business   development
department, the establishment of a Dutch transaction processing center which now
handles the majority of the  Company's  international  business and higher legal
costs to register and defend our intellectual property. The Company expects that
its general and  administrative  expenses  may  continue to increase in absolute
dollars and  possibly  also as a  percentage  of revenue in order to support the
Company's efforts to grow its business.

Amortization of goodwill and acquisition-related charges

 
In October of 2000, the Company acquired Splash for approximately $83.8 million,
net of cash  received.  The  acquisition  was  intended to expand the  Company's
product line and further increase the Company's  market share,  primarily in the
graphic arts arena. In conjunction with the acquisition,  the Company recorded a
charge of $20.3 million for in-process research and development. Amortization of
goodwill and other intangibles  related to acquisition were $3.3 million for the
year ended  December 31, 2000. At December 31, 2000 the  unamortized  portion of
goodwill and other intangibles  totaled $76.3 million and will be amortized over
estimated lives ranging from 4 to 7 years.


                                                                              16


<PAGE>

Merger related expenses

On August 31, 1999 the Company  merged with MGI, a  Minnesota-based  corporation
that  develops  digital  print on  demand  products  and other  digital  imaging
products  through  a  pooling-of-interests  transaction.  The  Company  incurred
approximately $1.4 million of non-recurring expenses related to the merger which
consisted primarily of professional fees, severance costs, and travel expenses.

Other Income

Other income relates mainly to interest income and expense, and gains and losses
on  foreign  currency  transactions.  Other  income  of  $21.6  million  in 2000
increased by 33% from $16.3  million in 1999.  Other income of $16.3  million in
1999  increased by 65% from $9.9 million in 1998. The increase in 2000 from 1999
and in 1999 from 1998 is due to an increase in the average investment balance as
well as a higher  return on  investments  as a result of more  favorable  market
interest rates in 2000 compared to 1999.

Income Taxes 

 
The   Company's  pro  forma   effective  tax  rate,   excluding  the  effect  of
non-deductible  in-process  technology and goodwill,  was 33% in 2000, while the
actual tax rate was 40.8%.  In 1999 and 1998, the actual  effective tax rate was
33% and 32%,  respectively.  In each of these years, the Company  benefited from
tax-exempt interest income, a foreign sales corporation,  and the utilization of
the research and development  credits in achieving a consolidated  effective tax
rate lower than that  prescribed  by the  respective  Federal  and State  taxing
authorities.  The Company  anticipates that the pro forma effective tax rate for
2001 will remain approximately 33%.
 

Liquidity and Capital Resources

Cash, cash equivalents and short-term investments decreased by $116.7 million to
$353.6  million as of December 31, 2000,  from $470.3 million as of December 31,
1999.  Working  capital  decreased  by $97.7  million  to $389.9  million  as of
December 31,  2000,  down from $487.6  million as of December  31,  1999.  These
decreases  are primarily the result of the  repurchase of  approximately  $100.0
million of the Company's common stock during 2000. In addition,  the Company has
classified  $14.1  million as  restricted  investments  as of December 31, 2000.
These funds collateralize the 1999 Lease discussed below.

 
Net cash provided by operating activities was $76.5 million,  $131.5 million and
$81.1 million in 2000, 1999 and 1998,  respectively.  Cash provided by operating
activities  decreased in 2000  primarily  due to a decrease in net income and an
increase in deferred income taxes and inventories.

The  Company has  continued  to invest cash in  short-term  investments,  mainly
municipal  securities.  Sales in excess of purchases of  short-term  investments
were  $57.5  million  in 2000,  while  purchases  in excess of sales  were $38.0
million and $84.3 million in 1999 and 1998, respectively.  The Company's capital
expenditures   generally   consist  of  investments  in  computers  and  related
peripheral  equipment and office furniture for use in the Company's  operations.
The Company  purchased  approximately  $15.5  million,  $15.6  million and $13.2
million  of  such   equipment  and  furniture   during  2000,   1999  and  1998,
respectively.  During  2000 the  Company  invested  $83.8  million,  net of cash
received, in the acquisition of Splash.
 

In 1997, the Company began development of a corporate campus on a 35-acre parcel
of land in Foster  City,  California.  During  1997 and 1998 the  Company  spent
approximately  $27.3 million on the land and associated  improvement  costs.  In
addition to purchasing  the land, the Company  entered into an agreement  ("1997
Lease") to lease a ten-story  295,000  square foot building to be constructed on
the site. The lessor of the building  funded $56.8 million for the  construction
of the building. In July 1999 the Company completed construction of the building
and began making rent payments.  Also in conjunction with the lease, the Company
has entered  into a separate  ground  lease with the lessor of the  building for
approximately 35 years.

In December 1999 the Company entered into a second  agreement  ("1999 Lease") to
lease  a  maximum  of  543,000  square  feet  of  additional  facilities,  to be
constructed  adjacent to the first building  discussed above. As of December 31,
2000 the lessor  has funded  $13.4  million  of a maximum  commitment  of $137.0
million  for  the  construction  of the  facilities,  with  the  portion  of the
committed amount actually used for construction to be determined by the Company.
Rent  obligations  for the  building  will  bear a  direct  relationship  to the
carrying cost of the  commitments  drawn down.  Construction  of the  facilities
began in January 2000 and is scheduled for  completion  over the next 36 months.
In connection  with the lease,  the Company  entered into a lease of the related


                                                                              17


<PAGE>

parcels of land in Foster City to the lessor of the  buildings at a nominal rate
and for a term of 30 years.  If the Company does not renew the  building  lease,
the ground lease converts to a market rate.

Both leases have an initial term of seven years,  with options to renew  subject
to certain conditions.  The Company may, at its option,  purchase the facilities
during  or at the end of the term of the lease for the  amount  expended  by the
respective lessor to construct the facilities. The Company has guaranteed to the
lessors a residual value  associated with the buildings  equal to  approximately
82% of the their funding. The Company may be liable to the lessor for the amount
of the residual  guarantee if it either  defaults on a covenant,  fails to renew
the lease, or does not purchase or locate a purchaser for the leased building at
the end of the lease  term.  During  the term of the  leases  the  Company  must
maintain a minimum  tangible  net worth.  In  addition,  the Company has pledged
certain marketable securities, which are in proportion to the amount drawn under
each lease.  Under the 1997  Lease,  the pledged  collateral  ($70.2  million at
December 31, 2000) may be withdrawn at any time,  but  withdrawal  results in an
increase to the lease rate and the imposition of additional  financial  covenant
restrictions.  The funds pledged under the 1999 Lease ($14.1 million at December
31,  2000) may be  invested by the  Company in certain  securities,  however the
funds are restricted as to withdrawal at all times.

Net cash used in financing activities of $82.5 million in 2000 was primarily the
difference  between the $100.0  million used to repurchase  common stock and the
cash received from  exercises of common stock  options,  net of the tax benefits
associated  with the  exercises.  Net cash  provided by financing  activities of
$26.7 million and $14.2 million in 1999 and 1998,  respectively,  were primarily
the result of  exercises  of common  stock  options and the tax  benefits to the
Company  associated  with  those  exercises.  Net  cash  provided  by  financing
activities  in 2000,  1999 and 1998 includes  approximately  $0.8 million , $0.9
million and $0.1 million of cash used to repay long-term obligations.

The Company's inventory consists primarily of memory subsystems,  processors and
ASICs,  which are sold to third-party  contract  manufacturers  responsible  for
manufacturing  the  Company's  products.  Should the Company  decide to purchase
components and do its own  manufacturing,  or should it become necessary for the
Company to purchase  and sell  components  other than the  processors,  ASICs or
memory  subsystems  for  its  contract  manufacturers,  inventory  balances  and
potentially  fixed assets would  increase  significantly,  thereby  reducing the
Company's available cash resources.  Further,  the inventory the Company carries
could become obsolescent thereby negatively impacting the Company's consolidated
financial  position  and results of  operations.  The Company is also reliant on
several sole-source  suppliers for certain key components and could experience a
further significant  negative impact on its consolidated  financial position and
results of operations if such supply were reduced or not available.

The Company,  along with its directors and certain  officers and employees,  has
been named in class action  lawsuits filed in both the San Mateo County Superior
Court  and the  United  States  District  Court  for the  Northern  District  of
California.  The  lawsuits  are all  related to the  precipitous  decline in the
trading price of the Company's stock that occurred in December 1997. The Company
believes the lawsuits are without merit and intends to contest them  vigorously,
but there can be no assurance that if damages are ultimately awarded against the
Company,  the  litigation  will not adversely  affect the  Company's  results of
operations. See Item 3 "Legal proceedings."

Splash,  along with former Splash  officers were named in class action  lawsuits
filed  in the  United  States  District  Court  for  the  Northern  District  of
California. The lawsuits are related to a decline in Splash's stock price during
1997.  The Company became  successor to the lawsuits when it acquired  Splash in
October 2000. The Company believes the lawsuits are without merit and intends to
contest  them  vigorously,  but there can be no  assurance  that if damages  are
ultimately awarded against the Company, the litigation will not adversely affect
the Company's results of operations. See Item 3 "Legal proceedings."

The Company  believes that its existing  capital  resources,  together with cash
generated from  continuing  operations will be sufficient to fund its operations
and meet capital requirements through at least 2000.

Euro Assessment

Eleven of the fifteen member  countries of the European  Union have  established
fixed conversion rates between their existing sovereign  currencies and the Euro
and have adopted the Euro as a common  currency as of January 1, 1999.  The Euro
is trading on currency exchanges and is available for non-cash transactions. The
conversion to the Euro is not expected to have a material  adverse effect on the
operating  results of the  Company as the Company  predominantly  invoices in US
Dollars.  The Company is currently in the process of  evaluating  the  reporting
requirements  in the  respective  countries  and the related  system,  legal and
taxation  requirements.  The Company expects that required modifications will be
made on a timely  basis and that  such  modifications  will not have a  material
adverse impact on the Company's  operating  results.  There can be no assurance,
however,  the Company will be able to complete such modifications to comply with
Euro  requirements.  Failure to comply Euro  requirements  could have a material
adverse effect on the Company's operating results.

                                                                              18


<PAGE>

Factors That Could Adversely Affect Performance

Our performance may be adversely affected by the following factors:

We rely on sales to a relatively  small number of OEM partners,  and the loss of
any of these customers could substantially decrease our revenues

Because we sell our  products  primarily  to our OEM  partners,  we rely on high
sales volumes to a relatively small number of customers.  We expect that we will
continue  to depend on these  OEM  partners  for a  significant  portion  of our
revenues.  If we lose an  important  OEM or we are unable to recruit  additional
OEMs,  our revenues may be materially and adversely  affected.  We cannot assure
you that our major  customers  will continue to purchase our products at current
levels or that they will  continue to purchase our products at all. In addition,
our results of operations could be adversely affected by a decline in demand for
copiers or laser  printers,  other  factors  affecting our major  customers,  in
particular,  or the  computer  industry in general.  Xerox,  our second  largest
customer,  has experienced serious financial difficulties in their business over
the past year.  If Xerox  continues to face such  difficulties,  our  short-term
revenues and profitability  could be materially and adversely  affected through,
among  other  things,   decreased  sales  volumes  and  write-offs  of  accounts
receivables and inventory related to Xerox products.

We rely upon our OEM partners to develop new products,  applications and product
enhancements  in a timely  and  cost-effective  manner.  Our  continued  success
depends  upon the  ability of these  OEMs to meet  changing  customer  needs and
respond to emerging industry standards and other technological changes. However,
we cannot  assure you that our OEMs will  effectively  meet these  technological
challenges.  These OEMs, who are not within our control,  may  incorporate  into
their products the technologies of other companies in addition to, or instead of
our  products.  These  OEMs may  introduce  and  support  products  that are not
compatible with our products.  We rely on these OEMs to market our products with
their  products,  and if these OEMs do not  effectively  market our products our
sales revenue may be materially  and adversely  affected.  With the exception of
certain minimum purchase  obligations,  these OEMs are not obligated to purchase
products  from us. We cannot assure you that our OEMs will continue to carry our
products.

Our OEMs work  closely  with us to develop  products  that are  specific to each
OEM's copiers and printers. For many of the products we are developing,  we need
to coordinate development,  quality testing,  marketing and other tasks with our
OEMs. We cannot control our OEMs' development  efforts and coordinating with our
OEMs may cause delays that we cannot manage by ourselves. In addition, our sales
revenue and results of  operations  may be adversely  affected if we cannot meet
our OEM's product  needs for their  specific  copiers and  printers,  as well as
successfully  manage the  additional  engineering  and support  effort and other
risks associated with such a wide range of products.

We are pursuing,  and will continue to pursue, the business of additional copier
and printer OEMs. However,  because there are a limited number of OEMs producing
copiers and printers in sufficient volume to be attractive  customers for us, we
expect that customer concentration will continue to be a risk.

If we are unable to develop new products,  or execute product introductions on a
timely basis, our future revenue and operating results may be harmed.

Our  operating  results  will  depend  to  a  significant  extent  on  continual
improvement of existing  technologies  and rapid  innovation of new products and
technologies.  Our success  depends  not only on our  ability to predict  future
requirements,  but also to develop and introduce new products that  successfully
address customer needs. Any delays in the launch or availability of new products
we are  planning  could harm our  financial  results.  During  transitions  from
existing  products to new  products,  customers  may delay or cancel  orders for
existing  products.  Our results of operations  may be adversely  affected if we
cannot successfully manage product transitions or provide adequate  availability
of products after they have been introduced.

In  this  environment,  we must  continue  to make  significant  investments  in
research and development in order to enhance  performance and  functionality  of
our  products,  including  product  lines  different  than our Fiery servers and
embedded  controllers.  We cannot assure you that we will successfully  identify
new product  opportunities,  develop and  introduce  new products to market in a
timely manner, and achieve market acceptance of our products. Also, if we decide
to develop new products,  our research and development  expenses may increase in
the short term without a corresponding  increase in revenue.  Finally, we cannot
assure you that  products and  technologies  developed by others will not render
our products or technologies obsolete or noncompetitive.

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

                                                                              19


<PAGE>

Under our license agreements with Adobe, a separate license must be granted from
Adobe to us for each  type of  copier or  printer  used  with a Fiery  Server or
Controller.  If Adobe does not grant us such licenses or approvals, if the Adobe
license  agreements  are  terminated,  or if  our  relationship  with  Adobe  is
otherwise  impaired,  our financial  condition and results of operations  may be
harmed.  To  date,  we  have  successfully  obtained  licenses  to  use  Adobe's
PostScript(TM)  software for our products,  where required.  However,  we cannot
assure  you  that  Adobe  will  continue  to  grant  future  licenses  to  Adobe
PostScript(TM)  software on reasonable  terms, in a timely manner, or at all. In
addition,  we cannot  assure you that Adobe will continue to give us the quality
assurance approvals we are required to obtain from Adobe for the Adobe licenses.

If the demand for products that enable color printing of digital data decreases,
our sales revenue may decrease

Our products are  primarily  targeted at enabling the color  printing of digital
data.  If demand  for this  service  declines,  or if the  demand  for our OEM's
specific  printers or copiers that our products are designed for should decline,
our sales revenue may be adversely affected. Although demand for networked color
printers and copiers has  increased in recent  years,  we cannot assure you that
such demand will continue,  nor can we control  whether the demand will continue
for the  specific  OEM  printers  and copiers  that  utilize our  products  will
continue.  We believe  that  demand for our  products  may also be affected by a
variety of economic conditions and considerations, and we cannot assure you that
demand for our products will continue at current levels.

If we enter new markets or  distribution  channels  this could result in delayed
revenues or higher operating expenses

We continue to explore opportunities to develop product lines different from our
servers and embedded controllers,  such as our new line of software products and
EFI  Professional  Services  that we  announced in February  2000.  We expect to
invest funds to develop new  distribution  and marketing  channels for these new
products and  services.  We do not know if we will be  successful  in developing
these  channels or whether  the market  will  accept any of our new  products or
services.  In  addition,  even  if we are  able to  introduce  new  products  or
services,  the lack of  marketplace  acceptability  of  these  new  products  or
services may adversely impact the Company's operating results.

We sell products that are large capital  expenditures  as well as  discretionary
purchase  items.  In  difficult  economic  times,  such as the current  economic
climate,  spending on information technology is often decreased. As our products
are of a more discretionary nature than many other technology  products,  we may
be more  adversely  impacted  than other  technology  firms.  We are  subject to
economic sensitivity that could harm our results of operations.

We face competition  from other suppliers as well as our own OEM customers,  and
if we are not able to compete successfully then our business may be harmed

Our industry is highly  competitive and is characterized by rapid  technological
changes. We compete against a number of other suppliers of imaging products.  We
cannot assure you that products or technologies developed by competing suppliers
will not render our products or technologies obsolete or noncompetitive.

While many of our OEM's sell our products on an exclusive  basis, we do not have
any formal agreements that prevent the OEMs from offering alternative  products.
If an OEM offers  products  from  alternative  suppliers  our market share could
decrease,  which could reduce our revenue and  negatively  affect our  financial
results.

Our OEM partners may themselves  internally  develop and supply products similar
to our current products. These OEMs may be able to develop similar products that
are compatible  with their own products more quickly than we can. These OEMs may
choose to market their own products,  even if these products are technologically
inferior, have lower performance or cost more. We cannot assure you that we will
be able to continue to successfully  compete against similar products  developed
internally by our OEMs or against their  financial  and other  resources.  If we
cannot compete successfully against our OEMs' internally developed products, our
business may be harmed.

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

We depend upon  skilled  employees,  such as software  and  hardware  engineers,
quality assurance engineers and other technical professionals. We are located in
the Silicon Valley where  competition  among  companies to hire  engineering and
technical  professionals  is intense.  It is difficult for us to locate and hire
qualified  engineers  and  technical  professionals  and for us to retain  these
people.  There are many technology companies located nearby that may try to hire
our  employees.  The  movement of our stock price 


                                                                              20


<PAGE>
may also  impact our  ability to hire and retain  employees.  If we do not offer
competitive compensation,  we may not be able to recruit or retain employees. If
we cannot successfully hire and retain employees,  we may not be able to develop
products  timely or to meet demand for our products in a timely  fashion and our
results of operations may be adversely impacted.

Our  operating  results  may  fluctuate  based upon many  factors,  which  could
adversely affect our stock price

We expect our stock price to vary with our operating results and,  consequently,
adverse  fluctuations  in operating  results  could  adversely  affect our stock
price. Operating results may fluctuate due to:

        o       varying demand for our products;
        o       success and timing of new product introductions;
        o       changes in interest rates and  availability of bank or financing
                credit to consumers of digital copiers and printers;
        o       price reductions by us and our competitors;
        o       delay, cancellation or rescheduling of orders;
        o       product performance;
        o       availability  of key  components,  including  possible delays in
                deliveries from suppliers;
        o       the status of our relationships with our OEM partners;
        o       the  performance of third-party  manufacturers; 
        o       the status of our relationships with our key suppliers;
        o       the financial and operational  condition of OEM partners and key
                suppliers
        o       potential excess or shortage of skilled employees; and
        o       general economic conditions.

Many or our products,  and the related OEM copiers and  printers,  are purchased
utilizing  lease  contracts or bank  financing.  If  prospective  purchasers  of
digital  copiers and  printers  are unable to obtain  credit,  or interest  rate
changes make credit terms undesirable,  this may significantly reduce the demand
for  digital  copiers  and  printers,  negatively  impacting  our  revenues  and
operating results.

Typically we do not have long-term volume purchase contracts with our customers,
and a  substantial  portion of our backlog is scheduled  for delivery  within 90
days or less.  Our  customers  may cancel  orders and  change  volume  levels or
delivery times for product they have ordered from us without penalty. However, a
significant portion of our operating expenses are fixed in advance,  and we plan
these  expenditures  based on the sales  forecasts  from our OEM  customers  and
product development programs. If we were unable to adjust our operating expenses
in response to a shortfall in our sales,  it could harm our quarterly  financial
results.

We attempt to hire additional  employees to match growth in projected demand for
our products. If we project a higher demand than materializes,  we will hire too
many  employees  and  incur  expenses  that we need  not have  incurred  and our
financial results may be lower. If we project a lower demand than  materializes,
we will  hire  too few  employees,  we may  not be able to meet  demand  for our
products and our sales revenue may be lower.  If we cannot  successfully  manage
our growth, our results of operations may be harmed.

The value of our investment portfolio will decrease if interest rates increase

We have an investment portfolio of mainly fixed income securities  classified as
available-for-sale  securities. As a result, our investment portfolio is subject
to interest rate risk and will fall in value if market  interest rates increase.
We attempt to limit this exposure to interest  rate risk by investing  primarily
in short-term  securities.  We may be unable to  successfully  limit our risk to
interest  rate  fluctuations  and this may cause  our  investment  portfolio  to
decrease in value.

Our stock price has been and may continue to be volatile

Our  common  stock,  and the  stock  market  generally,  have  from time to time
experienced  significant  price and volume  fluctuations.  The market prices for
securities  of  technology   companies  have  been  especially   volatile,   and
fluctuations   in  the  stock  market  are  often  unrelated  to  the  operating
performance  of  particular  companies.  These  broad  market  fluctuations  may
adversely  affect the market price of our common  stock.  Our common stock price
may also be affected by the factors discussed in this section as well as:

        o       Fluctuations in our results of operations,  revenues or earnings
                or those of our competitors;
        o       Failure of results of  operations,  revenues or earnings to meet
                the expectations of stock market analysts and investors;
        o       Changes in stock market analysts' recommendations regarding us;


                                                                              21


<PAGE>
        o       Real or perceived technological advances by our competitors;
        o       Financial performance of OEM partners and key suppliers;
        o       Political or economic  instability in regions where our products
                are sold or used; and
        o       General market and economic conditions.

We face risks from our international operations and from currency fluctuations

Approximately  50% of our revenue from the sale of products for the twelve month
periods ended  December 31, 2000 and December 31, 1999,  came from sales outside
North  America,  primarily  to  Europe  and  Japan.  We  expect  that  sales  to
international  destinations  will  continue to be a  significant  portion of our
total revenue.  You should be aware that we are subject to certain risks because
of our international operations. These risks include the regulatory requirements
of foreign governments which may apply to our products,  as well as requirements
for  export   licenses   which  may  be  required  for  the  export  of  certain
technologies.  The  necessary  export  licenses  may be delayed or  difficult to
obtain,  which  could  cause a delay  in our  international  sales  and hurt our
product  revenue.  Other  risks  include  trade  protection  measures,   natural
disasters, and political or economic conditions in a specific country or region.

We believe that economic  conditions in other parts of the world, such as Brazil
and Japan, may also limit demand for our products. The move to a single European
currency,  the Euro, and the resulting central bank management of interest rates
to maintain fixed  currency  exchange rates among the member nations may lead to
economic conditions which adversely impact sales of our products.

Given the significance of our export sales to our total product revenue, we face
a continuing  risk from the  substantial  fluctuations  in the value of the U.S.
dollar  versus the Japanese yen, the Euro and other major  European  currencies,
and numerous Southeast Asian currencies, which could cause lower unit demand and
the necessity that we lower average  selling prices for our products  because of
the reduced strength of local currencies.  Either of these events could harm our
revenues and gross margin.  Although we typically  invoice our customers in U.S.
dollars,  when we do invoice our customers in local  currencies,  our cash flows
and earnings are exposed to fluctuations in interest rates and foreign  currency
exchange  rates  between the  currency of the  invoice and the U.S.  dollar.  We
attempt to limit or hedge these  exposures  through  operational  strategies and
financial market  instruments where we consider it appropriate.  To date we have
mostly used forward contracts to reduce our risk from interest rate and currency
fluctuations.  However,  our  efforts to reduce the risk from our  international
operations and from fluctuations in foreign currencies or interest rates may not
be successful, which could harm our financial condition and operating results.

We may be unable to adequately protect our proprietary information

We rely on a  combination  of  copyright,  patent,  trademark  and trade  secret
protection,   nondisclosure   agreements,   and  licensing  and  cross-licensing
arrangements  to  establish,  maintain  and  protect our  intellectual  property
rights, all of which afford only limited protection. We have patent applications
pending in the United States and in various foreign  countries.  There can be no
assurance  that patents will issue from these pending  applications  or from any
future applications, or that, if issued, any claims allowed will be sufficiently
broad  to  protect  our  technology.  Any  failure  to  adequately  protect  our
proprietary  information  could  harm  our  financial  condition  and  operating
results.  We cannot be  certain  that any  patents  that may be issued to us, or
which we license from third parties, or any other of our proprietary rights will
not be  challenged,  invalidated  or  circumvented.  In  addition,  we cannot be
certain  that any rights  granted  to us under any  patents,  licenses  or other
proprietary   rights  will  provide  adequate   protection  of  our  proprietary
information.

From time to time,  litigation  may be  necessary  to  defend  and  enforce  our
proprietary rights. Such litigation,  whether or not concluded  successfully for
us, could  involve  significant  expense and the  diversion of our attention and
other resources.

We face risks from third party claims of infringement and potential litigation

Third  parties may claim that our  products  infringe,  or may  infringe,  their
proprietary   rights.   Such  claims  could  result  in  lengthy  and  expensive
litigation.  Such  claims  and any  related  litigation,  whether  or not we are
successful in the litigation, could result in substantial costs and diversion of
our  resources.  Although  we may seek  licenses  from  third  parties  covering
intellectual property that we are allegedly infringing, we cannot guarantee that
any such licenses could be obtained on acceptable terms, if at all.

Seasonal purchasing patterns of our OEM customers have historically caused lower
fourth quarter revenue, which may negatively impact the stock price

                                                                              22

<PAGE>

Our results of operations have typically  followed a seasonal pattern reflecting
the buying  patterns of our large OEM customers.  In the past, our fiscal fourth
quarter (the quarter ending  December 31) results have been  adversely  affected
because some or all of our OEM customers wanted to decrease, or otherwise delay,
fourth quarter orders. In addition,  the first fiscal quarter  traditionally has
been a weaker quarter  because our OEM partners focus on training of their sales
forces. The primary reasons for this seasonal pattern are:

        o       Fluctuation  in demand for our products from our OEM  customers,
                who have  historically  sought to  minimize  year-end  inventory
                investment   (including   the  reduction  in  demand   following
                introductory "channel fill" purchases). Fluctuation in demand is
                also caused by timing of new product  releases  and  training by
                our OEM partners; and

        o       The fact that our OEM partners  have  typically  achieved  their
                yearly  sales goals during the fourth  quarter and  consequently
                delayed  further  purchases  into the next fiscal year,  and the
                fact that we do not know when the OEMs reach  these  sales goals
                as they generally do not share them with us.

As a result of these  factors,  we believe that period to period  comparisons of
our  operating  results  are not  meaningful,  and you  should  not rely on such
comparisons  to predict  our  future  performance.  We  anticipate  that  future
operating  results  may  fluctuate  significantly  due to this  seasonal  demand
pattern.

We may make  acquisitions and acquisitions involve numerous financial risks

We seek to develop new technologies and products from both internal and external
sources.  As part of this  effort,  we may  make,  and  have in the  past  made,
acquisitions  of  other  companies  or  other  companies'   technology   assets.
Acquisitions involve numerous risks, including the following:

        o       Difficulties  in  integration of  operations,  technologies,  or
                products;
        o       Risks of  entering  markets in which we have  little or no prior
                experience,  or entering markets where competitors have stronger
                market positions;
        o       Possible write-downs of impaired assets; and
        o       Potential loss of key employees of the acquired company.

Mergers and acquisitions of companies are inherently risky, and we cannot assure
you that our previous or future  acquisitions  will be  successful  and will not
harm our business, operating results, financial condition, or stock price.

We may incur losses on our equity investments.

We recently  announced the creation of a fund to invest in the equity securities
of  privately  held  companies,  many of which  can still be  considered  in the
startup or development  stages.  These  investments are inherently  risky as the
market  for the  technologies  or  products  they  have  under  development  are
typically  in the  early  stages  and may  never  materialize.  We could  lose a
substantial part of or our entire initial investment in these companies.

The  location  and  concentration  of  our facilities subjects us to the risk of
earthquakes, floods or other natural disasters

Our  corporate  headquarters,  including  most of our research  and  development
facilities and  manufacturing  operations,  are located in the San Francisco Bay
Area of Northern California,  an area known for seismic activity.  This area has
also  experienced  flooding in the past.  In  addition,  many of the  components
necessary to supply our products are purchased  from  suppliers  subject to risk
from natural  disasters,  based in areas  including  the San Francisco Bay Area,
Taiwan,  and Japan. A significant  natural disaster,  such as an earthquake or a
flood, could harm our business, financial condition, and operating results.

We  are  dependent on sub-contractors to manufacture and deliver products to our
customers

We subcontract with other companies to manufacture our products.  We are totally
reliant on the ability of our  subcontractors  to produce products to be sold to
our customers,  and while we closely monitor our  subcontractors  performance we
cannot assure you that such subcontractors will continue to produce our products
in a timely and effective  manner.  We also can not assure you that difficulties
experienced by our  subcontractors ( such as interruptions in a  subcontractor's
ability to make or ship our products,  or fix quality assurance problems ) would
not harm our business,  operating results, or financial condition.  If we decide
to  change   subcontractors  we  could  experience  delays  in  setting  up  new
subcontractors which would result in delay in delivery of our products.


                                                                              23


<PAGE>


I
tem 7A: Quantitative and Qualitative Disclosures About Market Risk

Market Risk

The Company is exposed to various  market  risks,  including  changes in foreign
currency exchange rates.  Market risk is the potential loss arising from adverse
changes in market  rates and  prices,  such as  foreign  currency  exchange  and
interest rates.  The Company does not enter into  derivatives or other financial
instruments  for  trading or  speculative  purposes.  The  Company  enters  into
financial  instrument  contracts  to manage  and reduce the impact of changes in
foreign currency exchange rates. The  counterparties to such contracts are major
financial institutions.

Foreign Exchange Contracts

During 2000 the Company utilized forward foreign exchange contracts to hedge the
currency fluctuations in transactions denominated in foreign currencies, thereby
limiting the Company's risk that would otherwise result from changes in exchange
rates. The transactions hedged were intercompany accounts receivable and payable
between  the  Company and its  Japanese  subsidiary.  The periods of the forward
foreign  exchange  contracts  correspond to the reporting  periods of the hedged
transactions. Foreign exchange gains and losses on intercompany balances and the
offsetting losses and gains on forward foreign exchange  contracts are reflected
in the income statement.

As of  December  31,  2000,  the  Company had one  outstanding  forward  foreign
exchange  contract to sell Yen equivalent to approximately  $3.2 million with an
expiration  date of January 12, 2001.  The  estimated  fair value of the foreign
currency  contract  represents  the amount  required  to enter  into  offsetting
contracts with similar remaining maturities based on quoted market prices. As of
December  31, 2000,  the  difference  between the fair value of the  outstanding
contract and the contract  amount was  immaterial.  Market risk was estimated as
the potential  decrease in fair value resulting from a hypothetical 10% increase
of the  amount  of Yen to  purchase  one US  Dollar.  A 10%  fluctuation  in the
exchange  rate for this  currency  would change the fair value by  approximately
$0.3 million.  However,  since the contract hedges foreign currency  denominated
transactions,  any change in the fair value of the  contract  would be offset by
changes in the underlying value of the transactions being hedged.

Interest Rate Risk

The  fair  value  of  the  Company's   cash  portfolio  at  December  31,  2000,
approximated carrying value. Market risk was estimated as the potential decrease
in fair value  resulting  from an  instantaneous  hypothetical  100  basis-point
increase in interest rates for any debt instruments in the Company's  investment
portfolio.  As  of  December  31,  2000,  the  Company's  cash  equivalents  and
short-term  investment  portfolio  includes debt  securities  of $259.6  million
subject to interest  rate risk. A 100  basis-point  increase in market  interest
rates would result in a decrease of fair value of approximately $2.1 million.

The fair value of the Company's  long-term debt,  including current  maturities,
was  estimated  to be $3.5  million as of  December  31,  2000,  and equaled the
carrying value. The Company's long-term debt requires interest payments based on
a variable  rate and  therefore  its fair value is not subject to interest  rate
risk.


                                                                              24


<PAGE>


Item 8:  Financial Statements and Supplementary Data

<TABLE>
                                                  Electronics for Imaging, Inc.
                                                   Consolidated Balance Sheets
<CAPTION>

                                                                                                      December 31,
(In thousands, except share and per share amounts)                                               2000              1999
 --------------------------------------------------------------------------------------------------------------------------
<S>                                                                                          <C>                   <C>     
Assets

Current assets:
Cash and cash equivalents                                                                    $102,804              $163,824
Short-term investments                                                                        250,799               306,504
Accounts receivable, net                                                                       72,006                81,904
Inventories                                                                                    27,076                11,878
Other current assets                                                                           43,166                24,902
                                                                                                                           
---------------------------------------------------------------------------------------------------------------------------

          Total current assets                                                                495,851               589,012
                                                                                                                           
---------------------------------------------------------------------------------------------------------------------------

Property and equipment, net                                                                    51,456                49,776
Restricted investments                                                                         14,134                    --
Other assets                                                                                   92,949                17,287

---------------------------------------------------------------------------------------------------------------------------

                    Total assets                                                             $654,390              $656,075
                                                                                                                           
---------------------------------------------------------------------------------------------------------------------------

Liabilities and Stockholders' Equity

Current liabilities:
Accounts payable                                                                              $49,252               $47,102
Accrued and other liabilities                                                                  50,483                29,771
Income taxes payable                                                                            6,199                24,548
                                                                                                                           
---------------------------------------------------------------------------------------------------------------------------

          Total current liabilities                                                           105,934               101,421

---------------------------------------------------------------------------------------------------------------------------

Long - term obligations, less current portion                                                   3,140                 3,467


Commitments and Contingencies (Note 6)

---------------------------------------------------------------------------------------------------------------------------

Stockholders' equity:

Preferred stock, $.01 par value; 5,000,000 shares authorized; none
      issued and outstanding                                                                       --                    --
Commonstock,  $.01 par value;  150,000,000  shares  authorized;  52,685,593  and
      55,722,214 shares issued and outstanding, respectively                                      575                   557

Additional paid-in capital                                                                    240,199               201,679
Treasury stock, at cost, 4,477,500 shares                                                     (99,959)                   --
Accumulated other comprehensive income (loss)                                                     420                  (772)
Retained earnings                                                                             404,081               349,723
                                                                                                                           
---------------------------------------------------------------------------------------------------------------------------

          Total stockholders' equity                                                          545,316               551,187
                                                                                                                           
---------------------------------------------------------------------------------------------------------------------------

                    Total liabilities and stockholders' equity                               $654,390              $656,075
                                                                                                                           
---------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to consolidated financial statements.
</FN>

                                                                                                                         25
</TABLE>



<PAGE>


<TABLE>
                                        Electronics for Imaging, Inc.
                                      Consolidated Statements of Income
<CAPTION>
                                                                                   Years ended December 31,
(In thousands, except per share amounts)                                       2000            1999            1998
-------------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>             <C>             <C>     
Revenue                                                                    $588,449        $570,752        $446,999

Cost of revenue                                                             311,152         290,636         249,179
                                                                                                                   
-------------------------------------------------------------------------------------------------------------------

Gross profit                                                                277,297         280,116         197,820
                                                                                                                   
-------------------------------------------------------------------------------------------------------------------

Operating expenses:

Research and development                                                     94,097          74,971          60,150

Sales and marketing                                                          64,526          59,373          60,615

General and administrative                                                   24,784          18,403          16,637

Amortization of goodwill and other acquisition-related charges               23,621              --              --

Merger related expenses                                                          --           1,422              --
                                                                            -------         -------         -------

                                                                            207,028         154,169         137,402
                                                                                                                   
-------------------------------------------------------------------------------------------------------------------

Income from operations                                                       70,269         125,947          60,418
                                                                                                                   
-------------------------------------------------------------------------------------------------------------------

Other income, net                                                            21,550          16,250           9,859
                                                                             ------          ------           -----

Income before income taxes                                                   91,819         142,197          70,277

Provision for income taxes                                                  (37,461)        (46,914)        (22,456)

-------------------------------------------------------------------------------------------------------------------

Net income                                                                 $ 54,358        $ 95,283        $ 47,821
                                                                                                                   
-------------------------------------------------------------------------------------------------------------------

Net income per basic common share                                             $0.99           $1.74           $0.89

Shares used in per-share calculation                                         54,649          54,853          53,507

Net income per diluted common share                                           $0.97           $1.67           $0.87

Shares used in per-share calculation                                         55,983          56,963          54,972

-------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to consolidated financial statements.
</FN>
                                                                                                                 26
</TABLE>



<PAGE>


<TABLE>
                                                Electronics for Imaging, Inc.
                                      Consolidated Statements of Stockholders' Equity
<CAPTION>
                                                         Additional                     Other                              Total
                                      Common Stock        Paid-in     Treasury     Comprehensive    Retained           Stockholders'
(in thousands)                      Shares     Amount     Capital       Stock      Income (Loss)    Earnings              Equity
                                                                                                                                 
---------------------------------------------------------------------------------------------------------------------------------

<S>                                 <C>        <C>     <C>          <C>           <C>             <C>                   <C>     
Balances as of December 31, 1997    53,030     $530    $139,578           --          --          $206,619              $346,727

Comprehensive income
    Net income                                                                                      47,821                47,821
    Functional currency adjustment                                                 (199)                                    (199)
                                                                                -------------------------------------------------
Comprehensive income                                                               (199)            47,821                47,622

Exercise of common stock options       954       10       8,683                                                            8,693

Tax benefit related to stock plans                        5,638                                                            5,638

---------------------------------------------------------------------------------------------------------------------------------

Balances as of December 31, 1998    53,984      540     153,899           --       (199)           254,440               408,680

---------------------------------------------------------------------------------------------------------------------------------
Comprehensive income
    Net income                                                                                      95,283                95,283
    Functional currency adjustment                                                   71                                       71
    Market valuation on short-term
     investments                                                                   (644)                                    (644)

                                                                                -------------------------------------------------
Comprehensive income                                                               (573)            95,283                94,710

Exercise of common stock options     1,738       17      27,573           --                                              27,590

Tax benefit related to stock plans                       20,207                                                           20,207
                                                                                                                               
---------------------------------------------------------------------------------------------------------------------------------

Balances as of December 31, 1999    55,722      557     201,679           --       (772)           349,723               551,187
                                                                                                                               
---------------------------------------------------------------------------------------------------------------------------------
Comprehensive income
    Net income                                                                                      54,358                54,358
    Functional currency adjustment                                                  (96)                                     (96)
    Market valuation on short-term
     investments                                                                  1,288                                   1 ,288
                                                                                                                               
                                                                                -------------------------------------------------

Comprehensive income                                                              1,192             54,358                55,550

 
Exercise of common stock options     1,441       18      18,294                                                           18,312

Tax benefit related to stock plans                       14,271                                                           14,271

Fair value of stock options
    assumed                                               5,955                                                            5,955
 

Repurchase of common stock -
(treasury method)                   (4,477)                          (99,959)                                            (99,959)
 
---------------------------------------------------------------------------------------------------------------------------------
 
Balances as of December 31, 2000    52,686     $575    $240,199     $(99,959)      $420           $404,081              $545,316
 
---------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to consolidated financial statements.
</FN>
                                                                                                                              27
</TABLE>


<PAGE>


<TABLE>
                                                Electronics for Imaging, Inc.
                                           Consolidated Statements of Cash Flows
<CAPTION>
                                                                                       Years ended December 31,

(In thousands)                                                                 2000              1999             1998
----------------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>               <C>               <C>    
Cash flows from operating activities:
Net income                                                                 $ 54,358          $ 95,283          $47,821
Adjustments to reconcile net income to net cash
provided by operating activities:
    Depreciation and amortization                                            18,461            14,464           14,051
    Purchased in-process research & development                              20,300                --               --
    Deferred taxes                                                           (3,039)          (13,304)          (2,110)
    Change in reserve for bad debts                                             988              (431)             250
    Other                                                                        96                71             (199)
 

    Changes in operating assets and liabilities:
 
        Accounts receivable                                                  10,196           (21,813)         (27,431)
        Inventories                                                         (10,305)            4,607            9,912
        Receivable from subcontract manufacturers                           (11,022)             (407)          12,276
        Other current assets                                                 (3,965)            2,245              (38)
        Accounts payable and accrued liabilities                               (887)           13,988           19,802
        Income taxes payable                                                  1,354            36,806            6,795
 
                                                                                                                      
----------------------------------------------------------------------------------------------------------------------
 
    Net cash provided by operating activities                                76,535           131,509           81,129
 
----------------------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
Purchases of short-term investments                                      (1,134,284)         (132,188)        (327,483)
Sales / maturities of short-term investments                              1,191,777            94,171          243,196
Net purchases of restricted investments                                     (14,134)               --               --
Investment in property and equipment, net                                   (15,510)          (15,622)         (13,210)
Business acquired, net of cash received                                     (83,769)               --               --
Purchase of other assets                                                        825               347             (181)
                                                                                                                      
----------------------------------------------------------------------------------------------------------------------

    Net cash used for investing activities                                  (55,095)          (53,292)         (97,678)

----------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Repayment of long-term obligations                                             (813)             (892)            (101)
Issuance of common stock                                                     18,312            27,590           14,331
Repurchase of common stock                                                  (99,959)               --               --
                                                                                                                      
----------------------------------------------------------------------------------------------------------------------

    Net cash provided by (used for) financing activities                    (82,460)           26,698           14,230

----------------------------------------------------------------------------------------------------------------------

Increase (decrease) in cash and cash equivalents                            (61,020)          104,915           (2,319)
Cash and cash equivalents at beginning of year                              163,824            58,909           61,228
                                                                                                                      
----------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents at end of year                                   $102,804          $163,824          $58,909

----------------------------------------------------------------------------------------------------------------------

Supplemental disclosures of cash flow information:
Cash paid for interest                                                         $355              $303             $369
Cash paid for income taxes                                                   40,984            22,591           11,448
Equipment purchased under capital leases                                         --                --              430
                                                                                                                      
----------------------------------------------------------------------------------------------------------------------

                                                                                                                    28
</TABLE>



<PAGE>

    See accompanying notes to consolidated financial statements.

Electronics for Imaging, Inc.
Notes to Consolidated Financial Statements

Note 1:  The Company and Its Significant Accounting Policies

The Company and Its Business

Electronics for Imaging,  Inc., a Delaware corporation (the "Company"),  through
its   subsidiaries,   designs  and  markets  products  that  support  color  and
black-and-white  printing  on a variety  of  peripheral  devices.  Its  products
incorporate  hardware and software  technologies  that transform digital copiers
and printers  from many leading  copier  manufacturers  into fast,  high-quality
networked printers.  The Company's products include stand-alone  servers,  which
are connected to digital copiers and other peripheral devices,  and controllers,
which are  embedded in digital  copiers and desktop  color laser  printers.  The
Company  operates in one industry  and sells its products  primarily to original
equipment manufacturers in North America, Europe and Japan. Substantially all of
the  Company's  revenue to date has resulted  from the sale of print servers and
controllers.

Basis of Presentation

The accompanying combined consolidated financial statements include the accounts
of the Company and its subsidiaries.  All significant inter-company accounts and
transactions have been eliminated in consolidation.

Revenue Recognition

Revenue is  recognized  when the  product is shipped,  provided  no  significant
obligations  remain and  collectibility is reasonably  probable.  Provisions for
estimated  warranty costs and potential  sales returns are recorded when revenue
is recognized.

Fair Value of Financial Instruments

The carrying amounts of cash, cash equivalents, short-term investments, accounts
receivable,  long-term  investments,  accounts payable,  accrued liabilities and
bonds payable as presented in the financial  statements,  approximate fair value
based on the nature of these instruments and prevailing interest rates.

Concentration of Credit Risk

The  Company  is  exposed  to credit  risk in the event of default by any of its
customers to the extent of amounts recorded on the  consolidated  balance sheet.
The Company performs ongoing  evaluations of the  collectibility of the accounts
receivable  balances for its  customers  and  maintains  reserves for  estimated
credit losses; such actual losses have been within management's expectations.

Cash, Cash Equivalents and Short-term Investments

The Company  generally  invests its excess  cash in deposits  with major  banks,
money  market  securities,   municipal,   U.S.  government  and  corporate  debt
securities.  By policy,  the Company invests primarily in high-grade  marketable
securities. The Company is exposed to credit risk in the event of default by the
financial  institutions or issuers of these investments to the extent of amounts
recorded on the consolidated balance sheet.

The Company considers all highly liquid  investments,  generally with a maturity
of three months or less at the time of  purchase,  to be cash  equivalents.  The
cost of these  investments has generally  approximated  fair value.  Investments
with longer maturities are classified as available-for-sale or hold-to-maturity.
Available-for-sale and hold-to-maturity securities are stated at fair value with


                                                                              29


<PAGE>

unrealized  gains and losses reported as a separate  component of  stockholders'
equity, net of deferred income taxes.  Hold-to-maturity securities collateralize
certain lease obligations. Realized gains and losses on sales of investments are
included in other revenues.

Inventories

Inventories are stated at standard cost which  approximates  the lower of actual
cost using a first-in,  first-out  method, or market.  The Company  periodically
reviews its inventories  for potential  slow-moving or obsolete items and writes
down specific items to net realizable value as appropriate.

Property and  Equipment

Property and equipment is recorded at cost.  Depreciation  on assets is computed
using the  straight-line  method over the estimated  useful lives of the assets,
generally  10 to 60  months.  Leasehold  improvements  are  amortized  using the
straight-line  method over the estimated useful lives of the improvements or the
lease term, if shorter.  Land improvements are amortized using the straight-line
method over the estimated useful lives of the improvements.

Amortization of Intangibles

Goodwill and other  intangible  assets acquired to date are being amortized on a
straight-line basis over periods ranging from 1 to 7 years.

Income Taxes

The Company  accounts  for income  taxes under the  provisions  of  Statement of
Financial  Accounting  Standards  No.  109 (SFAS  109),  "Accounting  for Income
Taxes". Under SFAS 109, deferred tax liabilities and assets are determined based
on the differences  between the financial  statement and tax bases of assets and
liabilities,  using  enacted  tax  rates in  effect  for the  year in which  the
differences  are expected to reverse.  No provision for U.S.  income tax is made
for undistributed earnings of the Company's foreign subsidiaries,  to the extent
it is the Company's  intention to  indefinitely  reinvest  these earnings in the
respective subsidiaries.

Foreign Currency Translation

The functional currency for all of the Company's foreign operations,  except for
Japan,  is the U.S.  dollar.  The functional  currency for Japan is the Japanese
Yen. Where the U.S. dollar is the functional currency,  translation  adjustments
are  recorded in income.  Where the  Japanese  Yen is the  functional  currency,
translation  adjustments are recorded as a separate  component of  Stockholders'
Equity.  Foreign currency  translation and transaction gains and losses have not
been significant in any period presented.

Accounting for Derivative Instruments and  Risk Management

The  Company  operates  internationally,  giving rise to exposure to market risk
from changes in foreign  exchange rates.  Derivative  financial  instruments are
used by the Company to reduce  those  risks.  The Company does not hold or issue
financial  or  derivative  financial  instruments  for  trading  or  speculative
purposes.  The magnitude and volume of such  transactions  were not material for
the periods presented.  As of December 31, 2000, the Company had one outstanding
forward foreign exchange  contract to sell Yen equivalent to approximately  $3.2
million with an expiration date of January 12, 2000.

 
In June 1999,  the  Financial  Accounting  Standards  Board (the "FASB")  issued
Statement of Financial  Accounting  Standards No. 133 (SFAS 133) "Accounting for
Derivative  Instruments and Hedging".  This statement establishes accounting and
reporting  standards for derivative  instruments and for hedging  activities and
requires,  among other  things,  that all  derivatives  be  recognized as either
assets or liabilities  in the statement of financial  position and measure those
instruments at fair value. In June 1999, the FASB issued  Statement of Financial
Accounting Standards No. 137 (SFAS 137),  "Accounting for Derivative Instruments
and Hedging  Activities - Deferral of Effective Date of FASB Statement No. 133".
SFAS 133, as amended by SFAS 137, is  effective  for fiscal  quarters and fiscal
years  beginning after June 15, 2000. The Company adopted SFAS 133 on January 1,
2001 and the adoption of this  pronouncement  is not expected to have a material
impact on the Company's financial position and results of operations.


                                                                              30


<PAGE>

Stock Options

In 1997, the Company adopted Statement of Financial Accounting Standards No. 123
(SFAS 123), "Accounting for Stock-Based  Compensation".  As permitted under this
standard,  the Company has elected to follow Accounting Principles Board Opinion
No. 25 (APB 25),  "Accounting  for Stock Issued to Employees" in accounting  for
its stock options and other stock-based  employee awards.  Pro forma information
regarding net income and earnings per share, as calculated  under the provisions
of SFAS 123, are disclosed in Note 9.

Computation  of Net Income per Common  Share

Net income per basic common share is computed using the weighted  average number
of common shares  outstanding  during the period.  Net income per diluted common
share is  computed  using the  weighted  average  number of  common  shares  and
potential common shares outstanding  during the period.  Potential common shares
result  from  the  assumed  exercise,   using  the  treasury  stock  method,  of
outstanding common stock options having a dilutive effect.

Comprehensive Income

Effective January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130 (SFAS 130), "Reporting  Comprehensive  Income". This Statement
requires that all items recognized  under accounting  standards as components of
comprehensive  earnings  be reported in an annual  financial  statement  that is
displayed with the same prominence as other annual  financial  statements.  This
Statement  also requires that an entity  classify  items of other  comprehensive
earnings by their nature in an annual financial statement.  Comprehensive income
has  been  presented  as part of the  Consolidated  Statements  of  Stockholder'
Equity.  Accumulated other  comprehensive  income (losses),  as presented in the
accompanying  consolidated balance sheets,  consists of the net unrealized gains
(losses)  on  available-for-sale  investments,  net of tax,  and the  cumulative
translation adjustment.

Reclassifications

Certain prior year balances have been  reclassified  to conform with the current
year presentation.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
reported  amounts of revenues and expenses during the reporting  period.  Actual
results could differ from those estimates.

Note 2: Mergers and Acquisitions

1999 Merger

On August 31, 1999 the Company merged with Management  Graphics Inc. ("MGI"),  a
Minnesota-based  corporation that developed digital print on demand products and
other  digital  imaging  products.  The merger was  accounted for as a tax free,
pooling of interests  combination and, accordingly,  the consolidated  financial
statements  have been restated to include the historical  results of MGI for all
periods  presented  prior to the  acquisition,  as if the  merged  entity  was a
wholly-owned subsidiary of Electronics For Imaging, Inc. since inception.

2000 Acquisitions

On October 23, 2000,  the Company  acquired  Splash  Technology  Holdings,  Inc.
("Splash") for total consideration of approximately  $159.7  million,  comprised
of $146.8  million in cash,  $6.0  million  for the fair value of stock  options
assumed  and  $6.9  million  of  capitalized   transaction-related   costs.  The
acquisition   was  accounted  for  as  a  purchase   business   combination  and
accordingly,  the  purchase  price  has  been  allocated  to  the  tangible  and
identifiable  intangible assets acquired and liabilities assumed on the basis of
their estimated fair values on the date of acquisition as follows:


                                                                              31


<PAGE>

(in thousands)
--------------------------------------------------------------------------------
Fair value of assets acquired and liabilities assumed                  $ 59,885
In-process research and development                                      20,300
Developed technology                                                     18,500
Workforce-in-place                                                        2,200
Trademarks and trade names                                                5,500
Goodwill                                                                 53,275
                                                                         ------
 
                                                                       $159,660

--------------------------------------------------------------------------------

Valuation of the  intangible  assets  acquired was  determined by an independent
third-party appraiser and consists of developed technology, trademarks and trade
names, and workforce-in-place.  The amount allocated to the purchased in-process
research and development  ("IPR&D")was  determined using  established  valuation
techniques and was expensed upon acquisition because  technological  feasibility
had not been established and no future alternative uses existed.  The percentage
of  completion  for such  products  was  estimated to range from 50% to 90%. The
value of this  IPR&D was  determined  by  estimating  the costs to  develop  the
purchased IPR&D into a commercially viable product, estimating the resulting net
cash flows from the sale of the products  resulting  from the  completion of the
IPR&D and  discounting  the net cash flows back to their  present value at rates
ranging  from 25% to 30%.  The excess of the  purchase  price over  tangible and
identifiable  intangible  assets  acquired  and  liabilities  assumed  has  been
recorded as goodwill.  The  developed  technology,  trademarks  and trade names,
workforce-in-place  and goodwill are being amortized over estimated useful lives
ranging from 4 to 7 years.

Capitalized transaction related costs include direct transaction costs primarily
for financial advisory and legal fees totaling $2.1 million,  employee severance
costs  totaling  $3.4  million and costs  associated  with  terminating  certain
contracts of Splash totaling $1.4 million.

The unaudited pro forma information set forth below represents the revenues, net
income and  earnings  per share of the Company and Splash as if the  acquisition
were effective on January 1, 1999, and includes  certain pro forma  adjustments,
including  the  adjustment of  amortization  expense to reflect  purchase  price
allocations,  interest  income to reflect net cash used for the purchase and the
related income tax effects of these adjustments.

                                                      Years Ended December 31,
(in thousands, except per share data)               2000                  1999
--------------------------------------------------------------------------------
Revenue                                           $640,096              $640,760
Net income                                         $55,192               $85,901
Basic earnings per common  share                     $1.01                 $1.57
Diluted  earnings  per common  share                 $0.99                 $1.51

--------------------------------------------------------------------------------
The unaudited pro forma information is presented for informational purposes only
and is not  necessarily  indicative of the results of  operations  that actually
would have been achieved had the acquisition  been  consummated at the beginning
of the period presented.


<TABLE>
Note 3: Balance Sheet Components
<CAPTION>
                                                                                              December 31,
(In thousands)                                                                      2000                          1999
----------------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>                           <C>    
Accounts receivable:

Accounts receivable                                                              $74,436                       $83,170
Less reserves and allowances                                                      (2,430)                       (1,266)
                                                                                 -------                       -------
                                                                                 $72,006                       $81,904

----------------------------------------------------------------------------------------------------------------------


                                                                                                                    32


<PAGE>


Inventories:

Raw materials                                                                    $25,928                       $10,844
Work in process                                                                       --                            33
Finished goods                                                                     1,148                         1,001
                                                                                 -------                       -------
                                                                                 $27,076                       $11,878

----------------------------------------------------------------------------------------------------------------------

Other current assets:

Receivable from subcontract manufacturers                                        $18,911                       $ 4,742
Deferred income taxes, current portion                                            17,695                        14,772
Other                                                                              6,560                         5,388
                                                                                --------                         -----
                                                                                 $43,166                       $24,902

----------------------------------------------------------------------------------------------------------------------

Property and equipment:

Land and land improvements                                                       $28,930                       $27,681
Equipment and purchased software                                                  70,413                        59,499
Furniture and leasehold improvements                                              16,354                        13,261
                                                                                --------                        ------
                                                                                 115,697                       100,441
Less accumulated depreciation and amortization                                   (64,241)                      (50,665)
                                                                                 --------                      --------
                                                                                 $51,456                       $49,776

----------------------------------------------------------------------------------------------------------------------

Other assets:

Deferred income taxes, non-current portion                                       $15,031                       $14,915
Goodwill                                                                          53,406                            --
Other intangibles                                                                 29,432                            --
Accumulated amortization of goodwill and intangibles                              (6,560)                           --
Other                                                                              1,640                         2,372
                                                                                --------                         -----
                                                                                 $92,949                       $17,287

----------------------------------------------------------------------------------------------------------------------

Accrued and other liabilities:
 
Accrued compensation and benefits                                                $15,019                       $ 7,263
Accrued product-related obligations                                               13,427                         7,809
Accrued royalty payments                                                           8,564                         7,327
Other accrued liabilities                                                         13,473                         7,372
                                                                                  ------                         -----
                                                                                 $50,483                       $29,771

----------------------------------------------------------------------------------------------------------------------
</TABLE>


Note 4: Short-term and Restricted Investments

<TABLE>
The following tables summarize the Company's investments placed in securities:
<CAPTION>
                                             Amortized     Gross Unrealized  Gross Unrealized       Fair
December 31, 2000                               Cost             Gains            Losses            Value
---------------------------------------------------------------------------------------------------------
(In thousands)

<S>                                          <C>                   <C>            <C>             <C>
Municipal Securities                         $254,060              $782               --          $254,842
U.S. Government Securities                      9,911               180               --            10,091
----------------------------------------------------------------------------------------------------------

Total short-term and restricted
       investments                           $263,971              $962               --          $264,933
                                                                                                          
----------------------------------------------------------------------------------------------------------
                                                                                                                    33


<PAGE>

                                             Amortized     Gross Unrealized  Gross Unrealized       Fair
December 31, 1999                               Cost             Gains            Losses            Value
---------------------------------------------------------------------------------------------------------
(In thousands)

Municipal Securities                         $246,861                --           $(804)          $246,057
U.S. Government Securities                     54,636                --            (139)            54,497
U.S. Corporate Debt Securities                  5,969                --             (19)             5,950
----------------------------------------------------------------------------------------------------------

Total investments                            $307,466                --           $(962)          $306,504
                                                                                                          
----------------------------------------------------------------------------------------------------------

The following table summarizes debt maturities as of December 31, 2000:

                                                                                 Amortized          Fair
(In thousands)                                                                     Cost             Value
----------------------------------------------------------------------------------------------------------
 
Less than one year                                                              $163,174          $163,389
Due in 1-2 years                                                                  75,942            76,467
Due in 2-3 years                                                                  24,855            25,077
----------------------------------------------------------------------------------------------------------

Total short-term and restricted investments                                     $263,971          $264,933

----------------------------------------------------------------------------------------------------------



Note 5: Long -Term Debt

Long Term Debt  consists  of amounts  due to the City of Foster City for certain
bonds assumed by the Company during the purchase of land (see Note 6). Principal
amounts owing under the bonds are as follows:

(in thousands)                                                              Year  ending December 31, 2000
----------------------------------------------------------------------------------------------------------

Total principal                                                                                     $3,466
Less: current portion                                                                                 (326)
-----------------------------------------------------------------------------------------------------------
                                                                                                    $3,140

----------------------------------------------------------------------------------------------------------

The  bonds  are  secured  by the  land  and  bear  an  annual  interest  rate of
approximately 7%. Interest and principal payments are due semi-annually with the
last payment occurring in June 2009.  Principal payments under the bonds payable
are as follows:

 
Year  ending December 31,                                                                   (in thousands)
----------------------------------------------------------------------------------------------------------
2001                                                                                                $  326
2002                                                                                                   297
2003                                                                                                   317
2004                                                                                                   340
2005                                                                                                   365
Thereafter                                                                                           1,495
----------------------------------------------------------------------------------------------------------
                                                                                                    $3,140

----------------------------------------------------------------------------------------------------------


                                                                                                                    34
</TABLE>



<PAGE>
Note 6: Commitments and Contingencies

Leases

In 1997, the Company began development of a corporate campus on a 35-acre parcel
of land in Foster  City,  California.  During  1997 and 1998 the  Company  spent
approximately  $27.3 million on the land and associated  improvement  costs.  In
addition to purchasing  the land, the Company  entered into an agreement  ("1997
Lease") to lease a ten-story  295,000  square foot building to be constructed on
the site. The lessor of the building  funded $56.8 million for the  construction
of the building. In July 1999 the Company completed construction of the building
and began making rent payments.  Also in conjunction with the lease, the Company
has entered  into a separate  ground  lease with the lessor of the  building for
approximately 35 years.

In December 1999 the Company entered into a second  agreement  ("1999 Lease") to
lease  a  maximum  of  543,000  square  feet  of  additional  facilities,  to be
constructed  adjacent to the first building  discussed above. As of December 31,
2000,  the lessor has funded  $13.4  million of a maximum  commitment  of $137.0
million  for  the  construction  of the  facilities,  with  the  portion  of the
committed amount actually used for construction to be determined by the Company.
Rent  obligations  for the  building  will  bear a  direct  relationship  to the
carrying cost of the  commitments  drawn down.  Construction  of the  facilities
began in January 2000 and is scheduled for  completion  over the next 36 months.
In connection  with the lease,  the Company  entered into a lease of the related
parcels of land in Foster City to the lessor of the  buildings at a nominal rate
and for a term of 30 years.  If the Company does not renew the  building  lease,
the ground lease converts to a market rate.

Both leases have an initial term of seven years,  with options to renew  subject
to certain conditions.  The Company may, at its option,  purchase the facilities
during  or at the end of the term of the lease for the  amount  expended  by the
respective lessor to construct the facilities. The Company has guaranteed to the
lessors a residual value  associated with the buildings  equal to  approximately
82% of the their funding. The Company may be liable to the lessor for the amount
of the residual  guarantee if it either  defaults on a covenant,  fails to renew
the lease, or does not purchase or locate a purchaser for the leased building at
the end of the lease  term.  During  the term of the  leases  the  Company  must
maintain a minimum  tangible  net worth.  In  addition,  the Company has pledged
certain marketable securities,  which is in proportion to the amount drawn under
each lease.  Under the 1997  Lease,  the pledged  collateral  ($70.2  million at
December 31, 2000) may be withdrawn at any time,  but  withdrawal  results in an
increase to the lease rate and the imposition of additional  financial  covenant
restrictions.  The funds pledged under the 1999 Lease ($14.1 million at December
31,  2000) may be  invested by the  Company in certain  securities,  however the
funds are restricted as to withdrawal at all times.

The Company also leases  office  facilities  in various  locations in the United
States and overseas for periods ranging from two to five years, expiring between
May 2002 and August 2005.

The   following   summarizes   the  future   minimum  lease  payment  under  the
non-cancelable operating leases:

 
Fiscal Year                                                       (In thousands)
--------------------------------------------------------------------------------
2001                                                                    $  5,308
2002                                                                       5,024
2003                                                                       4,180
2004                                                                       2,579
2005                                                                         207
Thereafter                                                                    --
--------------------------------------------------------------------------------
Total                                                                    $17,298
                                                                                
--------------------------------------------------------------------------------

Note: Lease obligation related to the principal  corporate facility is estimated
      and is  based on  current  market  interest  rates ( LIBOR)   and based on
      collateralized assumptions.

Rental expense amounted to approximately  $6.7 million,  $6.6 million,  and $4.6
million for the fiscal years ended 2000, 1999 and 1998, respectively.

Legal Proceedings

The  Company  and  certain  principal  officers  and  directors  were  named  as
defendants  in class action  complaints  filed in both the  California  Superior
Court of the County of San Mateo on December  15,  1997,  and the United  States
District  Court for the Northern  District of California on December 31, 1997 on
behalf of purchasers of the common stock of the Company  during the class period
from April 10, 1997, through December 11, 1997.  Additionally,  in January 1999,
two class action  complaints were filed, and subsequently  consolidated into one
case,  in the  United  States  District  Court  for  the  Northern  District  of
California against Splash and certain of its officers on behalf of purchasers of
the common stock of Splash  during the class period from January 7, 1997 through
October 13, 1998. The complaints allege violations of securities laws during the
class period. Management believes the lawsuits are

                                                                              35

<PAGE>

without merit.  However,  due to the inherent  uncertainties of litigation,  the
Company cannot  accurately  predict the ultimate outcome of the litigation.  Any
unfavorable  outcome  of the  litigation  could  have an  adverse  impact on the
Company's financial condition and results of operations.

On August 31,  2000,  after the  announcement  of the merger  agreement  between
Splash and the Company,  a class action lawsuit was filed against Splash and its
directors.  The  Plaintiffs,  Splash and the Company have agreed in principle to
enter into a settlement  agreement that would resolve all  outstanding  disputes
and dismiss the case with  prejudice.  The parties are currently  finalizing the
details of the settlement agreement.  The Company and Splash deny any wrongdoing
whatsoever,  but agreed to the settlement to eliminate the burden and expense of
further  litigation.  In addition,  the Company is involved from time to time in
litigation relating to claims arising in the normal course of its business.  The
Company believes that the ultimate resolution of such claims will not materially
affect the Company's business or financial condition.

Note 7: Income Taxes

<TABLE>
The provision (benefit) for income taxes is summarized as follows:
<CAPTION>
                                                                                      Years ended December 31,
(In thousands)                                                               2000              1999             1998
--------------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>               <C>              <C>    
Current:
U.S. Federal                                                              $34,451           $51,085          $20,771
State                                                                       4,197             8,044            3,749
Foreign                                                                     1,852             1,463               46
--------------------------------------------------------------------------------------------------------------------
       Total current                                                       40,500            60,592           24,566

Deferred:
U.S. Federal                                                               (2,469)          (13,265)          (2,348)
State                                                                        (549)             (408)             238
Foreign                                                                       (21)               (5)              --
--------------------------------------------------------------------------------------------------------------------

      Total deferred                                                       (3,039)          (13,678)          (2,110)
                                                                                                                    
--------------------------------------------------------------------------------------------------------------------

Total provision (benefit) for income taxes                                $37,461           $46,914          $22,456
                                                                                                                    
--------------------------------------------------------------------------------------------------------------------
</TABLE>


The tax effects of temporary  differences  that give rise to deferred tax assets
(liabilities) are as follows:

                                                                December 31,
(In thousands)                                              2000            1999
--------------------------------------------------------------------------------

 
Depreciation                                             $  (306)        $ 1,901
Inventory reserves                                         7,209           4,532
Other reserves and accruals                                4,473           6,762
State taxes payable                                          523           1,568
Amortization of intangibles                                1,276           4,636
Deferred tax on I/C transactions                          10,117           8,148
Net operating loss carryforwards and credits               5,811              --
Manufacturing reserves                                     1,873              --
Other                                                      1,750           2,140
--------------------------------------------------------------------------------

Total deferred tax assets                                $32,726         $29,687
                                                                                
--------------------------------------------------------------------------------


                                                                              36


<PAGE>


<TABLE>
A  reconciliation  between  the income tax  provision  computed  at the  federal
statutory rate and the actual tax provision is as follows:
<CAPTION>

                                                                         Years ended December 31,
(In thousands)                                           2000                      1999                      1998
                                                         ----                      ----                      ----

                                                        $        %                $         %               $         %
-----------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>        <C>          <C>          <C>          <C>          <C> 
Tax expense at federal statutory rate               $32,137    35.0         $49,769      35.0         $24,572      35.0
State income taxes, net of federal benefit            4,798     5.2           5,502       3.9           3,063       4.4
Tax-exempt interest income                           (4,480)   (4.9)         (3,601)     (2.5)         (2,717)     (4.0)
Research and development credits                     (3,934)   (4.3)         (2,725)     (1.9)         (1,874)     (2.8)
FSC benefit                                          (2,148)   (2.3)         (3,360)     (2.4)         (1,039)     (1.5)
Unbenefited foreign net operating losses              2,546     2.8              --        --              --        --
In-process technology and amortization of goodwill    7,698     8.4              --        --              --        --
Other                                                   844     0.9           1,329       0.9             451       0.9
-----------------------------------------------------------------------------------------------------------------------

                                                    $37,461    40.8         $46,914      33.0         $22,456      32.0
                                                                                                                       
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

Income before income taxes includes $0.3 million,  $2.0 million and $3.2 million
of  income   relating  to  non  -U.S.   operations  for  2000,  1999  and  1998,
respectively.

The company has approximately  $13.2 million and $1.0 million of loss and credit
carryforwards at December 31, 2000. These losses and credits will expire between
2002 and 2019.

                                                                              37


<PAGE>

Note 8: Earnings Per Share

<TABLE>
The following table presents a reconciliation  of basic and diluted earnings per
share for the three years in the period ended December 31, 2000:
<CAPTION>
                                                                                     Years ended December 31,
(In thousands, except per share data)                                       2000             1999              1998        
---------------------------------------------------------------------------------------------------------------------------
<S>                                                                      <C>              <C>               <C>    
Net income available to common shareholders                              $54,358          $95,283           $47,821
Shares

   Basic shares                                                           54,649           54,853            53,507
   Effect of Dilutive Securities                                           1,334            2,110             1,465
                                                                          ------           ------            ------
Diluted shares                                                            55,983           56,963            54,972
---------------------------------------------------------------------------------------------------------------------------

Earnings per common share

   Basic EPS                                                               $0.99            $1.74             $0.89
   Diluted EPS                                                             $0.97            $1.67             $0.87

---------------------------------------------------------------------------------------------------------------------------

</TABLE>

Antidilutive  Options.  Options to purchase  4,729,988;  349,791,  and 2,742,510
shares of common stock  outstanding  as of December 31,  2000,  1999,  and 1998,
respectively,  were not included in the  computations of diluted EPS because the
options'  exercise  prices were  greater  than the average  market  price of the
common shares for the years then ended.


Note 9:  Employee Benefit Plans

Stock Option Plans

<TABLE>
As of December 31, 2000,  the Company has six  stock-based  compensation  plans,
described  below.  The Company  applies APB 25 and  related  interpretations  in
accounting for its plans. Accordingly,  no compensation cost has been recognized
for its fixed stock option plans. Had  compensation  cost for options granted in
2000, 1999 and 1998 under the Company's  option plans been  determined  based on
the fair value at the grant dates as  prescribed  by SFAS 123, the Company's net
income and pro forma net income per share would have been as follows:
<CAPTION>
                                                                                     Years ended December 31,
(In thousands, except per share amounts)                                   2000                1999             1998
---------------------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>                 <C>             <C>    
Net income                                As reported                     $54,358             $95,283         $47,821
                                          Pro forma                       $ 4,266             $61,410         $18,543

Earnings per basic                        As reported                       $0.99               $1.74           $0.89
        common share                      Pro forma                         $0.08               $1.12           $0.35

Earnings per diluted                      As reported                       $0.97               $1.67           $0.87
        common share                      Pro forma                         $0.08               $1.08           $0.34

---------------------------------------------------------------------------------------------------------------------------
</TABLE>


The Company has five stock  option  plans:  the 1989 Stock Plan (a  "Predecessor
Plan") , the 1990 Stock Plan (a "Predecessor  Plan"),  the MGI 1985 Nonqualified
Stock Option Plan (a "Predecessor  Plan"),  the Splash 1996 Stock Option Plan (a
"Predecessor  Plan") and the 1999 Equity  Incentive Plan (a "Stock  Plan").  The
Company  does not grant any options  under the  Predecessor  Plans,  however all
outstanding  options under the Predecessor  Plans continue to be governed by the
terms and conditions of the existing option  agreements for those grants.  Under
the Stock Plans,  the exercise  price of each option  equals the market price of
the  Company's  stock on the date of grant and an  option's  maximum  term is 10
years. Options are granted  periodically  throughout the year and generally vest
ratably over two to four years. At December 31, 2000,  approximately 2.7 million
shares were available for future grants to employees, directors or consultants.

                                                                              38


<PAGE>


<TABLE>
The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes  option-pricing  model,  the  attribution  method with  respect to
graded vesting and the following weighted-average assumptions:
<CAPTION>

                                                                                 Years Ended December 31,
Black Scholes Assumptions & Fair Value                              2000                  1999                  1998
---------------------------------------------------------------------------------------------------------------------------
<S>                                                             <C>                   <C>                  <C>
Expected Volatility                                                 88.0%                 76.3%               76.0%
Dividend Yield                                                       0.0%                  0.0%                0.0%
Risk Free Interest Rate                                         4.91% to 5.11%        5.95% to 6.44%       4.49% to 4.65%
Weighted Average Expected Option Term                              4.0 years             4.5 years           4.4 years

Weighted Average Fair Value of Options Granted                       $21.96               $19.35              $6.98

---------------------------------------------------------------------------------------------------------------------------
</TABLE>


<TABLE>
A summary of the status of the Company's stock option activity is presented below:
<CAPTION>
                                                                      Years ended December 31,
(In thousands, except exercise price)          2000                           1999                               1998
-------------------------------------------------------------------------------------------------------------------------------

                                                  Average                            Average                            Average
                                                 Exercise                           Exercise                           Exercise
                                      Shares        Price                 Shares       Price                 Shares       Price
-------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>         <C>                     <C>        <C>                     <C>        <C>   
Beginning of Year                      7,335       $27.73                  6,734      $21.04                  6,401      $21.76

Granted                                9,045        27.92                  2,955       36.81                  1,931       16.05
Exercised                             (1,441)       12.60                 (1,738)      16.06                   (954)       9.19
Forfeited                             (2,036)       35.63                   (616)      31.09                   (644)      30.73
-------------------------------------------------------------------------------------------------------------------------------

End of Year                           12,903       $28.31                  7,335      $27.73                  6,734      $21.04

-------------------------------------------------------------------------------------------------------------------------------


                                                                                                                             39

</TABLE>



<PAGE>


<TABLE>
The following table summarizes information about stock options outstanding at December 31, 2000:
<CAPTION>
                                              Options Outstanding                               Options Exercisable
-------------------------------------------------------------------------------------------------------------------------------
      Range of                 Number           Weighted Avg.      Weighted Avg.         Number           Weighted Avg.
   Exercise Prices           Outstanding       Remaining Life     Exercise Price       Exercisable       Exercise Price
                            (in thousands)                                            (in thousands)                           
-------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>                 <C>                 <C>                  <C>             <C>   
   $0.15 to $11.94                 588               6.40                 $7.70               283              $3.14
   $11.95 to $12.81              2,615               9.48                $12.81               239             $12.79
   $12.82 to $15.77              1,182               7.48                $14.62               677             $14.62
   $15.78 to $21.38                499               8.99                $20.26                65             $18.31
   $21.39 to $22.31              1,536               9.43                $22.31               306             $22.31
   $22.32 to $25.63                575               5.97                $25.42               509             $25.61
   $25.64 to $33.81              1,656               8.11                $33.59               673             $33.39
   $33.82 to $45.18              1,008               8.56                $42.47               343             $41.89
   $45.19 to $45.19              2,067               9.08                $45.19               583             $45.19
   $45.20 to $60.31              1,177               7.54                $50.19               587             $49.30
-------------------------------------------------------------------------------------------------------------------------------
 
   $0.01 to $60.31              12,903               8.49                $28.31             4,265             $29.78

-------------------------------------------------------------------------------------------------------------------------------

</TABLE>

Employee Stock Purchase Plan

In 2000,  the Company  established  an Employee Stock Purchase Plan which allows
qualified  employees (as defined) to purchase designated shares of the Company's
common stock at a price equal to 85% of the closing  price on  specified  dates.
The Company has authorized 400,000 shares for purchase under this plan, with the
first purchases occurring in 2001.

Employee 401(k) Plan

The  Company  sponsors  a 401(k)  Savings  Plan (the  "401(k)  Plan") to provide
retirement and incidental  benefits for its employees.  Employees may contribute
from 1% to 20% of their annual  compensation  to the Plan,  limited to a maximum
annual amount as set periodically by the Internal  Revenue Service.  The Company
currently  matches 50 % of the  employee  contributions,  up to a maximum of the
first 4% of the employee's compensation  contributed to the plan, subject to IRS
limitations. The Company match is annually determined by the Board of Directors.
All matching  contributions  vest over four years starting with the hire date of
the individual employee. Company matching contributions to the Plan totaled $1.0
million in 2000.

Note 10: Information Concerning Business Segments and Major Customers

Information about Products and Services

The Company operates in a single industry  segment,  technology for high-quality
printing in short production runs. The Company does not have separate  operating
segments for which discrete  financial  statements  are prepared.  The Company's
management makes operating decisions and assesses performance based on primarily
product revenues and related gross margins.


                                                                              40


<PAGE>


<TABLE>
The following is a breakdown of revenues for the years ended December 31, 2000, 1999 and 1998 by product category:
<CAPTION>
                                                                   2000             1999              1998
(In thousands)                                                  Revenue          Revenue           Revenue                          
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                            <C>              <C>               <C>     
Stand-alone Servers Connecting
    to Digital Color Copiers                                   $268,436         $244,028          $291,785

Embedded Desktop Controllers,
    Bundled Color Solutions
    & Chipset Solutions                                         129,277          149,899            90,133

Controllers for Digital
    Black and White Solutions                                   130,780          121,071            19,196

Spares, Licensing
    & Other misc. sources                                        59,956           55,754            45,885                          
------------------------------------------------------------------------------------------------------------------------------------

Total Revenue                                                  $588,449         $570,752          $446,999

------------------------------------------------------------------------------------------------------------------------------------
</TABLE>



Information about Geographic Areas

The Company's sales originated in the United States,  The Netherlands and Japan.
Shipments  to  some of the  Company's  OEM  partners  are  made  to  centralized
purchasing  and  manufacturing  locations,  which in turn sell  through to other
locations.  As a result of these  factors,  the Company  believes  that sales to
certain  geographic  locations  might be higher or lower,  as  accurate  data is
difficult to obtain.

<TABLE>
 The following is a breakdown of revenues by shipment  destination for the years ended 2000, 1999 and 1998, respectively:
<CAPTION>
                                                              Years ended December 31,

(In thousands)                                       2000                      1999             1998
------------------------------------------------------------------------------------------------------------------
<S>                                              <C>                    <C>                 <C>     
North America                                    $291,679               $277,997            $221,638
Europe                                            191,403                182,602             144,076
Japan                                              85,983                 90,781              68,991
Rest of World                                      19,384                 19,372              12,294
-------------------------------------------------------------------------------------------------------------------

                                                 $588,449               $570,752            $446,999

-------------------------------------------------------------------------------------------------------------------
</TABLE>


Information about Major Customers

Three  customers,   with  total  revenues   greater  than  10%,   accounted  for
approximately  36%, 23% and 11% of revenue in 2000. Two customers  accounted for
36% and 23% of revenue in 1999. Three customers accounted for approximately 44%,
27% and 14% of  revenue  in 1998.  Three  customers,  with  accounts  receivable
balances greater than 10%, in aggregate accounted for approximately 79%, 69% and
85% of the accounts receivable balance as of December 31 in 2000, 1999 and 1998,
respectively.


                                                                              41


<PAGE>

 
                       Report of Independent Accountants

To the Board of Directors and Stockholders of
Electronics for Imaging, Inc.

 
In our opinion,  the  accompanying  consolidated  balance sheets and the related
consolidated  statements of income,  of  stockholders'  equity and of cash flows
present fairly, in all material respects,  the financial position of Electronics
for  Imaging,  Inc. and its  subsidiaries  at December 31, 2000 and December 31,
1999,  and the results of their  operations and their cash flows for each of the
three years in the period ended December 31, 2000 in conformity  with accounting
principles  generally accepted in the United States of America.  These financial
statements   are  the   responsibility   of  the   Company's   management;   our
responsibility  is to express an opinion on these financial  statements based on
our audits.  We conducted  our audits of these  statements  in  accordance  with
auditing  standards  generally  accepted in the United States of America,  which
require that we plan and perform the audit to obtain reasonable  assurance about
whether the financial  statements  are free of material  misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the financial  statements,  assessing the  accounting  principles
used and  significant  estimates made by management,  and evaluating the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.
 

PRICEWATERHOUSECOOPERS LLP

San Jose, California
January 23, 2001



                                                                              42


<PAGE>

                  Quarterly Consolidated Financial Information

(Unaudited)
(In thousands, except per share data)

<TABLE>
The following  table  presents the Company's  operating  results for each of the
eight quarters in the two-year  period ended December 31, 2000. The  information
for each of these  quarters is unaudited but has been prepared on the same basis
as the audited  consolidated  financial  statements  appearing elsewhere in this
Annual  Report.  In  the  opinion  of  management,   all  necessary  adjustments
(consisting only of normal recurring  adjustments) have been included to present
fairly the unaudited quarterly results when read in conjunction with the audited
consolidated financial statements of the Company and the notes thereto appearing
in this Annual Report. These operating results are not necessarily indicative of
the results for any future period.
<CAPTION>

2000:                                                                Q1               Q2                Q3               Q4
---------------------------------------------------------------------------------------------------------------------------
<S>                                                            <C>              <C>               <C>               <C>     
Revenue                                                        $151,515         $152,176          $153,182         $131,576
Gross profit                                                     73,612           72,943            73,499           57,243
Income (loss) from operations                                    32,444           28,452            24,974          (15,601)
Net income (loss)                                                25,423           22,832            20,045          (13,942)
Net income (loss) per basic common share                          $0.45            $0.41             $0.37           $(0.26)
Net income (loss) per diluted common share                        $0.44            $0.40             $0.37           $(0.26)

                                                     ----------------------------------------------------------------------
Revenue by product
    Stand-alone Servers Connecting to Digital Copiers          $ 73,747         $ 76,855          $ 67,666         $ 50,168
    Embedded Desktop Controllers, Bundled
        Color Solutions & Chipset Solutions                      33,214           23,783            33,801           38,480
    Controllers for Digital Black and White Solutions            26,828           36,823            37,052           30,078
    Spares, Licensing & other misc. sources                      17,726           14,715            14,663           12,850
                                                               --------        ---------         ---------         --------
Total revenue                                                  $151,515         $152,176          $153,182         $131,576

                                                     ----------------------------------------------------------------------
Shipments by geographic area
    North America                                              $ 73,935         $ 71,755          $ 79,855         $ 66,134
    Europe                                                       52,849           57,185            43,496           37,873
    Japan                                                        18,727           19,354            24,548           23,354
    Rest of World                                                 6,004            3,882             5,283            4,215
                                                              ---------        ---------         ---------        ---------
Total                                                          $151,515         $152,176          $153,182         $131,576


1999:                                                                Q1               Q2                Q3               Q4
---------------------------------------------------------------------------------------------------------------------------

Revenue                                                        $124,204         $140,686          $158,211         $147,651
Gross profit                                                     58,655           69,260            78,975           73,226
Income from operations                                           22,694           31,644            38,743           32,866
Net income                                                       17,286           23,524            29,358           25,115
Net income per basic common share                                  0.32             0.43              0.53             0.45
Net income per diluted common share                               $0.31            $0.41             $0.51            $0.44

                                                     ----------------------------------------------------------------------
Revenue by product
    Stand-alone Servers Connecting to Digital Copiers          $ 62,221         $ 58,106          $ 60,184         $ 63,517
    Embedded Desktop Controllers, Bundled
       Color Solutions & Chipset Solutions                       31,664           36,913            43,940           37,382
    Controllers for Digital Black and White Solutions            16,794           35,176            41,907           27,194
    Spares, Licensing & other misc. sources                      13,525           10,491            12,180           19,558
                                                              ---------        ---------         ---------        ---------
Total revenue                                                  $124,204         $140,686          $158,211         $147,651

                                                     ----------------------------------------------------------------------
Shipments by geographic area
    North America                                              $ 56,784         $ 65,633          $ 77,762         $ 77,818
    Europe                                                       42,690           47,403            45,833           46,676
    Japan                                                        22,175           22,832            27,614           18,160
    Rest of World                                                 2,555            4,818             7,002            4,997
                                                              ---------        ---------         ---------        ---------
Total                                                          $124,204         $140,686          $158,211         $147,651

---------------------------------------------------------------------------------------------------------------------------


                                                                                                                         43

</TABLE>



<PAGE>


                                    PART III


Item  9:  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure

     None.



Item 10: Directors and Executive Officers of the Registrant

     Information regarding directors of the Company is incorporated by reference
     from the information contained under the caption "Election of Directors" in
     the Company's  Proxy  Statement for the  Company's  2001 Annual  Meeting of
     Stockholders (the "2001 Proxy  Statement").  Information  regarding current
     executive  officers of the  Registrant is  incorporated  by reference  from
     information  contained  under  the  caption  "Executive  Officers"  in  the
     Company's 2001 Proxy Statement.  Information regarding Section 16 reporting
     compliance is  incorporated by reference from  information  contained under
     the caption "Section 16 (a) Beneficial  Ownership Reporting  Compliance" in
     the Company's 2001 Proxy Statement.


Item 11:  Executive Compensation

     The information required by this item is incorporated by reference from the
     information  contained under the caption  "Executive  Compensation"  in the
     Company's 2001 Proxy Statement.


Item 12:  Security Ownership of Certain Beneficial Owners and Management

     The information required by this item is incorporated by reference from the
     information  contained  under  the  caption  "Security  Ownership"  in  the
     Company's 2001 Proxy Statement.


Item 13:  Certain Relationships and Related Transactions

     The information required by this item is incorporated by reference from the
     information  contained  under the  caption  "Related  Transactions"  in the
     Company's 2001 Proxy Statement.


                                                                              44


<PAGE>



                                     PART IV


Item 14:  Exhibits, Financial Statement Schedules, and Reports on Form 10-K.

(a)      Documents Filed as Part of Form 10-K 
----------------------------------------------



(1)      Index to Financial Statements

         The Financial  Statements required by this item are submitted in Item 8
         of this report as follows:

             Report of Independent Accountants.
             Consolidated   Balance   Sheets  at  December  31,  2000  and  1999
             Consolidated  Statements  of  Income  for  the  three  years  ended
             December 31, 2000 Consolidated  Statements of Stockholders'  Equity
             for the three years ended December 31, 2000 Consolidated Statements
             of Cash Flows for the three years ended  December 31, 2000 Notes to
             Consolidated Financial Statements

         (2) Index to Financial Statement Schedule

         Schedule II - Valuation and Qualifying Accounts


         Report of Independent Accountants on Financial Statement Schedule

         (All other  schedules are omitted  because of the absence of conditions
         under which they are required or because the necessary  information  is
         provided in the consolidated financial statements or notes thereto.)

         (3) Exhibits

Exhibits

         2.1      Agreement and Plan of Merger,  dated as of August 30, 2000, by
                  and among the Company,  Vancouver Acquisition Corp. and Splash
                  Technology Holdings, Inc. (7)

         2.2      Amendment  No.  1,  dated  as of  October  19,  2000,  to  the
                  Agreement and Plan of Merger,  dated as of August 30, 2000, by
                  and among the Company,  Vancouver Acquisition Corp. and Splash
                  Technology Holdings, Inc. (8)

         2.3      Agreement and Plan of Merger and  Reorganization,  dated as of
                  July 14, 1999, among the Company,  Redwood  Acquisition  Corp.
                  and Management Graphics, Inc. (5)


         3.1      Amended and Restated Certificate of Incorporation. (2)

         3.2      Bylaws as amended. (1)

         4.1      See Exhibit 3.1

         4.2      Specimen Common Stock certificate of the Company. (1)

         10.1+    License  Agreement,  dated as of February 9, 1990, between the
                  Company and the Massachusetts Institute of Technology. (1)

         10.2     Amendment  to  License  Agreement  dated  December  21,  1990,
                  between  the  Company  and  the  Massachusetts   Institute  of
                  Technology. (1)

         10.3     Amendment  to License  Agreement  dated May 29, 1991 and March
                  19,  1991,  by and between  the Company and the  Massachusetts
                  Institute of Technology. (1)


                                                                              45


<PAGE>

         Exhibit

         No.     Description

         10.4+    Third  Amendment to License  Agreement  dated June 1, 1992, by
                  and between the Company  and the  Massachusetts  Institute  of
                  Technology. (1)
 
         10.5     First Amendment to License  Agreement dated November 19, 1990,
                  by and between the Company and the Massachusetts  Institute of
                  Technology.

         10.6++   Agreement dated December 6, 2000, by and between Adobe Systems
                  Incorporated and the Company.

         10.7**   1989 Stock Plan of the Company. (1)

         10.8**   1990 Stock Plan of the Company. (1)

         10.9**   Management  Graphics,  Inc.  1985  Nonqualified  Stock  Option
                  Plan.(9)

         10.10**  The 1999 Equity Incentive Plan. (6)

         10.11**  Form of Indemnification Agreement.(1)

         10.12**  Employment Agreement dated January 11, 2000 by and between Dan
                  Avida and the Company.(9)

         10.13**  Employment  Agreement dated March 8, 2000, by and between Fred
                  Rosenzweig and the Company.(9)

         10.14**  Employment  Agreement dated March 8, 2000, by and between Eric
                  Saltzman and the Company.(9)

         10.15*   Employment  Agreement  dated March 8, 2000, by and between Jan
                  Smith and the Company.(9)

         10.16**  Employment  Agreement  dated March 8, 2000, by and between Guy
                  Gecht and the Company.(9)

         10.17**  Master Lease and Open End Mortgages  dated as of July 18, 1997
                  by and  between the Company  and FBTC  Leasing  Corp.  for the
                  lease  financing  of  the  Company's  corporate   headquarters
                  building to be built in Foster City, California.(4)

         10.18    Lease   Financing  of  Properties   Located  in  Foster  City,
                  California,  dated as of January 18,  2000 among the  Company,
                  Societe   Generale    Financial    Corporation   and   Societe
                  Generale.(9)

         10.19**  2000 Employee Stock Purchase Plan.(3)

         10.20**  Employment  Agreement  dated  April 13,  2000,  by and between
                  Joseph Cutts and the Company.(3)

         10.21**  Splash Technology Holdings, Inc. 1996 Stock Option Plan. (10)

         10.22++  Fourth Amendment to License  Agreement dated October 17, 1994,
                  by and between the Company and the Massachusetts  Institute of
                  Technology.

         10.23++  Fifth  Amendment to License  Agreement  dated June 1, 2000, by
                  and between the Company  and the  Massachusetts  Institute  of
                  Technology.

         21.1     List of Subsidiaries.

         23.1     Consent of PricewaterhouseCoopers LLP.

         24.1     Power of Attorney (see signature page)


                **    Items that are management  contracts or compensatory plans
                      or arrangements  required to be filed as exhibits pursuant
                      to Item 14 (c) of Form 10-K.


                                                                              46


<PAGE>

                +     The  Company  has  received  confidential  treatment  with
                      respect to portions of these documents.

                ++    The  Company has  requested  confidential  treatment  with
                      respect to portions of these documents.

                (1)   Filed  as  an  exhibit  to  the   Company's   Registration
                      Statement  on Form S-1  (No.  33-50966)  and  incorporated
                      herein by reference.

                (2)   Filed  as  an  exhibit  to  the   Company's   Registration
                      Statement on Form S-1 (File No. 33-57382) and incorporated
                      herein by reference.

                (3)   Filed as an exhibit to the Company's  Quarterly  Report on
                      Form 10-Q for the  quarter  ended June 30,  2000 (File No.
                      000-18805) and incorporated herein by reference.

                (4)   Filed as an exhibit to the Company's  Quarterly  Report on
                      Form 10-Q for the  quarter  ended June 30,  1997 (File No.
                      0-18805) and incorporated herein by reference.

                (5)   Filed as an exhibit to the Company's Report of Unscheduled
                      Material Events on Form 8-K on September 8, 1999 (File No.
                      0-18805) and incorporated herein by reference.

                (6)   Filed  as  an  exhibit  to  the   Company's   Registration
                      Statement   on  Form  S-8   (File   No.   333-88135)   and
                      incorporated herein by reference.

                (7)   Filed as exhibit (d) (1) to the Company's Schedule TO-T on
                      September 14, 2000 is incorporated herein by reference.

                (8)   Filed as exhibit (d) (5) to the Company's TO/A Number 3 on
                      October 20, 2000 is incorporated herein by reference.

                (9)   Filed as an exhibit to the Company's Annual Report on Form
                      10-K  for the year  ended  December  31,  2000  (File  No.
                      000-18805) and incorporated herein by reference.

                (10)  Filed  as  an  exhibit  to  the   Company's   Registration
                      Statement   on  Form  S-8   (File   No.   333-49298)   and
                      incorporated herein by reference.




(b)       Reports on Form 8-K 

         A report on Form 8-K was filed by the Company on October 31, 2000.  The
         report related to the acquisition of Splash Technology  Holdings,  Inc.
         in a cash merger,  valued at approximately  $159.7 million.  The merger
         was completed on October 23, 2000


(c)      List of Exhibits 

         See Item 14 (a).


(d)      Consolidated  Financial  Statement  Schedule  II for  the  years  ended
         December 31, 2000, 1999 and 1998, respectively.

         See Page 47 of this Annual Report on Form 10-K.


                                                                              47


<PAGE>


<TABLE>
                                             ELECTRONICS FOR IMAGING, INC.

                                                      Schedule II

                                            Valuation and Qualifying Accounts
<CAPTION>
                                               Balance at       Charged to      Charged to/                        Balance at
                                               beginning        costs and        from other                          end of
Description                                    of period         expenses        accounts         Deductions         period
------------------------------------------------------------------------------------------------------------------------------------
(In thousands)
<S>                                              <C>                <C>           <C>                 <C>             <C>
Year Ended December 31, 2000
Allowance for doubtful accounts and
sales-related reserves                           $1,266             $979          $451 (1)            $(266)          $2,430

------------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1999
Allowance for doubtful accounts and
sales-related reserves                           $1,697             $200          $--                 $(631)          $1,266

------------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1998
Allowance for doubtful accounts and
sales-related reserves                           $1,628             $250          $--                 $(181)          $1,697

------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Bad debt reserve  received through  acquisition of Splash  Technology  Holdings,  Inc. - $173, and returned goods not previously
included in allowance account - $277.
</FN>
                                                                                                                                 48
</TABLE>



<PAGE>


                      Report of Independent Accountants on
                          Financial Statement Schedule

To the Board of Directors and Stockholders
of Electronics for Imaging, Inc.


Our audits of the consolidated  financial  statements  referred to in our report
dated  January  23,  2001  appearing  in this  Annual  Report  on  Form  10-K of
Electronics for Imaging,  Inc. also included an audit of the financial statement
schedule  listed  in Item  14(a)(2)  of this  Form  10-K.  In our  opinion,  the
financial  statement  schedule  presents fairly, in all material  respects,  the
information  set  forth  therein  when  read in  conjunction  with  the  related
consolidated financial statements.


PRICEWATERHOUSECOOPERS LLP

San Jose, California
January 23, 2001


                                                                              49


<PAGE>


                                   SIGNATURES

Pursuant to the requirements of Sections 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                         ELECTRONICS FOR IMAGING, INC.

 
March 27, 2001                       By:   /s/ Guy Gecht
                                           -----------------------------
                                           Guy Gecht
                                           Chief Executive Officer

                                POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE  PRESENT,  that each person  whose  signature  appears
below constitutes and appoints Guy Gecht and Joseph Cutts jointly and severally,
his attorneys-in-fact,  each with the power of substitution,  for him in any and
all  capacities,  to sign any amendments to the Form 10-K Annual Report,  and to
file  the  same,  with  exhibits  thereto  and  other  documents  in  connection
therewith,  with the Securities and Exchange  Commission,  hereby  ratifying and
confirming  all  that  each  of said  attorneys-in-fact,  or his  substitute  or
substitutes, may do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
       Signature                                       Title                                                    Date
       ---------                                       -----                                                    -----
<S>                                           <C>                                                           <C>
 /s/ Guy Gecht
-----------------------------                 Chief Executive Officer and Director                          March 27, 2001
     Guy Gecht                                 (Principal Executive Officer)


 /s/ Fred Rosenzweig
-----------------------------                 President, Chief Operating Officer and
     Fred Rosenzweig                          Director (Principal Operating Officer)                        March 27, 2001


 /s/ Joseph Cutts 
-----------------------------                 Chief Financial Officer and Corporate Secretary
     Joseph Cutts                             (Principal Financial and Accounting Officer)                  March 27, 2001


 /s/ Jean-Louis Gasse'e                       Director                                                      March 27, 2001
-----------------------------
     Jean-Louis Gasse'e


 /s/ Dan Maydan                               Director                                                      March 27, 2001
-----------------------------
     Dan Maydan


                                                                                                                        50
</TABLE>



<PAGE>


Exhibit Index


Exhibit
No.      Description
---      -----------

2.1      Agreement and Plan of Merger, dated as of August 30, 2000, by and among
         the  Company,   Vancouver   Acquisition  Corp.  and  Splash  Technology
         Holdings, Inc. (7)

2.2      Amendment  No. 1, dated as of October 19, 2000,  to the  Agreement  and
         Plan of Merger,  dated as of August 30, 2000, by and among the Company,
         Vancouver Acquisition Corp. and Splash Technology Holdings, Inc. (8)

2.3      Agreement and Plan of Merger and  Reorganization,  dated as of July 14,
         1999,  among the Company,  Redwood  Acquisition  Corp.  and  Management
         Graphics, Inc. (5)

3.1      Amended and Restated Certificate of Incorporation. (2)

3.2      Bylaws as amended. (1)

4.1      See Exhibit 3.1

4.2      Specimen Common Stock certificate of the Company. (1)

10.1+    License  Agreement,  dated as of February 9, 1990,  between the Company
         and the Massachusetts Institute of Technology. (1)

10.2     Amendment to License  Agreement  dated  December 21, 1990,  between the
         Company and the Massachusetts Institute of Technology. (1)

10.3     Amendment to License  Agreement  dated May 29, 1991 and March 19, 1991,
         by  and  between  the  Company  and  the  Massachusetts   Institute  of
         Technology. (1)

10.4+    Third Amendment to License Agreement dated June 1, 1992, by and between
         the Company and the Massachusetts Institute of Technology. (1)

10.5     First  Amendment to License  Agreement  dated November 19, 1990, by and
         between the Company and the Massachusetts Institute of Technology.

10.6++   Agreement  dated  December  6,  2000,  by  and  between  Adobe  Systems
         Incorporated and the Company.

10.7**   1989 Stock Plan of the Company. (1)

10.8**   1990 Stock Plan of the Company. (1)

10.9**   Management Graphics, Inc. 1985 Nonqualified Stock Option Plan.(9)

10.10**  The 1999 Equity Incentive Plan. (6)

10.11**  Form of Indemnification Agreement.(1)

10.12**  Employment  Agreement  dated  January 11, 2000 by and between Dan Avida
         and the Company.(9)

10.13**  Employment   Agreement  dated  March  8,  2000,  by  and  between  Fred
         Rosenzweig and the Company.(9)

10.14**  Employment  Agreement dated March 8, 2000, by and between Eric Saltzman
         and the Company.(9)

10.15**  Employment  Agreement dated March 8, 2000, by and between Jan Smith and
         the Company.(9)


                                                                              51


<PAGE>

Exhibit
No.      Description
---      -----------

10.16**  Employment  Agreement dated March 8, 2000, by and between Guy Gecht and
         the Company.

10.17**  Master  Lease and Open End  Mortgages  dated as of July 18, 1997 by and
         between the Company and FBTC Leasing Corp.  for the lease  financing of
         the  Company's  corporate  headquarters  building to be built in Foster
         City, California.(4)

10.18    Lease Financing of Properties Located in Foster City, California, dated
         as of January 18, 2000 among the Company,  Societe  Generale  Financial
         Corporation and Societe Generale.(9)

10.19**  2000 Employee Stock Purchase Plan.(3)

10.20**  Employment  Agreement dated April 13, 2000, by and between Joseph Cutts
         and the Company.(3)

10.21**  Splash Technology Holdings, Inc. 1996 Stock Option Plan (10)

10.22++  Fourth  Amendment to License  Agreement  dated October 17, 1994, by and
         between the Company and the Massachusetts Institute of Technology.

10.23++  Fifth Amendment to License Agreement dated June 1, 2000, by and between
         the Company and the Massachusetts Institute of Technology.
 
21.1     List of Subsidiaries.

23.1     Consent of PricewaterhouseCoopers LLP.

24.2     Power of Attorney (see signature page)


         **    Items that are  management  contracts  or  compensatory  plans or
               arrangements required to be filed as exhibits pursuant to Item 14
               (c) of Form 10-K.

         +     The Company has received  confidential  treatment with respect to
               portions of these documents.

         ++    The Company has requested  confidential treatment with respect to
               portions of these documents.

         (1)   Filed as an exhibit to the  Company's  Registration  Statement on
               Form S-1 (No. 33-50966) and incorporated herein by reference.

         (2)   Filed as an exhibit to the  Company's  Registration  Statement on
               Form  S-1  (File  No.  33-57382)  and   incorporated   herein  by
               reference.

         (3)   Filed as an exhibit  to the  Company's  Quarterly  Report on Form
               10-Q for the quarter ended June 30, 2000 (File No. 000-18805) and
               incorporated herein by reference.

         (4)   Filed as an exhibit  to the  Company's  Quarterly  Report on Form
               10-Q for the quarter  ended June 30, 1997 (File No.  0-18805) and
               incorporated herein by reference.

         (5)   Filed  as an  exhibit  to the  Company's  Report  of  Unscheduled
               Material  Events  on Form 8-K on  September  8,  1999  (File  No.
               0-18805) and incorporated herein by reference.

         (6)   Filed as an exhibit to the  Company's  Registration  Statement on
               Form  S-8  (File  No.  333-88135)  and  incorporated   herein  by
               reference.

         (7)   Filed  as  exhibit  (d)  (1) to the  Company's  Schedule  TO-T on
               September 14, 2000 is incorporated herein by reference.


                                                                              52


<PAGE>

         (8)   Filed  as  exhibit  (d) (5) to the  Company's  TO/A  Number  3 on
               October 20, 2000 is incorporated herein by reference.

         (9)   Filed as an exhibit to the  Company's  Annual Report on Form 10-K
               for the year ended  December  31, 2000 (File No.  000-18805)  and
               incorporated herein by reference.

         (10)  Filed as an exhibit to the  Company's  Registration  Statement on
               Form  S-8  (File  No.  333-49298)  and  incorporated   herein  by
               reference.


                                                                              53





                                FIRST AMENDEMENT
to License Agreement dated November 19, 1990, by and between the Company and the
                      Massachusetts Insitute of Technology

This  amendment  with the  effective  date of 19 November 1990 is to the License
Agreement dated February 9, 1990 between  Electronics for Imaging,  Inc. and the
Massachusetts Institute of Technology.

The parties  thereto  agree that the grant of  Paragraph  2.1 also  includes the
exclusive  license to practice any  invention  covered by the Patent  Rights and
that the  exclusivity  provision  of 2.3 applies to  practice  of any  invention
covered by the Patent Rights.

Agreed to for:

MASSACHUSETTS INSTITUTE                      ELECTRONICS FOR IMAGING, INC.
OF TECHNOLOGY

By:  John T. Prist                           By:  E. Arazi           
     ------------------------                     ------------------------   
                                                                              
Title    Dir. TLO                            Title     President             
     ------------------------                     ------------------------    
                                                                              
Date      11-19-90                           Date      Nov 19 1990             
     ------------------------                     ------------------------    
                                             







                Agreement dated December 6, 2000, by and between
                   Adobe Systems Incorporated and the Company

ADOBE
LOGO

December 6, 2000

Guy Gecht
CEO, Electronics For Imaging, Inc.
303 Velocity Way
Foster City, CA 94404


RE: Adobe PostScript Royalties

Dear Guy:

As per our conversation of this morning, following is a revised letter outlining
the terms and conditions Adobe will apply to a new pricing model for EFI.

Terms:

The  following  pricing  structure  applies to products sold by EFI that utilize
Adobe  PostScript  (PS). [ *** ] Royalty  payments are  calculated at the end of
each quarter.


                                    [ *** ]



This new pricing structure and its attached terms will be effective  December 1,
2000. If signed and returned to Adobe by midnight, December 6, 2000. These rates
are effective through June 30, 2002. At that time EFI and Adobe may have entered
into another pricing  agreement.  If EFI and Adobe have not entered into another
pricing structure,  the pricing presented here shall remain in effect until such
time that another pricing structure is agreed upon.



[ *** ] CERTAIN CONFIDENTIAL  INFORMATION CONTAINED IN THIS DOCUMENT,  MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION  PURSUANT TO RULE 24B-2 OF THE  SECURITIES  EXCHANGE
 ACT OF 1934,  AS
AMENDED.




<PAGE>


EFI and Adobe also agree that for each quarter and each category,  EFI shall pay
royalties to Adobe based on the above new rates on a segment by segment, quarter
by quarter basis [ *** ].

Guy, as discussed today, in the interests of moving our business forward,  Adobe
has given  consideration  to the many  issues you and your team have raised over
the past several weeks. [ *** ]. I look forward to our meeting in early January.



Yours sincerely, 
Adobe Systems Incorporated

/s/ Bruce Chizen
--------------------------
Bruce Chizen 
President



Agreed and Acknowledged

By: /s/ Guy Gecht
   ------------------------
        Guy Gecht
        CEO, Electronics For Imaging, Inc.
        

Date:   6 December 2000
     ----------------------

Cc:      Graham Fronman
         Richard Grant
         Susan Schultz
         Fred Rosenzweig
         Jim Etheridge
         Jackson Chen

[ *** ] CERTAIN CONFIDENTIAL  INFORMATION CONTAINED IN THIS DOCUMENT,  MARKED BY
BRACKET,  HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION  PURSUANT TO RULE 24B-2 OF THE  SECURITIES  EXCHANGE ACT OF 1934,  AS
AMENDED.




                                FOURTH AMENDMENT

         This Fourth  Amendment  (the  "Amendment"),  with an effective  date of
October 17, 1994,  is to the License  Agreement  dated  February 9, 1990 between
ELECTRONICS FOR IMAGING, INC. ("EFI") and MASSACHUSETTS  INSTITUTE OF TECHNOLOGY
("MIT") (the "License Agreement").

         The parties hereby agree as follows:

1. Paragraph 1.7 of the License  Agreement is amended to read in its entirety as
follows:

         1.7 A "Licensed  Product" shall mean any product,  software,  or system
         (including without  limitation input and output devices,  which include
         without limitation scanners and printers), and any circuitry,  software
         or  subassembly  which has been added by LICENSEE  to any input  and/or
         output  device  when  said  product,  system,  software,  circuitry  or
         subassembly:

                  (a)      is  covered  in  whole  or  in  part  by  an  issued,
                           unexpired  claim or a pending claim  contained in the
                           Patent  Rights in the  country in which any  Licensed
                           Product is made, used or sold; or

                  (b)      is  manufactured  or is used by using a process which
                           is  covered  in  whole  or  in  part  by  an  issued,
                           unexpired  claim or a pending claim  contained in the
                           Patent  Rights in the  country in which any  Licensed
                           Process  is used or in  which  such  product  or part
                           thereof is used or sold.

2. Paragraph 1.9 of the License  Agreement
 is amended to read in its entirety as
follows:

         1.9 "Net Sales" shall mean  LICENSEE's  billings for Licensed  Products
         excluding  input and output devices (which include  without  limitation
         scanners and printers) and Licensed  Processes  produced hereunder less
         the sum of the following:

                  (a)      discounts allowed in amounts customary in the trade;

                  (b)      sales,  tariff  duties,  value added taxes and/or use
                           taxes   directly   imposed  and  with   reference  to
                           particular sales;

                  (c)      outbound transportation prepaid or allowed;

                  (d)      amounts allowed or credited on returns; and

                  (e)      billings for Licensed Products and Licensed Processes
                           made and sold outside of the United States.

<PAGE>

                  No  deductions   shall  be  made  for   commissions   paid  to
         individuals   whether  they  be  with  independent  sales  agencies  or
         regularly  employed  by  LICENSEE  and on its  payroll,  or for cost of
         collections.  Licensed  Products shall be considered "sold" when billed
         out or invoiced.

3. The  provisions  of  Paragraph  2.2 of the License  Agreement  shall apply to
sublicenses only when such sublicenses convey exclusivity in any field of use.

4. Paragraph 2.8 of the License  Agreement is amended to read in its entirety as
follows:

         2.8 LICENSEE  agrees that any  sublicenses  granted by it shall provide
         that  the  obligations  to  M.I.T.  of  Articles  II,  VIII,  IX, X and
         Paragraphs  13.6 and 15.4, if applicable to such  sublicense,  shall be
         binding upon the  sublicensee as if it were a party to this  Agreement.
         LICENSEE  further agrees to attach copies of such  applicable  Articles
         and Paragraphs to sublicense agreements.

5. The provisions of Section 15.4 shall not apply to any sublicense entered into
between EFI and Apple Computer, Inc.

Agreed to for:

MASSACHUSSETS INSTITUTE                           ELECTRONICS FOR IMAGING,
OF TECHNOLOGY                                     INC.


By:  /s/ Lita Nelsen                              By:  /s/ Lawrence B. Levy
     --------------------------------                  -------------------------
                                                                                
Title:    Lita L. Nelsen, Director                Title:    Vice-Chairman & CFO
          TECHNOLOGY LICENSING OFFICE                       --------------------
          ---------------------------                       
                                                                                
Date:      27 October 1994                        Date:      October 27, 1994   
          ---------------------------                       --------------------
                                                  


                                      -2-


                                FIFTH AMENDEMENT
    to License Agreement dated June 1, 2000, by and between the Company and
                     Massachussets Institute of Technology


This Fifth  Amendment  with an effective date of June 1, 2000, is to the License
Agreement  dated  February  9,  1990  between  ELECTRONICS  FOR  IMAGING,   INC.
("LICENSEE") and MASSACHUSETTS INSTITUTE OF TECHNOLOGY ("M.I.T.")  (the "License
Agreement").

The parties  hereby  agree as follows: 

1. Section 4.1(b) of the License Agreement is amended to read in its entirety as
      follows:



  (b) [ *** ]



2.  Section 7.3 of the License Agreement is amended to read in its  entirety  as
      follows:

      7.3 In the event that  LICENSEE  shall  undertake the  enforcement  and/or
      defense of the Patent  Rights by  litigation,  LICENSEE may withhold up to
      fifty percent (50%) of the royalties otherwise thereafter due M.I.T. under
      Article  IV and  apply  the  same  toward  reimbursement  of up to half of
      LICENSEE's expenses,  including  reasonable  attorney's fees in connection
      therewith.  Should  this half of  LICENSEE's  expenses  exceed  50% of the
      royalties due for any given quarter, then the excess shall be carried over
      quarter-to-quarter  until  this  half  of  LICENSEE'S  expenses  has  been
      withheld from the royalties thereafter due M.I.T. Any recovery by LICENSEE
      for any such suit,  whether
 by virtue of  judgement or  settlement  of the
      enforcement  action,  shall  be  first  applied  in  satisfaction  of  any
      unreimbursed expenses and legal fees of LICENSEE relating to the suit, and
      next toward reimbursement of M.I.T. for any royalties past due or withheld
      and applied  pursuant to this Article VII. The balance  remaining from any
      such  recovery  shall be divided  equally  between  LICENSEE  and  M.I.T.;
      provided however, where the defendant in the enforcement action is brought
      for multiple patents, this balance from such recovery shall be apportioned
      pro-rata based on the time that was remaining before the expiration of the
      patents when the enforcement action was commenced.




Agreed to for:

MASSACHUSETTS INSTITUTE                      ELECTRONICS FOR IMAGING, INC.
OF TECHNOLOGY


By:  John H. Turner Jr.                           By:   James Etheridge
     ------------------------                     ------------------------    
                                                                              
Title  Associate  Director
       Technology Licensing Office           Title    General Counsel       
     -----------------------------                ------------------------    
                                                                              
Date      13 July 2000                        Date    14 June 2000             
     ------------------------                     ------------------------    



[ *** ] CERTAIN CONFIDENTIAL  INFORMATION CONTAINED IN THIS DOCUMENT,  MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION  PURSUANT TO RULE 24B-2 OF THE  SECURITIES  EXCHANGE ACT OF 1934,  AS
AMENDED. 




                                                                    EXHIBIT 23.1

                       CONSENT OF INDEPENDENT ACCOUNTANTS

 
We  hereby  consent  to the  incorporation  by  reference  in  the  Registration
Statement on Form S-8 (Nos. 33-56422,  33-80523,  33-85762,  33-93602, 333-11685
and 33-88135) of Electronics  for Imaging,  Inc. of our report dated January 23,
2001, relating to the financial statements,  which appears in this Form 10-K. We
also consent to the  incorporation  by reference of our report dated January 23,
2001, relating to the financial  statement schedule,  which appears in this Form
10-K.
 

PRICEWATERHOUSECOOPERS LLP

 
San Jose, California
March 27, 2001








<TABLE> <S> <C>


<ARTICLE>                     5
<LEGEND>
This  schedule  contains  summary  financial   information  extracted  from  the
condensed  balance  sheet,  condensed  statement  of  operations  and  condensed
statement of cash flows  included in the Company's  Form 10-K for the year ended
December  31,  2000  and is  qualified  in its  entirety  by  reference  to such
financial statements and the notes thereto.
</LEGEND>
       
<S>                             <C>
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                                                            DEC-31-2000
<PERIOD-START>                                                               JAN-01-2000
<PERIOD-END>                                                                 DEC-31-2000
<CASH>                                                                           102,804
<SECURITIES>                                                                     250,799
<RECEIVABLES>                                                                     74,436
<ALLOWANCES>                                                                       2,430
<INVENTORY>                                                                       27,076
<CURRENT-ASSETS>                                                                 495,851
<PP&E>                                                                           115,697
<DEPRECIATION>                                                                    64,241
<TOTAL-ASSETS>                                                                   654,390
<CURRENT-LIABILITIES>                                                            105,934
<BONDS>                                                                            3,140
<PREFERRED-MANDATORY>                                                                  0
<PREFERRED>                                                                            0
<COMMON>                                                                             575
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<SALES>                                                                          588,449
<TOTAL-REVENUES>                                                                 588,449
<CGS>                                                                            311,152
<TOTAL-COSTS>                                                                    311,152
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<LOSS-PROVISION>                                                                       0
<INTEREST-EXPENSE>                                                                     0
<INCOME-PRETAX>                                                                   91,819
<INCOME-TAX>                                                                      37,461
<INCOME-CONTINUING>                                                               54,358
<DISCONTINUED>                                                                         0
<EXTRAORDINARY>                                                                        0
<CHANGES>                                                                              0
<NET-INCOME>                                                                      54,358
<EPS-BASIC>                                                                         0.99
<EPS-DILUTED>                                                                       0.97
        

</TABLE>