DES PLAINES, IL--(Marketwire - June 11, 2009) - Schawk, Inc. (
NYSE:
SGK), a leading
provider of brand point management services, enabling companies of all
sizes to connect their brands with consumers to create deeper brand
affinity, reported fourth-quarter and full-year 2008 results and amended
its debt agreements to resolve certain covenant concerns.
Management Comments
President and Chief Executive Officer David A. Schawk commented, "We are
pleased to announce that the Company has amended its revolving credit
facility and the terms of its outstanding notes to resolve certain
financial covenant issues. We believe the amended debt agreements provide
the necessary flexibility to support our operations without restricting
opportunities for growth and reflect our lenders' confidence in Schawk and
our ability to generate strong cash flow from operations. We appreciate
their continued support."
Mr. Schawk continued, "Despite the challenging economic climate in 2008 and
early 2009, Schawk's business has maintained a steady and expanding client
base and, as a result of our efforts over the last year, we believe we have
improved our market share. While many of our clients have delayed projects
during this period of economic uncertainty, in recent weeks we have seen a
number of those clients discussing new projects, adding to our optimism for
additional business as the economy improves as expected. As the markets
normalize, we believe we are well positioned to meet the service demands of
these clients through operational and organizational changes that we have
implemented to better utilize our brand point management activities, global
capacity and technological capabilities.
"We are seeing positive signs from our broad array of clients, with
consumer package goods manufacturers, corporate brand providers and
retailers becoming more active. Furthermore, we are optimistic that as our
clients' activities continue to increase, the significant efforts we have
implemented to improve our cost structure and capitalize on our global
capacity will benefit our operating results. Concurrent with this, our cash
position and liquidity remain solid, which has enabled us to focus on
delivering world-class service and innovation to our clients and the
markets we serve. As consumer confidence improves, we anticipate that our
consumer products and retail clients will begin to activate their new and
innovative product initiatives. Schawk is well-prepared to produce this
work through our more efficient organization and processes."
Mr. Schawk concluded, "We have made significant progress in strengthening
our internal controls, but recognize that further improvements must be
implemented. We will continue our efforts to remedy the remaining material
weaknesses throughout 2009."
Amended Debt Agreements
Schawk has amended its debt agreements with its bank group and private
lenders. The amendments provide the Company greater flexibility in its
allowable leverage ratio and net worth covenant, while also reducing the
size of the Company's revolving credit facility, providing higher pricing
on the Company's borrowings and providing its lenders with a security
interest in the Company's personal property. A summary of the principal
terms of these amendments may be found in the Company's 2008 Form 10-K
filed with Securities and Exchange Commission.
Consolidated Results for Three Months Ended December 31, 2008
Net sales in the fourth quarter of 2008 were $108.9 million compared to
$141.3 million in the same period of 2007, a reduction of $32.4 million, or
22.9 percent. Sales attributable to acquisitions for the fourth quarter of
2008 as compared to the comparable prior-year period totaled $0.4 million.
The quarter-over-quarter decline in sales was the result of a slowdown in
the Company's business as compared to the fourth quarter of 2007. The
slowdown was particularly evident in the Company's United States and Mexico
reportable segment, which represents more than two-thirds of its sales and
which experienced a sales decline of $17.7 million, or 19.0 percent. Also
contributing to the quarter-over-quarter sales decline were lower sales in
the Europe reportable segment, which declined $5.5 million, or 31.0
percent, and lower sales in the Other reportable segment of $9.2 million,
or 30.2 percent.
Consumer products packaging accounts sales in the fourth quarter of 2008
were $69.3 million, or 63.7 percent of total sales, compared to $89.6
million in the same period of 2007, representing a decline of 22.6 percent.
Advertising and retail accounts sales of $28.6 million, or 26.2 percent of
total sales, in the full year of 2008 declined 33.1 percent compared to the
prior-year period. Entertainment accounts sales for 2008 of $8.1 million,
or 7.5 percent of total sales, declined 5.7 percent as compared to the same
period in 2007. Results during the fourth-quarter and full-year 2008 period
mirror the slowdown in the U.S. economy, as a number of clients have
delayed projects, resulting in lower revenue for the Company. Additionally,
lower consumer products packaging sales in 2008 reflected consumer package
goods (CPG) manufacturers' continued struggles with higher raw material and
transportation costs and private label competition. Importantly, though
client demand softened significantly during the period, no major clients
were lost during the fourth quarter or full year of 2008.
Gross profit was $31.5 million, or 28.9 percent of sales, in the fourth
quarter of 2008, a decline of $18.1 million from $49.6 million, or 35.1
percent of sales, in the fourth quarter of 2007. The decrease in gross
profit is largely attributable to the decrease in sales volume.
The Company reported an operating loss of $68.5 million in the 2008 fourth
quarter compared to operating income of $16.1 million in the fourth quarter
of 2007. The decrease in operating income, as compared to the prior-year
period, was the result of lower sales volume and gross profit, as discussed
above, impairment of goodwill resulting in non-cash charges of $48.0
million, acquisition, integration and restructuring expenses of $5.3
million, impairment charges on long-lived assets of $0.4 million,
multi-employer pension plan withdrawal expense of $7.3 million, remediation
and related expenses of $2.8 million, and currency losses associated with
foreign exchange transactions of $2.9 million.
The Company reported $48.0 million of non-cash goodwill charges in the 2008
fourth quarter relating to its European and Anthem operations. The goodwill
impairment reflects the general decline in global economic conditions,
particularly the general reduction in consumer and business confidence
experienced during the fourth quarter of 2008. In the first quarter of
2009, the Company's market capitalization decreased due to a decline in the
trading price of its common stock. Accordingly, the Company has commenced a
review for potential impairment, which could result in additional goodwill
impairment charges in 2009.
The acquisition, integration and restructuring charge in the fourth quarter
of 2008 arose from the Company's implementation of previously announced
plans to roll out its brand point management initiative and innovation and
to improve efficiency through enhanced utilization of its global capacity.
As a result of these actions, the Company incurred costs of $5.3 million
for employee terminations, obligations for future lease payments, fixed
asset impairments, and other associated costs.
The $0.4 million of long-lived asset impairment charges that arose in the
2008 fourth quarter are principally attributable to land and buildings
which the Company currently leases to a third party and has decided to
sell. Based on a market value appraisal performed by an independent
appraiser, the Company determined that the carrying value of the land and
buildings could not be supported by the estimated market value of the
facility. The carrying value at December 31, 2008, was written down to its
estimated fair value.
The $7.3 million of multi-employer pension plan withdrawal expense that
arose in the 2008 fourth quarter was a result of the Company's decision to
terminate participation in the union supplemental retirement and disability
fund primarily related to employees of its Minneapolis, MN, facility.
Accordingly, the Company's decision triggered the assumption of a partial
termination withdrawal liability. As a result, the Company recorded a
liability as of December 31, 2008, net of discount, for $7.3 million to
reflect this obligation, which is included in other long-term liabilities
on the consolidated balance sheets. While the obligation is taken at
December 31, 2008, payment obligations will not arise before the third
quarter of 2010.
The remediation and related expenses of $2.8 million, which is included in
the Company's selling, general, and administrative (SG&A) expenses, is
principally due to an increase in the Company's audit, legal and other
costs related to the Company's internal control remediation and related
matters.
The Company reported losses associated with foreign currency transactions
of $2.9 million in the 2008 fourth quarter compared to a gain of $0.2
million on foreign currency transactions for the same period in 2007. These
transactions were recorded by international subsidiaries primarily for
unhedged currency exposure arising from intercompany debt obligations.
Interest expense in the fourth quarter of 2008 was $1.8 million compared to
$2.2 million in the fourth quarter of 2007, primarily reflecting lower
interest rates during the 2008 period.
Income tax for the fourth quarter of 2008 was a benefit of $11.8 million,
which was principally due to the Company's operating loss during the
period, compared to income tax expense of $6.3 million in the fourth
quarter of 2007.
Net loss in the fourth quarter of 2008 was $58.4 million, or $2.27 per
diluted share, as compared to net income of $7.8 million, or $0.28 per
diluted share, in the fourth quarter of 2007. As discussed above, during
the fourth quarter of 2008 the Company incurred impairment of goodwill
charges of $48.0 million, acquisition, integration and restructuring
expenses of $5.3 million, impairment charges on long-lived assets of $0.4
million, multi-employer pension plan withdrawal expense of $7.3 million,
remediation and related expenses of $2.8 million, and currency losses
associated with foreign exchange transactions of $2.9 million. The loss
before income taxes was $70.2 million. Because of this loss, the income tax
provision for the fourth quarter was a benefit of $11.8 million. Excluding
the aforementioned items (net of tax effect), fourth-quarter 2008 net loss
was $0.3 million, or a loss of $0.01 per diluted share, as compared to
income of $8.2 million, or $0.30 per diluted share, on the same basis for
the comparable prior-year period. Please refer to the tables at the end of
this press release for a reconciliation of non-GAAP measures.
Other Information
Depreciation and amortization expense was $4.7 million in the fourth
quarter of 2008 compared to $5.7 million in the fourth quarter of 2007.
Capital expenditures in the fourth quarter of 2008 were $4.7 million
compared to $7.2 million in the same period of 2007.
As announced in February 2008, the Company's board of directors authorized
a share repurchase program to allow for the repurchase of up to two million
shares of common stock. During the 2008 fourth quarter, the Company bought
1,364,000 shares for a cost of $17.6 million. For the full year of 2008 all
shares authorized for repurchase under the program had been repurchased for
a total of $27.4 million.
Consolidated Results for Twelve Months Ended December 31, 2008
Full-year 2008 sales were $494.2 million compared to $544.4 million in the
comparable prior-year period, a reduction of $50.2 million, or 9.2 percent.
Sales attributable to acquisitions since the prior year totaled $6.3
million. On a segment basis, the United States and Mexico segment declined
11.3 percent, while sales in Europe and Other segments declined 10.8
percent and 1.0 percent, respectively.
Consumer products packaging accounts sales in 2008 were $316.3 million, or
64.0 percent of total sales, compared to $338.6 million in the same period
of 2007, representing a decline of 6.6 percent. Advertising and retail
accounts sales of $134.2 million, or 27.2 percent of total sales, in the
full year of 2008 declined 14.7 percent compared to the same period of
2007. Entertainment accounts sales for 2008 of $36.4 million, or 7.4
percent of total sales, declined 15.6 percent as compared to the prior-year
period.
Gross profit was $164.4 million, or 33.3 percent of sales, for the full
year of 2008, a decline of $28.0 million from $192.4 million, or 35.3
percent of sales, for the full year of 2007. The decrease in gross profit
is largely attributable to the decrease in sales volume.
Operating loss was $56.6 million in the twelve months of 2008 compared to
operating income of $60.2 million in the same period of 2007. The decrease
in operating income in the full year of 2008 compared to the full year of
2007 is the result of lower sales volume and gross profit, as discussed
above, acquisition, integration and restructuring expenses of $10.4
million, impairment charges on long-lived assets of $6.6 million,
multi-employer pension plan withdrawal expense of $7.3 million, impairment
of goodwill charges of $48.0 million, remediation and related expenses of
$6.8 million, and losses associated with foreign currency transactions of
$4.3 million.
Full-year 2008 interest expense was $6.9 million compared to $9.2 million
in the same period of 2007 as a result of a decrease in average outstanding
debt and a reduction in average interest rates.
Income tax expense for the full year of 2008 was a benefit of $3.1 million
compared to income tax expense of $20.7 million in the same period of 2007.
The effective tax rate declined to 4.9 percent in 2008 compared to 40.3
percent in 2007. The decrease in the effective tax rate was primarily due
to the non-deductibility of $10.5 million of the goodwill impairment
recorded with respect to the Company's European and Anthem operations, an
increase in the deferred tax asset valuation allowance of approximately
$6.8 million and income tax reserve increases of approximately $4.5
million.
For the full year ended December 31, 2008, the Company's net loss was $60.0
million, or $2.24 per diluted share, as compared to a profit of $30.6
million, or $1.10 per diluted share, in the same period of 2007. During
2008, the Company incurred acquisition integration and restructuring
expenses of $10.4 million, impairment charges on long-lived assets of $6.6
million, multi-employer pension plan withdrawal expense of $7.3 million,
impairment of goodwill charges of $48.0 million, remediation and related
expenses of $6.8 million, and losses associated with foreign currency
transactions of $4.3 million. In addition, the Company recognized a $1.1
million gain on the sale of assets, $1.6 million of income related to the
reversal of vacant property reserves and $1.1 million of expense related to
the write-off of capitalized acquisition-related due diligence costs during
the 2007 period that were not repeated in the 2008 period. Excluding the
aforementioned items (net of tax effect), net income for the 12 months of
2008 was $13.6 million, or $0.51 per diluted share, compared to $30.2
million, or $1.09 per diluted share, on the same basis for the twelve
months of 2007. Please refer to the table at the end of this press release
for a reconciliation of non-GAAP measures.
Other Information
Depreciation and amortization expense was $20.8 million for the full year
of 2008 compared to $21.4 million in the prior-year period.
Capital expenditures in the 2008 full year were $14.9 million compared to
$18.1 million in the same period of 2007.
EBITDA and Adjusted EBITDA Performance
The Company has not recently reported EBITDA (Earnings Before Interest,
Taxes, Depreciation or Amortization) or Adjusted EBITDA as financial
measures. Both of these measures are important indicators of performance
under the Company's amended debt agreements and are consistent measurement
tools for evaluating the operating activities of the business from period
to period. EBITDA for the fourth quarter of 2008 was negative $12.9 million
compared to a positive EBITDA of $23.4 million for the fourth quarter of
2007. Adjusted EBITDA for the fourth quarter of 2008 was $2.2 million
compared to $23.6 million for the fourth quarter of 2007.
EBITDA for full-year 2008 was $22.0 million as compared to $83.5 million
for full-year 2007. Adjusted EBITDA was $42.2 million for the full year of
2008 compared to $82.9 million for the comparable prior-year period. These
results for EBITDA and Adjusted EBITDA are calculated consistent with the
schedule presented at the end of this press release. A reconciliation of
this non-GAAP measure is also provided at the end of this release.
Cost-Reduction Activities
The $10.4 million restructuring charge in 2008 noted above is anticipated
to result in total annual savings of approximately $21.9 million, with an
estimated $7.4 million in savings realized in 2008. The Company anticipates
additional actions taken and expected to be taken during 2009 will result
in restructuring charges of approximately $2.0 to $3.0 million generating
annual savings of $6.0 to $7.0 million beginning in the first quarter of
2009 (estimated $5.0 to $5.5 million savings in 2009). Furthermore, the
Company has taken other 2009 cost-reduction actions expected to reduce
expenses by approximately $6.0 to $7.0 million for 2009.
Full-Year 2009 Sales and "Adjusted EBITDA" Guidance
In fiscal 2009, the Company expects full-year revenues to range between
$440 to $450 million, and Adjusted EBITDA (as calculated under the terms of
the Company's amended debt agreements) to range between $43 to $49 million.
The Company bases these annual estimates on an expectation that consumer
spending will modestly increase during 2009, and CPG's, retail and
corporate brands will increase their product innovation and promotional
activities in response to competitive pressure, and that the Company's cost
reduction activities in 2008 and during 2009 are anticipated to lower the
expense base of the Company. In the event that consumer confidence is more
than modestly increased, the Company expects that its revenue and Adjusted
EBITDA will exceed initial projections. In addition, the Company presently
expects that current cash balances and anticipated cash flows from
operations and other activities will be sufficient to fund debt service as
well as debt reduction through the end of 2009 without hindering the
Company's ability to focus on the services provided to its clients.
Conference Call
Schawk invites you to join its fourth-quarter and full-year 2008 earnings
conference call on Monday, June 15 at 9:00 a.m. Central time. To
participate in the conference call, please dial 866-804-6929 or
857-350-1675 at least five minutes prior to the start time and ask for the
Schawk, Inc. conference call, or on the Internet, go to
http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=82169&eventID=2263039. If you are unavailable to
participate on the live call, a replay will be available through June 22 at
11:59 p.m. Central time. To access the replay, dial
888-286-8010 or 617-801-6888, enter conference ID 65759387, and follow the
prompts. The replay will also be available on the Internet for 30 days at
the following address:
http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=82169&eventID=2263039.
About Schawk, Inc.
Schawk, Inc, is the leading provider of brand point management services,
enabling companies of all sizes to connect their brands with consumers to
create deeper brand affinity. With a global footprint of more than 60
offices, Schawk helps companies create compelling and consistent brand
experiences by providing integrated strategic, creative and executional
services across brand touchpoints. Founded in 1953, Schawk is trusted by
many of the world's leading organizations to help them achieve global brand
consistency. For more information about Schawk, visit
http://www.schawk.com
Non-GAAP Financial Measures
There are non-GAAP measures attached to this press release entitled
"Reconciliation of Non-GAAP measures to GAAP." Management believes that the
presentation of these measures provides investors with greater transparency
and supplemental data relating to the Company's financial condition and
results of operations and provides more consistent insight into the
performance of the Company's core operations from period to period.
Non-GAAP measures are reconciled to the closest GAAP measures on schedules
attached to this press release. The non-GAAP measures should not be viewed
as alternatives to GAAP. Furthermore, these measures may not be consistent
with similar measures provided by other companies. See also the Company's
discussion of the use of EBITDA and Adjusted EBITDA in the attached
"Reconciliation of Non-GAAP EBITDA and Adjusted EBITDA."
Safe Harbor Statement
Certain statements in this press release are forward-looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934,
as amended and are subject to the safe harbor created thereby. These
statements are made based upon current expectations and beliefs that are
subject to risk and uncertainty. Actual results might differ materially
from those contained in the forward-looking statements because of factors,
such as, among other things, unanticipated difficulties associated with
additional accounting issues, if any, which may cause our investors to lose
confidence in our reported financial information and may have a negative
impact on the trading price of our stock; our ability to remedy known
internal control deficiencies and weaknesses and the discovery of future
control deficiencies or weaknesses, which may require substantial costs and
resources to rectify; higher than expected costs, or unanticipated
difficulties associated with, integrating acquired operations; higher than
expected costs associated with compliance with legal and regulatory
requirements; the strength of the United States economy in general and
specifically market conditions for the consumer products industry; the
level of demand for Schawk's services; loss of key management and
operational personnel; our ability to implement our growth strategy,
rebranding initiatives and cost reduction plans and to realize anticipated
cost savings; the stability of state, federal and foreign tax laws; our
continued ability to identify and exploit industry trends and exploit
technological advances in the imaging industry; our ability to implement
restructuring plans; the stability of political conditions in Asia and
other foreign countries in which we have production capabilities; terrorist
attacks and the U.S. response to such attacks; as well as other factors
detailed in Schawk, Inc.'s filings with the Securities and Exchange
Commission.
For more information about Schawk, visit its website at
http://www.schawk.com
Financial Tables Follow
Schawk, Inc.
Consolidated Statements of Operations
(In Thousands, Except Per Share Amounts)
Three Months Ended Year Ended
December 31, December 31,
------------------------ ------------------------
2008 2007 2008 2007
----------- ----------- ----------- -----------
(Unaudited) (Unaudited)
Net sales $ 108,895 $ 141,256 $ 494,184 $ 544,409
Cost of sales 77,445 91,682 329,814 352,015
----------- ----------- ----------- -----------
Gross profit 31,450 49,574 164,370 192,394
Selling, general and
administrative
expenses 39,018 32,286 148,596 131,024
Impairment of goodwill 48,041 -- 48,041 --
Acquisition integration
and restructuring
expenses 5,274 -- 10,390 --
Multiemployer pension
plan withdrawal
expense 7,254 -- 7,254 --
Impairment of
long-lived assets 387 1,197 6,644 1,197
----------- ----------- ----------- -----------
Operating income (loss) (68,524) 16,091 (56,555) 60,173
Other income (expense):
Interest income 90 122 291 297
Interest expense (1,753) (2,156) (6,852) (9,214)
----------- ----------- ----------- -----------
(1,663) (2,034) (6,561) (8,917)
----------- ----------- ----------- -----------
Income (loss) before
income taxes (70,187) 14,057 (63,116) 51,256
Income tax provision
(benefit) (11,821) 6,259 (3,110) 20,658
----------- ----------- ----------- -----------
Net income (loss) ($ 58,366) $ 7,798 ($ 60,006) $ 30,598
=========== =========== =========== ===========
Net earnings (loss) per
share:
Basic ($ 2.27) $ 0.29 ($ 2.24) $ 1.14
Diluted ($ 2.27) $ 0.28 ($ 2.24) $ 1.10
Weighted average shares
outstanding:
Basic 25,741 26,987 26,739 26,869
Diluted 25,741 27,745 26,739 27,701
Dividends per common
share $ 0.0325 $ 0.0325 $ 0.13 $ 0.13
Schawk, Inc.
Consolidated Balance Sheets
(In Thousands, Except Share Amounts)
Dec. 31, Dec. 31,
2008 2007
----------- -----------
(Restated)
Assets
Current assets:
Cash and cash equivalents $ 20,205 $ 11,754
Trade accounts receivable, less allowance for
doubtful accounts of $3,138
at December 31, 2008 and $2,063 at December
31, 2007 83,218 113,215
Inventories 23,617 21,902
Prepaid expenses and other current assets 11,243 13,524
Income tax receivable 3,348 --
Assets held for sale 6,555 --
Deferred income taxes 2,765 4,755
----------- -----------
Total current assets 150,951 165,150
Property and equipment, less accumulated
depreciation of $92,583 at December 31, 2008
and $96,183 at December 31, 2007 58,325 77,083
Goodwill 184,037 246,368
Other intangible assets, net 39,125 41,528
Deferred income taxes 2,752 --
Other assets 5,163 4,858
----------- -----------
Total assets $ 440,353 $ 534,987
=========== ===========
Liabilities and Stockholders Equity
Current liabilities:
Trade accounts payable $ 20,694 $ 26,308
Accrued expenses 52,016 52,420
Income taxes payable -- 4,754
Current portion of long-term debt 23,563 4,433
----------- -----------
Total current liabilities 96,273 87,915
Long-term debt 112,264 105,942
Deferred income taxes 1,858 15,814
Other liabilities 29,137 24,547
Stockholders equity:
Common stock, $0.008 par value, 40,000,000
shares authorized, 29,478,456 and 29,213,166
shares issued at December 31, 2008 and
December 31, 2007, respectively; 25,218,566
and 27,013,482 shares outstanding at December
31, 2008 and December 31, 2007, respectively 217 216
Additional paid-in capital 187,801 184,110
Retained earnings 68,016 131,457
Accumulated comprehensive income 1,368 14,162
----------- -----------
257,402 329,945
Treasury stock, at cost, 4,259,890 and
2,199,684 shares of common stock at
December 31, 2008 and December 31, 2007,
respectively (56,581) (29,176)
----------- -----------
Total stockholders equity 200,821 300,769
----------- -----------
Total liabilities and stockholders equity $ 440,353 $ 534,987
=========== ===========
Schawk, Inc.
Reconciliation of Non-GAAP measures to GAAP
(In Thousands, Except Share Amounts)
Three Months Ended
December 31,
2008 2007
----------- -----------
Income (loss) before income taxes per GAAP ($ 70,187) $ 14,057
Plus: Impairment of goodwill 48,041 -
Plus: Acquisition integration and restructuring
expenses 5,274 -
Plus: Pension withdrawal expense 7,254 -
Plus: Remediation and related expenses 2,860 -
Plus: Impairment of long-lived assets 387 1,197
Plus: Foreign exchange (gain) loss 2,885 -
Less: Gain on sale of real estate and other - (430)
----------- -----------
Adjusted income (loss) before income tax
(non-GAAP) (3,486) 14,824
----------- -----------
Adjusted income tax provision (benefit)
(non-GAAP) (3,176) 6,581
----------- -----------
Adjusted net income (loss) (non-GAAP) ($ 310) $ 8,243
=========== ===========
Weighted average number of common and common
stock equivalent shares outstanding (GAAP) 25,741 27,745
=========== ===========
Net income (loss) per diluted share per GAAP ($ 2.27) $ 0.28
Adjustments: net of tax effects
Plus: Impairment of goodwill 1.77 -
Plus: Acquisition integration and restructuring
expenses 0.13 -
Plus: Pension withdrawal expense 0.20 -
Plus: Remediation and related expenses 0.09 -
Plus: Impairment of long-lived assets 0.01 0.03
Plus: Foreign exchange (gain) loss 0.08 -
Less: Gain on sale of real estate and other - (0.01)
Less: Uncertain tax positions and other discreet
tax adjustments (0.02) -
----------- -----------
Adjusted net income (loss) per diluted share
(non-GAAP) ($ 0.01) $ 0.30
=========== ===========
Income tax provision (benefit) per GAAP ($ 11,821) $ 6,259
Plus: Tax effect of Goodwill Impairment 2,480 -
Plus: Tax effect of acquisition integration and
restructuring expense 1,864 -
Plus: Tax effect of pension withdrawal expense 2,231 -
Plus: Tax effect of remediation and related
expenses 662 -
Plus: Tax effect of impairment of long-lived
assets 135 419
Plus: Tax effect of foreign exchange (gain)
loss 721 -
Plus: Tax effect of gain on sale of real estate
and other - (97)
Plus: Uncertain tax positions and other discreet
tax adjustments 552 -
----------- -----------
Adjusted income tax provision (benefit)
(non-GAAP) ($ 3,176) $ 6,581
=========== ===========
Schawk, Inc.
Reconciliation of Non-GAAP measures to GAAP
(In Thousands, Except Share Amounts)
Twelve Months Ended
December 31,
2008 2007
----------- -----------
Income (loss) before income taxes per GAAP ($ 63,116) $ 51,256
Plus: Impairment of goodwill 48,041 -
Plus: Acquisition integration and restructuring
expenses 10,390 -
Plus: Pension withdrawal expense 7,254 -
Plus: Remediation and related expenses 6,813 -
Plus: Impairment of long-lived assets 6,644 1,197
Plus: Foreign exchange (gain) loss 4,268 (208)
Less: Gain on sale of real estate and other - (1,540)
----------- -----------
Adjusted income before income tax (non-GAAP) 20,294 50,705
----------- -----------
Adjusted income tax provision (non-GAAP) 6,700 20,488
----------- -----------
Adjusted net income (non-GAAP) $ 13,594 $ 30,217
=========== ===========
Weighted average number of common and common
stock equivalent shares outstanding (GAAP) 26,739 27,701
=========== ===========
Net income (loss) per diluted share per GAAP ($ 2.24) $ 1.10
Adjustments: Net of Tax effects
Plus: Impairment of goodwill 1.70 -
Plus: Acquisition integration and restructuring
expenses 0.25 -
Plus: Pension withdrawal expense 0.16 -
Plus: Remediation and related expenses 0.17 -
Plus: Impairment of long-lived assets 0.16 0.03
Plus: Foreign exchange (gain) loss 0.12 (0.01)
Less: Gain on sale of real estate and other - (0.04)
Less: Uncertain tax positions and other discreet
tax adjustments 0.18 -
----------- -----------
Adjusted net income (loss) per diluted share
(non-GAAP) $ 0.51 $ 1.09
=========== ===========
Income tax provision (benefit) per GAAP ($ 3,110) $ 20,658
Plus: Tax effect of Goodwill Impairment 2,480 -
Plus: Tax effect of acquisition integration and
restructuring expense 3,637 -
Plus: Tax effect of pension withdrawal expense 2,880 -
Plus: Tax effect of remediation and related
expenses 2,231 -
Plus: Tax effect of impairment of long-lived
assets 2,325 419
Plus: Tax effect of foreign exchange (gain)
loss 1,067 (52)
Plus: Tax effect of gain on sale of real estate
and other - (537)
Plus: Uncertain tax positions and other discreet
tax adjustments (4,810) -
----------- -----------
Adjusted income tax provision (non-GAAP) $ 6,700 $ 20,488
=========== ===========
Schawk, Inc.
Reconciliation of Non-GAAP EBITDA and Adjusted EBITDA
(In Thousands)
Three Months Ended Year Ended
December 31, December 31,
--------- ---------- --------- ---------
2008 2007 2008 2007
--------- ---------- --------- ---------
(Unaudited) (Unaudited)
Net Income (loss) ($ 58,366) $ 7,798 ($ 60,006) $ 30,598
Interest expense, net of
interest income 1,663 2,034 6,561 8,917
Income tax expense (benefit) (11,821) 6,259 (3,110) 20,658
--------- ---------- --------- ---------
Operating Income (68,524) 16,091 (56,555) 60,173
Depreciation and amortization 4,688 5,725 20,751 21,353
Impairment of long-lived
assets 387 1,197 6,644 1,197
Impairment of goodwill 48,041 - 48,041 -
Non-cash restructuring charge 36 - 628 -
Unrealized foreign exchange
(gain) loss 1,097 124 1,097 (243)
Share-based compensation 1,385 235 1,385 1,011
--------- ---------- --------- ---------
EBITDA (12,890) 23,372 21,991 83,491
Permitted add backs on amended
debt agreements:
(Gain) loss on sale of
equipment 524 143 362 (852)
Permitted acquisitions 2,027 - 2,519 -
Interest income 90 122 291 297
Restructuring charge 5,238 - 9,762 -
Pension withdrawal expense 7,254 - 7,254 -
--------- ---------- --------- ---------
Adjusted EBITDA $ 2,243 $ 23,637 $ 42,179 $ 82,936
========= ========== ========= =========
EBITDA is defined as earnings before interest, income taxes, depreciation
and amortization, and other certain non-cash items. Adjusted EBITDA, as
defined in the covenants under the Company's amended debt agreements, is
EBITDA as adjusted to exclude certain items, including items that are
generally considered non-operating. Both measures are important indicators
of performance under the Company's amended debt agreements and provide
management with a consistent measurement tool for evaluating the operating
activities of the Company from period to period. These measures do not
represent cash flows from operations as defined by generally accepted
accounting principles, should not be considered as an alternative to net
income or cash flow from operations as an indicator of our operating
performance, and are not indicative of cash available to fund all cash flow
needs. These measures also may be inconsistent with similar measures
presented by other companies.
Contact Information: AT SCHAWK, INC.:
Timothy Allen
Vice President, Finance
Operations and Investor Relations
847-827-9494
Timothy.Allen@schawk.com
AT DRESNER CORPORATE SERVICES:
Investors: Philip Kranz
312-780-7240
pkranz@dresnerco.com