Schawk, Inc.
Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
Three months Ended Increase
September 30, (Decrease)
------------------ ---------------
2010 2009 Amount Percent
-------- -------- ------- ------
Net sales $112,562 $113,463 $ (901) (0.8)%
Cost of sales 68,768 67,957 811 1.2%
-------- -------- -------
Gross profit 43,794 45,506 (1,712) (3.8)%
Selling, general and administrative
expenses 28,675 32,193 (3,518) (10.9)%
Foreign exchange (gain) loss 694 (644) 1,338 nm
Indemnity settlement -- (4,986) 4,986 nm
Acquisition integration and
restructuring expenses 371 1,328 (957) (72.1)%
Multiemployer pension withdrawal
expense 500 -- 500 nm
-------- -------- -------
Operating income 13,554 17,615 (4,061) (23.1)%
Other income (expense)
Interest income 15 124 (109) (87.9)%
Interest expense (1,642) (2,880) 1,238 (43.0)%
-------- -------- -------
Income before income taxes 11,927 14,859 (2,932) (19.7)%
Income tax provision (benefit) 4,154 1,553 2,601 167.5%
-------- -------- -------
Net income $ 7,773 $ 13,306 $(5,533) (41.6)%
======== ======== =======
Earnings per share:
Basic $ 0.30 $ 0.53 $ (0.23)
Diluted $ 0.30 $ 0.53 $ (0.23)
Weighted average number of common and
common equivalent shares outstanding:
Basic 25,557 24,955
Diluted 25,923 25,040
nm = not meaningful
Schawk, Inc.
Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
Nine months Ended Increase
September 30, (Decrease)
------------------ ---------------
2010 2009 Amount Percent
-------- -------- ------- ------
Net sales $342,110 $330,540 $11,570 3.5%
Cost of sales 209,617 209,006 611 0.3%
-------- -------- -------
Gross profit 132,493 121,534 10,959 9.0%
Selling, general and administrative
expenses 91,619 98,313 (6,694) (6.8)%
Foreign exchange (gain) loss 2,244 (1,089) 3,333 nm
Indemnity settlement -- (4,986) 4,986 nm
Acquisition integration and
restructuring expenses 1,386 3,646 (2,260) (62.0)%
Multiemployer pension withdrawal
expense 500 -- 500 nm
Impairment of long-lived assets 680 136 544 400.0%
-------- -------- -------
Operating income 36,064 25,514 10,550 41.3%
Other income (expense)
Interest income 31 224 (193) (86.2)%
Interest expense (5,401) (6,797) 1,396 (20.5)%
-------- -------- -------
Income before income taxes 30,694 18,941 11,753 62.1%
Income tax provision 4,596 3,163 1,433 45.3%
-------- -------- -------
Net income $ 26,098 $ 15,778 $10,320 65.4%
======== ======== =======
Earnings per share:
Basic $ 1.03 $ 0.63 $ 0.40
Diluted $ 1.01 $ 0.63 $ 0.38
Weighted average number of common and
common equivalent shares outstanding:
Basic 25,387 24,937
Diluted 25,794 24,949
nm = not meaningful
Schawk, Inc.
Consolidated Balance Sheets
(In thousands, except share amounts)
September 30, December 31,
2010 2009
----------- -----------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 28,959 $ 12,167
Trade accounts receivable, less allowance for
doubtful accounts of $1,187 at September 30,
2010 and $1,619 at December 31, 2009 86,802 88,822
Inventories 21,324 20,536
Prepaid expenses and other current assets 10,314 8,192
Income tax receivable 212 2,565
Deferred income taxes 3,544 992
----------- -----------
Total current assets 151,155 133,274
Property and equipment, less accumulated
depreciation of $103,459 at September 30, 2010
and $96,440 at December 31, 2009 46,215 50,247
Goodwill 188,641 187,664
Other intangible assets, net 34,534 37,605
Deferred income taxes 1,294 1,424
Other assets 6,919 6,005
----------- -----------
Total assets $ 428,758 $ 416,219
=========== ===========
Liabilities and stockholders' equity
Current liabilities:
Trade accounts payable $ 15,925 $ 16,957
Accrued expenses 62,624 64,079
Deferred income taxes 5,510 205
Income taxes payable 4,976 14,600
Current portion of long-term debt 21,189 12,858
----------- -----------
Total current liabilities 110,224 108,699
----------- -----------
Long-term liabilities:
Long-term debt 41,423 64,707
Other liabilities 15,988 15,920
Deferred income taxes 4,350 2,059
----------- -----------
Total long-term liabilities 61,761 82,686
----------- -----------
Stockholders' equity:
Common stock, $0.008 par value, 40,000,000
shares authorized, 30,390,003 and 29,855,796
shares issued at September 30, 2010 and
December 31, 2009, respectively; 25,644,433
and 25,108,894 shares outstanding at September
30, 2010 and December 31, 2009, respectively 223 220
Additional paid-in capital 197,580 191,701
Retained earnings 108,996 85,953
Accumulated comprehensive income, net 10,795 7,804
Treasury stock, at cost, 4,745,570 and 4,746,902
shares of common stock at September 30, 2010
and December 31, 2009, respectively (60,821) (60,844)
----------- -----------
Total stockholders' equity 256,773 224,834
----------- -----------
Total liabilities and stockholders' equity $ 428,758 $ 416,219
=========== ===========
Schawk, Inc.
Segment Financial Data
(Unaudited)
(In thousands)
Three months Ended Increase
September 30, (Decrease)
------------------ ---------------
2010 2009 Amount Percent
-------- -------- ------- ------
Sales to external clients:
North America $ 97,360 $ 98,493 $(1,133) (1.2)%
Europe 16,724 16,978 (254) (1.5)%
Asia Pacific 7,547 7,668 (121) (1.6)%
Intercompany sales elimination (9,069) (9,676) 607 (6.3)%
-------- -------- -------
Sales to external clients $112,562 $113,463 $ (901) (0.8)%
======== ======== =======
Operating segment income (loss):
North America $ 17,627 $ 18,164 $ (537) (3.0)%
Europe 1,490 1,022 468 45.8%
Asia Pacific 982 2,192 (1,210) (55.2)%
Corporate (6,545) (3,763) (2,782) (73.9)%
-------- -------- -------
Operating segment income $ 13,554 $ 17,615 $(4,061) 23.1%
======== ======== =======
Nine months Ended Increase
September 30, (Decrease)
------------------ ---------------
2010 2009 Amount Percent
-------- -------- ------- ------
Sales to external clients:
North America $297,996 $285,722 $12,274 4.3%
Europe 49,099 48,872 227 0.5%
Asia Pacific 22,609 20,690 1,919 9.3%
Intercompany sales elimination (27,594) (24,744) (2,850) 11.5%
-------- -------- -------
Sales to external clients $342,110 $330,540 $11,570 3.5%
======== ======== =======
Operating segment income (loss):
North America $ 50,906 $ 38,765 $12,141 31.3%
Europe 2,853 2,180 673 30.9%
Asia Pacific 3,637 5,287 (1,650) (31.2)%
Corporate (21,332) (20,718) (614) (3.0)%
-------- -------- -------
Operating segment income $ 36,064 $ 25,514 $10,550 41.3%
======== ======== =======
Schawk, Inc.
Reconciliation of Non-GAAP measures to GAAP
(Unaudited)
(In Thousands, Except Share Amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------- ----------------
2010 2009 2010 2009
-------- ------- ------- -------
Income before income taxes - GAAP $ 11,927 $14,859 $30,694 $18,941
Adjustments:
Acquisition integration and
restructuring expenses 371 1,328 1,386 3,646
Remediation and related expenses -- 723 -- 4,042
Multiemployer pension withdrawal
expense 500 -- 500 --
Impairment of long-lived assets (1) -- -- 680 136
Indemnity settlement -- (4,986) -- (4,986)
Foreign currency (gain) loss 694 (644) 2,244 (1,089)
-------- ------- ------- -------
Adjusted income before income tax - non
GAAP 13,492 11,280 35,504 20,690
Adjusted income tax provision - non
GAAP 4,676 3,386 11,808 6,913
-------- ------- ------- -------
Adjusted net income - non GAAP $ 8,816 $ 7,894 $23,696 $13,777
======== ======= ======= =======
Weighted average common and common
stock equivalents outstanding - GAAP 25,923 25,040 25,794 24,949
======== ======= ======= =======
Earnings per diluted share - GAAP $ 0.30 $ 0.53 $ 1.01 $ 0.63
Adjustments - net of tax effects:
Acquisition integration and
restructuring expenses 0.01 0.04 0.03 0.10
Remediation and related expenses -- 0.02 -- 0.10
Multiemployer pension withdrawal
expense 0.01 -- 0.01 --
Impairment of long-lived assets -- -- 0.02 --
Indemnity settlement -- (0.20) -- (0.20)
Foreign currency (gain) loss 0.02 (0.02) 0.07 (0.03)
Uncertain tax positions -- -- -- --
Amended tax return adjustments -- (0.05) -- (0.06)
Effective settlement of certain
income tax audits -- -- (0.22) --
-------- ------- ------- -------
Adjusted earnings per diluted share -
non GAAP $ 0.34 $ 0.31 $ 0.92 $ 0.55
======== ======= ======= =======
Income tax provision (benefit) - GAAP $ 4,154 $ 1,553 $ 4,596 $ 3,163
Adjustments: (2)
Acquisition integration and
restructuring expenses 161 438 539 1,149
Remediation and related expenses -- 287 -- 1,605
Multiemployer pension withdrawal
expense 199 -- 199 --
Impairment of long-lived assets -- -- 270 45
Foreign currency (gain) loss 162 (170) 574 (327)
Uncertain tax positions -- (95) -- (95)
Amended tax return adjustments -- 1,373 -- 1,373
Effective settlement of certain
income tax audits -- -- 5,630 --
-------- ------- ------- -------
Adjusted income tax provision - non
GAAP $ 4,676 $ 3,386 $11,808 $ 6,913
======== ======= ======= =======
(1) Please see Note 6 to the Company's unaudited consolidated financial
statements in the Company's 2010 Third-Quarter Form 10-Q for a
discussion related to certain insurance recoveries.
(2) Adjustments have been tax-effected at the jurisdictions' statutory
rates.
Schawk, Inc.
Reconciliation of Non-GAAP Adjusted EBITDA and Management Adjusted EBITDA
(Unaudited)
(In Thousands)
Three Months Nine Months Trailing 12
Ended Ended Months Ended
September 30, September 30, September 30,
--------------- --------------- ----------------
2010 2009 2010 2009 2010 2009
------- ------- ------- ------- ------- --------
Net income (loss) -
GAAP $ 7,773 $13,306 $26,098 $15,778 $29,817 $(42,588)
Interest expense 1,642 2,880 5,401 6,797 7,828 8,550
Income tax expense
(benefit) 4,154 1,553 4,596 3,163 9,030 (8,658)
------- ------- ------- ------- ------- --------
Adjusted Income (loss)
- non GAAP 13,569 17,739 36,095 25,738 46,675 (42,696)
Depreciation and
amortization expense 4,358 4,701 13,258 14,209 17,702 18,897
Impairment of goodwill -- -- -- -- -- 48,041
Impairment of
long-lived assets -- -- 680 136 1,985 523
Non-cash restructuring
charges -- 133 -- 210 -- 246
Stock based
compensation 373 411 1,414 1,290 1,861 2,675
------- ------- ------- ------- ------- --------
Adjusted EBITDA - non
GAAP 18,300 22,984 51,447 41,583 68,223 27,686
Permitted add backs on
debt covenants:
(Gain) loss on sale of
property and equipment -- -- -- 44 -- 568
Proforma effect of
acquisitions and asset
sales -- -- -- -- -- 2,027
Acquisition integration
and restructuring
expenses(1) -- 758 -- 2,999 -- 8,237
Multiemployer pension
plan withdrawal
expense -- -- -- -- -- 7,254
------- ------- ------- ------- ------- --------
Adjusted EBITDA for
covenant compliance -
non GAAP 18,300 23,742 51,447 44,626 68,223 45,772
Acquisition integration
and restructuring
expenses 371 437 1,386 437 4,198 437
Multiemployer pension
plan withdrawal
expense 500 -- 500 -- 2,300 --
Indemnity settlement
income -- (4,986) -- (4,986) -- (4,986)
Foreign exchange (gain)
loss 694 (644) 2,244 (1,089) 2,791 9
Remediation and related
expenses -- 723 -- 4,042 415 4,042
------- ------- ------- ------- ------- --------
Management adjusted
EBITDA - non GAAP $19,865 $19,272 $55,577 $43,030 $77,927 $ 45,274
======= ======= ======= ======= ======= ========
(1) Capped at $3.0 million for 2009 per the Company's new debt agreements.
Amounts in excess of $3.0 million are included as an adjustment for
Management adjusted EBITDA.
Use of Non-GAAP Adjusted EBITDA, Adjusted EBITDA for covenant compliance,
and Management adjusted EBITDA
Adjusted EBITDA, as presented within this release, is defined as earnings
before interest, income taxes, depreciation and amortization, and other
certain non-cash items. Adjusted EBITDA for covenant compliance, as
defined in the Company's January 2010 debt agreements, is defined as
Adjusted EBITDA excluding certain items, including items that are generally
considered non-operating, as permitted under the Company's current
revolving credit facility, and is used by management to gauge its ongoing
compliance with the Company's principal debt covenants, as well as pricing
on its revolving credit facility. Management adjusted EBITDA is used to
evaluate the core operating activities of the Company from period to
period. None of the measures presented above 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
or EBITDA as defined under guidance from the Securities and Exchange
Commission.
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