DES PLAINES, IL--(Marketwire - March 15, 2010) - 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 2009 results. Net income in
the fourth quarter of 2009 was $3.7 million, or $0.15 per diluted share,
versus a net loss of $58.4 million, or $2.27 per diluted share, in the
fourth quarter of 2008. For the full year of 2009, net income was $19.5
million, or $0.78 per diluted share, compared to a net loss of $60.0
million, or $2.24 per diluted share, in the comparable prior-year period.
Net income for the fourth quarter and full year of 2008 was negatively
impacted by a $48.0 million goodwill impairment charge. The negative
after-tax impact of the goodwill impairment charge was $1.77 per diluted
share for the fourth quarter of 2008 and $1.70 per diluted share for the
full year of 2008. Net income for the full year of 2009 was positively
impacted by the receipt of $9.2 million in cash as part of a settlement
related to an escrow account that had been established to pay indemnity
claims in connection with the Company's 2005 acquisition of Seven Worldwide
Holdings, Inc., of which $5.0 million was reported as income in the third
quarter of 2009. The full-year 2009 after-tax benefit of the indemnity
settlement income was $0.20 per diluted share.
Management Comments
President and Chief Executive Officer David A. Schawk commented, "Our
on-going cost-reduction initiatives coupled with continued revenue growth
provided the Company with solid margin and operating income performance in
the fourth quarter. In addition, our cash flow during 2009 allowed us to
reduce our total debt, and aided by our 2009 financial performance and debt
reductions, we successfully renegotiated our revolving credit facility in
January of 2010. Moreover, throughout 2009, the management team focused
intensively on enhancing our internal controls. This commitment and effort
across the entire company has resulted in remediation of the material
weaknesses in our internal controls identified in our 2008 Form 10-K.
"Compared to the prior-year period, fourth-quarter 2009 revenue increased
approximately 11.9 percent, or 9.5 percent, if the favorable $2.6 million
foreign currency translation impact is excluded. The fourth quarter of
2009 was our third consecutive quarter of sequential revenue growth
allowing us to further leverage our cost-reduction and capacity-utilization
activities and improve operating income.
"During the fourth quarter of 2009, we experienced substantial improvement
in margins. Gross margin improved to 40.6 percent in the fourth quarter of
2009 from 28.9 percent in the same period of last year, primarily
reflecting the benefits of the period-over-period sales increase coupled
with our cost-reduction and capacity-utilization activities."
Schawk continued, "Also in the fourth quarter, we took additional steps to
better utilize our global capacity while reducing our overall cost base,
and as a result, we generated almost $2.9 million in annual cost savings
from initiatives enacted during the fourth quarter alone, leading to total
annual cost savings for all 2009 initiatives of $15.6 million, of which
approximately $8.9 million was realized during 2009.
"Furthermore, the Company reduced its debt by over $13 million during the
fourth quarter of 2009 which further strengthens its financial position.
During 2009, the Company reduced its overall debt by approximately $58
million."
Schawk concluded, "We continue to believe that the operational improvements
that we commenced in 2008 and continued throughout 2009 have made us more
agile thereby allowing us to navigate more effectively through the current
economic climate. These changes, as challenging as they are, have only
strengthened our ability to deliver end-to-end, all-encompassing solutions
to our clients. Given the breadth of our product and service offerings
coupled with our global footprint, we believe that no other company in our
industry can match the solutions that Schawk can offer its clients.
Finally, the fourth-quarter and full-year 2009 results reflect the
dedication and commitment of the Company's employees. Despite these
difficult times, our employees have remained focused on executing on the
Company's strategy and initiatives. It is this continued dedication that
drives the Company's overall success."
Consolidated Results for Fourth Quarter Ended December 31, 2009
Consolidated net sales in the fourth quarter of 2009 were $121.9 million
compared to $108.9 million in the same period of 2008, an increase of
approximately $13.0 million, or 11.9 percent. Approximately $2.6 million of
the sales increase quarter over quarter was the result of changes in
foreign currency translation rates, as the U.S. dollar declined in value
relative to the local currencies of certain of the Company's non-U.S.
subsidiaries. Acquisitions contributed $3.8 million, $3.6 million in Europe
and $0.2 million in Asia Pacific, or 3.1 percent of consolidated net sales
during the fourth quarter of 2009. The remainder of the
quarter-over-quarter increase in sales was the result of an increase in the
Company's business compared to the fourth quarter of 2008, as clients
increased their product and brand innovation and introduction activity.
The increase in the Company's revenue in the 2009 fourth quarter over the
2008 period was evident in all segments. The North America segment
experienced a sales increase of $8.0 million, or 8.3 percent, of which $1.4
million of the increase was attributable to changes in foreign currency
translation rates. Sales in the Europe segment increased $4.8 million, or
35.0 percent, of which $0.7 million of the increase was attributable to
changes in foreign currency translation rates. Sales in the Asia Pacific
segment increased $2.6 million, or 42.3 percent, of which $0.5 million was
attributable to changes in foreign currency translation rates.
Consumer packaged goods (CPG) accounts sales in the fourth quarter of 2009
were $84.9 million, or 69.7 percent of total sales, compared to $74.0
million in the same period of 2008, representing an increase of 14.8
percent. The increase over the prior-year quarter was primarily driven by
increased product and brand innovation and introduction activity by the
Company's clients. Advertising and retail accounts sales of $26.0 million,
or 21.3 percent of total sales, in the fourth quarter of 2009 increased 9.0
percent compared to the prior-year period. Entertainment accounts sales for
the fourth quarter of 2009 of $8.3 million, or 6.8 percent of total sales,
declined 2.9 percent compared to the same period in 2008.
On a sequential basis, sales for the fourth quarter of 2009 increased $8.4
million, or 7.4 percent, versus the third quarter of 2009. The improvement
was driven by increases in packaging and retail account sales.
Gross profit was $49.5 million in the fourth quarter of 2009, an increase
of $18.1 million from the fourth quarter of 2008. Fourth-quarter 2009 gross
profit as a percentage of sales increased to 40.6 percent of sales from
28.9 percent of sales in the 2008 fourth-quarter period. The increase was
largely attributable to the Company's continued cost-reduction activities
implemented during 2008 and 2009, coupled with higher sales in the 2009
fourth quarter relative to the prior-year comparable period, which further
leveraged the Company's cost-reduction activities.
Selling, general and administrative (SG&A) expenses declined $5.7 million,
to $33.4 million in the fourth quarter of 2009 from $39.0 million in the
fourth quarter of 2008, principally reflecting the Company's cost-reduction
initiatives. In addition, professional fees, included in SG&A and related
to internal control remediation efforts and related matters, were $0.4
million, a decrease of $2.4 million over the prior-year quarter.
During the fourth quarter of 2009, the Company recorded no goodwill
impairment expense compared to $48.0 million of expense in the fourth
quarter of 2008.
During the fourth quarter of 2009, the Company recorded an additional $1.8
million expense related to its 2008 decision to terminate participation in
a union supplemental retirement and disability fund. The additional $1.8
million of multi-employer pension withdrawal expense arose out of the
Company's year-end 2009 estimate of its future termination liability. In
the fourth quarter of 2008, the Company recorded an initial $7.3 million
liability related to its decision to terminate its participation in the
fund.
Acquisition, integration and restructuring expenses declined from $5.3
million in the fourth quarter of 2008 to $2.8 million in the fourth quarter
of 2009. The charges in the 2009 fourth quarter arose from the Company's
previously announced plans to consolidate, reduce and re-align the
Company's work force and operations and are for employee terminations,
asset impairments, obligations for future lease payments and other
associated costs.
Expenses related to impairment of long-lived assets increased by $0.9
million to $1.3 million during the fourth quarter of 2009 compared to
fourth quarter of 2008. The increase period over period was primarily
related to a revaluation of a non-core vacant property owned by the
Company.
The Company reported operating income of $10.3 million in the 2009 fourth
quarter compared to an operating loss of $68.5 million in the fourth
quarter of 2008. The increase in operating income compared to the
prior-year period was primarily the result of improvements in gross margin
percent and a $48.0 million reduction in goodwill impairment expense
coupled with reductions in SG&A and acquisition, integration and
restructuring and multi-employer pension withdrawal expenses.
On a segment basis, operating income improved in all operating segments.
North America operating income increased approximately $28.6 million to
$18.0 million in the fourth quarter of 2009 compared to the prior-year
quarter. Europe operating income increased approximately $38.8 million to
$1.7 million, and Asia-Pacific operating income increased approximately
$3.4 million to $2.1 million during the fourth quarter of 2009 compared to
the prior-year period. The increases in operating income during the fourth
quarter of 2009 relative to the same period in 2008 were partially
attributable to goodwill impairment charges during the fourth quarter of
2008 of $14.3 million for North America, $32.7 million for Europe, and $1.0
million for Asia Pacific. The remaining improvement in operating income is
primarily driven by increased revenue period over period coupled with the
Company's successful cost-reduction initiatives.
The Company reported a loss associated with foreign currency transactions
of $0.5 million in the fourth quarter of 2009 and a loss of $2.9 million in
the fourth quarter of 2008. These transactions were recorded by non-U.S.
subsidiaries primarily for unhedged currency exposure arising from
intercompany debt obligations.
Interest expense in the fourth quarter of 2009 was $2.4 million, compared
to $1.8 million in the fourth quarter of 2008, due to higher interest
payable under the Company's June 2009 amended debt agreements.
Income tax expense for the fourth quarter of 2009 was $4.4 million,
compared to an income tax benefit of $11.8 million in the fourth quarter of
2008.
Net income in the fourth quarter of 2009 was $3.7 million, or $0.15 per
diluted share, compared to a net loss of $58.4 million, or $2.27 per
diluted share, in the fourth quarter of 2008. As discussed above, during
the fourth quarter of 2009 the Company incurred acquisition, integration
and restructuring expenses of $2.8 million and remediation and related
expenses of $0.4 million. The income before income taxes was $8.2 million.
The income tax provision for the fourth quarter was $4.4 million. Excluding
the aforementioned items (net of tax effects), fourth-quarter 2009 net
income was $8.1 million, or $0.32 per diluted share, compared to a loss of
approximately $1.0 million, or $0.04 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 $4.4 million for the fourth
quarter of 2009 compared to $4.7 million in the fourth quarter of 2008.
Capital expenditures in the fourth quarter of 2009 were $1.4 million
compared to $4.7 million in the same period of 2008.
EBITDA and Management Adjusted EBITDA Performance
EBITDA for the fourth quarter of 2009 was $16.8 million compared to
negative EBITDA of $12.8 million for the fourth quarter of 2008.
Management adjusted EBITDA for the fourth quarter of 2009 was $22.8 million
compared to $5.1 million for the fourth quarter of 2008. Following the
Company's entry into its new credit facility, the Company has updated its
calculation and presentation of an adjusted EBITDA measure as compared to
the adjusted EBITDA measure presented in its previous 2009 quarterly
earnings releases, as further noted and presented in the non-GAAP
reconciliation schedule attached at the end of this press release.
Consolidated Results for the Year Ended December 31, 2009
Consolidated net sales were $452.4 million in 2009 compared to $494.2
million in the same period of 2008, a reduction of $41.7 million, or 8.4
percent. Approximately $13.7 million of the sales decline year over year
was the result of changes in foreign currency translation rates, as the
U.S. dollar increased in value relative to the local currencies of certain
of the Company's non-U.S. subsidiaries. Acquisitions contributed $11.1
million, or 2.5 percent, during the full year of 2009 compared to the prior
year, comprised of $10.2 million in Europe and $0.9 million in Asia
Pacific. The remainder of the year-over-year decline in sales was the
result of a slowdown in the Company's business compared to the same period
of 2008, as the Company's clients maintained reduced levels of spending on
advertising, marketing and new product introductions and particularly with
respect to the Company's CPG accounts, delayed packaging redesigns and
sales promotion projects.
The reduction in the Company's revenues for 2009 was evident in nearly all
segments. The North America segment, experienced a sales decline of $34.3
million, or 8.1 percent, of which $3.8 million of the period-over-period
sales decline was attributable to changes in foreign currency translation
rates. Sales in the Europe segment declined $3.6 million, or 5.1 percent,
of which $9.3 million was attributable to changes in foreign currency
translation rates. Sales in the Asia Pacific segment increased $0.7
million, or 2.5 percent, including a decrease of $0.6 million attributable
to changes in foreign currency translation rates.
CPG accounts sales in the full year of 2009 were $318.7 million, or 70.4
percent of total sales, compared to $346.7 million in the same period of
2008, representing a decline of 8.1 percent, as the Company's clients
maintained reduced levels of spending on advertising, marketing and new
product introductions and, particularly with respect to the Company's CPG
accounts, delayed packaging redesigns and sales promotion projects.
Advertising and retail accounts sales of $89.8 million, or 19.8 percent of
total sales, declined 12.0 percent for 2009 compared to the prior-year
period. Entertainment accounts sales of $32.8 million, or 7.2 percent of
total sales, declined 9.2 percent for 2009 compared to the prior year.
Gross profit was $171.1 million in 2009, an increase of $6.7 million from
the prior-year period. In addition, gross profit as a percent of sales
increased to 37.8 percent of sales in 2009 compared to 33.3 percent of
sales in the 2008, which is largely attributable to the Company's
cost-reduction initiatives implemented during 2008 and 2009.
SG&A expenses declined $18.0 million to $130.6 million in the full year of
2009, from $148.6 million in the comparable prior-year period. The
reduction in expenses reflects the Company's cost-reduction activities
partially aided by a decrease in professional fees related to internal
control remediation and related efforts which declined by $2.3 million to
$4.5 million for 2009.
During 2009, the Company recorded no goodwill impairment expense as
compared to $48.0 million of expense for 2008.
Additionally, during the third quarter of 2009, the Company received $9.2
million in cash as part of a settlement related to an escrow account that
had been established to pay indemnity claims in connection with the
Company's 2005 acquisition of Seven Worldwide Holdings, Inc., of which $5.0
million was reported as income.
Acquisition, integration and restructuring expenses declined from $10.4
million to $6.5 million and arose from the Company's previously announced
plans to consolidate, reduce and re-align the Company's work force and
operations. As a result of these actions, the Company incurred costs for
employee terminations, asset impairments, obligations for future lease
payments and other associated costs.
As explained previously, the Company recorded an additional $1.8 million
expense related to its 2008 decision to terminate participation in a union
supplemental retirement and disability fund. In the fourth quarter of 2008,
the Company recorded an initial $7.3 million liability related to its
decision to terminate its participation in the fund.
Expenses related to impairment of long-lived assets declined by $5.2
million to $1.4 million in the full year of 2009 compared to the same
period of 2008. The reduction in expense was principally driven by $2.3
million of software-related asset impairment expenses in 2008 not recurring
in 2009, coupled with a reduction of $2.2 million of asset impairment
expenses, primarily related to a non-core vacant property owned by the
Company.
The Company reported operating income of $35.8 million in the full year of
2009 compared to a loss of $56.6 million in the same period of 2008. The
increase in operating income, compared to the prior-year period, was
primarily the result of improvements in gross margin percent and a $48.0
million reduction in goodwill impairment expense coupled with reductions in
SG&A and acquisition, integration and restructuring, long-lived asset
impairment and pension withdrawal expenses. In addition, the Company
benefitted from the aforementioned indemnity settlement.
On a segment basis, operating income improved in all operating segments.
North America segment operating income increased $32.9 million to $56.7
million in 2009 compared to the prior year. Europe segment operating
income increased $41.2 million to $3.8 million, and Asia-Pacific segment
operating income increased $6.0 million to $7.4 million for 2009 compared
to the prior year. The increases in operating income for 2009 relative to
the prior year were partially attributable to goodwill impairment charges
of $14.3 million for North America, $32.7 million for Europe, and $1.0
million for Asia Pacific recorded in 2008. The remaining improvement in
operating income was primarily driven by expense reductions driven by the
Company's cost-reduction and capacity-utilization initiatives.
The remediation and related expenses of $4.5 million, which is included in
the Company's SG&A expenses, is principally due to costs related to the
Company's internal control remediation and related matters.
The Company reported a full-year gain associated with foreign currency
transactions of $0.5 million during 2009 compared to a loss of $4.3 million
on foreign currency transactions for the same period in 2008. These
transactions were recorded by non-U.S. subsidiaries primarily for unhedged
currency exposure arising from intercompany debt obligations.
Interest expense for the full year of 2009 was $9.2 million compared to
$6.9 million in the comparable prior-year period, primarily driven by
higher interest payable related to the Company's June 2009 amended debt
agreements.
Income tax expense for 2009 was $7.6 million, compared to an income tax
benefit of $3.1 million during 2008. The change in the effective tax rate
for 2009 compared to 2008 was attributed to the nontaxable indemnity
settlement income and amended tax return adjustments in 2009, coupled with
the non-deductibility of $10.5 million of the goodwill impairment charge
during 2008 and increases to the deferred tax asset valuation allowance and
income tax reserves during 2008.
Full-year 2009 net income was $19.5 million, or $0.78 per diluted share,
compared to a net loss of $60.0 million, or $2.24 per diluted share, in the
comparable prior-year period. As discussed above, during fiscal year 2009
the Company incurred acquisition integration and restructuring expenses of
$6.5 million and remediation and related expenses of $4.5 million.
Additionally, as previously discussed, the Company reported $5.0 million of
income related to a $9.2 million indemnity settlement, as well as a $0.5
million gain on foreign currency transactions in the full year of 2009. The
income before income taxes was $27.1 million. The income tax provision for
2009 was $7.6 million. Excluding the aforementioned items (net of tax
effects), year-to-date net income was $23.1 million, or $0.93 per diluted
share, compared to income of $13.6 million, or $0.51 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 $18.7 million for 2009 compared
to $20.8 million in the prior-year period.
Capital expenditures were $5.3 million during 2009 compared to $14.9
million in 2008.
The Company repurchased 488,700 shares of its stock in the first quarter of
2009 for a cost of approximately $4.3 million. The Company suspended its
share repurchase program in March 2009.
EBITDA and Management Adjusted EBITDA Performance
EBITDA for 2009 was $58.4 million compared to EBITDA of $22.3 million for
2008. Management adjusted EBITDA for 2009 was $65.3 million compared to
$49.0 million for 2008. Following the Company's entry into its new credit
facility, the Company has updated its calculation and presentation of an
adjusted EBITDA measure as compared to the adjusted EBITDA measure
presented in its previous 2009 quarterly earnings releases, as further
noted and presented in the non-GAAP reconciliation schedule attached at the
end of this press release.
Cost-Reduction Activities
The Company incurred acquisition, integration and restructuring charges of
$2.8 million in the three-month period ended December 31, 2009 and $6.5
million in total for 2009. These full-year charges are anticipated to
generate approximately $15.6 million in total annual savings (estimated
$8.9 million realized in 2009) and were part of the Company's previously
announced actions for 2009. In the Company's third-quarter 2009 earnings
release, the Company expected $12.8 million in annualized savings
(estimated $8.5 million during 2009) related to cost-reduction activities
initiated during 2009. Furthermore, as disclosed previously, the Company
enacted other specific 2009 cost-reduction actions, which reduced expenses
approximately $6.0 to $7.0 million for the year. The Company will continue
to evaluate opportunities for further cost-reduction activities, as they
arise.
Debt Update
During 2009, the Company reduced its total outstanding debt by $58.3
million ($13.2 million in the fourth quarter), to $77.6 million. The
reduction in debt was principally driven by cash flow from operations,
which included the effect of the indemnity settlement, as well as the
utilization of available international cash balances. At December 31, 2009,
the Company had $12.2 million of cash, as well as borrowing capacity of
$80.0 million under its former credit facility, of which approximately
$60.1 million was available. On January 12, 2010, the Company increased
its revolving credit facility to $90 million and extended its term to July
2012.
Conference Call
Schawk invites you to join its fourth-quarter 2009 earnings conference call
on Tuesday, March 16, 2010, at 9:00 a.m. Central time. To participate in
the conference call, please dial 888-396-2356 or
617-847-8709 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=2790225. If you are unavailable to
participate on the live call, a replay will be available through March 23
at 11:59 p.m. Central time. To access the replay, dial 888-286-8010 or
617-801-6888, enter conference ID 62222779, 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=2790225.
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 48
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
In addition to the presentation of EBITDA and Management adjusted EBITDA in
this release, the Company has presented certain other non-GAAP measures in
the attachment entitled "Reconciliation of Non-GAAP measures to GAAP."
Management believes that the presentation of these non-GAAP 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 by showing the effects of certain
non-operating items. These non-GAAP measures are reconciled to the closest
GAAP measures on the schedule attached to this press release. The non-GAAP
measures should not be viewed as alternatives to GAAP and may not be
consistent with similar measures provided by other companies. For the
Company's discussion of the use of EBITDA and Management adjusted EBITDA,
see the attached schedule entitled "Reconciliation of Non-GAAP EBITDA and
Management 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, our ability to maintain an effective system of
disclosure and remedy known internal controls and the discovery of any
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; changes in or
weak consumer confidence and consumer spending; unfavorable foreign
exchange rate fluctuations; 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 ability of the Company to comply with the financial covenants
contained in its debt agreements and obtain waivers or amendments in the
event of non-compliance with such covenants; 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 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.
Schawk, Inc.
Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Net sales $ 121,906 $ 108,895 $ 452,446 $ 494,184
Cost of sales 72,366 77,445 281,372 329,814
--------- --------- --------- ---------
Gross profit 49,540 31,450 171,074 164,370
Selling, general and
administrative expenses 33,352 39,018 130,576 148,596
Impairment of goodwill -- 48,041 -- 48,041
Indemnity settlement income -- -- (4,986) --
Acquisition integration and
restructuring expenses 2,813 5,274 6,459 10,390
Multiemployer pension
plan withdrawal expense 1,800 7,254 1,800 7,254
Impairment of long-lived assets 1,305 387 1,441 6,644
--------- --------- --------- ---------
Operating income (loss) 10,270 (68,524) 35,784 (56,555)
Other income (expense)
Interest income 311 90 535 291
Interest expense (2,428) (1,753) (9,225) (6,852)
--------- --------- --------- ---------
(2,117) (1,663) (8,690) (6,561)
--------- --------- --------- ---------
Income (loss) before income
taxes 8,153 (70,187) 27,094 (63,116)
Income tax provision 4,434 (11,821) 7,597 (3,110)
--------- --------- --------- ---------
Net income (loss) $ 3,719 ($ 58,366) $ 19,497 ($ 60,006)
========= ========= ========= =========
Earnings (loss) per share:
Basic $ 0.15 ($ 2.27) $ 0.78 ($ 2.24)
Diluted $ 0.15 ($ 2.27) $ 0.78 ($ 2.24)
Weighted average number of
common and common equivalent
shares outstanding:
Basic 25,053 25,741 24,966 26,739
Diluted 25,308 25,741 25,001 26,739
Dividends per Class A common
share $ 0.01 $ 0.0325 $ 0.0625 $ 0.13
Schawk, Inc.
Consolidated Balance Sheets
(In thousands, except share amounts)
December 31, December 31,
2009 2008
------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 12,167 $ 20,205
Trade accounts receivable, less allowance for
doubtful accounts of $1,619 in 2009 and
$3,138 in 2008 88,822 83,218
Inventories 20,536 23,617
Prepaid expenses and other current assets 8,192 11,243
Income tax receivable 2,565 3,348
Assets held for sale -- 6,555
Deferred income taxes 992 2,765
------------ ------------
Total current assets 133,274 150,951
Property and equipment, net 50,247 58,325
Goodwill 187,664 184,037
Other intangible assets, net 37,605 39,125
Deferred income taxes 1,424 2,752
Other assets 6,005 5,163
------------ ------------
Total assets $ 416,219 $ 440,353
============ ============
Liabilities and stockholders' equity
Current liabilities:
Trade accounts payable $ 16,957 $ 20,694
Accrued expenses 64,079 51,934
Deferred income taxes 205 82
Income taxes 14,600 --
Current portion of long-term debt 12,858 23,563
------------ ------------
Total current liabilities 108,699 96,273
------------ ------------
Long-term liabilities:
Long-term debt 64,707 112,264
Deferred income taxes 2,059 1,858
Other long-term liabilities 15,920 29,137
------------ ------------
Total long-term liabilities 82,686 143,259
------------ ------------
Stockholders' equity:
Common stock, $0.008 par value, 40,000,000
shares authorized, 29,855,796 and 29,478,456
shares issued at December 31, 2009 and 2008,
respectively, 25,108,894 and 25,218,566
shares outstanding at December 31, 2009 and
2008, respectively 220 217
Additional paid-in capital 191,701 187,801
Retained earnings 85,953 68,016
Accumulated comprehensive income, net 7,804 1,368
------------ ------------
285,678 257,402
Treasury stock, at cost, 4,746,902 and
4,259,890 shares of common stock at December
31, 2009 and 2008, respectively (60,844) (56,581)
------------ ------------
Total stockholders' equity 224,834 200,821
------------ ------------
Total liabilities and stockholders' equity $ 416,219 $ 440,353
============ ============
Schawk, Inc.
Segment Financial Data
(In Thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------- -------------------
2009 2008 2009 2008
-------- -------- -------- --------
Sales to external customers:
North America 104,991 96,967 390,713 425,055
Europe 18,537 13,733 67,409 71,040
Asia Pacific 8,658 6,081 29,348 28,630
Intercompany sales elimination (10,280) (7,886) (35,024) (30,541)
-------- -------- -------- --------
Sales to external customers $121,906 $108,895 $452,446 $494,184
Operating segment income (loss): (1)
North America 17,969 (10,648) 56,734 23,848
Europe 1,656 (37,166) 3,836 (37,324)
Asia Pacific 2,102 (1,263) 7,389 1,366
Corporate (11,457) (19,447) (32,175) (44,445)
-------- -------- -------- --------
Operating segment income (loss) $ 10,270 ($68,524) $ 35,784 ($56,555)
-------- -------- -------- --------
(1) 2008 Operating segment income, for all periods presented, reflects
goodwill impairment expense for North America, Europe and Asia Pacific
of $14.3 million, $32.7 million, and $1.0 million, respectively
Schawk, Inc.
Reconciliation of Non-GAAP measures to GAAP
(Unaudited)
(In Thousands, Except Share Amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------- --------------------
2009 2008 2009 2008
---------- --------- --------- ---------
Income (loss) before income
taxes - GAAP $ 8,153 ($ 70,187) $ 27,094 ($ 63,116)
Adjustments:
Impairment of goodwill -- 48,041 -- 48,041
Acquisition integration and
restructuring expenses 2,813 5,274 6,459 10,390
Multiemployer pension plan
withdrawal expense 1,800 7,254 1,800 7,254
Remediation and related
expenses 441 2,860 4,484 6,813
Impairment of long-lived
assets 1,305 387 1,441 6,644
Indemnity settlement income -- -- (4,986) --
Foreign currency (gain) loss 547 2,885 (542) 4,268
---------- --------- --------- ---------
Adjusted income before income
tax - non GAAP 15,059 (3,486) 35,750 20,294
Adjusted income tax provision -
non GAAP 7,007 (2,527) 12,639 6,700
---------- --------- --------- ---------
Adjusted net income - non GAAP $ 8,052 ($ 959) $ 23,111 $ 13,594
========== ========= ========= =========
Weighted average common and
common stock equivalents
outstanding - GAAP 25,308 25,741 25,001 26,739
========== ========= ========= =========
Earnings per diluted share -
GAAP $ 0.15 ($ 2.27) $ 0.78 ($ 2.24)
Adjustments - net of tax
effects:
Impairment of goodwill -- 1.77 -- 1.70
Acquisition integration and
restructuring expenses 0.07 0.13 0.17 0.25
Multiemployer pension plan
withdrawal expense 0.04 0.17 0.04 0.16
Remediation and related
expenses 0.01 0.09 0.11 0.17
Impairment of long-lived
assets 0.03 0.01 0.04 0.16
Indemnity settlement income -- -- (0.20) --
Foreign currency (gain) loss 0.02 0.08 (0.01) 0.12
Uncertain tax positions and
other discrete tax
adjustments -- (0.02) -- 0.18
---------- --------- --------- ---------
Adjusted earnings per diluted
share - non GAAP $ 0.32 ($ 0.04) $ 0.93 $ 0.51
========== ========= ========= =========
Income tax provision (benefit)
- GAAP $ 4,434 ($ 11,821) $ 7,597 ($ 3,110)
Adjustments:
Impairment of goodwill -- 2,480 -- 2,480
Acquisition integration and
restructuring expenses 1,021 1,864 2,166 3,637
Multiemployer pension plan
withdrawal expense 715 2,880 715 2,880
Remediation and related
expenses 175 662 1,781 2,231
Impairment of long-lived
assets 518 135 563 2,325
Indemnity settlement income -- -- -- --
Foreign currency (gain) loss 144 721 (183) 1,067
Uncertain tax positions and
other discrete tax
adjustments -- 552 -- (4,810)
---------- --------- --------- ---------
Adjusted income tax provision -
non GAAP $ 7,007 ($ 2,527) $ 12,639 $ 6,700
========== ========= ========= =========
Schawk, Inc.
Reconciliation of Non-GAAP EBITDA and Management Adjusted EBITDA
(Unaudited)
(In Thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------- --------------------
2009 2008 2009 2008
---------- --------- ---------- ---------
Net income (loss) - GAAP $ 3,719 ($ 58,366) $ 19,497 ($ 60,006)
Interest expense 2,428 1,753 9,225 6,852
Income tax expense (benefit) 4,434 (11,821) 7,597 (3,110)
---------- --------- ---------- ---------
Adjusted Income (loss) - non
GAAP $ 10,581 ($ 68,434) $ 36,319 ($ 56,264)
Depreciation and amortization
expense 4,444 4,688 18,653 20,751
Impairment of goodwill -- 48,041 -- 48,041
Impairment of long-lived assets 1,305 387 1,441 6,644
Non-cash restructuring
charge -- 36 210 628
Unrealized foreign currency
(gain) loss -- 1,097 -- 1,097
Stock based compensation 447 1,385 1,737 1,385
---------- --------- ---------- ---------
EBITDA - non GAAP $ 16,777 ($ 12,800) $ 58,360 $ 22,282
Permitted add backs on debt
covenants:
(Gain) loss on sale of property
and equipment -- 524 -- 362
Proforma effect of acquisitions
and asset sales (1) -- 2,027 -- 2,519
Acquisition integration and
restructuring expenses (2) -- 5,238 3,000 9,762
Multiemployer pension plan
withdrawal expense -- 7,254 -- 7,254
---------- --------- ---------- ---------
EBITDA for covenant compliance
- non GAAP (3) $ 16,777 $ 2,243 $ 61,360 $ 42,179
Acquisition integration and
restructuring expenses 2,813 -- 3,248 --
Multiemployer pension plan
withdrawal expense 1,800 -- 1,800 --
Indemnity settlement income -- -- (4,986) --
Unrealized foreign currency
(gain) loss 1,008 -- (566) --
Remediation and related
expenses 441 2,860 4,484 6,813
---------- --------- ---------- ---------
Management adjusted EBITDA -
non GAAP $ 22,839 $ 5,103 $ 65,340 $ 48,992
========== ========= ========== =========
(1) In previous 2009 quarterly earnings releases, this was referred to as
Permitted acquisitions.
(2) 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.
(3) The calculation of EBITDA for covenant compliance is calculated based
upon the company's January 2010 debt agreements. This measurement,
adjusted for the 2009 effects of Unrealized foreign currency (gain)
loss and effects of 2009 (Gain) loss on sale of property and equipment
($0 for the fourth quarter and $115 for the full-year 2009), would
reconcile to Adjusted EBITDA presented in previous 2009 quarterly press
releases. Adjusted EBITDA, as presented and calculated under previous
2009 quarterly press releases, would be $17.8 million for the fourth
quarter and $60.9 million for the full year of 2009.
Use of Non-GAAP EBITDA, EBITDA for covenant compliance, and Management
adjusted EBITDA
EBITDA is defined as earnings before interest, income taxes, depreciation
and amortization, and other certain non-cash items. EBITDA for covenant
compliance, as defined in the Company's January 2010 debt agreements, is
defined as EBITDA adjusted to exclude 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 an
important measurement which provides management, as well as investors, with
a consistent measurement tool for evaluating 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. In previous quarterly earnings releases for
2009, the Company showed EBITDA and Adjusted EBITDA calculations consistent
with the amended debt agreements from its June 2009 debt amendments.
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