M & F Worldwide Corp. to Hold Conference Call on November 12, 2009
NEW YORK, Nov. 6 /PRNewswire-FirstCall/ -- M & F Worldwide Corp. ("M & F
Worldwide" or the "Company") (NYSE: MFW) today reported results for the third
quarter and nine months ended September 30, 2009. Additionally, M & F
Worldwide filed its quarterly report on Form 10-Q with the Securities and
Exchange Commission today.
M & F Worldwide will host a conference call to discuss its third quarter and
year-to-date 2009 results on November 12, 2009, at 9:00 a.m. (EST). The
conference call will be accessible by dialing (800) 230-1951 in the United
States and (612) 288-0337 internationally. For those unable to listen live, a
replay of the call will be available by dialing (800) 475-6701 in the United
States and (320) 365-3844 internationally; Access Code: 120099. The replay
will be available from 11:00 a.m. (EST) Thursday, November 12, 2009, through
11:59 p.m. (EST) Thursday, November 26, 2009.
Third Quarter 2009 Highlights
-- Net revenues of $450.7 million, down 6.6% as compared to the third
quarter of 2008
-- Operating income of $91.6 million, up 19.4% as compared to the third
quarter of 2008
-- Non-GAAP adjusted net income of $36.2 million, or $1.87 per non-GAAP
diluted share, excluding the impact of a gain on early extinguishment
of
debt
Third Quarter 2009 Performance
Consolidated Results
Consolidated net revenues decreased by $31.6 million, or 6.6%, to $450.7
million for the third quarter of 2009 from $482.3 million for the third
quarter of 2008. The decrease was primarily due to a decrease in net revenues
for the Harland Clarke segment of $17.7 million.
Non-GAAP adjusted net income was $36.2 million for the third quarter of 2009,
or $1.87 per non-GAAP diluted share, excluding the impact of a gain on early
extinguishment of debt. Net income increased by $16.4 million, or 81.6% to
$36.5 million for the third quarter of 2009, or $1.88 per diluted share, from
$20.1 million, or $1.04 per diluted share, for the third quarter of 2008. The
increase in net income and earnings per share reflects an increase in
operating income of $14.9 million ($9.1 million after tax), primarily due to
reductions in selling, general and administrative expenses and a decrease in
interest expense of $13.2 million ($8.1 million after tax), primarily due to
lower interest rates on variable rate debt.
Adjusted EBITDA increased by $14.4 million, or 11.8%, to $136.8 million for
the third quarter of 2009 from $122.4 million for the third quarter of 2008.
Adjusted EBITDA is a non-GAAP measure that is defined in the footnotes to this
release and reconciled to net income, the most directly comparable GAAP
measure, in the accompanying financial tables.
Segment Results
Net revenues for the Harland Clarke segment decreased by $17.7 million, or
5.5%, to $305.0 million for the third quarter of 2009 from $322.7 million for
the third quarter of 2008. The decrease in net revenues was primarily due to
volume declines from check and related products, which the Company believes
was partially affected by the economic downturn. Declines in volumes were
partially offset by increased revenues per unit. Operating income for the
Harland Clarke segment increased by $12.4 million, or 21.8%, to $69.4 million
for the third quarter of 2009 from $57.0 million for the third quarter of
2008. The increase in operating income was largely driven by increased
revenues per unit, reductions in labor costs, general overhead costs and
integration-related costs, and a decrease in depreciation and amortization,
which more than offset volume declines, inflation in delivery and material
costs, and a $2.8 million increase in restructuring costs. Operating income
for the third quarter of 2009 and 2008 includes restructuring costs of $3.4
million and $0.6 million, respectively.
Net revenues for the Harland Financial Solutions segment decreased by $4.9
million, or 6.7%, to $67.9 million for the third quarter of 2009 from $72.8
million for the third quarter of 2008. Net revenues from the enterprise
solutions product lines decreased $3.0 million, primarily due to declines in
license, hardware, and professional services revenues. Additionally, there
was a decrease in early termination fees in the third quarter of 2009 as
compared to the third quarter of 2008. Net revenues from the risk management
product lines decreased $1.4 million, primarily due to declines in lending
products. The Company believes the declines were partially affected by the
economic downturn, which has negatively affected information technology
purchases by financial institutions. Operating income for the Harland
Financial Solutions segment increased by $1.5 million, or 18.8%, to $9.5
million for the third quarter of 2009 from $8.0 million for the third quarter
of 2008. The increase in operating income was primarily due to labor cost
reductions, decreases in general overhead costs, and a $1.3 million reduction
in compensation expense related to an incentive agreement from an acquisition,
partially offset by the decrease in net revenues and a $0.8 million increase
in restructuring costs. Operating income for the third quarter of 2009
includes charges of $0.8 million for compensation expense related to an
incentive agreement from an acquisition and $0.9 million for restructuring
costs. Operating income for the third quarter of 2008 includes charges of
$2.1 million for compensation expense related to an incentive agreement from
an acquisition and $0.1 million for restructuring costs.
Net revenues for the Scantron segment decreased by $5.7 million, or 9.7%, to
$52.9 million for the third quarter of 2009 from $58.6 million for the third
quarter of 2008. The decrease in net revenues was primarily due to volume
declines in hardware and forms products and a decrease in service and
maintenance revenues. The Company believes these product lines and services
were partially affected by the economic downturn. Operating income for the
Scantron segment increased by $2.1 million, or 23.3%, to $11.1 million in the
third quarter of 2009 from $9.0 million in the third quarter of 2008. The
increase in operating income was primarily due to cost reductions and a
decrease in integration-related costs from the Data Management acquisition and
other restructuring activities and a $0.7 million decrease in restructuring
costs, partially offset by volume declines. Operating income for the third
quarter of 2008 includes restructuring costs of $0.7 million.
Net revenues for the Licorice Products segment, operated by Mafco Worldwide,
decreased by $3.3 million, or 11.7%, to $25.0 million for the third quarter of
2009 from $28.3 million for the third quarter of 2008. The decline in net
revenues was due to lower shipment volumes for all of Mafco Worldwide's
products, primarily from order shipment timing, continued worldwide
consumption declines in tobacco products using licorice and the continued
rationalization of inventories by Altria, Inc. ("Altria") and Philip Morris
International, Inc. ("PMI") subsequent to Altria's spin-off of PMI in 2008.
Operating income for the Licorice Products segment decreased by $1.1 million,
or 12.1%, to $8.0 million for the third quarter of 2009 from $9.1 million for
the third quarter of 2008. The decrease in operating income was primarily due
to the decline in net revenues and increased raw material costs.
Year-to-Date 2009 Performance
Consolidated Results
Consolidated net revenues decreased by $72.3 million, or 5.0%, to $1,366.9
million for the nine months ended September 30, 2009 from $1,439.2 million for
the nine months ended September 30, 2008. The decrease was primarily due to a
decrease in net revenues for the Harland Clarke segment of $57.4 million,
partially offset by an increase in net revenues of $14.6 million due to the
acquisition of Data Management I LLC by the Scantron segment on February 22,
2008.
Non-GAAP adjusted net income was $78.6 million for the nine months ended
September 30, 2009, or $4.07 per non-GAAP diluted share, excluding the impact
of a gain on early extinguishment of debt. Net income increased by $65.0
million, or 125.2%, to $116.9 million, or $6.02 per diluted share, for the
nine months ended September 30, 2009 from $51.9 million, or $2.52 per diluted
share, for the nine months ended September 30, 2008. Net income for the nine
months ended September 30, 2009 includes a $62.0 million ($38.3 million after
tax) gain on early extinguishment of debt related to the purchase of $116.2
million principal amount of Harland Clarke Holdings Corp. Senior Notes for
aggregate consideration of $50.6 million. The increase in net income and
earnings per share also reflects a decrease in interest expense of $35.0
million ($21.4 million after tax), primarily due to lower interest rates on
variable rate debt and an increase in operating income of $7.8 million ($4.8
million after tax), primarily due to reductions in selling, general and
administrative expenses, partially offset by an increase in restructuring
costs of $22.3 million ($13.6 million after tax). The increase in earnings
per share also reflects fewer weighted average shares of common stock
outstanding due to the Company's repurchase of 2.0 million shares in the
second quarter of 2008.
Adjusted EBITDA increased by $19.2 million, or 5.3%, to $385.0 million for the
nine months ended September 30, 2009 from $365.8 million for the nine months
ended September 30, 2008. Adjusted EBITDA is a non-GAAP measure that is
defined in the footnotes to this release and reconciled to net income, the
most directly comparable GAAP measure, in the accompanying financial tables.
Segment Results
Net revenues for the Harland Clarke segment decreased by $57.4 million, or
5.8%, to $926.4 million for the nine months ended September 30, 2009 from
$983.8 million for the nine months ended September 30, 2008. The decrease in
net revenues was primarily due to volume declines from check and related
products, which the Company believes was partially affected by the economic
downturn, as well as one less production day in the nine months ended
September 30, 2009. Declines in volumes were partially offset by increased
revenues per unit. Additionally, there was $0.7 million of revenue from
contract termination fees for the nine months ended September 30, 2009
compared to $2.3 million for the nine months ended September 30, 2008.
Operating income for the Harland Clarke segment decreased by $0.8 million, or
0.5%, to $172.6 million for the nine months ended September 30, 2009 from
$173.4 million for the nine months ended September 30, 2008. The decrease in
operating income was largely driven by a $20.4 million increase in
restructuring costs, volume declines, inflation in delivery and materials
costs, one less production day in the nine months ended September 30, 2009 and
a $1.6 million reduction in revenue from contract termination fees, which were
essentially offset by increased revenues per unit, and reductions in labor
costs, general overhead costs and integration-related costs. Operating income
for the nine months ended September 30, 2009 and 2008 includes restructuring
costs of $21.8 million and $1.4 million, respectively.
Net revenues for the Harland Financial Solutions segment decreased by $11.1
million, or 5.1%, to $206.8 million for the nine months ended September 30,
2009 from $217.9 million for the nine months ended September 30, 2008. Net
revenues from the enterprise solutions product lines decreased $9.5 million,
primarily due to declines in license, hardware, and professional services
revenues. Additionally, there was a decrease in early termination fees for
the nine months ended September 30, 2009 as compared to the nine months ended
September 30, 2008. Net revenues from the risk management product lines
decreased $1.0 million, primarily due to declines in mortgage products,
partially offset by organic growth in lending products. The Company believes
the declines were partially affected by the economic downturn, which has
negatively affected information technology purchases by financial
institutions. Operating income for the Harland Financial Solutions segment
increased by $7.3 million, or 35.1%, to $28.1 million for the nine months
ended September 30, 2009 from $20.8 million for the nine months ended
September 30, 2008. The increase in operating income was primarily due to
labor cost reductions, decreases in general overhead costs and a $4.3 million
decrease in compensation expense related to an incentive agreement for an
acquisition, partially offset by the decrease in net revenues and a $1.1
million increase in restructuring costs. Operating income for the nine months
ended September 30, 2009 includes charges of $2.9 million for compensation
expense related to an incentive agreement from an acquisition and $4.1 million
for restructuring costs. Operating income for the nine months ended September
30, 2008 includes charges of $7.2 million for compensation expense related to
an incentive agreement from an acquisition and $3.0 million for restructuring
costs.
Net revenues for the Scantron segment increased by $3.1 million, or 2.0%, to
$158.0 million for the nine months ended September 30, 2009 from $154.9
million for the nine months ended September 30, 2008. The Data Management
acquisition accounted for an increase of $14.6 million. The remaining $11.5
million decrease was as a result of volume declines in hardware and forms
products, partially offset by organic growth in software products. The
Company believes the hardware and forms product lines were partially affected
by the economic downturn. Operating income for the Scantron segment increased
by $5.4 million, or 28.1%, to $24.6 million for the nine months ended
September 30, 2009 from $19.2 million for the nine months ended September 30,
2008. The increase in operating income was partially due to the Data
Management acquisition, which accounted for an increase of $1.9 million. The
remaining $3.5 million increase was primarily due to cost reductions and a
decrease in integration-related costs from the Data Management acquisition and
other restructuring activities, partially offset by volume declines and a $0.8
million increase in restructuring costs. The nine months ended September 30,
2009 includes $1.3 million in one-time expenses related to a contractual
obligation owing to a former employee upon termination of employment.
Operating income for the nine months ended September 30, 2009 and 2008
includes restructuring costs of $3.1 million and $2.3 million, respectively.
Net revenues for the Licorice Products segment, operated by Mafco Worldwide,
decreased by $7.1 million, or 8.5%, to $76.2 million for the nine months ended
September 30, 2009 from $83.3 million for the nine months ended September 30,
2008. The decline in net revenues was due to lower shipment volumes for all
of Mafco Worldwide's products, primarily from order shipment timing, continued
worldwide consumption declines in tobacco products using licorice and the
continued rationalization of inventories by Altria and PMI subsequent to
Altria's spin-off of PMI in 2008. Operating income for the Licorice Products
segment decreased by $4.9 million, or 16.8%, to $24.3 million for the nine
months ended September 30, 2009 from $29.2 million for the nine months ended
September 30, 2008. The decrease in operating income was primarily due to the
decline in net revenues and increased raw material costs.
About M & F Worldwide
M & F Worldwide has four business segments, which are operated by Harland
Clarke, Harland Financial Solutions, Scantron and Mafco Worldwide. Harland
Clarke provides checks and related products and direct marketing services to
financial institutions and their customers. The operations of Harland
Financial Solutions include core processing, retail and lending software
solutions. Scantron is a leading provider of data management solutions and
testing and assessment products and services sold primarily to educational and
commercial customers. Mafco Worldwide produces licorice products for sale to
the tobacco, food, pharmaceutical and confectionery industries.
Forward-Looking Statements
This press release contains forward-looking statements that reflect
management's current assumptions and estimates of future performance and
economic conditions, which are forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. These statements are
subject to a number of risks and uncertainties, many of which are beyond M & F
Worldwide's control. All statements other than statements of historical facts
included in this press release, including those regarding M & F Worldwide's
strategy, future operations, financial position, estimated revenues, projected
costs, projections, prospects, plans and objectives of management, are
forward-looking statements. When used in this press release, the words
"believes," "anticipates," "plans," "expects," "intends," "estimates" or
similar expressions are intended to identify forward-looking statements,
although not all forward-looking statements contain such identifying words.
All forward-looking statements speak only as of the date of this press
release. Although M & F Worldwide believes that its plans, intentions and
expectations reflected in or suggested by the forward-looking statements made
in this press release are reasonable, such plans, intentions or expectations
may not be achieved. In addition to factors described in M & F Worldwide's
Securities and Exchange Commission filings and others, the following factors
may cause M & F Worldwide's actual results, performance or achievements to be
materially different from any future results, performance or achievements
expressed or implied by the forward-looking statements contained in this press
release include: (1) economic, climatic or political conditions in countries
in which Mafco Worldwide sources licorice root; (2) economic, regulatory or
political conditions that have an impact on the worldwide tobacco industry or
on the consumption of tobacco products in which licorice products are used;
(3) the failure of third parties to make full and timely payment to M & F
Worldwide for environmental, asbestos, tax and other matters for which M & F
Worldwide is entitled to indemnification; (4) unfavorable foreign currency
fluctuations; (5) difficult conditions in financial markets, the downturn in
and potential worsening of general economic and market conditions and the
impact of the credit crisis; (6) M & F Worldwide's substantial indebtedness;
(7) covenant restrictions under M & F Worldwide's indebtedness that may limit
its ability to operate its business and react to market changes; (8) the
maturity of the principal industry in which the Harland Clarke segment
operates and trends in the paper check industry, including a faster than
anticipated decline in check usage due to increasing use of alternative
payment methods, a decline in consumer confidence and/or checking account
openings and other factors, and our ability to grow non-check-related product
lines; (9) consolidation among or failure of financial institutions, decreased
spending by financial institutions on our products and services and other
adverse changes among the large clients on which M & F Worldwide depends,
resulting in decreased revenues and/or pricing pressure; (10) the ability to
retain M & F Worldwide's clients; (11) the ability to retain M & F Worldwide's
key employees and management; (12) lower than expected cash flow from
operations; (13) significant increases in interest rates; (14) intense
competition in all areas of M & F Worldwide's business; (15) interruptions or
adverse changes in M & F Worldwide's supplier relationships, technological
capacity, intellectual property matters, and applicable laws; (16) decreases
to educational budgets as a result of the continued general economic downturn
and the resulting impact on Scantron's customers; (17) variations in
contemplated brand strategies, business locations, management positions and
other business decisions in connection with integrating acquisitions; (18) M &
F Worldwide's ability to successfully integrate and manage future
acquisitions; (19) M & F Worldwide's ability to implement any or all
components of its business strategy or realize all of its expected cost
savings or synergies from acquisitions; (20) acquisitions otherwise not being
successful from a financial point of view, including, without limitation, due
to any difficulties with M & F Worldwide's servicing its debt obligations; and
(21) weak economic conditions and declines in the financial performance of our
businesses that may result in material impairment charges.
You should read carefully the factors described in M & F Worldwide's Annual
Report on Form 10-K for the year ended December 31, 2008 for a description of
risks that could, among other things, cause actual results to differ from
these forward-looking statements.
Non-GAAP Financial Measures
In this release, M & F Worldwide presents certain adjusted financial measures
that are not calculated according to generally accepted accounting principles
in the United States ("GAAP"). These non-GAAP financial measures are designed
to complement the GAAP financial information presented in this release because
management believes they present information regarding M & F Worldwide that
management believes is useful to investors. The non-GAAP financial measures
presented should not be considered in isolation from or as a substitute for
the comparable GAAP financial measure.
Non-GAAP Adjusted Net Income
Non-GAAP adjusted net income represents GAAP net income, adjusted to eliminate
the gain on early extinguishment of debt and related taxes from the
repurchases of Harland Clarke Holdings Corp. Senior Notes at a discount to
their principal amount. M & F Worldwide is presenting non-GAAP adjusted net
income as a measure of its financial performance because it believes
presenting non-GAAP adjusted net income will allow investors to better
understand the operating results of M & F Worldwide, since the gain on early
extinguishment of debt does not result from changes in the underlying business
operations of M & F Worldwide. Management of M & F Worldwide uses non-GAAP
adjusted net income to evaluate the operational results and financial
performance of M & F Worldwide in a manner similar to the manner in which it
uses GAAP net income.
EBITDA and Adjusted EBITDA
EBITDA represents net income before interest income and expense, income taxes,
depreciation and amortization (other than amortization related to contract
acquisition payments). M & F Worldwide presents EBITDA because it believes it
is an important measure of its performance and believes it is frequently used
by securities analysts, investors and other interested parties in the
evaluation of companies in M & F Worldwide's industries.
M & F Worldwide believes EBITDA provides useful information with respect to
its ability to meet its future debt service, capital expenditures, working
capital requirements and overall operating performance, although EBITDA should
not be considered as a measure of liquidity. In addition, M & F Worldwide
utilizes EBITDA when interpreting operating trends and results of operations
of its business.
M & F Worldwide also uses EBITDA for the following purposes: Mafco Worldwide's
and Harland Clarke Holdings' senior credit facilities use EBITDA (with
additional adjustments) to measure compliance with financial covenants such as
debt incurrence. M & F Worldwide's subsidiaries executive compensation is
based on EBITDA (with additional adjustments) performance measured against
targets. EBITDA is also widely used by M & F Worldwide and others in its
industry to evaluate and value potential acquisition candidates. EBITDA has
limitations as an analytical tool, and you should not consider it in isolation
or as a substitute for analysis of our results as reported under GAAP. See
below for a description of these limitations. Because of these limitations,
EBITDA should not be considered as a measure of discretionary cash available
to M & F Worldwide to invest in the growth of its business.
In addition, in evaluating EBITDA, you should be aware that in the future M &
F Worldwide may incur expenses such as those excluded in calculating it. M & F
Worldwide's presentation of this measure should not be construed as an
inference that its future results will be unaffected by unusual or
non-recurring items.
EBITDA has limitations as an analytical tool, and you should not consider it
in isolation or as a substitute for analysis of our results as reported under
GAAP. Some of these limitations are:
-- it does not reflect M & F Worldwide's cash expenditures and future
requirements for capital expenditures or contractual commitments;
-- it does not reflect changes in, or cash requirements for, M & F
Worldwide's working capital needs;
-- it does not reflect the significant interest expense or the cash
requirements necessary to service interest or principal payments on M
&
F Worldwide's debt;
-- although depreciation and amortization are non-cash charges, the
assets
being depreciated and amortized will often have to be replaced in the
future, and EBITDA does not reflect any cash requirements for such
replacements;
-- it is not adjusted for all non-cash income or expense items that are
reflected in M & F Worldwide's statements of cash flows; and
-- other companies in M & F Worldwide's industries may calculate EBITDA
differently from M & F Worldwide, limiting its usefulness as a
comparative measure.
Because of these limitations, EBITDA should not be considered as a measure of
discretionary cash available to invest in the growth of M & F Worldwide's
business or as a measure of cash that will be available to M & F Worldwide to
meet its obligations. You should compensate for these limitations by relying
primarily on M & F Worldwide's GAAP results and using EBITDA only
supplementally.
M & F Worldwide presents Adjusted EBITDA as a supplemental measure of its
performance. M & F Worldwide prepares Adjusted EBITDA by adjusting EBITDA to
reflect the impact of a number of items it does not consider indicative of M &
F Worldwide's ongoing operating performance. Such items include, but are not
limited to, gain on early extinguishment of debt, restructuring costs,
deferred purchase price compensation related to an acquisition and
non-recurring purchase accounting adjustments. You are encouraged to evaluate
each adjustment and the reasons M & F Worldwide considers them appropriate for
supplemental analysis. As an analytical tool, Adjusted EBITDA is subject to
all of the limitations applicable to EBITDA. In addition, in evaluating
Adjusted EBITDA, you should be aware that in the future, M & F Worldwide may
incur expenses, including cash expenses, similar to the adjustments in this
presentation. M & F Worldwide's presentation of Adjusted EBITDA should not be
construed as an inference that its future results will be unaffected by
unusual or non-recurring items.
- tables to follow -
M & F Worldwide Corp. and Subsidiaries
Consolidated Statements of Income
(in millions, except per share data)
(unaudited)
---------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
--------------- ---------------
2009 2008 2009 2008
---- ---- ---- ----
Product revenues, net $379.3 $404.6 $1,145.5 $1,214.7
Service revenues, net 71.4 77.7 221.4 224.5
---- ---- ----- -----
Total net revenues 450.7 482.3 1,366.9 1,439.2
Cost of products sold 222.4 247.0 682.8 736.2
Cost of services provided 36.4 40.7 114.3 116.9
---- ---- ----- -----
Total cost of revenues 258.8 287.7 797.1 853.1
----- ----- ----- -----
Gross profit 191.9 194.6 569.8 586.1
Selling, general and
administrative expenses 96.0 116.5 310.9 357.3
Restructuring costs 4.3 1.4 29.0 6.7
--- --- ---- ---
Operating income 91.6 76.7 229.9 222.1
Interest income 0.3 0.7 1.2 3.5
Interest expense (33.2) (46.4) (108.0) (143.0)
Gain on early extinguishment
of debt 0.5 - 62.0 -
Other (expense) income, net (0.1) - 0.7 1.3
----- --- --- ---
Income before income taxes
and extraordinary gain 59.1 31.0 185.8 83.9
Provision for income taxes 22.6 10.9 68.9 32.7
---- ---- ---- ----
Net income before
extraordinary gain 36.5 20.1 116.9 51.2
Extraordinary gain - - - 0.7
--- --- --- ---
Net income $36.5 $20.1 $116.9 $51.9
===== ===== ====== =====
Earnings per common share
before extraordinary gain:
Basic $1.89 $1.04 $6.05 $2.48
===== ===== ===== =====
Diluted $1.88 $1.04 $6.02 $2.48
===== ===== ===== =====
Extraordinary gain per common
share:
Basic $- $- $- $0.04
=== === === =====
Diluted $- $- $- $0.04
=== === === =====
Earnings per common share:
Basic $1.89 $1.04 $6.05 $2.52
===== ===== ===== =====
Diluted $1.88 $1.04 $6.02 $2.52
===== ===== ===== =====
Weighted average number of
shares used in per share
calculations:
Basic shares 19.3 19.2 19.3 20.4
==== ==== ==== ====
Diluted shares 19.4 19.2 19.3 20.4
==== ==== ==== ====
M & F Worldwide Corp. and Subsidiaries
Business Segment Information
(in millions)
(unaudited)
---------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
--------------- ---------------
2009 2008 2009 2008
---- ---- ---- ----
Net revenues
Harland Clarke segment $305.0 $322.7 $926.4 $983.8
Harland Financial
Solutions segment 67.9 72.8 206.8 217.9
Scantron segment 52.9 58.6 158.0 154.9
Licorice Products segment 25.0 28.3 76.2 83.3
Eliminations (0.1) (0.1) (0.5) (0.7)
----- ----- ----- -----
Total net revenues $450.7 $482.3 $1,366.9 $1,439.2
====== ====== ======== ========
Operating income
Harland Clarke segment $69.4 $57.0 $172.6 $173.4
Harland Financial
Solutions segment 9.5 8.0 28.1 20.8
Scantron segment 11.1 9.0 24.6 19.2
Licorice Products segment 8.0 9.1 24.3 29.2
Corporate (6.4) (6.4) (19.7) (20.5)
----- ----- ------ ------
Total operating income $91.6 $76.7 $229.9 $222.1
===== ===== ====== ======
Reconciliation of net income to Non-GAAP adjusted net income (in
millions, except per share amounts):
(unaudited)
-----------------------------
Three Months Nine Months
Ended Ended
September 30, September 30,
2009 2009
-------------- -------------
Net income $36.5 $116.9
Less: gain on early extinguishment of
debt, net of taxes of $0.2 and $23.7,
respectively (a) (0.3) (38.3)
----- ------
Non-GAAP adjusted net income $36.2 $78.6
===== =====
Diluted non-GAAP net income per share $1.87 $4.07
===== =====
Diluted GAAP net income per share $1.88 $6.02
===== =====
Weighted average number of shares used in
diluted per share calculations 19.4 19.3
==== ====
(a) Reflects gain from the purchase of Harland Clarke Holdings bonds
at less than their principal amount.
Reconciliation of net income to EBITDA and EBITDA to Adjusted EBITDA
(in millions):
(unaudited)
---------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
--------------- ---------------
2009 2008 2009 2008
---- ---- ---- ----
Net income $36.5 $20.1 $116.9 $51.9
Interest expense, net 32.9 45.7 106.8 139.5
Provision for income taxes 22.6 10.9 68.9 32.7
Depreciation and amortization 40.1 41.8 122.1 125.4
---- ---- ----- -----
EBITDA 132.1 118.5 414.7 349.5
Adjustments:
Restructuring costs (a) 4.3 1.4 29.0 6.7
Deferred purchase price
compensation (b) 0.8 2.1 2.9 7.2
Impairment of intangible
assets (c) - - - 0.5
Gain on early
extinguishment of debt (d) (0.5) - (62.0) -
Extraordinary gain (e) - - - (0.7)
Impact of purchase
accounting adjustments (f) 0.1 0.4 0.4 2.6
--- --- --- ---
Adjusted EBITDA $136.8 $122.4 $385.0 $365.8
====== ====== ====== ======
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(a) Reflects restructuring costs, including adjustments, recorded in
accordance with GAAP, consisting primarily of severance, post-closure
facility expenses and other related expenses, which were not recorded
in purchase accounting.
(b) Reflects charges accrued under a deferred purchase price agreement
required to be recorded as compensation expense in selling, general
and administrative expense resulting from an acquisition.
(c) Reflects a non-cash impairment charge from the write-down of Alcott
Routon intangible assets.
(d) Reflects gain from the purchase of Harland Clarke Holdings bonds at
less than their principal amount.
(e) Reflects a non-recurring extraordinary gain.
(f) Reflects the non-cash fair value deferred revenue and inventory
adjustments related to purchase accounting.
SOURCE M & F Worldwide Corp.
Christine Taylor, +1-212-572-5988
