NEW YORK,
Nov. 3, 2011 /PRNewswire/ -- 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, 2011. 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 2011 results on November 10, 2011, at
9:00 a.m. (EST). The conference call
will be accessible by dialing (800) 230-1085 in the United States and (612) 288-0329
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: 221553. The replay will be available
from 11:00 a.m. (EST) Thursday,
November 10, 2011, through 11:59
p.m. (EST) Thursday, November 24, 2011.
Third Quarter 2011 Highlights
- Net revenues of $438.3 million,
down $1.6 million, or 0.4%, as
compared to the third quarter of 2010.
- Operating income of $86.8
million, up $13.2 million, or
17.9%, as compared to the third quarter of 2010, due to a
$19.5 million non-cash gain for the
changes in fair value of contingent consideration arrangements
related to recent acquisitions primarily as a result of a reduction
in anticipated revenues for 2011.
- Net income of $44.5 million, up
$14.3 million, or 47.4%, as compared
to the third quarter of 2010. Net income for the third quarter of
2011 includes a $19.5 million
non-cash gain for changes in the fair value of contingent
consideration arrangements, of which $19.2
million is not subject to income taxes.
Third Quarter 2011 Performance
Consolidated Results
Consolidated net revenues decreased by $1.6 million, or 0.4%, to $438.3 million for the third quarter of 2011 from
$439.9 million for the third quarter
of 2010. The decrease was due to lower net revenues at the Harland
Clarke and Scantron segments, in part due to volume declines of
certain products and services, partially of offset by increases in
net revenues of $2.2 million for the
Licorice Products segment and $1.5
million for the Harland Financial Solutions segment, as
further described below.
Operating income increased by $13.2
million, or 17.9%, to $86.8
million for the third quarter of 2011 from $73.6 million for the third quarter of 2010. The
increase was primarily due to decreases in the fair value of
accrued contingent consideration related to the GlobalScholar
acquisition at the Scantron segment and the Parsam acquisition at
the Harland Financial Solutions segment that resulted in a non-cash
gain of $19.5 million. The reduction
in the fair value of accrued contingent consideration was the
result of revenue projections that fall below the threshold amount
that would trigger a payment. In addition, an increase in operating
income for the Harland Clarke segment of $14.8 million was substantially offset by
additional costs incurred at the Scantron segment, which were
primarily associated with the GlobalScholar and Spectrum K12
acquisitions, deferral of revenue as further described in Segment
Results for Scantron below and increased costs for the Corporate
segment.
Net income increased by $14.3
million, or 47.4%, to $44.5
million for the third quarter of 2011 from $30.2 million for the third quarter of 2010. The
increase was primarily due to a $19.5
million non-cash gain for changes in the fair value of
contingent consideration arrangements, of which $19.2 million is not subject to income taxes.
Adjusted EBITDA decreased by $8.4
million, or 6.9%, to $112.8
million for the third quarter of 2011 from $121.2 million for the third quarter of 2010.
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
$6.7 million, or 2.3%, to
$283.2 million for the third quarter
of 2011 from $289.9 million for the
third quarter of 2010. The decrease was primarily due to volume
declines, net of client additions and losses, in check and related
products that reduced net revenues by $6.4
million, as well as a decline in non-check revenues,
primarily resulting from a decline in sales of a survey solution to
assist financial institutions with the implementation of new
federal regulations in 2010 that also reduced net revenues by
$6.1 million. The decline was
partially offset by an increase in revenues per unit, which
increased net revenues by $6.7
million. Operating income for the Harland Clarke segment
increased by $14.8 million, or
29.0%, to $65.8 million for the third
quarter of 2011 from $51.0 million for the third quarter of 2010.
The increase in operating income was primarily due to labor cost
reductions resulting from restructuring activities, increased
revenues per unit and lower restructuring costs, asset impairment
charges and depreciation and amortization, partially offset by
volume declines in checks and related products. Operating income
for the third quarters of 2011 and 2010 includes restructuring
costs of $0.4 million and
$4.2 million, respectively.
Net revenues for the Harland Financial Solutions segment
increased by $1.5 million, or 2.1%,
to $72.4 million for the third
quarter of 2011 from $70.9 million
for the third quarter of 2010. The increase was primarily due to
revenues from the Parsam acquisition completed in December 2010, which increased net revenues by
$1.6 million, as well as a
$1.2 million increase in services
revenues resulting from new customers. The increases were partially
offset by a $1.0 million decrease in
maintenance revenues due to customers converting to perpetual
license agreements, as well as industry trends to hosted versus
in-house solutions. Operating income for the Harland Financial
Solutions segment decreased by $0.6 million, or 4.3%, to $13.2 million for the third quarter of 2011
from $13.8 million for the third
quarter of 2010. The decrease in operating income was due to an
increase in selling, general and administrative expenses as a
result of costs associated with the Parsam acquisition completed in
December 2010, increased foreign
currency transaction losses, higher incentive compensation accruals
and higher travel costs due to expanded selling efforts.
Net revenues for the Scantron segment decreased by $0.9 million, or 1.7%, to $52.4 million for the third quarter of 2011 from
$53.3 million for the third quarter
of 2010. The decrease was primarily driven by a decline in sales of
a survey solution to assist financial institutions with
implementation of new federal regulations in 2010 that reduced net
revenues by $2.3 million, as well as
a $1.2 million reduction in net
revenues from volume declines in sales of forms. The revenue
decreases were partially offset by $2.5
million of revenues resulting from the acquisitions of
GlobalScholar and Spectrum K12. Net revenues for the third quarter
of 2011 also included charges of $1.5
million for non-cash fair value acquisition accounting
adjustments to deferred revenue related to the GlobalScholar and
Spectrum K12 acquisitions. In addition, the current accounting for
revenue recognition for the recent acquisitions results in a
substantial deferral of revenue into future periods for amounts
that are billed and collected, while costs related to these sales,
with the exception of direct implementation costs, are recognized
in the current period. Deferred revenues related to GlobalScholar
and Spectrum K12 increased by $6.5
million during the third quarter of 2011. Operating income
for the Scantron segment increased by $4.2 million, or 53.2%, to $12.1 million for the third quarter of 2011 from
$7.9 million for the third
quarter of 2010. The increase in operating income was primarily due
to a decrease in the fair value of accrued contingent consideration
related to the GlobalScholar acquisition that resulted in a
non-cash gain of $19.2 million and
cost reductions. These decreases were partially offset by costs
associated with GlobalScholar and Spectrum K12 including a
$4.4 million increase in amortization
expense, the impact of the revenue acquisition accounting
adjustments and volume declines, as well as investments in growth
initiatives and a $1.3 million
increase in restructuring costs. Operating income for the third
quarters of 2011 and 2010 includes restructuring costs of
$1.9 million and $0.6 million, respectively.
Net revenues for the Licorice Products segment increased by
$2.2 million, or 7.7%, to
$30.6 million for the third quarter
of 2011 from $28.4 million for the
third quarter of 2010. Magnasweet and pure licorice
derivative sales increased by $1.8
million primarily due to an increase in shipment volumes of
pure licorice derivatives to international cosmetic,
pharmaceutical, food and beverage customers. Sales of licorice
extract to the worldwide tobacco industry increased by $0.7 million as the result of an increase in
shipment volumes for certain large tobacco customers. Sales of
licorice extract to non-tobacco customers decreased by $0.3 million. Operating income for the Licorice
Products segment decreased by $0.4
million, or 5.6%, to $6.8
million for the third quarter of 2011 from $7.2 million for the third quarter of 2010 due to
a change in the mix of products sold and an increase in raw
material costs partially offset by the increase in sales.
Year-to-date 2011 Performance
Consolidated Results
Consolidated net revenues decreased by $38.6 million, or 2.9%, to $1,309.8 million for the nine months ended
September 30, 2011 from $1,348.4 million for the nine months ended
September 30, 2010. The decrease was
due to lower net revenues at the Harland Clarke and Scantron
segments in part due to volume declines of certain products and
services, partially offset by increases in net revenues of
$9.4 million for the Harland
Financial Solutions segment and $8.9
million for the Licorice Products segment, as further
described below.
Operating income decreased by $21.2
million, or 8.8%, to $219.9
million for the nine months ended September 30, 2011 from $241.1 million for the nine months ended
September 30, 2010. The decrease was
primarily due to costs associated with the GlobalScholar and
Spectrum K12 acquisitions, including a $13.2
million increase in amortization expense, and deferral of
revenue as further described in Segment Results for Scantron below.
These items were partially offset by a decrease in the fair value
of accrued contingent consideration related to the GlobalScholar,
Spectrum K12, Parsam and SubscriberMail acquisitions that resulted
in a non-cash gain of $24.6 million,
as well as an $8.8 million increase
in operating income for the Harland Financial Solutions segment and
a $6.9 million decrease in
restructuring costs. The reduction in the fair value of accrued
contingent consideration was the result of revenue projections that
fall below the threshold amount that would trigger a payment.
Net income increased by $1.0
million, or 1.1%, to $94.6
million for the nine months ended September 30, 2011 from $93.6 million for the nine months ended
September 30, 2010. The increase was
primarily due to the $24.6 million
non-cash gain for changes in the fair value of contingent
consideration arrangements, of which $22.8
million is not subject to income taxes, as well as a
one-time gain of $13.2 million
($10.9 million after tax) on the sale
of marketable securities. These items were partially offset by the
decrease in operating income at the Scantron segment resulting from
costs incurred related to recent acquisitions and deferral of
revenue as further described in Segment Results below in addition
to a one-time charge of $20.0 million
($12.8 million after tax) associated
with the disposition of the Company's former non-operating
subsidiary, Pneumo Abex LLC.
Adjusted EBITDA decreased by $44.3
million, or 11.6%, to $337.0
million for the nine months ended September 30, 2011 from $381.3 million for the nine months ended
September 30, 2010. 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
$61.6 million, or 6.8%, to
$845.3 million for the nine months
ended September 30, 2011 from
$906.9 million for the nine months
ended September 30, 2010. The
decrease was primarily due to volume declines, net of client
additions and losses, in check and related products that reduced
net revenues by $46.0 million, as
well as a decline in non-check revenues, primarily resulting from a
decline in sales of a survey solution to assist financial
institutions with the implementation of new federal regulations in
2010 that reduced net revenues by $12.2
million. In addition, a decrease in revenues per unit
reduced net revenues by $1.8 million.
The 2010 period also included revenue for a one-time payment of
$4.8 million resulting from the loss
of a client. The decline in net revenues was partially offset by
one additional workday in the 2011 period. Operating income for the
Harland Clarke segment increased by $2.5 million, or 1.4%, to $185.4 million for the nine months ended
September 30, 2011 from $182.9 million for the nine months ended
September 30, 2010. The
increase in operating income was primarily due to labor cost
reductions resulting from restructuring activities, lower
depreciation and amortization, a decrease in restructuring costs,
lower asset impairment charges and declines in general overhead
expenses. These increases to operating income were partially offset
by the impact of the volume declines, lower revenues per unit in
check and related products and the one-time payment resulting from
the loss of a client that occurred in 2010. Operating income for
the nine months ended September 30,
2011 and 2010 includes restructuring costs of $3.7 million and $7.5
million, respectively.
Net revenues for the Harland Financial Solutions segment
increased by $9.4 million, or 4.5%,
to $219.7 million for the nine months
ended September 30, 2011 from
$210.3 million for the nine months
ended September 30, 2010. The
increase was primarily due to revenues from the Parsam acquisition
completed in December 2010, which
increased net revenues by $4.4
million, as well as a $4.2
million increase in software revenues for perpetual license
agreements and a $2.6 million
increase in services revenues resulting from new clients. The
increases were partially offset by a $2.6
million decrease in maintenance revenues due to certain
customers converting to perpetual license agreements, industry
trends to hosted versus in-house solutions and customers converting
from enterprise to term agreements. Operating income for the
Harland Financial Solutions segment increased by $8.8 million, or 24.0%, to $45.4 million for the nine months ended
September 30, 2011 from $36.6 million for the nine months ended
September 30, 2010. The increase in
operating income was primarily due to the increase in revenues,
cost reductions resulting from restructuring and favorable pricing
and decreases in depreciation and amortization, which were
partially offset by increases in travel costs and selling expenses
due to expanded selling efforts.
Net revenues for the Scantron segment decreased by $0.6 million, or 0.4%, to $152.9 million for the nine months ended
September 30, 2011 from $153.5 million for the nine months ended
September 30, 2010. The decrease in
net revenues was primarily due to a decline in sales of a survey
solution to assist financial institutions with the implementation
of new federal regulations in 2010 that reduced net revenues by
$5.1 million, as well as a
$2.4 million reduction in net
revenues from volume declines in sales of forms. The revenue
decrease was substantially offset by $7.2
million of revenues resulting from the acquisitions of
GlobalScholar and Spectrum K12. Net revenues for the nine months
ended September 30, 2011 also
included charges of $6.8 million for
non-cash fair value acquisition accounting adjustments to deferred
revenues related to the GlobalScholar and Spectrum K12
acquisitions. In addition, the current accounting for revenue
recognition for the recent acquisitions results in a substantial
deferral of revenue into future periods for amounts that are billed
and collected, while costs related to these sales, with the
exception of direct implementation costs, are recognized in the
current period. Deferred revenues related to GlobalScholar and
Spectrum K12 increased by $17.3
million during the nine months ended September 30, 2011. Operating income for the
Scantron segment decreased by $23.6
million to an operating loss of $4.6
million for the nine months ended September 30, 2011 from operating income of
$19.0 million for the nine
months ended September 30, 2010. The
decrease in operating income was primarily due costs associated
with GlobalScholar and Spectrum K12 including a $13.2 million increase in amortization expense,
volume declines and the impact of the revenue acquisition
accounting adjustments. These decreases were partially offset by a
reduction in the fair value of accrued contingent consideration
related to the GlobalScholar and Spectrum K12 acquisitions that
resulted in a non-cash gain of $22.8
million, as well as cost reductions related to restructuring
activities. Operating income for the nine months ended September 30, 2011 and 2010 includes
restructuring costs of $4.3 million and $7.1 million, respectively.
Net revenues for the Licorice Products segment increased by
$8.9 million, or 10.6%, to
$92.5 million for the nine months
ended September 30, 2011 from
$83.6 million for the nine months
ended September 30, 2010. Sales of
licorice extract to the worldwide tobacco industry increased by
$5.1 million as the result of an
increase in shipment volumes for certain large tobacco customers.
Magnasweet and pure licorice derivative sales increased by
$3.7 million primarily due to an
increase in shipment volumes of pure licorice derivatives to
international cosmetic, pharmaceutical, food and beverage
customers. Sales of licorice extract to non-tobacco customers
increased by $0.1 million. Operating
income for the Licorice Products segment increased by $1.4 million, or 6.6%, to $22.7 million for the nine months ended
September 30, 2011 from $21.3 million for the nine months ended
September 30, 2010 due to the
increase in sales partially offset by a change in the mix of
products sold and an increase in 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 is a provider of checks and
related products, direct marketing services and customized business
and home office products. Harland Financial Solutions provides
technology products and related services to financial institutions.
Scantron is a leading provider of data management solutions and
related services to educational, healthcare, commercial and
governmental entities worldwide including testing and assessment
solutions, patient information collection and tracking, and survey
services. 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) additional government
regulation of tobacco products, tobacco industry litigation or
enactment of new or increased taxes on cigarettes or other tobacco
products, to the extent any of the foregoing curtail growth in or
actually reduce consumption of tobacco products in which licorice
products are used or place limitations on the use of licorice
extracts as additives used in manufacturing tobacco products;
(3) the failure of third parties to make full and timely
payment to M & F Worldwide for environmental, 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 recent acquisitions as well as future acquisitions; (19) M
& F Worldwide's ability to achieve vendor-specific objective
evidence for software businesses we have acquired or will acquire,
which could affect the timing of recognition of revenue; (20) 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; (21) 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; (22) weak
economic conditions and declines in the financial performance of
our businesses that may result in material impairment charges and
(23) the failure of M & F Worldwide Corp. and MacAndrews &
Forbes Holdings Inc. to consummate the transaction contemplated by
the merger agreement entered into by the parties thereto on
September 12, 2011.
You should read carefully the factors described in M & F
Worldwide's Annual Report on Form 10-K for the year ended
December 31, 2010 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.
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 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, restructuring costs, asset impairment charges,
settlement of certain contingent claims, deferred purchase price
compensation related to an acquisition, changes in fair value of
contingent consideration, gains on the sale of certain marketable
securities and certain acquisition 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 September 30,
|
|
Nine Months
Ended September 30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
Product revenues, net
|
$
|
356.8
|
|
|
$
|
353.8
|
|
|
$
|
1,067.8
|
|
|
$
|
1,099.4
|
|
Service revenues, net
|
81.5
|
|
|
86.1
|
|
|
242.0
|
|
|
249.0
|
|
Total net revenues
|
438.3
|
|
|
439.9
|
|
|
1,309.8
|
|
|
1,348.4
|
|
Cost of products sold
|
216.6
|
|
|
210.6
|
|
|
650.9
|
|
|
648.9
|
|
Cost of services
provided
|
41.5
|
|
|
46.2
|
|
|
120.8
|
|
|
131.0
|
|
Total cost of
revenues
|
258.1
|
|
|
256.8
|
|
|
771.7
|
|
|
779.9
|
|
Gross profit
|
180.2
|
|
|
183.1
|
|
|
538.1
|
|
|
568.5
|
|
Selling, general and
administrative expenses
|
110.5
|
|
|
102.3
|
|
|
332.1
|
|
|
309.5
|
|
Revaluation of contingent
consideration
|
(19.5)
|
|
|
0.3
|
|
|
(24.6)
|
|
|
0.2
|
|
Asset impairment
charges
|
0.1
|
|
|
1.9
|
|
|
2.4
|
|
|
2.5
|
|
Restructuring costs
|
2.3
|
|
|
5.0
|
|
|
8.3
|
|
|
15.2
|
|
Operating income
|
86.8
|
|
|
73.6
|
|
|
219.9
|
|
|
241.1
|
|
Interest income
|
0.1
|
|
|
0.1
|
|
|
0.3
|
|
|
0.7
|
|
Interest expense
|
(27.5)
|
|
|
(28.1)
|
|
|
(82.4)
|
|
|
(89.5)
|
|
Settlement of contingent
claims
|
—
|
|
|
—
|
|
|
(20.0)
|
|
|
—
|
|
Other income (expense),
net
|
—
|
|
|
(0.1)
|
|
|
13.2
|
|
|
(0.3)
|
|
Income before income
taxes
|
59.4
|
|
|
45.5
|
|
|
131.0
|
|
|
152.0
|
|
Provision for income
taxes
|
14.9
|
|
|
15.3
|
|
|
36.4
|
|
|
58.4
|
|
Net income
|
$
|
44.5
|
|
|
$
|
30.2
|
|
|
$
|
94.6
|
|
|
$
|
93.6
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
|
Basic
|
$
|
2.30
|
|
|
$
|
1.57
|
|
|
$
|
4.89
|
|
|
$
|
4.84
|
|
Diluted
|
$
|
2.28
|
|
|
$
|
1.55
|
|
|
$
|
4.86
|
|
|
$
|
4.81
|
|
Weighted average number of
shares used in per share calculations:
|
|
|
|
|
|
|
|
|
Basic shares
|
19.3
|
|
|
19.3
|
|
|
19.3
|
|
|
19.3
|
|
Diluted shares
|
19.5
|
|
|
19.5
|
|
|
19.5
|
|
|
19.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
M & F
Worldwide Corp. and Subsidiaries
Business
Segment Information
(in
millions)
|
|
|
(unaudited)
|
|
|
Three Months
Ended September 30,
|
|
Nine Months
Ended September 30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
|
|
|
|
|
|
|
Harland Clarke
segment
|
$
|
283.2
|
|
|
$
|
289.9
|
|
|
$
|
845.3
|
|
|
$
|
906.9
|
|
|
Harland Financial
Solutions segment
|
72.4
|
|
|
70.9
|
|
|
219.7
|
|
|
210.3
|
|
|
Scantron
segment
|
52.4
|
|
|
53.3
|
|
|
152.9
|
|
|
153.5
|
|
|
Licorice Products
segment
|
30.6
|
|
|
28.4
|
|
|
92.5
|
|
|
83.6
|
|
|
Eliminations
|
(0.3)
|
|
|
(2.6)
|
|
|
(0.6)
|
|
|
(5.9)
|
|
|
Total net revenues
|
$
|
438.3
|
|
|
$
|
439.9
|
|
|
$
|
1,309.8
|
|
|
$
|
1,348.4
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
|
|
|
|
|
|
|
Harland Clarke
segment
|
$
|
65.8
|
|
|
$
|
51.0
|
|
|
$
|
185.4
|
|
|
$
|
182.9
|
|
|
Harland Financial
Solutions segment
|
13.2
|
|
|
13.8
|
|
|
45.4
|
|
|
36.6
|
|
|
Scantron segment
(a)
|
12.1
|
|
|
7.9
|
|
|
(4.6)
|
|
|
19.0
|
|
|
Licorice Products
segment
|
6.8
|
|
|
7.2
|
|
|
22.7
|
|
|
21.3
|
|
|
Corporate
|
(11.1)
|
|
|
(6.3)
|
|
|
(29.0)
|
|
|
(18.7)
|
|
|
Total operating
income
|
$
|
86.8
|
|
|
$
|
73.6
|
|
|
$
|
219.9
|
|
|
$
|
241.1
|
|
|
(a) Reflects the impact of a
decrease in the fair value of accrued contingent consideration
related to the GlobalScholar and Spectrum K12 acquisitions that
resulted in a non-cash gain of $19.2 million and $22.8 million for
the three and nine months ended September 30, 2011,
respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of net income to
EBITDA and EBITDA to Adjusted EBITDA (in millions):
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
Three Months
Ended September 30,
|
|
Nine Months
Ended September 30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
44.5
|
|
|
$
|
30.2
|
|
|
$
|
94.6
|
|
|
$
|
93.6
|
|
|
Interest expense, net
|
27.4
|
|
|
28.0
|
|
|
82.1
|
|
|
88.8
|
|
|
Provision for income
taxes
|
14.9
|
|
|
15.3
|
|
|
36.4
|
|
|
58.4
|
|
|
Depreciation and
amortization
|
41.4
|
|
|
39.2
|
|
|
123.3
|
|
|
119.9
|
|
|
EBITDA
|
128.2
|
|
|
112.7
|
|
|
336.4
|
|
|
360.7
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Restructuring costs
(a)
|
2.3
|
|
|
5.0
|
|
|
8.3
|
|
|
15.2
|
|
|
Acquisition-related deferred
compensation and changes in contingent consideration (b)
|
(19.5)
|
|
|
0.6
|
|
|
(24.6)
|
|
|
1.3
|
|
|
Asset impairment charges
(c)
|
0.1
|
|
|
1.9
|
|
|
2.4
|
|
|
2.5
|
|
|
Impact of purchase accounting
adjustments (d)
|
1.7
|
|
|
1.0
|
|
|
7.7
|
|
|
1.6
|
|
|
Settlement of contingent claims
(e)
|
—
|
|
|
—
|
|
|
20.0
|
|
|
—
|
|
|
Gain on sale of marketable
securities (f)
|
—
|
|
|
—
|
|
|
(13.2)
|
|
|
—
|
|
|
Adjusted EBITDA
|
$
|
112.8
|
|
|
$
|
121.2
|
|
|
$
|
337.0
|
|
|
$
|
381.3
|
|
|
____________
(a) Reflects restructuring
costs, including adjustments, recorded in accordance with GAAP,
consisting primarily of severance, post-closure facility expenses
and other related expenses.
(b) Reflects charges accrued
under deferred purchase price agreements and changes in the fair
value of contingent consideration related to
acquisitions.
(c) Reflects non-cash impairment
charges from the write-down of assets.
(d) Reflects the non-cash fair
value deferred revenue adjustments related to acquisition
accounting.
(e) Reflects a one-time charge
associated with the disposition of the Company's former
non-operating subsidiary, Pneumo Abex LLC.
(f) Reflects a one-time gain on
the sale of marketable securities.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE M & F Worldwide Corp.