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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended March 31, 2003
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COMMISSION FILE NUMBER 1-9335
SCHAWK, INC.
(Exact name of Registrant
as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
36-2545354
(I.R.S. Employer Identification No.)
1695 RIVER ROAD
DES PLAINES, ILLINOIS
(Address of principal executive office)
60018
(Zip Code)
847-827-9494
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------- -------
Indicate by checkmark whether the registrant is an accelerated filer (as defined
in Rule 12b-2 of the Exchange Act.)
Yes No X
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The number of shares outstanding of each of the issuer's classes of common stock
as of April 30, 2003 is: 21,386,220 Class A Common Stock, $.008 par value
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1
SCHAWK, INC.
FORM 10-Q QUARTLY REPORT
TABLE OF CONTENTS
March 31, 2003
PART I - FINANCIAL INFORMATION Page
- -------------------------------- ----
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures about Market Risk 12
Item 4. Controls and Procedures 12
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
Certificates Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 14
Certificates Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 16
2
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Schawk, Inc.
Consolidated Balance Sheets
(In Thousands)
MARCH 31, DECEMBER 31,
2003 2002
(UNAUDITED)
------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 1,745 $ 2,051
Trade accounts receivable, less allowance for doubtful accounts
of $1,411 at March 31, 2003 and $1,269 at December 31, 2002 40,305 37,946
Inventories 9,601 8,540
Prepaid expenses and other 3,162 3,539
Refundable income taxes 167 889
Deferred income taxes 1,716 1,713
------------------------
Total current assets 56,696 54,678
Property and equipment, less accumulated depreciation of $64,829
at March 31, 2003 and $63,457 at December 31, 2002 38,939 40,652
Goodwill 60,826 60,476
Other assets 4,687 4,664
------------------------
Total assets $ 161,148 $ 160,470
========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 5,093 $ 4,696
Accrued expenses 13,043 13,787
Income taxes payable 1,512 --
Notes payable to banks 2,327 3,281
Current portion of long-term debt and capital lease obligations 6,379 6,260
------------------------
Total current liabilities 28,354 28,024
Long-term debt 33,180 37,186
Capital lease obligations 75 46
Other 1,017 1,029
Deferred income taxes 4,443 4,418
Stockholders' Equity:
Common stock, $0.008 par value, 40,000,000 shares authorized, 23,399,146 and
23,381,763 shares issued at March 31, 2003 and December 31, 2002,
respectively; 21,444,315 and 21,436,487 shares outstanding at March 31,
2003 and December 31, 2002,
respectively 186 186
Additional paid-in capital 86,020 85,922
Retained earnings 30,762 27,253
Accumulated comprehensive loss, net (756) (1,558)
------------------------
116,212 111,803
Treasury stock, at cost, 1,954,831 and 1,945,276 shares of common
stock at March 31, 2003 and December 31, 2002, respectively (22,133) (22,036)
------------------------
Total stockholders' equity 94,079 89,767
------------------------
Total liabilities and stockholders' equity $ 161,148 $ 160,470
========================
See accompanying notes.
3
Schawk, Inc.
Consolidated Statements of Operations
Three Months Ended March 31, 2003 and 2002
(Unaudited)
(In Thousands, Except Per Share Amounts)
2003 2002
-------------------------------------------
Net sales $ 48,705 $ 43,618
Cost of sales 27,679 26,016
Selling, general, and administrative expenses 13,555 12,504
-------------------------------------------
Operating income 7,471 5,098
Other income (expense)
Interest income -- 5
Interest expense (528) (747)
-------------------------------------------
(528) (742)
-------------------------------------------
Income before income taxes and minority interest 6,943 4,356
Income tax provision 2,742 1,670
-------------------------------------------
Income before minority interest 4,201 2,686
Minority interest in net loss of subsidiary -- 38
-------------------------------------------
Net income $ 4,201 $ 2,724
===========================================
Earnings per share:
Basic $ 0.20 $ 0.13
Diluted $ 0.19 $ 0.13
Weighted average number of common and common
equivalent shares outstanding 21,575 21,651
Dividends per common share $ 0.0325 $ 0.0325
See accompanying notes.
4
Schawk, Inc.
Consolidated Statements of Cash Flows
Three Months Ended March 31, 2003 and 2002
(Unaudited)
(In Thousands)
2003 2002
--------------------
OPERATING ACTIVITIES
Net income $ 4,201 $ 2,724
Adjustments to reconcile net income to cash provided by operating
activities:
Depreciation and amortization 2,772 3,167
Deferred income taxes 22 (496)
Gain realized on sale of property and equipment (574) (42)
Minority interest -- (38)
Changes in operating assets and liabilities, net of effects from
acquisitions:
Trade accounts receivable (2,359) (1,743)
Inventories (1,061) (2,163)
Prepaid expenses and other 377 1,255
Trade accounts payable and accrued expenses (347) (1,306)
Income taxes refundable/payable 2,234 1,167
--------------------
Net cash provided by operating activities 5,265 2,525
INVESTING ACTIVITIES
Proceeds from sales of property and equipment 1,438 --
Capital expenditures (1,656) (1,621)
Other (116) (241)
--------------------
Net cash used in investing activities (334) (1,862)
FINANCING ACTIVITIES
Proceeds from debt 262 6,029
Principal payments on debt (5,044) (6,000)
Principal payments on capital lease obligations (96) (70)
Common stock dividends (692) (693)
Purchase of common stock (100) --
Issuance of common stock 101 203
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Net cash used in financing activities (5,569) (531)
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Effect of foreign currency rate changes 332 (7)
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Net increase (decrease) in cash and cash equivalents (306) 125
Cash and cash equivalents beginning of period 2,051 1,112
--------------------
Cash and cash equivalents end of period $ 1,745 $ 1,237
====================
SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest $ 536 $ 712
Cash paid for income taxes 483 558
See accompanying notes.
5
Schawk, Inc.
Notes to Consolidated Interim Financial Statements
(Unaudited)
(Thousands of dollars, except per share data)
NOTE 1. BASIS OF PRESENTATION
The consolidated financial statements have been prepared pursuant to the rules
and regulations of the Securities and Exchange Commission (SEC). Certain
information and footnote disclosures normally included in annual financial
statements prepared in accordance with accounting principles generally accepted
in the United States have been condensed or omitted pursuant to such rules and
regulations, although Schawk, Inc. (the Company) believes the disclosures
included are adequate to make the information presented not misleading. In
addition, certain prior year amounts have been reclassified to conform to the
current year presentation. In the opinion of management, all adjustments
necessary for a fair presentation for the periods presented have been reflected
and are of a normal recurring nature. These financial statements should be read
in conjunction with the Company's consolidated financial statements and the
notes thereto for the three years ended December 31, 2002, as filed with its
2002 annual report on Form 10-K.
NOTE 2. NEW ACCOUNTING PRINCIPLES
In December 2002, the Financial Accounting Standards Boards issued Statement of
Financial Accounting Standards ("SFAS") No. 148, Accounting for Stock-Based
Compensation-Transition and Disclosure, which (i) amends SFAS No. 123,
Accounting for Stock-Based Compensation to add two new transitional approaches
when changing from the Accounting Principles Board ("APB") Opinion No. 25,
Accounting for Stock Issued to Employees intrinsic value method of accounting
for stock-based employee compensation to the SFAS No. 123 fair value method and
(ii) amends APB Opinion No. 28 Interim Financial Reporting to call for
disclosure of SFAS No. 123 pro forma information on a quarterly basis. The
Company has elected to adopt the disclosure only provisions of SFAS No. 148 and
will continue to follow APB Opinion 25 and related interpretations in accounting
for the stock options ranted to its employees and directors. Accordingly,
employee and director compensation expense is recognized only for those options
whose price is less than fair market value at the measurement date. For
disclosures regarding stock options had compensation cost been determined in
accordance with SFAS No. 123 see Note 9 - Stock-Based Compensation.
NOTE 3. INTERIM RESULTS
Results of operations for the interim periods are not necessarily indicative of
the results to be expected for the full year.
NOTE 4. DESCRIPTION OF BUSINESS
The Company is a leading provider of digital imaging graphic services for the
consumer products industry. The Company focuses on providing these services to
multi-national clients in three primary markets: consumer products packaging,
advertising agencies and promotion.
NOTE 5. INVENTORIES
Inventories consist of the following:
March 31, December 31,
2003 2002
---- ----
Raw materials $ 1,977 $2,230
Work in process 8,738 7,424
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10,715 9,654
Less: LIFO reserve (1,114) (1,114)
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$ 9,601 $8,540
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6
NOTE 6. EARNINGS PER SHARE
Basic earnings per share and diluted earnings per share are shown on the
Consolidated Statement of Operations. Basic earnings per share are computed by
dividing net income by the weighted average shares outstanding for the period.
Diluted earnings per share are computed by dividing net income by the weighted
average number of common shares and common stock equivalent shares outstanding
(stock options) for the period.
The following table sets forth the computation of basic and diluted earnings per
share:
Three months ended March 31,
---------------------------
2003 2002
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Net income $ 4,201 $ 2,724
======= =======
Weighted average shares 21,437 21,466
Effect of dilutive stock options 138 185
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Adjusted weighted average shares and
assumed conversions 21,575 21,651
======= =======
Basic earnings per share $ 0.20 $ 0.13
======= =======
Diluted earnings per share $ 0.19 $ 0.13
======= =======
NOTE 7. SEGMENT REPORTING
The Company operates in a single business segment, Digital Imaging Graphic Arts.
The Company operates primarily in two geographic areas, the United States and
Canada. Summary financial information by geographic area is as follows:
Three months ended March 31, 2003
United States Canada Other Foreign Total
------------- ------ ------------- -----
Sales $39,489 $ 7,170 $ 2,046 $ 48,705
Long-lived assets 79,625 16,514 8,313 104,452
Net Assets 87,704 8,113 (1,738) 94,079
Three months ended March 31, 2002
United States Canada Other Foreign Total
------------- ------ ------------- -----
Sales $35,962 $ 5,802 $1,854 $ 43,618
Long-lived assets 86,137 15,456 8,434 110,027
Net Assets 75,936 6,367 (555) 81,748
NOTE 8. COMPREHENSIVE INCOME
The components of comprehensive income, net of related tax, for the quarter
ended March 31, 2003 and 2002, respectively, are as follows:
Three months ended March 31
--------------------------------
2003 2002
---------- ------------
Net income $4,201 $2,724
Foreign currency translation adjustments 802 (23)
---------- ------------
Comprehensive income $5,003 $2,701
========== ============
7
NOTE 9. STOCK BASED COMPENSATION
The Company has an Equity Option Plan that provides for the granting of options
to purchase up to 3,252 shares of Class A common stock to key employees. The
Company has also adopted an Outside Directors' Formula Stock Option Plan
authorizing unlimited grants of options to purchase shares of Class A common
stock to outside directors. Options granted under these plans have an exercise
price equal to the market price of the underlying stock at the date of grant and
are exercisable for a period of ten years from the date of grant and vest over a
three-year period.
The Company accounts for these plans under the recognition and measurement
principles of Accounting Principles Board (APB) Opinion No. 25, "Accounting for
Stock Issued to Employees", and related interpretations. No stock-based employee
compensation cost is reflected in the net income, as all options granted under
these plans have an exercise price equal to the market value of the underlying
common stock on the date of grant. The following table illustrates the effect on
net income and earnings per share if the Company had applied the fair value
recognition provisions of SFAS No. 123, "Accounting for Stock-Based
Compensation", to stock-based employee compensation.
Three Months Ended March 31
2003 2002
---- ----
Net income, as reported $ 4,201 $ 2,724
Less: Total stock-based employee compensation
expense determined under fair value based method
for all awards, net of related tax effects
(343) (371)
----------------------------
Net income, pro forma $3,858 $ 2,353
Earnings per share
Basic $ 0.20 $ 0.13
Diluted $ 0.19 $ 0.13
Pro forma earnings per share
Basic $ 0.18 $ 0.11
Diluted $ 0.18 $ 0.11
8
NOTE 10. COMMON STOCK REPURCHASES
In December 2002, the U.S. Securities and Exchange Commission issued a release
proposing amendments to Rule 10b-18 under the Securities Exchange Act of 1934,
which provides issuers with a "safe harbor" from liability for manipulation when
they repurchase their common stock in the market. The SEC also proposed
amendments to a number of regulations and forms, including form 10K and 10Q,
that would require disclosure of all issuer repurchases of equity securities,
regardless of whether the repurchases are effected in accordance with the safe
harbor.
As previously disclosed, the Company occasionally repurchases its common shares,
pursuant to a general authorization from the Board of Directors. The Board of
Directors reviews the authorization for management to repurchase shares on an
annual basis. At a February 2003 meeting, the Board renewed its annual
authorization to repurchase shares in accordance with applicable SEC rules.
The following table summarizes the Company's repurchase of its equity securities
in the first three months of 2003:
Total No. Share Avg. Price No. Shares Purchased Dollar Value of Shares
Purchased Paid Per as Part of Publicly that May be Purchased
Period Share Announced Program Under Program
- --------------------------------------------------------------------------------------------------
January 2003 -- -- -- --
February 2003 -- -- -- --
March 2003 10,400 $9.65 10,400 Not to exceed
$2,000,000 per year
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Thousands of dollars, except per share amounts)
Certain statements contained herein that relate to the Company's beliefs or
expectations as to future events are not statements of historical fact and are
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. The Company intends any such statements
to be covered by the safe harbor provisions for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1999. Although the
Company believes that the assumptions upon which such forward-looking statements
are based are reasonable within the bounds of its knowledge of its business and
operations, it can give no assurance the assumptions will prove to have been
correct and undue reliance should not be placed as such statements. Important
factors that could cause actual results to differ materially and adversely from
the Company's expectations and beliefs include, among other things, the strength
of the United States economy in general and specifically market conditions for
the consumer products industry, the level of demand for the Company's services,
loss of key management and operational personnel, the ability of the Company to
implement its growth strategy, the stability of state, federal and foreign tax
laws, the ability of the Company to identify and exploit industry trends and to
exploit technological advances in the imaging industry, the stability of
political conditions in other countries in which the Company has production
capabilities, terrorist attacks, wars, diseases and other geo-political events
as well as other factors detailed in the Company's filings with the Securities
and Exchange Commission. The Company assumes no obligation to update publicly
any of these statements in light of future events.
9
RESULTS OF OPERATIONS
QUARTERS ENDED MARCH 31, 2003 AND 2002
Schawk, Inc.
Comparative Consolidated Statements of Operations
Quarters Ended March 31, 2003 and 2002
(in thousands)
$ %
2003 2002 CHANGE CHANGE
---- ---- ------ ------
Net sales $ 48,705 $ 43,618 $ 5,087 11.7%
Cost of sales 27,679 26,016 1,663 6.4%
-------- -------- --------
Gross profit 21,026 17,602 3,424 19.5%
Gross margin percentage 43.2% 40.4%
Selling, general and administrative expenses 13,555 12,504 1,051 8.4%
-------- -------- --------
Operating income 7,471 5,098 2,373 46.5%
Operating margin percentage 15.3% 11.7%
Other income (expense)
Interest and dividend income - 5 (5) nm
Interest expense (528) (747) 219 (29.3%)
-------- -------- --------
(528) (742) 214 (28.8%)
Income before income taxes and minority interest 6,943 4,356 2,587 59.4%
Income tax provision 2,742 1,670 1,072 64.2%
-------- -------- --------
Effective income tax rate 39.5% 38.3%
Income before minority interest 4,201 2,686 1,515 56.4%
Minority interest in net loss of subsidiary - 38 (38) nm
-------- -------- --------
Net income $ 4,201 $ 2,724 $ 1,477 54.2%
======== ======== ========
(1) nm - Percentage not meaningful
Net sales for the first quarter of 2003 increased 11.7% versus 2002.
The increase was all from the consumer products packaging side of the business,
which represents approximately 85% of the Company's overall business. The
increase was from new accounts as well as increased business with existing
accounts. Conversely, the advertising agency portion of the business declined
slightly in the quarter as compared to the prior year first quarter. The lower
sales level in the advertising agency business is due to the continuing weakness
in the advertising market.
Gross margin as a percentage of net sales for the first quarter of 2003
increased to 43.2% from 40.4% for the prior year first quarter. The increase in
gross margin as a percentage of sales is reflective of the impact of increased
sales as well as the impact of cost reductions from restructurings and other
initiatives in prior years. Included in the gross margin percentage in 2003 is
1.1 percentage points from a $527 gain on the sale of a building.
Operating income in the first quarter of 2003 was 46.5% higher than the
previous year first quarter. The increase in operating income was attributable
to the increase in gross margin from higher sales. Included in the operating
margin of 15.3% in the 2003 period is 1.1 percentage points from the gain on the
sale of a building as noted in the Gross Margin discussion. Selling, General and
Administrative expenses in the first quarter of 2003 were higher in absolute
dollars but lower as a percentage of sales than in the prior year first quarter,
27.8% as compared to 28.7%, respectively.
10
Other income (expense) - net decreased in the first quarter of 2003
compared with the prior year first quarter. The lower net expense was as a
result of lower interest expense. The decrease in interest expense was from a
combination of lower interest rates and lower borrowing levels in 2003 as
compared to the prior year. The lower borrowing levels were due to strong cash
flows from operations that were utilized, in part, to pay down debt.
Income tax provision as a percentage of pretax income was higher than
the previous year as a result of higher profits in higher tax jurisdictions as
compared to the prior year. Company management believes that the effective tax
rate for 2003 will be between 38% and 40% on a full year basis.
Net income for the year ended December 31, 2002 increased significantly
versus 2001 for the reasons previously discussed.
Basic and diluted earnings per share were $0.20 and $0.19,
respectively, for the quarter ended March 31, 2003 compared with $0.13 and $0.13
for the first quarter of 2002.
LIQUIDITY AND CAPITAL RESOURCES
The Company presently finances its business from available cash and
from cash generated from operations. The Company maintains a $65,000 unsecured
credit facility, expiring May 2004, of which approximately $44,000 was available
for borrowings at March 31, 2003. The Company also maintains a $15,000 unsecured
demand line of credit to provide financing and working capital flexibility. At
March 31, 2003, approximately $13,600 was available for borrowings under the
demand line of credit. The Company also maintains working capital demand lines
of credit in Canada (US $3,200), China (US $1,500), and Malaysia (US $1,300).
The Company reduced its total debt by $5,000 in the first quarter of
2003 as follows: Long-term debt and capital lease obligations decreased to
$33,200 at March 31, 2003 from $37,200 at December 31, 2002. The Company reduced
long-term debt by payment of $4,000 on its unsecured credit facility. The
outstanding amount on the demand lines of credit, included in current
liabilities, decreased by $1,000, from $3,300 at December 31, 2002 to $2,300 at
March 31, 2003.
At March 31, 2003, outstanding debt of the Company consisted of: (i)
unsecured notes issued pursuant to a Note Purchase Agreement dated August 18,
1995, for $18,000 with annual repayments required from 2003 through 2005 at an
interest rate of 6.98%; (ii) $21,000 of borrowings under the Company's unsecured
credit facility; (iii) $1,400 of borrowings under its unsecured demand credit
line; and (iv) $200 under a Malaysian term loan; (v) $200 under its Canadian
line of credit; (vi) $400 under its Chinese credit facility; and (vii) $500
under its Malaysian credit facility.
Management believes that the level of working capital is adequate for
the Company's liquidity needs related to normal operations both currently and in
the foreseeable future, and that the Company has sufficient resources to support
its growth, either through currently available cash, through cash generated from
future operations or through short-term financing.
The Company had capital expenditures of $1,656 in the first quarter of
2003. Depreciation expense was $2,772 for the quarter.
The Company purchased $100 of its Class A Common Stock in the first
quarter of 2003, under a share repurchase program approved by the Board of
Directors.
SEASONALITY
With respect to consumer products packaging, the graphic services
market is not currently seasonal. On the other hand, there have historically
been cycles of design changes for brand images that most consumer products
brands are subject to. These historic cycles differ from brand to brand as to
when design changes have occured and thus the Company's sales volume levels are
unpredictable.
With respect to the advertising and promotional markets, some seasonality exists
in that the months of December and January are historically the slowest of the
year because advertising agencies and their clients typically finish their work
by mid-December and don't start up again until mid-January. In addition,
advertising and promotion is generally cyclical as the consumer economy is
cyclical. When consumer spending and GDP decrease, ad pages decline. Generally,
when ad pages decline the Company's advertising and promotion business declines.
The decline in the advertising market, which began in the second half of 2001,
continued into the first quarter of 2003.
11
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
A discussion regarding market risk is disclosed in the Company's December 31,
2002 Form 10-K. There have been no material changes in information regarding
market risk relating to the Company since December 31, 2002.
ITEM 4. CONTROLS AND PROCEDURES
Within 90 days of March 31, 2003, the Company's CEO and CFO performed an
evaluation under their supervision, with the participation of other members of
management as they deemed appropriate, of the effectiveness of the design and
operation of the Company's disclosure controls and procedures as contemplated by
Rule 13a-15 of the Exchange Act. Based on and as of the date of that evaluation,
the CEO and CFO concluded that the Company's disclosure controls and procedures
are effective, in all material respects, in timely alerting them to material
information relating to the Company required to be included in the periodic
reports the Company is required to file and submit to the SEC under the Exchange
Act.
There have been no significant changes in the Company's internal controls or in
other factors that could significantly affect internal controls subsequent to
the date the internal controls were most recently evaluated. There were no
significant deficiencies or material weaknesses identified in that evaluation
and, therefore, no corrective actions have been taken.
PART II - OTHER INFORMATION
ITEMS 1, 2, 3, 4, AND 5 ARE NOT APPLICABLE AND HAVE BEEN OMITTED.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
EXHIBIT # DESCRIPTION
- --------- -----------
3.1 Certificate of Incorporation of Schawk, Inc., as amended. Incorporated
herein by reference to Registration Statement No. 33-85152.
3.3 By-Laws of Schawk, Inc., as amended. Incorporated herein by Reference
to Registration Statement No. 333-39113.
4.1 Specimen Class A Common Stock Certificate. Incorporated herein by
Reference to Registration Statement No. 33-85152.
99.1 Certification of Chief Executive Officer and Chief Financial Officer
pursuant to Section 906 of the Sarbanse-Oxley Act of 2002.
B. Reports on Form 8-K
None.
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on the 9th day of May 2003.
SCHAWK, INC.
- ------------
(Registrant)
/s/ David A. Schawk
- ------------------------------------
President, Chief Executive Officer and Director
/s/ James J. Patterson
- ------------------------------------
Senior Vice President and Chief Financial Officer
13
CERTIFICATIONS
I, David A. Schawk, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Schawk, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: May 9, 2003 /s/ David A. Schawk
------------------------ -----------------------------
President & CEO
14
CERTIFICATIONS
I, James J. Patterson, certify that:
7. I have reviewed this quarterly report on Form 10-Q of Schawk, Inc.;
8. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
9. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
10. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
11. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
12. The registrant's other certifying officers and I have indicated in
this quarterly report whether there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: May 9, 2003 /s/ James J. Patterson
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Sr. Vice President & CFO
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