EXHIBIT 99.1
[SCHAWK LOGO]
AT SCHAWK, INC.: AT DRESNER CORPORATE SERVICES:
JAMES J. PATTERSON KRISTINE WALCZAK
SR. VP AND CFO 312-726-3600
847-827-9494 kwalczak@dresnerco.com
jpatterson@schawk.com
SCHAWK ANNOUNCES RECORD SALES AND EARNINGS
IN 2004 SECOND QUARTER
o Q2 EPS increased 42.9 percent to 30 cents
o Q2 sales increased 24.8 percent to $64.5 million
o Q2 operating margin increased to 17.1 percent due to increased sales
DES PLAINES, IL, JULY 27, 2004--SCHAWK, INC. (NYSE: SGK), one of North America's
leading providers of digital imaging graphics services to the consumer products
industry, reported record second quarter 2004 earnings of $0.30 per fully
diluted share, an increase of 42.9 percent compared to $0.21 per fully diluted
share reported in the second quarter of 2003. For the six months ended June 30,
2004, the Company reported record earnings of $0.46 per fully diluted share
compared to $0.41 per fully diluted share in the first six months of 2003, an
increase of 12.2 percent.
Net income increased 44.6 percent to a record $6.6 million in the second quarter
of 2004, compared with $4.6 million in the prior-year second quarter. For the
six months ended June 30, 2004, net income increased 16.7 percent to $10.2
million compared to $8.8 million in the prior-year six-month period.
SECOND QUARTER ENDED JUNE 30, 2004
Schawk reported record net sales of $64.5 million for the second quarter of 2004
compared to $51.6 million in the same quarter of 2003, a 24.8 percent increase.
Strong sales of graphics services to consumer products packaging clients drove
organic growth of 19.0 percent, and sales from recently acquired companies
provided an increase in revenue of 5.8 percent.
Gross margin for the second quarter increased to 42.6 percent in 2004 from 40.1
percent in 2003, primarily due to higher productivity resulting from increased
volume and newly crafted workflows.
Operating income for the second quarter of 2004 was $11.0 million compared to
$7.0 million in the second quarter of 2003, primarily due to strength in sales
to consumer packaged goods clients. Operating margin was 17.1 percent in the
second quarter of 2004 compared to 13.6 percent in the same period of 2003, due
to higher sales and higher productivity in the 2004 period.
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SCHAWK, INC. Q2 2004 RESULTS
ADD 1
Other income (expense) for the second quarter of 2004 was $0.5 million of net
other expense, compared to $0.3 million of net other income in the second
quarter of 2003. During the second quarter of 2003, non-recurring gains of $0.8
million from the proceeds of an insurance policy and a favorable litigation
settlement were recorded, offset by interest expense of $0.5 million. The 2004
net expense consisted entirely of interest expense.
Income tax expense for the second quarter of 2004 was at an effective tax rate
of 37.0 percent compared to 37.5 percent in the prior-year second quarter.
SIX MONTHS ENDED JUNE 30, 2004
For the six-month period ended June 30, 2004, net sales were $116.5 million
compared to $100.3 million for the same period of the prior year, a 16.1 percent
increase, consisting of 9.6 percent internal growth due to increased demand from
consumer packaged goods clients and 6.5 percent due to revenues from acquired
companies.
Gross margin for the first six months of 2004 was 41.4 percent, the same as in
the comparable prior-year period. Gross margin in the 2003 period included a
gain on the sale of a building that increased gross margin by 0.6 percent.
Operating income increased to $17.2 million for the six months ended June 30,
2004, compared to $14.5 million in the same period last year, and operating
margin for the 2004 six-month period was 14.8 percent compared to 14.5 percent
for the prior-year period. The primary reason for the increased operating income
and operating margin was increased sales and efficiencies resulting from newly
crafted workflows in the first half of 2004. Operating income for the first half
of 2003 included a gain on the sale of a building of $0.5 million.
Other income (expense) in the six-month period ended June 30, 2004, resulted in
net other expense of $1.0 million, compared to $0.3 million of net expense in
the comparable prior year period. The net other expense for the six month period
ended June 30, 2004, was entirely interest expense; the prior year period net
other expense consisted of $1.1 million of interest expense, offset by $0.8
million of non-recurring other income items, as discussed above.
Income tax expense for the first half of 2004 was at an effective rate of 37.0
percent compared to 38.4 percent in the prior year period. It is currently
anticipated that the effective tax rate will be in the range of 37 percent to 38
percent for the full year of 2004.
OTHER INFORMATION
Depreciation and amortization expense was $3.9 million for the second quarter of
2004 compared to $3.1 million in the prior-year second quarter. For the 2004
six-month period, depreciation and amortization expense was $6.8 million
compared to $5.9 million in the prior-year six-month period. The increase in
depreciation and amortization expense in 2004 is due to increased intangible
asset amortization related to recent acquisitions.
Capital expenditures in the second quarter of 2004 were $2.5 million compared to
$2.5 million in the second quarter of 2003. For the first six months of 2004,
capital expenditures were $4.4 million compared to $4.1 million in the
prior-year period.
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SCHAWK, INC. Q2 2004 RESULTS
ADD 2
MANAGEMENT COMMENTS
David A. Schawk, President and Chief Executive Officer commented, "After a slow
start in the first quarter, business increased to record levels in the second
quarter, producing record results for sales and earnings. Our operating margin
of 17.1 percent reflected the impact of significantly increased sales and higher
productivity.
"As we announced last quarter, March was a record month for Schawk, and business
continued strong through the three months of the second quarter. Driving this
growth in part is the movement toward "low carb" and "better for you" products,
which has led many food and beverage companies to respond to their consumers'
health concerns and change their recipes or produce new products. Schawk helped
its clients adapt quickly to these trends by providing the package design
solutions to bring new products to market quickly and in the most cost-efficient
manner, and draw customer attention to the new healthier choices on the grocer's
shelf."
Mr. Schawk continued, "Additionally, we also continued to benefit during the
second quarter from volume related to business recently awarded to us from both
existing and new clients, as well as business from the three companies we
recently acquired.
"The fact that we are an independent graphic services provider with
international operations and a full array of services, from concept to print
management, continues to be a differentiating factor in obtaining this increased
volume. Many of these assignments included multiple, high-value services, such
as workflow management, prepress, digital asset management, and design and art
production. Our services are being purchased by companies seeking to leverage
our services to bring enhanced value across their supply chain. By offering
these integrated services, Schawk is able to help reduce the amount of time it
takes to bring a new product to market, as well as achieve significant cost
savings for its consumer package goods and retail clients."
Mr. Schawk concluded, "We are encouraged by the record sales and earnings growth
in the second quarter of 2004 and will continue to pursue strategies to increase
future sales and profits from both organic growth and acquisitions."
CONFERENCE CALL
Schawk invites you to join its Second Quarter of 2004 Earnings Conference Call,
on Tuesday, July 27 at 9:30 a.m. central time. Hosting the call will be David A.
Schawk, President and CEO, A. Alex Sarkisian, Executive Vice President and Chief
Operating Officer, and John Cragen, Vice President and Corporate Controller. To
participate in the call, please dial 800-219-6110 or 303-262-2144 at least five
minutes prior to the start time and ask for the Schawk, Inc. conference call, or
on the Internet, go to http://www.actioncast.acttel.com, event ID 23737. If you
are unavailable to participate on the live call, a replay will be available
through August 3 at 11:59 p.m. eastern time. To access the replay, dial
800-405-2236 or 303-590-3000, enter conference ID 11003204, and follow the
prompts. The replay will also be available on the Internet at
http://www.actioncast.acttel.com, event ID 23737, for 30 days.
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SCHAWK, INC. Q2 2004 RESULTS
ADD 3
Schawk, Inc., headquartered in suburban Chicago, is a leading supplier of
digitized high resolution color graphic services, brand strategy and design and
an array of digitally based workflow solutions, all aimed at bringing enhanced
value to its clients. Schawk provides these advanced services for the food,
beverage, and consumer products packaging, point of sale, and advertising
markets.
Certain statements in this press release are forward-looking statements within
the meaning of Section 21E of the Securities and Exchange Act of 1934, as
amended and are subject to the safe harbor created thereby. These statements are
made based upon current expectations and beliefs that are subject to risk and
uncertainty. Actual results might differ materially from those contained in the
forward-looking statements because of factors, such as, among other things, the
strength of the United States economy in general and specifically market
conditions for the consumer products industry, the level of demand for Schawk's
services, loss of key management and operational personnel, our ability to
implement our growth strategy, the stability of state, federal and foreign tax
laws, our ability to identify and exploit industry trends and to exploit
technological advances in the imaging industry, our ability to continue to
implement our restructuring plan, the stability of political conditions in Asia
and other foreign countries in which we have production capabilities, terrorist
attacks and the U.S. response to such attacks, as well as other factors detailed
in Schawk, Inc.'s filings with the Securities and Exchange Commission.
For more information about Schawk, visit our website at http://www.schawk.com.
FINANCIAL TABLES TO FOLLOW
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SCHAWK, INC. Q2 2004 RESULTS
ADD 4
SCHAWK, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2004 AND 2003
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<Table>
<Caption>
2004 2003
--------------- ----------------
Net sales $ 64,456 $ 51,635
Cost of sales 37,025 30,947
Selling, general, and administrative expenses 16,412 13,640
--------------- ----------------
Operating income 11,019 7,048
Other income (expense)
Interest income 1 51
Interest expense (513) (528)
Other income -- 749
--------------- ----------------
(512) 272
--------------- ----------------
Income before income taxes 10,507 7,320
Income tax provision 3,886 2,742
--------------- ----------------
Net income $ 6,621 $ 4,578
=============== ================
Earnings per share:
Basic $ 0.31 $ 0.21
Diluted $ 0.30 $ 0.21
Weighted average number of common and common
equivalent shares outstanding 22,323 21,635
Dividends per common share $ 0.0325 $ 0.0325
</Table>
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SCHAWK, INC. Q2 2004 RESULTS
ADD 5
SCHAWK, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<Table>
<Caption>
2004 2003
--------------- ----------------
Net sales $ 116,533 $ 100,340
Cost of sales 68,335 58,795
Selling, general, and administrative expenses 30,954 27,026
--------------- ----------------
Operating income 17,244 14,519
Other income (expense)
Interest income 1 51
Interest expense (978) (1,056)
Other income -- 749
--------------- ----------------
(977) (256)
--------------- ----------------
Income before income taxes 16,267 14,263
Income tax provision 6,019 5,484
--------------- ----------------
Net income $ 10,248 $ 8,779
=============== ================
Earnings per share:
Basic $ 0.48 $ 0.41
Diluted $ 0.46 $ 0.41
Weighted average number of common and common
equivalent shares outstanding 22,320 21,594
Dividends per common share $ 0.065 $ 0.065
</Table>
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SCHAWK, INC. Q2 2004 RESULTS
ADD 6
SCHAWK, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<Table>
<Caption>
JUNE 30,
2004 DECEMBER 31,
(UNAUDITED) 2003
--------------- -----------------
ASSETS
Current assets:
Cash and cash equivalents $ 7,064 $ 5,227
Trade accounts receivable, less allowance for doubtful accounts
of $1,750 at June 30, 2004 and $1,595 at December 31, 2003 51,514 35,642
Inventories 9,294 8,085
Prepaid expenses and other 3,341 3,902
Refundable income taxes 1,858 1,204
Deferred income taxes 2,581 2,086
--------------- -----------------
Total current assets 75,652 56,146
Property and equipment, less accumulated depreciation of $71,184
at June 30, 2004 and $67,423 at December 31, 2003 34,453 36,372
Goodwill 64,379 62,936
Intangible assets, net 4,101 1,912
Other assets 4,041 2,325
--------------- -----------------
Total assets $ 182,626 $ 159,691
=============== =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 5,123 $ 5,108
Accrued expenses 15,688 14,004
Income taxes payable 1,103 446
Notes payable to banks 150 --
Current portion of long-term debt and capital lease obligations 6,043 6,062
--------------- -----------------
Total current liabilities 28,107 25,620
Long-term debt 31,000 21,000
Capital lease obligations 6 21
Other 939 970
Deferred income taxes 6,398 5,708
Stockholders' Equity:
Common stock 189 187
Additional paid-in capital 90,164 87,928
Retained earnings 50,310 41,461
Accumulated comprehensive income 397 1,087
--------------- -----------------
141,060 130,663
Treasury stock, at cost (24,884) (24,291)
--------------- -----------------
Total stockholders' equity 116,176 106,372
--------------- -----------------
Total liabilities and stockholders' equity $ 182,626 $ 159,691
=============== =================
</Table>
See accompanying notes.
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