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8-K - FORM 8-K - M & F WORLDWIDE CORP | y04605e8vk.htm |
Exhibit 99.1
M & F WORLDWIDE CORP.
REPORTS FULL YEAR AND FOURTH QUARTER 2010 RESULTS
REPORTS FULL YEAR AND FOURTH QUARTER 2010 RESULTS
M & F Worldwide Corp. to Hold Conference Call on March 16, 2011
New York, NY March 4, 2011 M & F Worldwide Corp. (M & F Worldwide or the Company)
(NYSE: MFW) today reported results for the fourth quarter and year ended December 31, 2010.
Additionally, M & F Worldwide filed its Annual Report on Form 10-K with the Securities and Exchange
Commission today.
M & F Worldwide will host a conference call to discuss its fourth quarter and full year 2010
results on March 16, 2011, at 9:00 a.m. (EDT). The conference call will be accessible by dialing
(800) 553-0326 in the United States and (612) 332-0636 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: 193239. The replay will be available from 11:00 a.m.
(EDT) Wednesday, March 16, 2011, through 11:59 p.m. (EDT) Wednesday, March 30, 2011.
2010 Highlights
| Net revenues of $1,782.6 million, down $31.5 million, or 1.7%, as compared to 2009. | ||
| Operating income of $313.6 million, up $47.4 million, or 17.8%, as compared to 2009. Operating income for 2009 included a $44.2 million non-cash write-down of the value of the Harland Clarke tradename. | ||
| Net income of $120.9 million, up $1.2 million, or 1.0%, as compared to 2009. Net income for 2009 included a $65.0 million ($40.1 million after tax) gain on early extinguishment of Harland Clarke Holdings debt, partially offset by the $44.2 million ($27.0 million after tax) non-cash write-down of the value of the Harland Clarke tradename. The increase in net income for 2010 also reflects a $21.3 million ($13.2 million after tax) decrease in interest expense. |
Full Year 2010 Performance
Consolidated Results
Consolidated net revenues decreased by $31.5 million, or 1.7%, to $1,782.6 million for 2010
from $1,814.1 million for 2009. The decrease was primarily due to volume declines for the Harland
Clarke and Scantron segments, partially offset by revenues from Harland Clarkes 2009 acquisitions
of Protocol IMS and SubscriberMail, increased revenues for the Licorice Products segment, as well
as increased revenues for the Harland Financial Solutions segment.
Operating income increased by $47.4 million, or 17.8%, to $313.6 million for 2010 from $266.2
million for 2009. The increase was primarily due to a $40.7 million decrease in asset impairment
charges, labor cost reductions resulting from restructuring activities and a $10.2 million decrease
in restructuring costs, partially offset by volume declines for the Harland Clarke and Scantron
segments, an increase in amortization expense of $6.3 million resulting from the reclassification
of the Harland Clarke tradename from an indefinite-lived to a definite-lived intangible asset in
the fourth quarter of 2009 for the Harland Clarke and Harland Financial Solutions segments and a
change in the mix of products sold and increased raw material costs for the Licorice Products
segment.
Net income increased by $1.2 million, or 1.0%, to $120.9 million for 2010 from $119.7 million
for 2009. The increase was primarily due to the $47.4 million ($29.4 million after tax) increase
in operating income and a $21.3 million ($13.2 million after tax) decrease in interest expense due
to lower effective interest rates and a decrease in total debt outstanding, substantially offset by
a $65.0 million ($40.1 million after tax) reduction in gains on early extinguishment of debt.
Adjusted EBITDA decreased by $7.2 million, or 1.4%, to $502.6 million for 2010 from $509.8
million for 2009. 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 $34.8 million, or 2.8%, to $1,191.2
million in 2010 from $1,226.0 million in 2009. The decrease was primarily due to volume declines in
check and related products, the loss of a client and a
decrease in revenues per unit, partially offset by a $27.0 million increase in revenues from
businesses acquired in 2009, the addition of new clients, and a one-time payment resulting from the
loss of a client. Revenues from new client additions more than offset lost revenues from client
losses. Operating income for the Harland Clarke segment increased by $42.2 million, or 21.6%, to
$238.0 million in 2010 from $195.8 million in 2009. The increase in operating income was primarily
due to a $29.9 million decrease in asset impairment charges, as well as labor cost reductions and
decreases in depreciation and occupancy expenses, primarily resulting from restructuring
activities, a $13.4 million decrease in restructuring costs, and a one-time payment resulting from
the loss of a client. These were partially offset by volume declines, an increase in amortization
expense of $4.6 million resulting from the reclassification of the Harland Clarke tradename from an
indefinite-lived to a definite-lived intangible asset in the fourth quarter of 2009, and costs in
connection with investments in growth initiatives. Operating income for 2010 and 2009 includes
restructuring costs of $12.3 million and $25.7 million, respectively.
Net revenues for the Harland Financial Solutions segment increased by $3.8 million, or 1.4%,
to $282.7 million in 2010 from $278.9 million in 2009. Increases in term license, maintenance,
outsourced host processing revenues and early termination fees as
well as revenues from the Parsam acquisition were partially offset by decreases
in other license revenues and hardware sales. Operating income for the Harland Financial Solutions
segment increased by $15.8 million, or 48.2%, to $48.6 million in 2010 from $32.8 million in 2009.
The increase in operating income was primarily due to a $10.6 million decrease in asset impairment
charges, increased revenues, a $2.4 million decrease in compensation expense related to an
incentive agreement from an acquisition, labor cost reductions resulting from restructuring
activities, and a $1.0 million decrease in restructuring costs. These changes were partially
offset by a $1.7 million increase in amortization expense resulting from the reclassification of
the Harland Clarke tradename from an indefinite-lived to a definite-lived intangible asset in the
fourth quarter of 2009. Operating income for 2010 includes charges of $1.1 million for compensation
expense related to an incentive agreement from an acquisition and $2.8 million for restructuring
costs. Operating income for 2009 includes charges of $3.5 million for compensation expense related
to an incentive agreement from an acquisition and $3.8 million for restructuring costs.
Net revenues for the Scantron segment decreased by $4.3 million, or 2.1%, to $203.7 million in
2010 from $208.0 million in 2009. The decrease was primarily due to declines in forms, hardware and
service maintenance revenues, partially offset by increases in revenues from web-based products and
services for the education market, sales of a solution that assists financial institutions with the
implementation of changes to federal regulations regarding overdraft services provided to financial
institution customers and revenues from the acquisition of Spectrum K12 School Solutions in July
2010. Operating income for the Scantron segment decreased by $9.2 million, or 26.7%, to $25.3
million in 2010 from $34.5 million in 2009. The decrease in operating income was primarily due to
a $4.2 million increase in restructuring costs, volume declines, and costs incurred in connection
with investments in growth initiatives in 2010, partially offset by labor cost reductions resulting
from restructuring activities and decreases in integration expenses. Operating income for 2010 and
2009 includes restructuring costs of $7.2 million and $3.0 million, respectively.
Net revenues for the Licorice Products segment increased by $9.6 million, or 9.4%, to $111.4
million in 2010 from $101.8 million in 2009. Magnasweet and pure licorice derivative sales
increased by $4.8 million primarily due to an increase in shipment volumes to international
customers. Sales of licorice extract to the worldwide tobacco industry increased by $3.2 million in
2010 compared to 2009. Certain customers reduced their licorice extract purchases during 2009 and
resumed more normal purchase patterns in 2010. Sales of licorice extract to non-tobacco customers
increased by $1.6 million primarily due to an increase in shipment volumes to confectionery
customers partially offset by the unfavorable impact of the U.S. dollar translation of Mafco
Worldwides Euro denominated sales due to the stronger dollar in 2010 versus 2009. Operating income
for the Licorice Products segment decreased by $3.7 million, or 11.5%, to $28.4 million in 2010
from $32.1 million in 2009. The decrease in operating income was primarily due to a change in the
mix of products sold resulting in lower average revenues per unit, increased raw material costs as
a percentage of sales and increased selling, general and administrative expenses.
Fourth Quarter 2010 Performance
Consolidated Results
Consolidated net revenues decreased by $13.0 million, or 2.9%, to $434.2 million for the
fourth quarter of 2010 from $447.2 million for the fourth quarter of 2009. The decrease was
primarily due to volume declines and decreased revenues per unit for the Harland Clarke segment,
partially offset by a $4.3 million increase in revenues from Harland Clarkes 2009 acquisitions of
Protocol IMS and SubscriberMail, increased revenues from the Licorice Products segment, as well as
increased revenues for the Harland Financial Solutions and Scantron segments.
2
Operating income increased by $36.2 million to $72.5 million for the fourth quarter of 2010
from $36.3 million for the fourth quarter of 2009. The increase was primarily due to a $43.0
million decrease in asset impairment charges, partially offset by volume declines and decreased
revenues per unit for the Harland Clarke segment and a $3.6 million increase in restructuring
charges.
Net income increased by $24.5 million to $27.3 million for the fourth quarter of 2010 from
$2.8 million for the fourth quarter of 2009. The increase was primarily due to the $36.2 million
($22.4 million after tax) increase in operating income and a $2.8 million ($1.7 million after tax)
decrease in interest expense, partially offset by a $3.0 million ($1.9 million after tax) reduction
in gains on early extinguishment of debt.
Adjusted EBITDA decreased by $3.3 million, or 2.6%, to $121.3 million for the fourth quarter
of 2010 from $124.6 million for the fourth quarter of 2009. 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 $15.3 million, or 5.1%, to $284.3
million for the fourth quarter of 2010 from $299.6 million for the fourth quarter of 2009. The
decrease was primarily due to volume declines in check and related products, the loss of a client
and a decrease in revenues per unit, partially offset by a $4.3 million increase in revenues from
businesses acquired in 2009 and the addition of new clients. Revenues from new client additions
more than offset lost revenues from client losses. Operating income for the Harland Clarke segment
increased by $31.9 million, or 137.5%, to $55.1 million for the fourth quarter of 2010 from $23.2
million for the fourth quarter of 2009. The increase in operating income was primarily due to a
$32.2 million decrease in asset impairment charges, as well as labor cost reductions and decreases
in depreciation and occupancy expenses primarily resulting from restructuring activities, and
decreases in general overhead expenses. These changes were partially offset by volume declines, a
decrease in revenues per unit, and a $0.9 million increase in restructuring costs. Operating income
for the fourth quarter of 2010 and 2009 includes restructuring costs of $4.8 million and $3.9
million, respectively.
Net revenues for the Harland Financial Solutions segment increased by $0.3 million, or 0.4%,
to $72.4 million for the fourth quarter of 2010 from $72.1 million for the fourth quarter of 2009.
Increases in maintenance, outsourced host processing, term license and other license revenues were
partially offset by a decrease in hardware sales. Operating income for the Harland Financial
Solutions segment increased by $7.3 million, or 155.3%, to $12.0 million for the fourth quarter of
2010 from $4.7 million for the fourth quarter of 2009. The increase in operating income was
primarily due to a $10.6 million decrease in asset impairment charges and a $0.6 million reduction
in compensation expense related to an incentive agreement, partially offset by a $2.5 million
increase in restructuring costs. Operating income for the fourth quarter of 2010 includes $2.2
million for restructuring costs. Operating income for the fourth quarter of 2009 includes charges
of $0.6 million for compensation expense related to an incentive agreement from an acquisition and
$(0.3) million for restructuring costs.
Net revenues for the Scantron segment increased by $0.2 million, or 0.4%, to $50.2 million for
the fourth quarter of 2010 from $50.0 million for the fourth quarter of 2009. The increase was
primarily due to the acquisition of Spectrum K12 School Solutions in July 2010, higher revenue from
web-based products and services for the education market and an increase in revenue from
installation contracts. These increases were partially offset by declines in hardware, service
maintenance and forms revenues. Operating income for the Scantron segment decreased by $3.6
million, or 36.4%, to $6.3 million for the fourth quarter of 2010 from $9.9 million for the fourth
quarter of 2009. The decrease in operating income was primarily due to costs incurred in connection
with investments in growth initiatives in 2010.
Net revenues for the Licorice Products segment increased by $2.2 million, or 8.6%, to $27.8
million for the fourth quarter of 2010 from $25.6 million for the fourth quarter of 2009. Sales of
licorice extract to the worldwide tobacco industry increased by $1.2 million in 2010 compared to
2009. Certain customers reduced their licorice extract purchases during 2009 and resumed more
normal purchase patterns in 2010. Magnasweet and pure licorice derivative sales increased by $1.1
million primarily due to an increase in shipment volumes to international customers. Sales of
licorice extract to non-tobacco customers declined by $0.1 million primarily due to an increase in
shipment volumes to confectionery customers which was more than offset by the unfavorable impact of
the U.S. dollar translation of Mafco Worldwides Euro denominated sales due to the stronger dollar
in 2010 versus 2009. Operating income for the Licorice Products segment decreased by $0.7 million,
or 9.0%, to $7.1 million for the fourth quarter of 2010 from $7.8 million for the fourth quarter of
2009. The decrease in operating income was primarily due to a change in the mix of products sold
resulting in lower average revenues per unit, increased raw material costs as a percentage of sales
and increased selling, general and administrative expenses.
3
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. 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 managements 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
Worldwides control. All statements other than statements of historical facts included in this
press release, including those regarding M & F Worldwides 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
Worldwides Securities and Exchange Commission filings and others, the following factors may cause
M & F Worldwides 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, 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
Worldwides substantial indebtedness; (7) covenant restrictions under M & F Worldwides
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 Worldwides clients; (11) the ability to retain M & F Worldwides 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 Worldwides business;
(15) interruptions or adverse changes in M & F Worldwides 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 Scantrons
customers; (17) variations in contemplated brand strategies, business locations, management
positions and other business decisions in connection with integrating acquisitions; (18) M & F
Worldwides ability to successfully integrate and manage acquisitions; (19) M & F Worldwides
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 Worldwides
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
Worldwides servicing its debt obligations; and (22) 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 Worldwides 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.
4
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 Worldwides
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 Worldwides and Harland
Clarke Holdings senior credit facilities use EBITDA (with additional adjustments) to measure
compliance with financial covenants such as debt incurrence. M & F Worldwides 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 Worldwides 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 Worldwides cash expenditures and future requirements for capital expenditures or contractual commitments; | ||
| it does not reflect changes in, or cash requirements for, M & F Worldwides 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 Worldwides 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 Worldwides statements of cash flows; and | ||
| other companies in M & F Worldwides 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 Worldwides 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 Worldwides GAAP results and using EBITDA only
supplementally.
5
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 Worldwides ongoing operating performance. Such items
include, but are not limited to, gain on early extinguishment of debt, restructuring costs,
asset impairment charges, deferred purchase price compensation related to an acquisition
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
Worldwides presentation of Adjusted EBITDA should not be construed as an inference that its future
results will be unaffected by unusual or non-recurring items.
For additional information contact:
Christine Taylor
(212) 572-5988
(212) 572-5988
- tables to follow -
6
M & F Worldwide Corp. and Subsidiaries
Consolidated Statements of Income
(in millions)
Consolidated Statements of Income
(in millions)
(unaudited) | ||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Product revenues, net |
$ | 356.8 | $ | 371.4 | $ | 1,456.2 | $ | 1,514.8 | ||||||||
Service revenues, net |
77.4 | 75.8 | 326.4 | 299.3 | ||||||||||||
Total net revenues |
434.2 | 447.2 | 1,782.6 | 1,814.1 | ||||||||||||
Cost of products sold |
208.3 | 220.7 | 857.2 | 903.3 | ||||||||||||
Cost of services provided |
40.3 | 37.8 | 171.3 | 152.1 | ||||||||||||
Total cost of revenues |
248.6 | 258.5 | 1,028.5 | 1,055.4 | ||||||||||||
Gross profit |
185.6 | 188.7 | 754.1 | 758.7 | ||||||||||||
Selling, general and administrative expenses |
104.8 | 104.7 | 414.5 | 415.6 | ||||||||||||
Asset impairment charges |
1.2 | 44.2 | 3.7 | 44.4 | ||||||||||||
Restructuring costs |
7.1 | 3.5 | 22.3 | 32.5 | ||||||||||||
Operating income |
72.5 | 36.3 | 313.6 | 266.2 | ||||||||||||
Interest income |
0.3 | 0.5 | 1.0 | 1.7 | ||||||||||||
Interest expense |
(28.3 | ) | (31.1 | ) | (117.8 | ) | (139.1 | ) | ||||||||
Gain on early extinguishment of debt |
| 3.0 | | 65.0 | ||||||||||||
Other expense, net |
(0.4 | ) | (1.8 | ) | (0.7 | ) | (1.1 | ) | ||||||||
Income before income taxes |
44.1 | 6.9 | 196.1 | 192.7 | ||||||||||||
Provision for income taxes |
16.8 | 4.1 | 75.2 | 73.0 | ||||||||||||
Net income |
$ | 27.3 | $ | 2.8 | $ | 120.9 | $ | 119.7 | ||||||||
Earnings per common share: |
||||||||||||||||
Basic |
$ | 1.41 | $ | 0.15 | $ | 6.26 | $ | 6.20 | ||||||||
Diluted |
$ | 1.40 | $ | 0.14 | $ | 6.22 | $ | 6.17 | ||||||||
Weighted average number of shares used in
per share calculations: |
||||||||||||||||
Basic shares |
19.3 | 19.3 | 19.3 | 19.3 | ||||||||||||
Diluted shares |
19.4 | 19.4 | 19.4 | 19.4 | ||||||||||||
7
M & F Worldwide Corp. and Subsidiaries
Business Segment Information
(in millions)
Business Segment Information
(in millions)
(unaudited) | ||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net revenues |
||||||||||||||||
Harland Clarke segment |
$ | 284.3 | $ | 299.6 | $ | 1,191.2 | $ | 1,226.0 | ||||||||
Harland Financial Solutions segment |
72.4 | 72.1 | 282.7 | 278.9 | ||||||||||||
Scantron segment |
50.2 | 50.0 | 203.7 | 208.0 | ||||||||||||
Licorice Products segment |
27.8 | 25.6 | 111.4 | 101.8 | ||||||||||||
Eliminations |
(0.5 | ) | (0.1 | ) | (6.4 | ) | (0.6 | ) | ||||||||
Total net revenues |
$ | 434.2 | $ | 447.2 | $ | 1,782.6 | $ | 1,814.1 | ||||||||
Operating income |
||||||||||||||||
Harland Clarke segment |
$ | 55.1 | $ | 23.2 | $ | 238.0 | $ | 195.8 | ||||||||
Harland Financial Solutions segment |
12.0 | 4.7 | 48.6 | 32.8 | ||||||||||||
Scantron segment |
6.3 | 9.9 | 25.3 | 34.5 | ||||||||||||
Licorice Products segment |
7.1 | 7.8 | 28.4 | 32.1 | ||||||||||||
Corporate |
(8.0 | ) | (9.3 | ) | (26.7 | ) | (29.0 | ) | ||||||||
Total operating income |
$ | 72.5 | $ | 36.3 | $ | 313.6 | $ | 266.2 | ||||||||
8
Reconciliation of net income to EBITDA and EBITDA to Adjusted EBITDA (in millions):
(unaudited) | ||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net income |
$ | 27.3 | $ | 2.8 | $ | 120.9 | $ | 119.7 | ||||||||
Interest expense, net |
28.0 | 30.6 | 116.8 | 137.4 | ||||||||||||
Provision for income taxes |
16.8 | 4.1 | 75.2 | 73.0 | ||||||||||||
Depreciation and amortization |
39.7 | 41.8 | 159.6 | 163.9 | ||||||||||||
EBITDA |
111.8 | 79.3 | 472.5 | 494.0 | ||||||||||||
Adjustments: |
||||||||||||||||
Restructuring costs (a) |
7.1 | 3.5 | 22.3 | 32.5 | ||||||||||||
Deferred purchase price compensation (b) |
0.1 | 0.6 | 1.4 | 3.5 | ||||||||||||
Asset impairment charges (c) |
1.2 | 44.2 | 3.7 | 44.4 | ||||||||||||
Gain on early extinguishment of debt (d) |
| (3.0 | ) | | (65.0 | ) | ||||||||||
Impact of acquisition accounting adjustments (e) |
1.1 | | 2.7 | 0.4 | ||||||||||||
Adjusted EBITDA |
$ | 121.3 | $ | 124.6 | $ | 502.6 | $ | 509.8 | ||||||||
(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 required to be recorded as compensation expense resulting from acquisitions. | |
(c) | Reflects non-cash impairment charges from the write-down of assets. | |
(d) | Reflects gains from the purchase of Harland Clarke Holdings bonds at less than their principal amount. | |
(e) | Reflects the non-cash fair value deferred revenue adjustments related to acquisition accounting. |
9