M & F Worldwide Corp. Reports Third Quarter 2007 Results
09 11월 2007 - 10:23PM
PR Newswire (US)
NEW YORK, Nov. 9 /PRNewswire-FirstCall/ -- M & F Worldwide
Corp. (NYSE:MFW), today reported results for the third quarter and
nine months ended September 30, 2007. As previously announced, on
May 1, 2007, M & F Worldwide (the "Company") completed the
acquisition of John H. Harland Company ("Harland") and related
financing transactions. M & F Worldwide's results for the third
quarter and nine months ended September 30, 2007 reflect Harland
results from and after May 1, 2007. As a result of the acquisition
of Harland, M & F Worldwide now has four business segments,
which are operated by Harland Clarke (which is the combination of
Clarke American's check printing, contact center and direct
marketing capabilities with Harland's corresponding businesses),
Harland Financial Solutions, Scantron and Mafco Worldwide. Third
Quarter Performance Consolidated Results Consolidated net revenues
for the third quarter of 2007 were $456.9 million, as compared to
$178.0 million for the third quarter of 2006. The Company's
revenues increased by $278.9 million in the third quarter of 2007
primarily as a result of the acquisition of Harland, which
accounted for $263.4 million of the increase. Net income for the
third quarter of 2007 was $10.1 million, as compared to $11.2
million for the third quarter of 2006. The net income for the third
quarter of 2007 includes pre-tax charges of $4.0 million ($2.4
million after tax) due to non-cash fair value purchase accounting
adjustments to inventory and deferred revenue, $2.0 million ($1.2
million after tax) for restructuring costs, and $3.1 million ($1.9
million after tax) due to impairment of Alcott Routon intangible
assets. Basic earnings per common share was $0.47 for the third
quarter of 2007 compared to $0.56 for the third quarter of 2006.
Diluted earnings per common share was $0.47 for the third quarter
of 2007 compared to $0.55 for the third quarter of 2006. Segment
Results Net revenues from the Harland Clarke segment increased by
$177.1 million to $332.4 million for the third quarter of 2007 from
$155.3 million in the third quarter of 2006, primarily as a result
of the Harland acquisition which accounted for $163.1 million of
the increase. The remaining $14.0 million of the increase was
primarily due to an increase in revenues from a large client and
higher revenues per unit, partially offset by a decline in units.
Operating income for the Harland Clarke segment was $55.4 million
for the third quarter of 2007 as compared to $22.5 million for the
third quarter of 2006, primarily resulting from the Harland
acquisition which accounted for $29.4 million of the increase. The
remaining $3.5 million was largely related to the increase in
revenues per unit and cost reductions, partially offset by
increased bonus expense and restructuring and integration costs.
Net revenues and operating income from the Harland Financial
Solutions segment for the third quarter of 2007 were $79.0 million
and $9.6 million, respectively. Net revenues and operating income
from the Scantron segment for the third quarter of 2007 were $21.9
million and $4.7 million, respectively. Operating income for the
Harland Financial Solutions and Scantron segments reflect pre-tax
charges of $3.1 million and $0.6 million, respectively, for
non-cash fair value purchase accounting adjustments to inventory
and deferred revenue. Net revenues from the Licorice Products
segment increased by $1.4 million, or 6.2%, to $24.1 million in the
third quarter of 2007 from $22.7 million in the third quarter of
2006. Operating income was $7.6 million for the third quarter of
2007 as compared to $7.3 million for the third quarter of 2006. The
increase in operating income of $0.3 million was mainly due to the
increase in net revenues, offset in part by an increase in
manufacturing costs, especially raw materials. Year-to-Date
Performance Consolidated Results Consolidated net revenues for the
nine months ended September 30, 2007 were $1,014.0 million, as
compared to $547.4 million for the nine months ended September 30,
2006. The Company's revenues increased by $466.6 million in the
2007 period primarily as a result of the Harland acquisition, which
accounted for $438.1 million of the increase. Net loss for the nine
months ended September 30, 2007 period was $15.7 million, as
compared to $29.6 million of net income for the 2006 period. The
net loss for the nine months ended September 30, 2007, includes a
nonrecurring pre-tax loss on early extinguishment of debt of $54.6
million ($34.1 million after tax) related to refinancing
transactions completed in connection with the Harland acquisition.
The net loss for the 2007 period also includes pre-tax charges of
$12.6 million ($8.0 million after tax) for non-cash fair value
purchase accounting adjustments to inventory and deferred revenue,
$2.4 million ($1.4 million after tax) for acquisition-related
retention bonuses, $4.9 million ($3.1 million after tax) for
restructuring costs, and $3.1 million ($1.9 million after tax) due
to impairment of Alcott Routon intangible assets. Basic loss per
common share was $0.75 for the nine months ended September 30, 2007
compared to basic earnings per share of $1.50 for the 2006 period.
Diluted loss per common share was $0.75 for the nine months ended
September 30, 2007 compared to diluted earnings per share of $1.46
for the 2006 period. Segment Results Net revenues from the Harland
Clarke segment increased by $298.9 million to $773.3 million for
the nine months ended September 30, 2007 from $474.4 million in the
nine months ended September 30, 2006, primarily as a result of the
Harland acquisition which accounted for $274.4 million of the
increase. The remaining $24.5 million of the increase was primarily
due to an increase in revenues from a large client and higher
revenues per unit, partially offset by a decline in units.
Operating income for the Harland Clarke segment was $122.8 million
for the nine months ended September 30, 2007 as compared to $68.6
million for the 2006 period, primarily resulting from the Harland
acquisition which accounted for $48.1 million of the increase. The
remaining $6.1 million was largely related to the increase in
revenues per unit and cost reductions, partially offset by
increased bonus expense and restructuring and integration costs.
Net revenues and operating income from the Harland Financial
Solutions segment for the period of May 1, 2007, the date of the
Harland acquisition, through September 30, 2007 were $131.1 million
and $13.5 million, respectively. Net revenues and operating income
from the Scantron segment for the same period were $33.3 million
and $1.6 million, respectively. Operating income for the Harland
Financial Solutions and Scantron segments reflect pre- tax charges
of $6.4 million and $4.3 million, respectively, for non-cash fair
value purchase accounting adjustments to inventory and deferred
revenue. Net revenues from the Licorice Products segment increased
by $4.0 million, or 5.5%, to $77.0 million for the nine months
ended September 30, 2007 from $73.0 million for the nine months
ended September 30, 2006. Operating income was $26.1 million for
the nine months ended September 30, 2007 as compared to $26.7
million for the 2006 period. The decrease in operating income of
$0.6 million was mainly due to an increase in manufacturing costs,
especially raw materials, and higher professional fees associated
with Mafco Worldwide's indemnification liabilities, which more than
offset the increase in net revenues. Harland Acquisition As
previously announced, on May 1, 2007, M & F Worldwide completed
its acquisition of Harland at a price per share of Harland common
stock of $52.75, representing an approximate transaction value of
$1.7 billion. Upon the completion of the transaction, Harland
became a wholly owned subsidiary of Clarke American Corp. ("Clarke
American"), a wholly-owned subsidiary of the Company. Clarke
American was renamed Harland Clarke Holdings Corp. ("Harland Clarke
Holdings") after completion of the Harland acquisition. In
connection with the Harland acquisition, Clarke American's prior
senior secured credit facility, Harland's then outstanding credit
facility and Clarke American's prior 11.75% senior notes due 2013
were repaid in full. The acquisition and debt repayments were
funded with new borrowings by Harland Clarke Holdings, consisting
of a $1.8 billion senior secured term loan and an aggregate $615.0
million principal amount of senior notes due 2015, comprised of
$310.0 million principal amount of 9.50% senior fixed rate notes
and $305.0 million principal amount of senior floating rate notes
bearing interest at LIBOR plus 4.75%. About M & F Worldwide
Prior to the acquisition of Harland on May 1, 2007, M & F
Worldwide had two business lines operated by Clarke American and
Mafco Worldwide. Clarke American provided checks and related
products and direct marketing services through two segments: the
Financial Institution segment, which was focused on financial
institution clients and their customers, and the Direct to Consumer
segment, which was focused on individual customers. As a result of
the acquisition of Harland, M & F Worldwide now has four
business lines, which are operated by Harland Clarke, Harland
Financial Solutions, Scantron and Mafco Worldwide. Subsequent to
the closing of the Harland acquisition, Clarke American's check
printing, contact center and direct marketing capabilities have
been combined with Harland's corresponding business and operate
under the name "Harland Clarke." Mafco Worldwide produces licorice
products for sale to the tobacco, food, pharmaceutical and
confectionery industries (which is M & F Worldwide's Licorice
Products segment). The operations of Harland Financial Solutions
include core processing, retail and lending software solutions as
well as maintenance services to financial and other institutions.
Scantron is a leading provider of data collection and testing and
assessment products sold primarily to educational and commercial
customers. This press release contains forward-looking statements,
within the meaning of the Private Securities Litigation Reform Act
of 1995, which involve risks and uncertainties. M & F
Worldwide's actual results may differ materially from those
discussed in such forward-looking statements. In addition to
factors described in M & F Worldwide's Securities and Exchange
Commission filings and others, the following factors could cause M
& F Worldwide's actual results to differ materially from those
expressed in any forward-looking statements made by M & F
Worldwide: (a) economic, climatic or political conditions in
countries in which Mafco Worldwide sources licorice root; (b)
economic, regulatory or political conditions that have an impact on
the worldwide tobacco industry or on the consumption of tobacco
products in which licorice products are used; (c) 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; (d) the
maturity of the principal industry in which the Company's 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 and other factors;
(e) consolidation among financial institutions and other adverse
changes among the large clients on which Harland Clarke Holdings
Corp. depends, resulting in decreased revenues; (f) the ability to
retain Harland Clarke Holdings Corp.'s clients; (g) the ability to
retain Harland Clarke Holdings Corp.'s key employees and
management; (h) lower than expected cash flow from operations; (i)
significant increases in interest rates; (j) unfavorable foreign
currency fluctuations; (k) M & F Worldwide's substantial
indebtedness; (l) variations in contemplated brand strategies,
business locations, management positions and other business
decisions in connection with integrating Harland; (m) our ability
to successfully integrate Harland into our business and manage
future acquisitions; (n) our ability to implement any or all
components of our business strategy or realize all of our expected
cost savings or synergies from the Harland acquisition; and (o) the
acquisition of Harland otherwise not being successful from a
financial point of view, including, without limitation, due to any
difficulties with Harland Clarke Holdings Corp. servicing its debt
obligations. M & F Worldwide Corp. and Subsidiaries
Consolidated Statements of Operations (in millions, except per
share data) (Unaudited) Three Months Ended Nine Months Ended
September 30, September 30, 2007 2006 2007 2006 Product revenues,
net $391.3 $177.5 $908.2 $546.0 Service revenues, net 65.6 0.5
105.8 1.4 Total net revenues 456.9 178.0 1,014.0 547.4 Cost of
products sold 240.4 108.3 555.0 329.8 Cost of services provided
33.2 0.4 58.5 1.1 Total cost of revenues 273.6 108.7 613.5 330.9
Gross profit 183.3 69.3 400.5 216.5 Selling, general and
administrative expenses 111.8 39.9 251.1 122.8 Restructuring costs
2.0 1.0 4.9 1.9 Operating income 69.5 28.4 144.5 91.8 Interest
income 2.9 0.7 5.8 1.8 Interest expense (54.4) (17.2) (118.3)
(50.6) Loss on early extinguishment of debt - - (54.6) - Other
income (expense), net 0.1 - 0.6 - Income (loss) before income taxes
18.1 11.9 (22.0) 43.0 Provision (benefit) for income taxes 8.0 0.7
(6.3) 13.4 Net income (loss) $10.1 $11.2 $(15.7) $29.6 Earnings
(loss) per common share: Basic $0.47 $0.56 $(0.75) $1.50 Diluted
$0.47 $0.55 $(0.75) $1.46 M & F Worldwide Corp. and
Subsidiaries Business Segment Information (in millions) (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30,
2007 2006 2007 2006 Net revenues Harland Clarke segment $332.4
$155.3 $773.3 $474.4 Harland Financial Solutions segment 79.0 -
131.1 - Scantron segment 21.9 - 33.3 - Licorice Products segment
24.1 22.7 77.0 73.0 Eliminations (0.5) - (0.7) - Total revenue
$456.9 $178.0 $1,014.0 $547.4 Operating income (loss) Harland
Clarke segment $55.4 $22.5 $122.8 $68.6 Harland Financial Solutions
segment 9.6 - 13.5 - Scantron segment 4.7 - 1.6 - Licorice Products
segment 7.6 7.3 26.1 26.7 Corporate (7.8) (1.4) (19.5) (3.5) Total
operating income $69.5 $28.4 $144.5 $91.8 DATASOURCE: M & F
Worldwide Corp. CONTACT: Christine Taylor, +1-212-572-5988
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