M & F Worldwide Corp. to Hold Conference Call on May 14, 2009
NEW YORK, May 8 /PRNewswire-FirstCall/ -- M & F Worldwide Corp.
(NYSE: MFW) today reported results for the first quarter ended
March 31, 2009. Additionally, M & F Worldwide filed its
quarterly report on Form 10-Q with the Securities and Exchange
Commission today. M & F Worldwide will host a conference call
to discuss its first quarter 2009 results on May 14, 2009, at 9:00
a.m. (EDT). The conference call will be accessible by dialing (800)
288-8961 in the United States and (612) 332-1210 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: 997850. The replay will be
available from 11:00 a.m. (EDT) Thursday, May 14, 2009, through
11:59 p.m. (EDT) Thursday, May 28, 2009. First Quarter Highlights -
Net revenues of $464.3 million, down 1.6% as compared to the first
quarter of 2008 - Non-GAAP adjusted net income of $18.8 million, or
$0.97 per diluted share, which excludes the impact of gain on
extinguishment of debt - Purchased $90.5 million principal amount
of Harland Clarke Holdings Corp. Senior Notes, resulting in a
pre-tax gain of $52.6 million First Quarter 2009 Performance
Consolidated Results Consolidated net revenues decreased by $7.7
million, or 1.6%, to $464.3 million for the first quarter of 2009
from $472.0 million for the first quarter of 2008, primarily due to
a decrease in net revenues for the Harland Clarke segment of $17.0
million, partially offset by an increase in net revenues of $14.6
million due to the acquisition of Data Management I LLC by Scantron
on February 22, 2008. Non-GAAP adjusted net income was $18.8
million, or $0.97 per non-GAAP diluted share, which excludes the
impact of gain on extinguishment of debt. Net income for the first
quarter of 2009 was $51.3 million, or $2.64 per diluted share, as
compared to $12.5 million, or $0.58 per diluted share, for the
first quarter of 2008. Net income for the first quarter of 2009
includes a $52.6 million ($32.5 million after tax) gain from early
extinguishment of debt related to the purchase of $90.5 million
principal amount of Harland Clarke Holdings Corp. Senior Notes for
aggregate consideration of $35.1 million. The increase in net
income and earnings per share for the first quarter of 2009 as
compared to the first quarter of 2008 also reflects a reduction in
interest expense of $12.9 million ($7.9 million after tax),
primarily due to lower interest rates on variable rate debt. The
increase in earnings per share for the first quarter of 2009 versus
the first quarter of 2008 also reflects fewer shares of common
stock outstanding due to the Company's repurchase of 2.0 million
shares in the second quarter of 2008. For the first quarter of
2009, Adjusted EBITDA increased by $5.2 million, or 4.4%, to $122.3
million as compared to $117.1 million for the first quarter of
2008. Adjusted EBITDA is a non-GAAP measure that is defined in the
footnotes to this release and is 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 $17.0 million, or 5.1%, to $315.1 million for the
first quarter of 2009 from $332.1 million for the first quarter of
2008, primarily as a result of volume declines from check and
related products, which we believe were partially affected by the
economic downturn, as well as one less production day in the first
quarter of 2009. Declines in volumes were partially offset by
increased revenues per unit. Operating income for the Harland
Clarke segment decreased by $2.4 million, or 4.5%, to $50.9 million
for the first quarter of 2009 from $53.3 million for the first
quarter of 2008. The decrease in operating income was largely
driven by the decrease in net revenues and an increase in
restructuring expenses of $6.9 million, in addition to increases in
materials and delivery expenses, which were partially offset by
labor cost reductions and a decrease in integration expenses.
Operating income for the first quarter of 2009 and 2008 includes
charges of $7.3 million and $0.4 million, respectively, for
restructuring costs. Net revenues for the Harland Financial
Solutions segment decreased by $2.0 million, or 2.8%, to $69.2
million for the first quarter of 2009 from $71.2 million for the
first quarter of 2008 as a result of decreases from both the risk
management and enterprise solutions product lines. Net revenues in
the risk management product lines decreased $0.3 million in the
first quarter of 2009 compared to the first quarter of 2008
primarily due to declines in mortgage products, partially offset by
growth in other lending products. Net revenues in the enterprise
solutions product lines decreased $1.7 million in the first quarter
of 2009 compared to the first quarter of 2008 primarily due to a
slight decline in new bookings, which we believe was partially
related to the economic downturn. Net revenues include charges of
$0.1 million and $1.0 million in the first quarter of 2009 and
2008, respectively, for non-cash fair value purchase accounting
adjustments to deferred revenue related to an acquisition.
Operating income for the Harland Financial Solutions segment
increased by $1.0 million, or 15.6% to $7.4 million for the first
quarter of 2009 from $6.4 million for the first quarter of 2008
primarily due to labor cost reductions, partially offset by
restructuring expenses of $2.4 million and the decrease in net
revenues. Operating income for the first quarter of 2009 and 2008
includes charges of $1.0 million and $2.5 million, respectively,
for compensation expense related to an incentive agreement from an
acquisition. Net revenues for the Scantron segment increased by
$12.8 million to $54.4 million for the first quarter of 2009 from
$41.6 million for the first quarter of 2008 primarily as a result
of the Data Management acquisition, which accounted for an increase
of $14.6 million. The remaining $1.8 million decrease is due to
declines from the legacy Scantron product lines, which we believe
were negatively affected by the economic downturn. Operating income
for the Scantron segment increased by $1.1 million, to $6.8 million
in the first quarter of 2009 from $5.7 million in the first quarter
of 2008. The increase is due to the Data Management acquisition,
which accounted for an increase of $1.8 million. The remaining $0.7
million decrease was primarily due to approximately $1.3 million in
one-time expenses related to a contractual obligation owing to a
former employee upon termination of employment and integration
expenses. Increases in selling, general and administrative expenses
were partially offset by cost reductions. Operating income for the
first quarter of 2009 includes charges of $1.4 million for
restructuring and $0.1 million for non-cash fair value purchase
accounting adjustments to deferred revenue related to an
acquisition. Operating income for the first quarter of 2008
includes charges of $0.9 million for restructuring and $0.6 million
for non-cash fair value purchase accounting adjustments to deferred
revenue and inventory related to acquisitions. Net revenues for the
Licorice Products segment, operated by Mafco Worldwide, decreased
by $1.8 million, or 6.5%, to $25.7 million for the first quarter of
2009 from $27.5 million for the first quarter of 2008. Magnasweet
and licorice derivatives sales decreased by $0.4 million and sales
of licorice extract to the worldwide tobacco industry decreased by
$0.6 million, primarily as the result of a decline in shipment
volumes to Magnasweet, licorice derivative and tobacco customers.
Sales of licorice extract to non-tobacco customers decreased by
$0.8 million as a result of lower shipment volumes and the
unfavorable impact of the U.S. dollar translation of Mafco
Worldwide's Euro denominated sales due to the stronger dollar in
the first quarter of 2009 versus the first quarter of 2008. The
decline in shipment volumes for the first quarter of 2009 compared
to the first quarter of 2008 for all of Mafco Worldwide's products
was primarily the result of order shipment timing and continued
worldwide consumption declines in tobacco products using licorice.
Operating income for the Licorice Products segment decreased by
$1.5 million, or 15.2%, to $8.4 million for the first quarter of
2009 from $9.9 million for the first quarter of 2008. The decrease
in operating income was primarily due to the decline in net
revenues, increased raw material costs, lower income earned on
Mafco Worldwide's over funded pension plan and an increase in
foreign currency translation losses. 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 provides checks and related products and
direct marketing services to financial institutions and their
customers. The operations of Harland Financial Solutions include
core processing, retail and lending software solutions. Scantron is
a leading provider of data collection and testing and assessment
products and services sold primarily to educational and commercial
customers. Mafco Worldwide produces licorice products for sale to
the tobacco, food, pharmaceutical and confectionery industries.
Forward Looking Statements This press release contains forward
looking statements that reflect management's current assumptions
and estimates of future performance and economic conditions, which
are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are
subject to a number of risks and uncertainties, many of which are
beyond M & F Worldwide's control. All statements other than
statements of historical facts included in this press release,
including those regarding M & F Worldwide's strategy, future
operations, financial position, estimated revenues, projected
costs, projections, prospects, plans and objectives of management,
are forward-looking statements. When used in this press release,
the words "believes," "anticipates," "plans," "expects," "intends,"
"estimates" or similar expressions are intended to identify
forward-looking statements, although not all forward-looking
statements contain such identifying words. All forward-looking
statements speak only as of the date of this press release.
Although M & F Worldwide believes that its plans, intentions
and expectations reflected in or suggested by the forward-looking
statements made in this press release are reasonable, such plans,
intentions or expectations may not be achieved. In addition to
factors described in M & F Worldwide's Securities and Exchange
Commission filings and others, the following factors may cause M
& F Worldwide's actual results, performance or achievements to
be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements
contained in this press release include: (1) economic, climatic or
political conditions in countries in which Mafco Worldwide sources
licorice root; (2) 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; (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 Worldwide's
substantial indebtedness; (7) covenant restrictions under M & F
Worldwide's indebtedness that may limit its ability to operate its
business and react to market changes; (8) the maturity of the
principal industry in which the Harland Clarke segment operates and
trends in the paper check industry, including a faster than
anticipated decline in check usage due to increasing use of
alternative payment methods, a decline in consumer confidence
and/or checking account openings and other factors, and our ability
to grow non-check-related product lines; (9) consolidation among or
failure of financial institutions, decreased spending by financial
institutions on our products and services and other adverse changes
among the large clients on which M & F Worldwide depends,
resulting in decreased revenues and/or pricing pressure; (10) the
ability to retain M & F Worldwide's clients; (11) the ability
to retain M & F Worldwide's key employees and management; (12)
lower than expected cash flow from operations; (13) significant
increases in interest rates; (14) intense competition in all areas
of M & F Worldwide's business; (15) interruptions or adverse
changes in M & F Worldwide's supplier relationships,
technological capacity, intellectual property matters, and
applicable laws; (16) decreases to educational budgets as a result
of the continued general economic downturn and the resulting impact
on Scantron's customers; (17) variations in contemplated brand
strategies, business locations, management positions and other
business decisions in connection with integrating acquisitions;
(18) M & F Worldwide's ability to successfully integrate and
manage future acquisitions; (19) M & F Worldwide's ability to
implement any or all components of its business strategy or realize
all of its expected cost savings or synergies from acquisitions;
and (20) acquisitions otherwise not being successful from a
financial point of view, including, without limitation, due to any
difficulties with M & F Worldwide's servicing its debt
obligations. You should read carefully the factors described in M
& F Worldwide's Annual Report on Form 10-K for the year ended
December 31, 2008 for a description of risks that could, among
other things, cause actual results to differ from these forward
looking statements. Non-GAAP Financial Measures In this release, M
& F Worldwide presents certain adjusted financial measures that
are not calculated according to generally accepted accounting
principles in the United States ("GAAP"). These non-GAAP financial
measures are designed to complement the GAAP financial information
presented in this release because management believes they present
information regarding M & F Worldwide that management believes
is useful to investors. The non-GAAP financial measures presented
should not be considered in isolation from or as a substitute for
the comparable GAAP financial measure. Adjusted Net Income Adjusted
net income represents GAAP net income, adjusted to eliminate the
gain on early extinguishment of debt and related taxes from the
repurchases of Harland Clarke Holdings Corp. Senior Notes at a
discount to their principal amount. M & F Worldwide is
presenting adjusted net income as a measure of its financial
performance because it believes presenting adjusted net income will
allow investors to better understand the operating results of M
& F Worldwide, since the gain on early extinguishment of debt
does not result from changes in the underlying business operations
of M & F Worldwide. Management of M & F Worldwide uses
adjusted net income to evaluate the operational results and
financial performance of M & F Worldwide in a manner similar to
the manner in which it uses GAAP net income. EBITDA and Adjusted
EBITDA 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 an important
measure of its performance and believes it is frequently used by
securities analysts, investors and other interested parties in the
evaluation of companies in M & F Worldwide's industries. M
& F Worldwide believes EBITDA provides useful information with
respect to its ability to meet its future debt service, capital
expenditures, working capital requirements and overall operating
performance, although EBITDA should not be considered as a measure
of liquidity. In addition, M & F Worldwide utilizes EBITDA when
interpreting operating trends and results of operations of its
business. M & F Worldwide also uses EBITDA for the following
purposes: Mafco Worldwide's and Harland Clarke Holdings' senior
credit facilities use EBITDA (with additional adjustments) to
measure compliance with financial covenants such as debt
incurrence. M & F Worldwide's subsidiaries executive
compensation is based on EBITDA (with additional adjustments)
performance measured against targets. EBITDA is also widely used by
M & F Worldwide and others in its industry to evaluate and
value potential acquisition candidates. EBITDA has limitations as
an analytical tool, and you should not consider it in isolation or
as a substitute for analysis of our results as reported under GAAP.
See below for a description of these limitations. Because of these
limitations, EBITDA should not be considered as a measure of
discretionary cash available to M & F Worldwide to invest in
the growth of its business. In addition, in evaluating EBITDA, you
should be aware that in the future M & F Worldwide may incur
expenses such as those excluded in calculating it. M & F
Worldwide's presentation of this measure should not be construed as
an inference that its future results will be unaffected by unusual
or nonrecurring items. EBITDA has limitations as an analytical
tool, and you should not consider it in isolation or as substitutes
for analysis of our results as reported under GAAP. Some of these
limitations are: -- it does not reflect M & F Worldwide's cash
expenditures and future requirements for capital expenditures or
contractual commitments; -- it does not reflect changes in, or cash
requirements for, M & F Worldwide's working capital needs; --
it does not reflect the significant interest expense or the cash
requirements necessary to service interest or principal payments on
M & F Worldwide's debt; -- although depreciation and
amortization are non-cash charges, the assets being depreciated and
amortized will often have to be replaced in the future, and EBITDA
does not reflect any cash requirements for such replacements; -- it
is not adjusted for all non-cash income or expense items that are
reflected in M & F Worldwide's statements of cash flows; and --
other companies in M & F Worldwide's industries may calculate
EBITDA differently from M & F Worldwide, limiting its
usefulness as a comparative measure. Because of these limitations,
EBITDA should not be considered as a measure of discretionary cash
available to invest in the growth of M & F Worldwide's business
or as a measure of cash that will be available to M & F
Worldwide to meet its obligations. You should compensate for these
limitations by relying primarily on M & F Worldwide's GAAP
results and using EBITDA only supplementally. M & F Worldwide
presents Adjusted EBITDA as a supplemental measure of its
performance. M & F Worldwide prepares Adjusted EBITDA by
adjusting EBITDA to reflect the impact of a number of items it does
not consider indicative of M & F Worldwide's ongoing operating
performance. Such items include, but are not limited to, gain on
early extinguishment of debt, restructuring costs, deferred
purchase price compensation related to an acquisition and
non-recurring purchase accounting adjustments. You are encouraged
to evaluate each adjustment and the reasons M & F Worldwide
considers them appropriate for supplemental analysis. As an
analytical tool, Adjusted EBITDA is subject to all of the
limitations applicable to EBITDA. In addition, in evaluating
Adjusted EBITDA, you should be aware that in the future, M & F
Worldwide may incur expenses, including cash expenses, similar to
the adjustments in this presentation. M & F Worldwide's
presentation of Adjusted EBITDA should not be construed as an
inference that its future results will be unaffected by unusual or
non-recurring items. - tables to follow - M & F Worldwide Corp.
and Subsidiaries Consolidated Statements of Income (in millions,
except per share data) (Unaudited) Three Months Ended March 31,
--------- 2009 2008 ---- ---- Product revenues, net $388.8 $402.3
Service revenues, net 75.5 69.7 ---- ---- Total net revenues 464.3
472.0 Cost of products sold 235.2 247.0 Cost of services provided
39.9 36.0 ---- ---- Total cost of revenues 275.1 283.0 ----- -----
Gross profit 189.2 189.0 Selling, general and administrative
expenses 109.8 118.5 Restructuring costs 11.1 1.4 ---- ---
Operating income 68.3 69.1 Interest income 0.5 2.2 Interest expense
(38.6) (51.5) Gain on early extinguishment of debt 52.6 --- Other
income, net 0.9 1.0 --- --- Income before income taxes 83.7 20.8
Provision for income taxes 32.4 8.3 ---- --- Net income $51.3 $12.5
===== ===== Earnings per common share: Basic $2.65 $0.58 =====
===== Diluted $2.64 $0.58 ===== ===== Weighted average number of
shares used in per share calculations: Basic shares 19.3 21.3 ====
==== Diluted shares 19.3 21.4 ==== ==== M & F Worldwide Corp.
and Subsidiaries Business Segment Information (in millions)
(Unaudited) Three Months Ended March 31, --------- 2009 2008 ----
---- Net revenues: Harland Clarke segment $315.1 $332.1 Harland
Financial Solutions segment 69.2 71.2 Scantron segment 54.4 41.6
Licorice Products segment 25.7 27.5 Eliminations (0.1) (0.4) -----
----- Total net revenues $464.3 $472.0 ====== ====== Operating
income: Harland Clarke segment $50.9 $53.3 Harland Financial
Solutions segment 7.4 6.4 Scantron segment 6.8 5.7 Licorice
Products segment 8.4 9.9 Corporate (5.2) (6.2) ----- ----- Total
operating income $68.3 $69.1 ===== ===== Calculation of Non-GAAP
adjusted net income (in millions, except per share amounts):
(Unaudited) Three Months Ended March 31, 2009 -------------- Net
income $51.3 Less: gain on early extinguishment of debt, net of
taxes of $20.1 (a) (32.5) ----- Non-GAAP adjusted net income $18.8
===== Diluted non-GAAP net income per share $0.97 ===== Diluted
GAAP net income per share $2.64 ===== Weighted average number of
shares used in per share calculations 19.3 ==== (a) Reflects gain
from the purchase of Harland Clarke Holdings Corp. bonds at less
than their principal amount. Reconciliation of net income to EBITDA
and EBITDA to Adjusted EBITDA (in millions): (Unaudited) Three
Months Ended March 31, --------- 2009 2008 ---- ---- Net income
$51.3 $12.5 Interest expense, net 38.1 49.3 Provision for income
taxes 32.4 8.3 Depreciation and amortization 40.8 41.5 ---- ----
EBITDA 162.6 111.6 Adjustments: Restructuring (a) 11.1 1.4 Peldec
deferred purchase price compensation (b) 1.0 2.5 Gain on early
extinguishment of debt (c) (52.6) --- Impact of purchase accounting
adjustments (d) 0.2 1.6 --- --- Adjusted EBITDA $122.3 $117.1
====== ====== (a) Reflects restructuring expenses, including
adjustments, recorded in accordance with GAAP, consisting primarily
of severance, post-closure facility expenses and other related
expenses, which were not recorded in purchase accounting. (b)
Reflects charges accrued under a deferred purchase price agreement
required to be recorded as compensation expense in selling, general
and administrative expense resulting from an acquisition. (c)
Reflects gain from the purchase of Harland Clarke Holdings Corp.
bonds at less than their principal amount. (d) Reflects the
non-cash fair value deferred revenue and inventory adjustments
related to purchase accounting. DATASOURCE: M & F Worldwide
Corp. CONTACT: Christine Taylor, +1-212-572-5988
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