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M & F Worldwide Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 3, 2011 07:20AM

M & F Worldwide Corp. (MFW) filed Quarterly Report for the period ended 2011-09-30. M&f Worldwide Corp. has a market cap of $479.4 million; its shares were traded at around $24.8 with a P/E ratio of 4 and P/S ratio of 0.3. M&f Worldwide Corp. had an annual average earning growth of 36.2% over the past 10 years.



Highlight of Business Operations:

Selling, general and administrative expenses for the Harland Clarke segment decreased by $5.6 million, or 11.0%, to $45.4 million in the 2011 period from $51.0 million in the 2010 period. The decrease was primarily due to labor cost reductions of $2.9 million resulting mostly from restructuring activities and a $2.8 million decline in other general overhead expenses, including lower professional fees of $0.7 million and travel costs of $0.5 million. Selling, general and administrative expenses as a percentage of revenues for the Harland Clarke segment were 16.0% in the 2011 period as compared to 17.6% in the 2010 period. The decrease in selling, general and administrative expenses as a percentage of revenues was primarily a result of restructuring and other cost reduction activities.

Selling, general and administrative expenses for the Harland Financial Solutions segment increased by $3.2 million, or 12.3%, to $29.2 million in the 2011 period from $26.0 million in the 2010 period. The increase was primarily due to costs of $1.0 million associated with the business acquired in the Parsam acquisition completed in December 2010, increased foreign currency transaction losses of $0.6 million, an increase in incentive compensation accruals of $0.5 million and an increase in travel costs of $0.5 million due to expanded selling efforts. Partially offsetting these increases was a decrease in compensation expense of $0.3 million related to an incentive agreement for an acquisition in 2007. Selling, general and administrative expenses as a percentage of revenues for the Harland Financial Solutions segment was 40.3% in the 2011 period as compared to 36.7% in the 2010 period. The increase in selling, general and administrative expenses as a percentage of revenues was primarily due to the increases in expenses.

Net revenues for the Scantron segment decreased by $0.6 million, or 0.4%, to $152.9 million in the 2011 period from $153.5 million in the 2010 period. The decrease was primarily due to a decline in sales of a survey solution to assist financial institutions with the implementation of new federal regulations in 2010 that reduced net revenues by $5.1 million, as well as a $2.4 million reduction in net revenues from volume declines in sales of forms. The revenue decrease was substantially offset by $7.2 million of revenues resulting from the acquisitions of GlobalScholar and Spectrum K12. Net revenues in the 2011 period also included charges of $6.8 million for non-cash fair value acquisition accounting adjustments to deferred revenues related to the GlobalScholar and Spectrum K12 acquisitions. In addition, as further discussed in "Economic and Other Factors Affecting the Businesses of the Company," GlobalScholar and Spectrum K12 have not established VSOE of fair value for their multiple-element contracts and also have contracts with substantive customer acceptance provisions, resulting in a substantial deferral of revenues into future periods. Deferred revenues related to GlobalScholar and Spectrum K12 increased by $17.3 million during the nine months ended September 30, 2011.

Cost of revenues for the Harland Financial Solutions segment decreased by $1.8 million, or 2.0%, to $89.7 million in the 2011 period from $91.5 million in the 2010 period. The decrease was primarily due to occupancy and telecom cost reductions totaling $2.1 million resulting from restructuring, consolidation of facilities and favorable pricing, as well as a $1.9 million decrease in depreciation and amortization expense. In addition, labor costs declined by $0.6 million due to lower employee benefit costs. The decrease was partially offset by costs of $1.8 million associated with the Parsam acquisition completed in December 2010. Cost of revenues as a percentage of revenues for the Harland Financial Solutions segment was 40.8% in the 2011 period as compared to 43.5% in the 2010 period. The decrease in cost of revenues as a percentage of revenues was primarily due to cost reduction activities and higher margins from growth in license revenues.

Selling, general and administrative expenses for the Harland Clarke segment decreased by $18.3 million, or 11.7%, to $138.2 million in the 2011 period from $156.5 million in the 2010 period. The decrease was primarily due to labor cost reductions of $9.2 million mostly resulting from restructuring activities, lower travel costs of $4.1 million, a decline in other general overhead expenses of $3.1 million, and lower professional fees of $1.8 million. Selling, general and administrative expenses as a percentage of revenues for the Harland Clarke segment were 16.3% in the 2011 period as compared to 17.3% in the 2010 period. The decrease in selling, general and administrative expenses as a percentage of revenues was primarily a result of restructuring and other cost reduction activities.

Read the The complete Report



Stocks Discussed: MFW,
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