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M & F Worldwide Corp. Reports Operating Results (10-Q)

August 05, 2010 | About:
10qk

10qk

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M & F Worldwide Corp. (MFW) filed Quarterly Report for the period ended 2010-06-30.

M & F Worldwide Corp. has a market cap of $559.1 million; its shares were traded at around $28.92 with a P/E ratio of 4.5 and P/S ratio of 0.3. M & F Worldwide Corp. had an annual average earning growth of 30.6% over the past 10 years.MFW is in the portfolios of Michael Price of MFP Investors LLC, Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

Net revenues for the Licorice Products segment increased by $2.5 million, or 9.8%, to $28.0 million in the 2010 period from $25.5 million in the 2009 period. Magnasweet and pure licorice derivative sales increased by $2.0 million primarily due to an increase in shipment volumes of pure licorice derivatives. Sales of licorice extract to the worldwide tobacco industry increased by $0.9 million, primarily due to the timing of shipments during the 2010 period compared to the 2009 period. Sales of licorice extract to non-tobacco customers decreased by $0.4 million primarily due to the unfavorable impact of the U.S. dollar translation of Mafco Worldwides Euro denominated sales related to the stronger dollar in the 2010 period versus the 2009 period.

Cost of revenues for the Harland Clarke segment decreased by $4.9 million, or 2.6%, to $185.6 million in the 2010 period from $190.5 million in the 2009 period. The decrease in cost of revenues was primarily due to labor cost reductions and decreases in depreciation and occupancy expenses, all of which resulted from restructuring activities. Additionally, lower volumes, which resulted in lower materials and other variable overhead expenses, contributed to the decrease. Decreases in cost of revenues were partially offset by increases resulting from the businesses acquired in the 2009 Acquisitions and by an increase in amortization expense of $1.4 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. Cost of revenues as a percentage of revenues for the Harland Clarke segment was 60.4% in the 2010 period as compared to 62.2% in the 2009 period.

Cost of revenues for the Harland Financial Solutions segment increased by $0.8 million, or 2.7%, to $30.3 million in the 2010 period from $29.5 million in the 2009 period. The increase in cost of revenues was primarily due to an increase in labor costs and an increase in amortization expense of $0.5 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, partially offset by a decrease in depreciation. Cost of revenues as a percentage of revenues for the Harland Financial Solutions segment was 43.2% in the 2010 period as compared to 42.3% in the 2009 period.

In the 2010 period, the Company recorded restructuring costs of $1.6 million for the Harland Clarke segment, $0.2 million for the Harland Financial Solutions segment and $5.2 million for the Scantron segment related to these plans. In the 2009 period, the Company recorded restructuring costs of $11.1 million for the Harland Clarke segment, $0.8 million for the Harland Financial Solutions segment and $1.7 million for the Scantron segment related to these plans.

During the 2009 period, Harland Clarke Holdings extinguished debt with a total principal amount of $24.2 million by purchasing Harland Clarke Holdings 2015 Senior Notes in individually negotiated transactions for an aggregate purchase price of $14.6 million, resulting in a gain of $8.9 million after the write-off of $0.7 million of unamortized deferred financing fees related to the extinguished debt. There were no early extinguishments of debt during the 2010 period.

Net revenues for the Licorice Products segment increased by $4.0 million, or 7.8%, to $55.2 million in the 2010 period from $51.2 million in the 2009 period. Magnasweet and pure licorice derivative sales increased by $2.7 million primarily due to an increase in shipment volumes of pure licorice derivatives. Sales of licorice extract to non-tobacco customers increased by $1.3 million primarily due to an increase in shipment volumes to confectionary customers and the favorable impact of the U.S. dollar translation of Mafco Worldwides Euro denominated sales due to the weaker dollar in the 2010 period versus the 2009 period. Sales of licorice extract to the worldwide tobacco industry were unchanged in the 2010 period compared to the 2009 period.

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