##### Table of Contents





SECURITIES AND EXCHANGE
    COMMISSION
 Washington, D.C.
    20549
 Form 10-K
  ANNUAL REPORT PURSUANT TO
    SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934
  For the fiscal year ended December 31, 2008
    Commission file number
    001-09335
  
  SCHAWK, INC.
 (Exact name of Registrant as
    specified in its charter)
  Delaware

66-0323724(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)1695 South River Road
    Des Plaines, Illinois(Address of principal
    executive office)

60018(Zip Code)  847-827-9494
 (Registrants telephone
    number, including area code)
 Securities registered pursuant to Section 12 (b) of
    the Act:
  Title of Each Class

Name of Exchange on Which RegisteredClass A Common Stock,
    $.008 par value

New York Stock Exchange   o þ
  o þ
  o þ
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer þ
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-2 o þ




---



##### 





SCHAWK,
    INC
  FORM 10-K
    ANNUAL REPORT
  TABLE
    OF CONTENTS
  DECEMBER
    31, 2008
   
 PagePART IItem 1.


Business


3Item 1A.


Risk Factors


12Item 1B.


Unresolved Staff Comments


19Item 2.


Properties


19Item 3.


Legal Proceedings


20Item 4.


Submission of Matters to a Vote of Security
    Holders


21PART IIItem 5.


Market for the Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


21Item 6.


Selected Financial Data


24Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


24Item 7A.


Quantitative and Qualitative Disclosures about
    Market Risk


42Item 8.


Financial Statements and Supplementary Data


43Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosures


91Item 9A.


Controls and Procedures


91Item 9B.


Other Information


96PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


96Item 11.


Executive Compensation


96Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Matters


96Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


97Item 14.


Principal Accountant Fees and Services


97PART IVItem 15.


Exhibits and Financial Statement Schedules


97Signatures


101EX-21EX-23EX-31.1EX-31.2EX-32EX-99.1   2




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##### Table of Contents



PART I  ITEM 1.
    BUSINESS  General
      point-of-sale
    sub-specialty mock-ups/sales point-of-sale
  tm
   3




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##### Table of Contents




    ability to service our clients graphic requirements
    throughout the world;
    rapid turnaround and delivery times;
    comprehensive,
    up-to-date
    knowledge of the printing press specifications of converters and
    printers located throughout the world;
    high quality design and creative capabilities with integrated
    production art expertise;
    consistent reproduction of brand equity across multiple
    packaging and promotional media;
    digital imaging asset management; and
    efficient workflow management resulting in globally competitive
    overall cost to the client.        Graphic
    Services Industry
  Industry services. point-of-sale and/or
 4




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Size of industry.
  start-ups
  Graphic services for consumer products
    companies. point-of-sale
  point-of-sale point-of-sale
  Factors driving increased demand for our brand point
    management services.
 5




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##### Table of Contents



Our
    Services
    Graphic services.
  Brand strategy and design. start-ups
  Software. tm
  state-of-the-art
   6




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##### Table of Contents



Competitive
    Strengths
    The Company is a leader in a highly fragmented
    market.
    The Company has direct client
    relationships. on-site
  The Company has a comprehensive service
    offering.
  The Company has unique global
    capabilities.
  The Company generates strong cash flow.
  Strategy
    Capitalizing on our recently enhanced
    platform.
 7




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##### Table of Contents



Matching our services to the needs of our
    clients.
  Pursuing acquisitions opportunistically.
  Acquisitions
  and/or
    
    expanding its geographic reach to Europe, Australia and India,
    which benefits its existing clients as they seek to establish
    global brand consistency; and
    increasing and expanding the scope of its global service
    offerings, such as creative design and high-end retouching,
    enhanced capabilities in serving life-sciences industry clients,
    and entering into new markets, such as retail and media.  non-U.S. divisions
     8




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##### Table of Contents



Marketing
    and Distribution
    Clients
  on-site on-site
  back-to-school
 9




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##### Table of Contents



and/or
    Competition
  state-of-the-art
      Research
    and Development
  off-the-shelf 3-D
   10




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##### Table of Contents



Employees
    Backlog
    Seasonality
    and Cyclicality
  speed-to-market and/or and/or
  Purchasing
    and Raw Materials
    Intellectual
    Property
  tm ® tm tm tm tm tm tm tm tm tm tm tm tm tm
 11




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##### Table of Contents



3-D,
  Available
    Information
  Form 10-K, Form 10-Q, Form 8-K,
  ITEM 1A.
    RISK
    FACTORS  The
    Companys operating results may be adversely affected by
    issues that affect its clients spending decisions during
    periods of economic downturn.
      The
    Company is subject to restrictive debt covenants under its debt
    arrangements that limit its operational flexibility and
    opportunities for growth.
   12




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In the
    event the Company fails to comply with the restrictive debt
    covenants under its debt arrangements, it may not be able to
    obtain the necessary amendments or waivers, and its lenders
    could accelerate the payment of all outstanding amounts due
    under those arrangements.
      The
    Company may be unable to renew or replace its revolving credit
    facility when it terminates in January 2010, and the terms of
    any renewed or replacement facility could be materially
    different than the terms in place today.
    The
    Company may not realize expected benefits from its cost
    reduction initiatives.
   13




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##### Table of Contents



If the
    Company fails to maintain an effective system of disclosure and
    internal controls or to rectify identified significant
    deficiencies and material weaknesses in its internal controls,
    it may not be able to accurately report its financial results
    and may continue to incur costs related to remediation of its
    internal controls.
  Form 10-K
    The
    United States Securities and Exchange Commission (the
    SEC) investigation may result in significant costs
    and expenses, may divert resources and could have a material
    adverse effect on the Companys business and results of
    operations.
    and/or
  Impairment
    charges have had and could continue to have a material adverse
    effect on the Companys financial results.
  Goodwill and Other Intangible Assets
 14




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The
    Companys operating results fluctuate from quarter to
    quarter, which may cause the value of its stock to
    decline.
    
    timing of the completion of particular projects or orders;
    material reduction, postponement or cancellation of major
    projects, or the loss of a major client;
    timing and amount of new business;
    differences in order flows;
    sensitivity to changing economic conditions;
    the strength of the consumer products industry;
    the relative mix of different types of work with differing
    margins;
    costs relating to expansion or reduction of operations,
    including costs to integrate current and any future acquisitions;
    changes in interest costs, foreign currency exchange rates and
    tax rates; and
    costs associated with compliance with legal and regulatory
    requirements.    The
    Company is subject to unpredictable order flows.
  project-by-project speed-to-market
  The
    Company is dependent on certain key clients.
   15




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The
    Companys foreign operations are subject to currency
    exchange, political, investment and other risks that could
    hinder it from transferring funds out of a foreign country,
    delay its debt service payments, cause its operating costs to
    increase and adversely affect its results of
    operations.
    
    political, social and economic instability;
    war, civil disturbance or acts of terrorism;
    taking of property by nationalization or expropriation without
    fair compensation;
    changes in government policies and regulations;
    imposition of limitations on conversions of foreign currencies
    into U.S. dollars or remittance of dividends and other
    payments by foreign subsidiaries;
    imposition or increase of withholding and other taxes on
    remittances and other payments by foreign subsidiaries;
    rapidly rising inflation in certain foreign countries; and
    impositions or increase of investment and other restrictions or
    requirements by foreign governments.      The
    Company operates in a highly competitive industry.
      The
    Companys clients could shift a significant portion of
    their marketing dollars from print to online at a level that
    exceeds Schawks current ability to deliver the online
    services they need at the volumes they require.
   16




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The
    Company may encounter difficulties arising from future
    acquisitions or consolidation efforts, which may adversely
    impact its business.
    
    difficulty in assimilating the operations and personnel of the
    acquired company with Schawks existing operations and
    realizing anticipated synergies;
    the loss of key employees or key clients of the acquired company;
    difficulty in maintaining uniform standards, controls,
    procedures and policies; and
    unrecorded liabilities of acquired companies that the Company
    failed to discover during its due diligence investigations.      The
    loss of key personnel could adversely affect the Companys
    current operations and its ability to achieve continued
    growth.
      Work
    stoppages and other labor relations matters may make it
    substantially more difficult or expensive for the Company to
    produce its products and services, which could result in
    decreased sales or increased costs, either of which would
    negatively impact the Companys financial condition and
    results of operations.
   17




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The
    Company remains susceptible to risks associated with
    technological and industry change, including risks based on the
    services it provides and may seek to provide in the future as a
    result of technological and industry changes.
    The
    price for the Companys common stock can be volatile and
    unpredictable.
    
    adverse information about, or the operating and stock price
    performance of, other companies in the Companys industry
    or companies that comprise its client base, such as consumer
    goods companies;
    deterioration or adverse changes in general economic conditions;
    continued high levels of volatility in the stock markets due to,
    among other things, disruptions in the capital and credit
    markets; and
    announcements of new clients or service offerings by
    Schawks competitors.    The
    Company may be subject to losses that might not be covered in
    whole or in part by existing insurance coverage. These uninsured
    losses could result in substantial liabilities to the Company
    that would negatively impact its financial
    condition.
   18




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##### Table of Contents



ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES    LeaseSquare


Owned/




ExpirationLocation

Feet


Leased


Purpose

Date

DivisionAddison, Texas


3,400



Leased


Operating Facility

July, 2009

Schawk U.S.A.Antwerp, Belgium


39,000



Owned


Operating Facility

N/A

Schawk BelgiumBattle Creek, Michigan


8,900



Leased


Operating Facility

December, 2009

Schawk U.S.A.Bristol, U.K.


9,200



Leased


Vacant

September, 2014

Schawk U.K.Carlstadt, New Jersey


45,000



Vacant


Subletting

February, 2011

Schawk U.S.A.Chennai, India


37,000



Leased


Operating Facility

October, 2011

Schawk AsiaCherry Hill, New Jersey


10,000



Leased


Operating Facility

January, 2009

Schawk U.S.A.Chicago, Illinois


68,000



Leased


Operating Facility

December, 2012

Schawk Retail Mktg.Chicago, Illinois


42,000



Leased


Vacant

June, 2019

Schawk U.S.A.Chicago, Illinois


87,000



Owned
(1)

Vacant

N/A

Schawk Retail Mktg.Chicago, Illinois


58,800



Leased


Operating Facility

September, 2015

Schawk RetailChicago, Illinois


11,900



Leased


General Offices

April, 2010

General OfficesCincinnati, Ohio


74,200



Leased


Operating Facility

August, 2009

Schawk U.S.A.Cincinnati, Ohio


12,000



Leased


Operating Facility

August, 2009

Schawk U.S.A.Cincinnati, Ohio


18,000



Leased


Operating Facility

November, 2014

Anthem U.S.A.Cincinnati, Ohio


12,200



Leased


Vacant

August, 2012

Anthem U.S.A.Crystal Lake, Illinois


78,800



Owned


Leased

N/A

N/ADes Plaines, Illinois


18,200



Owned


Executive Offices

N/A

Corporate OfficeDes Plaines, Illinois


55,000



Leased


Operating Facility

December, 2010

Schawk U.S.A.Hilversum, Netherlands


5,400



Leased


Operating Facility

October,  2011

Anthem, EuropeKalamazoo, Michigan


67,000



Owned


Operating Facility

N/A

Schawk U.S.A.Kobe, Japan


800



Leased


Operating Facility

February, 2009

Anthem  AsiaLeeds, U.K.


16,200



Leased


Operating Facility

January, 2010

Schawk U.K.Leeds, U.K.


4,400



Leased


Operating Facility

December, 2013

Schawk, U.K.Lithia Springs, Georgia


79,700



Leased


Operating Facility

July, 2009

Schawk Retail Mktg.London, U.K.


42,700



Leased


Operating Facility

March, 2015

Schawk U.K.London, U.K.


4,000



Leased


Vacant

November, 2009

Schawk U.K.London, U.K.


3,500



Leased


Operating Facility

June, 2010

Anthem EuropeLos Angeles, California


100,500



Owned


Operating Facility

N/A

Schawk U.S.A.Manchester, U.K.


45,200



Leased


Operating Facility

September, 2023

Schawk U.K.Meerhout, Belgium


5,900



Leased


Operating Facility

July, 2010

Schawk Retail Mktg.Melbourne, Australia


4,089



Leased


Operating Facility

October, 2009

Anthem AustraliaMinneapolis, Minnesota


31,000



Owned


Operating Facility

N/A

Schawk U.S.A.Mississauga, Canada


58,000



Leased


Operating Facility

December, 2014

Schawk CanadaMt. Olive, New Jersey


12,904



Leased


Operating Facility

August, 2012

Anthem U.S.A. 19




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##### Table of Contents



LeaseSquare


Owned/




ExpirationLocation

Feet


Leased


Purpose

Date

DivisionNorth Ryde, Australia


13,900



Leased


Operating Facility

May, 2011

Schawk AustraliaNeenah, Wisconsin


1,350



Leased


Operating Facility

September, 2009

Schawk U.S.A.New Berlin, Wisconsin


43,000



Leased


Operating Facility

June, 2010

Schawk U.S.A.New York, New York


52,500



Leased


Subletting

December, 2012

N/ANew York, New York


8,000



Leased


Subletting

January, 2011

N/ANew York, New York


6,400



Leased


Operating Facility

Month-to-month

Schawk Retail Mktg.New York, New York


5,000



Leased


Operating Facility

May, 2010

Anthem  U.S.A.Newcastle, U.K.


17,000



Leased


Operating Facility

September, 2015

Schawk U.K.Penang, Malaysia


2,330



Owned


Operating Facility

N/A

Schawk AsiaPenang, Malaysia


34,000



Owned


Operating Facility

N/A

Schawk AsiaPenang, Malaysia


1,700



Owned


Operating Facility

N/A

Schawk AsiaPlano, Texas


12,300



Leased


Subletting

December, 2011

N/APontiac, Illinois


24,900



Owned


Vacant

N/A

N/AQueretaro, Mexico


18,000



Owned


Operating Facility

N/A

Schawk MexicoRedmond, Washington


24,000



Leased


Operating Facility

April, 2017

Schawk U.S.A.Roseville, Minnesota


28,000



Leased


Operating Facility

May, 2009

Schawk/Anthem U.S.A.San Francisco, CA


20,100



Leased


Operating Facility

August, 2013

Schawk U.S.A.San Francisco, CA


13,500



Leased


Operating Facility

October, 2014

Anthem U.S.A.Santa Ana, CA


9,600



Leased


Vacant

July, 2011

Anthem  U.S.A.Shanghai, China


19,400



Leased


Operating Facility

November, 2009

Schawk AsiaShenzhen, China


7,100



Leased


Operating Facility

December, 2010

Schawk ShenzhenShenzhen, China


11,300



Leased


Operating Facility

July, 2009

Anthem ShenzhenSingapore


7,750



Leased


Operating Facility

November, 2010

Schawk AsiaSlough, U.K.


3,000



Leased


Subletting

January, 2010

Schawk U.K.Smyrna, Georgia


25,200



Leased


Operating Facility

January, 2009

Schawk U.S.A.Stamford, Connecticut


20,000



Leased


Operating Facility

August, 2010

Schawk U.S.A.Sterling Heights, MI


26,400



Leased


Operating Facility

December, 2012

Schawk U.S.A.Surry Hills, Australia


3,916



Leased


Operating Facility

November, 2009

Anthem AustraliaSwindon, U.K.


39,000



Leased


Vacant

September, 2018

Schawk U.K.Tokyo, Japan


900



Leased


Operating Facility

December, 2010

Schawk AsiaToronto, Ontario, Canada


8,300



Leased


Operating Facility

January, 2010

Anthem CanadaToronto, Ontario, Canada


17,500



Leased


Operating Facility

November, 2011

Schawk CanadaToronto, Ontario, Canada


13,600



Leased


Operating Facility

February, 2010

Schawk CanadaTunbridge Wells, U.K.


6,400



Leased


Subletting

March, 2009

Schawk U.K.     (1)
    
    Sold, March 2009  ITEM 3.
    LEGAL
    PROCEEDINGS   20




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##### Table of Contents



1996-2003.
      ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   PART II  ITEM 5.
    MARKET
    FOR THE REGISTRANTS COMMON STOCK, RELATED STOCKHOLDER
    MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES  Stock
    Prices
      Quarter Ended:

2008 High/Low


2007 High/LowMarch 31

$
16.70 - 12.79


$
19.62 - 17.00June 30


17.49 - 11.88



21.97 - 17.75September 30


18.61 - 9.92



23.89 - 17.21December 31


15.11 - 10.25



24.71 - 13.53  21




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##### Table of Contents



Dividends
    Declared Per Class A Common Share
  Quarter Ended:

2008


2007March 31

$
0.0325


$
0.0325June 30


0.0325



0.0325September 30


0.0325



0.0325December 31


0.0325



0.0325Total

$
0.1300


$
0.1300     Peer Group
  Comparison
    of 5 Year Cumulative Total Return 
    Assumes Initial Investment of $100* 
    December 2008
  
   *
    
    The graph assumes that $100 was invested on December 31,
    2003 in each of Schawk, Inc. common stock, the Russell 2000
    Index and the Peer Group Index, and that all dividends were
    reinvested. The Peer Group Index is weighted by market
    capitalization. 22




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##### Table of Contents



Equity
    Compensation Plan Information
    Number of SecuritiesRemaining Availablefor Future IssuanceNumber of Securities





Under Equityto be Issued Upon


Weighted-Average


Compensation PlansExercise of


Exercise Price of


(Excluding SharesOutstanding Options,


Outstanding Options,


Reflected in the FirstPlan Category

Warrants and Rights


Warrants and Rights


Column)Equity compensation plans approved by security holders


2,919


$
12.40



1,274Equity compensation plans not approved by security holders










TOTAL


2,919


$
12.40



1,274   Purchases
    of Equity Securities by the Company
  Rule 10b5-1
      No. SharesTotal No.


Avg. Price


Purchased as Part of


Dollar Value of SharesShares


Paid per


Publicly Announced


that may bePeriod

Purchased


Share


Program


Purchased Under ProgramAugust


119


$
14.24



119



1,881September


517


$
15.71



517



1,364October


656


$
12.62



656



708November


425


$
13.17



425



283December


283


$
12.94



283



2008 Total


2,000


$
13.68



2,000



  23




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##### Table of Contents



ITEM 6.
    SELECTED
    FINANCIAL DATA  Year Ended December 31,2008


2007


2006(1)


2005(2)


2004(3)(Restated)


(Restated)


(Restated)


(Restated)(In thousands, except per share amounts)CONSOLIDATED STATEMENT OF OPERATIONS INFORMATIONNet sales

$
494,184


$
544,409


$
546,118


$
565,485


$
237,219Income (loss) from continuing operations


(60,006
)


30,598



25,949



28,522



21,303Income (loss) per common share from continuing operations:Basic

$
(2.24
)

$
1.14


$
0.98


$
1.12


$
0.99Diluted

$
(2.24
)

$
1.10


$
0.95


$
1.06


$
0.95CONSOLIDATED BALANCE SHEET INFORMATIONTotal assets


440,353



534,987



530,760



552,611



216,617Long-term debt


112,264



105,942



140,763



169,579



39,964OTHER DATACash dividends per common share

$
0.13


$
0.13


$
0.13


$
0.13


$
0.13      Form 10-Q
  (1)
    
    Consolidated Statement of Operations and Balance Sheet
    Information was impacted by the disposition of the Book and
    Catalogue operations on February 28, 2006. See Note 4
    to the Consolidated Financial Statements. This disposition
    impacts the information presented above for years 2006 and 2005.(2)
    
    Consolidated Statement of Operations and Consolidated Balance
    Sheet Information was impacted by the acquisition of Seven on
    January 31, 2005 and the acquisition of Winnetts on
    December 31, 2004. See Note 3 to the Consolidated
    Financial Statements.(3)
    
    Consolidated Balance Sheet Information was impacted by the
    acquisition of Winnetts on December 31, 2004. See
    Note 3 to the Consolidated Financial Statements.  ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  (Thousands of dollars, except per share amounts)
  Cautionary
    Statement Regarding Forward-Looking Information
   24




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##### Table of Contents



Executive
    overview
    
    Strategic Analysis
    Planning and Messaging
    Conceptual Design
    Content Creation
    File Building
    Retouching
    Art Production
    Pre-Media       25




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##### Table of Contents



Recent
    Acquisitions
    Brandmark International Holding B.V.
  Marque Brand Consultants Pty Ltd.
  Protopak Innovations, Inc.
  Perks Design Partners Pty Ltd.
  Benchmark Marketing Services, LLC.
 26




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##### Table of Contents



Schawk India, Ltd.
  WBK, Inc.
  Anthem York.
  Seven Worldwide, Inc.
  Business Combinations
  Winnetts.
 27




---



##### Table of Contents



Financial
    Results Overview
        Goodwill impairment
 28




---



##### Table of Contents



Cost reduction actions Accounting for Costs Associated with Exit or Disposal
    Activities Employers Accounting for Postemployment
    Benefits
      Pension withdrawal expense
  Impairment of long lived assets
  No. 98-1 Accounting for the Costs of Computer Software Developed
    or Obtained for Internal Use (SOP No. 98-1)
     29




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##### Table of Contents



Discontinued
    Operations
  Accounting for the Impairment or Disposal of Long-Lived
    Assets Form 10-Q Form 10-Q
    Form 10-K, Form 10-Q Form 10-K
  Restatement
    of Prior Period Financial Statements
  Restatement
    reported in
    Form 10-K
    for the year ended December 31, 2007
  Form 10-K
    Restatement
    to correct error in the financial statements for the year ended
    December 31, 2002
  Goodwill
    and Other Intangible Assets
  Form 10-K
 30




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##### Table of Contents



Form 10-K.
  Controls
    and Procedures
  work-in-process
  RESULTS
    OF OPERATIONS
  For
    the Years Ended December 31, 2008 and 2007
  Schawk,
    Inc.
    Comparative Consolidated Statements of Operations
 Years
    Ended December 31, 2008 and 2007
  $


%2008


2007


Change


Change(In thousands)Net sales

$
494,184


$
544,409


$
(50,225
)


(9.2
)%Cost of sales


329,814



352,015



(22,201
)


(6.3
)%Gross profit


164,370



192,394



(28,024
)


(14.6
)%Gross profit percentage


33.3
%


35.3
%Selling, general and administrative expenses


148,596



131,024



17,572



13.4
%Acquisition integration and restructuring expenses


10,390







10,390



nmImpairment of long-lived assets


6,644



1,197



5,447



nmMultiemployer pension withdrawal expense


7,254







7,254



nmImpairment of goodwill


48,041







48,041



nmOperating income (loss)


(56,555
)


60,173



(116,728
)


nmOperating margin percentage


(11.4
%)


11.1
%Other income (expense):Interest income


291



297



(6
)


(2.0
)%Interest expense


(6,852
)


(9,214
)


2,362



(25.6
)%(6,561
)


(8,917
)


2,356



(26.4
)%Income (loss) before income taxes


(63,116
)


51,256



(114,372
)


nmIncome tax provision (benefit)


(3,110
)


20,658



(23,768
)


nmNet income (loss)

$
(60,006
)

$
30,598


$
(90,604
)


nmEffective income tax rate


4.9
%


40.3
%      31




---



##### Table of Contents



Net sales
    Gross profit
  Selling, general and administrative expenses
  Operating income (loss)
    Interest expense
  Income tax provision (benefit)
  Other
    Information
     32




---



##### Table of Contents



RESULTS
    OF OPERATIONS
  For
    the Years Ended December 31, 2007 and 2006
  Schawk,
    Inc.
    Comparative Consolidated Statements of Operations
 Years
    Ended December 31, 2007 and 2006
  $


%2007


2006


Change


Change(In thousands)Net sales

$
544,409


$
546,118


$
(1,709
)


(0.3
)%Cost of sales


352,015



356,149



(4,134
)


(1.2
)%Gross profit


192,394



189,969



2,425



1.3
%Gross margin percentage


35.3
%


34.8
%Selling, general and administrative expenses


131,024



137,995



(6,971
)


(5.1
)%Acquisition integration and restructuring expenses






3,933



(3,933
)


nmImpairment of long-lived assets


1,197







1,197



nmReserve reversal from litigation settlements






(6,871
)


6,871



nmOperating income


60,173



54,912



5,261



9.6
%Operating margin percentage


11.1
%


10.1
%Other income (expense):Interest income


297



467



(170
)


(36.4
)%Interest expense


(9,214
)


(10,617
)


1,403



(13.2
)%(8,917
)


(10,150
)


1,233



12.1
%Income from continuing operations before income taxes


51,256



44,762



6,494



14.5
%Income tax provision


20,658



18,813



1,845



9.8
%Income from continuing operations


30,598



25,949



4,649



17.9
%Income (loss) from discontinued operations






(1,332
)


1,332



nmNet income

$
30,598


$
24,617


$
5,981



24.3
%Effective income tax rate


40.3
%


42.0
%       Net sales
   33




---



##### Table of Contents



Gross margin
  Operating income
    Other income (expense)
  Income tax provision
  Business Combinations,
    LIQUIDITY
    AND CAPITAL RESOURCES
   34




---



##### Table of Contents



Cash
    provided by Operating Activities
      Cash
    used in Investing Activities
    Cash
    used in Financing Activities
    Revolving
    Credit Facility, Note Purchase Agreements and Other Debt
    Arrangements
     35




---



##### Table of Contents



2009
    Amendments to Revolving Credit Facility and Note Purchase
    Agreements
    
    reduced the size of the Companys revolving credit facility
    by $32.5 million, from $115.0 million (expandable to
    $125.0 million) to $82.5 million;
    after the payment of $2.6 million on or before
    September 30, 2009, the size of the Companys
    revolving credit facility will be further reduced to
    $80.0 million, which, based on the Companys
    June 1, 2009 outstanding revolving credit balance, is
    expected to provide approximately $15 million of available
    credit;
    increased the Companys maximum permitted cash-flow
    leverage ratio from 3.25 to 5.00 for the first quarter of 2009,
    decreasing to 3.00 in the fourth quarter of 2009 and thereafter;
    amended the credit facilitys pricing terms, including
    increasing the interest rate margin applicable on the revolving
    credit facility indebtedness to a variable rate of LIBOR plus
    300 to 450 basis points (bps), depending on the
    cash-flow leverage ratio, and set the minimum LIBOR at
    2.0 percent;
    increased the unused revolver commitment fee rate to 50 bps
    per year; 36




---



##### Table of Contents




    increased the interest rate on indebtedness outstanding under
    each of the notes outstanding under the Companys note
    agreements by 400 bps;
    reset the Companys minimum quarterly fixed charge coverage
    ratio;
    prohibit the Company from repurchasing its shares without lender
    consent and restrict future dividend payments by the Company
    (beginning with the first dividend declared after March,
    2009) to an aggregate $0.3 million per fiscal quarter,
    or approximately $.01 per share based on the number of shares of
    common stock currently outstanding;
    require the Company to obtain lender approval of any
    acquisitions;
    revised the Companys minimum consolidated net worth
    covenant to be based on 90 percent of the Companys
    consolidated net worth as of March 31, 2009;
    reduced the amount of the Companys permitted capital
    expenditures to $17.5 million, from $25.0 million,
    during any fiscal year; and
    provide a waiver for any noncompliance with certain financial
    covenants, as well as with covenants relating to (i) the
    reduction of indebtedness within prescribed time periods using
    the proceeds of a previously completed asset sale, (ii) the
    payment of dividends, and (iii) the delivery of the
    Companys annual and quarterly financial statements for the
    periods ended December 31, 2008 and March 31, 2009,
    respectively, within prescribed time periods.         37




---



##### Table of Contents



SEASONALITY
    Off-Balance
    Sheet Arrangements and Contractual Obligations
        Payments Due by PeriodLess








MoreThan 1


1-3


3-5


Than 5Contractual Obligations

Total


Year


Year


Years


Years(In thousands)Debt obligations

$
135,827


$
23,563


$
87,684


$
23,351


$
1,229Interest on debt(1)


12,965



4,272



7,310



1,328



55Operating lease obligations


50,972



12,645



17,800



11,927



8,600Purchase obligations


7,155



5,095



2,060







Deferred compensation


1,942



249



31



31



1,631Multiemployer pension withdrawal


7,400







7,400







Uncertain tax positions(2)


9,249



1,906



7,343







Total

$
225,510


$
47,730


$
129,628


$
36,637


$
11,515     (1)
    
    Reflects scheduled interest payments on fixed-rate debt.
    Variable-rate interest on approximately $66,250 of variable rate
    debt under its revolving credit agreement as of
    December 31, 2008 is excluded because regular interest
    payments are not scheduled and fluctuate depending on
    outstanding principal balance and market-rate interest levels.(2)
    
    Represents liability related to uncertain tax positions.     38




---



##### Table of Contents



Critical
    accounting policies and estimates
    Accounts Receivable.
  Impairment of Long-Lived Assets.
  Goodwill and Other Acquired Intangible
    Assets.
 39




---



##### Table of Contents



st Accounting Changes and Error Corrections
    and/or
  Income Taxes. Accounting for
    Uncertainty in Income Taxes (as amended)an interpretation of
    FASB Statement No. 109
    Exit Reserves.
 40




---



##### Table of Contents



New
    Accounting Pronouncements
  Business Combinations Business Combinations
    ,
    Noncontrolling Interests in Consolidated Financial
    Statements-an amendment of ARB No. 51
  The Fair Value Option for Financial Assets and
    Financial Liabilities Including an Amendment of FASB Statement
    No. 115 instrument-by-instrument
 41




---



##### Table of Contents



Fair Value Measurements No. 157-2,
  No. 142-3, Determining the Useful Life of Intangible Assets No. 142-3). FSP 142-3 No. 142-3
  Impact
    of Inflation
    ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Interest
    Rate Exposure
    Foreign
    Exchange Exposure
     42




---



##### 



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  Index to
    Financial Statements
   
 PageReport of Independent Registered Public
    Accounting Firm


44FINANCIAL STATEMENTS:Consolidated Balance Sheets 
    December 31, 2008 and 2007


45Consolidated Statements of Operations 
    Years Ended December 31, 2008, 2007 and 2006


46Consolidated Statements of Cash Flows 
    Years Ended December 31, 2008, 2007 and 2006


47Consolidated Statements of Stockholders
    Equity  Years Ended December 31, 2008, 2007 and
    2006


48Notes to Consolidated Financial Statements


49FINANCIAL STATEMENT SCHEDULES:SCHEDULE II  Valuation
    Reserves


100   43




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm                 
    44




---



##### Table of Contents



Schawk,
    Inc.
  Consolidated
    Balance Sheets
  December 31,2008


2007(Restated)(In thousands, except share amounts)ASSETSCurrent assets:Cash and cash equivalents

$
20,205


$
11,754Trade accounts receivable, less allowance for doubtful accounts
    of $3,138 in 2008 and $2,063 in 2007


83,218



113,215Inventories


23,617



21,902Prepaid expenses and other current assets


11,243



13,524Income tax receivable


3,348



Assets held for sale


6,555



Deferred income taxes


2,765



4,755Total current assets


150,951



165,150Property and equipment, net


58,325



77,083Goodwill


184,037



246,368Other intangible assets, net


39,125



41,528Deferred income taxes


2,752



Other assets


5,163



4,858Total assets

$
440,353


$
534,987LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Trade accounts payable

$
20,694


$
26,308Accrued expenses


52,016



52,420Income taxes payable






4,754Current portion of long-term debt


23,563



4,433Total current liabilities


96,273



87,915Long-term debt


112,264



105,942Deferred income taxes


1,858



15,814Other long-term liabilities


29,137



24,547Stockholders Equity:Common stock, $0.008 par value, 40,000,000 shares
    authorized, 29,478,456 and 29,213,166 shares issued at
    December 31, 2008 and 2007, respectively , 25,218,566 and
    27,013,482 shares outstanding at December 31, 2008 and
    2007, respectively


217



216Additional paid-in capital


187,801



184,110Retained earnings


68,016



131,457Accumulated comprehensive income, net


1,368



14,162257,402



329,945Treasury stock, at cost, 4,259,890 and 2,199,684 shares of
    common stock at December 31, 2008 and 2007, respectively


(56,581
)


(29,176
)Total stockholders equity


200,821



300,769Total liabilities and stockholders equity

$
440,353


$
534,987    45




---



##### Table of Contents



Schawk,
    Inc.
  Consolidated
    Statements of Operations
  Years Ended December 31,2008


2007


2006(In thousands, except per share amounts)Net sales

$
494,184


$
544,409


$
546,118Cost of sales


329,814



352,015



356,149Gross profit


164,370



192,394



189,969Selling, general, and administrative expenses


148,596



131,024



136,710Impairment of goodwill


48,041







Acquisition integration and restructuring expenses


10,390







3,933Multiemployer pension withdrawal expense


7,254







1,285Impairment of long-lived assets


6,644



1,197



Reserve reversal from litigation settlement










(6,871
)Operating income (loss)


(56,555
)


60,173



54,912Other income (expense):Interest income


291



297



467Interest expense


(6,852
)


(9,214
)


(10,617
)(6,561
)


(8,917
)


(10,150
)Income (loss) from continuing operations before income taxes


(63,116
)


51,256



44,762Income tax provision (benefit)


(3,110
)


20,658



18,813Income (loss) from continuing operations


(60,006
)


30,598



25,949Loss from discontinued operations, net of tax benefit of $851 in
    2006










(1,332
)Net income (loss)

$
(60,006
)

$
30,598


$
24,617Earnings per share:Basic:Income (loss) from continuing operations

$
(2.24
)

$
1.14


$
0.98Loss from discontinued operations

$



$



$
(0.05
)Net income (loss) per common share

$
(2.24
)

$
1.14


$
0.93Diluted:Income (loss) from continuing operations

$
(2.24
)

$
1.10


$
0.95Loss from discontinued operations

$



$



$
(0.05
)Net income (loss) per common share

$
(2.24
)

$
1.10


$
0.90Weighted average shares outstanding:Basic


26,739



26,869



26,393Diluted


26,739



27,701



27,395Dividends per Class A common share

$
0.13


$
0.13


$
0.13    46




---



##### Table of Contents



Schawk,
    Inc.
  Consolidated
    Statements of Cash Flows
  Years Ended December 31,2008


2007


2006(In thousands)Operating activitiesNet income (loss)

$
(60,006
)

$
30,598


$
24,617Adjustments to reconcile net income to cash provided by
    operating activities:Depreciation


16,693



17,574



19,051Amortization


4,058



3,779



3,466Impairment write-down of goodwill


48,041







Impairment write-down of long-lived assets


6,644



1,197



Non-cash restructuring charge


628







Deferred income taxes


(8,452
)


1,323



(9,826
)Reserve reversal from litigation settlement










(6,871
)Loss (gain) on sale of equipment


362



(852
)


532Share-based compensation expense


1,385



1,011



1,059Tax benefit from stock options exercised


(100
)


(608
)


(1,662
)Changes in operating assets and liabilities, net of effects from
    acquisitions:Trade accounts receivable


25,184



21,204



(3,568
)Inventories


(2,936
)


883



1,564Prepaid expenses and other current assets


1,048



(3,971
)


11Trade accounts payable, accrued expenses and other liabilities


1,993



(5,884
)


(20,130
)Income taxes refundable (payable)


(1,383
)


4,175



19,952Net cash provided by operating activities


33,159



70,429



28,195Investing activitiesProceeds from disposal of property and equipment


1,189



2,605



4,551Proceeds from sale of business










28,184Purchases of property and equipment


(14,912
)


(18,121
)


(24,662
)Acquisitions, net of cash acquired


(12,784
)


(21,384
)


(9,747
)Other


309



(261
)


(112
)Net cash used in investing activities


(26,198
)


(37,161
)


(1,786
)Financing activitiesIssuance of common stock


2,208



4,116



6,921Net principal proceeds (payments) on debt


28,033



(33,408
)


(27,514
)Principal payments on capital lease obligations






(37
)


(492
)Tax benefit from stock options exercised


100



608



1,662Cash dividends


(3,411
)


(3,474
)


(3,424
)Purchase of common stock


(27,430
)


(42
)


(1,223
)Net cash used in financing activities


(500
)


(32,237
)


(24,070
)Effect of foreign currency rate changes


1,990



546



319Net increase in cash and cash equivalents


8,451



1,577



2,658Cash and cash equivalents beginning of period


11,754



10,177



7,519Cash and cash equivalents end of period

$
20,205


$
11,754


$
10,177Supplementary cash flow disclosures:Dividends issued in the form of Class A common stock

$
24


$
24


$
23Cash paid for interest

$
5,494


$
7,574


$
8,898Cash paid for income taxes, net

$
6,481


$
15,923


$
3,686    47




---



##### Table of Contents



Schawk,
    Inc.
  Consolidated
    Statements of Stockholders Equity
 Years
    Ended December 31, 2006 (Restated), 2007 (Restated) and
    2008
  Class ACommon


Class A


Additional





Accumulated





TotalShares


Common


Paid-in


Retained


Comprehensive


Treasury


StockholdersOutstanding


Stock


Capital


Earnings


Income (Loss)


Stock


Equity(In thousands, except share amounts)Balance at December 31, 2005 (As originally reported)


26,070,747


$
208


$
168,794


$
86,081


$
1,933


$
(27,963
)

$
229,053Restatement Adjustments














(2,191
)


(784
)






(2,975
)Balance at December 31, 2005 (Restated)


26,070,747



208



168,794



83,890



1,149



(27,963
)


226,078Net income














24,617











24,617Foreign currency translation adjustment


















5,506







5,506Total comprehensive income


























30,123Sale of Class A common stock


559,086



3



5,814















5,817Tax benefit from stock options exercised










1,662















1,662Purchase of Class A treasury stock


(64,281
)


















(1,223
)


(1,223
)Stock issued under employee stock purchase plan


53,929



1



1,103















1,104Share-based compensation expense










1,059















1,059Issuance of Class A common stock under dividend
    reinvestment program


1,329











(23
)






26



3Cash dividends














(3,424
)










(3,424
)Balance at December 31, 2006 (Restated)


26,620,810



212



178,432



105,060



6,655



(29,160
)


261,199Net income














30,598











30,598Foreign currency translation adjustment


















7,507







7,507Total comprehensive income


























38,105Adoption of FIN 48










(53
)


(703
)










(756
)Sale of Class A common stock


345,754



3



3,266















3,269Tax benefit from stock options exercised










608















608Purchase of Class A treasury stock


(2,146
)


















(42
)


(42
)Stock issued under employee stock purchase plan


47,683



1



846















847Share-based compensation expense










1,011















1,011Issuance of Class A common stock under dividend
    reinvestment program


1,381











(24
)






26



2Cash dividends














(3,474
)










(3,474
)Balance at December 31, 2007 (Restated)


27,013,482



216



184,110



131,457



14,162



(29,176
)


300,769Net loss














(60,006
)










(60,006
)Foreign currency translation adjustment


















(12,794
)






(12,794
)Total comprehensive (loss)


























(72,800
)Sale of Class A common stock


142,533



1



1,431















1,432Tax benefit from stock options exercised










100















100Purchase of Class A treasury stock


(2,000,000
)


















(27,430
)


(27,430
)Stock issued under employee stock purchase plan


60,657







775















775Share-based compensation expense










1,385















1,385Issuance of Class A common stock under dividend
    reinvestment program


1,894











(24
)






25



1Cash dividends














(3,411
)










(3,411
)Balance at December 31, 2008


25,218,566


$
217


$
187,801


$
68,016


$
1,368


$
(56,581
)

$
200,821    48




---



##### Table of Contents



Schawk,
    Inc.
  Notes
    to Consolidated Financial Statements
 (In Thousands, Except Per Share Amounts)
  NOTE 1.
    Restatement
    of Previously Issued Financial Statements  Restatement
    to correct error in the financial statements for the year ended
    December 31, 2002
  Goodwill
    and Other Intangible Assets
  Materiality Considering the Effects of
    Prior Year Misstatements when Quantifying Misstatements in
    Current Year Financial Statements
  Form 10-K Form 10-K.
 49




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Consolidated
    Balance Sheet
  December 31, 2007PreviouslyReported


RestatedAssetsCurrent assets:Cash and cash equivalents

$
11,754


$
11,754Trade accounts receivable, less allowance for doubtful accounts
    of $2,063


113,215



113,215Inventories


21,902



21,902Prepaid expenses and other current assets


13,524



13,524Deferred income taxes


4,755



4,755Total current assets


165,150



165,150Property and equipment, net


77,083



77,083Goodwill


249,895



246,368Other intangible assets, net


41,528



41,528Other assets


4,858



4,858Total assets

$
538,514


$
534,987Liabilities and Stockholders EquityCurrent liabilities:Trade accounts payable

$
26,308


$
26,308Accrued expenses


52,420



52,420Income taxes payable


4,754



4,754Current portion of long-term debt


4,433



4,433Total current liabilities


87,915



87,915Long-term debt


105,942



105,942Other long-term liabilities


24,547



24,547Deferred income taxes


15,814



15,814Stockholders Equity:Common stock


216



216Additional paid-in capital


184,110



184,110Retained earnings


133,648



131,457Accumulated comprehensive income, net


15,498



14,162333,472



329,945Treasury stock, at cost


(29,176
)


(29,176
)Total stockholders equity


304,296



300,769Total liabilities and stockholders equity

$
538,514


$
534,987  50




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  NOTE 2.
    Significant
    Accounting Policies  Basis
    of Presentation
    Principles
    of Consolidation
    Cash
    Equivalents
    Accounts
    Receivable and Concentration of Credit Risk
    Inventories
  made-to-order Work-in-process
    Property
    and Equipment
   51




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Goodwill
  Goodwill and Other
    Intangible Assets, as amended Disclosures about Segments of
    an Enterprise and Related Information
      Software
    Developed for Internal Use
  98-1 Accounting for the Costs of Computer Software Developed
    or Obtained for Internal Use. (SOP No. 98-1).
  No. 98-1 Accounting for the Costs of Computer Software Developed
    or Obtained for Internal Use (SOP No. 98-1)
  Software
    Developed for Sale to Customers
  Accounting for the Costs of Computer
    Software to be Sold, Leased or Otherwise Marketed
 52




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Long-lived
    Assets
      Revenue
    Recognition
  Revenue Recognition
  and/or No. 00-21, Revenue Arrangements with Multiple Deliverables No. 00-21). EITF 00-21
  97-2, (SOP No. 97-2).
  Vendor
    Rebates
  EITF 02-16, Accounting by a Customer (Including a Reseller) for
    Certain Consideration Received from a Vendor No. 02-16)
 53




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Customer
    Rebates
    Shipping
    and Handling Fees and Costs
  Net sales jobs-in-progress Cost of sales
  Income
    Taxes
      Accounting for Uncertainty in
    Income Taxes-an interpretation of FASB Statement No. 109,
    Accounting for Income Taxes
  Use of
    Estimates
   54




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Foreign
    Currency Translation
    Fair
    Value Measurements
  Fair Value Measurements
  
    Level 1  Quoted prices in active markets
    for identical assets or liabilities. These are typically
    obtained from real-time quotes for transactions in active
    exchange markets involving identical assets.
    Level 2  Inputs, other than quoted prices
    included within Level 1, which are observable for the asset
    or liability, either directly or indirectly. These are typically
    obtained from readily-available pricing sources for comparable
    instruments.
    Level 3  Unobservable inputs, where there
    is little or no market activity for the asset or liability.
    These inputs reflect the reporting entitys own assumptions
    of the data that market participants would use in pricing the
    asset or liability, based on the best information available in
    the circumstances.    December 31,2008


2007Fair value of fixed-rate notes payable

$
65,262


$
71,487Carrying value of fixed-rate notes payable


69,286



72,857   The
    Fair Value Option for Financial Assets and Financial Liabilities
    Including an Amendment of FASB Statement No. 115
   55




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Stock
    Based Compensation
  Share-Based Payments, Accounting for Stock Issued to
    Employees
    New
    Accounting Pronouncements
  Business Combinations Business Combinations
    ,
    Noncontrolling Interests in Consolidated Financial
    Statements-an amendment of ARB No. 51
 56




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    instrument-by-instrument
  No. 157-2,
  No. 142-3, Determining the Useful Life of Intangible Assets No. 142-3). FSP 142-3 No. 142-3
  NOTE 3.
    Acquisitions  Brandmark
    International Holding B.V.
     57




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Accounts receivable

$
1,193Inventory


3Other current assets


78Fixed assets


146Goodwill


7,661Customer relationships


5,008Trade names


56Accounts payable


(472
)Accrued expenses


(634
)Income tax payable


(140
)Deferred income taxes


(590
)Other long term liabilities


(2,460
)Total cash paid at closing, net of $430 cash acquired

$
9,849         Marque
    Brand Consultants Pty Ltd.
     58




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Inventory

$
1Other current assets


1Fixed assets


40Goodwill


26Customer relationships


1,292Non-compete agreement


92Trade names


37Accounts payable


(48
)Income tax payable


(136
)Other current liabilities


(49
)Total cash paid at closing, net of $1,370 cash acquired

$
1,256         Perks
    Design Partners Pty Ltd.
      Protopak
    Innovations, Inc.
   59




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  U.S.-based
    Trade accounts receivable

$
836Other current assets


132Fixed assets


765Goodwill


7,020Customer relationships


4,736Non-compete agreement


379Trade names


284Accounts payable


(52
)Income tax payable


(84
)Deferred income taxes


(2,176
)Total cash paid at closing, net of $269 cash acquired

$
11,840     Schawk
    India, Ltd.
     60




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Benchmark
    Marketing Services, LLC
    No. 95-3 Recognition of Liabilities in Connection with a
    Purchase Business Combination. No. 95-3)
    Balance








BalanceDecember 31,








December 31,2007


Adjustments


Payments


2008Facility closure cost

$
666


$
(198
)

$
(42
)

$
426     WBK,
    Inc.
     61




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Anthem
    York
      Seven
    Worldwide Holdings, Inc.
      No. 95-3 Recognition of Liabilities in Connection with a
    Purchase Business Combination. No. 95-3)
 62




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Balance








BalanceJanuary 31,








December 31,2005


Adjustments


Payments


2005Employee severance

$
7,075


$
5,092


$
(6,721
)

$
5,446Facility closure cost


5,700



5,171



(1,223
)


9,648Total

$
12,775


$
10,263


$
(7,944
)

$
15,094   Balance








BalanceDecember 31,








December 31,2005


Adjustments


Payments


2006Employee severance

$
5,446


$
155


$
(5,263
)

$
338Facility closure cost


9,648



1,873



(2,930
)


8,591Total

$
15,094


$
2,028


$
(8,193
)

$
8,929   Balance








BalanceDecember 31,








December 31,2006


Adjustments


Payments


2007Employee severance

$
338


$
(81
)

$
(187
)

$
70Facility closure cost


8,591



(3,183
)

$
(1,557
)


3,851Total

$
8,929


$
(3,264
)

$
(1,744
)

$
3,921   Balance








BalanceDecember 31,








December 31,2007


Adjustments


Payments


2008Employee severance

$
70


$
(70
)

$



$
Facility closure cost


3,851



(1,052
)

$
(925
)

$
1,874Total

$
3,921


$
(1,122
)

$
(925
)

$
1,874     Weir
    Holdings Limited
     63




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  No. 95-3 Recognition of Liabilities in Connection with a
    Purchase Business Combination No. 95-3)
    Balance








BalanceDecember 31,








December 31,2004


Adjustments


Payments


2005Employee severance

$
1,254


$
65


$
(902
)

$
417Facility closure cost


1,246



718



(632
)


1,332Total

$
2,500


$
783


$
(1,534
)

$
1,749   Balance








BalanceDecember 31,








December 31,2005


Adjustments


Payments


2006Employee severance

$
417


$



$
(417
)

$
Facility closure cost


1,332



(686
)


(245
)


401Total

$
1,749


$
(686
)

$
(662
)

$
401   Balance








BalanceDecember 31,








December 31,2006


Adjustments


Payments


2007Facility closure cost

$
401


$
24


$
(16
)

$
409Total

$
401


$
24


$
(16
)

$
409   Balance








BalanceDecember 31,








December 31,2007


Adjustments


Payments


2008Facility closure cost

$
409


$
(72
)

$
(28
)

$
309Total

$
409


$
(72
)

$
(28
)

$
309   Note 6-
  Other
    acquisitions
   64




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  NOTE 4.
    Discontinued
    Operations  Accounting for the Impairment or Disposal of Long-Lived
    Assets Form 10-Q Form 10-Q
    Form 10-K, Form 10-Q Form 10-K.
  Form 10-Q,
   65




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Accounting
    for the Impairment of Long-Lived Assets
  2006Net sales

$
8,137Cost of sales


6,980Gross profit


1,157Selling, general and administrative expenses


3,145Operating loss


(1,988
)Interest expense


195Loss before income taxes


(2,183
)Income tax benefit


(851
)Net loss

$
(1,332
)   NOTE 5.
    Reserve
    Reversal from Litigation Settlements    Note 1-Basis
  NOTE 6.
    Acquisition
    Integration and Restructuring  2008
    Restructuring and Cost Reduction Plan
  Accounting
    for Costs Associated with Exit or Disposal Activities
 66




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Employers
    Accounting for Postemployment Benefits
    OtherEmployee


Lease


RelatedTerminations


Obligations


Costs


TotalExpense recorded

$
4,552


$
4,315


$
895


$
9,762Cash payments


(3,259
)


(224
)


(895
)


(4,378
)Liability balance December 31, 2008

$
1,293


$
4,091


$



$
5,384     2006
    Restructuring
     67




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  NOTE 7.
    Inventories    December 31,2008


2007Raw materials

$
2,994


$
3,393Work in process


18,487



16,497Finished goods


3,066



2,96924,547



22,859Less: LIFO reserve


(930
)


(957
)$
23,617


$
21,902     NOTE 8.
    Property
    and Equipment    Estimated


December 31,Useful Life


2008


2007Land and improvements


10-15 years


$
5,201


$
10,602Buildings and improvements


15-30 years



14,120



18,755Machinery and equipment


3-7 years



92,735



98,553Leasehold improvements


Life of lease



19,630



18,452Computer software and licenses


3-7 years



19,222



26,904150,908



173,266Accumulated depreciation and amortization






(92,583
)


(96,183
)$
58,325


$
77,083   NOTE 9.
    Goodwill
    and Other Intangible Assets  Goodwill and
    Other Intangible Assets Accounting Changes and Error
    Corrections
   68




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        Goodwill
    and Other Intangible Assets
  Form 10-K
    United Statesand Mexico


Europe


Other


TotalBalance at December 31, 2006 (restated)

$
169,002


$
39,056


$
25,947


$
234,005Acquisitions


577







11,328



11,905Additional purchase accounting adjustments


2,533



(3,659
)


250



(876
)Adjustments to exit reserves


(625
)


(2,615
)






(3,240
)Adjustments to exit reserve present value


5



638







643Foreign currency translation






531



3,400



3,931Balance at December 31, 2007 (restated)


171,492



33,951



40,925



246,368Acquisitions










7,687



7,687Additional purchase accounting adjustments


(14,209
)


(113
)


1,470



(12,852
)Adjustments to exit reserves


(950
)


(188
)


(113
)


(1,251
)Adjustments to exit reserve present value


53



78



19



150Goodwill impairment






(30,657
)


(17,384
)


(48,041
)Foreign currency translation






(3,071
)


(4,953
)


(8,024
)Balance at December 31, 2008

$
156,386


$



$
27,651


$
184,037  69




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    December 31, 2008Weighted





AccumulatedAverage Life


Cost


Amortization


NetCustomer relationships


14.2 years


$
50,411


$
(12,251
)

$
38,160Digital images


5.0 years



890



(675
)


215Developed technologies


3.0 years



712



(712
)


Non-compete agreements


3.4 years



1,210



(919
)


291Patents


20.0 years



84



(84
)


Trade names


2.6 years



703



(504
)


199Contract acquisition cost


3.0 years



935



(675
)


26013.3 years


$
54,945


$
(15,820
)

$
39,125   December 31, 2007Weighted





AccumulatedAverage Life


Cost


Amortization


NetCustomer relationships


15.0 years


$
49,722


$
(10,013
)

$
39,709Digital images


5.0 years



935



(493
)


442Developed technologies


3.0 years



712



(687
)


25Non-compete agreements


3.4 years



1,201



(717
)


484Patents


20.0 years



326



(326
)


Trade names


2.2 years



658



(361
)


297Contract acquisition cost


3.0 years



935



(364
)


57114.1 years


$
54,489


$
(12,961
)

$
41,528    70




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  NOTE 10.
    Accrued
    Expenses    December 31,2008


2007Accrued compensation and payroll taxes

$
16,946


$
26,466Deferred revenue


8,217



4,817Deferred lease costs


3,992



2,885Accrued professional fees


3,665



2,968Restructuring reserves


3,456



Vacant property reserve


2,243



3,085Accrued customer rebates


1,498



1,340Facility exit reserve


1,309



2,303Accrued sales & use tax


1,227



608Accrued property taxes


920



1,293Accrued interest


721



651Other


7,822



6,004$
52,016


$
52,420   NOTE 11.
    Other
    Long-Term Liabilities    December 31,2008


2007Multiemployer pension withdrawal liability

$
7,410


$
694FIN48 reserves


7,343



8,425Vacant property reserve


4,080



8,321Deferred revenue


2,543



1,815Employment tax reserve


2,396



Restructuring reserve


1,928



Facility exit reserve


1,300



2,364Other


2,137



2,928$
29,137


$
24,547   No. 95-3 Recognition of Liabilities in Connection with a
    Purchase Business Combination. No. 95-3).
 71




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   NOTE 12.
    Debt    December 31,2008


2007Revolving credit agreement

$
66,250


$
36,655Series A senior note payable  Tranche A


10,714



12,857Series A senior note payable  Tranche B


8,572



10,000Series C senior note payable


10,000



10,000Series D senior note payable


20,000



20,000Series E senior note payable


20,000



20,000Canadian bank credit line






851Other


291



12135,827



110,375Less amounts due in one year or less


(23,563
)


(4,433
)$
112,264


$
105,942     2009

$
23,5632010


67,4062011


20,2782012


20,2782013


3,073Thereafter


1,229$
135,827   Revolving
    Credit Facility, Note Purchase Agreements and Other Debt
    Arrangements
     72




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        2009
    Amendments to Revolving Credit Facility and Note Purchase
    Agreements
    
    reduced the size of the Companys revolving credit facility
    by $32,500, from $115,000 (expandable to $125,000) to $82,500;
    after the payment of $2,630 on or before September 30,
    2009, the size of the Companys revolving credit facility
    will be further reduced to $80,000;
    increased the Companys maximum permitted cash-flow
    leverage ratio from 3.25 to 5.00 for the first quarter of 2009,
    decreasing to 3.00 in the fourth quarter of 2009 and thereafter; 73




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   
    amended the credit facilitys pricing terms, including the
    interest rate margin applicable on the revolving credit facility
    indebtedness to a variable rate of LIBOR plus 300 to
    450 basis points (bps), depending on the
    cash-flow leverage ratio, and set the minimum LIBOR at
    2.0 percent;
    increased the unused revolver commitment fee rate to 50 bps
    per year;
    increased the interest rate on indebtedness outstanding under
    each of the notes outstanding under the Companys note
    agreements by 400 bps;
    reset the Companys minimum quarterly fixed charge coverage
    ratio;
    prohibit the Company from repurchasing its shares without lender
    consent and restrict future dividend payments by the Company
    (beginning with the first dividend declared after March,
    2009) to an aggregate $300 per fiscal quarter, or
    approximately $.01 per share based on the number of shares
    of common stock currently outstanding;
    require the Company to obtain lender approval of any
    acquisitions;
    revised the Companys minimum consolidated net worth
    covenant to be based on 90 percent of the Companys
    consolidated net worth as of March 31, 2009;
    reduced the amount of the Companys permitted capital
    expenditures to $17,500, from $25,000, during any fiscal
    year; and
    provide a waiver for any noncompliance with certain financial
    covenants, as well as with covenants relating to (i) the
    reduction of indebtedness within prescribed time periods using
    the proceeds of a previously completed asset sale, (ii) the
    payment of dividends, and (iii) the delivery of the
    Companys annual and quarterly financial statements for the
    periods ended December 31, 2008 and March 31, 2009,
    respectively, within prescribed time periods.      NOTE 13.
    Income
    Taxes    Year Ended December 31,2008


2007


2006(Restated)United States

$
(23,450
)

$
33,034


$
39,210Foreign


(39,666
)


18,222



5,552Total

$
(63,116
)

$
51,256


$
44,762  74




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Years Ended December 31,2008


2007


2006(Restated)Current:Federal

$
1,219


$
12,433


$
16,409State


887



3,199



3,934Foreign


3,236



3,703



8,2965,342



19,335



28,639Deferred:Federal


(6,104
)


(264
)


(4,380
)State


(1,768
)


(154
)


(386
)Foreign


(580
)


1,741



(5,060
)(8,452
)


1,323



(9,826
)Total

$
(3,110
)

$
20,658


$
18,813     December 31,2008


2007Deferred income tax assets:Operating loss carryforwards

$
17,870


$
14,088Capital loss carryforwards


6,604



9,182Income tax credits


4,996



6,162Restructuring reserves


4,364



5,204Multiemployer pension withdrawal liability


2,939



Accruals and reserves not currently deductible


3,403



5,540Other


7,444



3,487Deferred income tax assets before valuation allowances


47,620



43,663Valuation allowances


(28,619
)


(27,346
)Deferred income tax assets

$
19,001


$
16,317Deferred income tax liabilities:Depreciation and amortization

$
(1,643
)

$
(3,372
)Intangible assets


(3,232
)


(12,980
)Domestic subsidiary stock


(8,553
)


(9,790
)Other


(1,997
)


(1,234
)Deferred income tax liabilities

$
(15,425
)

$
(27,376
)  75




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Year Ended December 31,2008


2007


2006(Restated)Income taxes at statutory rate


35.0
%


35.0
%


35.0
%Nondeductible expenses


3.0



0.8



1.7State income taxes


2.0



3.6



4.7Foreign rate differential


(1.1
)


(0.7
)


1.5Income tax reserve adjustments


(7.1
)


1.8



(0.1
)Deferred tax asset valuation allowance


(10.8
)


(0.9
)


4.3Remediation adjustments


0.8



0.0



0.0Nondeductible impairment charges


(16.6
)


0.0



0.0Other, net


(0.3
)


0.7



(5.1
)4.9
%


40.3
%


42.0
%       Form 10-K
 76




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
       Accounting for Uncertainty in Income
    Taxes  an interpretation of FASB Statement
    No. 109, Accounting for Income Taxes
           77




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      2008


2007Balance at January 1, 2008

$
13,597


$
13,550Additions related to tax positions in prior years


2,854



805Reductions for tax positions in prior years


(8,150
)


(764
)Foreign currency translation


(107
)


6Balance at December 31, 2008

$
8,194


$
13,597   NOTE 14.
    Related
    Party Transactions      NOTE 15.
    Leases
    and Commitments        Operating LeasesGross Rents


Subleases


Net Rents2009

$
14,292


$
(1,647
)

$
12,6452010


11,957



(1,904
)


10,0532011


8,923



(1,176
)


7,7472012


8,761



(854
)


7,9072013


4,645



(625
)


4,020Thereafter


10,416



(1,816
)


8,600$
58,994


$
(8,022
)

$
50,972    78




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      NOTE 16.
    Employee
    Benefit Plans          end-of-quarter
    NOTE 17.
    Stock
    Based Compensation  Share-Based Payments
 79




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      2006
    Long-Term Incentive Plan
      Options
         80




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
     2008

2007

2006Expected dividend yield

0.81% - 0.83%

0.63% - 0.71%

0.70% - 0.76%Expected stock price volatility

31.5% - 34.8%

28.24% - 29.97%

27.33% - 27.40%Risk-free interest rate range

2.98% - 3.75%

3.96% - 4.54%

4.28% - 4.83%Weighted-average expected life

6.5 - 7.5 years

5.5 - 6 years

6 yearsForfeiture rate

1.0% to 2.0%

2.72%

2.65%Total fair value of options granted

$1,174

$1,216

$870     WeightedWeighted Average


AverageNumber of


Exercise Price


Remaining


AggregateShares


per Share


Term


Intrinsic ValueOutstanding December 31, 2005


3,333


$
11.73Granted


144


$
17.75Exercised


(326
)

$
9.84Outstanding December 31, 2006


3,151


$
12.11Granted


190


$
18.70Exercised


(313
)

$
10.44Cancelled


(55
)

$
18.51Outstanding December 31, 2007


2,973


$
12.45Granted


204


$
15.87Exercised


(143
)

$
9.97Cancelled


(115
)

$
15.85Outstanding December 31, 2008


2,919


$
12.40



4.30


$
3,374Vested at December 31, 2008


2,595


$
12.41



3.53


$
3,374Exercisable at December 31, 2008


2,595


$
12.41



3.53


$
3,374      81




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
     Options Outstanding


Options ExercisableWeighted AverageRemaining


Weighted





WeightedRange of

Number


Contractual Life


Average Exercise


Number


Average ExerciseExercise Price

Outstanding


(Years)


Price


Exercisable


Price$ 6.20 - $ 8.26


162



1.1


$
7.70



162


$
7.708.26 - 10.33


1,259



2.4


$
9.29



1,259


$
9.2910.33 - 12.39


55



2.9


$
10.91



55


$
10.9112.39 - 14.45


494



4.5


$
14.20



494


$
14.2014.45 - 16.52


204



9.3


$
15.87



5


$
15.6216.52 - 18.58


229



7.5


$
18.03



116


$
17.8718.58 - 20.65


511



5.6


$
18.87



501


$
18.8620.65 - 21.08


5



8.9


$
21.08



3


$
21.082,919











2,595     WeightedAverageGrant DateNumber of


Fair ValueShares


per ShareNonvested at January 1, 2006


570


$
4.85Granted


144


$
6.02Vested


(388
)

$
4.58Nonvested at December 31, 2006


326


$
5.70Granted


191


$
6.38Vested


(232
)

$
5.65Forfeited


(30
)

$
6.55Nonvested at December 31, 2007


255


$
6.25Granted


204


$
5.76Vested


(107
)

$
6.23Forfeited


(28
)

$
6.15Nonvested at December 31, 2008


324


$
5.95   Restricted
    Stock
   82




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##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
       Weighted AverageNumber of


Grant DateShares


Fair ValueOutstanding at January 1, 2006






Granted


25


$
17.43Outstanding at December 31, 2006


25


$
17.43Granted


35


$
18.47Forfeited


(2
)

$
17.93Outstanding at December 31, 2007


58


$
18.04Granted


66


$
15.90Forfeited


(6
)

$
18.32Outstanding at December 31, 2008


118


$
16.84     Employee
    Share-Based Compensation Expense
    2008


2007


2006Total cost of share-based compensation

$
1,385


$
1,011


$
1,059Income tax


(263
)


(287
)


(387
)Amount charged against income

$
1,122


$
724


$
672Impact on net income per common share:Basic

$
0.04


$
0.03


$
0.03Diluted

$
0.04


$
0.03


$
0.02     NOTE 18.
    Earnings
    Per Share   83




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
     2008


2007


2006Weighted average shares-Basic


26,739



26,869



26,393Effect of dilutive stock options






832



1,002Weighted average shares-Diluted


26,739



27,701



27,395         NOTE 19.
    Segment
    and Geographic Reporting  Disclosures about
    Segments of an Enterprise and Related Information
     84




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##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
     2008





2007


2006Sales to external customers:United States and Mexico

$
337,965






$
382,985


$
407,818Europe


64,108







71,830



79,344Other


122,652







126,637



97,284Intercompany sales elimination


(30,541
)






(37,043
)


(38,328
)Total

$
494,184






$
544,409


$
546,118Operating segment income (loss):United States and Mexico

$
36,233






$
58,874


$
65,741Europe


(34,028
)(1)






7,262



(1,484
)Other


(14,316
)(2)






12,485



6,444Corporate


(44,444
)(3)






(18,448
)


(15,789
)Operating income (loss)


(56,555
)






60,173



54,912Interest
    expense-net


(6,561
)






(8,917
)


(10,150
)Income (loss) from continuing operations before income taxes

$
(63,116
)





$
51,256


$
44,762Depreciation and amortization expenses:United States and Mexico

$
9,308






$
9,864


$
13,923Europe


3,175







3,767



3,659Other


4,421







3,666



1,272Corporate


3,847







4,056



3,663Total

$
20,751






$
21,353


$
22,517     (1)
    
    Includes $30,657 impairment of goodwill for Europe reporting unit(2)
    
    Includes $17,354 impairment of goodwill for Anthem reporting unit(3)
    
    Includes $7,254 of multiemployer pension withdrawal expense,
    $6,800 of expenses related to remediation of material weaknesses
    and SEC investigation and $2,336 of long lived asset impairments 85




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##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
     2008


2007(Restated)Total Assets:United States and Mexico

$
285,797


$
315,712Europe


30,265



74,091Other


85,433



103,119Corporate


38,858



42,065Total

$
440,353


$
534,987Expenditures for long-lived assets:United States and Mexico

$
7,185


$
5,407Europe


2,163



765Other


4,714



5,126Corporate


850



6,823Total

$
14,912


$
18,121     OtherUnited States


Canada


Europe


Foreign


Total2008Sales

$
348,469


$
45,976


$
67,764


$
31,975


$
494,184Long-lived assets


51,059



3,890



4,889



3,650



63,4882007Sales

$
388,051


$
44,054


$
80,055


$
32,249


$
544,409Long-lived assets


65,117



5,589



7,292



3,943



81,9412006Sales

$
405,360


$
34,533


$
81,102


$
25,123


$
546,118Long-lived assets


63,148



4,597



8,900



3,716



80,361       NOTE 20.
    Quarterly
    Financial Data (unaudited)  Form 10-Q
 86




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##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   Form 10-K
  March 31,


June 30,


September 30,


December 31,2007


2007


2007


2007(In thousands, except per share amounts)Net sales

$
129,624


$
142,740


$
130,789


$
141,256Cost of sales


84,602



91,337



84,394



91,682Gross profit


45,022



51,403



46,395



49,574Selling, general, and administrative expenses


32,863



32,909



32,966



32,286Impairment of long-lived assets














1,197Operating income


12,159



18,494



13,429



16,091Other income (expense):Interest income


90







85



122Interest expense


(2,398
)


(2,382
)


(2,278
)


(2,156
)(2,308
)


(2,382
)


(2,193
)


(2,034
)Income before income taxes


9,851



16,112



11,236



14,057Income tax provision


3,839



6,170



4,390



6,259Net income

$
6,012


$
9,942


$
6,846


$
7,798Net earnings per share:Basic

$
0.23


$
0.37


$
0.25


$
0.29Diluted

$
0.22


$
0.36


$
0.25


$
0.28   March 31,


June 30,2008


2008(In thousands, except per share amounts)Net sales

$
126,407


$
133,436Cost of sales


83,440



86,650Gross profit


42,967



46,786Selling, general, and administrative expenses


36,271



36,104Acquisition integration and restructuring expense






3,174Impairment of long-lived assets






2,184Operating income


6,696



5,324Other income (expense):Interest income


74



64Interest expense


(1,778
)


(1,696
)(1,704
)


(1,632
)Income before income taxes


4,992



3,692Income tax provision


732



2,916Net income

$
4,260


$
776Net earnings per share:Basic

$
0.16


$
0.03Diluted

$
0.15


$
0.03   87




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##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  September 30, 2008(1)Previously





December 31,Reported


Reclassified


2008(2)(In thousands, except per share amounts)Net sales

$
124,167


$
125,446


$
108,895Cost of sales


81,300



82,279



77,445Gross profit


42,867



43,167



31,450Selling, general, and administrative expenses


36,869



37,203



39,018Impairment of goodwill










48,041Multiemployer pension withdrawal expense










7,254Acquisition integration and restructuring expense


1,942



1,942



5,274Impairment of long-lived assets


3,451



4,073



387Operating income (loss)


605



(51
)


(68,524
)Other income (expense):Interest income


63



63



90Interest expense


(1,625
)


(1,625
)


(1,753
)(1,562
)


(1,562
)


(1,663
)Loss from continuing operations before income taxes


(957
)


(1,613
)


(70,187
)Income tax provision (benefit)


5,280



5,063



(11,821
)Loss from continuing operations


(6,237
)


(6,676
)


(58,366
)Loss from discontinued operations, net of tax


(439
)






Net loss

$
(6,676
)

$
(6,676
)

$
(58,366
)Loss per share from continuing operations:Basic

$
(0.23
)

$



$
Diluted

$
(0.23
)

$



$
Loss per share from discontinued operations:Basic

$
(0.02
)

$



$
Diluted

$
(0.02
)

$



$
Net loss per share:Basic

$
(0.25
)

$
(0.25
)

$
(2.27
)Diluted

$
(0.25
)

$
(0.25
)

$
(2.27
)     (1)
    
    During the fourth quarter of 2008, the Company reassessed the
    likelihood of completing the sale of its large format printing
    operation within one year and determined that it could no longer
    meet the requirements of SFAS No. 144 for classifying
    the business as held for sale. Accordingly, in this
    Form 10-K,
    the business previously reported in the third quarter 2008
    Form 10-Q
    as discontinued operations has been reclassified as continuing
    operations. See Note 4  Discontinued Operations
    for further information.(2)
    
    Results for the fourth quarter of 2008 include $48,041 of pretax
    goodwill impairment charges, a pretax charge of $7,254 for
    withdrawal from a multiemployer pension plan and a pretax charge
    of $5,274 for acquisition integration and restructuring expense.
    See Note 9  Goodwill and Intangible Assets,
    Note 16  Employee Benefit Plans and
    Note 6  Acquisition Integration and
    Restructuring for further information. 88




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##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   NOTE 21.
    Contingencies  Kohlberg &
    Company Indemnity
  1996-2003.
  United
    States Securities and Exchange Commission
    NOTE 22.
    Impairment
    of Long-lived Assets  ,
  No. 98-1 Accounting for the Costs of Computer Software Developed
    or Obtained for Internal Use (SOP No. 98-1)
 89




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
         90




---



##### Table of Contents



ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURES.    ITEM 9A.
    CONTROLS
    AND PROCEDURES  Evaluation
    of Disclosure Controls and Procedures
  Rules 13a-15(e) 15d-15(e) (Exchange Act) Form 10-K.
  Managements
    Report on Internal Control Over Financial Reporting
  Rule 13a-15(f)
      Revenue
    Recognition
  Form 10-K
 91




---



##### Table of Contents



Work-in-Process
    Inventory
  work-in-process work-in-process
  Entity-
    Level Controls
  Form 10-K
  Form 10-K.
  Remediation
    of Certain Previously Identified Material Weaknesses
  Form 10-K (2007
    Form 10-K)
  
    Revenue recognition;
    Accounting for capitalized software costs;
    Accounting for income taxes; and,
    Entity-level controls.    
    Reviewed and redesigned the Companys Sarbanes-Oxley
    Section 404 documentation and related controls, including a
    revised comprehensive business risk assessment.  
    With respect to the aforementioned material weaknesses from
    2007, the Company identified and implemented specific plans with
    respect to the remediation thereof.


    Testing of these revised controls began in the fourth quarter
    of 2008, with the assistance of a global accounting firm.  
    Added experienced financial personnel to the Companys
    accounting staff, in order to provide for strengthened analysis
    and review of financial results. 92




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##### Table of Contents




    Strengthened the Companys internal audit function by
    outsourcing certain of the Sarbanes-Oxley services and internal
    auditing to a global accounting firm.
    Engaged a global accounting firm to assist the Company in
    completing an accounting review of its significant income tax
    balances.  Form 10-K
  Accounting
    for Capitalized Software Costs
  Software developed for sale to third
    parties. No. 97-2 Software Revenue Recognition (SOP No. 97-2), No. 98-9 Software Revenue Recognition (SOP No. 98-9), with Respect to Certain Transactions No. 00-21 Revenue Arrangements with Multiple Deliverables No. 00-21),
  Software developed for internal use. No. 98-1 Accounting for the Costs of Computer Software Developed
    or Obtained for Internal Use (SOP No. 98-1).
  Accounting
    for Income Taxes
    
    reviewed and validated significant income tax balances, which
    included analyzing prior year tax returns and opening balance
    sheets, reconciling current and deferred balances and assessing
    FIN 48 liabilities;
    implemented revised income tax accounting processes, including
    converting its UK subsidiaries to its common general ledger
    system, which allows its Corporate tax function access to US
    GAAP-based financial information by legal entity;
    provided SFAS 109 training to both its global finance team
    and local service providers;
    filed delinquent foreign tax returns and statutory
    accounts; and
    strengthened procedures to improve oversight of income tax
    returns and statutory accounts filings.  Remediation
    Plan Related to 2008 Material Weaknesses
    
    implemented additional transaction level controls for revenue
    recognition.
    instituted a worldwide training program and monthly test of
    documentation per location to train employees on proper revenue
    recognition. 93




---



##### Table of Contents



work-in-process
  
    The Company will identify and then implement a consistent and
    reviewable process to ensure an accurate
    work-in-process
    inventory amount. Such a process will include clearer
    instructions, reporting and reviews with respect to the
    inventory calculations, as well as identification of service
    revenue streams and related costs.
    Until such a revised process is in place, the Company will
    employ a substantive review methodology to mitigate the risk of
    errors.    
    provided training to process owners on the appropriate
    requirements to document and perform internal control procedures.
    developed and implemented additional formal policies and
    procedures, enhanced the formalized review of its internal
    controls and significant accounting procedures and added
    experienced financial management with the requisite areas of
    expertise to strengthen proper accounting and reporting.
    strengthened the Companys internal audit function by
    outsourcing certain functions and internal auditing to a global
    accounting firm.
    augmented its analysis and review of financial results at an
    entity level.    
    Stronger communication protocols and relationships between
    operations management and finance and accounting personnel will
    be established to ensure transactions are identified for proper
    accounting analysis and treatment.
    The Company will formalize the review process for all contracts.
    The structure of finance and accounting teams will be assessed
    and, as necessary, additional US GAAP trained finance and
    accounting personnel will be hired.
    The Company will continue to improve the Sarbanes-Oxley
    Section 404 controls implemented in the fourth quarter of
    2008 and will provide additional training for applicable
    personnel to ensure compliance with these controls.
    The role of the Disclosure Committee will be enhanced to provide
    improved oversight of the accuracy and timeliness of disclosures
    made by the Company.
    More precise monitoring controls will be implemented at both
    operating unit and corporate levels.  Changes
    in Internal Control Over Financial Reporting
   94




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
    on Internal Control over Financial Reporting
                  95




---



##### Table of Contents



work-in-process
      
     ITEM 9B.
    OTHER
    INFORMATION.   PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.  Form 10-K
      ITEM 11.
    EXECUTIVE
    COMPENSATION.  Form 10-K
  ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS  Form 10-K
 96




---



##### Table of Contents



Form 10-K.
  ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE.  Form 10-K
  ITEM 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES.  Form 10-K
 PART IV  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES  (a)

1.

The following financial statements of Schawk, Inc. are filed as
    part of this report under
    Item 8-Financial
    Statements and Supplementary Data:Report of Independent Registered Public Accounting FirmConsolidated Balance Sheets  Years Ended
    December 31, 2008 and 2007Consolidated Statements of Operations  Years Ended
    December 31, 2008, 2007, and 2006Consolidated Statements of Cash Flows  Years Ended
    December 31, 2008, 2007, and 2006Consolidated Statements of Stockholders Equity 
    Years Ended December 31, 2008, 2007, and 2006Notes to Consolidated Financial Statements 
    December 31, 20082.

Financial statement schedules required to be filed by
    Item 8 of this form, and by Item 15(d) below:Schedule II  Valuation and qualifying accounts.3.

Exhibits   ExhibitNumber

Description

Incorporated Herein by Reference to:(1)3
.1

Certificate of Incorporation of Schawk, Inc., as amended.

Exhibit 4.2 to Registration Statement No. 333-391133
.3

By-Laws of Schawk, Inc., as amended.

Exhibit 3.2 to Form 8-K filed with the SEC December 18, 20074
.1

Specimen Class A Common Stock Certificate.

Exhibit 4.1 to Registration Statement No. 33-8515210
.1

Lease Agreement dated as of July 1, 1987, and between
    Process Color Plate, a division of Schawk, Inc. and The Clarence
    W. Schawk 1979 Childrens Trust.

Registration Statement No. 33-8515210
.2

Lease Agreement dated as of June 1, 1989, by and between
    Schawk Graphics, Inc., a division of Schawk, Inc. and C.W.
    Properties.

Registration Statement No. 33-8515210
.3

Schawk, Inc. 1991 Outside Directors Formula Stock Option
    Plan, as amended.*

Appendix C to Proxy Statement for the 2001 Annual Meeting of
    Stockholders10
.4

Form of Amended and Restated Employment Agreement between
    Clarence W. Schawk and Schawk, Inc.*

Registration Statement No. 33-8515210
.4.1

Addendum to Restated Employment Agreement dated March 9,
    1998 between Schawk, Inc. and Clarence W. Schawk*

Exhibit 10.4.1 to Form 10-K filed with the SEC on April 28, 2008 97




---



##### Table of Contents



ExhibitNumber

Description

Incorporated Herein by Reference to:(1)10
.5

Form of Amended and Restated Employment Agreement between David
    A. Schawk and Schawk, Inc.*

Registration Statement No. 33-8515210
.6

Letter of Agreement dated September 21, 1992, by and
    between Schawk, Inc. and Judith W. McCue.

Registration Statement No. 33-8515210
.7

Schawk, Inc. Retirement Trust effective January 1, 1996.*

Exhibit 10.37 to Form 10-K filed with the SEC on March 28, 199610
.8

Schawk, Inc. Retirement Plan for Imaging Employees Amended and
    Restated effective January 1, 1996.*

Exhibit 10.38 to Form 10-K filed with the SEC on March 28, 199610
.9

Stockholder Investment Program dated July 28, 1995.

Registration Statement No. 33-6137510
.10

Schawk, Inc. Employee Stock Purchase Plan effective
    January 1, 1999.*

Registration Statement No. 333-6852110
.11

Note Purchase Agreement dated December 23, 2003 by and
    between Schawk, Inc. and Massachusetts Mutual Life Insurance
    Company

Exhibit 10.47 to Form 10-K filed with the SEC on March 8, 200410
.12

Credit Agreement dated June 11, 2004 by and between Schawk
    Inc. and Bank One, N. A.

Exhibit 10.1 to Form 8-K filed with the SEC on June 16, 200410
.13

Schawk, Inc. 2001 Equity Option Plan

Appendix B to Proxy Statement for the 2001 Annual Meeting of
    Stockholders10
.14

Schawk, Inc. 2003 Equity Option Plan

Appendix A to Proxy Statement for the 2003 Annual Meeting of
    Stockholders (File No. 00110
.15

Stock Purchase Agreement by and among Schawk, Inc., Seven
    Worldwide, Inc., KAGT Holdings, Inc. and the Stockholders of
    KAGT Holdings, Inc. dated as of December 17, 2004.

Exhibit 2.1 to Form 8-K filed with the SEC on December 20, 200410
.16

Business Sale Deed by and among Schawk, Inc., Schawk UK Limited,
    Sokaris XXI, S.L., Schawk Belgium B.V.B.A. and Weir Holdings
    Limited dated December 31, 2004.

Exhibit 2.1 to Form 8-K filed with the SEC on January 6, 200510
.17

Amended and Restated Registration Rights Agreement, dated as of
    January 31, 2005, among Schawk, Inc. and certain principal
    stockholders of Schawk, Inc.

Exhibit 10.1 to Form 8-K filed with the SEC on February 2, 200510
.18

Credit Agreement, dated as of January 28, 2005, among
    Schawk, Inc., certain subsidiaries of Schawk, Inc. from time to
    time party thereto, certain financial institutions from time to
    time party thereto as lenders, and JPMorgan Chase Bank, N.A., as
    agent.

Exhibit 10.4 to Form 8-K filed with the SEC on February 2, 200510
.19

Note Purchase and Private Shelf Agreement, dated as of
    January 28, 2005, among Schawk, Inc., Prudential Investment
    Management, Inc., The Prudential Insurance Company of America,
    and RGA Reinsurance Company.

Exhibit 10.5 to Form 8-K filed with the SEC on February 2, 200510
.20

First Amendment to Note Purchase Agreement, dated as of
    January 28, 2005, among Schawk, Inc. and the institutional
    purchasers party thereto.

Exhibit 10.6 to Form 8-K filed with the SEC on February 2, 200510
.21

Description of executive compensation arrangements

Form 8-K filed with the SEC on June 6, 2005 98




---



##### Table of Contents



ExhibitNumber

Description

Incorporated Herein by Reference to:(1)10
.22

Asset Purchase Agreement, dated as of March 3, 2006, by and
    between CAPS Group Acquisition, LLC and Schawk, Inc.

Exhibit 10.1 to Form 10-Q filed with the SEC on May 10, 200610
.23

Schawk, Inc. 2006 Long-term Incentive Plan

Annex A to the Proxy Statement for the 2006 Annual Meeting filed
    with the SEC on April 21, 200610
.24

Description of executive equity awards

Form 8-K filed with the SEC on June 6, 200510
.25

Amendment No. 1, dated February 28, 2008 to Credit
    Agreement dated as of January 28, 2005, among Schawk, Inc.,
    certain subsidiaries of Schawk, Inc., certain lenders, and
    JPMorgan Chase Bank, N.A., as agent.

Exhibit 10.1 to Registrants Form 8-K filed with the SEC on
    March 5, 200810
.26

Separation Agreement and General Release dated May 31, 2008
    between James J. Patterson and Schawk USA, Inc.

Exhibit 10.1 to Form 8-K filed with the SEC on June 5, 200810
.27

Employment Agreement dated as of September 18, 2008 between
    Timothy J. Cunningham and Schawk, Inc.*

Exhibit 10.1 to Form 8-K filed with the SEC on September 23, 200818


Preferability Letter of Ernst & Young LLP

Exhibit 18 to Form 10-Q filed with the SEC on November 17, 200821


List of Subsidiaries.**23


Consent of Independent Registered Public Accounting Firm**31
.1

Certification of Chief Executive Officer pursuant to
    Rule 13a-14(a)
    and
    Rule 15d-14(a)
    of the Securities Exchange Act of 1934, as amended**31
.2

Certification of Chief Financial Officer pursuant to
    Rule 13a-14(a)
    and
    rule 15d-14(a)
    of the Securities Exchange Act of 1934, as amended**32


Certification of Chief Executive Officer and Chief Financial
    Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002**99
.1

Information responsive to
    Items 10-14
    of Part III of the Registrants
    Form 10-K**     (1)
    
    The file number of each report or filing referred to herein is
    001-09335
    unless otherwise noted.*
    
    Represents a management contract or compensation plan or
    arrangement required to be identified and filed pursuant to
    Items 15(a)(3) and 15(b) of
    Form 10-K.**
    
    Document filed herewith. 99




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##### Table of Contents



Schawk,
    Inc.



SCHEDULE II 
    VALUATION AND QUALIFYING ACCOUNTS  ProvisionBalance at


Charged to


Write-offs/


OtherAllowances for

Beginning


Costs and


Allowances


Additions


Balance atLosses on Receivables

of Year


Expenses


Taken(1)


(Deductions)(2)


End of Year(In thousands)2008

$
2,063


$
1,834


$
(519
)

$
(240
)

$
3,1382007

$
2,255


$
515


$
(879
)

$
172


$
2,0632006

$
5,940


$
(180
)

$
(3,618
)

$
113


$
2,255   ProvisionBalance at


Charged to


Write-offs/


OtherDeferred Tax Asset

Beginning


Costs and


Allowances


Additions


Balance atValuation Allowance

of Year


Expenses


Taken(1)


(Deductions)(2)


End of Year2008

$
27,346


$
7,471






$
(6,198
)

$
28,6192007

$
24,492


$
1,210






$
1,644


$
27,3462006

$
20,116


$
2,891






$
1,485


$
24,492     (1)
    
    Net of collections on accounts previously written off.(2)
    
    Other Additions (Deductions) consists principally of adjustments
    related to foreign exchange. 100




---



##### Table of Contents



SIGNATURES      By:
    /s/  David
    A. Schawk       /s/  Clarence
    W. SchawkClarence
    W. Schawk

Chairman of the Board and Director/s/  David
    A. SchawkDavid
    A. Schawk

President, Chief Executive Officer, and Director (Principal
    Executive Officer)/s/  A.
    Alex Sarkisian, Esq.A.
    Alex Sarkisian

Executive Vice President, Chief Operating Officer and Director/s/  Timothy
    J. CunninghamTimothy
    J. Cunningham

Executive Vice President, Chief Financial Officer and Chief
    Accounting Officer/s/  John
    T. McEnroe, Esq.John
    T. McEnroe, Esq.

Director and Assistant Secretary/s/  Leonard
    S. CaroniaLeonard
    S. Caronia

Director/s/  Judith
    W. McCue, Esq.Judith
    W. McCue, Esq.

Director/s/  Hollis
    W. RademacherHollis
    W. Rademacher

Director/s/  Michael
    G. ORourkeMichael
    G. ORourke

Director/s/  Stanley
    N. LoganStanley
    N. Logan

Director  101