##### 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, 2006
  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 River Road
    Des Plaines, Illinois

60018(Zip Code)(Address of principal executive
    office)   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
  þ o
  Regulation S-K Form 10-K Form 10-K. o
   o þ o
  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




---



##### 



SCHAWK,
    INC
  FORM 10-K
    ANNUAL REPORT
  TABLE OF
    CONTENTS
  DECEMBER 31,
    2006
  PagePART IItem 1.


Business


3Item 1A.


Risk
    Factors


10Item 1B.


Unresolved Staff
    Comments


14Item 2.


Properties


14Item 3.


Legal
    Proceedings


16Item 4.


Submission of
    Matters to a Vote of Security Holders


16PART IIItem 5.


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


16Item 6.


Selected Financial
    Data


18Item 7.


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


19Item 7A.


Quantitative and
    Qualitative Disclosures about Market Risk


29Item 8.


Financial
    Statements and Supplementary Data


30Item 9.


Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosures


60Item 9A.


Controls and
    Procedures


60Item 9B.


Other
    Information


63PART IIIItem 10.


Directors,
    Executive Officers and Corporate Governance


63Item 11.


Executive
    Compensation


63Item 12.


Security Ownership
    of Certain Beneficial Owners and Management and Related
    Matters


63Item 13.


Certain
    Relationships and Related Transactions, and Director
    Independence


63Item 14.


Principal
    Accountant Fees and Services


63PART IVItem 15.


Exhibits and
    Financial Statement Schedules


64Signatures


68List of SubsidiariesConsent of Independent Registered Public Accounting FirmCertificationCertificationCertification   2




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##### Table of Contents



PART I  ITEM 1.
    BUSINESS  General
    point-of-sale
    
    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 creative design capabilities and production art
    expertise;
    consistent reproduction of colors across multiple packaging and
    promotional media;
    digital imaging asset management; and
    efficient workflow management.    Graphic
    Services Industry
  Industry services. point-of-sale and/or
   3




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##### Table of Contents



Size of industry.
  start-ups
  Graphic services for consumer products
    companies. point-of-sale
     4




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##### Table of Contents



point-of-sale point-of-sale
  Factors driving increased demand for our brand image
    solutions.
  Services
  3-D
    Graphic services.
  Brand strategy and creative design. start-ups
  Enterprise products. 3-D
  state-of-the-art
 5




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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 on-site
  The Company has a comprehensive service
    offering.
  The Company has unique global
    capabilities.
  The Company generates strong cash flow.
 6




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##### Table of Contents



Strategy
    Capitalizing on our recently enhanced
    platform.
  Matching our services to the needs of our
    clients.
  Pursuing acquisitions opportunistically.
  Acquisitions
  53-year and/or
  
    expanding our geographic reach to Europe, Australia and India,
    which benefits our existing clients as they seek to establish
    global brand consistency; and
    increasing and expanding the scope of our global service
    offerings, such as creative design and high end retouching, and
    entering into new markets, such as retail and media.  out-of-home (point-of-sale,
    non-U.S. divisions
 7




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##### Table of Contents



Marketing
    and Distribution
    Clients
  on-site on-site
  back-to-school and/or
   8




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##### Table of Contents



Competition
  state-of-the-art
      Research
    and Development
  off-the-shelf 3-D
    Employees
    Backlog
   9




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##### Table of Contents



Seasonality
    and Cyclicality
  speed-to-market
  Purchasing
    and Raw Materials
    Intellectual
    Property
  3-D,
  Available
    Information
  www.schawk.com Form 10-K, Form 10-Q, Form 8-K,
  ITEM 1a.
    RISK
    FACTORS  The
    Companys business is sensitive to general economic
    conditions. An economic decline or other circumstances that
    result in reductions in our clients marketing and
    advertising budgets could negatively impact the Companys
    sales volume and revenues and the ability to respond to
    competition or take advantage of business
    opportunities.   10




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##### Table of Contents



The
    Companys operating results fluctuate from quarter to
    quarter.
    
    timing of the completion of particular projects or orders;
    material reduction or cancellation of major projects or the loss
    of a major client;
    timing of new business;
    differences in order flows;
    sensitivity to general economic conditions;
    the health of the consumer products industry;
    the relative mix of different types of work with differing
    margins;
    costs relating to the expansion of operations, including costs
    to integrate current and future acquisitions;
    changes in interest costs and tax rates; and
    costs associated with compliance with legal and regulatory
    requirements.  period-to-period
  The
    Company is subject to unpredictable order flows.
  project-by-project speed-to-market
  The
    Company is dependent on certain key clients.
    The
    Companys foreign operations are subject to currency
    exchange, political, investment and other risks that could
    hinder the Company from transferring funds out of a foreign
    country, delay our debt service payments, cause the
    Companys operating costs to increase and adversely affect
    its results of operations.
   11




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##### Table of Contents




    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 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;
    hyperinflation 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.
      Failure
    to properly manage the Companys expanding operations may
    adversely impact our business.
    The
    Company may encounter difficulties arising from future
    acquisitions or consolidation efforts.
    
    difficulty in assimilating the operations and personnel of the
    acquired company with our existing operations and realizing
    anticipated synergies;
    the loss of key employees or key clients of the acquired company; 12




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##### Table of Contents




    difficulty in maintaining uniform standards, controls,
    procedures and policies; and
    unrecorded liabilities of acquired companies that the Company
    failed to discover during our 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 us to produce our
    products and services, which could result in decreased sales or
    increased costs, either of which would negatively impact our
    financial condition and results of operations.
    The
    Company is subject to restrictive debt covenants.
    The
    Company remains susceptible to risks associated with
    technological change, including risks based on the services the
    Company provides and may seek to provide in the future as a
    result of technological changes.
   13




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##### Table of Contents



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 us that would
    negatively impact our financial condition.
    ITEM 1b.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES    LeaseSquare


Owned/



ExpirationLocation

Feet


Leased

Purpose

Date

DivisionAddison, Texas


3,400


Leased

Operating Facility

Month-to-month

Schawk U.S.A.Antwerp, Belgium


39,000


Owned

Operating Facility

N/A

Schawk BelgiumBattle Creek, Michigan


8,862


Leased

Operating Facility

August, 2007

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


9,200


Leased

Subletting

September, 2014

Schawk U.K.Carlstadt, New Jersey


46,000


Vacant

Operating Facility

February, 2011

N/AChennai, India


10,682


Leased

Operating Facility

October, 2007

Schawk AsiaCherry Hill, New Jersey


10,000


Leased

Operating Facility

January, 2009

Schawk U.S.A.Chicago, Illinois


45,000


Leased

Vacant

September, 2009

N/AChicago, Illinois


66,000


Leased

Operating Facility

June, 2009

AmbrosiChicago, Illinois


42,000


Leased

Operating Facility

June, 2019

Schawk U.S.A.Chicago, Illinois


87,000


Owned

Operating Facility

N/A

AmbrosiChicago, 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


13,200


Leased

Operating Facility

February, 2009

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.Foster City, California


7,800


Leased

Vacant

May, 2008

N/AGrand Rapids, Michigan


N/A


Owned

Vacant Lot

N/A

N/AHackettstown, NJ


3,000


Leased

Operating Facility

June, 2009

Anthem  U.S.A.Kalamazoo, Michigan


67,000


Owned

Operating Facility

N/A

Schawk U.S.A. 14




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##### Table of Contents



LeaseSquare


Owned/



ExpirationLocation

Feet


Leased

Purpose

Date

DivisionKobe, Japan


800


Leased

Operating Facility

February, 2007

Anthem  AsiaLeeds, U.K


16,200


Leased

Operating Facility

January, 2010

Schawk U.K.Lithia Springs, Georgia


79,700


Leased

Operating Facility

July, 2009

AmbrosiLondon, U.K


42,700


Leased

Operating Facility

March, 2015

Schawk U.K.London, U.K


4,000


Leased

Vacant

November, 2009

Schawk U.K.Los 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.Minneapolis, Minnesota


31,000


Owned

Operating Facility

N/A

Schawk U.S.A.Mississauga, Canada


58,000


Leased

Operating Facility

December, 2014

Schawk CanadaNashua, NH


3,000


Leased

Operating Facility

November, 2008

Schawk U.S.A.New Berlin, Wisconsin


43,000


Leased

Operating Facility

June, 2008

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


10,000


Leased

Operating Facility

December, 2008

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

AmbrosiNew 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.N. Ryde, Australia


13,900


Leased

Operating Facility

May, 2008

Schawk AustraliaOrlando, Florida


12,000


Owned

Leased

N/A

N/APenang, Malaysia


2,330


Owned

Operating Facility

N/A

Schawk AsiaPenang, Malaysia


34,000


Owned

Operating Facility

N/A

Schawk AsiaPenang, Malaysia


1,706


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, 2007

Schawk U.S.A.San Francisco, CA


18,200


Leased

Operating Facility

April, 2010

Schawk U.S.A.San Francisco, CA


8,100


Leased

Operating Facility

September, 2008

Anthem U.S.A.San Francisco, CA


21,200


Leased

Operating Facility

May, 2008

AmbrosiSanta Ana, CA


9,645


Leased

Operating Facility

July, 2011

Anthem  U.S.A.Shanghai, China


19,400


Leased

Operating Facility

November, 2008

Schawk AsiaShenzhen, China


7,100


Leased

Operating Facility

December, 2008

Schawk ShenzhenShenzhen, China


11,300


Leased

Operating Facility

July, 2008

Anthem  ShenzhenSingapore


7,500


Leased

Operating Facility

January, 2008

Schawk AsiaSlough, U.K


3,000


Leased

Subletting

January, 2010

Schawk U.K.Smyrna, Georgia


25,200


Leased

Operating Facility

October, 2008

Schawk U.S.A.Stamford, Connecticut


20,000


Leased

Operating Facility

August, 2007

Schawk U.S.A.Sterling Heights, MI


26,400


Leased

Operating Facility

May, 2008

Schawk U.S.A.Swindon, U.K


39,000


Leased

Subletting

September, 2018

Schawk U.K.Toronto, Canada


8,300


Leased

Operating Facility

January, 2010

Anthem CanadaToronto, Canada


17,500


Leased

Operating Facility

November, 2007

Schawk CanadaTunbridge Wells, U.K


6,400


Leased

Subletting

March, 2009

Schawk U.K.  15




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##### Table of Contents



ITEM 3.
    LEGAL
    PROCEEDINGS    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:

2006 High/Low


2005 High/LowMarch 31

$
26.22 - 20.27


$
21.98 - 17.70June 30


26.15 - 17.34



26.00 - 17.96September 30


19.57 -  15.11



24.75 - 19.64December 31


20.97 - 17.58



21.40 - 17.05   Dividends
    Declared per Class A Common Share
  Quarter Ended:

2006


2005March 31

$
0.0325


$
0.0325June 30


0.0325



0.0325September 30


0.0325



0.0325December 31


0.0325



0.0325Total

$
0.1300


$
0.1300   16




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##### Table of Contents



Peer Group
    Index
  Comparison
    of 5 Year Cumulative Total Return
    Assumes Initial Investment of $100*
 December 2006
  
    *
    
    The graph assumes that $100 was invested on December 31,
    2001 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.  Equity
    Compensation Plan Information
    Number ofSecurities to be





Number ofIssued Upon


Weighted-Average


SecuritiesExercise of


Exercise Price of


Remaining AvailableOutstanding


Outstanding


for Future IssuanceOptions, Warrants


Options, Warrants


Under EquityPlan Category

and Rights


and Rights


Compensation PlansEquity compensation plans approved
    by security holders


3,151


$
12.11



856Equity compensation plans not
    approved by security holders










TOTAL


3,151


$
12.11



856   Purchases
    of Equity Securities by the Company
   17




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##### Table of Contents



No. Shares


Dollar Value ofTotal No.


Avg. Price


Purchased as Part


Shares That may beShares


Paid per


of Publicly


Purchased UnderPeriod

Purchased


Share


Announced Program


ProgramJanuary














February














March


1,781


$
23.15







April














May


62,500


$
18.90







June














July














August














September














October














November














December














2006 Total


64,281


$
19.02







   ITEM 6.
    SELECTED
    FINANCIAL DATA  Year Ended December 31,2006(1)


2005(2)


2004(3)


2003


2002(In thousands, except per share amounts)CONSOLIDATED INCOME STATEMENT
    INFORMATIONNet sales

$
548,406


$
562,104


$
238,345


$
201,031


$
186,189Income from continuing operations


29,523



29,687



22,678



16,984



13,531Income per common share from
    continuing operations:Basic

$
1.12


$
1.16


$
1.05


$
0.79


$
0.63Diluted

$
1.08



1.10



1.01



0.78



0.62CONSOLIDATED BALANCE SHEET
    INFORMATIONTotal assets


538,246



558,818



220,763



159,691



160,470Long-term debt and capital lease
    obligations


140,763



169,579



39,964



21,021



37,232OTHER DATACash dividends per common share

$
0.13


$
0.13


$
0.13


$
0.13


$
0.13     (1)
    
    Consolidated Income Statement 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.(2)
    
    Consolidated Income Statement and Consolidated Balance Sheet
    Information was impacted by the acquisition of Seven Worldwide
    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. 18




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##### Table of Contents



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
    EXECUTIVE-LEVEL OVERVIEW
      
    Planning and Messaging
    Strategic Design
    Content Creation
    File Building
    Retouching
    Art Production
    Pre-Media     19




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##### Table of Contents



Acquisitions
    WBK, Inc.
  Anthem York
  Schawk India
  Seven Worldwide.
  Winnetts.
 20




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##### Table of Contents



21




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##### Table of Contents



RESULTS
    OF OPERATIONS
 YEARS ENDED DECEMBER 31, 2006 AND 2005
  Schawk,
    Inc.
  Comparative
    Consolidated Statements of Operations
    Years Ended December 31, 2006 and 2005
  $


%2006


2005


Change


Change(In thousands)Net sales

$
548,406


$
562,104


$
(13,698
)


(2.4
)%Cost of sales


355,375



367,455



(12,080
)


(3.3
)%Gross profit


193,031



194,649



(1,618
)


(0.8
)%Gross margin percentage


35.2
%


34.6
%Selling, general and
    administrative expenses


135,728



132,559



3,169



2.4
%Acquisition integration and
    restructuring expenses


3,933



6,898



(2,965
)


(43.0
)%Reserve reversal from litigation
    settlement


(5,120
)






(5,120
)


nmOperating income


58,490



55,192



3,298



6.0
%Operating margin percentage


10.7
%


9.8
%Other income (expense)Interest and dividend income


467



359



108



30.1
%Interest expense


(10,716
)


(8,599
)


(2,117
)


(24.6
)%Other income (expense)






498



(498
)


nm(10,249
)


(7,742
)


(2,507
)


(32.4
)%Income from continuing operations
    before income taxes


48,241



47,450



791



1.7
%Income tax provision


18,718



17,763



955



5.4
%Income from continuing operations


29,523



29,687



(164
)


(0.6
)%Income (loss) from discontinued
    operations


(1,135
)


785



(1,920
)


nmNet income

$
28,388


$
30,472


$
(2,084
)


(6.8
)%Effective income tax rate


38.8
%


37.4
%       Net sales
  Gross margin
  Operating income
 22




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##### Table of Contents



Other income (expense)
  Income tax provision
 23




---



##### Table of Contents



RESULTS
    OF OPERATIONS
 YEARS ENDED DECEMBER 31, 2005 AND 2004
  Schawk,
    Inc.
  Comparative
    Consolidated Statements of Operations
    Years Ended December 31, 2005 and 2004
  $


%2005


2004


Change


Change(In thousands)Net sales

$
562,104


$
238,345


$
323,759



135.8
%Cost of sales


367,455



137,017



230,438



168.2
%Gross profit


194,649



101,328



93,321



92.1
%Gross margin percentage


34.6
%


42.5
%Selling, general and
    administrative expenses


132,559



63,536



69,023



108.6
%Acquisition integration and
    restructuring expenses


6,898







6,898



nmOperating income


55,192



37,792



17,400



46.0
%Operating margin percentage


9.8
%


15.9
%Other income (expense)Interest and dividend income


359



188



171



91.0
%Interest expense


(8,599
)


(1,960
)


(6,639
)


nmOther income (expense)


498







498



nm(7,742
)


(1,772
)


(5,970
)


nmIncome from continuing operations
    before incometaxes


47,450



36,020



11,430



31.7
%Income tax provision


17,763



13,342



4,421



33.1
%Income from continuing operations


29,687



22,678



7,009



30.9
%Income from discontinued operations


785







785Net Income

$
30,472


$
22,678


$
7,794



34.4
%Effective income tax rate


37.4
%


37.0
%       Net sales
  Gross margin
  Operating income
   24




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##### Table of Contents



Other income (expense)
  Income tax provision
  LIQUIDITY
    AND CAPITAL RESOURCES
    Cash
    provided by (used in) Operating Activities
      Cash
    used in Investing Activities
    Cash
    provided by Financing Activities
         25




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##### 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


Years


Years


YearsLong-Term Debt Obligations

$
142,899


$
2,148


$
7,145


$
105,033


$
28,573Capital Lease Obligations


44



31



13







Operating Lease Obligations


71,065



15,847



22,327



12,101



20,790Purchase Obligations


2,347



2,347











Deferred Compensation


1,623



26



18



11



1,568Total

$
217,978


$
20,399


$
29,503


$
117,145


$
50,931       Critical
    Accounting Policies
   26




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##### Table of Contents



Accounts Receivable.
  Impairment of Long-Lived Assets.
  Goodwill and Other Acquired Intangible
    Assets.
    Customer Rebates.
  Stock-Based Compensation. ),Share-Based Payments,
    (SFAS 123R), Accounting for Stock Issued to Employees
    (APB 25).
 27




---



##### Table of Contents



Income Taxes.
    Exit Reserves.
  New
    Accounting Pronouncements
  FASB Accounting for Uncertainty in Income Taxes.
 28




---



##### Table of Contents



FAS 157
  Impact
    of Inflation
    ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Interest
    Rate Exposure
    Foreign
    Exchange Exposure
   29




---



##### Table of Contents



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  Index
    to Financial Statements
  PageManagements
    Responsibilities for Financial Reporting


31Report of
    Independent Registered Public Accounting Firm


32FINANCIAL STATEMENTS:Consolidated
    Balance Sheets  December 31, 2006 and
    2005


33Consolidated
    Statements of Operations  Years Ended
    December 31, 2006, 2005 and 2004


34Consolidated
    Statements of Cash Flows  Years Ended
    December 31, 2006, 2005 and 2004


35Consolidated
    Statements of Stockholders Equity  Years Ended
    December 31, 2006, 2005 and 2004


36Notes to
    Consolidated Financial Statements


37FINANCIAL STATEMENT SCHEDULES:SCHEDULE II 
    Valuation Reserves


67  30




---



##### Table of Contents



MANAGEMENTS
    RESPONSIBILITIES FOR FINANCIAL REPORTING  Form 10-K
      /s/  David
    A. Schawk

/s/  James
    J.
    PattersonDavid A. Schawk

James J. PattersonPresident and Chief Executive
    Officer
    Principal Executive Officer

Senior Vice President and Chief
    Financial Officer Principal Financial and Accounting Officer  31




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm                   32




---



##### Table of Contents



Schawk,
    Inc.
  Consolidated
    Balance Sheets
  December 312006


2005(In thousands)ASSETSCurrent assets:Cash and cash equivalents

$
10,177


$
7,519Trade accounts receivable, less
    allowance for doubtful accounts of $4,621 in 2006 and $5,940 in
    2005


127,627



117,723Inventories


23,575



24,868Prepaid expenses and other


10,171



9,701Deferred income taxes


8,580



9,845Assets of discontinued operations






29,253Total current assets


180,130



198,909Property and equipment, net


82,227



77,291Goodwill


235,501



233,838Intangible assets


35,755



42,223Other assets


4,633



6,557Total assets

$
538,246


$
558,818LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Trade accounts payable

$
26,522


$
27,776Accrued expenses


51,489



61,967Income taxes payable


10,249



6,367Current portion of long-term debt
    and capital lease obligations


2,177



454Liabilities of discontinued
    operations






8,208Total current liabilities


90,437



104,772Long-term debt


140,751



169,528Capital lease obligations


12



51Other long-term liabilities


23,461



27,383Deferred income taxes


14,657



25,688Stockholders
    Equity:Common stock


229



225Additional paid-in capital


178,415



168,777Retained earnings


113,365



88,424Accumulated comprehensive income,
    net


6,079



1,933298,088



259,359Treasury stock, at cost


(29,160
)


(27,963
)Total stockholders equity


268,928



231,396Total liabilities and
    stockholders equity

$
538,246


$
558,818    33




---



##### Table of Contents



Schawk,
    Inc.
  Consolidated
    Statements of Operations
  Years Ended December 312006


2005


2004(In thousands, except per share amounts)Net sales

$
548,406


$
562,104


$
238,345Cost of sales


355,375



367,455



137,017Gross profit


193,031



194,649



101,328Selling, general, and
    administrative expenses


135,728



132,559



63,536Acquisition integration and
    restructuring expenses


3,933



6,898



Reserve reversal from litigation
    settlement


(5,120
)






Operating income


58,490



55,192



37,792Other income (expense):Interest and dividend income


467



359



188Interest expense


(10,716
)


(8,599
)


(1,960
)Other






498



(10,249
)


(7,742
)


(1,772
)Income from continuing operations
    before income taxes


48,241



47,450



36,020Income tax provision


18,718



17,763



13,342Income from continuing operations


29,523



29,687



22,678Income (loss) from discontinued
    operations, net of tax (benefit) expense of ($720) in 2006 and
    $486 in 2005


(1,135
)


785



Net income

$
28,388


$
30,472


$
22,678Earnings per share:Basic:Income from continuing operations

$
1.12


$
1.16


$
1.05Income (loss) from discontinued
    operations

$
(0.04
)

$
0.03



Net income per common share

$
1.08


$
1.19


$
1.05Diluted:Income from continuing operations

$
1.08


$
1.10


$
1.01Income (loss) from discontinued
    operations

$
(0.04
)

$
0.03



Net income per common share

$
1.04


$
1.13


$
1.01Weighted average shares
    outstanding:Basic


26,393



25,529



21,603Diluted


27,395



26,963



22,515Dividends per Class A common
    share

$
0.13


$
0.13


$
0.13    34




---



##### Table of Contents



Schawk,
    Inc.
  Consolidated
    Statements of Cash Flows
  Years Ended December 312006


2005


2004(In thousands)Operating activitiesNet income

$
28,388


$
30,472


$
22,678Adjustments to reconcile net income
    to cash provided by operating activities:Depreciation


21,245



22,606



11,803Amortization


3,466



4,443



923Deferred income taxes


(11,272
)


2,761



(789
)Reserve reversal from litigation
    settlement


(5,120
)Loss realized on sale of equipment


532



295



101Share-based compensation expense


1,059Tax benefit from stock options
    exercised


(1,662
)


1,657



Changes in operating assets and
    liabilities, net of effects from acquisitions:Trade accounts receivable


(4,650
)


(4,919
)


(14,230
)Inventories


2,223



947



(231
)Prepaid expenses and other


817



(1,033
)


431Trade accounts payable and accrued
    expenses


(22,918
)


(22,795
)


4,562Income taxes refundable/payable


21,303



347



1,185Net cash provided by operating
    activities


33,411



34,781



26,433Investing activitiesProceeds from disposal of property
    and equipment


4,551



2,213



248Proceeds from sale of business


28,184







Purchases of property and equipment


(29,771
)


(22,158
)


(12,238
)Acquisitions, net of cash acquired


(9,747
)


(205,702
)


(29,278
)Contingent acquisition purchase
    price paid to escrow account










(2,574
)Other


(219
)


(87
)


(527
)Net cash used in investing
    activities


(7,002
)


(225,734
)


(44,369
)Financing activitiesProceeds from debt






151,825



33,200Issuance of common stock


6,922



74,805



4,428Principal payments on debt


(27,514
)


(27,841
)


(14,700
)Principal payments on capital lease
    obligations


(493
)


(648
)


(66
)Tax benefit from stock options
    exercised


1,662Cash dividends


(3,424
)


(3,354
)


(2,790
)Purchase of common stock


(1,223
)


(3,115
)


(603
)Capitalized loan fees






(580
)


Increase in deferred compensation
    liability






302



Net cash provided by (used in)
    financing activities


(24,070
)


191,394



19,469Effect of foreign currency rate
    changes


319



(190
)


508Net increase in cash and cash
    equivalents


2,658



251



2,041Cash and cash equivalents beginning
    of period


7,519



7,268



5,227Cash and cash equivalents end of
    period


10,177


$
7,519


$
7,268Supplementary disclosure of cash
    flow information:Dividends issued in the form of
    Class A common stock

$
23


$
24


$
19Cash paid for interest


8,898



7,355



1,876Cash paid for income taxes


3,686



14,559



13,025     35




---



##### Table of Contents



Schawk,
    Inc.
  Consolidated
    Statements of Stockholders Equity
 Years
    Ended December 31, 2004, 2005 and 2006
  Class A


Additional





Accumulated





TotalCommon


Paid-In


Retained


Comprehensive


Treasury


StockholdersStock


Capital


Earnings


Income


Stock


Equity(In thousands)Balance at December 31, 2003

$
187


$
87,928


$
41,461


$
1,087


$
(24,291
)

$
106,372Net income










22,678











22,678Sale of Class A common stock


3



3,672















3,675Purchase of Class A treasury
    stock


















(603
)


(603
)Stock issued under employee stock
    purchase plan


1



750















751Foreign currency translation
    adjustment














1,355







1,355Issuance of Class A common
    stock under dividend reinvestment program










(19
)






21



2Cash dividends










(2,790
)










(2,790
)Balance at December 31, 2004


191



92,350



61,330



2,442



(24,873
)


131,440Net income










30,472











30,472Sale of Class A common stock


1



2,963















2,964Tax benefit from stock options
    exercised






1,657















1,657Purchase of Class A treasury
    stock


















(3,115
)


(3,115
)Stock issued under employee stock
    purchase plan


1



1,319















1,320Stock issued for acquisitions


32



70,488















70,520Foreign currency translation
    adjustment














(509
)






(509
)Issuance of Class A common
    stock under dividend reinvestment program










(24
)






25



1Cash dividends










(3,354
)










(3,354
)Balance at December 31, 2005


225



168,777



88,424



1,933



(27,963
)


231,396Net income










28,388











28,388Sale of Class A common stock


3



5,814















5,817Tax benefit from stock options
    exercised






1,662















1,662Purchase of Class A treasury
    stock


















(1,223
)


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


1



1,103















1,104Stock-based compensation expense






1,059















1,059Foreign currency translation
    adjustment














4,146







4,146Issuance of Class A common
    stock under dividend reinvestment program










(23
)






26



3Cash dividends










(3,424
)










(3,424
)Balance at December 31, 2006

$
229


$
178,415


$
113,365


$
6,079


$
(29,160
)

$
268,928    36




---



##### Table of Contents



Schawk,
    Inc.
  Notes
    to Consolidated Financial Statements
 (In
    thousands, except per share amounts)
  NOTE 1.
    Basis of
    Presentation and Description of Business    NOTE 2.
    Summary
    of Significant Accounting Policies  Principles
    of Consolidation
    Cash
    Equivalents
    Accounts
    Receivable and Concentration of Credit Risk
    Inventories
  Work-in-process,
  Property
    and Equipment
    Goodwill
  and/or
 37




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Long-lived
    Assets
    Revenue
    Recognition
  and/or and/or
  Customer
    Rebates
    Shipping
    and Handling Fees and Costs
  Net sales jobs-in-progress Cost of sales
  Income
    Taxes
       38




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Use of
    Estimates
    Foreign
    Currency Translation
    Fair
    Value of Financial Instruments
    December 31,


December 31,2006


2005Fair value of fixed-rate notes
    payable

$
72,625


$
71,739Book value of fixed-rate notes
    payable


75,000



75,000   Comprehensive
    Income
    2006


2005


2004Net income

$
28,388


$
30,472


$
22,678Foreign currency translation
    adjustments


4,146



(509
)


1,355Comprehensive income

$
32,534


$
29,963


$
24,033   Stock
    Based Compensation
  Share-Based Payments,
    (SFAS 123R Accounting for Stock Issued to
    Employees (APB 25
 39




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
       Reclassifications
    New
    Accounting Pronouncements
  (FASB Accounting for Uncertainty in Income Taxes.
  Fair Value
    Measurements (FAS 157
  NOTE 3.
    Acquisitions  WBK,
    Inc
   40




---



##### Table of Contents



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

$
747Other current assets


10Fixed assets


66Customer relationship intangible
    asset


1,600Non-compete agreement intangible
    asset


50Goodwill


2,686Accounts payable


(168
)Other current liabilities


(126
)Total purchase price

$
4,865       Schawk
    India, Ltd.
   41




---



##### Table of Contents



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

$
151Trade accounts receivable


104Other current assets


71Fixed assets


136Goodwill


2,340Other assets


2Accounts payable


(14
)Other current liabilities


(30
)Long-term debt


(303
)Minority interest


(15
)Total fair value of assets

$
2,442Less equity method prior investment


(71
)Less cash received


(151
)Net cash purchase price

$
2,220     Anthem
    York
      Fixed assets

$
250Inventory


110Goodwill


1,837Total purchase price

$
2,197      42




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   Seven
    Worldwide Holdings, Inc.
    Trade accounts receivable

$
69,885Inventory


20,004Other current assets


5,899Fixed assets


39,533Intangible assets, principally
    customer relationships


43,651Goodwill


162,439Other assets


908Accounts payable


(19,093
)Other current liabilities


(73,958
)Income taxes payable


(11,022
)Deferred income taxes


(5,880
)Long term debt and capital lease
    obligations


(50
)Other liabilities


(27,908
)Total purchase price, net of
    $6,160 cash received

$
204,408      43




---



##### 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


4,715



3,969



(1,114
)


7,570Total

$
11,790


$
9,061


$
(7,835
)

$
13,016   Balance








BalanceDecember 31,








December 31,2005


Adjustments


Payments


2006Employee severance

$
5,446


$
155


$
(5,263
)

$
338Facility closure cost


7,570



163



(2,572
)


5,161Total

$
13,016


$
318


$
(7,835
)

$
5,499     Weir
    Holdings Limited
      Trade accounts receivable

$
7,071Inventory


1,267Other current assets


651Deferred income tax asset


985Fixed assets


6,566Customer relationship intangible
    asset


8,201Goodwill


9,630Other assets


307Current liabilities


(7,593
)Capital leases


(464
)Facility exit reserve


(3,283
)Net cash consideration

$
23,338    44




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      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     Other
    acquisitions
    NOTE 4.
    Discontinued
    Operations     45




---



##### Table of Contents



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


Year EndedDecember 31,


December 31,2006


2005Revenues

$
8,465


$
52,416Operating income (loss)

$
(1,660
)

$
2,522       Current assets

$
16,189Other non-current assets


2,303Intangible assets


15,327Assets of discontinued operations

$
33,819Current liabilities

$
5,635Liabilities of discontinued
    operations

$
5,635   NOTE 5.
    Reserve
    Reversal from Litigation Settlements    NOTE 6.
    Restructuring   46




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   NOTE 7.
    Inventories    December 31,2006


2005Raw materials

$
4,444


$
4,662Work in process


20,193



21,26424,637



25,926Less: LIFO reserve


(1,062
)


(1,058
)$
23,575


$
24,868   NOTE 8.
    Property
    and Equipment    December 31,2006


2005Land and improvements

$
10,614


$
11,146Buildings and improvements


20,970



21,594Machinery and equipment


86,233



81,981Leasehold improvements


14,979



17,368Computer software


31,687



19,708164,483



151,797Accumulated depreciation and
    amortization


(82,256
)


(74,506
)$
82,227


$
77,291   NOTE 9.
    Goodwill
    and Intangible Assets    Balance at December 31, 2004

$
71,720Acquisitions


161,934Foreign currency translation


184Balance at December 31, 2005


233,838Acquisitions


(667
)Foreign currency translation


2,330Balance at December 31, 2006

$
235,501    47




---



##### Table of Contents



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


December 31,Average Life


2006


2005Customer relationships


15.0 years


$
40,579


$
43,934Digital images


5.0 years



928



882Developed technologies


3.0 years



712



762Non-compete agreements


3.6 years



731



681Patents


20.0 years



326



326Trade names


2.0 years



308



157Contract acquisition cost


3.0 years



156



14.3 years



43,740



46,742Accumulated amortization






(7,985
)


(4,519
)$
35,755


$
42,223     NOTE 10.
    Accrued
    Expenses    December 31,2006


2005Accrued compensation and payroll
    taxes

$
27,243


$
26,687Facility exit reserve


3,696



8,825Accrued property taxes


2,614



2,564Vacant property reserve


2,527



5,274Unearned revenue


2,309



1,291Accrued professional fees


1,787



2,449Accrued customer rebates


1,684



2,830Restructuring reserve


1,105



Accrued interest


757



870Other


7,767



11,177$
51,489


$
61,967  48




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  NOTE 11.
    Other
    Long-Term Liabilities    December 31,2006


2005Vacant property reserve

$
14,827


$
16,552Facility exit reserve


2,204



5,940Other


6,430



4,891$
23,461


$
27,383   NOTE 12.
    Debt    December 31,2006


2005U.S. bank revolving credit
    agreement

$
67,891


$
94,520Series A senior note
    payable  Tranche A


15,000



15,000Series A senior note
    payable  Tranche B


10,000



10,000Series C senior note payable


10,000



10,000Series D senior note payable


20,000



20,000Series E senior note payable


20,000



20,000Other


8



13142,899



169,533Less amounts due in one year or
    less


(2,148
)


(5
)$
140,751


$
169,528        49




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
     2007

$
2,1482008


3,5742009


3,5712010


81,4622011


23,571Thereafter


28,573$
142,899   NOTE 13.
    Stockholders
    Equity    December 31,2006


2005Common stock:Class A voting,
    $0.008 par value, 40,000,000 shares authorized;
    28,989,013 and 28,441,689 shares issued at
    December 31, 2006 and 2005, respectively; 26,555,119 and
    26,070,747 shares outstanding at December 31, 2006 and
    2005, respectively

$
229


$
225Treasury stock:2,433,894 and
    2,370,942 shares of Class A common stock at
    December 31, 2006 and 2005, respectively

$
29,160


$
27,963   NOTE 14.
    Income
    Taxes    Years Ended December 31,2006


2005


2004Current:Federal

$
17,306


$
5,957


$
11,205State


4,148



2,781



186Foreign


8,536



6,264



1,16229,990



15,002



12,553Deferred:Federal


(4,380
)


6,192



663State


(386
)


83



298Foreign


(6,506
)


(3,514
)


(172
)(11,272
)


2,761



789Total

$
18,718


$
17,763


$
13,342  50




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    December 31,2006


2005Deferred income tax assets:Inventory

$
102


$
44Accruals and reserves not
    currently deductible


5,795



5,170Bad debt reserve


1,502



2,166Accrued vacation


1,699



2,189Other






715Restructuring reserves


7,827



6,078Net operating losses


12,366



7,407Income tax credits


5,913



3,862Capital losses


9,597



13,258Deferred income tax assets before
    valuation allowances


44,801



40,889Valuation allowances


(23,046
)


(20,116
)Deferred income tax assets

$
21,755


$
20,773Deferred income tax liabilities:Prepaid expenses

$
(749
)

$
(372
)Property and equipment


(3,891
)


(5,826
)Customer intangibles


(12,190
)


(16,420
)Domestic subsidiary stock


(9,805
)


(9,536
)Goodwill on asset acquisitions






(1,046
)Other


(1,197
)


(3,416
)Deferred income tax liabilities

$
(27,832
)

$
(36,616
)     Year Ended December 31,2006


2005


2004Income taxes at statutory rate


35.0
%


35.0
%


35.0
%Nondeductible expenses


1.6



1.1



.2State income taxes


4.6



3.2



3.0Foreign rate differential


(1.6
)


(0.9
)


1.2Reduction of accrual for prior
    year taxes


(0.1
)


(2.1
)


Other


(0.7
)


1.1



Prior year state refunds received










(2.4
)38.8
%


37.4
%


37.0
%  51




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    2006


2005


2004Domestic

$
41,988


$
40,418


$
32,923Foreign


6,253


$
7,032


$
3,097Total

$
48,241


$
47,450


$
36,020         NOTE 15.
    Related
    Party Transactions  Note 4-
      NOTE 16.
    Leases
    and Commitments     52




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##### Table of Contents



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


OperatingLeases


Leases2007

$
31


$
15,8472008


13



12,2642009






10,0632010






7,3542011






4,747Thereafter






20,790$
44


$
71,065Less: Amounts representing interest


341Less: Current portion


29$
12       NOTE 17.
    Employee
    Benefit Plans      end-of-quarter beginning-of-quarter end-of-quarter
 53




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##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      NOTE 18.
    Stock
    Based Compensation  ),Share-Based Payments, ,Accounting for Stock Issued to
    Employees (APB 25).
      2006
    Long-Term Incentive Plan
      Options
   54




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
            Year Ended December 31,2006

2005

2004Expected dividend yield

0.70% - 0.76%

0.70%

0.90% - 1.00%Expected stock price volatility

27.33% - 27.40%

19.78% - 20.34%

16.60%Risk-free interest rate range

4.28% - 4.83%

4.0%

4.0%Weighted-average expected life

6 years

7 years

7 yearsForfeiture rate

2.65%

na

naTotal fair value of options granted

$870

$3,057

$2,097     Weighted Average


Weighted AverageNumber of


Exercise Price


Remaining


AggregateShares


per Share


Contractual Term


Intrinsic ValueOutstanding December 31, 2003


2,895


$
9.49Granted


576


$
14.21Exercised


(360
)

$
10.20Cancelled


(28
)

$
9.47Outstanding December 31, 2004


3,083


$
10.29Granted


574


$
18.79Exercised


(324
)

$
9.54Cancelled






Outstanding December 31, 2005


3,333


$
11.73Granted


144


$
17.75Exercised


(326
)

$
9.84Cancelled






Outstanding December 31, 2006


3,151


$
12.11



5.40


$
23,418Vested at December 31, 2006


2,825


$
11.50



4.97


$
22,719Exercisable at December 31,
    2006


2,825


$
11.50



4.97


$
22,719  55




---



##### Table of Contents



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


Options ExercisableWeighted Average








WeightedRemaining


Weighted





Average ofNumber


Contractual Life


Average


Number


ExercisableRange of Exercise Price

Outstanding


(Years)


Exercise Price


Exercisable


price$6.20 - $8.26


279



2.1


$
7.73



279


$
7.738.26  - 10.33


1,412



4.4



9.29



1,412



9.2910.33 - 12.39


192



2.3



11.30



192



11.3012.39 - 14.45


526



7.2



14.20



525



14.2014.45 - 16.52


68



1.8



14.92



68



14.9216.52 - 18.58


124



9.6



17.46



3



18.1818.58 - 20.65


550



8.3



18.82



346



18.813,151











2,825     Weighted AverageNumber of


Grant DateShares


per ShareNonvested at January 1, 2006


570


$
4.85Granted


144


$
6.02Vested


(388
)

$
4.58Forfeited


Nonvested at December 31, 2006


326


$
5.70   Restricted
    Stock
     56




---



##### Table of Contents



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


Grant DateShares


Fair ValueOutstanding at January 1, 2006






Granted


25


$
17.43Forfeited


Outstanding at December 31,
    2006


25


$
17.43     Employee
    Share-Based Compensation Expense
    Year EndedDecember 31, 2006Total cost of share-based
    compensation

$
1,059Income tax


(411
)Amount charged against income

$
648Impact on net income per common
    share:Basic

$
0.02Diluted

$
0.02     Pro
    Forma Employee Share-Based Compensation Expense
    Year Ended


Year EndedDecember 31, 2005


December 31, 2004Net income, as reported

$
30,472


$
22,678Less: Total stock-based employee
    compensation expense determined under fair value based method
    for all awards, net of related tax effects


(1,503
)


(1,064
)Net income, pro forma

$
28,969


$
21,614Earnings per shareBasic

$
1.19


$
1.05Diluted

$
1.13


$
1.01Pro forma earnings per shareBasic

$
1.13


$
1.00Diluted

$
1.07


$
0.96  57




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##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  NOTE 19.
    Earnings
    Per Share      2006


2005


2004Weighted average shares-Basic


26,393



25,529



21,603Effect of dilutive stock options


1,002



1,434



912Weighted average shares-Diluted


27,395



26,963



22,515         NOTE 20.
    Geographic
    Reporting    OtherUnited States


Canada


Europe


Foreign


Total2006Sales

$
407,105


$
35,485


$
80,805


$
25,011


$
548,406Long-lived assets


271,687



20,495



56,009



9,925



358,1162005Sales

$
421,503


$
35,849


$
82,021


$
22,732


$
562,105Long-lived assets


289,941



18,917



44,820



6,231



359,9092004Sales

$
190,983


$
33,398


$



$
13,964


$
238,345Long-lived assets


87,863



19,196



23,734



7,144



137,937   equipment-net,
  NOTE 21.
    Other
    Income   58




---



##### Table of Contents



Schawk,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   NOTE 22.
    Quarterly
    Financial Data (unaudited)    March 31,


June 30,


Sept 30,


Dec 31,


March 31,


June 30,


Sept 30,


Dec 31,2006


2006


2006


2006


2005


2005


2005


2005(In thousands, except per share amounts)Net sales

$
133,754


$
140,095


$
134,779


$
139,778


$
119,180


$
145,229


$
151,644


$
146,051Gross Profit


45,716



49,756



48,349



49,210



41,336



51,182



53,374



48,757Income (loss) from continuing
    operations

$
5,215


$
8,296


$
8,206


$
7,176


$
5,799


$
8,440


$
8,156


$
7,292Income (loss) from discontinued
    operations


(433
)


44



(57
)


(689
)


(235
)


(588
)


604



1,004Net income

$
4,782


$
8,970


$
8,149


$
6,487


$
5,564


$
7,852


$
8,760


$
8,296Earnings per share from continuing
    operations:Basic

$
0.20


$
0.34


$
0.31


$
0.27


$
0.24


$
0.33


$
0.31


$
0.28Diluted


0.19



0.32



0.30



0.26



0.23



0.31



0.29



0.27Net earnings per share:Basic

$
0.18


$
0.34


$
0.31


$
0.24


$
0.23


$
0.31


$
0.34


$
0.32Diluted


0.17



0.32



0.30



0.24



0.22



0.29



0.32



0.30   NOTE 23.
    Subsequent
    Events     59




---



##### 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) Form 10-K.
  Managements
    Report on Internal Control over Financial Reporting
  Company Rule 13a-15(f) (Internal Controls (GAAP
     60




---



##### Table of Contents



Form 10-K.
  /s/  David
    A. Schawk

/s/  James
    J. PattersonPresident and

Senior Vice President andChief Executive Officer

Chief Financial Officer   Changes
    in Internal Control over Financial Reporting
   61




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
    On Internal Control over Financial Reporting
                     62




---



##### Table of Contents



ITEM 9B.
    OTHER
    INFORMATION.   PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.      ITEM 11.
    EXECUTIVE
    COMPENSATION.    ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS  Form 10-K.
  ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE.    ITEM 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES.   63




---



##### Table of Contents



PART IV  ITEM 15.
    EXHIBITS,
    AND FINANCIAL STATEMENT SCHEDULES  Item 8-Financial
                    Incorporated Hereinby Reference to3.1

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 4.3 to Registration
    Statement
    No. 333-391134.1

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 Stockholders (File
    No. 001-09335)10.4*

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

Registration Statement
    No. 33-8515210.5*

Form of David A. Schawk 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.

1996
    10-K (File
    No. 001-09335)10.8*

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

1996
    10-K (File
    No. 001-09335)10.9

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. 333-68521 64




---



##### Table of Contents



Incorporated Hereinby Reference to10.11

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

2003
    10-K (File
    No. 001-09335)10.12

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

Form 8-K
    dated June 16, 2004 (File
    No. 001-09335)10.13

Schawk, Inc. 2001 Equity Option
    Plan

Appendix B to Proxy Statement
    for the 2001 Annual Meeting of Stockholders (File
    No. 001-09335)10.14

Schawk, Inc. 2003 Equity Option
    Plan

Appendix A to Proxy Statement
    for the 2003 Annual Meeting of Stockholders (File
    No. 001-09335)10.15

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, 2004 (file
    no. 001-09335)10.16

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, 2005 (file
    no. 001-09335)10.17

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, 2005 (file
    no. 001-09335)10.18

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, 2005 (file
    no. 001-09335)10.19

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, 2005 (file
    no. 001-09335)10.20

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, 2005 (file
    no. 001-09335)10.21

Description of executive
    compensation arrangements

Form 8-K
    filed with the SEC on June 6, 2005 (file
    no. 001-09335)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, 2006 (file
    no. 001-09335)) 65




---



##### Table of Contents



Incorporated Hereinby Reference to10.24

Description of executive equity
    awards

Form 8-K
    filed with the SEC on August 14, 2006 (file
    no. 001-09335)21 **

List of Subsidiaries.23 **

Consent of Independent Registered
    Public Accounting Firm31.1 **

Certification of Chief Executive
    Officer pursuant to
    Rule 13a-14(a)
    and
    Rule 15d-14(a)
    of the Securities Exchange Act of 1934, as amended31.2 **

Certification of Chief Financial
    Officer pursuant to
    Rule 13a-14(a)
    and rule
    15d-14(a) of
    the Securities Exchange Act of 1934, as amended32 **

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     *
    
    Represents management contract or compensation plan or
    arrangement required to be filed pursuant to Item 14 (c).**
    
    Document filed herewith. 66




---



##### Table of Contents



Schawk,
    Inc.
 SCHEDULE II 
    VALUATION AND QUALIFYING ACCOUNTS
    ALLOWANCE FOR DOUBTFUL ACCOUNTS  Year Ended December 31,2006


2005


2004(In thousands)Balance beginning of year

$
5,940


$
1,632


$
1,449Acquisitions


5



5,846



Provision (reversal of provision)


(180
)


(627
)


752Deductions(1)


(1,252
)


(776
)


(569
)Foreign currency adjustment


108



(135
)


Balance end of year

$
4,621


$
5,940


$
1,632     (1)
    
    Uncollectible accounts written off, net of recoveries. 67




---



##### Table of Contents



SIGNATURES      By:
    /s/  Clarence
    W. Schawk     th
  /s/  Clarence
    W. SchawkClarence
    W. Schawk

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

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

Executive Vice President, Chief
    Operating Officer and Director/s/  James
    J. PattersonJames
    J. Patterson

Senior Vice President and Chief
    Financial Officer
    (Principle Financial Officer and 
    rinciple 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  68