##### Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended June 30, 2007

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission File Number 333-133825



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SGS INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|DELAWARE                                                       |  | 20-3939981                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|                                                     |  |           
|---------------------------------------------------- |  | ----------
|626 West Main Street, Suite 500 Louisville, Kentucky |  | 40202     
|(Address of principal executive offices)             |  | (Zip Code)

(502) 637-5443

(Registrants telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)



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Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a
non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.

Large
accelerated filer ̈Accelerated filer ̈Non-accelerated filer  x

Indicate by
check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ̈No  x

As of June 30, 2007 there were 1,000 shares of the
registrants common stock, $0.01 par value, outstanding.



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##### Table of Contents

TABLE OF CONTENTS



|           |  |          |  |                                                                                                   |  |   
|---------- |  | -------- |  | ------------------------------------------------------------------------------------------------- |  | --
|           |  |          |  | Page                                                                                             
|PART I     |  | 5       
|           |  | Item 1.  |  | Financial Statements                                                                              |  | 3 
|           |  |          | 
|           |  |          |  | Condensed Consolidated Statements of Operations for the Three Months Ended June 30, 2007 and 2006 |  | 3 
|           |  |          | 
|           |  |          |  | Condensed Consolidated Statements of Operations for the Six Months Ended June 30, 2007 and 2006   |  | 4 
|           |  |          | 
|           |  |          |  | Condensed Consolidated Balance Sheets as of June 30, 2007 and December 31, 2006                   |  | 5 
|           |  |          | 
|           |  |          |  | Condensed Consolidated Statement of Stockholders Equity for the Six Months Ended June 30, 2007   |  | 6 
|           |  |          | 
|           |  |          |  | Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2007 and 2006   |  | 7 
|           |  |          | 
|           |  |          |  | Notes to Condensed Consolidated Financial Statements                                              |  | 8 
|           |  |          | 
|           |  | Item 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations             |  | 26
|           |  |          | 
|           |  | Item 3.  |  | Quantitative and Qualitative Disclosures About Market Risk                                        |  | 32
|           |  |          | 
|           |  | Item 4.  |  | Controls and Procedures                                                                           |  | 33
|           | 
|PART II    |  | 34      
|           |  | Item 1.  |  | Legal Proceedings                                                                                 |  | 34
|           |  |          | 
|           |  | Item 1A. |  | Risk Factors                                                                                      |  | 34
|           |  |          | 
|           |  | Item 6.  |  | Exhibits                                                                                          |  | 34
|           | 
|SIGNATURES |  | 38      



2



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##### Table of Contents

PART I

FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

SGS International, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands of dollars)



|                                                                |  |                                 |        |   |                                 |   |        |  
|--------------------------------------------------------------- |  | ------------------------------- | ------ | - | ------------------------------- | - | ------ | -
|                                                                |  | Three Months EndedJune 30, 2007 |        |   | Three Months EndedJune 30, 2006 |  
|                                                                |  |                                 |        |   | (as Restated, see Note F)       |  
|REVENUES                                                        |  | $                               | 79,337 |   |                                 | $ | 72,597 |  
|COSTS AND EXPENSES:                                             |  |                                 |        |   |                                 |   |        |  
|Cost of goods sold (exclusive of depreciation)                  |  |                                 | 53,116 |   |                                 |   | 45,120 |  
|Selling, general and administrative expenses                    |  |                                 | 12,438 |   |                                 |   | 10,827 |  
|Depreciation and amortization                                   |  |                                 | 5,792  |   |                                 |   | 4,708  |  
|Interest expense                                                |  |                                 | 9,276  |   |                                 |   | 8,551  |  
|Other expense, net                                              |  |                                 | 481    |   |                                 |   | 410    |  
|                                                                |  |                                 |        |   |                                 |   |        |  
|Total costs and expenses                                        |  |                                 | 81,103 |   |                                 |   | 69,616 |  
|                                                                |  |                                 |        |   |                                 |   |        |  
|INCOME FROM (LOSS ON) CONTINUING OPERATIONS BEFORE INCOME TAXES |  |                                 | (1,766 | ) |                                 |   | 2,981  |  
|PROVISION (BENEFIT) FOR INCOME TAXES                            |  |                                 | (601   | ) |                                 |   | 1,392  |  
|                                                                |  |                                 |        |   |                                 |   |        |  
|INCOME FROM (LOSS ON) CONTINUING OPERATIONS                     |  |                                 | (1,165 | ) |                                 |   | 1,589  |  
|                                                                |  |                                 |        |   |                                 |   |        |  
|LOSS ON DISCONTINUED OPERATIONS                                 |  |                                 |       |   |                                 |   | (85    | )
|BENEFIT FOR INCOME TAXES                                        |  |                                 |       |   |                                 |   | (81    | )
|                                                                |  |                                 |        |   |                                 |   |        |  
|NET INCOME (LOSS)                                               |  | $                               | (1,165 | ) |                                 | $ | 1,585  |  
|                                                                |  |                                 |        |   |                                 |   |        |  

The accompanying notes, together with the notes to the Consolidated Financial Statements included in our annual
report on Form 10-K for the year ended December 31, 2006, are an integral part of the financial statements.



3



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##### Table of Contents

SGS International, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands of dollars)



|                                                                                               |  |                               |         |                               |   |         |  
|---------------------------------------------------------------------------------------------- |  | ----------------------------- | ------- | ----------------------------- | - | ------- | -
|                                                                                               |  | Six Months EndedJune 30, 2007 |         | Six Months EndedJune 30, 2006 |  
|                                                                                               |  |                               |         | (as Restated, see Note F)     |  
|REVENUES                                                                                       |  | $                             | 153,444 |                               | $ | 141,420 |  
|COSTS AND EXPENSES:                                                                            |  |                               |         |                               |   |         |  
|Cost of goods sold (exclusive of depreciation)                                                 |  |                               | 100,988 |                               |   | 91,781  |  
|Selling, general and administrative expenses                                                   |  |                               | 22,739  |                               |   | 19,339  |  
|Depreciation and amortization                                                                  |  |                               | 10,897  |                               |   | 8,958   |  
|Interest expense                                                                               |  |                               | 18,223  |                               |   | 17,089  |  
|Other expense, net                                                                             |  |                               | 189     |                               |   | 482     |  
|                                                                                               |  |                               |         |                               |   |         |  
|Total costs and expenses                                                                       |  |                               | 153,036 |                               |   | 137,649 |  
|                                                                                               |  |                               |         |                               |   |         |  
|INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES                                          |  |                               | 408     |                               |   | 3,771   |  
|PROVISION FOR INCOME TAXES                                                                     |  |                               | 236     |                               |   | 1,678   |  
|                                                                                               |  |                               |         |                               |   |         |  
|INCOME FROM CONTINUING OPERATIONS                                                              |  |                               | 172     |                               |   | 2,093   |  
|                                                                                               |  |                               |         |                               |   |         |  
|INCOME FROM (LOSS ON) DISCONTINUED OPERATIONS (including gain on disposal of $935 during 2007) |  |                               | 842     |                               |   | (270    | )
|PROVISION (BENEFIT) FOR INCOME TAXES                                                           |  |                               | 170     |                               |   | (133    | )
|                                                                                               |  |                               |         |                               |   |         |  
|NET INCOME                                                                                     |  | $                             | 844     |                               | $ | 1,956   |  
|                                                                                               |  |                               |         |                               |   |         |  

The accompanying notes, together with the notes to the Consolidated Financial Statements included in our annual
report on Form 10-K for the year ended December 31, 2006, are an integral part of the financial statements.



4



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##### Table of Contents

SGS International, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands of dollars, except share data)



|                                                                                                                      |  |               |         |                   |   |        
|--------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | ----------------- | - | -------
|                                                                                                                      |  | June 30, 2007 |         | December 31, 2006
|                                                                                                                      |  | (unaudited)   |         | (audited)        
|ASSETS                                                                                                                |  |               |         |                   |   |        
|Current assets:                                                                                                       |  |               |         |                   |   |        
|Cash and cash equivalents                                                                                             |  | $             | 10,775  |                   | $ | 12,658 
|Receivables from customers, less allowances of $1,608 and $1,422 at June 30, 2007 and December 31, 2006,
respectively |  |               | 62,910  |                   |   | 57,417 
|Inventories                                                                                                           |  |               | 5,832   |                   |   | 5,733  
|Deferred income taxes                                                                                                 |  |               | 1,194   |                   |   | 1,676  
|Prepaid expenses and other current assets                                                                             |  |               | 9,254   |                   |   | 8,053  
|                                                                                                                      |  |               |         |                   |   |        
|Total current assets                                                                                                  |  |               | 89,965  |                   |   | 85,537 
|Properties, plants and equipment, net                                                                                 |  |               | 54,813  |                   |   | 52,413 
|Goodwill                                                                                                              |  |               | 167,311 |                   |   | 157,778
|Other intangible assets, net                                                                                          |  |               | 179,916 |                   |   | 163,113
|Deferred financing costs, net                                                                                         |  |               | 9,482   |                   |   | 10,177 
|Other assets                                                                                                          |  |               | 426     |                   |   | 509    
|                                                                                                                      |  |               |         |                   |   |        
|TOTAL ASSETS                                                                                                          |  | $             | 501,913 |                   | $ | 469,527
|                                                                                                                      |  |               |         |                   |   |        
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                  |  |               |         |                   |   |        
|Current liabilities:                                                                                                  |  |               |         |                   |   |        
|Accounts payable, trade                                                                                               |  | $             | 18,016  |                   | $ | 15,719 
|Accrued compensation                                                                                                  |  |               | 5,771   |                   |   | 6,122  
|Accrued taxes, including taxes on income                                                                              |  |               | 2,762   |                   |   | 1,680  
|Accrued interest                                                                                                      |  |               | 1,064   |                   |   | 1,091  
|Other current liabilities                                                                                             |  |               | 7,698   |                   |   | 7,046  
|Current portion of short-term and long-term obligations                                                               |  |               | 1,778   |                   |   | 3,605  
|                                                                                                                      |  |               |         |                   |   |        
|Total current liabilities                                                                                             |  |               | 37,089  |                   |   | 35,263 
|Long-term obligations, net of current portion                                                                         |  |               | 342,159 |                   |   | 318,384
|Non-current liabilities                                                                                               |  |               | 563     |                   |   | 517    
|Deferred income taxes                                                                                                 |  |               | 5,678   |                   |   | 5,395  
|                                                                                                                      |  |               |         |                   |   |        
|Total liabilities                                                                                                     |  |               | 385,489 |                   |   | 359,559
|                                                                                                                      |  |               |         |                   |   |        
|Commitments and contingencies                                                                                         |  |               |         |                   |   |        
|Stockholders equity:                                                                                                 |  |               |         |                   |   |        
|Common stock, $.01 par value, 1,000 shares authorized and outstanding                                                 |  |               |        |                   |   |       
|Additional capital                                                                                                    |  |               | 107,000 |                   |   | 107,000
|Accumulated other comprehensive income - unrealized translation adjustments, net of tax                               |  |               | 8,043   |                   |   | 2,431  
|Retained earnings                                                                                                     |  |               | 1,381   |                   |   | 537    
|                                                                                                                      |  |               |         |                   |   |        
|Total stockholders equity                                                                                            |  |               | 116,424 |                   |   | 109,968
|                                                                                                                      |  |               |         |                   |   |        
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                            |  | $             | 501,913 |                   | $ | 469,527
|                                                                                                                      |  |               |         |                   |   |        

The accompanying notes, together with the notes to the Consolidated Financial Statements included in our annual
report on Form 10-K for the year ended December 31, 2006, are an integral part of the financial statements.



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##### Table of Contents

SGS International, Inc. and Subsidiaries

Condensed Consolidated Statement of Stockholders Equity

(unaudited)

(in thousands of dollars)



|                                        |  |                     |       |             |   |                   |  |                  |         |                                     |   |                          |  |   |       |  |   |        
|--------------------------------------- |  | ------------------- | ----- | ----------- | - | ----------------- |  | ---------------- | ------- | ----------------------------------- | - | ------------------------ |  | - | ----- |  | - | -------
|                                        |  | ComprehensiveIncome |       | CommonStock |   | AdditionalCapital |  | RetainedEarnings |         | AccumulatedOtherComprehensiveIncome |   | TotalStockholdersEquity
|Balance at December 31, 2006            |  |                     |       |             | $ |                  |  | $                | 107,000 |                                     | $ | 537                      |  | $ | 2,431 |  | $ | 109,968
|Comprehensive income:                   |  |                     |       |             |   |                   |  |                  |         |                                     |   |                          |  |   |       |  |   |        
|Net income                              |  | $                   | 844   |             |   |                  |  |                  |        |                                     |   | 844                      |  |   |      |  |   | 844    
|Cumulative translation adjustments, net |  |                     | 5,612 |             |   |                  |  |                  |        |                                     |   |                         |  |   | 5,612 |  |   | 5,612  
|                                        |  |                     |       |             |   |                   |  |                  |         |                                     |   |                          |  |   |       |  |   |        
|Comprehensive income                    |  | $                   | 6,456 |             |   |                   |  |                  |         |                                     |   |                          |  |   |       |  |   |        
|                                        |  |                     |       |             |   |                   |  |                  |         |                                     |   |                          |  |   |       |  |   |        
|Balance at June 30, 2007                |  |                     |       |             | $ |                  |  | $                | 107,000 |                                     | $ | 1,381                    |  | $ | 8,043 |  | $ | 116,424
|                                        |  |                     |       |             |   |                   |  |                  |         |                                     |   |                          |  |   |       |  |   |        

The accompanying notes, together with the notes to the Consolidated Financial Statements included in our annual
report on Form 10-K for the year ended December 31, 2006, are an integral part of the financial statements.



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##### Table of Contents

SGS International, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands of dollars)



|                                                            |  |                               |         |   |                               |   |        |  
|----------------------------------------------------------- |  | ----------------------------- | ------- | - | ----------------------------- | - | ------ | -
|                                                            |  | Six Months EndedJune 30, 2007 |         |   | Six Months EndedJune 30, 2006 |  
|                                                            |  |                               |         |   | (as Restated, see Note F)     |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                       |  | $                             | 10,989  |   |                               | $ | 15,504 |  
|                                                            |  |                               |         |   |                               |   |        |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                       |  |                               |         |   |                               |   |        |  
|Acquisition of property, plant and equipment                |  |                               | (6,171  | ) |                               |   | (3,621 | )
|Proceeds from sales of assets                               |  |                               |        |   |                               |   | 2,060  |  
|Proceeds from divestiture of business, net of cash divested |  |                               | 628     |   |                               |   |       |  
|Business acquisitions, net of cash acquired                 |  |                               | (28,471 | ) |                               |   | (2,026 | )
|                                                            |  |                               |         |   |                               |   |        |  
|Net cash used in investing activities                       |  |                               | (34,014 | ) |                               |   | (3,587 | )
|                                                            |  |                               |         |   |                               |   |        |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                       |  |                               |         |   |                               |   |        |  
|Borrowings on acquisition facility                          |  |                               | 23,057  |   |                               |   |       |  
|Net borrowings on revolving lines of credit                 |  |                               |        |   |                               |   | 800    |  
|Payments on long-term debt                                  |  |                               | (2,367  | ) |                               |   | (724   | )
|                                                            |  |                               |         |   |                               |   |        |  
|Net cash provided by financing activities                   |  |                               | 20,690  |   |                               |   | 76     |  
|                                                            |  |                               |         |   |                               |   |        |  
|Effect of exchange rate changes on cash                     |  |                               | 452     |   |                               |   | 217    |  
|                                                            |  |                               |         |   |                               |   |        |  
|INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS            |  |                               | (1,883  | ) |                               |   | 12,210 |  
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD              |  |                               | 12,658  |   |                               |   | 4,081  |  
|                                                            |  |                               |         |   |                               |   |        |  
|CASH AND CASH EQUIVALENTS, END OF PERIOD                    |  | $                             | 10,775  |   |                               | $ | 16,291 |  
|                                                            |  |                               |         |   |                               |   |        |  

The accompanying notes, together with the notes to the Consolidated Financial Statements included in our annual
report on Form 10-K for the year ended December 31, 2006, are an integral part of the financial statements.



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##### Table of Contents

SGS International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

(all amounts in thousands of dollars, unless otherwise stated)



|A. | Summary of Significant Accounting Policies
|-- | ------------------------------------------

General Nature of Business

SGS International, Inc. (the Company), headquartered in Louisville, Kentucky,
supplies photographic and digital images and manufactures flexographic printing plates and rotogravure cylinders for the packaging printing industry. As of June 30, 2007, the Company had 38 locations in the United States, Canada, Mexico, the
United Kingdom, the Netherlands, and China.

Acquisitions

On February 28, 2007, the Companys subsidiary, Southern Graphic Systems, Inc., entered into an Asset Purchase Agreement (the Purchase
Agreement) with C.M. Jackson Associates, Inc. (CMJ), a supplier of design and creative, production art and pre-press, packaging management, project tracking and digital asset management services with an emphasis on store
brands. Under the Purchase Agreement, the Company acquired substantially all of CMJs assets for an aggregate cash purchase price of $16,650 (the Purchase Price). In conjunction with this acquisition, the Company borrowed
$8,000 on its acquisition facility. The acquired assets include CMJs leasehold interest in its single facility located in Ramsey, New Jersey. The Company will operate the acquired business under the C.M. Jackson Associates, Inc.
name. The Purchase Agreement contains customary representations, warranties, covenants and indemnification provisions. $5,000 of the Purchase Price is payable in two equal installments on February 28, 2008 and 2009, respectively. The deferred
purchase price installments are subject to forfeiture if certain key CMJ employees now employed by the Company terminate their employment before the expiration of their respective employment agreements. A portion of the second deferred installment
is payable only if the acquired business achieves a specified threshold of earnings before interest, depreciation and amortization. This $5,000 of deferred purchase price will continue to be recorded as compensation expense through 2009. The
purchase price allocation for the acquisition from CMJ is provided below, but remains subject to completion of final fair value allocations.



|                                 |  |   |        |  
|-------------------------------- |  | - | ------ | -
|Purchase price                   |  | $ | 11,650 |  
|Transaction costs                |  |   | 300    |  
|                                 |  |   |        |  
|Total acquisition price          |  | $ | 11,950 |  
|                                 |  |   |        |  
|Allocation of acquisition price: |  |   |        |  
|Current assets                   |  | $ | 265    |  
|Properties, plants and equipment |  |   | 217    |  
|Goodwill                         |  |   | 3,298  |  
|Customer relationships           |  |   | 7,800  |  
|Other intangible assets          |  |   | 400    |  
|Liabilities assumed              |  |   | (30    | )
|                                 |  |   |        |  
|Total acquisition price          |  | $ | 11,950 |  
|                                 |  |   |        |  



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SGS International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited - continued)

(all amounts in thousands of dollars,
unless otherwise stated)



Results of operations of the acquired business from CMJ are included in the condensed consolidated
statements of operations from the date of the acquisition. Pro forma results of the Company, assuming the acquisition from CMJ had been made at the beginning of each period presented, would not have been materially different from the results
reported.

On April 2, 2007, SGS International, Inc. (the Registrant) and SGS Packaging Europe Holdings Limited
(Holdings), a wholly owned subsidiary of the Registrant, entered into Share Sale and Purchase Agreements (the Agreements) under which Holdings acquired the outstanding shares of McGurk Studios Limited (Studios)
and Thames McGurk Limited (Thames and, together with Studios, McGurks) for an aggregate consideration (the Consideration) of 9.2 million pounds sterling (approximately $18,193,920 based on the U.S.
dollar/pound sterling exchange rate on April 2, 2007), subject to adjustment as described in the Agreements. The Consideration consists of a cash payment in the amount of 8,543,446 pounds sterling (approximately $16,895,519 based on the
April 2, 2007 U.S. dollar/pound sterling exchange rate) and assumption of McGurks short-term and long-term indebtedness in the amount of 656,554 pounds sterling (approximately $1,298,401 based on the April 2, 2007 U.S. dollar/pound
sterling exchange rate). McGurks is a UK-based provider of end-to-end digital design, artwork and reprographics for packaging solutions with locations in Hull and London, England, and Hong Kong.

On March 30, 2007, in connection with the financing of the acquisition of McGurks described above, the Company borrowed the sum of $15.0 million
under its acquisition facility (the McGurk Borrowing).

The purchase price allocation for this acquisition is provided below.
The purchase price allocation for this acquisition is subject to completion of final fair value allocations.



|                                 |  |   |        |    
|-------------------------------- |  | - | ------ | ---
|Purchase price                   |  | $ | 16,896 | (1)
|Transaction costs                |  |   | 310    |    
|                                 |  |   |        |    
|Total acquisition price          |  | $ | 17,206 |    
|                                 |  |   |        |    
|Allocation of acquisition price: |  |   |        |    
|Current assets                   |  | $ | 5,599  |    
|Properties, plant and equipment  |  |   | 3,041  |    
|Goodwill                         |  |   | 3,030  |    
|Customer relationships           |  |   | 9,885  |    
|Other intangible assets          |  |   | 692    |    
|Liabilities assumed              |  |   | (5,041 | )  
|                                 |  |   |        |    
|Total acquisition price          |  | $ | 17,206 |    
|                                 |  |   |        |    

---

|(1) | The acquisition price in the table above consists of the aggregate consideration of $18,194 (9,200 pounds sterling) less debt assumed of $1,298 (657 pounds sterling).
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

SGS International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited - continued)

(all amounts in thousands of dollars,
unless otherwise stated)



The following table presents the unaudited pro forma results of operations for the Company for the
three month periods ended June 30, 2007 and June 30, 2006 and the six month periods ended June 30, 2007 and June 30, 2006. The unaudited pro forma financial information summarizes the results of operations for the periods
indicated as if the McGurks acquisition had occurred as of the beginning of each period. The pro forma information contains the actual combined operating results of the Company and McGurks, with the results prior to the acquisition adjusted to
include the pro forma impact of (1) amortization expense associated with the customer relationships and other intangible assets (calculated using a useful life of 20 years) recorded in connection with the preliminary purchase price allocation,
(2) interest expense associated with the McGurk Borrowing of $15,000 at a variable rate of LIBOR plus 2.5%, and (3) income tax expense at a blended rate of 38.5% in 2007 and 37.9% in 2006.

Pro forma



|                  |  |                                 |         |   |                                 |   |        
|----------------- |  | ------------------------------- | ------- | - | ------------------------------- | - | -------
|                  |  | Three Months EndedJune 30, 2007 |         |   | Three Months EndedJune 30, 2006
|Revenues          |  | $                               | 79,337  |   |                                 | $ | 76,730 
|Net income (loss) |  |                                 | (1,165  | ) |                                 |   | 1,774  
|                  |  |                                
|                  |  | Six Months EndedJune 30, 2007   |         |   | Six Months EndedJune 30, 2006  
|Revenues          |  | $                               | 158,183 |   |                                 | $ | 148,843
|Net income        |  |                                 | 850     |   |                                 |   | 2,032  

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles
generally accepted in the United States of America for interim financial reporting and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and related footnotes that would normally be required by accounting
principles generally accepted in the United States of America for complete financial reporting. These unaudited condensed consolidated financial statements should be read in conjunction with the Companys consolidated audited financial
statements for the year ended December 31, 2006 in the Companys Form 10-K filed with the Securities and Exchange Commission. The December 31, 2006 balance sheet data was derived from audited financial statements, but does not include
all disclosures required by accounting principles generally accepted in the United States of America.

The accompanying unaudited condensed
consolidated financial statements include all adjustments (consisting of a normal and recurring nature) that management considers necessary for a fair statement of financial information for the interim periods. Interim results are not necessarily
indicative of the results that may be expected for the remainder of the year ending December 31, 2007.



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SGS International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited - continued)

(all amounts in thousands of dollars,
unless otherwise stated)



Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of SGS International, Inc., its wholly owned subsidiaries and companies
more than fifty percent owned. These subsidiaries include Southern Graphic Systems, Inc., Project Dove Holdco, Inc., Project Dove Manitoba, L.P., Southern Graphic Systems-Canada, Co., Southern Graphic Systems Mexico, S. De R.L. De C.V, SGS Packaging
Europe Holdings Limited, SGS Packaging Europe Limited, MCG Graphics, Ltd., The Box Room Limited, SGS Packaging Netherlands B.V. These subsidiaries also include Mozaic Group, Ltd (Mozaic) through February 28, 2007 and, since
April 2, 2007, McGurk Studios Limited and Thames McGurk Limited.

On February 28, 2007, the Company sold its controlling interest
in Mozaic to a third party. The Company has retained a 10% interest in Mozaic. The accompanying unaudited condensed consolidated balance sheet as of June 30, 2007 does not include the accounts of Mozaic. The accompanying unaudited condensed
consolidated statements of operations and statements of cash flows for the three months ended and six months ended June 30, 2007 include the accounts of Mozaic through the date of its sale on February 28, 2007. Effective March 1,
2007, the Company is accounting for the investment in Mozaic using the cost method.

Use of Estimates

The condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America
and require management to make certain estimates and assumptions. Such estimates and assumptions may affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial
statements. They may also affect the reported amounts of revenues and expenses during the reporting period. Areas that require significant judgments, estimates and assumptions include revenue recognition, accounts receivable and the allowance for
doubtful accounts, impairment of goodwill, other intangible assets and long-lived assets, accrued health and welfare benefits, and tax matters. Management uses historical experience and all available information to make these judgments but actual
results could differ from those estimates upon subsequent resolution of some matters.

Recently Issued and Adopted Accounting Standard

The Company adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for
Uncertainty in Income Taxes, and interpretation of FASB Statement No. 109 (FIN 48) on January 1, 2007. At the adoption date and as of June 30, 2007, the Company had no material unrecognized tax benefits and no adjustments to
liabilities or operations were required.

The Company recognizes interest and penalties related to uncertain tax positions in income tax
expense. There were no such amounts recognized for the three months and six months ended June 30, 2007.

Tax years December 30,
2005 to December 31, 2005 and January 1, 2006 to December 31, 2006 are subject to examination by the federal and state taxing authorities. There are no income tax examinations currently in process. For the tax years ended
December 31, 2003 through December 29, 2005, the Company has been indemnified for all taxes, interest and penalties by the previous owner.



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SGS International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited - continued)

(all amounts in thousands of dollars,
unless otherwise stated)



|B. | Goodwill and Other Intangible Assets
|-- | ------------------------------------

Goodwill and
other intangible assets consist of the following:



|                                                  |  |              |         |   |                  |   |         |  
|------------------------------------------------- |  | ------------ | ------- | - | ---------------- | - | ------- | -
|                                                  |  | June 30,2007 |         |   | December 31,2006 |  
|Goodwill, cost                                    |  | $            | 167,311 |   |                  | $ | 157,778 |  
|Customer relationships, cost                      |  |              | 168,518 |   |                  |   | 148,572 |  
|Customer relationships, accumulated amortization  |  |              | (11,366 | ) |                  |   | (7,415  | )
|Other intangible assets, cost                     |  |              | 24,524  |   |                  |   | 23,115  |  
|Other intangible assets, accumulated amortization |  |              | (1,760  | ) |                  |   | (1,159  | )
|                                                  |  |              |         |   |                  |   |         |  
|                                                  |  | $            | 347,227 |   |                  | $ | 320,891 |  
|                                                  |  |              |         |   |                  |   |         |  

The change in goodwill, customer relationships (cost) and other intangible assets (cost) during
the six months ended June 30, 2007 is due to the following:



|                                                       |  |          |         |                             |   |                              |  |   |       
|------------------------------------------------------ |  | -------- | ------- | --------------------------- | - | ---------------------------- |  | - | ------
|                                                       |  | Goodwill |         | Customerrelationships, cost |   | Other intangibleassets, cost
|Balance at December 31, 2006                           |  | $        | 157,778 |                             | $ | 148,572                      |  | $ | 23,115
|Acquisitions during the six months ended June 30, 2007 |  |          | 6,364   |                             |   | 17,842                       |  |   | 1,101 
|Changes due to foreign currency fluctuations           |  |          | 3,169   |                             |   | 2,104                        |  |   | 308   
|                                                       |  |          |         |                             |   |                              |  |   |       
|Balance at June 30, 2007                               |  | $        | 167,311 |                             | $ | 168,518                      |  | $ | 24,524
|                                                       |  |          |         |                             |   |                              |  |   |       

Amortization of customer relationships and other intangible assets is estimated to be
approximately $9,240 in 2007 and $9,420 each year from 2008 through 2011.



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SGS International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited - continued)

(all amounts in thousands of dollars,
unless otherwise stated)



|C. | Interest Expense
|-- | ----------------

Interest expense consists of the
following:



|                                          |  |                                 |        |                                 |   |       
|----------------------------------------- |  | ------------------------------- | ------ | ------------------------------- | - | ------
|                                          |  | Three Months EndedJune 30, 2007 |        | Three Months EndedJune 30, 2006
|Interest on senior term loan              |  | $                               | 2,326  |                                 | $ | 1,926 
|Interest on senior subordinated notes     |  |                                 | 6,000  |                                 |   | 6,000 
|Amortization of deferred financing costs  |  |                                 | 337    |                                 |   | 303   
|Commitment fees on senior credit facility |  |                                 | 108    |                                 |   | 195   
|Interest on acquisition facility          |  |                                 | 461    |                                 |   |      
|Other                                     |  |                                 | 44     |                                 |   | 127   
|                                          |  |                                 |        |                                 |   |       
|Total                                     |  | $                               | 9,276  |                                 | $ | 8,551 
|                                          |  |                                 |        |                                 |   |       
|                                          |  |                                
|                                          |  | Six Months EndedJune 30, 2007   |        | Six Months EndedJune 30, 2006  
|Interest on senior term loan              |  | $                               | 4,609  |                                 | $ | 4,003 
|Interest on senior subordinated notes     |  |                                 | 12,000 |                                 |   | 12,000
|Amortization of deferred financing costs  |  |                                 | 695    |                                 |   | 600   
|Commitment fees on senior credit facility |  |                                 | 281    |                                 |   | 389   
|Interest on acquisition facility          |  |                                 | 567    |                                 |   |      
|Other                                     |  |                                 | 71     |                                 |   | 97    
|                                          |  |                                 |        |                                 |   |       
|Total                                     |  | $                               | 18,223 |                                 | $ | 17,089
|                                          |  |                                 |        |                                 |   |       



|D. | Contingencies and Commitments
|-- | -----------------------------

Various lawsuits,
claims and proceedings have been or may be instituted or asserted against entities within the Company. While the amounts claimed may be substantial, the ultimate liability cannot be determined because of the considerable uncertainties that exist.
Therefore, it is possible that results of operations or liquidity in a particular period could be materially affected by certain contingencies. However, based on currently available facts and in light of legal and other defenses available to us,
management believes that the disposition of matters that are pending or asserted will not have a materially adverse effect on the Companys financial position, results of operations, or liquidity.



|E. | Income Taxes
|-- | ------------

At the end of each quarter, the
Company makes its best estimate of the effective tax rate expected to be applicable for the full fiscal year and the impact of discrete items, if any, and adjusts the quarterly tax rate, as necessary. The effective tax rate was 34.0% for the
three months ended June 30, 2007 and 32.5% for the six months ended June 30, 2007, compared to 45.3% for the three months ended June 30, 2006 and 44.1% for the six months ended June 30, 2006. The change in rates for 2007
compared to 2006 results from a combination of dispersion of global income and certain discrete items recognized during the periods in 2006. Additionally, as income before income taxes increases, the impact of the permanent items on our
effective tax rate declines. We currently expect our effective tax rate for the 2007 fiscal year to be between 33% and 34%.



13



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##### Table of Contents

SGS International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited - continued)

(all amounts in thousands of dollars,
unless otherwise stated)



The Company has not recorded a deferred tax liability for undistributed earnings of certain
international subsidiaries because such earnings are considered to be permanently reinvested in foreign countries. As of June 30, 2007, undistributed earnings of international subsidiaries considered permanently reinvested were approximately
$284. The unrecognized deferred tax liability is dependent on many factors, including withholding taxes under current tax treaties and foreign tax credits. Determination of the amount of unrecognized deferred income tax liability related to these
earnings is not practicable. For certain subsidiaries where the undistributed earnings are not considered permanently reinvested, the Company has recorded a deferred tax liability, net of expected foreign tax credits.



|F. | Restatement of Condensed Consolidated Quarterly Financial Statements (unaudited)
|-- | --------------------------------------------------------------------------------

The Companys unaudited interim condensed consolidated statements of operations have been restated for the three months ended June 30, 2006 and the six months ended June 30, 2006 to reflect the
correction of errors as described below.

The following table summarizes the effects of the restatement adjustments discussed below on
income before income taxes for each of the previously reported quarterly periods.



|                                                                                                |  |                               |       |   |                              |   |       |  
|----------------------------------------------------------------------------------------------- |  | ----------------------------- | ----- | - | ---------------------------- | - | ----- | -
|                                                                                                |  | ThreeMonthsEndedJune 30, 2006 |       |   | SixMonths EndedJune 30, 2006 |  
|Effects of restatement adjustments:                                                             |  |                               |       |   |                              |   |       |  
|Income before income taxes, as originally reported                                              |  | $                             | 1,766 |   |                              | $ | 2,944 |  
|Work-in-process inventory                                                                       |  |                               | (524  | ) |                              |   | (541  | )
|Revenue for unbilled accounts receivable                                                        |  |                               | 1,571 |   |                              |   | 1,078 |  
|Properties, plants and equipment, including depreciation and amortization                       |  |                               | (24   | ) |                              |   | 22    |  
|Other                                                                                           |  |                               | 107   |   |                              |   | (2    | )
|                                                                                                |  |                               |       |   |                              |   |       |  
|Income before income taxes, as restated                                                         |  |                               | 2,896 |   |                              |   | 3,501 |  
|                                                                                                |  |                               |       |   |                              |   |       |  
|Effects of income (loss) on discontinued operations                                             |  |                               | (85   | ) |                              |   | (270  | )
|                                                                                                |  |                               |       |   |                              |   |       |  
|Income from continuing operations before income taxes, as restated with discontinued operations |  | $                             | 2,981 |   |                              | $ | 3,771 |  
|                                                                                                |  |                               |       |   |                              |   |       |  

Work-in-process Inventory

The adjustment to income before income taxes represent costs that had been recognized in previous periods that should have been recorded when the
inventory was sold.

Revenue for Unbilled Accounts Receivable

The adjustment to income before income taxes is to recognize revenue for items shipped but not billed when the criteria of Staff Accounting Bulletin
No. 104, Revenue Recognition had been met.



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##### Table of Contents

SGS International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited - continued)

(all amounts in thousands of dollars,
unless otherwise stated)



Errors in Recording Depreciation and Amortization

The adjustment to income before income taxes to accurately record depreciation and amortization for fixed and intangible assets is due to the following
items:



| |  |  | The Company was in the process of installing a fixed asset ledger system during 2006. As a result, certain balances within construction work in process were not
properly transferred to the fixed asset categories of buildings, equipment, or software in a timely manner. The delay in transferring these assets into the respective fixed asset categories and designating the assets as placed in service resulted in
an understatement of depreciation and amortization expense of $146 and $315 in the three months ended and six months ended June 30, 2006, respectively.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Company understated depreciation expense and amortization expense due to depreciating fixed assets and amortizing customer relationships using incorrect useful
lives. Accordingly, depreciation expense and amortization expense were understated by $308 and $616 in the three months ended and six months ended June 30, 2006, respectively.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Company inappropriately expensed amounts that should have been capitalized as fixed assets. Accordingly, cost of goods sold was overstated by $430 and $953 in
the three months ended and six months ended June 30, 2006, respectively.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Other Items

The following items also represented errors detected that impacted the restatements for the three months ended and six months ended June 30, 2006:



| |  |  | The Company did not recognize the appropriate amount of revenue for a significant customer in accordance with the pricing terms of the related sales contract. As a
result, revenue was overstated in the three months ended and six months ended June 30, 2006.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Company amortized deferred financing fees using the straight-line method, as opposed to the effective interest method. As a result, interest expense was
restated for the three months ended June 30, 2006.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Company did not recognize a foreign currency loss on the portion of the senior secured term loan denominated in pound sterling. As a result, other expense was
restated for the three months ended June 30, 2006.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Tax Impact

The restatement to the provision for taxes on income is due to the tax effects of the adjustments to income before income taxes and the restatement to
record a valuation allowance in the amount of $75 on a deferred tax asset.



15



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##### Table of Contents

SGS International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited - continued)

(all amounts in thousands of dollars,
unless otherwise stated)



The following tables presents the Companys unaudited interim condensed consolidated statements
of operations as previously reported and as restated for the three months ended June 30, 2006 and the six months ended June 30, 2006 to reflect the correction of errors as described above.



|                                                      |  |                                  |         |             |   |                                        |  |   |         |  
|----------------------------------------------------- |  | -------------------------------- | ------- | ----------- | - | -------------------------------------- |  | - | ------- | -
|                                                      |  | Three Months Ended June 30, 2006 |        
|                                                      |  | As OriginallyReported            |         | As Restated |   | As Restated withDiscontinuedOperations | 
|Revenues                                              |  | $                                | 74,353  |             | $ | 75,814                                 |  | $ | 72,597  |  
|Costs and expenses:                                   |  |                                  |         |             |   |                                        |  |   |         |  
|Cost of goods sold (exclusive of depreciation)        |  |                                  | 47,542  |             |   | 47,636                                 |  |   | 45,120  |  
|Selling, general, and administrative expenses         |  |                                  | 11,405  |             |   | 11,405                                 |  |   | 10,827  |  
|Depreciation and amortization                         |  |                                  | 4,365   |             |   | 4,819                                  |  |   | 4,708   |  
|Interest expense                                      |  |                                  | 8,692   |             |   | 8,586                                  |  |   | 8,551   |  
|Other expense, net                                    |  |                                  | 583     |             |   | 472                                    |  |   | 410     |  
|                                                      |  |                                  |         |             |   |                                        |  |   |         |  
|Total costs and expenses                              |  |                                  | 72,587  |             |   | 72,918                                 |  |   | 69,616  |  
|                                                      |  |                                  |         |             |   |                                        |  |   |         |  
|Income from continuing operations before income taxes |  |                                  | 1,766   |             |   | 2,896                                  |  |   | 2,981   |  
|Provision for income taxes                            |  |                                  | 978     |             |   | 1,311                                  |  |   | 1,392   |  
|                                                      |  |                                  |         |             |   |                                        |  |   |         |  
|Income from continuing operations                     |  |                                  | 788     |             |   | 1,585                                  |  |   | 1,589   |  
|                                                      |  |                                  |         |             |   |                                        |  |   |         |  
|Loss on discontinued operations                       |  |                                  |        |             |   |                                       |  |   | (85     | )
|Benefit for taxes on income                           |  |                                  |        |             |   |                                       |  |   | (81     | )
|                                                      |  |                                  |         |             |   |                                        |  |   |         |  
|Net income                                            |  | $                                | 788     |             | $ | 1,585                                  |  | $ | 1,585   |  
|                                                      |  |                                  |         |             |   |                                        |  |   |         |  
|                                                      | 
|                                                      |  | Six Months Ended June 30, 2006   |        
|                                                      |  | As OriginallyReported            |         | As Restated |   | As Restated withDiscontinuedOperations | 
|Revenues                                              |  | $                                | 147,102 |             | $ | 147,960                                |  | $ | 141,420 |  
|Costs and expenses:                                   |  |                                  |         |             |   |                                        |  |   |         |  
|Cost of goods sold (exclusive of depreciation)        |  |                                  | 97,401  |             |   | 96,989                                 |  |   | 91,781  |  
|Selling, general, and administrative expenses         |  |                                  | 20,532  |             |   | 20,532                                 |  |   | 19,339  |  
|Depreciation and amortization                         |  |                                  | 8,257   |             |   | 9,188                                  |  |   | 8,958   |  
|Interest expense                                      |  |                                  | 17,362  |             |   | 17,144                                 |  |   | 17,089  |  
|Other expense, net                                    |  |                                  | 606     |             |   | 606                                    |  |   | 482     |  
|                                                      |  |                                  |         |             |   |                                        |  |   |         |  
|Total costs and expenses                              |  |                                  | 144,158 |             |   | 144,459                                |  |   | 137,649 |  
|                                                      |  |                                  |         |             |   |                                        |  |   |         |  
|Income from continuing operations before income taxes |  |                                  | 2,944   |             |   | 3,501                                  |  |   | 3,771   |  
|Provision for income taxes                            |  |                                  | 1,380   |             |   | 1,545                                  |  |   | 1,678   |  
|                                                      |  |                                  |         |             |   |                                        |  |   |         |  
|Income from continuing operations                     |  |                                  | 1,564   |             |   | 1,956                                  |  |   | 2,093   |  
|                                                      |  |                                  |         |             |   |                                        |  |   |         |  
|Loss on discontinued operations                       |  |                                  |        |             |   |                                       |  |   | (270    | )
|Benefit for taxes on income                           |  |                                  |        |             |   |                                       |  |   | (133    | )
|                                                      |  |                                  |         |             |   |                                        |  |   |         |  
|Net income                                            |  | $                                | 1,564   |             | $ | 1,956                                  |  | $ | 1,956   |  
|                                                      |  |                                  |         |             |   |                                        |  |   |         |  



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##### Table of Contents

SGS International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited - continued)

(all amounts in thousands of dollars,
unless otherwise stated)



The following table presents the Companys unaudited interim condensed consolidated statements
of cash flows as previously reported and as restated for the six months ended June 30, 2006 for the error corrections described above.



|                                               |  |                               |        |   |          |   |        |  
|---------------------------------------------- |  | ----------------------------- | ------ | - | -------- | - | ------ | -
|                                               |  | Six Months EndedJune 30, 2006 |       
|                                               |  | As OriginallyReported         |        |   | Restated |  
|CASH FLOWS FROM OPERATING ACTIVITIES           |  | $                             | 14,551 |   |          | $ | 15,504 |  
|                                               |  |                               |        |   |          |   |        |  
|CASH FLOWS FROM INVESTING ACTIVITIES          |  |                               |        |   |          |   |        |  
|Acquisition of property, plant and equipment   |  |                               | (2,668 | ) |          |   | (3,621 | )
|Proceeds from sales of assets                  |  |                               | 2,060  |   |          |   | 2,060  |  
|Business acquisitions, net of cash acquired    |  |                               | (2,026 | ) |          |   | (2,026 | )
|                                               |  |                               |        |   |          |   |        |  
|Net cash used in investing activities          |  |                               | (2,634 | ) |          |   | (3,587 | )
|                                               |  |                               |        |   |          |   |        |  
|CASH FLOWS FROM FINANCING ACTIVITIES          |  |                               |        |   |          |   |        |  
|Net borrowings on revolving lines of credit    |  |                               | 800    |   |          |   | 800    |  
|Payments on long-term debt                     |  |                               | (724   | ) |          |   | (724   | )
|                                               |  |                               |        |   |          |   |        |  
|Net cash used in financing activities          |  |                               | 76     |   |          |   | 76     |  
|                                               |  |                               |        |   |          |   |        |  
|Effect of exchange rate changes on cash        |  |                               | 217    |   |          |   | 217    |  
|                                               |  |                               |        |   |          |   |        |  
|Increase in cash and cash equivalents          |  |                               | 12,210 |   |          |   | 12,210 |  
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |  |                               | 3,308  |   |          |   | 4,081  |  
|                                               |  |                               |        |   |          |   |        |  
|CASH AND CASH EQUIVALENTS, END OF PERIOD       |  | $                             | 15,518 |   |          | $ | 16,291 |  
|                                               |  |                               |        |   |          |   |        |  



|G. | Supplemental Guarantor Information
|-- | ----------------------------------

The
Companys debt includes the senior credit facility and the 12% senior subordinated notes. As of June 30, 2007, the U.S. borrowings under the senior credit facility have been guaranteed by Southern Graphics Inc. (the parent of SGS
International, Inc.), Southern Graphic Systems, Inc. and Project Dove Holdco, Inc. As of June 30, 2007, The Canadian borrowings under the senior credit facility have been guaranteed by SGS Packaging Europe Holdings Limited, SGS Packaging Europe
Limited, MCG Graphics Limited, Southern Graphic Systems Mexico, S. De R.L. De C.V., The Box Room Limited, SGS Packaging Netherlands, B.V., Synnoflex Inc., McGurk Studios Limited, Thames McGurk Limited, Southern Graphic Systems, Inc., Project Dove
Holdco, Inc., Project Dove Manitoba, L.P., Southern Graphics Inc., and SGS International, Inc. The senior subordinated notes are general unsecured obligations and are guaranteed on a senior subordinated basis by certain of the Companys
domestic subsidiaries and rank secondary to the Companys senior credit facility. Guarantor subsidiaries for the senior subordinated notes include Southern Graphic Systems, Inc. and Project Dove Holdco, Inc. Non- Guarantor subsidiaries for the
senior subordinated notes include the remaining direct and indirect domestic and foreign subsidiaries. The subsidiary guarantors are 100% owned by the Company, the guarantees are full and unconditional, and the guarantees are joint and several.

Following are condensed consolidating financial statements of the Company. Investments in subsidiaries are either consolidated or accounted
for under the equity method of accounting. Intercompany balances and transactions have been eliminated.



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##### Table of Contents

SGS International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited - continued)

(in thousands of dollars)



Supplemental Condensed Consolidating Balance Sheet

June 30, 2007



|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|------------------------------------------------------- |  | -------------- | ------- | --------------------------------- | - | ------------------------------------- |  | ------------ | ------- |  | ------------ | -------- | - |  | - | -------
|                                                        |  | Parent /Issuer |         | ConsolidatedGuarantorSubsidiaries |   | ConsolidatedNon-GuarantorSubsidiaries |  | Eliminations |         |  | Consolidated
|Assets                                                  |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Current assets                                          |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Cash and cash equivalents                               |  | $              | 1,146   |                                   | $ | 1,563                                 |  | $            | 8,066   |  | $            |         |   |  | $ | 10,775 
|Receivables from customers, less allowances             |  |                |        |                                   |   | 39,667                                |  |              | 23,243  |  |              |         |   |  |   | 62,910 
|Intercompany receivables                                |  |                | 313,005 |                                   |   | 36,989                                |  |              | 50,587  |  |              | (400,581 | ) |  |   |       
|Inventories                                             |  |                |        |                                   |   | 3,366                                 |  |              | 2,466   |  |              |         |   |  |   | 5,832  
|Deferred income taxes                                   |  |                |        |                                   |   | 1,047                                 |  |              | 147     |  |              |         |   |  |   | 1,194  
|Prepaid expenses and other current assets               |  |                | 102     |                                   |   | 6,859                                 |  |              | 2,293   |  |              |         |   |  |   | 9,254  
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Total current assets                                    |  |                | 314,253 |                                   |   | 89,491                                |  |              | 86,802  |  |              | (400,581 | ) |  |   | 89,965 
|Investment in subsidiaries                              |  |                | 112,409 |                                   |   | 23,001                                |  |              | 14,800  |  |              | (150,210 | ) |  |   |       
|Properties, plants and equipment, net                   |  |                | 11      |                                   |   | 43,832                                |  |              | 10,970  |  |              |         |   |  |   | 54,813 
|Goodwill                                                |  |                |        |                                   |   | 120,689                               |  |              | 46,622  |  |              |         |   |  |   | 167,311
|Other intangible assets, net                            |  |                |        |                                   |   | 131,818                               |  |              | 48,098  |  |              |         |   |  |   | 179,916
|Deferred financing costs, net                           |  |                | 9,482   |                                   |   |                                      |  |              |        |  |              |         |   |  |   | 9,482  
|Deferred income taxes                                   |  |                | 2,492   |                                   |   |                                      |  |              |        |  |              | (2,492   | ) |  |   |       
|Other assets                                            |  |                |        |                                   |   | 200                                   |  |              | 226     |  |              |         |   |  |   | 426    
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Total assets                                            |  | $              | 438,647 |                                   | $ | 409,031                               |  | $            | 207,518 |  | $            | (553,283 | ) |  | $ | 501,913
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Liabilities                                             |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Current liabilities                                     |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Accounts payable, trade                                 |  | $              | 357     |                                   | $ | 10,178                                |  | $            | 7,481   |  | $            |         |   |  | $ | 18,016 
|Intercompany payables                                   |  |                |        |                                   |   | 321,862                               |  |              | 78,719  |  |              | (400,581 | ) |  |   |       
|Accrued compensation                                    |  |                |        |                                   |   | 4,164                                 |  |              | 1,607   |  |              |         |   |  |   | 5,771  
|Accrued taxes, including taxes on income                |  |                |        |                                   |   | 393                                   |  |              | 2,369   |  |              |         |   |  |   | 2,762  
|Accrued interest                                        |  |                | 12      |                                   |   | 1,038                                 |  |              | 14      |  |              |         |   |  |   | 1,064  
|Other current liabilities                               |  |                |        |                                   |   | 4,698                                 |  |              | 3,000   |  |              |         |   |  |   | 7,698  
|Current portion of short-term and long-term obligations |  |                | 1,230   |                                   |   | 57                                    |  |              | 491     |  |              |         |   |  |   | 1,778  
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Total current liabilities                               |  |                | 1,599   |                                   |   | 342,390                               |  |              | 93,681  |  |              | (400,581 | ) |  |   | 37,089 
|Noncurrent liabilities                                  |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Long-term obligations, net of current portion           |  |                | 320,520 |                                   |   | 199                                   |  |              | 21,440  |  |              |         |   |  |   | 342,159
|Noncurrent liabilities                                  |  |                |        |                                   |   |                                      |  |              | 563     |  |              |         |   |  |   | 563    
|Deferred income taxes                                   |  |                |        |                                   |   | 2,267                                 |  |              | 5,903   |  |              | (2,492   | ) |  |   | 5,678  
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Total liabilities                                       |  |                | 322,119 |                                   |   | 344,856                               |  |              | 121,587 |  |              | (403,073 | ) |  |   | 385,489
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Commitments and contingencies                           |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Stockholders equity                                    |  |                | 116,528 |                                   |   | 64,175                                |  |              | 85,931  |  |              | (150,210 | ) |  |   | 116,424
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Total liabilities and stockholders equity              |  | $              | 438,647 |                                   | $ | 409,031                               |  | $            | 207,518 |  | $            | (553,283 | ) |  | $ | 501,913
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        



18



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##### Table of Contents

SGS International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited - continued)

(in thousands of dollars)



Supplemental Condensed Consolidating Balance Sheet

December 31, 2006



|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|------------------------------------------------------- |  | -------------- | ------- | --------------------------------- | - | ------------------------------------- |  | ------------ | ------- |  | ------------ | -------- | - |  | - | -------
|                                                        |  | Parent /Issuer |         | ConsolidatedGuarantorSubsidiaries |   | ConsolidatedNon-GuarantorSubsidiaries |  | Eliminations |         |  | Consolidated
|Assets                                                  |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Current assets                                          |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Cash                                                    |  | $              | 2,100   |                                   | $ | 2,286                                 |  | $            | 8,272   |  | $            |         |   |  | $ | 12,658 
|Receivables from customers, less allowances             |  |                |        |                                   |   | 39,005                                |  |              | 18,412  |  |              |         |   |  |   | 57,417 
|Intercompany receivables                                |  |                | 289,829 |                                   |   | 37,289                                |  |              | 41,748  |  |              | (368,866 | ) |  |   |       
|Inventories                                             |  |                |        |                                   |   | 3,588                                 |  |              | 2,145   |  |              |         |   |  |   | 5,733  
|Deferred income taxes                                   |  |                |        |                                   |   | 1,547                                 |  |              | 129     |  |              |         |   |  |   | 1,676  
|Prepaid expenses and other current assets               |  |                | 80      |                                   |   | 6,020                                 |  |              | 1,953   |  |              |         |   |  |   | 8,053  
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Total current assets                                    |  |                | 292,009 |                                   |   | 89,735                                |  |              | 72,659  |  |              | (368,866 | ) |  |   | 85,537 
|Investment in subsidiaries                              |  |                | 105,366 |                                   |   | 23,001                                |  |              | 14,800  |  |              | (143,167 | ) |  |   |       
|Properties, plants and equipment, net                   |  |                |        |                                   |   | 43,322                                |  |              | 9,091   |  |              |         |   |  |   | 52,413 
|Goodwill                                                |  |                |        |                                   |   | 117,391                               |  |              | 40,387  |  |              |         |   |  |   | 157,778
|Other intangible assets, net                            |  |                |        |                                   |   | 127,049                               |  |              | 36,064  |  |              |         |   |  |   | 163,113
|Deferred financing costs, net                           |  |                | 10,177  |                                   |   |                                      |  |              |        |  |              |         |   |  |   | 10,177 
|Deferred income taxes                                   |  |                | 1,923   |                                   |   |                                      |  |              |        |  |              | (1,923   | ) |  |   |       
|Other assets                                            |  |                |        |                                   |   | 275                                   |  |              | 234     |  |              |         |   |  |   | 509    
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Total assets                                            |  | $              | 409,475 |                                   | $ | 400,773                               |  | $            | 173,235 |  | $            | (513,956 | ) |  | $ | 469,527
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Liabilities                                             |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Current liabilities                                     |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Accounts payable, trade                                 |  | $              | 413     |                                   | $ | 8,852                                 |  | $            | 6,454   |  | $            |         |   |  | $ | 15,719 
|Intercompany payables                                   |  |                |        |                                   |   | 314,588                               |  |              | 54,278  |  |              | (368,866 | ) |  |   |       
|Accrued compensation                                    |  |                |        |                                   |   | 4,025                                 |  |              | 2,097   |  |              |         |   |  |   | 6,122  
|Accrued taxes, including taxes on income                |  |                |        |                                   |   | 391                                   |  |              | 1,289   |  |              |         |   |  |   | 1,680  
|Accrued interest                                        |  |                | 6       |                                   |   | 1,058                                 |  |              | 27      |  |              |         |   |  |   | 1,091  
|Other current liabilities                               |  |                |        |                                   |   | 4,318                                 |  |              | 2,728   |  |              |         |   |  |   | 7,046  
|Current portion of short-term and long-term obligations |  |                | 1,000   |                                   |   | 57                                    |  |              | 2,548   |  |              |         |   |  |   | 3,605  
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Total current liabilities                               |  |                | 1,419   |                                   |   | 333,289                               |  |              | 69,421  |  |              | (368,866 | ) |  |   | 35,263 
|Noncurrent liabilities                                  |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Long-term obligations, net of current portion           |  |                | 298,088 |                                   |   | 155                                   |  |              | 20,141  |  |              |         |   |  |   | 318,384
|Noncurrent liabilities                                  |  |                |        |                                   |   |                                      |  |              | 517     |  |              |         |   |  |   | 517    
|Deferred income taxes                                   |  |                |        |                                   |   | 2,952                                 |  |              | 4,366   |  |              | (1,923   | ) |  |   | 5,395  
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Total liabilities                                       |  |                | 299,507 |                                   |   | 336,396                               |  |              | 94,445  |  |              | (370,789 | ) |  |   | 359,559
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Commitments and contingencies                           |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Stockholders equity                                    |  |                | 109,968 |                                   |   | 64,377                                |  |              | 78,790  |  |              | (143,167 | ) |  |   | 109,968
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Total liabilities and stockholders equity              |  | $              | 409,475 |                                   | $ | 400,773                               |  | $            | 173,235 |  | $            | (513,956 | ) |  | $ | 469,527
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        



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##### Table of Contents

SGS International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited - continued)

(in thousands of dollars)



Supplemental Condensed Consolidating Statement of Operations

For the Three Months Ended June 30, 2007



|                                                      |  |                |        |   |                                   |   |        |                                       |  |   |              |   |  |              |        |   |  |   |        |  
|----------------------------------------------------- |  | -------------- | ------ | - | --------------------------------- | - | ------ | ------------------------------------- |  | - | ------------ | - |  | ------------ | ------ | - |  | - | ------ | -
|                                                      |  | Parent /Issuer |        |   | ConsolidatedGuarantorSubsidiaries |   |        | ConsolidatedNon-GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |       
|Revenues                                              |  |                |        |   |                                   |   |        |                                       |  |   |              |   |  |              |        |   |  |   |        |  
|Sales                                                 |  | $              |       |   |                                   | $ | 53,955 |                                       |  | $ | 25,382       |   |  | $            |       |   |  | $ | 79,337 |  
|Sales to related parties                              |  |                |       |   |                                   |   | 1,005  |                                       |  |   | 139          |   |  |              | (1,144 | ) |  |   |       |  
|                                                      |  |                |        |   |                                   |   |        |                                       |  |   |              |   |  |              |        |   |  |   |        |  
|Total revenues                                        |  |                |       |   |                                   |   | 54,960 |                                       |  |   | 25,521       |   |  |              | (1,144 | ) |  |   | 79,337 |  
|                                                      |  |                |        |   |                                   |   |        |                                       |  |   |              |   |  |              |        |   |  |   |        |  
|Costs and expenses                                    |  |                |        |   |                                   |   |        |                                       |  |   |              |   |  |              |        |   |  |   |        |  
|Cost of goods sold                                    |  |                |       |   |                                   |   | 34,526 |                                       |  |   | 19,734       |   |  |              | (1,144 | ) |  |   | 53,116 |  
|Selling, general and administrative expenses          |  |                | 566    |   |                                   |   | 9,594  |                                       |  |   | 2,278        |   |  |              |       |   |  |   | 12,438 |  
|Depreciation and amortization                         |  |                |       |   |                                   |   | 4,284  |                                       |  |   | 1,508        |   |  |              |       |   |  |   | 5,792  |  
|Interest expense                                      |  |                | 926    |   |                                   |   | 7,748  |                                       |  |   | 602          |   |  |              |       |   |  |   | 9,276  |  
|Other (income) expense, net                           |  |                | (1,506 | ) |                                   |   | 86     |                                       |  |   | 1,901        |   |  |              |       |   |  |   | 481    |  
|                                                      |  |                |        |   |                                   |   |        |                                       |  |   |              |   |  |              |        |   |  |   |        |  
|Total costs and expenses                              |  |                | (14    | ) |                                   |   | 56,238 |                                       |  |   | 26,023       |   |  |              | (1,144 | ) |  |   | 81,103 |  
|                                                      |  |                |        |   |                                   |   |        |                                       |  |   |              |   |  |              |        |   |  |   |        |  
|Equity in net income of subsidiaries                  |  |                | (1,353 | ) |                                   |   |       |                                       |  |   |             |   |  |              | 1,353  |   |  |   |       |  
|                                                      |  |                |        |   |                                   |   |        |                                       |  |   |              |   |  |              |        |   |  |   |        |  
|Income from continuing operations before income taxes |  |                | (1,339 | ) |                                   |   | (1,278 | )                                     |  |   | (502         | ) |  |              | 1,353  |   |  |   | (1,766 | )
|Provision (benefit) for taxes on income (loss)        |  |                | (174   | ) |                                   |   | (406   | )                                     |  |   | (21          | ) |  |              |       |   |  |   | (601   | )
|                                                      |  |                |        |   |                                   |   |        |                                       |  |   |              |   |  |              |        |   |  |   |        |  
|Income from continuing operations                     |  |                | (1,165 | ) |                                   |   | (872   | )                                     |  |   | (481         | ) |  |              | 1,353  |   |  |   | (1,165 | )
|                                                      |  |                |        |   |                                   |   |        |                                       |  |   |              |   |  |              |        |   |  |   |        |  
|Income from discontinued operations                   |  |                |       |   |                                   |   |       |                                       |  |   |             |   |  |              |       |   |  |   |       |  
|Provision (benefit) for taxes on income (loss)        |  |                |       |   |                                   |   |       |                                       |  |   |             |   |  |              |       |   |  |   |       |  
|                                                      |  |                |        |   |                                   |   |        |                                       |  |   |              |   |  |              |        |   |  |   |        |  
|Net income (loss)                                     |  | $              | (1,165 | ) |                                   | $ | (872   | )                                     |  | $ | (481         | ) |  | $            | 1,353  |   |  | $ | (1,165 | )
|                                                      |  |                |        |   |                                   |   |        |                                       |  |   |              |   |  |              |        |   |  |   |        |  



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##### Table of Contents

SGS International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited - continued)

(in thousands of dollars)



Supplemental Condensed Consolidating Statement of Operations

For the Three Months Ended June 30, 2006

(as Restated, see note F)



|                                                      |  |                |        |   |                                   |   |        |                                        |  |   |              |   |  |              |        |   |  |   |        |  
|----------------------------------------------------- |  | -------------- | ------ | - | --------------------------------- | - | ------ | -------------------------------------- |  | - | ------------ | - |  | ------------ | ------ | - |  | - | ------ | -
|                                                      |  | Parent /Issuer |        |   | ConsolidatedGuarantorSubsidiaries |   |        | Consolidated Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |       
|Revenues                                              |  |                |        |   |                                   |   |        |                                        |  |   |              |   |  |              |        |   |  |   |        |  
|Sales                                                 |  | $              |       |   |                                   | $ | 56,824 |                                        |  | $ | 15,773       |   |  | $            |       |   |  | $ | 72,597 |  
|Sales to related parties                              |  |                |       |   |                                   |   | 960    |                                        |  |   | 821          |   |  |              | (1,781 | ) |  |   |       |  
|                                                      |  |                |        |   |                                   |   |        |                                        |  |   |              |   |  |              |        |   |  |   |        |  
|Total revenues                                        |  |                |       |   |                                   |   | 57,784 |                                        |  |   | 16,594       |   |  |              | (1,781 | ) |  |   | 72,597 |  
|                                                      |  |                |        |   |                                   |   |        |                                        |  |   |              |   |  |              |        |   |  |   |        |  
|Costs and expenses                                    |  |                |        |   |                                   |   |        |                                        |  |   |              |   |  |              |        |   |  |   |        |  
|Cost of goods sold                                    |  |                |       |   |                                   |   | 34,084 |                                        |  |   | 12,817       |   |  |              | (1,781 | ) |  |   | 45,120 |  
|Selling, general and administrative expenses          |  |                | 575    |   |                                   |   | 8,797  |                                        |  |   | 1,455        |   |  |              |       |   |  |   | 10,827 |  
|Depreciation and amortization                         |  |                |       |   |                                   |   | 3,820  |                                        |  |   | 888          |   |  |              |       |   |  |   | 4,708  |  
|Interest expense                                      |  |                | (7,324 | ) |                                   |   | 15,207 |                                        |  |   | 2,292        |   |  |              | (1,624 | ) |  |   | 8,551  |  
|Other (income) expense, net                           |  |                | 466    |   |                                   |   | (135   | )                                      |  |   | (1,545       | ) |  |              | 1,624  |   |  |   | 410    |  
|                                                      |  |                |        |   |                                   |   |        |                                        |  |   |              |   |  |              |        |   |  |   |        |  
|Total costs and expenses                              |  |                | (6,283 | ) |                                   |   | 61,773 |                                        |  |   | 15,907       |   |  |              | (1,781 | ) |  |   | 69,616 |  
|                                                      |  |                |        |   |                                   |   |        |                                        |  |   |              |   |  |              |        |   |  |   |        |  
|Equity in net income of subsidiaries                  |  |                | (2,268 | ) |                                   |   |       |                                        |  |   |             |   |  |              | 2,268  |   |  |   |       |  
|                                                      |  |                |        |   |                                   |   |        |                                        |  |   |              |   |  |              |        |   |  |   |        |  
|Income from continuing operations before income taxes |  |                | 4,015  |   |                                   |   | (3,989 | )                                      |  |   | 687          |   |  |              | 2,268  |   |  |   | 2,981  |  
|Provision (benefit) for taxes on income (loss)        |  |                | 2,430  |   |                                   |   | (1,349 | )                                      |  |   | 311          |   |  |              |       |   |  |   | 1,392  |  
|                                                      |  |                |        |   |                                   |   |        |                                        |  |   |              |   |  |              |        |   |  |   |        |  
|Income from continuing operations                     |  |                | 1,585  |   |                                   |   | (2,640 | )                                      |  |   | 376          |   |  |              | 2,268  |   |  |   | 1,589  |  
|                                                      |  |                |        |   |                                   |   |        |                                        |  |   |              |   |  |              |        |   |  |   |        |  
|Income from discontinued operations                   |  |                |       |   |                                   |   |       |                                        |  |   | (85          | ) |  |              |       |   |  |   | (85    | )
|Provision (benefit) for taxes on income (loss)        |  |                |       |   |                                   |   |       |                                        |  |   | (81          | ) |  |              |       |   |  |   | (81    | )
|                                                      |  |                |        |   |                                   |   |        |                                        |  |   |              |   |  |              |        |   |  |   |        |  
|Net income (loss)                                     |  | $              | 1,585  |   |                                   | $ | (2,640 | )                                      |  | $ | 372          |   |  | $            | 2,268  |   |  | $ | 1,585  |  
|                                                      |  |                |        |   |                                   |   |        |                                        |  |   |              |   |  |              |        |   |  |   |        |  



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SGS International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited - continued)

(in thousands of dollars)



Supplemental Condensed Consolidating Statement of Operations

For the Six Months Ended June 30, 2007



|                                                      |  |                |        |   |                                   |   |         |                                       |  |              |        |  |              |        |   |  |   |        
|----------------------------------------------------- |  | -------------- | ------ | - | --------------------------------- | - | ------- | ------------------------------------- |  | ------------ | ------ |  | ------------ | ------ | - |  | - | -------
|                                                      |  | Parent /Issuer |        |   | ConsolidatedGuarantorSubsidiaries |   |         | ConsolidatedNon-GuarantorSubsidiaries |  | Eliminations |        |  | Consolidated
|Revenues                                              |  |                |        |   |                                   |   |         |                                       |  |              |        |  |              |        |   |  |   |        
|Sales                                                 |  | $              |       |   |                                   | $ | 108,092 |                                       |  | $            | 45,352 |  | $            |       |   |  | $ | 153,444
|Sales to related parties                              |  |                |       |   |                                   |   | 2,076   |                                       |  |              | 561    |  |              | (2,637 | ) |  |   |       
|                                                      |  |                |        |   |                                   |   |         |                                       |  |              |        |  |              |        |   |  |   |        
|Total revenues                                        |  |                |       |   |                                   |   | 110,168 |                                       |  |              | 45,913 |  |              | (2,637 | ) |  |   | 153,444
|                                                      |  |                |        |   |                                   |   |         |                                       |  |              |        |  |              |        |   |  |   |        
|Costs and expenses                                    |  |                |        |   |                                   |   |         |                                       |  |              |        |  |              |        |   |  |   |        
|Cost of goods sold                                    |  |                |       |   |                                   |   | 69,178  |                                       |  |              | 34,447 |  |              | (2,637 | ) |  |   | 100,988
|Selling, general and administrative expenses          |  |                | 1,181  |   |                                   |   | 18,011  |                                       |  |              | 3,547  |  |              |       |   |  |   | 22,739 
|Depreciation and amortization                         |  |                |       |   |                                   |   | 8,283   |                                       |  |              | 2,614  |  |              |       |   |  |   | 10,897 
|Interest expense                                      |  |                | 1,583  |   |                                   |   | 15,477  |                                       |  |              | 1,163  |  |              |       |   |  |   | 18,223 
|Other (income) expense, net                           |  |                | (1,713 | ) |                                   |   | (3      | )                                     |  |              | 1,905  |  |              |       |   |  |   | 189    
|                                                      |  |                |        |   |                                   |   |         |                                       |  |              |        |  |              |        |   |  |   |        
|Total costs and expenses                              |  |                | 1,051  |   |                                   |   | 110,946 |                                       |  |              | 43,676 |  |              | (2,637 | ) |  |   | 153,036
|                                                      |  |                |        |   |                                   |   |         |                                       |  |              |        |  |              |        |   |  |   |        
|Equity in net income of subsidiaries                  |  |                | 1,326  |   |                                   |   |        |                                       |  |              |       |  |              | (1,326 | ) |  |   |       
|                                                      |  |                |        |   |                                   |   |         |                                       |  |              |        |  |              |        |   |  |   |        
|Income from continuing operations before income taxes |  |                | 275    |   |                                   |   | (778    | )                                     |  |              | 2,237  |  |              | (1,326 | ) |  |   | 408    
|Provision (benefit) for taxes on income (loss)        |  |                | (569   | ) |                                   |   | (186    | )                                     |  |              | 991    |  |              |       |   |  |   | 236    
|                                                      |  |                |        |   |                                   |   |         |                                       |  |              |        |  |              |        |   |  |   |        
|Income from continuing operations                     |  |                | 844    |   |                                   |   | (592    | )                                     |  |              | 1,246  |  |              | (1,326 | ) |  |   | 172    
|                                                      |  |                |        |   |                                   |   |         |                                       |  |              |        |  |              |        |   |  |   |        
|Income from discontinued operations                   |  |                |       |   |                                   |   |        |                                       |  |              | 842    |  |              |       |   |  |   | 842    
|Provision (benefit) for taxes on income (loss)        |  |                |       |   |                                   |   |        |                                       |  |              | 170    |  |              |       |   |  |   | 170    
|                                                      |  |                |        |   |                                   |   |         |                                       |  |              |        |  |              |        |   |  |   |        
|Net income (loss)                                     |  | $              | 844    |   |                                   | $ | (592    | )                                     |  | $            | 1,918  |  | $            | (1,326 | ) |  | $ | 844    
|                                                      |  |                |        |   |                                   |   |         |                                       |  |              |        |  |              |        |   |  |   |        



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SGS International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited - continued)

(in thousands of dollars)



Supplemental Condensed Consolidating Statement of Operations

For the Six Months Ended June 30, 2006

(as Restated, see note F)



|                                                      |  |                |       |   |                                   |   |         |                                        |  |   |              |   |  |              |        |   |  |   |         |  
|----------------------------------------------------- |  | -------------- | ----- | - | --------------------------------- | - | ------- | -------------------------------------- |  | - | ------------ | - |  | ------------ | ------ | - |  | - | ------- | -
|                                                      |  | Parent /Issuer |       |   | ConsolidatedGuarantorSubsidiaries |   |         | Consolidated Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |       
|Revenues                                              |  |                |       |   |                                   |   |         |                                        |  |   |              |   |  |              |        |   |  |   |         |  
|Sales                                                 |  | $              |      |   |                                   | $ | 110,715 |                                        |  | $ | 30,705       |   |  | $            |       |   |  | $ | 141,420 |  
|Sales to related parties                              |  |                |      |   |                                   |   | 1,882   |                                        |  |   | 1,362        |   |  |              | (3,244 | ) |  |   |        |  
|                                                      |  |                |       |   |                                   |   |         |                                        |  |   |              |   |  |              |        |   |  |   |         |  
|Total revenues                                        |  |                |      |   |                                   |   | 112,597 |                                        |  |   | 32,067       |   |  |              | (3,244 | ) |  |   | 141,420 |  
|                                                      |  |                |       |   |                                   |   |         |                                        |  |   |              |   |  |              |        |   |  |   |         |  
|Costs and expenses                                    |  |                |       |   |                                   |   |         |                                        |  |   |              |   |  |              |        |   |  |   |         |  
|Cost of goods sold                                    |  |                |      |   |                                   |   | 71,130  |                                        |  |   | 23,895       |   |  |              | (3,244 | ) |  |   | 91,781  |  
|Selling, general and administrative expenses          |  |                | 700   |   |                                   |   | 16,027  |                                        |  |   | 2,612        |   |  |              |       |   |  |   | 19,339  |  
|Depreciation and amortization                         |  |                |      |   |                                   |   | 7,123   |                                        |  |   | 1,835        |   |  |              |       |   |  |   | 8,958   |  
|Interest expense                                      |  |                | 911   |   |                                   |   | 15,166  |                                        |  |   | 2,636        |   |  |              | (1,624 | ) |  |   | 17,089  |  
|Other (income) expense, net                           |  |                | 577   |   |                                   |   | (167    | )                                      |  |   | (1,552       | ) |  |              | 1,624  |   |  |   | 482     |  
|                                                      |  |                |       |   |                                   |   |         |                                        |  |   |              |   |  |              |        |   |  |   |         |  
|Total costs and expenses                              |  |                | 2,188 |   |                                   |   | 109,279 |                                        |  |   | 29,426       |   |  |              | (3,244 | ) |  |   | 137,649 |  
|                                                      |  |                |       |   |                                   |   |         |                                        |  |   |              |   |  |              |        |   |  |   |         |  
|Equity in net income of subsidiaries                  |  |                | 3,337 |   |                                   |   |        |                                        |  |   |             |   |  |              | (3,337 | ) |  |   |        |  
|                                                      |  |                |       |   |                                   |   |         |                                        |  |   |              |   |  |              |        |   |  |   |         |  
|Income from continuing operations before income taxes |  |                | 1,149 |   |                                   |   | 3,318   |                                        |  |   | 2,641        |   |  |              | (3,337 | ) |  |   | 3,771   |  
|Provision (benefit) for taxes on income (loss)        |  |                | (807  | ) |                                   |   | 1,436   |                                        |  |   | 1,049        |   |  |              |       |   |  |   | 1,678   |  
|                                                      |  |                |       |   |                                   |   |         |                                        |  |   |              |   |  |              |        |   |  |   |         |  
|Income from continuing operations                     |  |                | 1,956 |   |                                   |   | 1,882   |                                        |  |   | 1,592        |   |  |              | (3,337 | ) |  |   | 2,093   |  
|                                                      |  |                |       |   |                                   |   |         |                                        |  |   |              |   |  |              |        |   |  |   |         |  
|Income from discontinued operations                   |  |                |      |   |                                   |   |        |                                        |  |   | (270         | ) |  |              |       |   |  |   | (270    | )
|Provision (benefit) for taxes on income (loss)        |  |                |      |   |                                   |   |        |                                        |  |   | (133         | ) |  |              |       |   |  |   | (133    | )
|                                                      |  |                |       |   |                                   |   |         |                                        |  |   |              |   |  |              |        |   |  |   |         |  
|Net income                                            |  | $              | 1,956 |   |                                   | $ | 1,882   |                                        |  | $ | 1,455        |   |  | $            | (3,337 | ) |  | $ | 1,956   |  
|                                                      |  |                |       |   |                                   |   |         |                                        |  |   |              |   |  |              |        |   |  |   |         |  



23



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SGS International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited - continued)

(in thousands of dollars)



Supplemental Condensed Consolidating Statement of Cash Flows

For the Six Months Ended June 30, 2007



|                                                            |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  
|----------------------------------------------------------- |  | -------------- | ------- | - | --------------------------------- | - | ------ | ------------------------------------- |  | - | ------------ | - | ------------ | - | - |  | - | ------- | -
|                                                            |  | Parent /Issuer |         |   | ConsolidatedGuarantorSubsidiaries |   |        | ConsolidatedNon-GuarantorSubsidiaries |  |   | Eliminations |   | Consolidated |  
|Cash provided by operations                                 |  | $              | 4,373   |   |                                   | $ | 3,052  |                                       |  | $ | 3,564        |   |              | $ |  |  | $ | 10,989  |  
|                                                            |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  
|Investing activities:                                       |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  
|Acquisition of property, plant and equipment                |  |                | (11     | ) |                                   |   | (5,319 | )                                     |  |   | (841         | ) |              |   |  |  |   | (6,171  | )
|Proceeds from divestiture of business, net of cash divested |  |                |        |   |                                   |   | 1,500  |                                       |  |   | (872         | ) |              |   |  |  |   | 628     |  
|Business acquisition, net of cash acquired                  |  |                | (27,737 | ) |                                   |   |       |                                       |  |   | (734         | ) |              |   |  |  |   | (28,471 | )
|                                                            |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  
|Cash used in investing activities                           |  |                | (27,748 | ) |                                   |   | (3,819 | )                                     |  |   | (2,447       | ) |              |   |  |  |   | (34,014 | )
|                                                            |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  
|Financing activities:                                       |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  
|Borrowings on acquisition facility                          |  |                | 23,000  |   |                                   |   | 57     |                                       |  |   |             |   |              |   |  |  |   | 23,057  |  
|Payments on long-term debt                                  |  |                | (579    | ) |                                   |   | (12    | )                                     |  |   | (1,776       | ) |              |   |  |  |   | (2,367  | )
|                                                            |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  
|Cash provided by (used in) financing activities             |  |                | 22,421  |   |                                   |   | 45     |                                       |  |   | (1,776       | ) |              |   |  |  |   | 20,690  |  
|                                                            |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  
|Effect of exchange rate changes on cash                     |  |                |        |   |                                   |   |       |                                       |  |   | 452          |   |              |   |  |  |   | 452     |  
|                                                            |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  
|Net change in cash and cash equivalents                     |  |                | (954    | ) |                                   |   | (722   | )                                     |  |   | (207         | ) |              |   |  |  |   | (1,883  | )
|Cash and cash equivalents, beginning of period              |  |                | 2,100   |   |                                   |   | 2,285  |                                       |  |   | 8,273        |   |              |   |  |  |   | 12,658  |  
|                                                            |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  
|Cash and cash equivalents, end of period                    |  | $              | 1,146   |   |                                   | $ | 1,563  |                                       |  | $ | 8,066        |   |              | $ |  |  | $ | 10,775  |  
|                                                            |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  



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SGS International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited - continued)

(in thousands of dollars)



Supplemental Condensed Consolidating Statement of Cash Flows

For the Six Months Ended June 30, 2006

(as Restated, see note F)



|                                                          |  |                |       |   |                                   |   |        |                                        |  |   |              |   |              |   |   |  |   |        |  
|--------------------------------------------------------- |  | -------------- | ----- | - | --------------------------------- | - | ------ | -------------------------------------- |  | - | ------------ | - | ------------ | - | - |  | - | ------ | -
|                                                          |  | Parent /Issuer |       |   | ConsolidatedGuarantorSubsidiaries |   |        | Consolidated Non-GuarantorSubsidiaries |  |   | Eliminations |   | Consolidated |  
|Cash provided by operations                               |  | $              | 1,168 |   |                                   | $ | 7,952  |                                        |  | $ | 6,384        |   |              | $ |  |  | $ | 15,504 |  
|                                                          |  |                |       |   |                                   |   |        |                                        |  |   |              |   |              |   |   |  |   |        |  
|Investing activities:                                     |  |                |       |   |                                   |   |        |                                        |  |   |              |   |              |   |   |  |   |        |  
|Acquisition of property, plant and equipment              |  |                | (471  | ) |                                   |   | (2,672 | )                                      |  |   | (478         | ) |              |   |  |  |   | (3,621 | )
|Proceeds from divesture of business, net of cash divested |  |                |      |   |                                   |   | 2,060  |                                        |  |   |             |   |              |   |  |  |   | 2,060  |  
|Business acquisition, net of cash acquired                |  |                |      |   |                                   |   |       |                                        |  |   | (2,026       | ) |              |   |  |  |   | (2,026 | )
|                                                          |  |                |       |   |                                   |   |        |                                        |  |   |              |   |              |   |   |  |   |        |  
|Cash used in investing activities                         |  |                | (471  | ) |                                   |   | (612   | )                                      |  |   | (2,504       | ) |              |   |  |  |   | (3,587 | )
|                                                          |  |                |       |   |                                   |   |        |                                        |  |   |              |   |              |   |   |  |   |        |  
|Financing activities:                                     |  |                |       |   |                                   |   |        |                                        |  |   |              |   |              |   |   |  |   |        |  
|Net borrowings on lines of credit                         |  |                |      |   |                                   |   |       |                                        |  |   | 800          |   |              |   |  |  |   | 800    |  
|Payments on long-term debt                                |  |                | (496  | ) |                                   |   |       |                                        |  |   | (228         | ) |              |   |  |  |   | (724   | )
|                                                          |  |                |       |   |                                   |   |        |                                        |  |   |              |   |              |   |   |  |   |        |  
|Cash provided by (used in) financing activities           |  |                | (496  | ) |                                   |   |       |                                        |  |   | 572          |   |              |   |  |  |   | 76     |  
|                                                          |  |                |       |   |                                   |   |        |                                        |  |   |              |   |              |   |   |  |   |        |  
|Effect of exchange rate changes on cash                   |  |                |      |   |                                   |   |       |                                        |  |   | 217          |   |              |   |  |  |   | 217    |  
|                                                          |  |                |       |   |                                   |   |        |                                        |  |   |              |   |              |   |   |  |   |        |  
|Net change in cash and cash equivalents                   |  |                | 201   |   |                                   |   | 7,340  |                                        |  |   | 4,669        |   |              |   |  |  |   | 12,210 |  
|Cash and cash equivalents, beginning of period            |  |                | 2,005 |   |                                   |   | 851    |                                        |  |   | 1,225        |   |              |   |  |  |   | 4,081  |  
|                                                          |  |                |       |   |                                   |   |        |                                        |  |   |              |   |              |   |   |  |   |        |  
|Cash and cash equivalents, end of period                  |  | $              | 2,206 |   |                                   | $ | 8,191  |                                        |  | $ | 5,894        |   |              | $ |  |  | $ | 16,291 |  
|                                                          |  |                |       |   |                                   |   |        |                                        |  |   |              |   |              |   |   |  |   |        |  



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|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

The following Managements Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with Item 1,  Financial Statements in Part 1 of this quarterly
report on Form 10-Q.

The statements in the discussion and analysis regarding our expectations regarding the performance of our business, our liquidity and
capital resources and other non-historical statements are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties. Our actual results may differ materially from those contained in or implied by
any of these forward-looking statements.

Overview

We
are a global leader in the digital imaging and communication industry, offering design-to-print graphic services to the international consumer products packaging market. We offer a full spectrum of innovative digital solutions that streamline the
capture, management, execution, and distribution of graphics information. Our brand development, creative design, prepress, image carriers and print support services are utilized in each of the three main printing processes: flexography, gravure and
lithography. Our customers, many of which we have served for over 20 years, include large branded consumer products companies, mass merchant retailers and the printers and converters that service them. Our services ensure that our customers are able
to obtain or produce consistent, high quality packaging materials often on short turnaround times.

RESULTS OF OPERATIONS

The information presented below for the three months ended June 30, 2007 and 2006 and for the six months ended June 30, 2007 and 2006 was prepared by management
and is unaudited. In the opinion of management, all adjustments necessary for a fair statement of our financial position and operating results for such quarters and as of such dates have been included. (Dollar amounts below are in thousands and
percentages are expressed as a percentage of sales.)



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Three months ended June 30, 2007 compared to three months ended June 30, 2006



|                                                                |  |                                 |        |   |                                 |       |   |                           |   |        |   |  |       |  
|--------------------------------------------------------------- |  | ------------------------------- | ------ | - | ------------------------------- | ----- | - | ------------------------- | - | ------ | - |  | ----- | -
|                                                                |  | Three Months EndedJune 30, 2007 |        |   | Three Months EndedJune 30, 2006 |      
|                                                                |  |                                 |        |   |                                 |       |   | (as Restated, see note F) |  
|                                                                |  | (unaudited)                     |        |   | (unaudited)                     |      
|Sales                                                           |  | $                               | 79,337 |   |                                 | 100.0 | % |                           | $ | 72,597 |   |  | 100.0 | %
|Costs and expenses:                                             |  |                                 |        |   |                                 |       |   |                           |   |        |   |  |       |  
|Cost of goods sold                                              |  |                                 | 53,116 |   |                                 | 66.9  | % |                           |   | 45,120 |   |  | 62.2  | %
|Selling, general, and administrative expenses                   |  |                                 | 12,438 |   |                                 | 15.7  | % |                           |   | 10,827 |   |  | 14.9  | %
|Depreciation and amortization                                   |  |                                 | 5,792  |   |                                 | 7.3   | % |                           |   | 4,708  |   |  | 6.5   | %
|Interest expense                                                |  |                                 | 9,276  |   |                                 | 11.7  | % |                           |   | 8,551  |   |  | 11.8  | %
|Other expense, net                                              |  |                                 | 481    |   |                                 | 0.6   | % |                           |   | 410    |   |  | 0.6   | %
|                                                                |  |                                 |        |   |                                 |       |   |                           |   |        |   |  |       |  
|Total costs and expenses                                        |  |                                 | 81,103 |   |                                 | 102.2 | % |                           |   | 69,616 |   |  | 95.9  | %
|                                                                |  |                                 |        |   |                                 |       |   |                           |   |        |   |  |       |  
|Income from (loss on) continuing operations before income taxes |  |                                 | (1,766 | ) |                                 | -2.2  | % |                           |   | 2,981  |   |  | 4.1   | %
|Provision (benefit) for income taxes                            |  |                                 | (601   | ) |                                 | -0.8  | % |                           |   | 1,392  |   |  | 1.9   | %
|                                                                |  |                                 |        |   |                                 |       |   |                           |   |        |   |  |       |  
|Income from (loss on) continuing operations                     |  |                                 | (1,165 | ) |                                 | -1.5  | % |                           |   | 1,589  |   |  | 2.2   | %
|                                                                |  |                                 |        |   |                                 |       |   |                           |   |        |   |  |       |  
|Loss on discontinued operations                                 |  |                                 |       |   |                                 | 0.0   | % |                           |   | (85    | ) |  | -0.1  | %
|Benefit for income taxes                                        |  |                                 |       |   |                                 | 0.0   | % |                           |   | (81    | ) |  | -0.1  | %
|                                                                |  |                                 |        |   |                                 |       |   |                           |   |        |   |  |       |  
|Net income (loss)                                               |  | $                               | (1,165 | ) |                                 | -1.5  | % |                           | $ | 1,585  |   |  | 2.2   | %
|                                                                |  |                                 |        |   |                                 |       |   |                           |   |        |   |  |       |  

Sales. Sales for the three months ended June 30, 2007 increased $6.7 million, or 9.3%, to $79.3
million from $72.6 million for the three months ended June 30, 2006. The increase in sales was primarily due to sales from acquired businesses. The acquisitions during 2006 added incremental revenue for the three months ended June 30, 2007
of $1.8 million. The acquisition of the operations of C. M. Jackson Associates, Inc. on February 28, 2007 added incremental revenue for the three months ended June 30, 2007 of $1.8 million. The acquisition of McGurk Studios Limited and
Thames McGurk Limited (collectively McGurks) on April 2, 2007 added incremental revenue for the three months ended June 30, 2007 of $5.7 million. Sales from existing facilities were $2.6 million lower for the three months ended
June 30, 2007 compared to the three months ended June 30, 2006. This decrease in sales from existing facilities is primarily due to the timing of orders received. Specifically, sales in the three months ended June 30, 2007 were
negatively impacted by the increased sales in the first quarter of 2007 due to the timing of orders received from customers and the corresponding sales. By comparison, sales in the three months ended June 30, 2006, were positively impacted by
the lower sales made in the first and third quarters of 2006 due to the timing of orders received from customers and the corresponding sales.

Cost of
Goods Sold. Cost of goods sold for the three months ended June 30, 2007 increased $8.0 million, or 17.7%, to $53.1 million from $45.1 million for the three months ended June 30, 2006. The increase was primarily due to costs of goods
sold from acquired businesses. The acquisitions during 2006 added incremental cost of goods sold for the three months ended June 30, 2007 of $1.9 million. The acquisition of the operations of C. M. Jackson Associates, Inc. on February 28,
2007 added incremental cost of goods sold for the three months ended June 30, 2007 of $1.4 million. The acquisition of McGurks on April 2, 2007 added incremental cost of good sold for the three months ended June 30, 2007 of $4.2
million.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the three months ended June 30, 2007
increased $1.6 million, or 14.8%, to $12.4 million from $10.8 million for the three months ended June 30, 2006. The increase was due to expenses from acquired businesses. The acquisition of the operations of C. M. Jackson Associates, Inc. on
February 28, 2007 added incremental selling, general and administrative expenses for the three months ended June 30, 2007 of $1.2 million. The acquisition of McGurks on April 2, 2007 added incremental selling, general and
administrative expenses for the three months ended June 30, 2007 of $0.6 million.



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##### Table of Contents

Depreciation and Amortization Expenses. Depreciation and amortization expenses for the three months ended
June 30, 2007 increased $1.1 million, or 23.0%, to $5.8 million from $4.7 million for the three months ended June 30, 2006. The acquisitions during 2006 added incremental depreciation and amortization expenses for the three months ended
June 30, 2007 of $0.2 million. The acquisition of the operations of C. M. Jackson Associates, Inc. on February 28, 2007 added incremental depreciation and amortization expenses for the three months ended June 30, 2007 of $0.1 million.
The acquisition of McGurks on April 2, 2007 added incremental depreciation and amortization expenses for the three months ended June 30, 2007 of $0.3 million. The remainder of the increase in depreciation and amortization expenses was
primarily due to depreciation and amortization of assets acquired or placed in service during 2006 and 2007.

Interest Expense.Interest expense for
the three months ended June 30, 2007 increased by $0.7 million, or 8.5%, to $9.3 million from $8.6 million for the three months ended June 30, 2006. Interest expense on the borrowings on the acquisition facility during 2007 added $0.5
million of interest expense in the three months ended June 30, 2007. The remainder of this increase was primarily due to the increase in interest rates from the three months ended June 30, 2007 compared to the three months ended
June 30, 2006.

Other Expense, net.Other expense (income), net for the three months ended June 30, 2007 was $0.5 million of income
compared to $0.4 million of expense for the three months ended June 30, 2006.

Income from (loss on) continuing operations before income taxes.
Income from continuing operations before income taxes for the three months ended June 30, 2007 decreased by $4.7 million to a loss of $1.8 million from income of $2.9 million for the three months ended June 30, 2006. This decrease was
primarily due to the expenses from acquired businesses partially offset by sales from acquired businesses as previously discussed.

Income from (loss
on) discontinued operations, including gain on disposal.There was no income from (loss on) discontinued operations for the three months ended June 30, 2007 due to the sale of the controlling interest in Mozaic Group, Ltd. on
February 28, 2007. This is compared to a loss of $0.1 million for the three months ended June 30, 2006.

Provision (benefit) for income
taxes. The effective tax rate was 34.0% for the three months ended June 30, 2007 compared to 45.3% for the three months ended June 30, 2006. The change in rates for 2007 compared to 2006 results from a combination of dispersion of
global income and certain discrete items recognized during the periods in 2006. Additionally, as income before income taxes increases, the impact of the permanent items on our effective tax rate declines. We currently expect our effective
tax rate for the 2007 fiscal year to be between 33% and 34%.

Net income (loss). Net income (loss) for the three months ended June 30, 2007
decreased by $2.8 million to a loss of $1.2 million from income of $1.6 million for the three months ended June 30, 2006. This decrease was primarily due to the expenses from acquired businesses partially offset by sales from acquired
businesses as previously discussed.



28



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##### Table of Contents

Six months ended June 30, 2007 compared to six months ended June 30, 2006



|                                                      |  |                               |         |  |                               |   |                           |   |         |   |  |       |  
|----------------------------------------------------- |  | ----------------------------- | ------- |  | ----------------------------- | - | ------------------------- | - | ------- | - |  | ----- | -
|                                                      |  | Six Months EndedJune 30, 2007 |         |  | Six Months EndedJune 30, 2006 |  
|                                                      |  |                               |         |  |                               |   | (as Restated, see note F) |  
|                                                      |  | (unaudited)                   |         |  | (unaudited)                   |  
|Sales                                                 |  | $                             | 153,444 |  | 100.0                         | % |                           | $ | 141,420 |   |  | 100.0 | %
|Costs and expenses:                                   |  |                               |         |  |                               |   |                           |   |         |   |  |       |  
|Cost of goods sold                                    |  |                               | 100,988 |  | 65.8                          | % |                           |   | 91,781  |   |  | 64.9  | %
|Selling, general, and administrative expenses         |  |                               | 22,739  |  | 14.8                          | % |                           |   | 19,339  |   |  | 13.7  | %
|Depreciation and amortization                         |  |                               | 10,897  |  | 7.1                           | % |                           |   | 8,958   |   |  | 6.3   | %
|Interest expense                                      |  |                               | 18,223  |  | 11.9                          | % |                           |   | 17,089  |   |  | 12.1  | %
|Other expense, net                                    |  |                               | 189     |  | 0.1                           | % |                           |   | 482     |   |  | 0.3   | %
|                                                      |  |                               |         |  |                               |   |                           |   |         |   |  |       |  
|Total costs and expenses                              |  |                               | 153,036 |  | 99.7                          | % |                           |   | 137,649 |   |  | 97.3  | %
|                                                      |  |                               |         |  |                               |   |                           |   |         |   |  |       |  
|Income from continuing operations before income taxes |  |                               | 408     |  | 0.3                           | % |                           |   | 3,771   |   |  | 2.7   | %
|Provision for income taxes                            |  |                               | 236     |  | 0.2                           | % |                           |   | 1,678   |   |  | 1.2   | %
|                                                      |  |                               |         |  |                               |   |                           |   |         |   |  |       |  
|Income from continuing operations                     |  |                               | 172     |  | 0.1                           | % |                           |   | 2,093   |   |  | 1.5   | %
|                                                      |  |                               |         |  |                               |   |                           |   |         |   |  |       |  
|Income from (loss on) discontinued operations         |  |                               | 842     |  | 0.5                           | % |                           |   | (270    | ) |  | -0.2  | %
|Provision (benefit) for income taxes                  |  |                               | 170     |  | 0.1                           | % |                           |   | (133    | ) |  | -0.1  | %
|                                                      |  |                               |         |  |                               |   |                           |   |         |   |  |       |  
|Net income                                            |  | $                             | 844     |  | 0.6                           | % |                           | $ | 1,956   |   |  | 1.4   | %
|                                                      |  |                               |         |  |                               |   |                           |   |         |   |  |       |  

Sales. Sales for the six months ended June 30, 2007 increased $12.0 million, or 8.5%, to $153.4
million from $141.4 million for the six months ended June 30, 2006. The acquisitions during 2006 added incremental revenue for the six months ended June 30, 2007 of $3.0 million. The acquisition of the operations of C. M. Jackson
Associates, Inc. on February 28, 2007 added incremental revenue for the six months ended June 30, 2007 of $2.1 million. The acquisition of McGurks on April 2, 2007 added incremental revenue for the six months ended June 30, 2007
of $5.7 million. The remaining $1.2 million of the increase in sales was due to organic growth.

Cost of Goods Sold. Cost of goods sold for the six
months ended June 30, 2007 increased $9.2 million, or 10.0%, to $101.0 million from $91.8 million for the six months ended June 30, 2006. The increase was primarily due to costs of goods sold from acquired businesses. The acquisitions
during 2006 added incremental cost of goods sold for the six months ended June 30, 2007 of $3.0 million. The acquisition of the operations of C. M. Jackson Associates, Inc. on February 28, 2007 added incremental cost of goods sold for the
six months ended June 30, 2007 of $1.7 million. The acquisition of McGurks on April 2, 2007 added incremental cost of good sold for the six months ended June 30, 2007 of $4.2 million.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the six months ended June 30, 2007 increased $3.4 million, or
17.6%, to $22.7 million from $19.3 million for the six months ended June 30, 2006. The increase was primarily due to expenses from acquired businesses. The acquisition of the operations of C. M. Jackson Associates, Inc. on February 28,
2007 added incremental selling, general and administrative expenses for the six months ended June 30, 2007 of $1.6 million. The acquisition of McGurks on April 2, 2007 added incremental selling, general and administrative expenses for the
six months ended June 30, 2007 of $0.6 million.

Depreciation and Amortization Expenses. Depreciation and amortization expenses for the six
months ended June 30, 2007 increased $1.9 million, or 21.6%, to $10.9 million from $9.0 million for the six months ended June 30, 2006. The acquisitions during 2006 added incremental depreciation and amortization expenses for the six
months ended June 30, 2007 of $0.3 million. The acquisition of the operations of C. M. Jackson Associates, Inc. on February 28, 2007 added incremental depreciation and amortization expenses for the three months ended June 30, 2007 of
$0.1 million. The acquisition of McGurks on April 2, 2007 added incremental depreciation and amortization expenses for the three months ended June 30, 2007 of $0.3 million. The remainder of the increase in depreciation and amortization
expenses was primarily due to depreciation and amortization of assets acquired or placed in service during 2006 and 2007.



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Interest Expense.Interest expense for the six months ended June 30, 2007 increased by $1.1 million, or 6.6%,
to $18.2 million from $17.1 million for the six months ended June 30, 2006. Interest expense on the borrowings on the acquisition facility in 2007 added $0.6 million of interest expense in the three months ended June 30, 2007. The
remainder of this increase was primarily due to the increase in interest rates from the six months ended June 30, 2007 compared to the six months ended June 30, 2006.

Other Expense, net.Other expense (income), net for the six months ended June 30, 2007 was $0.2 million of income compared to $0.5 million of expense for the six months ended June 30, 2006. This
fluctuation was primarily due to a lower loss on foreign exchange during the six months ended June 30, 2007 compared to the six months ended June 30, 2006.

Income from continuing operations before income taxes. Income from continuing operations before income taxes for the six months ended June 30, 2007 decreased by $3.4 million to $0.4 million from $3.8
million for the six months ended June 30, 2006. This decrease was primarily due to the expenses from acquired businesses partially offset by sales from acquired businesses as previously discussed.

Income from (loss on) discontinued operations, including gain on disposal.The income from (loss on) discontinued operations fluctuated from a gain of $0.8
million for the six months ended June 30, 2007 to a loss of $0.3 million for the six months ended June 30, 2006. This fluctuation was primarily due to the gain on the divestiture of the controlling interest in Mozaic Group, Ltd. of $0.9
million during the six months ended June 30, 2007.

Provision for income taxes. The effective tax rate was 32.5% for the six months ended
June 30, 2007 compared to 44.1% for the six months ended June 30, 2006. The change in rates for 2007 compared to 2006 results from a combination of dispersion of global income and certain discrete items recognized during the periods
in 2006. Additionally, as income before income taxes increases, the impact of the permanent items on our effective tax rate declines. We currently expect our effective tax rate for the 2007 fiscal year to be between 33% and 34%.

Net income. Net income for the six months ended June 30, 2007 decreased by $1.1 million to $0.8 million from $1.9 million for the six months
ended June 30, 2006. This decrease was primarily due to the expenses from acquired businesses partially offset by sales from acquired businesses as previously discussed.

Liquidity and Capital Resources

At June 30, 2007, we had
$10.8 million in cash and cash equivalents and $43.9 million in adjusted working capital1compared with $12.7 million in cash and cash equivalents and
$41.2 million in adjusted working capital1at December 31, 2006. The $1.9 million decrease in cash is primarily due to $28.5 million used for business
acquisitions and $6.2 million used for acquisition of property, plant and equipment, partially offset by $23.0 million of borrowings on the acquisition facility and $11.0 million of cash provided by operating activities. The $2.7 million increase in
working capital is due to working capital associated with acquired businesses.

---

|1 | Adjusted working capital is defined as current assets (excluding cash and cash equivalents) less current liabilities (excluding short-term debt and current portion of long-term
debt). However, adjusted working capital is not a recognized measurement under GAAP, and when analyzing our financial position, investors should use adjusted working capital in addition to, and not as an alternative for working capital, as defined
in GAAP. The following table reconciles working capital to adjusted working capital:
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                            |  |               |         |   |                   |   |         |  
|----------------------------------------------------------- |  | ------------- | ------- | - | ----------------- | - | ------- | -
|                                                            |  | June 30, 2007 |         |   | December 31, 2006 |  
|Working capital                                             |  | $             | 52,876  |   |                   | $ | 50,274  |  
|Less cash                                                   |  |               | (10,775 | ) |                   |   | (12,658 | )
|Add current portion of short-term and long-term obligations |  |               | 1,778   |   |                   |   | 3,605   |  
|                                                            |  |               |         |   |                   |   |         |  
|Adjusted working capital                                    |  | $             | 43,879  |   |                   | $ | 41,221  |  
|                                                            |  |               |         |   |                   |   |         |  



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##### Table of Contents

We expect that cash generated from operating activities and availability under our revolving credit facility, which is
included in our senior secured credit facility, will be our principal sources of liquidity. At June 30, 2007, there were no borrowings outstanding under the revolving credit facility, which had $35 million of borrowing availability. Based on
our current level of operations, we believe our cash flow from operations and availability under the revolving credit facility will be adequate to meet our liquidity needs for at least the next twelve months. There is no assurance, however, that our
business will generate sufficient cash flows from operations, or that future borrowings will be available to us under our revolving credit facility in an amount sufficient to enable us to repay our indebtedness, or to fund our other liquidity needs.

We are highly leveraged and our aggregate indebtedness at June 30, 2007 was $343.9 million. In 2011, our debt service requirements will substantially
increase as a result of the maturity of the senior secured term loans on December 30, 2011. We anticipate that we will refinance these borrowings prior to the maturity of the senior secured term loans. Our ability to operate our business,
service our debt requirements and reduce our total debt will depend upon our future operating performance.

Our senior secured credit facility contains
customary financial and other covenants, including a maximum leverage ratio and a minimum interest coverage ratio, as defined in the senior secured credit facility agreement. Our senior secured credit facility also places certain restrictions on our
ability to make capital expenditures. As of June 30, 2007 we were in compliance with all covenants. Below are the required financial covenant levels and the actual levels as of June 30, 2007:



|                                |  |                 |              |        |   |            
|------------------------------- |  | --------------- | ------------ | ------ | - | -----------
|                                |  | Required        |              | Actual
|Maximum leverage ratio          |  |                 | 6.25         |        |   | 5.16       
|Minimum interest coverage ratio |  |                 | 1.60         |        |   | 1.96       
|Maximum capital expenditures    |  | not to exceed $ | 15.0 million |        | $ | 6.2 million

On February 28, 2007, we entered into an Asset Purchase Agreement (the Purchase Agreement) with
C.M. Jackson Associates, Inc. (CMJ). Under the Purchase Agreement, the Company acquired substantially all of CMJs assets for an aggregate cash purchase price of $16,650. In conjunction with this acquisition, we borrowed $8.0
million on our acquisition facility.

On April 2, 2007, we acquired McGurks for an aggregate purchase price of $18.2 million ($16.9 million of cash
and $1.3 million through the assumption of short-term and long-term indebtedness). In conjunction with this acquisition, we borrowed $15.0 million on our acquisition facility.

Cash flow

Six months ended June 30, 2007 compared to the six months ended June 30, 2006

Cash flows from operating activities.Net cash provided by operating activities was $11.0 million for the six months ended June 30, 2007 as compared to
$15.5 million for the six months ended June 30, 2006. The primary reasons for the decrease were changes in working capital and a decrease in net income.



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Cash flows from investing activities. Net cash used for investing activities was $34.0 million for the six months
ended June 30, 2007 as compared to $3.6 million for the six months ended June 30, 2006. The increase in cash used for investing activities is primarily due to the acquisition of the operations of C.M. Jackson Associates, Inc. and the
acquisition of McGurks, which included cash payments related to these acquisitions of $12.0 and $17.2 million, respectively, during the six months ended June 30, 2007. In addition, capital expenditures increased $2.6 million to $6.2 million for
the six months ended June 30, 2007 as compared to $3.6 million for the six months ended June 30, 2006. Capital expenditures are generally made to replace existing assets, support new business or customer initiatives, increase productivity,
facilitate cost reductions, or meet regulatory requirements. Our operations typically do not have large capital requirements.

Cash flows from financing
activities.Net cash provided by financing activities was $20.7 million for the six months ended June 30, 2007 as compared to $0.1 million for the six months ended June 30, 2006. The primary reason for this fluctuation was borrowings
of $23.0 million on the acquisition facility during the six months ended June 30, 2007 compared to zero borrowings on the acquisition facility during the six months ended June 30, 2006.

Contractual Obligations

The $22.9 million outstanding on the
acquisition facility is payable in quarterly installments of approximately $56 thousand through September 2011, with the remaining amount due at maturity on December 31, 2011. Borrowings on the acquisition facility bear interest at a variable
rate of LIBOR plus 2.5%. At June 30, 2007, the interest rate was 7.86%.

Off-Balance Sheet Arrangements

We do not have any material off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in
financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies

We adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes,
and interpretation of FASB Statement No. 109 (FIN 48) on January 1, 2007. At the adoption date and as of June 30, 2007, we had no material unrecognized tax benefits and no adjustments to liabilities or operations were required.

We recognize interest and penalties related to uncertain tax positions in income tax expense. There were no such amounts recognized for the three months
and six months ended June 30, 2007.

Tax years December 30, 2005 to December 31, 2005 and January 1, 2006 to December 31, 2006 are
subject to examination by the federal and state taxing authorities, respectively. There are no income tax examinations currently in process. For the tax years ended December 31, 2003 through December 29, 2005, we have been indemnified for
all taxes, interest and penalties by the previous owner.

There have been no other material changes to our critical accounting policies since
December 31, 2006.



|Item 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------

At
June 30, 2007 there were no material changes in our December 31, 2006 market risks relating to interest and foreign exchange rates.



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|Item 4. | Controls and Procedures
|------- | -----------------------

Disclosure Controls and Procedures

In connection with the preparation of this quarterly report on Form 10-Q for the quarter ended June 30, 2007, members of management, at the direction
(and with the participation) of our chief executive officer and chief financial officer, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934, as amended (Exchange Act)), as of June 30, 2007 and concluded that they were not effective as a result of the material weaknesses described below. Disclosure controls and procedures are controls and
other procedures that are designed to ensure that the information required to be disclosed in reports filed or submitted under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in the
SECs rules and forms and (2) accumulated and communicated to management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

A material weakness is a control deficiency, or a combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the
annual or interim financial statements will not be prevented or detected.

There were seven material weaknesses discussed in our Annual Report on Form 10-K
as of December 31, 2006, four of which have been remediated as discussed below. The material weaknesses over (1) lack of sufficient resources in our accounting and finance organization, (2) accounting for unbilled accounts receivable
and (3) accounting for work in process inventory continued to exist as of June 30, 2007.

Notwithstanding these material weaknesses which
continued to exist as of June 30, 2007, management has concluded that our condensed consolidated financial statements included in this quarterly report fairly present in all material respects our financial condition, results of operations and
cash flows for the periods presented in accordance with GAAP.

Changes in Internal Control Over Financial Reporting

Based on the evaluation performed as of June 30, 2007, management has concluded that four of the material weaknesses previously reported in the Annual Report on Form
10-K as of December 31, 2006 have been remediated as a result of the following changes in internal control:



| |  |  | Accounting for contract revenue. As of December 31, 2006, we did not maintain effective controls over the accuracy of revenues earned under contracts
with non-standard terms and conditions. Beginning in the first quarter of 2007, we established and communicated to appropriate individuals a policy that requires that all customer contracts must be approved by legal counsel prior to signing. This
enables us to better track non-standard terms and conditions. We also improved the coordination between the finance department and legal counsel to ensure non-standard terms and conditions receive appropriate accounting treatment. These procedures
remained in effect during the second quarter of 2007.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Accounting for property, plant and equipment. As of December 31, 2006, we did not maintain effective controls over the completeness and accuracy of our
property, plant and equipment. We installed a new fixed asset system in the fourth quarter of 2006, which was fully updated and operational during both the first and second quarters of 2007. This fixed asset system enables us to ensure that
property, plant and equipment assets are properly monitored and depreciated in accordance with our fixed asset policy. We also implemented additional controls during the first and second quarters of 2007 concerning the preparation and review of
reconciliations over the fixed asset accounting process during the monthly closing process.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



33



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##### Table of Contents

| |  |  | Accounting for intangible assets. As of December 31, 2006, we did not maintain effective controls to accurately and completely record amortization of
acquired intangibles. Beginning in the first quarter of 2007, we established and communicated to appropriate individuals a policy that requires that all useful lives for all newly acquired intangible assets are to be reviewed for consistency with
the established policy in accordance with GAAP. These procedures remained in effect during the second quarter of 2007.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Accounting for accrued and other expenses. As of December 31, 2006, we did not maintain effective controls to ensure the completeness and accuracy of
certain of our accrued liabilities, accounts payable and related expense accounts. We hired additional personnel during 2006 and the first quarter of 2007 to improve the handling of cut-off for purchases and expenditures. We also provided additional
training and communication in this area during the first quarter of 2007. These procedures remained in effect during the second quarter of 2007.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As described above, there were changes in the Registrants internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the six months and quarter ended June 30, 2007 that
materially affected, or are reasonably likely to materially affect, the Registrants internal control over financial reporting.

PART II

OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

Various lawsuits, claims and proceedings have
been or may be instituted or asserted against entities within the Company. While the amounts claimed may be substantial, the ultimate liability cannot be determined because of the considerable uncertainties that exist. Therefore, it is possible that
results of operations or liquidity in a particular period could be materially affected by certain contingencies. However, based on currently available facts and in light of legal and other defenses available to us, management believes that the
disposition of matters that are pending or asserted will not have a materially adverse effect on the Companys financial position, results of operations, and liquidity.



|Item 1A. | Risk Factors
|-------- | ------------

There have been no material changes to the risk
factors included in the Registrants Form 10-K for the year ended December 31, 2006.



|Item 6. | Exhibits
|------- | --------



|              |  |                                                                                                                                                                                                                                                                         
|------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBITNUMBER |  | DESCRIPTION                                                                                                                                                                                                                                                             
|3.            |  | CERTIFICATE OF INCORPORATION AND BY-LAWS                                                                                                                                                                                                                                
|              | 
|3.1           |  | Certificate of Incorporation of the Registrant filed with the Secretary of State of the State of Delaware on November 8, 2005, incorporated by reference to exhibit 3.1 to the
Registrants registration statement on Form S-4 filed on May 5, 2006, File No. 333-133825



34



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##### Table of Contents

|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | 
|3.2 |  | By-Laws of the Registrant adopted on November 8, 2005, incorporated by reference to exhibit 3.2 to the Registrants registration statement on Form S-4 filed on May 5, 2006,
File No. 333-133825                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | 
|4.  |  | INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | 
|4.1 |  | Certificate of Incorporation. See Exhibit 3.1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | 
|4.2 |  | By-laws. See Exhibit 3.2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | 
|4.3 |  | Indenture dated as of December 30, 2005, by and between the Registrant and Wells Fargo Bank National Association, as trustee, relating to the 12% Senior Subordinated Notes due 2013, incorporated
by reference to exhibit 4.3 to the Registrants registration statement on Form S-4 filed on May 5, 2006, File No. 333-133825                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | 
|4.4 |  | Form of Global 12% Notes due 2013 (included in Exhibit 4.3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | 
|4.5 |  | Form of Regulation S Temporary Global 12% Notes due 2013 (included in Exhibit 4.3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | 
|4.6 |  | Supplemental Indenture, dated April 25, 2006, by and among the Registrant, Southern Graphic Systems, Inc., Project Dove Holdco, Inc. and Wells Fargo Bank, N.A., as trustee, incorporated by
reference to exhibit 4.6 to the Registrants registration statement on Form S-4 filed on May 5, 2006, File No. 333-133825                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | 
|4.7 |  | Registration Rights Agreement, dated as of December 30, 2005, by and between the Registrant, certain of its subsidiaries as Guarantors, and UBS Securities LLC and Lehman Brothers Inc. as Initial
Purchasers, incorporated by reference to exhibit 4.7 to the Registrants registration statement on Form S-4 filed on May 5, 2006, File No. 333-133825                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | 
|4.8 |  | Credit Agreement, dated as of December 30, 2005, among the Registrant and Southern Graphic Systems  Canada, Co., as borrowers, certain of the Registrants subsidiaries, as guarantors,
UBS Securities LLC and Lehman Brothers Inc., as joint arrangers and joint bookmanagers, UBS AG, Stamford Branch, as issuing bank, US administrative agent, US collateral agent and Canadian collateral agent, Lehman Brothers Inc., as syndication agent,
CIT Lending Services Corporation, as documentation agent, National City Bank, as Canadian administrative agent, UBS Loan Finance LLC, as swingline lender, and the lenders referred to therein, incorporated by reference to exhibit 10.7 to the
Registrants registration statement on Form S-4 filed on May 5, 2006, File No. 333-133825



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##### Table of Contents

|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.9  |  | First Amendment to Credit Agreement by and among the Registrant and Southern Graphic Systems - Canada, Co., as borrowers, certain affiliates of the borrowers, as guarantors, and the lenders
party to the Credit Agreement as described therein, incorporated by reference to exhibit 10.8 to the Registrants registration statement on Form S-4 filed on May 5, 2006, File No. 333-133825                                                                                                                                                               
|     | 
|4.10 |  | Security Agreement, dated as of December 30, 2005, by the Registrant, as borrower, certain of the Registrants subsidiaries, as guarantors, and UBS AG, Stamford Branch, as US collateral
agent, incorporated by reference to exhibit 10.9 to the Registrants registration statement on Form S-4 filed on May 5, 2006, File No. 333-133825                                                                                                                                                                                                                
|     | 
|4.11 |  | Canadian Security Agreement, dated as of December 30, 2005, by certain of the Registrants subsidiaries, as pledgors, and UBS AG, Stamford Branch, as Canadian collateral agent, incorporated
by reference to exhibit 10.10 to the Registrants registration statement on Form S-4 filed on May 5, 2006, File No. 333-133825                                                                                                                                                                                                                               
|     | 
|4.12 |  | Debenture dated as of December 30, 2005, from SGS-UK Holdings Limited and others, as chargors, in favour of UBS AG, Stamford Branch, as Canadian collateral agent, incorporated by reference to
exhibit 10.11 to the Registrants registration statement on Form S-4 filed on May 5, 2006, File No. 333-133825                                                                                                                                                                                                                                             
|     | 
|4.13 |  | Limited Waiver and Consent to Credit Agreement dated as of April 11, 2007 among the Registrant and Southern Graphic Systems  Canada, Co., as borrowers, certain of the Registrants
subsidiaries, as guarantors, the lenders signatory thereto, UBS AG, Stamford Branch, as US administrative agent, US collateral agent and Canadian collateral agent, and National City Bank, as Canadian administrative agent, incorporated by reference
to exhibit 4.13 to the Registrants Form 10-Q Report for the quarter ended March 31, 2007, File No. 333-133825
|     | 
|10.  |  | MATERIAL CONTRACTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     | 
|10.1 |  | Share Sale and Purchase Agreement dated April 2, 2007 among (1) McGurk Group Limited, Mr. P.J. Fraine, Ms J.K. Martindale, Ms A.J. Crisp and (2) SGS Packaging Europe Holdings Limited and (3) Mr.
P.E. McGurk, Mr. L. McGurk, Ms. A.L. Austin, Mr. J.R. McCarthy and (4) Mr. P.E. McGurk and (5) SGS International, Inc., incorporated by reference to exhibit 10.3 to the Registrants Form 10-Q Report for the quarter ended March 31, 2007, File
No. 333-133825                                                                                        
|     | 
|10.2 |  | Share Sale and Purchase Agreement dated April 2, 2007 among (1) Mr. P.E. McGurk, Mr. L. McGurk, Ms. A.L. Austin, Mr. J.R. McCarthy and (2) SGS Packaging Europe Holdings Limited and (3) McGurk
Group Limited, Mr. P.J. Fraine, Ms J.K. Martindale, Ms A.J. Crisp and (4) Mr. P.E. McGurk and (5) SGS International, Inc., incorporated by reference to exhibit 10.4 to the Registrants Form 10-Q Report for the quarter ended March 31, 2007, File
No. 333-133825                                                                                        



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##### Table of Contents

|     |  |                                                                                                                                                                              
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|31   |  | CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002                                                                                                     
|     | 
|31.1 |  | Certification of Principal Executive Officer                                                                                                                                 
|     | 
|31.2 |  | Certification of Principal Financial Officer                                                                                                                                 
|     | 
|32   |  | CERTIFICATIONS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002                                                                                                     
|     | 
|32.1 |  | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



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##### Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                      |  |  |  |                         |  |                                      
|--------------------- |  |  |  | ----------------------- |  | -------------------------------------
|                      |  |  |  | SGS INTERNATIONAL, INC.
|                      |  |  | 
|Date: August 13, 2007 |  |  |  | By:                     |  | /s/ HENRY R. BAUGHMAN                
|                      |  |  |  |                         |  | Henry R. Baughman                    
|                      |  |  |  |                         |  | President and Chief Executive Officer
|                      |  |  |  |                         |  | (Principal Executive Officer)        
|                      |  |  | 
|Date: August 13, 2007 |  |  |  | By:                     |  | /s/ James M. Dahmus                  
|                      |  |  |  |                         |  | James M. Dahmus                      
|                      |  |  |  |                         |  | Chief Financial Officer              
|                      |  |  |  |                         |  | (Principal Financial Officer)        



38