##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-Q







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

For the quarterly period ended June 30, 2009

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





SGS INTERNATIONAL, INC.

(Exact name of registrant as specified in its
charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|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)





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 has
submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the
definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                                |  | Accelerated filer         |  |  ̈
|                        |  |                                                  | 
|Non-accelerated filer   |  | x  (Do not check if a smaller reporting company) |  | Smaller reporting company |  |  ̈

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 July 31, 2009 there were 100 shares of the registrants common stock, $0.01 par value, outstanding.









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##### Table of Contents

TABLE OF CONTENTS



|                               |  |                                                                                        |  |    
|------------------------------ |  | -------------------------------------------------------------------------------------- |  | ---
|PART I  FINANCIAL INFORMATION |  | 3                                                                                     
|Item 1.                        |  | Financial Statements                                                                   |  | 3  
|                               |  |                                                                                       
|                               |  | Condensed Consolidated Statements of Operations                                        |  | 3-4
|                               |  |                                                                                       
|                               |  | Condensed Consolidated Balance Sheets                                                  |  | 5  
|                               |  |                                                                                       
|                               |  | Condensed Consolidated Statement of Stockholders Equity                               |  | 6  
|                               |  |                                                                                       
|                               |  | Condensed Consolidated Statements of Cash Flows                                        |  | 7  
|                               |  |                                                                                       
|                               |  | Notes to Condensed Consolidated Financial Statements                                   |  | 8  
|                               |  |                                                                                       
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations. |  | 24 
|                               |  |                                                                                       
|Item 3.                        |  | Quantitative and Qualitative Disclosures About Market Risk                             |  | 31 
|                               |  |                                                                                       
|Item 4T.                       |  | Controls and Procedures                                                                |  | 31 
|                               | 
|PART II  OTHER INFORMATION    |  | 32                                                                                    
|Item 1.                        |  | Legal Proceedings                                                                      |  | 32 
|                               |  |                                                                                       
|Item 1A.                       |  | Risk Factors                                                                           |  | 32 
|                               |  |                                                                                       
|Item 6.                        |  | Exhibits.                                                                              |  | 32 
|                               | 
|SIGNATURES                     |  | 34                                                                                    



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, 2009 |        | Three Months EndedJune 30, 2008 |  
|NET SALES                                      |  | $                               | 80,342 |                                 | $ | 84,492 |  
|                                               |  |                                
|COSTS OF OPERATIONS:                           |  |                                 |        |                                 |   |        |  
|Cost of goods sold (exclusive of depreciation) |  |                                 | 51,258 |                                 |   | 55,876 |  
|Selling, general, and administrative expenses  |  |                                 | 12,638 |                                 |   | 12,232 |  
|Depreciation and amortization                  |  |                                 | 5,918  |                                 |   | 7,207  |  
|                                               |  |                                 |        |                                 |   |        |  
|INCOME FROM OPERATIONS                         |  |                                 | 10,528 |                                 |   | 9,177  |  
|                                               |  |                                 |        |                                 |   |        |  
|                                               |  |                                
|NON-OPERATING EXPENSES (INCOME):               |  |                                 |        |                                 |   |        |  
|                                               |  |                                
|Interest expense                               |  |                                 | 7,364  |                                 |   | 9,199  |  
|Other expense (income), net                    |  |                                 | 991    |                                 |   | (714   | )
|                                               |  |                                 |        |                                 |   |        |  
|INCOME FROM OPERATIONS BEFORE INCOME TAXES     |  |                                 | 2,173  |                                 |   | 692    |  
|                                               |  |                                
|PROVISION FOR INCOME TAXES                     |  |                                 | 852    |                                 |   | 377    |  
|                                               |  |                                 |        |                                 |   |        |  
|NET INCOME                                     |  | $                               | 1,321  |                                 | $ | 315    |  
|                                               |  |                                 |        |                                 |   |        |  

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, 2008, are an integral part of the financial statements.



3



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SGS International, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands of dollars)







|                                               |  |                               |         |   |                               |   |         |  
|---------------------------------------------- |  | ----------------------------- | ------- | - | ----------------------------- | - | ------- | -
|                                               |  | Six Months EndedJune 30, 2009 |         |   | Six Months EndedJune 30, 2008 |  
|NET SALES                                      |  | $                             | 161,039 |   |                               | $ | 167,743 |  
|                                               |  |                              
|COSTS OF OPERATIONS:                           |  |                               |         |   |                               |   |         |  
|Cost of goods sold (exclusive of depreciation) |  |                               | 102,635 |   |                               |   | 110,188 |  
|Selling, general, and administrative expenses  |  |                               | 25,294  |   |                               |   | 24,817  |  
|Depreciation and amortization                  |  |                               | 11,647  |   |                               |   | 13,700  |  
|                                               |  |                               |         |   |                               |   |         |  
|INCOME FROM OPERATIONS                         |  |                               | 21,463  |   |                               |   | 19,038  |  
|                                               |  |                               |         |   |                               |   |         |  
|                                               |  |                              
|NON-OPERATING EXPENSES (INCOME):               |  |                               |         |   |                               |   |         |  
|                                               |  |                              
|Interest expense                               |  |                               | 15,444  |   |                               |   | 18,701  |  
|Gain on debt extinguishment                    |  |                               | (10,500 | ) |                               |   |        |  
|Other expense (income), net                    |  |                               | 443     |   |                               |   | (353    | )
|                                               |  |                               |         |   |                               |   |         |  
|INCOME FROM OPERATIONS BEFORE INCOME TAXES     |  |                               | 16,076  |   |                               |   | 690     |  
|                                               |  |                              
|PROVISION FOR INCOME TAXES                     |  |                               | 6,363   |   |                               |   | 377     |  
|                                               |  |                               |         |   |                               |   |         |  
|NET INCOME                                     |  | $                             | 9,713   |   |                               | $ | 313     |  
|                                               |  |                               |         |   |                               |   |         |  

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, 2008, are an integral part of the financial statements.



4



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SGS International, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands of dollars, except share data)







|                                                                                                                      |  |               |         |   |                   |   |         |  
|--------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | - | ----------------- | - | ------- | -
|                                                                                                                      |  | June 30, 2009 |         |   | December 31, 2008 |  
|ASSETS                                                                                                                |  |               |         |   |                   |   |         |  
|                                                                                                                      |  |              
|Current assets:                                                                                                       |  |               |         |   |                   |   |         |  
|Cash and cash equivalents                                                                                             |  | $             | 7,828   |   |                   | $ | 10,766  |  
|Receivables from customers, less allowances of $1,224 and $1,327 at June 30, 2009 and December 31, 2008,
respectively |  |               | 64,306  |   |                   |   | 56,302  |  
|Inventories                                                                                                           |  |               | 8,935   |   |                   |   | 9,064   |  
|Deferred income taxes                                                                                                 |  |               | 1,887   |   |                   |   | 699     |  
|Prepaid expenses and other current assets                                                                             |  |               | 3,664   |   |                   |   | 3,780   |  
|                                                                                                                      |  |               |         |   |                   |   |         |  
|Total current assets                                                                                                  |  |               | 86,620  |   |                   |   | 80,611  |  
|                                                                                                                      |  |              
|Properties, plants and equipment, net                                                                                 |  |               | 43,970  |   |                   |   | 46,186  |  
|Goodwill                                                                                                              |  |               | 178,559 |   |                   |   | 172,618 |  
|Other intangible assets, net                                                                                          |  |               | 167,718 |   |                   |   | 169,214 |  
|Deferred financing costs, net                                                                                         |  |               | 5,857   |   |                   |   | 7,100   |  
|Other assets                                                                                                          |  |               | 462     |   |                   |   | 384     |  
|                                                                                                                      |  |               |         |   |                   |   |         |  
|TOTAL ASSETS                                                                                                          |  | $             | 483,186 |   |                   | $ | 476,113 |  
|                                                                                                                      |  |               |         |   |                   |   |         |  
|                                                                                                                      |  |              
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                  |  |               |         |   |                   |   |         |  
|                                                                                                                      |  |              
|Current liabilities:                                                                                                  |  |               |         |   |                   |   |         |  
|Accounts payable, trade                                                                                               |  | $             | 13,262  |   |                   | $ | 14,536  |  
|Accrued compensation                                                                                                  |  |               | 6,169   |   |                   |   | 5,920   |  
|Accrued taxes, including taxes on income                                                                              |  |               | 2,866   |   |                   |   | 1,501   |  
|Accrued interest                                                                                                      |  |               | 884     |   |                   |   | 1,018   |  
|Other current liabilities                                                                                             |  |               | 9,805   |   |                   |   | 9,792   |  
|Current portion of short-term and long-term obligations                                                               |  |               | 7,718   |   |                   |   | 1,089   |  
|                                                                                                                      |  |               |         |   |                   |   |         |  
|Total current liabilities                                                                                             |  |               | 40,704  |   |                   |   | 33,856  |  
|                                                                                                                      |  |              
|Long-term obligations, net of current portion                                                                         |  |               | 320,748 |   |                   |   | 344,611 |  
|Non-current liabilities                                                                                               |  |               | 185     |   |                   |   | 204     |  
|Deferred income taxes                                                                                                 |  |               | 14,529  |   |                   |   | 7,926   |  
|                                                                                                                      |  |               |         |   |                   |   |         |  
|Total liabilities                                                                                                     |  |               | 376,166 |   |                   |   | 386,597 |  
|                                                                                                                      |  |               |         |   |                   |   |         |  
|Commitments and contingencies                                                                                         |  |               |         |   |                   |   |         |  
|                                                                                                                      |  |              
|Stockholders equity:                                                                                                 |  |               |         |   |                   |   |         |  
|Common stock, $.01 par value, 1,000 shares authorized and 100 shares outstanding                                      |  |               |        |   |                   |   |        |  
|Additional capital                                                                                                    |  |               | 107,000 |   |                   |   | 107,000 |  
|Accumulated other comprehensive loss - unrealized translation adjustments, net of tax                                 |  |               | (6,948  | ) |                   |   | (14,739 | )
|Retained earnings (accumulated deficit)                                                                               |  |               | 6,968   |   |                   |   | (2,745  | )
|                                                                                                                      |  |               |         |   |                   |   |         |  
|Total stockholders equity                                                                                            |  |               | 107,020 |   |                   |   | 89,516  |  
|                                                                                                                      |  |               |         |   |                   |   |         |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                            |  | $             | 483,186 |   |                   | $ | 476,113 |  
|                                                                                                                      |  |               |         |   |                   |   |         |  

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, 2008, are an integral part of the financial statements.



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SGS International, Inc. and Subsidiaries

Condensed Consolidated Statement of Stockholders Equity

(unaudited)

(in thousands of dollars)







|                                        |  |                     |        |             |   |                   |  |                                      |         |  |                                   |        |   |                          |   |         |   |  |   |        
|--------------------------------------- |  | ------------------- | ------ | ----------- | - | ----------------- |  | ------------------------------------ | ------- |  | --------------------------------- | ------ | - | ------------------------ | - | ------- | - |  | - | -------
|                                        |  | ComprehensiveIncome |        | CommonStock |   | AdditionalCapital |  | RetainedEarnings(AccumulatedDeficit) |         |  | AccumulatedOtherComprehensiveLoss |        |   | TotalStockholdersEquity
|Balance at December 31, 2008            |  |                     |        |             | $ |                  |  | $                                    | 107,000 |  | $                                 | (2,745 | ) |                          | $ | (14,739 | ) |  | $ | 89,516 
|                                        |  |                     |        |             |   |                  
|Comprehensive income:                   |  |                     |        |             |   |                   |  |                                      |         |  |                                   |        |   |                          |   |         |   |  |   |        
|                                        |  |                     |        |             |   |                  
|Net income                              |  | $                   | 9,713  |             |   |                  |  |                                      |        |  |                                   | 9,713  |   |                          |   |        |   |  |   | 9,713  
|Cumulative translation adjustments, net |  |                     | 7,791  |             |   |                  |  |                                      |        |  |                                   |       |   |                          |   | 7,791   |   |  |   | 7,791  
|                                        |  |                     |        |             |   |                   |  |                                      |         |  |                                   |        |   |                          |   |         |   |  |   |        
|                                        |  |                     |        |             |   |                  
|Comprehensive income                    |  | $                   | 17,504 |             |   |                   |  |                                      |         |  |                                   |        |   |                          |   |         |   |  |   |        
|                                        |  |                     |        |             |   |                   |  |                                      |         |  |                                   |        |   |                          |   |         |   |  |   |        
|                                        |  |                     |        |             |   |                  
|Balance at June 30, 2009                |  |                     |        |             | $ |                  |  | $                                    | 107,000 |  | $                                 | 6,968  |   |                          | $ | (6,948  | ) |  | $ | 107,020
|                                        |  |                     |        |             |   |                   |  |                                      |         |  |                                   |        |   |                          |   |         |   |  |   |        

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, 2008, are an integral part of the financial statements.



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SGS International, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands of dollars)







|                                                 |  |                               |         |   |                               |   |         |  
|------------------------------------------------ |  | ----------------------------- | ------- | - | ----------------------------- | - | ------- | -
|                                                 |  | Six Months EndedJune 30, 2009 |         |   | Six Months EndedJune 30, 2008 |  
|CASH FLOWS FROM OPERATING ACTIVITIES             |  | $                             | 13,201  |   |                               | $ | 10,294  |  
|                                                 |  |                               |         |   |                               |   |         |  
|                                                 |  |                              
|CASH FLOWS FROM INVESTING ACTIVITIES:            |  |                               |         |   |                               |   |         |  
|Acquisition of properties, plants and equipment  |  |                               | (4,265  | ) |                               |   | (5,702  | )
|Proceeds from sales of equipment                 |  |                               | 7       |   |                               |   | 487     |  
|Business acquisitions, net of cash acquired      |  |                               | (3,619  | ) |                               |   | (23,834 | )
|                                                 |  |                               |         |   |                               |   |         |  
|Net cash used in investing activities            |  |                               | (7,877  | ) |                               |   | (29,049 | )
|                                                 |  |                               |         |   |                               |   |         |  
|                                                 |  |                              
|CASH FLOWS FROM FINANCING ACTIVITIES:            |  |                               |         |   |                               |   |         |  
|Borrowings on revolving credit facility          |  |                               | 21,609  |   |                               |   |        |  
|Payments on revolving credit facility            |  |                               | (14,903 | ) |                               |   |        |  
|Payments to extinguish senior subordinated notes |  |                               | (15,000 | ) |                               |   |        |  
|Payments on acquisition facility                 |  |                               | (197    | ) |                               |   |        |  
|Payments for deferred financing fees             |  |                               |        |   |                               |   | (117    | )
|Payments on long-term debt                       |  |                               | (371    | ) |                               |   | (1,192  | )
|                                                 |  |                               |         |   |                               |   |         |  
|                                                 |  |                              
|Net cash used in financing activities            |  |                               | (8,862  | ) |                               |   | (1,309  | )
|                                                 |  |                               |         |   |                               |   |         |  
|                                                 |  |                              
|Effect of exchange rate changes on cash          |  |                               | 600     |   |                               |   | (113    | )
|                                                 |  |                               |         |   |                               |   |         |  
|                                                 |  |                              
|DECREASE IN CASH AND CASH EQUIVALENTS            |  |                               | (2,938  | ) |                               |   | (20,177 | )
|                                                 |  |                              
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD   |  |                               | 10,766  |   |                               |   | 34,467  |  
|                                                 |  |                               |         |   |                               |   |         |  
|                                                 |  |                              
|CASH AND CASH EQUIVALENTS, END OF PERIOD         |  | $                             | 7,828   |   |                               | $ | 14,290  |  
|                                                 |  |                               |         |   |                               |   |         |  

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, 2008, are an integral part of the financial statements.



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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,
operates in one operating business segment, pre-press graphic services. The Company provides a variety of services that include the preparatory steps that precede the actual printing of an image onto packaging material. The Company supplies
photographic images, digital images, flexographic printing plates and rotogravure cylinders for the packaging printing industry. The Company has 38 locations in the United States, Canada, Mexico, the United Kingdom, the Netherlands, and Hong Kong.

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, 2008 in the Companys Form 10-K filed
with the U.S. Securities and Exchange Commission (SEC). The December 31, 2008 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, 2009.

The Company has evaluated subsequent events for recognition or disclosure through August 10, 2009, the
date the Company filed this report with the SEC. See Note I, Subsequent Event, for additional information.

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 Limited, The Box Room Limited, SGS Packaging Netherlands B.V., McGurk Studios Limited, Thames McGurk Limited, and SGS Asia Pacific Limited. These
subsidiaries also include SGS Packaging Chile Limitada since January 2009 and include Backwell Design Inc. and Gemini Graphic Imaging Inc. since May 2008. On December 31, 2008, Backwell Design Inc. and Gemini Graphic Imaging Inc. transferred
all of their assets and liabilities to Southern Graphic Systems-Canada, Co.

Inventories and Cost of Goods Sold

Raw materials inventory is valued at the lower of cost or market with cost determined using the first-in, first-out (FIFO) method.
Work-in-process inventory is valued at the lower of cost or net realizable value. There is no finished goods inventory since all products are shipped upon completion. Raw materials inventory and work-in-process inventory are as follows:



|                |  |              |       |                  |   |      
|--------------- |  | ------------ | ----- | ---------------- | - | -----
|                |  | June 30,2009 |       | December 31,2008
|Raw materials   |  | $            | 2,686 |                  | $ | 2,949
|Work-in-process |  |              | 6,249 |                  |   | 6,115
|                |  |              |       |                  |   |      
|Total           |  | $            | 8,935 |                  | $ | 9,064
|                |  |              |       |                  |   |      



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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. These 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, work-in-process inventory, 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 and actual results could differ from those estimates upon subsequent
resolution of some matters.

Recently Issued and Adopted Accounting Standards

On January 1, 2009, the Company adopted the provisions of Statement of Financial Accounting Standards No. 141 (revised 2007), Business
Combinations(SFAS 141(R)). SFAS 141(R) requires an acquirer to measure the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree at their fair values on the acquisition date, with goodwill being
the excess value over the net identifiable assets acquired. The adoption of SFAS 141(R) did not have an impact on the Companys condensed consolidated financial statements. The impact on the Companys financial statements for subsequent
periods will depend on the nature and size of future acquisitions.

On January 1, 2009, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements - An Amendment of ARB No. 51, (SFAS 160). SFAS 160 establishes accounting and reporting standards for the noncontrolling
interest in a subsidiary and for the deconsolidation of a subsidiary. The adoption of SFAS 160 did not have an impact on the Companys consolidated financial statements.

On April 1, 2009, the Company adopted the provisions of the following three FASB Staff Positions (FSPs) intended to provide application guidance and
revise the disclosures regarding fair value measurements and impairments of securities:



| |  |  | FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying
Transactions That Are Not Orderly (FSP FAS 157-4), addresses the determination of fair values when there is no active market or where the price inputs represent distressed sales. FSP FAS 157-4 reaffirms the view in SFAS 157 that the
objective of fair value measurement is to reflect an assets sale price in an orderly transaction at the date of the financial statements.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments, enhances consistency in financial reporting by increasing the
frequency of fair value disclosures to a quarterly instead of annual basis for any financial instruments that are not currently reflected on the balance sheet at fair value.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments, provides additional guidance designed to create
greater consistency in the timing of impairment recognition and provide greater clarity about the credit and noncredit components of impaired debt securities that are not expected to be sold.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The adoption of these FSPs had no material impact on the Companys consolidated financial statements. See Note F, Fair Value
Measurements, for these disclosures.



9



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In June 2009, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting
Standards No. 165, Subsequent Events (SFAS 165). SFAS 165 incorporates the subsequent events guidance contained in the auditing standards literature into authoritative accounting literature. It also requires entities to disclose the date
through which they have evaluated subsequent events and whether the date corresponds with the release of their financial statements. SFAS 165 is effective for all interim and annual periods ending after June 15, 2009. The Company adopted SFAS
165 upon its issuance and it had no material impact on the Companys condensed consolidated financial statements. See Note A, Basis of Presentation, for this new disclosure.

In June 2009, the FASB issued Statement of Financial Accounting Standards No. 166, Accounting for Transfers of Financial Assets - an amendment of
FASB Statement No. 140 (SFAS 166). SFAS 166 revises SFAS No. 140 and requires entities to provide more information about sales of securitized financial assets and similar transactions, particularly if the seller retains some risk with
respect to the assets. SFAS 166 is effective for fiscal years beginning after November 15, 2009. The adoption of SFAS 166 will not have a material impact on the Companys consolidated financial statements.

In June 2009, the FASB issued Statement of Financial Accounting Standards No. 167, Amendments to FASB Interpretation No. 46(R) (SFAS
167). SFAS 167 amends certain requirements of FASB Interpretation No. 46(R) to improve financial reporting by companies involved with variable interest entities and to provide more relevant and reliable information to users of financial
statements. SFAS 167 is effective for fiscal years beginning after November 15, 2009. The adoption of SFAS 167 will not have a material impact on the Companys consolidated financial statements.

In June 2009, the FASB issued Statement of Financial Accounting Standards No. 168, The FASB
Accounting Standards CodificationTMand the Hierarchy of Generally Accepted Accounting
Principles - a replacement of FASB Statement No. 162(SFAS 168). SFAS 168 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of
financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States. SFAS 168 is effective for financial statements issued for interim and annual
periods ending after September 15, 2009. The adoption of SFAS 168 will change how various elements of GAAP are referenced in the Companys financial statement disclosures, but will have no impact on the Companys financial position,
results of operation or cash flows.



|B. | Acquisitions
|-- | ------------

Effective January 1, 2008,
Southern Graphic Systems-Canada, Co., a wholly owned subsidiary of SGS International, Inc., acquired the outstanding shares of 1043497 Ontario Limited (1043497) and Cooper & Williamson, Inc. (together with 1043497 and its wholly
owned subsidiaries Tri-Ad Graphic Communications Ltd. and Flexart Design Inc., Tri-Ad) under a Share Purchase Agreement (the SPA), for an initial cash purchase price of 22.0 million Canadian dollars plus an estimated
additional 1.85 million Canadian dollars in accordance with the working capital and net asset provisions described in the SPA ($24,196 based on the U.S. dollar/Canadian dollar exchange rate at the time of acquisition). Tri-Ad is a Canadian
provider of packaging and retail graphics services with locations in Toronto, Ontario and outside of Montreal, Quebec. The purchase price allocation for the acquisition of Tri-Ad is provided below.



10



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|                                 |  |   |        |  
|-------------------------------- |  | - | ------ | -
|Purchase price                   |  | $ | 24,196 |  
|Transaction costs                |  |   | 947    |  
|                                 |  |   |        |  
|                                 | 
|Total cash acquisition price     |  | $ | 25,143 |  
|                                 |  |   |        |  
|                                 | 
|Allocation of acquisition price: |  |   |        |  
|Current assets                   |  | $ | 7,778  |  
|Properties, plants and equipment |  |   | 2,475  |  
|Goodwill                         |  |   | 11,148 |  
|Customer relationships           |  |   | 7,085  |  
|Other intangible assets          |  |   | 885    |  
|Liabilities assumed              |  |   | (4,228 | )
|                                 |  |   |        |  
|                                 | 
|Total cash acquisition price     |  | $ | 25,143 |  
|                                 |  |   |        |  

On October 1, 2008, 1043497 Ontario Limited, Cooper & Williamson, Inc., Tri-Ad
Graphic Communications Ltd. and Flexart Design Inc. were amalgamated as a single company named Tri-Ad Graphic Communications Ltd. Immediately following the amalgamation, Tri-Ad Graphic Communications Ltd. transferred all of its assets and
liabilities to Southern Graphic Systems-Canada, Co. and was subsequently dissolved.

On May 2, 2008, Southern Graphic Systems-Canada,
Co. acquired a Canadian provider of packaging and retail graphics, Backwell Design Inc. and Gemini Graphic Imaging Inc., for an aggregate cash consideration of 3.1 million Canadian dollars ($3,098 based on the U.S. dollar/Canadian dollar
exchange rate at the time of acquisition). The purchase price allocation for the acquisition is provided below.



|                                 |  |   |        |  
|-------------------------------- |  | - | ------ | -
|Purchase price                   |  | $ | 3,098  |  
|Transaction costs                |  |   | 50     |  
|                                 |  |   |        |  
|                                 | 
|Total cash acquisition price     |  | $ | 3,148  |  
|                                 |  |   |        |  
|                                 | 
|Allocation of acquisition price: |  |   |        |  
|Current assets                   |  | $ | 766    |  
|Properties, plants and equipment |  |   | 70     |  
|Goodwill                         |  |   | 946    |  
|Customer relationships           |  |   | 2,841  |  
|Liabilities assumed              |  |   | (1,475 | )
|                                 |  |   |        |  
|                                 | 
|Total cash acquisition price     |  | $ | 3,148  |  
|                                 |  |   |        |  

On December 31, 2008, Southern Graphic Systems, Inc. acquired substantially all of the assets
of a provider of packaging and retail graphics located in Marietta, Georgia (the Marietta acquisition or Marietta) for an aggregate cash consideration of $6,031. The purchase price allocation for the acquisition is provided
below.



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|                                 |  |   |      
|-------------------------------- |  | - | -----
|Purchase price                   |  | $ | 6,031
|Transaction costs                |  |   | 79   
|                                 |  |   |      
|                                 | 
|Total cash acquisition price     |  | $ | 6,110
|                                 |  |   |      
|                                 | 
|Allocation of acquisition price: |  |   |      
|Current assets                   |  | $ | 152  
|Properties, plants and equipment |  |   | 445  
|Goodwill                         |  |   | 1,051
|Customer relationships           |  |   | 4,462
|                                 |  |   |      
|                                 | 
|Total cash acquisition price     |  | $ | 6,110
|                                 |  |   |      

Results of operations of the above acquisitions are included in the consolidated statements of
operations from the date of each acquisition. Pro forma results of the Company, assuming each acquisition, or all the acquisitions in the aggregate, had been made at the beginning of each period presented, would not have been materially different
from the results reported.



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

Goodwill and
other intangible assets consist of the following:



|                                                  |  |              |         |   |                  |   |         |  
|------------------------------------------------- |  | ------------ | ------- | - | ---------------- | - | ------- | -
|                                                  |  | June 30,2009 |         |   | December 31,2008 |  
|Goodwill, cost                                    |  | $            | 178,559 |   |                  | $ | 172,618 |  
|                                                  |  |             
|Customer relationships, cost                      |  |              | 173,809 |   |                  |   | 170,121 |  
|Customer relationships, accumulated amortization  |  |              | (27,874 | ) |                  |   | (23,082 | )
|                                                  |  |             
|Other intangible assets, cost                     |  |              | 26,294  |   |                  |   | 25,961  |  
|Other intangible assets, accumulated amortization |  |              | (4,511  | ) |                  |   | (3,786  | )
|                                                  |  |              |         |   |                  |   |         |  
|Total                                             |  | $            | 346,277 |   |                  | $ | 341,832 |  
|                                                  |  |              |         |   |                  |   |         |  

The change in goodwill, customer relationships (cost) and other intangible assets (cost) during
the six months ended June 30, 2009 is due to the following:



|                                                                           |  |          |         |                              |   |                               |  |   |       
|-------------------------------------------------------------------------- |  | -------- | ------- | ---------------------------- | - | ----------------------------- |  | - | ------
|                                                                           |  | Goodwill |         | Customerrelationships (cost) |   | Other intangibleassets (cost)
|Balance at December 31, 2008                                               |  | $        | 172,618 |                              | $ | 170,121                       |  | $ | 25,961
|                                                                           |  |          |        
|Revisions to purchase accounting during the six months ended June 30, 2009 |  |          | 2,507   |                              |   |                              |  |   |      
|Changes due to foreign currency fluctuations                               |  |          | 3,434   |                              |   | 3,688                         |  |   | 333   
|                                                                           |  |          |         |                              |   |                               |  |   |       
|                                                                           |  |          |        
|Balance at June 30, 2009                                                   |  | $        | 178,559 |                              | $ | 173,809                       |  | $ | 26,294
|                                                                           |  |          |         |                              |   |                               |  |   |       

The revisions to purchase accounting during the six months ended June 30, 2009 include $2,212
related to a revision of the estimated purchase price allocation for the Tri-ad acquisition in light of a potential settlement of our dispute with the former owners regarding certain post-closing purchase price adjustments under the SPA.



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##### Table of Contents

The $2, 212 increase in goodwill results from our expectation that we will accept certain liabilities and
agree to pay the former owners an additional $1,850 Canadian dollars.

Amortization of customer relationships and other intangible assets is
estimated to be approximately $9,900 annually from 2009 through 2013.



|D. | Interest Expense
|-- | ----------------

Interest expense consists of the
following:



|                                                    |  |                                 |        |                                 |   |       
|--------------------------------------------------- |  | ------------------------------- | ------ | ------------------------------- | - | ------
|                                                    |  | Three Months EndedJune 30, 2009 |        | Three Months EndedJune 30, 2008
|Interest on senior term loan                        |  | $                               | 1,112  |                                 | $ | 2,155 
|Interest on borrowings on acquisition facility      |  |                                 | 397    |                                 |   | 567   
|Interest on borrowings on revolving credit facility |  |                                 | 64     |                                 |   |      
|Interest on senior subordinated notes               |  |                                 | 5,351  |                                 |   | 6,000 
|Amortization of deferred financing costs            |  |                                 | 369    |                                 |   | 377   
|Commitment fees on senior credit facility           |  |                                 | 41     |                                 |   | 58    
|Other                                               |  |                                 | 30     |                                 |   | 42    
|                                                    |  |                                 |        |                                 |   |       
|Total                                               |  | $                               | 7,364  |                                 | $ | 9,199 
|                                                    |  |                                 |        |                                 |   |       
|                                                    |  |                                
|                                                    |  | Six Months EndedJune 30, 2009   |        | Six Months EndedJune 30, 2008  
|Interest on senior term loan                        |  | $                               | 2,278  |                                 | $ | 4,425 
|Interest on borrowings on acquisition facility      |  |                                 | 804    |                                 |   | 1,307 
|Interest on borrowings on revolving credit facility |  |                                 | 146    |                                 |   |      
|Interest on senior subordinated notes               |  |                                 | 10,835 |                                 |   | 12,000
|Amortization of deferred financing costs            |  |                                 | 1,244  |                                 |   | 737   
|Commitment fees on senior credit facility           |  |                                 | 82     |                                 |   | 128   
|Other                                               |  |                                 | 55     |                                 |   | 104   
|                                                    |  |                                 |        |                                 |   |       
|Total                                               |  | $                               | 15,444 |                                 | $ | 18,701
|                                                    |  |                                 |        |                                 |   |       



|E. | Gain on Debt Extinguishment
|-- | ---------------------------

In privately
negotiated transactions that settled on February 13 and February 18, 2009, respectively, the Companys wholly-owned subsidiary, Southern Graphic Systems, Inc., acquired SGS International, Inc.s 12% senior subordinated notes
maturing on December 15, 2013 (Notes) in an aggregate principal amount of $25,500 for a cash purchase price of $15,000, resulting in a gain on debt extinguishment of $10,500.

With the cancellation of these repurchased Notes, $174,500 aggregate principal amount of Notes remain outstanding. The Note repurchases were financed in
part by aggregate borrowings of $14,903 in February 2009 under the Companys revolving credit facility.



|F. | Fair Value Measurements
|-- | -----------------------

The table below provides
the carrying value and estimated fair value of the Companys financial instruments as of June 30, 2009. The estimated fair value is determined using quoted prices in markets that are not active. The estimated fair value at June 30,
2009 is determined using the average price of the Notes either traded or purchased by third parties between June 1, 2009 and July 31, 2009.



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|                          |  |                                      |         |                                         |   |        
|------------------------- |  | ------------------------------------ | ------- | --------------------------------------- | - | -------
|                          |  | Total Carrying Valueat June 30, 2009 |         | Fair Value Measurementsat June 30, 2009
|Senior subordinated notes |  | $                                    | 174,500 |                                         | $ | 119,152

The Companys ability to further repurchase Notes is limited due to the terms of the
Companys senior secured credit facility.



|G. | 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, and liquidity.



|H. | Income Taxes
|-- | ------------

The effective tax rates for the
quarter and six months ended June 30, 2009 were 39.2% and 39.6%, compared to 54.5% and 54.6% for the quarter and six months ended June 30, 2008. The decrease in the effective tax rate was primarily due to the impact of expenses not fully
deductible for income tax purposes. Since income (loss) before income taxes was closer to zero for the quarter and six months ended June 30, 2008 than for the quarter and six months ended June 30, 2009, the impact of expenses not fully
deductible for income tax purposes was more significant for the quarter and six months ended June 30, 2008 than for the quarter and six months ended June 30, 2009.

The Company has not recorded a deferred tax liability for undistributed earnings of certain international subsidiaries because such earnings are
considered permanently invested in foreign countries. As of June 30, 2009, undistributed earnings of international subsidiaries considered permanently reinvested were approximately $1,786. 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. The Company does not consider
undistributed earnings from certain other international operations to be permanently reinvested. A portion of the estimated tax liabilities upon repatriation of earnings from these international operations is expected to be offset with foreign tax
credits.

On December 15, 2008 the United States and Canada exchanged instruments of ratification to place in force the Fifth Protocol
of the U.S.-Canada Tax Treaty (Fifth Protocol). Included in the Fifth Protocol were provisions that affected certain hybrid entities that receive or pay cross border payments. The hybrid provisions in the Fifth Protocol are effective January 1,
2010. The Company believes that certain subsidiaries may be affected by the new provisions and is currently evaluating strategies to minimize any adverse tax impact from the Fifth Protocol provisions.



|I. | Subsequent Event
|-- | ----------------

We made $4,800 of payments on our
revolving credit facility between July 1, 2009 and August 10, 2009. The borrowings outstanding under our revolving credit facility have decreased from $6,700 at June 30, 2009 to $1,900 at August 10, 2009.



|J. | Supplemental Guarantor Information
|-- | ----------------------------------

The
Companys debt includes the senior credit facility and the Notes. 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. The Canadian borrowings under the senior credit facility have been guaranteed by SGS Packaging Europe Holdings Limited, SGS Packaging Europe Limited, MCG



14



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##### Table of Contents

Graphics Limited, Southern Graphic Systems Mexico, S. De R.L. De C.V., The Box Room Limited, SGS Packaging Netherlands, B.V., McGurk Studios Limited, Thames
McGurk Limited, SGS Asia Pacific Limited, Southern Graphic Systems, Inc., Project Dove Holdco, Inc., Project Dove Manitoba, L.P., Southern Graphics Inc., SGS International, Inc., Backwell Design Inc., Gemini Graphic Imaging Inc., and SGS Packaging
Chile Limitada. The Notes are general unsecured obligations and are guaranteed on a senior subordinated basis by the Companys domestic subsidiaries and rank secondary to the Companys senior credit facility. Guarantor subsidiaries for the
Notes include Southern Graphic Systems, Inc. and Project Dove Holdco, Inc. Non-guarantor subsidiaries for the Notes include the direct and indirect foreign subsidiaries. The subsidiary guarantors are 100% owned by SGS International, Inc., 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, 2009



|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|------------------------------------------------------- |  | -------------- | ------- | --------------------------------- | - | ------------------------------------- |  | ------------ | ------- |  | ------------ | -------- | - |  | - | -------
|                                                        |  | Parent /Issuer |         | ConsolidatedGuarantorSubsidiaries |   | ConsolidatedNon-GuarantorSubsidiaries |  | Eliminations |         |  | Consolidated
|Assets                                                  |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Current assets                                          |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Cash and cash equivalents                               |  | $              | 137     |                                   | $ | 2,409                                 |  | $            | 5,282   |  | $            |         |   |  | $ | 7,828  
|Receivables from customers, less allowances             |  |                |        |                                   |   | 42,389                                |  |              | 21,917  |  |              |         |   |  |   | 64,306 
|Intercompany receivables                                |  |                | 405,530 |                                   |   | 114,707                               |  |              | 7,118   |  |              | (527,355 | ) |  |   |       
|Inventories                                             |  |                |        |                                   |   | 6,082                                 |  |              | 2,853   |  |              |         |   |  |   | 8,935  
|Deferred income taxes                                   |  |                | 423     |                                   |   | 687                                   |  |              | 777     |  |              |         |   |  |   | 1,887  
|Prepaid expenses and other current assets               |  |                | 105     |                                   |   | 1,966                                 |  |              | 1,593   |  |              |         |   |  |   | 3,664  
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Total current assets                                    |  |                | 406,195 |                                   |   | 168,240                               |  |              | 39,540  |  |              | (527,355 | ) |  |   | 86,620 
|Investment in subsidiaries                              |  |                | 118,925 |                                   |   | 33,693                                |  |              | 36,567  |  |              | (189,185 | ) |  |   |       
|Properties, plants and equipment, net                   |  |                |        |                                   |   | 35,029                                |  |              | 8,941   |  |              |         |   |  |   | 43,970 
|Goodwill                                                |  |                |        |                                   |   | 121,013                               |  |              | 57,546  |  |              |         |   |  |   | 178,559
|Other intangible assets, net                            |  |                |        |                                   |   | 122,807                               |  |              | 44,911  |  |              |         |   |  |   | 167,718
|Deferred financing costs, net                           |  |                | 5,857   |                                   |   |                                      |  |              |        |  |              |         |   |  |   | 5,857  
|Other assets                                            |  |                |        |                                   |   | 147                                   |  |              | 315     |  |              |         |   |  |   | 462    
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Total assets                                            |  | $              | 530,977 |                                   | $ | 480,929                               |  | $            | 187,820 |  | $            | (716,540 | ) |  | $ | 483,186
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|                                                        |  |                |         |                                   |  
|Liabilities                                             |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Current liabilities                                     |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Accounts payable, trade                                 |  | $              | 726     |                                   | $ | 8,010                                 |  | $            | 4,526   |  | $            |         |   |  | $ | 13,262 
|Intercompany payables                                   |  |                | 112,404 |                                   |   | 379,553                               |  |              | 35,398  |  |              | (527,355 | ) |  |   |       
|Accrued compensation                                    |  |                |        |                                   |   | 5,147                                 |  |              | 1,022   |  |              |         |   |  |   | 6,169  
|Accrued taxes, including taxes on income                |  |                |        |                                   |   | 782                                   |  |              | 2,084   |  |              |         |   |  |   | 2,866  
|Accrued interest                                        |  |                | 1       |                                   |   | 881                                   |  |              | 2       |  |              |         |   |  |   | 884    
|Other current liabilities                               |  |                |        |                                   |   | 6,219                                 |  |              | 3,586   |  |              |         |   |  |   | 9,805  
|Current portion of short-term and long-term obligations |  |                | 7,097   |                                   |   | 615                                   |  |              | 6       |  |              |         |   |  |   | 7,718  
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Total current liabilities                               |  |                | 120,228 |                                   |   | 401,207                               |  |              | 46,624  |  |              | (527,355 | ) |  |   | 40,704 
|Non-current liabilities                                 |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Long-term obligations, net of current portion           |  |                | 302,257 |                                   |   | 222                                   |  |              | 18,269  |  |              |         |   |  |   | 320,748
|Non-current liabilities                                 |  |                |        |                                   |   | 55                                    |  |              | 130     |  |              |         |   |  |   | 185    
|Deferred income taxes                                   |  |                | 1,472   |                                   |   | 1,329                                 |  |              | 11,728  |  |              |         |   |  |   | 14,529 
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Total liabilities                                       |  |                | 423,957 |                                   |   | 402,813                               |  |              | 76,751  |  |              | (527,355 | ) |  |   | 376,166
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|                                                        |  |                |         |                                   |  
|Contingencies and commitments                           |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|                                                        |  |                |         |                                   |  
|Stockholders equity                                    |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Common stock                                            |  |                |        |                                   |   |                                      |  |              |        |  |              |         |   |  |   |       
|Other stockholders equity                              |  |                | 107,020 |                                   |   | 78,116                                |  |              | 111,069 |  |              | (189,185 | ) |  |   | 107,020
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Total stockholders equity                              |  |                | 107,020 |                                   |   | 78,116                                |  |              | 111,069 |  |              | (189,185 | ) |  |   | 107,020
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Total liabilities and stockholders equity              |  | $              | 530,977 |                                   | $ | 480,929                               |  | $            | 187,820 |  | $            | (716,540 | ) |  | $ | 483,186
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        



16



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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, 2008



|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|------------------------------------------------------- |  | -------------- | ------- | --------------------------------- | - | ------------------------------------- |  | ------------ | ------- |  | ------------ | -------- | - |  | - | -------
|                                                        |  | Parent /Issuer |         | ConsolidatedGuarantorSubsidiaries |   | ConsolidatedNon-GuarantorSubsidiaries |  | Eliminations |         |  | Consolidated
|Assets                                                  |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Current assets                                          |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Cash and cash equivalents                               |  | $              | 410     |                                   | $ | 3,382                                 |  | $            | 6,974   |  | $            |         |   |  | $ | 10,766 
|Receivables from customers, less allowances             |  |                |        |                                   |   | 38,435                                |  |              | 17,867  |  |              |         |   |  |   | 56,302 
|Intercompany receivables                                |  |                | 391,639 |                                   |   | 91,750                                |  |              | 2,624   |  |              | (486,013 | ) |  |   |       
|Inventories                                             |  |                |        |                                   |   | 6,477                                 |  |              | 2,587   |  |              |         |   |  |   | 9,064  
|Deferred income taxes                                   |  |                |        |                                   |   | 581                                   |  |              | 118     |  |              |         |   |  |   | 699    
|Prepaid expenses and other current assets               |  |                | 78      |                                   |   | 2,322                                 |  |              | 1,380   |  |              |         |   |  |   | 3,780  
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Total current assets                                    |  |                | 392,127 |                                   |   | 142,947                               |  |              | 31,550  |  |              | (486,013 | ) |  |   | 80,611 
|Investment in subsidiaries                              |  |                | 106,624 |                                   |   | 33,694                                |  |              |        |  |              | (140,318 | ) |  |   |       
|Properties, plants and equipment, net                   |  |                |        |                                   |   | 36,916                                |  |              | 9,270   |  |              |         |   |  |   | 46,186 
|Goodwill                                                |  |                |        |                                   |   | 120,966                               |  |              | 51,652  |  |              |         |   |  |   | 172,618
|Other intangible assets, net                            |  |                |        |                                   |   | 126,492                               |  |              | 42,722  |  |              |         |   |  |   | 169,214
|Deferred financing costs, net                           |  |                | 7,100   |                                   |   |                                      |  |              |        |  |              |         |   |  |   | 7,100  
|Deferred income taxes                                   |  |                | 1,635   |                                   |   | 1,211                                 |  |              |        |  |              | (2,846   | ) |  |   |       
|Other assets                                            |  |                |        |                                   |   | 164                                   |  |              | 220     |  |              |         |   |  |   | 384    
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Total assets                                            |  | $              | 507,486 |                                   | $ | 462,390                               |  | $            | 135,414 |  | $            | (629,177 | ) |  | $ | 476,113
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|                                                        |  |                |         |                                   |  
|Liabilities                                             |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Current liabilities                                     |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Accounts payable, trade                                 |  | $              | 562     |                                   | $ | 9,084                                 |  | $            | 4,890   |  | $            |         |   |  | $ | 14,536 
|Intercompany payables                                   |  |                | 90,135  |                                   |   | 362,941                               |  |              | 32,937  |  |              | (486,013 | ) |  |   |       
|Accrued compensation                                    |  |                |        |                                   |   | 5,238                                 |  |              | 682     |  |              |         |   |  |   | 5,920  
|Accrued taxes, including taxes on income                |  |                |        |                                   |   | 345                                   |  |              | 1,156   |  |              |         |   |  |   | 1,501  
|Accrued interest                                        |  |                | 6       |                                   |   | 1,010                                 |  |              | 2       |  |              |         |   |  |   | 1,018  
|Other current liabilities                               |  |                |        |                                   |   | 8,276                                 |  |              | 1,516   |  |              |         |   |  |   | 9,792  
|Current portion of short-term and long-term obligations |  |                | 392     |                                   |   | 674                                   |  |              | 23      |  |              |         |   |  |   | 1,089  
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Total current liabilities                               |  |                | 91,095  |                                   |   | 387,568                               |  |              | 41,206  |  |              | (486,013 | ) |  |   | 33,856 
|Non-current liabilities                                 |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Long-term obligations, net of current portion           |  |                | 326,875 |                                   |   | 463                                   |  |              | 17,273  |  |              |         |   |  |   | 344,611
|Non-current liabilities                                 |  |                |        |                                   |   |                                      |  |              | 204     |  |              |         |   |  |   | 204    
|Deferred income taxes                                   |  |                |        |                                   |   |                                      |  |              | 10,772  |  |              | (2,846   | ) |  |   | 7,926  
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Total liabilities                                       |  |                | 417,970 |                                   |   | 388,031                               |  |              | 69,455  |  |              | (488,859 | ) |  |   | 386,597
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|                                                        |  |                |         |                                   |  
|Contingencies and commitments                           |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|                                                        |  |                |         |                                   |  
|Stockholders equity:                                   |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Common stock                                            |  |                |        |                                   |   |                                      |  |              |        |  |              |         |   |  |   |       
|Other stockholders equity                              |  |                | 89,516  |                                   |   | 74,359                                |  |              | 65,959  |  |              | (140,318 | ) |  |   | 89,516 
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Total stockholders equity                              |  |                | 89,516  |                                   |   | 74,359                                |  |              | 65,959  |  |              | (140,318 | ) |  |   | 89,516 
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        
|Total liabilities and stockholders equity              |  | $              | 507,486 |                                   | $ | 462,390                               |  | $            | 135,414 |  | $            | (629,177 | ) |  | $ | 476,113
|                                                        |  |                |         |                                   |   |                                       |  |              |         |  |              |          |   |  |   |        



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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 Three Months Ended June 30, 2009



|                                                                            |  |                |        |   |                                   |   |        |                                       |  |              |        |  |              |        |   |  |   |       
|--------------------------------------------------------------------------- |  | -------------- | ------ | - | --------------------------------- | - | ------ | ------------------------------------- |  | ------------ | ------ |  | ------------ | ------ | - |  | - | ------
|                                                                            |  | Parent /Issuer |        |   | ConsolidatedGuarantorSubsidiaries |   |        | ConsolidatedNon-GuarantorSubsidiaries |  | Eliminations |        |  | Consolidated
|Revenues                                                                    |  |                |        |   |                                   |   |        |                                       |  |              |        |  |              |        |   |  |   |       
|Sales                                                                       |  | $              |       |   |                                   | $ | 56,788 |                                       |  | $            | 23,554 |  | $            |       |   |  | $ | 80,342
|Sales to related parties                                                    |  |                |       |   |                                   |   | 713    |                                       |  |              | 1,364  |  |              | (2,077 | ) |  |   |      
|                                                                            |  |                |        |   |                                   |   |        |                                       |  |              |        |  |              |        |   |  |   |       
|Revenues                                                                    |  |                |       |   |                                   |   | 57,501 |                                       |  |              | 24,918 |  |              | (2,077 | ) |  |   | 80,342
|                                                                            |  |                |        |   |                                   |   |        |                                       |  |              |        |  |              |        |   |  |   |       
|Costs of operations                                                         |  |                |        |   |                                   |   |        |                                       |  |              |        |  |              |        |   |  |   |       
|Cost of goods sold (exclusive of depreciation)                              |  |                |       |   |                                   |   | 36,693 |                                       |  |              | 16,642 |  |              | (2,077 | ) |  |   | 51,258
|Selling, general and administrative expenses                                |  |                | 443    |   |                                   |   | 8,059  |                                       |  |              | 4,136  |  |              |       |   |  |   | 12,638
|Depreciation and amortization                                               |  |                |       |   |                                   |   | 4,404  |                                       |  |              | 1,514  |  |              |       |   |  |   | 5,918 
|                                                                            |  |                |        |   |                                   |   |        |                                       |  |              |        |  |              |        |   |  |   |       
|Income (loss) from operations                                               |  |                | (443   | ) |                                   |   | 8,345  |                                       |  |              | 2,626  |  |              |       |   |  |   | 10,528
|                                                                            |  |                |        |   |                                   |   |        |                                       |  |              |        |  |              |        |   |  |   |       
|Interest expense                                                            |  |                | 971    |   |                                   |   | 6,186  |                                       |  |              | 207    |  |              |       |   |  |   | 7,364 
|Other (income) expense, net                                                 |  |                | (105   | ) |                                   |   | (285   | )                                     |  |              | 1,381  |  |              |       |   |  |   | 991   
|                                                                            |  |                |        |   |                                   |   |        |                                       |  |              |        |  |              |        |   |  |   |       
|Income (loss) from operations before equity in net income from subsidiaries |  |                | (1,309 | ) |                                   |   | 2,444  |                                       |  |              | 1,038  |  |              |       |   |  |   | 2,173 
|                                                                            |  |                |        |   |                                   |   |        |                                       |  |              |        |  |              |        |   |  |   |       
|Equity in net income of subsidiaries                                        |  |                | 1,988  |   |                                   |   |       |                                       |  |              |       |  |              | (1,988 | ) |  |   |      
|                                                                            |  |                |        |   |                                   |   |        |                                       |  |              |        |  |              |        |   |  |   |       
|Income from operations before income taxes                                  |  |                | 679    |   |                                   |   | 2,444  |                                       |  |              | 1,038  |  |              | (1,988 | ) |  |   | 2,173 
|Provision (benefit) for taxes on income                                     |  |                | (642   | ) |                                   |   | 1,029  |                                       |  |              | 465    |  |              |       |   |  |   | 852   
|                                                                            |  |                |        |   |                                   |   |        |                                       |  |              |        |  |              |        |   |  |   |       
|Net income (loss)                                                           |  | $              | 1,321  |   |                                   | $ | 1,415  |                                       |  | $            | 573    |  | $            | (1,988 | ) |  | $ | 1,321 
|                                                                            |  |                |        |   |                                   |   |        |                                       |  |              |        |  |              |        |   |  |   |       



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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, 2008



|                                                                                   |  |                |        |   |                                   |   |        |                                       |  |              |        |  |              |        |   |  |   |        |  
|---------------------------------------------------------------------------------- |  | -------------- | ------ | - | --------------------------------- | - | ------ | ------------------------------------- |  | ------------ | ------ |  | ------------ | ------ | - |  | - | ------ | -
|                                                                                   |  | Parent /Issuer |        |   | ConsolidatedGuarantorSubsidiaries |   |        | ConsolidatedNon-GuarantorSubsidiaries |  | Eliminations |        |  | Consolidated |       
|Revenues                                                                           |  |                |        |   |                                   |   |        |                                       |  |              |        |  |              |        |   |  |   |        |  
|Sales                                                                              |  | $              |       |   |                                   | $ | 55,593 |                                       |  | $            | 28,899 |  | $            |       |   |  | $ | 84,492 |  
|Sales to related parties                                                           |  |                |       |   |                                   |   | 719    |                                       |  |              | 2,716  |  |              | (3,435 | ) |  |   |       |  
|                                                                                   |  |                |        |   |                                   |   |        |                                       |  |              |        |  |              |        |   |  |   |        |  
|Revenues                                                                           |  |                |       |   |                                   |   | 56,312 |                                       |  |              | 31,615 |  |              | (3,435 | ) |  |   | 84,492 |  
|                                                                                   |  |                |        |   |                                   |   |        |                                       |  |              |        |  |              |        |   |  |   |        |  
|Costs of operations                                                                |  |                |        |   |                                   |   |        |                                       |  |              |        |  |              |        |   |  |   |        |  
|Cost of goods sold (exclusive of depreciation)                                     |  |                |       |   |                                   |   | 36,561 |                                       |  |              | 22,750 |  |              | (3,435 | ) |  |   | 55,876 |  
|Selling, general and administrative expenses                                       |  |                | 434    |   |                                   |   | 7,816  |                                       |  |              | 3,982  |  |              |       |   |  |   | 12,232 |  
|Depreciation and amortization                                                      |  |                |       |   |                                   |   | 5,389  |                                       |  |              | 1,818  |  |              |       |   |  |   | 7,207  |  
|                                                                                   |  |                |        |   |                                   |   |        |                                       |  |              |        |  |              |        |   |  |   |        |  
|Income (loss) from operations                                                      |  |                | (434   | ) |                                   |   | 6,546  |                                       |  |              | 3,065  |  |              |       |   |  |   | 9,177  |  
|                                                                                   |  |                |        |   |                                   |   |        |                                       |  |              |        |  |              |        |   |  |   |        |  
|Interest expense                                                                   |  |                | 1,001  |   |                                   |   | 7,544  |                                       |  |              | 654    |  |              |       |   |  |   | 9,199  |  
|Other (income) expense, net                                                        |  |                | (1,586 | ) |                                   |   | 311    |                                       |  |              | 561    |  |              |       |   |  |   | (714   | )
|                                                                                   |  |                |        |   |                                   |   |        |                                       |  |              |        |  |              |        |   |  |   |        |  
|Income (loss) from operations before equity in net income (loss) from subsidiaries |  |                | 151    |   |                                   |   | (1,309 | )                                     |  |              | 1,850  |  |              |       |   |  |   | 692    |  
|                                                                                   |  |                |        |   |                                   |   |        |                                       |  |              |        |  |              |        |   |  |   |        |  
|Equity in net income (loss) of subsidiaries                                        |  |                | (72    | ) |                                   |   |       |                                       |  |              |       |  |              | 72     |   |  |   |       |  
|                                                                                   |  |                |        |   |                                   |   |        |                                       |  |              |        |  |              |        |   |  |   |        |  
|Income (loss) from operations before income taxes                                  |  |                | 79     |   |                                   |   | (1,309 | )                                     |  |              | 1,850  |  |              | 72     |   |  |   | 692    |  
|Provision (benefit) for taxes on income (loss)                                     |  |                | (236   | ) |                                   |   | (444   | )                                     |  |              | 1,057  |  |              |       |   |  |   | 377    |  
|                                                                                   |  |                |        |   |                                   |   |        |                                       |  |              |        |  |              |        |   |  |   |        |  
|Net income (loss)                                                                  |  | $              | 315    |   |                                   | $ | (865   | )                                     |  | $            | 793    |  | $            | 72     |   |  | $ | 315    |  
|                                                                                   |  |                |        |   |                                   |   |        |                                       |  |              |        |  |              |        |   |  |   |        |  



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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, 2009



|                                                                     |  |                |         |   |                                   |   |         |                                       |  |              |        |  |              |        |   |  |   |         |  
|-------------------------------------------------------------------- |  | -------------- | ------- | - | --------------------------------- | - | ------- | ------------------------------------- |  | ------------ | ------ |  | ------------ | ------ | - |  | - | ------- | -
|                                                                     |  | Parent /Issuer |         |   | ConsolidatedGuarantorSubsidiaries |   |         | ConsolidatedNon-GuarantorSubsidiaries |  | Eliminations |        |  | Consolidated |       
|Revenues                                                             |  |                |         |   |                                   |   |         |                                       |  |              |        |  |              |        |   |  |   |         |  
|Sales                                                                |  | $              |        |   |                                   | $ | 117,193 |                                       |  | $            | 43,846 |  | $            |       |   |  | $ | 161,039 |  
|Sales to related parties                                             |  |                |        |   |                                   |   | 993     |                                       |  |              | 2,312  |  |              | (3,305 | ) |  |   |        |  
|                                                                     |  |                |         |   |                                   |   |         |                                       |  |              |        |  |              |        |   |  |   |         |  
|Revenues                                                             |  |                |        |   |                                   |   | 118,186 |                                       |  |              | 46,158 |  |              | (3,305 | ) |  |   | 161,039 |  
|                                                                     |  |                |         |   |                                   |   |         |                                       |  |              |        |  |              |        |   |  |   |         |  
|Costs of operations                                                  |  |                |         |   |                                   |   |         |                                       |  |              |        |  |              |        |   |  |   |         |  
|Cost of goods sold (exclusive of depreciation)                       |  |                |        |   |                                   |   | 74,182  |                                       |  |              | 31,758 |  |              | (3,305 | ) |  |   | 102,635 |  
|Selling, general and administrative expenses                         |  |                | 830     |   |                                   |   | 16,622  |                                       |  |              | 7,842  |  |              |       |   |  |   | 25,294  |  
|Depreciation and amortization                                        |  |                |        |   |                                   |   | 8,776   |                                       |  |              | 2,871  |  |              |       |   |  |   | 11,647  |  
|                                                                     |  |                |         |   |                                   |   |         |                                       |  |              |        |  |              |        |   |  |   |         |  
|Income (loss) from operations                                        |  |                | (830    | ) |                                   |   | 18,606  |                                       |  |              | 3,687  |  |              |       |   |  |   | 21,463  |  
|                                                                     |  |                |         |   |                                   |   |         |                                       |  |              |        |  |              |        |   |  |   |         |  
|Interest expense                                                     |  |                | 2,504   |   |                                   |   | 12,523  |                                       |  |              | 417    |  |              |       |   |  |   | 15,444  |  
|Gain on debt extinguishment                                          |  |                | (10,500 | ) |                                   |   |        |                                       |  |              |       |  |              |       |   |  |   | (10,500 | )
|Other (income) expense, net                                          |  |                | (722    | ) |                                   |   | (317    | )                                     |  |              | 1,482  |  |              |       |   |  |   | 443     |  
|                                                                     |  |                |         |   |                                   |   |         |                                       |  |              |        |  |              |        |   |  |   |         |  
|Income from operations before equity in net income from subsidiaries |  |                | 7,888   |   |                                   |   | 6,400   |                                       |  |              | 1,788  |  |              |       |   |  |   | 16,076  |  
|                                                                     |  |                |         |   |                                   |   |         |                                       |  |              |        |  |              |        |   |  |   |         |  
|Equity in net income of subsidiaries                                 |  |                | 4,510   |   |                                   |   |        |                                       |  |              |       |  |              | (4,510 | ) |  |   |        |  
|                                                                     |  |                |         |   |                                   |   |         |                                       |  |              |        |  |              |        |   |  |   |         |  
|Income from operations before income taxes                           |  |                | 12,398  |   |                                   |   | 6,400   |                                       |  |              | 1,788  |  |              | (4,510 | ) |  |   | 16,076  |  
|Provision for taxes on income                                        |  |                | 2,685   |   |                                   |   | 2,643   |                                       |  |              | 1,035  |  |              |       |   |  |   | 6,363   |  
|                                                                     |  |                |         |   |                                   |   |         |                                       |  |              |        |  |              |        |   |  |   |         |  
|Net income                                                           |  | $              | 9,713   |   |                                   | $ | 3,757   |                                       |  | $            | 753    |  | $            | (4,510 | ) |  | $ | 9,713   |  
|                                                                     |  |                |         |   |                                   |   |         |                                       |  |              |        |  |              |        |   |  |   |         |  



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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 Six Months Ended June 30, 2008



|                                                                            |  |                |        |   |                                   |   |         |                                       |  |   |              |   |  |              |        |   |  |   |         |  
|--------------------------------------------------------------------------- |  | -------------- | ------ | - | --------------------------------- | - | ------- | ------------------------------------- |  | - | ------------ | - |  | ------------ | ------ | - |  | - | ------- | -
|                                                                            |  | Parent /Issuer |        |   | ConsolidatedGuarantorSubsidiaries |   |         | ConsolidatedNon-GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |       
|Revenues                                                                    |  |                |        |   |                                   |   |         |                                       |  |   |              |   |  |              |        |   |  |   |         |  
|Sales                                                                       |  | $              |       |   |                                   | $ | 111,045 |                                       |  | $ | 56,698       |   |  | $            |       |   |  | $ | 167,743 |  
|Sales to related parties                                                    |  |                |       |   |                                   |   | 1,898   |                                       |  |   | 3,911        |   |  |              | (5,809 | ) |  |   |        |  
|                                                                            |  |                |        |   |                                   |   |         |                                       |  |   |              |   |  |              |        |   |  |   |         |  
|Revenues                                                                    |  |                |       |   |                                   |   | 112,943 |                                       |  |   | 60,609       |   |  |              | (5,809 | ) |  |   | 167,743 |  
|                                                                            |  |                |        |   |                                   |   |         |                                       |  |   |              |   |  |              |        |   |  |   |         |  
|Costs of operations                                                         |  |                |        |   |                                   |   |         |                                       |  |   |              |   |  |              |        |   |  |   |         |  
|Cost of goods sold (exclusive of depreciation)                              |  |                |       |   |                                   |   | 71,824  |                                       |  |   | 44,173       |   |  |              | (5,809 | ) |  |   | 110,188 |  
|Selling, general and administrative expenses                                |  |                | 785    |   |                                   |   | 16,261  |                                       |  |   | 7,771        |   |  |              |       |   |  |   | 24,817  |  
|Depreciation and amortization                                               |  |                |       |   |                                   |   | 10,223  |                                       |  |   | 3,477        |   |  |              |       |   |  |   | 13,700  |  
|                                                                            |  |                |        |   |                                   |   |         |                                       |  |   |              |   |  |              |        |   |  |   |         |  
|Income (loss) from operations                                               |  |                | (785   | ) |                                   |   | 14,635  |                                       |  |   | 5,188        |   |  |              |       |   |  |   | 19,038  |  
|                                                                            |  |                |        |   |                                   |   |         |                                       |  |   |              |   |  |              |        |   |  |   |         |  
|Interest expense                                                            |  |                | 2,172  |   |                                   |   | 15,195  |                                       |  |   | 1,334        |   |  |              |       |   |  |   | 18,701  |  
|Gain on debt extinguishment                                                 |  |                |       |   |                                   |   |        |                                       |  |   |             |   |  |              |       |   |  |   |        |  
|Other (income) expense, net                                                 |  |                | (3,137 | ) |                                   |   | 95      |                                       |  |   | 2,689        |   |  |              |       |   |  |   | (353    | )
|                                                                            |  |                |        |   |                                   |   |         |                                       |  |   |              |   |  |              |        |   |  |   |         |  
|Income (loss) from operations before equity in net income from subsidiaries |  |                | 180    |   |                                   |   | (655    | )                                     |  |   | 1,165        |   |  |              |       |   |  |   | 690     |  
|                                                                            |  |                |        |   |                                   |   |         |                                       |  |   |              |   |  |              |        |   |  |   |         |  
|Equity in net income (loss) of subsidiaries                                 |  |                | (571   | ) |                                   |   |        |                                       |  |   |             |   |  |              | 571    |   |  |   |        |  
|                                                                            |  |                |        |   |                                   |   |         |                                       |  |   |              |   |  |              |        |   |  |   |         |  
|Income (loss) from operations before income taxes                           |  |                | (391   | ) |                                   |   | (655    | )                                     |  |   | 1,165        |   |  |              | 571    |   |  |   | 690     |  
|Provision (benefit) for taxes on income (loss)                              |  |                | (704   | ) |                                   |   | (144    | )                                     |  |   | 1,225        |   |  |              |       |   |  |   | 377     |  
|                                                                            |  |                |        |   |                                   |   |         |                                       |  |   |              |   |  |              |        |   |  |   |         |  
|Net income (loss)                                                           |  | $              | 313    |   |                                   | $ | (511    | )                                     |  | $ | (60          | ) |  | $            | 571    |   |  | $ | 313     |  
|                                                                            |  |                |        |   |                                   |   |         |                                       |  |   |              |   |  |              |        |   |  |   |         |  



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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, 2009



|                                                 |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  
|------------------------------------------------ |  | -------------- | ------- | - | --------------------------------- | - | ------ | ------------------------------------- |  | - | ------------ | - | ------------ | - | - |  | - | ------- | -
|                                                 |  | Parent /Issuer |         |   | ConsolidatedGuarantorSubsidiaries |   |        | ConsolidatedNon-GuarantorSubsidiaries |  |   | Eliminations |   | Consolidated |  
|Cash provided by (used in) operations            |  | $              | 8,218   |   |                                   | $ | 5,801  |                                       |  | $ | (818         | ) |              | $ |  |  | $ | 13,201  |  
|                                                 |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  
|                                                 |  |                |         |   |                                  
|Investing activities:                            |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  
|Acquisition of properties, plants and equipment  |  |                |        |   |                                   |   | (3,378 | )                                     |  |   | (887         | ) |              |   |  |  |   | (4,265  | )
|Proceeds from sales of assets                    |  |                |        |   |                                   |   | 4      |                                       |  |   | 3            |   |              |   |  |  |   | 7       |  
|Business acquisitions, net of cash acquired      |  |                |        |   |                                   |   | (3,047 | )                                     |  |   | (572         | ) |              |   |  |  |   | (3,619  | )
|                                                 |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  
|Cash used in investing activities                |  |                |        |   |                                   |   | (6,421 | )                                     |  |   | (1,456       | ) |              |   |  |  |   | (7,877  | )
|                                                 |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  
|                                                 |  |                |         |   |                                  
|Financing activities:                            |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  
|Payments on acquisition facility                 |  |                | (197    | ) |                                   |   |       |                                       |  |   |             |   |              |   |  |  |   | (197    | )
|Borrowings on revolving credit facility          |  |                | 21,609  |   |                                   |   |       |                                       |  |   |             |   |              |   |  |  |   | 21,609  |  
|Payments on revolving credit facility            |  |                | (14,903 | ) |                                   |   |       |                                       |  |   |             |   |              |   |  |  |   | (14,903 | )
|Payments to extinguish senior subordinated notes |  |                | (15,000 | ) |                                   |   |       |                                       |  |   |             |   |              |   |  |  |   | (15,000 | )
|Payments on long-term debt                       |  |                |        |   |                                   |   | (353   | )                                     |  |   | (18          | ) |              |   |  |  |   | (371    | )
|                                                 |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  
|Cash used in financing activities                |  |                | (8,491  | ) |                                   |   | (353   | )                                     |  |   | (18          | ) |              |   |  |  |   | (8,862  | )
|                                                 |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  
|                                                 |  |                |         |   |                                  
|Effect of exchange rate changes on cash          |  |                |        |   |                                   |   |       |                                       |  |   | 600          |   |              |   |  |  |   | 600     |  
|                                                 |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  
|Net change in cash and cash equivalents          |  |                | (273    | ) |                                   |   | (973   | )                                     |  |   | (1,692       | ) |              |   |  |  |   | (2,938  | )
|                                                 |  |                |         |   |                                  
|Cash and cash equivalents, beginning of period   |  |                | 410     |   |                                   |   | 3,382  |                                       |  |   | 6,974        |   |              |   |  |  |   | 10,766  |  
|                                                 |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  
|Cash and cash equivalents, end of period         |  | $              | 137     |   |                                   | $ | 2,409  |                                       |  | $ | 5,282        |   |              | $ |  |  | $ | 7,828   |  
|                                                 |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  



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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 Cash Flows

For the Six Months Ended June 30, 2008



|                                                |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  
|----------------------------------------------- |  | -------------- | ------- | - | --------------------------------- | - | ------ | ------------------------------------- |  | - | ------------ | - | ------------ | - | - |  | - | ------- | -
|                                                |  | Parent /Issuer |         |   | ConsolidatedGuarantorSubsidiaries |   |        | ConsolidatedNon-GuarantorSubsidiaries |  |   | Eliminations |   | Consolidated |  
|Cash provided by operations                     |  | $              | 101     |   |                                   | $ | 4,754  |                                       |  | $ | 5,439        |   |              | $ |  |  | $ | 10,294  |  
|                                                |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  
|                                                |  |                |         |   |                                  
|Investing activities:                           |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  
|Acquisition of properties, plants and equipment |  |                |        |   |                                   |   | (3,420 | )                                     |  |   | (2,282       | ) |              |   |  |  |   | (5,702  | )
|Proceeds from sales of assets                   |  |                |        |   |                                   |   | 487    |                                       |  |   |             |   |              |   |  |  |   | 487     |  
|Business acquisition, net of cash acquired      |  |                |        |   |                                   |   |       |                                       |  |   | (23,834      | ) |              |   |  |  |   | (23,834 | )
|                                                |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  
|Cash used in investing activities               |  |                |        |   |                                   |   | (2,933 | )                                     |  |   | (26,116      | ) |              |   |  |  |   | (29,049 | )
|                                                |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  
|                                                |  |                |         |   |                                  
|Financing activities:                           |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  
|Payments for deferred financing fees            |  |                | (117    | ) |                                   |   |       |                                       |  |   |             |   |              |   |  |  |   | (117    | )
|Payments on long-term debt                      |  |                | (700    | ) |                                   |   | (309   | )                                     |  |   | (183         | ) |              |   |  |  |   | (1,192  | )
|Intercompany financing, net                     |  |                | (15,725 | ) |                                   |   |       |                                       |  |   | 15,725       |   |              |   |  |  |   |        |  
|                                                |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  
|Cash used in financing activities               |  |                | (16,542 | ) |                                   |   | (309   | )                                     |  |   | 15,542       |   |              |   |  |  |   | (1,309  | )
|                                                |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  
|                                                |  |                |         |   |                                  
|Effect of exchange rate changes on cash         |  |                |        |   |                                   |   |       |                                       |  |   | (113         | ) |              |   |  |  |   | (113    | )
|                                                |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  
|Net change in cash and cash equivalents         |  |                | (16,441 | ) |                                   |   | 1,512  |                                       |  |   | (5,248       | ) |              |   |  |  |   | (20,177 | )
|                                                |  |                |         |   |                                  
|Cash and cash equivalents, beginning of period  |  |                | 17,515  |   |                                   |   | 3,068  |                                       |  |   | 13,884       |   |              |   |  |  |   | 34,467  |  
|                                                |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  
|Cash and cash equivalents, end of period        |  | $              | 1,074   |   |                                   | $ | 4,580  |                                       |  | $ | 8,636        |   |              | $ |  |  | $ | 14,290  |  
|                                                |  |                |         |   |                                   |   |        |                                       |  |   |              |   |              |   |   |  |   |         |  



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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 I 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. You should read the following discussion together with the financial statements and the related notes included elsewhere in this report.

Overview

We are a global leader in the digital imaging industry, offering design-to-print graphic services to the
international consumer products packaging market in North America, Europe and Asia. Our global service platform and financial capability provide a distinct competitive advantage over the majority of companies in our industry. 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.

During 2009, we have continued our strategy of reducing our debt levels to strengthen our balance sheet and reduce interest expense. In February 2009, we acquired an aggregate principal amount of $25.5 million of our
12% senior subordinated notes for a cash purchase price of $15.0 million. This was in addition to the optional principal repayment we made on our senior term loan of $8.2 million in September 2008. During the quarter ended June 30, 2009, we
further reduced our debt levels on our revolving credit facility by $2.2 million. During the remainder of 2009, we plan to accelerate the rate of repayment on our debt obligations from the level of repayment experienced during the quarter ended
June 30, 2009. Our debt reduction strategy combined with lower interest rates will continue to generate savings in interest expense and increased cash flow from operations.

During 2009, we have paid $3.4 million and $0.2 million in deferred purchase price payments for acquisitions closed in 2008 and 2006, respectively. During 2009, we also paid an additional $2.0 million in deferred
consideration payments for an acquisition completed in 2007. As of June 30, 2008, we have approximately $1.8 million remaining to be paid for previously completed acquisitions. The declining level of remaining deferred purchase price payment
obligations related to previous acquisitions enables us to further utilize our future cash flows to fund our debt reduction initiative.

Net sales for the
six months ended June 30, 2009 were $161.0 million, a $6.7 million decline from sales of $167.7 million for the six months ended June 30, 2008. This reduction was due to the strengthening of the United States dollar, which negatively
impacted sales by $5.1 million, $6.0 million, and $0.4 million for our operations in Canada, the United Kingdom, and other foreign jurisdictions, respectively. Excluding the negative impact from foreign currency fluctuations, sales increased by $4.8
million primarily due to the impact of additional sales from acquisitions.

We acquired Backwell Design Inc. and Gemini Graphic Imaging Inc. (together with
Backwell Design Inc. Backwell) in May 2008. We also acquired a provider of packaging and retail graphics located in Marietta, Georgia on December 31, 2008 (the Marietta acquisition or Marietta). These
acquisitions generated incremental sales of $4.8 million for the six months ended June 30, 2009 compared to the six months ended June 30, 2008. During 2009, we will continue to focus on integrating our recent acquisitions.

After excluding the impact from foreign currency fluctuations and acquisitions, sales were flat for the six months ended June 30, 2009 compared to the six months
ended June 30, 2008 due to a combination of factors, including a reduction of $3.5 million in sales to our tobacco industry customers, which was offset by organic growth with customers in other industries in the United States. We believe this
$3.5 million decrease in sales to our tobacco industry customers is due to the consolidation of brands within tobacco companies and anticipated changes in labeling requirements from the United States and Canadian Governments that have not yet been
fully specified by the governing authorities. We expect sales to our tobacco industry customers to continue to be soft until the anticipated changes in labeling requirements are finalized, at which point we anticipate a one-time increase in sales.
Sales to our customers in the tobacco industry represented less



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than 5% of our sales for the 2008 fiscal year. The offsetting $3.5 million increase in sales for the six month period is primarily due to organic growth with
customers in other industries in the United States. This organic growth in the United States has primarily resulted from the success of sales for store brands. We believe the growth in our store brands sales is due to a shift by
consumers in response to the challenging economic environment, as well as our investment to expand our store brand business in recent years.

We have
previously reported that price erosion in the industry, which we estimate at approximately 2% to 3% annually, is negatively impacting our sales. To date we have attempted to mitigate the negative impact of price concessions on our sales by putting
in place effective cost control measures, among other things. As part of our strategy to combat continuing downward pressure on our pricing, we are seeking business at pricing that we believe is commensurate with the value we deliver, that will
enable us to maintain margins at the levels we have historically achieved, and that will allow us to realize profitable organic growth. Consistent with that strategy, we have raised prices on our non-contractual work.

Cost of goods sold (exclusive of depreciation) expressed as a percentage of sales for our entire business was 63.7% for the six months ended June 30, 2009, compared
to 65.7% for the six months ended June 30, 2008. This reduction in cost of goods sold as a percentage of sales is due to a combination of factors, including the consolidation of certain operations during 2008 in North America and Europe. We
plan to continue the process of consolidating certain operations in 2009.

RESULTS OF OPERATIONS

The information presented below for the quarters ended and six months ended June 30, 2009 and 2008 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 in the table below are in thousands and percentages are expressed
as a percentage of sales.)

Quarter ended June 30, 2009 compared to quarter ended June 30, 2008



|                                                      |  |                            |        |                            |   |        |         |  |   |                  |   |  |       |   
|----------------------------------------------------- |  | -------------------------- | ------ | -------------------------- | - | ------ | ------- |  | - | ---------------- | - |  | ----- | --
|                                                      |  | Quarter EndedJune 30, 2009 |        | Quarter EndedJune 30, 2008 |   |        | $Change |  |   | PercentageChange |  
|                                                      |  | (unaudited)                |        | (unaudited)                |   |        |         |  |   |                  |  
|Net sales                                             |  | $                          | 80,342 |                            | $ | 84,492 |         |  | $ | (4,150           | ) |  | (4.9  | )%
|                                                      |  |                            |        |                           
|Cost of goods sold (exclusive of depreciation)        |  |                            | 51,258 |                            |   | 55,876 |         |  |   | (4,618           | ) |  | (8.3  | )%
|Selling, general, and administrative expenses         |  |                            | 12,638 |                            |   | 12,232 |         |  |   | 406              |   |  | 3.3   | % 
|Depreciation and amortization                         |  |                            | 5,918  |                            |   | 7,207  |         |  |   | (1,289           | ) |  | (17.9 | )%
|                                                      |  |                            |        |                            |   |        |         |  |   |                  |   |  |       |   
|                                                      |  |                            |        |                           
|Income from operations                                |  |                            | 10,528 |                            |   | 9,177  |         |  |   | 1,351            |   |  | 14.7  | % 
|                                                      |  |                            |        |                           
|Interest expense                                      |  |                            | 7,364  |                            |   | 9,199  |         |  |   | (1,835           | ) |  | (19.9 | )%
|Other expense (income), net                           |  |                            | 991    |                            |   | (714   | )       |  |   | 1,705            |   |  | nm    |   
|                                                      |  |                            |        |                            |   |        |         |  |   |                  |   |  |       |   
|                                                      |  |                            |        |                           
|Income from continuing operations before income taxes |  |                            | 2,173  |                            |   | 692    |         |  |   | 1,481            |   |  | nm    |   
|Provision for income taxes                            |  |                            | 852    |                            |   | 377    |         |  |   | 475              |   |  | nm    |   
|                                                      |  |                            |        |                            |   |        |         |  |   |                  |   |  |       |   
|                                                      |  |                            |        |                           
|Net income                                            |  | $                          | 1,321  |                            | $ | 315    |         |  |   | 1,006            |   |  | nm    |   
|                                                      |  |                            |        |                            |   |        |         |  |   |                  |   |  |       |   



nm  Percentage change is not meaningful

Net Sales. Sales for the quarter ended June 30, 2009 decreased 4.9%, or $4.2 million,
to $80.3 million from $84.5 million for the quarter ended June 30, 2008. This decrease in sales, which was partially mitigated by sales generated from acquisitions, was principally due to changes in foreign currency exchange rates. The
strengthening of the United States dollar, as compared to the Canadian dollar and British pound, negatively impacted sales by $2.1 million and $2.8 million, respectively. The strengthening of the United States dollar compared to the euro and Mexican
peso negatively impacted sales by $0.2 million on a combined basis. These decreases were partially offset by sales generated from the acquisitions of Backwell in Canada on May 2, 2008 and Marietta in the United States on December 31, 2008.
These acquisitions contributed sales of $0.1 million and $2.3 million, respectively, for the quarter ended June 30, 2009.



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After excluding the impact of sales generated from acquisitions, sales in the United States decreased by $1.1 million for
the quarter ended June 30, 2009 compared to the quarter ended June 30, 2008. This decrease was primarily due to a $1.0 million decrease in sales to our customers in the tobacco industry. We believe this reduction in sales to our tobacco
industry customers is due to the consolidation of brands within tobacco companies and anticipated changes in labeling requirements that have not yet occurred. We expect sales to our tobacco industry customers to continue to be soft until the
anticipated changes in labeling requirements are finalized, at which point we anticipate a one-time increase in sales. After excluding the impact of foreign currency fluctuations and sales generated from acquisitions, sales in Canada increased
approximately $0.9 million for the quarter ended June 30, 2009 compared to the quarter ended June 30, 2008. We believe this increase was primarily due to organic growth. This increase in sales in Canada occurred despite a $0.4 million
decrease in sales to our tobacco industry customers, for reasons similar to the decrease in the United States as previously discussed. After excluding the impact of foreign currency fluctuations, sales in the United Kingdom decreased by $0.9 million
for the quarter ended June 30, 2009 compared to the quarter ended June 30, 2008. This decrease was primarily due to the overall economic downturn in the United Kingdom.

Cost of Goods Sold. Cost of goods sold for the quarter ended June 30, 2009 decreased 8.3%, or $4.6 million, to $51.3 million from $55.9 million for the quarter ended June 30, 2008. The decrease in
cost of goods sold was due to the strengthening of the United States dollar as compared to the Canadian dollar and British pound, which reduced cost of goods sold by $1.4 million and $2.2 million, respectively. The strengthening of the United States
dollar compared to the euro and Mexican peso reduced cost of sales by $0.2 million on a combined basis. This decrease in cost of goods sold was partially offset by the additional costs of goods sold from acquired businesses. The acquisition of
Backwell and Marietta added incremental costs of goods sold of $1.4 million in the quarter ended June 30, 2009 compared to the quarter ended June 30, 2008.

Cost of goods sold expressed as a percentage of sales decreased to 63.8% for the quarter ended June 30, 2009 from 66.1% for the quarter ended June 30, 2008. The decrease in cost of goods sold as a percentage
of sales is due to a combination of factors, including the consolidation of certain operations during 2008 in North America and Europe, as well as sales in the United States operations representing a higher percentage of total company sales for the
quarter ended June 30, 2009 than for the quarter ended June 30, 2008. The United States operations have a lower cost of goods sold percentage than our operations in Canada and the United Kingdom.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the quarter ended June 30, 2009 increased 3.3%, or $0.4
million, to $12.6 million from $12.2 million for the quarter ended June 30, 2008. This increase was primarily due to the combination of expenses associated with acquisitions, increased severance costs and expenses associated with driving
organic growth in the United States, partially offset by the previously discussed strengthening of the United States dollar as compared to the Canadian dollar and British pound. The acquisitions of Backwell and Marietta added incremental selling,
general and administrative expenses of $0.4 million for the quarter ended June 30, 2009 compared to the quarter ended June 30, 2008. Severance costs were $0.3 million higher for the quarter ended June 30, 2009 than the quarter ended
June 30, 2008 due to headcount reductions in the United Kingdom. The impact of foreign currency fluctuations resulted in a decrease of selling, general and administrative expenses of $0.6 million in the quarter ended June 30, 2009 compared
to the quarter ended June 30, 2008. The remaining increase in selling, general and administrative expenses is primarily due to the incremental expenses required to drive the organic sales growth (excluding tobacco related business) in the
United States.

Depreciation and Amortization Expenses. Depreciation and amortization expenses for the quarter ended June 30, 2009 decreased
17.9%, or $1.3 million, to $5.9 million from $7.2 million for the quarter ended June 30, 2008. Depreciation and amortization expenses decreased $1.0 million for the quarter ended June 30, 2009 compared to the quarter ended June 30,
2008 due to certain production software becoming fully amortized during 2008. In addition, the previously discussed strengthening of the United States dollar resulted in a decrease of $0.3 million of depreciation and amortization expenses for the
quarter ended June 30, 2009 compared to the quarter ended June 30, 2008. These decreases in depreciation and amortization expenses were partially offset by $0.1 million in incremental depreciation and amortization expenses associated with
the previously discussed acquisitions.

Interest Expense. Interest expense for the quarter ended June 30, 2009 decreased 19.9%, or $1.8
million, to $7.4 million from $9.2 million for the quarter ended June 30, 2008. This decrease was primarily due to lower interest rates on the



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senior term and acquisition loan facilities during the quarter ended June 30, 2009 than for the quarter ended June 30, 2008, as well as the
Companys debt reduction strategy. The weighted average interest rates on the senior term and acquisition loan facilities were 4.1% and 6.7% for the quarters ended June 30, 2009 and June 30, 2008, respectively. The reduction in these
interest rates resulted in a reduction of interest expense of $0.9 million for the quarter ended June 30, 2009 compared to the quarter ended June 30, 2008. In addition, the acquisition in February 2009 of $25.5 million of 12% senior
subordinated notes and the optional principal repayment of $8.2 million on the senior term loan facility in September 2008 resulted in a combined reduction in interest expense of $0.7 million for the quarter ended June 30, 2009 compared to the
quarter ended June 30, 2008. The residual decrease in interest expense was primarily due to the previously discussed strengthening of the United States dollar as compared to the Canadian dollar and British pound.

Other Expense (Income), net.Other expense (income), net fluctuated by $1.7 million to $1.0 million of expense for the quarter ended June 30, 2009 from $0.7
million of income for the quarter ended June 30, 2008. Other expense (income), net, primarily consists of realized (gains) losses on foreign exchange, net of interest income. The fluctuation in other expense (income), net from the quarter ended
June 30, 2008 to the quarter ended June 30, 2009 was primarily due to less favorable fluctuations in the exchange rates related to the United States dollar, Canadian dollar and British pound during the quarter ended June 30, 2009 than
compared to the quarter ended June 30, 2008.

Provision for Income Taxes. The effective tax rate for the quarter ended June 30, 2009 was
39.2%, compared to 54.5% for the quarter ended June 30, 2008. The decrease in the effective tax rate is primarily due to expenses not fully deductible for income tax purposes having a larger impact on the effective tax rate for the quarter
ended June 30, 2008 than for the quarter ended June 30, 2009. This larger impact in the quarter ended June 30, 2008 than the quarter ended June 30, 2009 is due to the income before income taxes for the quarter ended June 30,
2008 being closer to zero than the income before income taxes for the quarter ended June 30, 2009.

Six months ended June 30, 2009 compared to
six months ended June 30, 2008



|                                                      |  |                               |         |   |                               |   |         |         |  |   |                  |   |  |       |   
|----------------------------------------------------- |  | ----------------------------- | ------- | - | ----------------------------- | - | ------- | ------- |  | - | ---------------- | - |  | ----- | --
|                                                      |  | Six Months EndedJune 30, 2009 |         |   | Six Months EndedJune 30, 2008 |   |         | $Change |  |   | PercentageChange |  
|                                                      |  | (unaudited)                   |         |   | (unaudited)                   |   |         |         |  |   |                  |  
|Net sales                                             |  | $                             | 161,039 |   |                               | $ | 167,743 |         |  | $ | (6,704           | ) |  | (4.0  | )%
|                                                      |  |                               |         |  
|Cost of goods sold (exclusive of depreciation)        |  |                               | 102,635 |   |                               |   | 110,188 |         |  |   | (7,553           | ) |  | (6.9  | )%
|Selling, general, and administrative expenses         |  |                               | 25,294  |   |                               |   | 24,817  |         |  |   | 477              |   |  | 1.9   | % 
|Depreciation and amortization                         |  |                               | 11,647  |   |                               |   | 13,700  |         |  |   | (2,053           | ) |  | (15.0 | )%
|                                                      |  |                               |         |   |                               |   |         |         |  |   |                  |   |  |       |   
|                                                      |  |                               |         |  
|Income from operations                                |  |                               | 21,463  |   |                               |   | 19,038  |         |  |   | 2,425            |   |  | 12.7  | % 
|                                                      |  |                               |         |  
|Interest expense                                      |  |                               | 15,444  |   |                               |   | 18,701  |         |  |   | (3,257           | ) |  | (17.4 | )%
|Gain on debt extinguishment, net                      |  |                               | (10,500 | ) |                               |   |        |         |  |   | (10,500          | ) |  | nm    |   
|Other expense (income), net                           |  |                               | 443     |   |                               |   | (353    | )       |  |   | 796              |   |  | nm    |   
|                                                      |  |                               |         |   |                               |   |         |         |  |   |                  |   |  |       |   
|                                                      |  |                               |         |  
|Income from continuing operations before income taxes |  |                               | 16,076  |   |                               |   | 690     |         |  |   | 15,386           |   |  | nm    |   
|Provision for income taxes                            |  |                               | 6,363   |   |                               |   | 377     |         |  |   | 5,986            |   |  | nm    |   
|                                                      |  |                               |         |   |                               |   |         |         |  |   |                  |   |  |       |   
|                                                      |  |                               |         |  
|Net income                                            |  | $                             | 9,713   |   |                               | $ | 313     |         |  |   | 9,400            |   |  | nm    |   
|                                                      |  |                               |         |   |                               |   |         |         |  |   |                  |   |  |       |   



nm  Percentage change is not meaningful

Net Sales. Sales for the six months ended June 30, 2009 decreased 4.0%, or $6.7
million, to $161.0 million from $167.7 million for the six months ended June 30, 2008. This decrease in sales, which was partially mitigated by organic growth and sales generated from acquisitions, was principally due to changes in foreign
currency exchange rates. The strengthening of the United States dollar, as compared to the Canadian dollar and British pound, negatively impacted sales by $5.1 million and $6.0 million, respectively. The strengthening of the United States dollar
compared to the euro and Mexican peso negatively impacted sales by $0.4 million on a combined basis. These decreases were partially offset by sales generated from the acquisitions of Backwell in Canada on May 2, 2008 and Marietta in the United
States on December 31, 2008. These acquisitions contributed sales of $0.5 million and $4.3 million, respectively, for the six months ended June 30, 2009.



27



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After excluding the impact of sales generated from acquisitions, sales in the United States increased by $1.8 million for
the six months ended June 30, 2009 compared to the six months ended June 30, 2008 primarily due to organic growth driven by the success of sales for store brands. We believe the growth in our store brands sales is a result of a
shift by consumers in response to the challenging economic environment, as well our investment to expand our store brand business in recent years. The increase in sales in the United States was despite a $2.8 million decrease in sales to our
customers in the tobacco industry customers for the six months ended June 30, 2009 compared to the six months ended June 30, 2008 due to the reasons previously discussed. After excluding the impact of foreign currency fluctuations and
sales generated from acquisitions, sales in Canada increased approximately $0.2 million for the six months ended June 30, 2009 compared to the six months ended June 30, 2008 due to organic growth. This increase in sales in Canada occurred
despite a $0.7 million decrease in sales to our tobacco industry customers, as previously discussed. After excluding the impact of foreign currency fluctuations, sales in the United Kingdom decreased by $1.3 million for the six months ended
June 30, 2009 compared to the six months ended June 30, 2008. This decrease was primarily due to the overall economic downturn in the United Kingdom.

Cost of Goods Sold. Cost of goods sold for the six months ended June 30, 2009 decreased 6.9%, or $7.6 million, to $102.6 million from $110.2 million for the six months ended June 30, 2008. The decrease in cost of goods sold
was due to the strengthening of the United States dollar as compared to the Canadian dollar and British pound, which reduced cost of goods sold by $3.5 million and $4.5 million, respectively. The strengthening of the United States dollar compared to
the euro and Mexican peso reduced cost of sales by $0.3 million on a combined basis. This decrease in cost of goods sold was partially offset by the additional costs of goods sold from acquired businesses. The acquisition of Backwell and Marietta
added incremental costs of goods sold of $2.8 million in the six months ended June 30, 2009 compared to the six months ended June 30, 2008.

Cost
of goods sold expressed as a percentage of sales decreased to 63.7% for the six months ended June 30, 2009 from 65.7% for the six months ended June 30, 2008. The decrease in cost of goods sold as a percentage of sales is due to a
combination of factors, including the consolidation of certain operations during 2008 in North America and Europe, as well as sales in the United States operations representing a higher percentage of total company sales for the six months ended
June 30, 2009 than for the six months ended June 30, 2008. The United States operations have a lower cost of goods sold percentage than our operations in Canada and the United Kingdom.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the six months ended June 30, 2009 increased 1.9%, or $0.5
million, to $25.3 million from $24.8 million for the six months ended June 30, 2008. This increase was primarily due to the combination of expenses associated with acquisitions, increased severance costs and expenses associated with driving
organic growth in the United States, partially offset by the previously discussed strengthening of the United States dollar as compared to the Canadian dollar and British pound. The acquisitions of Backwell and Marietta added incremental selling,
general and administrative expenses of $0.8 million for the six months ended June 30, 2009 compared to the six months ended June 30, 2008. Severance costs were $0.4 million higher for the six months ended June 30, 2009 than the six
months ended June 30, 2008 due to headcount reductions in the United Kingdom. The impact of foreign currency fluctuations resulted in a decrease of selling, general and administrative expenses of $1.4 million for the six months ended
June 30, 2009 compared to the six months ended June 30, 2008. The remaining increase in selling, general and administrative expenses is primarily due to the incremental expenses driving the organic sales growth (excluding tobacco related
business) in the United States.

Depreciation and Amortization Expenses. Depreciation and amortization expenses for the six months ended
June 30, 2009 decreased 15.0%, or $2.1 million, to $11.6 million from $13.7 million for the six months ended June 30, 2008. Depreciation and amortization expenses decreased $1.5 million for the six months ended June 30, 2009 compared
to the six months ended June 30, 2008 due to certain production software becoming fully amortized during 2008. In addition, the previously discussed strengthening of the United States dollar as compared to the Canadian dollar and British pound
resulted in a decrease of $0.7 million of depreciation and amortization expenses for the six months ended June 30, 2009 compared to the six months ended June 30, 2008. These decreases in depreciation and amortization expenses were
partially offset by $0.3 million in incremental depreciation and amortization expenses associated with the previously discussed acquisitions.

Interest
Expense. Interest expense for the six months ended June 30, 2009 decreased 17.4%, or $3.3 million, to $15.4 million from $18.7 million for the six months ended June 30, 2008. This decrease was primarily due to lower interest rates on
the senior term and acquisition loan facilities during the six months ended June 30, 2009 than for the six months ended June 30, 2008, as well as the Companys debt reduction strategy. The weighted average interest rates on the senior
term and acquisition loan facilities were 4.3% and 7.0% for the six months ended June 30, 2009 and June 30, 2008,



28



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##### Table of Contents

respectively. The reduction in these interest rates resulted in a reduction of interest expense of $2.0 million for the six months ended June 30, 2009
compared to the six months ended June 30, 2008. In addition, the acquisition in February 2009 of $25.5 million of 12% senior subordinated notes (Notes) and the optional principal repayment of $8.2 million on the senior term loan
facility in September 2008 resulted in a combined reduction in interest expense of $1.2 million for the six months ended June 30, 2009 compared to the six months ended June 30, 2008. These decreases in interest expense were partially
offset by an increase of $0.5 million in the six months ended June 30, 2009 of deferred financing costs that were written off due to the extinguishment of $25.5 million in principal of the Notes. The residual decrease in interest expense was
primarily due to the previously discussed strengthening of the United States dollar as compared to the Canadian dollar and British pound.

Gain on Debt
Extinguishment.The $10.5 million gain on debt extinguishment is due to the acquisition of $25.5 million of Notes for a cash purchase price of $15.0 million.

Other Expense (Income), net.Other expense (income), net fluctuated by $0.8 million to $0.4 million of expense for the six months ended June 30, 2009 from $0.4 million of income for the six months ended June 30, 2008. Other
expense (income), net, primarily consists of realized (gains) losses on foreign exchange, net of interest income. The fluctuation in other expense (income), net from the six months ended June 30, 2008 to the six months ended June 30, 2009
was primarily due to less favorable fluctuations in the exchange rates related to the United States dollar, Canadian dollar and British pound during the six months ended June 30, 2009 than compared to the six months ended June 30, 2008.

Provision for Income Taxes. The effective tax rate for the six months ended June 30, 2009 was 39.6%, compared to 54.6% for the six months
ended June 30, 2008. The decrease in the effective tax rate is primarily due to expenses not fully deductible for income tax purposes having a larger impact on the effective tax rate for the six months ended June 30, 2008 than for the six
months ended June 30, 2009. This larger impact in the six months ended June 30, 2008 than the six months ended June 30, 2009 is due to the income before income taxes for the six months ended June 30, 2008 being closer to zero
than the income before income taxes for the six months ended June 30, 2009.

Liquidity and Capital Resources

At June 30, 2009, we had $7.8 million in cash and cash equivalents and $45.8 million in adjusted working capital1compared with $10.8 million in cash and cash equivalents and $37.1 million in adjusted working
capital at December 31, 2008. The $3.0 million decrease in cash is primarily due to managements decision to reduce debt levels and maintain a lower level of cash for operations. Specifically, the decrease in cash is due to the payment of
$15.0 million to acquire an aggregate amount of $25.5 million of our Notes, the payment of $3.6 million in cash related to acquisitions and $4.3 million in capital expenditures made during the six months ended June 30, 2009. These payments are
partially offset by $6.7 million in net borrowings on our revolving credit facility and $13.2 million of cash generated from operations during the six months ended June 30, 2009. The $8.7 million increase in adjusted working capital is
primarily due to an $8.0 million increase in accounts receivable, a $1.3 million decrease in accounts payable, and a $1.2 million increase in the current deferred tax asset. These increases in adjusted working capital were partially offset by a $1.4
million increase in accrued taxes.



|1 | Adjusted working capital is defined as current assets (excluding cash and cash equivalents) less current liabilities (excluding the 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, 2009 |        |   | December 31, 2008 |  
|Working capital                                             |  | $             | 45,916 |   |                   | $ | 46,755  |  
|Less cash                                                   |  |               | (7,828 | ) |                   |   | (10,766 | )
|Add current portion of short-term and long-term obligations |  |               | 7,718  |   |                   |   | 1,089   |  
|                                                            |  |               |        |   |                   |   |         |  
|                                                            |  |              
|Adjusted working capital                                    |  | $             | 45,806 |   |                   | $ | 37,078  |  
|                                                            |  |               |        |   |                   |   |         |  



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Our revolving credit facility (the Revolver) under our senior secured credit facility provides for $35
million of borrowing availability. Lehman Commercial Paper Inc. (Lehman) has a lending commitment of $8.9 million (or 25.5%) of the total $35 million available under the Revolver. We have concluded that Lehman is unable or unwilling to
fund its portion of loans under the Revolver and that, as a result, the amount actually available under the Revolver is $26.1 million. We expect that cash generated from operating activities and availability under the Revolver, which is included in
our senior secured credit facility, will be our principal sources of liquidity. At June 30, 2009, there were $6.7 million of borrowings outstanding under the Revolver and $19.4 million of remaining borrowing availability. We made $4.8 million
of payments between July 1, 2009 and August 10, 2009 to reduce our borrowings outstanding under the Revolver to $1.9 million at August 10, 2009. Based on our current level of operations, we believe our cash flow from operations and
availability under the Revolver will be adequate to meet our liquidity needs for at least the next twelve months. We cannot assure you, however, that our business will generate sufficient cash flows from operations, or that future borrowings will be
available to us under the Revolver 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, 2009 was $328.5 million. In 2011, our debt service requirements will substantially increase as a result of the maturity on December 30, 2011 of the senior secured term loans and
borrowings on the senior secured acquisition facility. We anticipate that we will refinance these borrowings prior to their maturity. 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 agreement. Our senior secured credit facility also places certain restrictions on our ability to make capital expenditures. As of June 30, 2009, we were in compliance
with all covenants. Below are the required financial covenant levels and the actual levels as of June 30, 2009:



|                                    |  |                 |              |        |   |            
|----------------------------------- |  | --------------- | ------------ | ------ | - | -----------
|                                    |  | Required        |              | Actual
|Maximum leverage ratio              |  |                 | 5.25         |        |   | 4.86       
|Minimum interest coverage ratio     |  |                 | 1.80         |        |   | 2.19       
|Maximum annual capital expenditures |  | not to exceed $ | 15.0 million |        | $ | 4.3 million

We believe that our financing arrangements provide us with sufficient financial flexibility to fund our
operations, debt service requirements and other committed obligations. Our ability to access additional capital in the long-term depends on availability of capital markets and pricing on commercially reasonable terms as well as our credit profile at
the time we are seeking funds. From time-to-time, we review our long-term financing and capital structure. As a result of our review, we may periodically explore alternatives to our current financing, including the issuance of additional long-term
debt, refinancing our credit facility and other restructurings or financings.

Cash flows

Six months ended June 30, 2009 compared to six months ended June 30, 2008

Cash flows from operating activities.Net cash provided by operating activities was $13.2 million for the six months ended June 30, 2009 as compared to $10.3 million for the six months ended June 30,
2008. The primary reason for this increase is the $3.7 million reduction in cash paid for interest to $14.3 million for the six months ended June 30, 2009 from $18.0 million for the six months ended June 30, 2008. This increase in cash
provided by operating activities was partially offset by the combined impact from the timing of cash collections of receivables and payments of liabilities.

Cash flows from investing activities. Net cash used for investing activities was $7.9 million for the six months ended June 30, 2009 as compared to $29.0 million for the six months ended June 30, 2008. The decrease in cash
used for investing activities is primarily due to a reduction of $20.2 million in acquisition-related cash payments in the six months ended June 30, 2009 compared to the six months ended June 30, 2008.

Cash flows from financing activities.Net cash used in financing activities was $8.9 million for the six months ended June 30, 2009 as compared
to cash used by financing activities of $1.3 million for the six months ended June 30, 2008. The primary reason for this fluctuation was the payment of $15.0 million to acquire $25.5 million of Notes, partially offset by $6.7 million in net
borrowings on the Revolver during the six months ended June 30, 2009.



30



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Contractual Obligations

At June 30, 2009, there were no material changes in our December 31, 2008 contractual obligations, except for the reduction in principal payments on debt and interest payments on debt due to the extinguishment of $25.5 million in
principal of the Notes.

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 and Recently Issued Accounting Standards

See Note A to the condensed consolidated financial statements for the impact of recently issued accounting standards.

There have been no other material changes to our critical accounting policies since December 31, 2008.



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

At
June 30, 2009, there were no material changes in our December 31, 2008 market risks relating to interest and foreign exchange rates.



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

Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act) designed to provide reasonable
assurance that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SECs rules and
forms. These include controls and procedures designed to ensure that this information is accumulated and communicated to the Companys management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely
decisions regarding required disclosure. Management, with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Companys disclosure controls and procedures as of June 30, 2009.
Based on this evaluation, which excluded an assessment of internal control of the Marietta acquired operations, the Companys Chief Executive Officer and Chief Financial Officer have concluded that the Companys disclosure controls and
procedures were effective as of June 30, 2009, at the reasonable assurance level.

The Company completed its Marietta acquisition effective
December 31, 2008. As permitted by the SEC, managements assessment as of June 30, 2009 did not include the internal controls of Marietta, which is included in the Companys condensed consolidated financial statements as of
June 30, 2009.

Changes in Internal Control Over Financial Reporting

The Company is in the process of implementing the Order to Cash module in its enterprise resource planning system for most of its US and Canadian
locations. This implementation will result in certain changes to business processes and internal controls impacting financial reporting. Management is taking the necessary steps to monitor and maintain appropriate internal controls during this
period of change. Although we believe we are designing effective internal controls for this implementation, if the module is implemented late in the 4thquarter, management may not have enough information to conclude that the controls are operating effectively. The Company also
continues to integrate new acquisitions into corporate processes. No potential internal control changes due to new acquisitions would be considered material to, or are reasonably likely to materially affect, our internal control over financial
reporting. The Marietta acquisition is expected to be fully integrated into corporate processes by year-end.

There were no other changes in the
Companys internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter ended June 30, 2009 that have materially affected, or are reasonably likely to materially affect,
the Companys internal control over financial reporting.



31



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##### Table of Contents

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, 2008.



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



|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT NUMBER |  | 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|               | 
|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



32



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|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|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 SGS International, Inc. 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 Quarterly Report on Form 10-Q for the quarter ended March 31, 2007, filed May 15, 2007, File No. 333-133825)
|     | 
|31.  |  | CERTIFICATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     | 
|31.1 |  | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|     | 
|31.2 |  | Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     | 
|32   |  | CERTIFICATIONS PURSUANT TO SECTION 906 OF THE SARBANES OXLEY ACT OF 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     | 
|32.1 |  | Certification of Chief Executive Officer and Principal 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 10, 2009 |  | By:                     |  | /s/ Henry R. Baughman                            
|                      |  |                         |  | Henry R. Baughman                                
|                      |  |                         |  | President, Chief Executive Officer and Director  
|                      |  |                         |  | (Principal Executive Officer)                    
|                      |  |                        
|Date: August 10, 2009 |  | By:                     |  | /s/ James M. Dahmus                              
|                      |  |                         |  | James M. Dahmus                                  
|                      |  |                         |  | Senior Vice President and Chief Financial Officer
|                      |  |                         |  | (Principal Financial Officer)                    



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