Harland Clarke Holdings Corp. generated $1.71 billion in net revenue during 2009, a 4.6% drop from the $1.79 billion it recorded in 2008. The company’s net income more than doubled from $47.2 million to $112.1 million, however, primarily due to gains from early debt retirement.
Harland Clarke Holdings operates three business segments: Its Harland Clarke unit sells checks and products, direct marketing services and a variety of customized business and home office products; Harland Financial Solutions offers technology products and services to financial institutions; and Scantron provides data management solutions and services to educational, healthcare, commercial and government entities.
All three operating units saw revenue decreases, although Scantron’s received a full-year benefit from its early 2008 acquisition of Data Management LLC.
The Harland Clarke segment saw its revenue drop by 5%, from $1.29 billion to $1.23 billion. The company attributed the drop to volume declines from check and related products, which the company believes were partly the result of economic downturn. However, declines in volumes were partially offset by increased revenues per unit. Operating income for the Harland Clarke segment decreased by 9.8%, to $195.8 million for 2009 from $217.1 million for 2008. During the year Harland Clarke took a non-cash writedown of $33.4 million of the Harland Clarke tradename. It also took $25.7 million in restructuring costs.
Revenue for the Harland Financial Solutions segment fell by 5% as well, from $293.7 million to $278.9 million. The decline was primarily due to volume drops in license, hardware and professional services revenues as well as in mortgage products, partially offset by increases in lending products, which are the result of the economic downturn’s impact on financial institution purchases. Operating income for the Harland Financial Solutions segment decreased by 3.8%, to $32.8 million for 2009 from $34.1 million for 2008, primarily due to a $10.6 million non-cash write-down of the value of the Harland Clarke tradename in 2009 and the decrease in net revenues.
The Scantron segment’s revenue fell by 1.6%, to $208 million for 2009 from $211.3 million for 2008. While the Data Management acquisition accounted for an increase of $14.6 million, the remaining $17.9 million decrease was a result of volume declines in hardware and forms products, partially offset by organic growth in software products, again due to the downturn. Operating income for the Scantron segment increased by 21.5%, to $34.5 million for 2009 from $28.4 million for 2008. The Data Management acquisition accounted for $1.9 million of the increase , with the rest the result of cost reductions and restructuring.
