Note 2 - Acquisitions

Lipson Associates, Inc. and Laga, Inc.

Effective October 19, 2011, the Company acquired substantially all of the domestic assets and assumed certain trade account and business related liabilities of Lipson Associates, Inc. and Laga, Inc., as well as the stock of their foreign operations. Lipson Associates, Inc. and Laga, Inc. does business as Brandimage – Desgrippes & Laga ("Brandimage").

Brandimage is a leading branding and design network specializing in providing services that seek to engage and enhance the brand experience, including brand positioning and strategy, product development and structural design, package design and environmental design. Brandimage has operations in Chicago, Cincinnati, Paris, Brussels, Shanghai, Seoul and Hong Kong. The net assets and results of operations of Brandimage are included in the Consolidated Financial Statements as of October 19, 2011 in all three of the Company's operating segments: Americas, Europe and Asia Pacific. The Brandimage business was acquired to enhance the Company's service offerings related to branding and design and operates in conjunction with Schawk's legacy brand development capabilities, which are performed under its Anthem Worldwide brand.

The purchase price of $24,562 consisted of $27,011 paid in cash at closing, less $2,449 received in the fourth quarter of 2012 for a net working capital adjustment. The Company funded the purchase price through a draw from its existing credit facility. The Company recorded a purchase price allocation based on a fair value appraisal performed by an independent consulting company. The goodwill ascribed to this acquisition consists largely of expected profitability from future services and is deductible for tax purposes.

A summary of the final fair values assigned to the acquired assets is as follows:

Accounts receivable	$	4,939
Inventory		4,117
Prepaid expenses and other current assets		1,365
Income tax receivable		8
Property and equipment		482
Goodwill		18,930
Customer relationships		5,457
Trade name		729
Other assets		241
Trade accounts payable		(3,247	)
Accrued expenses		(7,192	)
Notes payable		(23	)
Deferred income taxes		(247	)
Other long term liabilities		(2,958	)

Total cash paid, net of $1,961 cash acquired	$	22,601

The weighted average amortization periods of the customer relationships intangible asset and the trade name intangibles asset is 8.0 years and 5.0 years, respectively. The intangible asset amortization expense related to the customer relationships intangible asset and the trade name intangible asset was $658 and $172, respectively, for the year ended December 31, 2012. The intangible asset amortization expense was $250 for the year ended December 31, 2011. The intangible asset amortization expense will be approximately $821 each year 2013 through 2015, $792 in 2016 and $677 in 2017. Supplemental pro-forma information is not presented because the acquisition is considered to be immaterial to the Company's consolidated financial statements.

Real Branding LLC

Effective November 10, 2010, the Company acquired 100 percent of the equity of Real Branding LLC ("Real Branding"), a United States - based digital marketing agency. Real Branding provides digital marketing services to consumer product and entertainment clients through its locations in San Francisco and New York. The net assets and results of operations of Real Branding are included in the Consolidated Financial Statements as of November 10, 2010 in the Americas operating segment. This business was acquired to strengthen the Company's ability to offer integrated strategic, creative and executional services in the digital media marketplace.

The purchase price of $9,590 consisted of $6,000 paid in cash at closing, $182 paid for a net working capital adjustment in the first quarter of 2011, and $3,408 recorded as an estimated liability to the sellers for contingent consideration based on future performance of the business, as described below.

The Company recorded a purchase price allocation based on a fair value appraisal by an independent consulting company. The goodwill ascribed to this acquisition is deductible for tax purposes. A summary of the final fair values assigned to the acquired assets is as follows:

Accounts receivable	$	981
Prepaid expenses and other current assets		87
Property and equipment		149
Goodwill		4,293
Customer relationships		3,966
Non-compete agreements		100
Trade accounts payable		(77	)
Accrued expenses		(1,006	)
Other long term liabilities		(3,408	)

Total cash paid, net of $1,097 cash acquired	$	5,085

Under the acquisition agreement, the purchase price may be increased by up to $6,000 if a specified target of earnings before interest, taxes, depreciation and amortization is achieved for the years 2011 through 2014 and is payable periodically during 2012 through 2015, based on actual future performance. Based on performance projections available at the date of the acquisition, the Company originally recorded estimated contingent consideration of $3,958, less a present value discount of $550. During the fourth quarter of 2011, it became apparent that the original performance projections would not be achieved and the Company reevaluated the estimated contingent consideration payable based on current expectations of the performance of the Real Branding business during 2012 through 2014. As a result of the reevaluation, the Company reduced the estimated contingent consideration payable as of December 31, 2011 to $264, less a present value discount of $25, resulting in a net reduction in the estimated contingent consideration payable of $3,320. The reduction in the net contingent consideration payable is included as a credit to Selling, general and administrative expenses for the year ended December 31, 2011 in the Consolidated Statements of Comprehensive Income (Loss).

During the third quarter of 2012, the Company initiated a restructuring program for the Real Branding locations and reevaluated its future performance projections for the business. As a result of the reevaluation, the Company now believes that the performance thresholds will not be met for any of the years 2012 through 2014 and no contingent consideration will be paid. Accordingly, the remaining contingent consideration liability of $264, less a present value discount of $19, was reversed as a credit to Selling, general and administrative expenses in the Consolidated Statement of Comprehensive Income (Loss) during the third quarter of 2012.

In addition, as a result of the restructuring program initiated in the third quarter of 2012 and the reevaluation of the Real Branding business, the Company analyzed the recoverability of the remaining book value of the customer relationship intangible asset related to the Real Branding acquisition and determined that the projected cash flows did not support the carrying value of the asset. Accordingly, in the third quarter of 2012, the Company recorded an impairment charge of $2,350 to write-down the book value of the customer relationship intangible asset to its estimated fair value of $544. The impairment charge is included in Impairment of long-lived assets for the year ended December 31, 2012 in the Consolidated Statements of Comprehensive Income (Loss).

The weighted-average amortization period of the customer relationship and non-compete intangible assets is 6.9 years. The intangible asset amortization expense was $471 for the year ended December 31, 2012, and will be approximately $127 per year in 2013 and 2014, approximately $124 in 2015, approximately $107 in 2016 and approximately $89 in 2017.

Supplemental pro-forma information is not presented because the acquisition is considered to be immaterial to the Company's consolidated financial statements.

Untitled London Limited

Effective September 17, 2010, the Company acquired the operating assets of Untitled London Limited, a United Kingdom-based agency that provides strategic, creative and technical services for digital marketing. The net assets and results of operations of Untitled London Limited are included in the Consolidated Financial Statements in the Europe operating segment, effective September 17, 2010. This business was acquired to expand the Company's digital marketing capabilities in Europe.

The purchase price was approximately $860. The Company recorded a purchase price allocation based on a fair value appraisal performed by an independent consulting firm. The goodwill ascribed to this acquisition is deductible for tax purposes. A summary of the final fair values assigned to the acquired net assets is as follows:

Accounts receivable	$	79
Inventory		15
Property and equipment		63
Goodwill		449
Customer relationships		215
Non-compete agreements		39

Total cash paid at closing	$	860

The weighted-average amortization period of the customer relationship and non-compete intangible assets is 8.8 years. The intangible asset amortization expense was $35 for the year ended December 31, 2012, and will be approximately $22 for 2013 through 2017.

Supplemental pro-forma information is not presented because the acquisition is considered to be immaterial to the Company's consolidated financial statements.

Exit Reserves from Prior Acquisitions

The Company recorded exit reserves related to its acquisitions of Weir Holdings Limited and Seven Worldwide Holdings, Inc., which occurred in 2004 and 2005, respectively. The major expenses included in the exit reserves were employee severance and lease termination expenses. The exit reserve balances related to employee severance were paid in prior years. The exit reserves related to the facility closures are being paid over the term of the leases, with the longest lease expiring in 2015. The adjustments recorded during 2012 are principally due to changes in expense assumptions for certain vacant facilities. The remaining reserve balance of $324 is included on the Consolidated Balance Sheets as of December 31, 2012 as follows: $120 is included in Accrued expenses and $204 is included in Other long-term liabilities.

The following table summarizes the reserve activity from 2010 through 2012

	Beginning of Period		Adjustments			Payments			End of Period

2010	$	2,431	$	(715	)	$	(936	)	$	780
2011	$	780	$	(246	)	$	(167	)	$	367
2012	$	367	$	44		$	(87	)	$	324