8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  11/07/2006

SGS International, Inc.

(Exact name of registrant as specified in its charter)

Commission File Number:  333-133825

Kentucky	20-3939981
(State or other jurisdiction of	(IRS Employer
incorporation)	Identification No.)

626 West Main Street

Suite 500

Louisville, Kentucky 40202

(Address of principal executive offices, including zip code)

(502) 637-5443

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ]   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ]   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Information to be included in the report

Item 2.02.    Results of Operations and Financial Condition

On November 13, 2006, SGS International, Inc. (the "Company") issued a press release announcing its financial results for the third quarter of 2006 and which included information regarding an earnings conference call being held by the Company to discuss those financial results. A copy of the press release is furnished as Exhibit 99.1 to this report.

Item 5.02.    Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On November 7, 2006, the Company's Board of Directors adopted the SGS International, Inc. Management Incentive Plan - 2006 (the "Plan"). The purpose of the Plan is to reward eligible employees who contribute to the Company's profitability and improved productivity. Eligible participants include all sales staff positions and salaried positions grade 17 or higher who are not participating in any other Company bonus plan, commission program or under contractual obligation (except to the extent such contractual obligation provides for participation in the Plan). Each Plan participant will have a target incentive opportunity that is a percentage of the participant's annual base salary, with the percentage being determined by salary grade. Portions of the incentive opportunity will be related to the Company's EBITDA (i.e., earnings before interest, taxes, depreciation and amortization) performance, departmental financial performance and achievement of individual financial goals, respectively. Payment of any a ward is contingent upon the Company meeting a minimum EBITDA target. Unless otherwise negotiated, new employees hired in the Plan year before December 1 may be added as Plan participants but their award would be based on a prorated period commensurate with their hire date. Awards will be paid after completion of the Company's year-end financial audit. A participant whose employment is terminated voluntarily or with cause before an award is paid out will not be eligible to receive an award. A participant who dies, retires, becomes disabled or is terminated without cause during the Plan year may be eligible for a pro rated award at the discretion of the Plan committee.

The Plan committee will be made up of the Company's President, Executive Vice President, Chief Financial Officer and Vice President of Human Resources. The Plan will be administered by the Compensation Committee of the Company's Board of Directors.

Item 9.01.    Financial Statements and Exhibits

(d) Exhibits

The following is furnished as an exhibit to this report:

Exhibit Number       Description

99.1                           Press release issued by the Company dated November 13, 2006.

Signature(s)

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 hereunto duly authorized.

		SGS International, Inc.
Date: November 13, 2006	By:	/s/    Benjamin F. Harmon, IV
		Benjamin F. Harmon, IV
		Vice President, General Counsel and Secretary

Exhibit Index

Exhibit No.	Description
EX-99.1	Press release dated November 13, 2006

EX-99.1 2 rrd135914_16933.htm PRESS RELEASE DATED NOVEMBER 13, 2006

Exhibit 99.1

Date: November 13, 2006

SGS REPORTS RECORD Q3 REVENUE, UP 1.8% VERSUS 2005

SGS International, Inc., a provider of design-to-print graphic services to the consumer products packaging market, announced that sales in the third quarter of 2006 increased by 1.8% versus the same period in 2005, to a third consecutive quarterly performance record. Sales for the third quarter increased to $71.1 million from $69.9 million in the prior year's quarter. The increase in sales was due to acquisitions completed in 2005 that added $5.8M to 2006 revenues, and to acquisitions completed in 2006 that added $0.6M to 2006 revenues. Excluding the impact of acquisitions, revenues declined by $5.2M, or 7.4% versus Q3 2005. Revenue for the first nine months of 2006 was $218.2M, up $16.7M, or 8.3% versus the same period in 2005. Acquisitions accounted for $17.8M of the increase. Excluding the impact of acquisitions, revenues from continuing operations were lower by $1.1M, or 0.5% versus the same nine months in 2005.

Net income for the third quarter of 2006 decreased from $6.2 million in 2005 to $0.8 million in the current year. The decline was primarily due to an increase of $7.0 million in interest expense associated with debt incurred in the acquisition of the business from its former owner. For the first nine months of 2006, net income was $2.4M, down from $16.2M in the same period in 2005. The decrease was primarily due to a year-to-year increase in interest expense of $21.2M.

EBITDA in the third quarter decreased 8.2% from $15.9 million in 2005 to $14.6 million in the current year. Included in the third quarter 2006 EBITDA are restructuring charges of $0.5 million. On the year, EBITDA decreased 1.4% from $44.4M during the first nine months of 2005 to $43.8M during the first nine months of 2006. EBITDA in 2006 would have been $45.6M but for the incurrence of $1.8M in restructuring charges. The reconciliation of this non-GAAP measure to a GAAP measure is as follows:

	Quarter Ended 09/30/06 (in $ millions)	Quarter Ended 09/30/05 (in $ millions)	Nine Mnth End 09/30/06 (in $ millions)	Nine Mnth End 09/30/05 (in $ millions)
Revenue	$ 71.1	$ 69.9	$ 218.2	$ 201.5
Net income	0.8	6.2	2.4	16.2
Add:
Depreciation and amortization	4.3	4.6	12.5	12.7
Other expense	(0.1)	(0.3)	0.6	0.6
Interest expense	8.9	1.9	26.2	5.0
Income tax expense	0.7	3.5	2.1	9.9
EBITDA	$ 14.6	$ 15.9	$ 43.8	$ 44.4

While EBITDA is a non-GAAP measure Management believes its inclusion enhances the users' overall understanding of the Company's current financial performance and prospects for the future. This non-GAAP financial information should be considered in addition to, and not as a substitute for, or superior to, results prepared in accordance with GAAP.

Hank Baughman, CEO of SGS, said "Our Q3 results were slightly below expectations as some of our customers delayed spending plans for a quarter or two. Nonetheless, we were able to hold our EBITDA margins and make important progress in several areas including the acquisition of the Lukkien packaging division in the Netherlands, and organizational changes which we expect will add significant strength to our Sales and Marketing functions."

SGS International, Inc. is the parent company of Southern Graphic Systems, Inc., a global leader in the digital imaging and communications industry offering design-to-print graphic services to the international consumer products packaging market.

Conference Call Notification

SGS International, Inc., will hold a teleconference at 10:30 AM EST on November 13, 2006. Please dial (1-800-374-0624) in the USA or (1-7066347233) internationally to access the call. The conference ID number is 4001383.

Please contact Jim Dahmus, CFO of SGS, at 502-634-5295 if you have any questions about this release.

This press release contains forward-looking information. These statements reflect management's expectations, estimates and assumptions, based on information available at the time of the statement. Forward-looking statements include, but are not limited to, statements regarding future events, plans, goals, objectives, and expectations. The words "anticipate," "believe,' "estimate," "expect," "plan," "intend," "likely," "will," "should," and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and other factors, which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by those statements. Factors that could cause actual results to differ materially from those in the forward-looking statem ents include; loss of existing customers and/or failure to acquire new customers; graphic products industry trends, including greater than anticipated pricing pressures, product and service rates and factors affecting supply and demand; and our ability to execute our business plan, including the costs of and ability to integrate acquisitions; as well as other risk factors summarized in SGS International, Inc.'s filings with the Securities and Exchange Commission. We undertake no obligation to publicly update or revise any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, or changes to future results over time.

-----END PRIVACY-ENHANCED MESSAGE-----

EX-99.1

Exhibit 99.1

Date: November 13, 2006

SGS REPORTS RECORD Q3 REVENUE, UP 1.8% VERSUS 2005

SGS International, Inc., a provider of design-to-print graphic services to the consumer products packaging market, announced that sales in the third quarter of 2006 increased by 1.8% versus the same period in 2005, to a third consecutive quarterly performance record. Sales for the third quarter increased to $71.1 million from $69.9 million in the prior year's quarter. The increase in sales was due to acquisitions completed in 2005 that added $5.8M to 2006 revenues, and to acquisitions completed in 2006 that added $0.6M to 2006 revenues. Excluding the impact of acquisitions, revenues declined by $5.2M, or 7.4% versus Q3 2005. Revenue for the first nine months of 2006 was $218.2M, up $16.7M, or 8.3% versus the same period in 2005. Acquisitions accounted for $17.8M of the increase. Excluding the impact of acquisitions, revenues from continuing operations were lower by $1.1M, or 0.5% versus the same nine months in 2005.

Net income for the third quarter of 2006 decreased from $6.2 million in 2005 to $0.8 million in the current year. The decline was primarily due to an increase of $7.0 million in interest expense associated with debt incurred in the acquisition of the business from its former owner. For the first nine months of 2006, net income was $2.4M, down from $16.2M in the same period in 2005. The decrease was primarily due to a year-to-year increase in interest expense of $21.2M.

EBITDA in the third quarter decreased 8.2% from $15.9 million in 2005 to $14.6 million in the current year. Included in the third quarter 2006 EBITDA are restructuring charges of $0.5 million. On the year, EBITDA decreased 1.4% from $44.4M during the first nine months of 2005 to $43.8M during the first nine months of 2006. EBITDA in 2006 would have been $45.6M but for the incurrence of $1.8M in restructuring charges. The reconciliation of this non-GAAP measure to a GAAP measure is as follows:

	Quarter Ended 09/30/06 (in $ millions)	Quarter Ended 09/30/05 (in $ millions)	Nine Mnth End 09/30/06 (in $ millions)	Nine Mnth End 09/30/05 (in $ millions)
Revenue	$ 71.1	$ 69.9	$ 218.2	$ 201.5
Net income	0.8	6.2	2.4	16.2
Add:
Depreciation and amortization	4.3	4.6	12.5	12.7
Other expense	(0.1)	(0.3)	0.6	0.6
Interest expense	8.9	1.9	26.2	5.0
Income tax expense	0.7	3.5	2.1	9.9
EBITDA	$ 14.6	$ 15.9	$ 43.8	$ 44.4

While EBITDA is a non-GAAP measure Management believes its inclusion enhances the users' overall understanding of the Company's current financial performance and prospects for the future. This non-GAAP financial information should be considered in addition to, and not as a substitute for, or superior to, results prepared in accordance with GAAP.

Hank Baughman, CEO of SGS, said "Our Q3 results were slightly below expectations as some of our customers delayed spending plans for a quarter or two. Nonetheless, we were able to hold our EBITDA margins and make important progress in several areas including the acquisition of the Lukkien packaging division in the Netherlands, and organizational changes which we expect will add significant strength to our Sales and Marketing functions."

SGS International, Inc. is the parent company of Southern Graphic Systems, Inc., a global leader in the digital imaging and communications industry offering design-to-print graphic services to the international consumer products packaging market.

Conference Call Notification

SGS International, Inc., will hold a teleconference at 10:30 AM EST on November 13, 2006. Please dial (1-800-374-0624) in the USA or (1-7066347233) internationally to access the call. The conference ID number is 4001383.

Please contact Jim Dahmus, CFO of SGS, at 502-634-5295 if you have any questions about this release.

This press release contains forward-looking information. These statements reflect management's expectations, estimates and assumptions, based on information available at the time of the statement. Forward-looking statements include, but are not limited to, statements regarding future events, plans, goals, objectives, and expectations. The words "anticipate," "believe,' "estimate," "expect," "plan," "intend," "likely," "will," "should," and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and other factors, which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by those statements. Factors that could cause actual results to differ materially from those in the forward-looking statem ents include; loss of existing customers and/or failure to acquire new customers; graphic products industry trends, including greater than anticipated pricing pressures, product and service rates and factors affecting supply and demand; and our ability to execute our business plan, including the costs of and ability to integrate acquisitions; as well as other risk factors summarized in SGS International, Inc.'s filings with the Securities and Exchange Commission. We undertake no obligation to publicly update or revise any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, or changes to future results over time.